SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the year ended December 31, 1996 Commission File Number: 0-19131
MEDIMMUNE, INC.
(Exact name of registrant as specified in its charter)
Delaware 52-1555759
State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or organization)
35 West Watkins Mill Road
Gaithersburg, Maryland 20878
(Address of principal executive office)
(Zip Code)
Registrant's telephone number, including area code: (301) 417-0770
Securities Registered pursuant to Section 12(b) of the Act: None
Securities Registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
(Title of Class)
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:
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K [ ].
Aggregate market value of the 20,243,426 shares of voting stock held by
non-affiliates of the registrant based on the closing price on
February 28, 1997 was $293,529,677. Common Stock outstanding as of
February 28, 1997: 21,898,698 shares.
Documents Incorporated by Reference:
Document Part of Form 10-K
Proxy Statement for the Annual Meeting Part III
of Stockholders to be held May 16, 1997
MEDIMMUNE, INC.
FORM 10-K
TABLE OF CONTENTS
PART I PAGE
Item 1. Business 1
Item 2. Properties 30
Item 3. Legal Proceedings 31
Item 4. Submission of Matters to a Vote of Security Holders 31
PART II
Item 5. Market for MedImmune, Inc.'s Common Stock and Related
Shareholder Matters 31
Item 6. Selected Financial Data 32
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 32
Item 8. Financial Statements and Supplementary Data 41
Report of Independent Accountants 67
Report of Management 69
Item 9. Changes in and Disagreements with Accountants on
Accounting Financial Disclosure 70
PART III
Item 10. Directors and Executive Officers of MedImmune, Inc. 70
Item 11. Executive Compensation 71
Item 12. Security Ownership of Certain Beneficial Owners and
Management 71
Item 13. Certain Relationships and Related Transactions 71
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND
REPORTS ON FORM 8-K 72
SIGNATURES 74
Schedule I S-1
Exhibit Index E1-E5
Exhibits (Attached to this Report on Form 10-K)
CytoGam is a registered trademark and RespiGam is a trademark of
the Company.
____________________
THE STATEMENTS IN THIS ANNUAL REPORT THAT ARE NOT DESCRIPTIONS OF
HISTORICAL FACTS MAY BE 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, FACTORS SUCH AS PRODUCT DEMAND AND
MARKET ACCEPTANCE RISKS, THE EARLY STAGE OF PRODUCT DEVELOPMENT,
COMMERCIALIZATION AND TECHNOLOGICAL DIFFICULTIES, CAPACITY AND
SUPPLY CONSTRAINTS AND 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 I
ITEM 1. BUSINESS
MedImmune ("the Company") is a biotechnology company focused on
developing and marketing products for infectious diseases and
transplantation medicine. Since commencing operations in 1988,
the Company has pursued a strategy of establishing an initial
commercial base using proven technologies and targeting
well-understood diseases to support longer-term product
development. This strategy has relied on the advancement of an
internally developed pipeline of product candidates and on
in-licensing products from third parties.
The Company is currently marketing two products, CytoGam
(Cytomegalovirus Immune Globulin Intravenous (Human), CMV-IGIV)
and RespiGam (Respiratory Syncytial Virus Immune Globulin
Intravenous (Human), RSV-IGIV). The Company has established core
competencies in transplantation and infectious diseases and has a
research and development portfolio which includes six products
now
<PAGE>1
undergoing clinical trials, including two in Phase 3 studies and
a number of product candidates in preclinical development.
Products on the Market.
RespiGam
RespiGam is marketed for the prevention of serious respiratory
syncytial virus ("RSV") disease in children under 24 months of
age with a lung condition called bronchopulmonary dysplasia
("BPD") or a history of premature birth (i.e., born at 35 weeks
or less gestation). RespiGam is the only product demonstrated to
be safe and effective in reducing the incidence and duration of
RSV hospitalization and the severity of RSV illness in these high
risk infants.
RespiGam is a specialty immune globulin purified from donor
plasma screened to have high levels of neutralizing antibodies
against RSV. RSV is the leading cause of pneumonia and
bronchiolitis in children and results in an estimated 90,000
hospitalizations and 4,500 deaths annually in the United States.
RSV outbreaks occur worldwide, usually during the late fall,
winter and early spring. Certain populations of infants, children
and adults are at increased risk for developing severe RSV
disease. These include severely premature infants (i.e., less
than or equal to 32 weeks gestation) and infants with BPD. There
are approximately 100,000 children in this high-risk group in the
United States.
The Company directly markets RespiGam in the leading 420 neonatal
and pediatric hospitals in the United States. These hospitals
comprise approximately 70% of the total potential business for
RespiGam. The Company's direct marketing efforts are
supplemented
<PAGE>2
by the Wyeth-Lederle Vaccines and Pediatrics sales force of Wyeth-
Ayerst Laboratories (a division of American Home Products
Corporation ("AHP")), one of the leading pharmaceutical companies
focused on pediatric medicine. AHP has focused on promoting
RespiGam to physicians in smaller hospitals and to office-based
pediatricians. The Company submitted an application to Canadian
regulatory authorities during 1996 to request approval to market
RespiGam. There can be no assurance that such a license will be
granted, or, if granted, that licensure will occur in a timely
manner.
The Company has established a collaboration with Baxter
Healthcare Corporation ("Baxter"), one of the leading producers
and marketers of immune globulins worldwide, to commercialize
RespiGam outside North America. The Company has been advised
that Baxter expects to file regulatory applications in Europe
during 1997 seeking a license to market RespiGam throughout
Europe (see "Collaborative Agreements"). There can be no
assurances that such a license or licenses will be granted, or,
if granted, that licensure will occur in a timely manner.
After receiving approval from the United States Food & Drug
Administration ("FDA") for the marketing of RespiGam in January
1996, the Company launched RespiGam for its first full RSV season
during fourth quarter 1996. Sales of RespiGam in the fourth
quarter were $13.9 million. The Company was supply-constrained
in the fourth quarter and expects to be limited in its supply of
RespiGam in the first quarter 1997. The Company has worked
closely with its contract manufacturers to increase product
supply for the 1997-1998 RSV season. While the Company believes
it will
<PAGE>3
be successful in achieving this goal, there can be no assurances
that demand will not exceed supply during subsequent RSV seasons.
CytoGam
CytoGam is marketed for the attenuation of primary
cytomegalovirus ("CMV") disease associated with kidney
transplantation. Approximately 75% of untreated donor-
positive/recipient-negative kidney transplant recipients are
expected to develop CMV disease. Infection of a transplant
recipient with CMV by a donor organ is associated with increased
mortality and substantial morbidity including pneumonia,
hepatitis, opportunistic infections and possibly graft rejection.
CytoGam is a specialty immune globulin product enriched in
antibodies against CMV. CytoGam has been shown to reduce the
incidence of severe CMV disease and opportunistic infections
associated with kidney transplantation. The Company began
marketing CytoGam through its own hospital-based sales force in
1993. Sales of CytoGam have grown at a compounded annual rate of
approximately 30% since 1993 to $18.4 million in 1996. While
sales growth has been strong, the Company expects to continue to
face increasing pressure from cost containment efforts as well as
competition from other effective anti-viral therapies.
Products in Development
MEDI-493 RSV Monoclonal Antibody
MEDI-493 is a humanized monoclonal antibody being evaluated in
clinical studies for the prevention of RSV disease in high-risk
infants (see "RespiGam" above). MEDI-493 is administered by
intramuscular injection and consequently has the potential to
enhance patient care, reduce costs associated with drug
administration and improve convenience for parents, physicians
and
<PAGE>4
nurses. Taken together, the Company believes these benefits may
provide the potential to reach a broader population of children
with MEDI-493 than with RespiGam.
The Company has tested MEDI-493 in Phase 1 and Phase 2 clinical
trials involving approximately 300 patients for both prevention
and treatment of RSV disease. During the 1996-1997 RSV season,
the Company is evaluating MEDI-493 in a Phase 3 clinical trial,
IMpact-RSV, being conducted at 139 medical centers in 1,502 high-
risk infants and children in the United States, Canada and the
United Kingdom. The Company expects to complete the trial in May
1997 and announce results during the third quarter. While the
Company believes it has established a rapid and comprehensive
development program for MEDI-493, substantial risk remains,
including: 1) no assurances can be given that the clinical trial
will show with statistical significance that MEDI-493 is safe and
effective in preventing RSV-associated hospitalization; 2)no
assurances can be given that an observed effect, if any, will be
great enough to warrant commercialization; 3)no assurances can be
given that the FDA will license the drug for marketing; and 4)no
assurances can be given that if FDA licensure occurs, it would
occur in a timely manner. To date, the Company has retained
exclusive worldwide marketing and manufacturing rights for MEDI-
493.
Human Papillomavirus Vaccine
Human papillomaviruses ("HPVs") are responsible for the
development of genital warts and cervical cancer. There are
currently no vaccines to prevent these common sexually
transmitted diseases that affect 24 to 40 million men and women
<PAGE>5
in the United States. There are over 75 different types of HPV
associated with a variety of clinical disorders ranging from
benign lesions to potentially lethal cancers. Four types of HPV
cause the majority of genital warts and cervical cancer cases:
HPV-6, HPV-11, HPV-16 and HPV-18.
The Company's first HPV vaccine candidate, MEDI-501, is composed
of the HPV-11 L1 capsid protein which self assembles into virus-
like particles (VLPs). The VLPs, which are produced in vitro
using recombinant DNA technology, imitate the structure of
natural papillomavirus, but are not infectious. When presented
to the immune system, VLPs may be able to elicit a similar immune
response to that seen with naturally occurring HPV. Scientists
at the Company, in collaboration with a team at Georgetown
University, have shown the potential effectiveness of a VLP
vaccine candidate using a dog model for papillomavirus infection.
The model involves a virus called canine oral papillomavirus
(COPV) which mimics HPV infection closely because it produces
both warts and tumors at a mucosal site. In December 1995, The
Company and its collaborators published in "The Proceedings of
the National Academy of Sciences" the results of studies which
indicated that a COPV VLP vaccine preparation was able to protect
dogs against COPV warts. That study provided the scientific
rationale for developing an analogous vaccine for humans.
The Company began a Phase 1 clinical trial with MEDI-501 in
February 1997 to evaluate its safety, tolerance, and
immunogenicity. The trial, which is being conducted at the
University of Rochester Medical Center, is expected to conclude
in approximately 12 months. The Company expects to begin testing
<PAGE>6
of vaccine candidates for other types of HPVs in the next 12 to
18 months including HPV-18, HPV-16 and HPV-6. The Company
believes a multi-component vaccine consisting of two or more HPV
types would be necessary to prevent HPV disease of the genital
tract.
Monoclonal Antibodies for Transplantation Medicine
The Company is developing several monoclonal antibodies for use
in transplantation medicine. There are approximately 19,000 solid
organ transplants and 11,000 bone marrow transplantation
procedures annually in the United States. Despite significant
improvements in the transplantation arena, life-threatening
complications such as graft-vs.-host disease ("GvHD") and organ
rejection remain serious medical problems.
BTI-322 is a rat anti-CD2 monoclonal antibody being developed by
the Company in collaboration with BioTransplant, Incorporated for
various applications in transplantation medicine. In studies
conducted to date, involving over 60 patients in the United
States and Europe, BTI-322 has shown initial promise in its
ability to prevent and treat organ graft rejection and to treat
GvHD. BTI-322 is currently being evaluated in a multi-center
Phase 2 clinical trial for the treatment of acute GvHD. Safety,
efficacy and pharmacokinetic parameters are being monitored
during the study which is expected to be completed within one
year.
Laboratory studies have suggested that BTI-322 primarily inhibits
the response of T cells directed at transplant antigens while
subsequently allowing immune cells to respond normally to other
<PAGE>7
antigens. The specificity and long lasting effects of this
inhibition suggest that BTI-322 could have potential utility in
applications other than transplantation, such as in autoimmune
diseases. The Company is currently developing MEDI-507, a
humanized form of the product, which is expected to enter
clinical trials in 1997 for selected applications in
transplantation and autoimmune diseases. Autoimmune diseases are
of major medical importance worldwide and include common
afflictions like rheumatoid arthritis, multiple sclerosis and
Crohn's disease.
In 1994, the Company in-licensed from the University of Kentucky
a murine monoclonal antibody known as T10B9 (now MEDI-500). MEDI-
500 suppresses most T cells by binding to a protein (the alpha-
beta receptor) on the surface of the T cell. MEDI-500 has been
evaluated in several transplantation clinical trials involving
approximately 400 individuals. A Phase 2 clinical trial
comparing MEDI-500 with the only commercially available
monoclonal antibody for treatment of acute rejection suggested
that MEDI-500 may have a similar efficacy profile but with
reduced side effects. A Phase 3 clinical trial, sponsored by the
National Heart, Lung, and Blood Institute ("NHLBI"), is currently
evaluating MEDI-500 for prevention of graft-versus-host disease
(GvHD).
Lyme Disease Vaccine
Lyme disease is the most common arthropod-borne disease in the
United States. Virtually every state within the U.S. has
reported cases of Lyme disease, with an annual nationwide
reported incidence of nearly 14,000 new cases in 1996, a 30-40%
<PAGE>8
increase over 1995. Lyme disease is also reported in Europe,
Japan, China, Russia and Australia. The disease is caused by a
bacterium know as Borrelia burgdorferi ("B. burgdorferi") and is
transmitted through a tick, Ixodes scapularis, which is most
commonly found on the white-footed mouse or deer.
The Company in-licensed a newly characterized B. burgdorferi
protein called decorin binding protein ("Dbp") from Texas A&M
University, which initial animal studies suggest may provide
protection against B. burgdorferi infection. Unlike antibodies
to vaccines in development by other companies, Dbp antibodies can
be given to mice during the early phase of infection and still
clear the bacterium from animals. This may allow a significantly
greater window of opportunity for a protective immune response to
clear infection. The Company believes Dbp is the only protein
identified from B. burgdorferi to date for which this effect has
been demonstrated. In addition, antibodies from animals immunized
with Dbp inhibited growth of many strains of the Lyme disease-
causing bacteria not inhibited by antibodies to another vaccine
candidate in development, including some species of Lyme bacteria
commonly found outside the United States. These results suggest
that Dbp may provide an improved Lyme disease vaccine candidate
or, alternatively, a supplement to the vaccine candidates
currently in development.
Urinary Tract Infection Vaccine
Urinary tract infections ("UTIs") commonly require medical
attention in women and children. Escherichia coli ("E. coli")
strains are the main causative agents of UTIs. While many factors
contribute to the acquisition and progression of UTIs, it is
<PAGE>9
widely accepted that colonization of the urogenital tract by
pathogenic bacteria is a prerequisite for disease. A number of
studies have pointed to a role for pilus proteins, the long
filamentous protein appendages on the surface of E. coli, in
mediating attachment to host cells. Certain proteins located at
the distal tip of the pilus, called "adhesins," have been
implicated in this attachment, providing an important novel
target for vaccine development.
The Company and its collaborators at Washington University in St.
Louis are developing antibacterial candidates based on the tip
adhesins on the E. coli pili. The FimH adhesin which is at the
tip of UTI-associated pili, binds to mannose receptors
distributed throughout the human bladder. In preliminary
experiments at the Company, the FimH adhesin protein elicited a
strong antibody response in mice. These antibodies inhibited
attachment to human bladder cells in vitro in greater than 90% of
different E. coli clinical UTI isolates tested. Furthermore,
anti-FimH antibodies reduced bladder colonization by UTI-
associated E. coli in a mouse model. Taken together these data
suggested that the FimH adhesin could potentially serve as a
target for an anti-bacterial vaccine to combat UTIs.
The Company is currently conducting in vivo animal model studies
and designing large scale production and purification protocols
for its first UTI vaccine candidate. Adhesin-based vaccines may
also be an effective strategy for other diseases caused by
bacteria.
Streptococcus pneumoniae Vaccine
<PAGE>10
Streptococcus pneumoniae is a major cause of pneumonia, middle-
ear infections and meningitis worldwide, especially in the very
young or elderly. Pneumonia causes more than one million deaths
per year and is the most common cause of childhood death in
developing countries. In industrialized countries, pneumococcal
pneumonia is a serious problem among the elderly. Middle-ear
infections affect almost every child at least once during the
first 2 years of life. Vaccination against pneumococcal
infections has become more urgent in recent years due to the
emergence of antibiotic-resistant strains throughout the world.
The Company has recently established a collaboration with The
Rockefeller University ("Rockefeller") in New York to develop
products for the prevention and treatment of Streptococcus
pneumoniae infection. The Company has been granted a worldwide
exclusive license to commercialize product candidates developed
from a novel set of genes discovered by scientists at
Rockefeller. In addition, research efforts are underway by
scientists at the Company and Rockefeller to identify novel
conserved surface proteins for potential vaccine applications.
During 1997, promising candidate proteins are expected to be
evaluated in a number of in vitro and in vivo models to determine
their potential as vaccine candidates.
Other Infectious Disease Products
The Company has several additional efforts in place to develop
vaccines for common viral and bacterial infectious diseases
including B19 parvovirus, Haemophilus influenzae and
Staphylococcus aureus.
<PAGE>11
Discovered in 1975, B19 parvovirus has been linked to a number of
serious conditions including certain types of miscarriages in
pregnant women, life-threatening sudden reduction of red blood
cells in sickle cell anemia patients, chronic anemia in AIDS and
chemotherapy patients, and persistent arthritis in some adults.
MEDI-491 is a vaccine intended to prevent human B19 parvovirus
infection. Like MEDI-501, MEDI-491 utilizes virus-like particle
("VLP") technology. By producing two natural B19 parvovirus
proteins in the correct proportions in an insect cell recombinant
protein production system, the Company and collaborators at the
National Heart, Lung, and Blood Institute ("NHLBI") are able to
generate VLPs which resemble the natural B19 parvovirus
particles, but are not infectious. The Company has completed a
Phase 1 clinical trial to evaluate the safety of MEDI-491. The
Company believes that a successful B19 parvovirus vaccine could
be used to immunize women entering their child-bearing years to
protect them from experiencing risk of B19 parvovirus-induced
miscarriages. Alternately, a successful B19 parvovirus vaccine
could be incorporated into routine childhood immunization
programs to reduce the prevalence of this virus.
Haemophilus influenza ("H. influenzae") causes otitis media or
middle ear infections in young children. There are more than
700,000 cases in the United States each year and many infections
recur. As part of MedImmune's ongoing collaboration with Human
Genome Sciences, Inc. ("HGS"), the genome of H. influenzae has
been sequenced and approximately 90 novel surface proteins have
been identified as potential vaccine candidates. These candidate
proteins are currently being evaluated by MedImmune scientists.
<PAGE>12
Staphylococcus aureus ("S. aureus") is a bacterium which infects
over nine million individuals each year in the United States, and
is the most frequent cause of infections in the hospital. A
significant percentage of all hospital-acquired S. aureus
infections are now resistant to most antibiotics. To date, 99% of
the genome has been sequenced and over 3,000 genes have been
identified as part of MedImmune's ongoing collaboration with HGS.
Novel candidates are being selected for evaluation.
Products and Product Development Programs
The following table summarizes the indications and current status of
the Company's products and product development programs.
<TABLE>
<S> <C> <C>
Product Indication Status(1)
- --------------------------------------------------------------------------
Infectious Disease Products
RespiGam(2) Prevention of serious RSV disease in Marketed
infants with prematurity or lung
disease
MEDI-493 RSV Prevention of RSV disease in infants Phase 3
Monoclonal Treatment of RSV disease Phase 2
Antibody
MEDI-491 B19 Prevention of B19 parvovirus Phase 1
Parvovirus infection
Vaccine
HPV Vaccine Prevention of genital warts Phase 1
Prevention of cervical cancer Pre-clinical
development
Second Generation Prevention of Lyme disease Pre-clinical
Lyme Disease development
Vaccine
<PAGE>13
E. coli Vaccine Prevention of urinary tract Pre-clinical
infections development
H. influenzae Prevention of otitis media (middle Research
Vaccine ear infections)
S. aureus Prevention of staphylococcus Research
Vaccine/ infections
Immunotherapeutic
S. pneumoniae Prevention and treatment of Research
Vaccine streptococcus pneumoniae infection
RSV Vaccine(3) Prevention of RSV disease Phase 2 (AHP
sponsored)
Transplantation Products
CytoGam Attenuation of primary CMV disease in Marketed
kidney transplant patients
Prevention of CMV disease in all Product license
solid organ transplant patients application
amendment
submitted
MEDI-500 (T10B9) Prevention of GvHD in bone marrow Phase 3 (NHLBI
Monoclonal transplant patients sponsored)
Antibody
Treatment of acute kidney rejection Phase 2
BTI-322 Treatment of GvHD in bone marrow Phase 2
Monoclonal transplant patients
Antibody
Prevention of kidney rejection Phase 1
Treatment of acute kidney rejection Phase 1
MEDI-507 Prevention of kidney rejection Pre-clinical
Monoclonal development
Antibody
Treatment of autoimmune diseases Pre-clinical
development
</TABLE>
(1) "Phase 1" and "Phase 2" clinical trials generally involve
administration of a product to a limited number of patients
<PAGE>14
to evaluate safety, dosage and, to some extent, efficacy.
"Phase 3" clinical trials generally examine the efficacy
and safety of a product in an expanded patient population at
multiple clinical sites.
(2) AHP co-promotes RespiGam in the United States. Baxter holds
a license to commercialize RespiGam outside North America,
and the Company would receive a royalty on any sales by
Baxter.
(3) This product is being developed by AHP. The Company is
entitled to a royalty on any sales, if and when licensed for
marketing by the FDA.
Marketing, Research, Development and Collaborative Agreements
The Company's internal research programs are augmented by
collaborative projects with its scientific partners. As part of
its strategy, the Company has established alliances with
pharmaceutical and other biotechnology companies, academic
scientists and government laboratories. Currently, its principal
strategic alliances are the following:
American Home Products Corporation.
In November 1993, the Company entered into a strategic alliance
with American Cyanamid Company ("ACY") to co-develop and
co-promote products for the treatment and prevention of RSV and
to co-promote ZOSYN(1), an anti-infective developed by ACY. In 1994,
American Home Products Corporation ("AHP") acquired ACY and in
October 1995, AHP invested $15 million in the Company through the
(1) ZOSYN is a trademark of American Home Products Corporation.
<PAGE>15
purchase of 967,742 shares of Common Stock. The Company and AHP
collaborated on the development of RespiGam and AHP is
co-promoting the product. In connection with the October 1995
investment, the Company and AHP agreed to amend certain terms of
agreements entered into concurrently with the formation of their
1993 strategic alliance. Pursuant to these amendments, AHP's
funding obligations and co-promotion rights with respect to
MEDI-493 were terminated, and the Company returned its right to
co-promote ZOSYN. In addition, the Company's obligation to
co-fund and co-promote an RSV vaccine being developed by AHP was
converted into the right to receive royalties on any sales of
this vaccine, and AHP was granted the right to receive royalties
on any sales of MEDI-493.
Baxter Healthcare Corporation.
In June 1995, the Company entered into an exclusive,
royalty-bearing license agreement with Baxter Healthcare
Corporation ("Baxter") to commercialize RespiGam outside North
America. Within its territory, Baxter will be responsible for
funding clinical and regulatory activities and for manufacturing
and marketing RespiGam. Upon the achievement of certain sales
milestones, Baxter is obligated to reimburse the Company for
certain previously funded research and development activities.
Concurrent with the execution of the license agreement, Baxter
also purchased 826,536 shares of Common Stock for $9.5 million.
BioTransplant, Incorporated.
In October 1995, the Company and BioTransplant, Incorporated
("BTI") formed a strategic alliance for the development of
<PAGE>16
products to treat and prevent organ transplant rejection. The
alliance is based upon the development of products derived from
BTI's anti-CD2 antibody BTI-322, the Company's anti-T cell
receptor antibody MEDI-500 and future generations of products
derived from these two molecules (such as MEDI-507, or humanized
BTI-322). Pursuant to the alliance, the Company received an
exclusive worldwide license to develop and commercialize BTI-322
and any products based on BTI-322, with the exception of the use
of BTI-322 in kits for xenotransplantation or
allotransplantation. The Company has paid BTI $4 million in
license fees and research support to date. The Company has
assumed responsibility for clinical testing and commercialization
of any resulting products. BTI will receive research support and
milestone payments which could total up to an additional $12
million, as well as royalties on any sales of BTI-322, MEDI-500,
MEDI-507 and future generations of these products, if any.
Human Genome Sciences, Inc.
In July 1995, the Company entered into a collaborative research
and development relationship with Human Genome Sciences, Inc.
("HGS") to create antibacterial vaccines and immunotherapeutic
products based upon the genomic sequences of bacteria. The
Company and HGS initiated collaborative research efforts with
programs to develop vaccines for non-typeable Haemophilus
influenzae and Staphylococcus aureus. Rights to another genomic
sequence for vaccine development, Helicobacter pylori, were out-
licensed to Oravax, Inc. and Pasteur Merieux Connaught in
November 1996 for license payments as well as milestone and
royalty obligations. Additional research projects for the
development of vaccines and antibody-based products will be
determined as additional genomic
<PAGE>17
sequences are completed of other bacteria selected by the Company
and HGS. Pursuant to a collaboration and license agreement
between the Company and HGS, the Company will be solely
responsible for the commercialization of any products developed
through the collaboration, and HGS will be entitled to royalties
based upon the extent to which any products jointly developed are
covered by patents or license rights held by HGS.
Massachusetts Health Research Institute and Massachusetts Public
Health Biologics Laboratories.
In August 1989 and April 1990, the Company entered into a series
of research, supply and license agreements with Massachusetts
Health Research Institute ("MHRI") and Massachusetts Public
Health Biologics Laboratories ("MPHBL") covering products
intended for the prevention or treatment of CMV and RSV infection
and other respiratory virus infections by immune globulins or
monoclonal antibodies. The Company has agreed to pay royalties on
all sales using the licensed technology. Pursuant to the
agreements, the Company paid $11.8 million in 1996, $5.1 million
in 1995 and $4.9 million in 1994, for royalties, process
development and manufacturing.
Other Agreements.
The Company has a number of other collaborative and business
agreements with academic institutions and business corporations,
including agreements with 1) Washington University in St. Louis
covering development of pilus-based anti-bacterial vaccines, 2)
Georgetown University, the German Cancer Research Center and the
University of Rochester covering development of vaccines for
human papillomaviruses and 3) Rockefeller University for the
discovery
<PAGE>18
and commercialization of products to treat and prevent
Streptococcus pneumoniae. In addition, the Company has license
agreements with third parties on CytoGam, RespiGam, MEDI-493 and
substantially all of its other potential products. The Company is
obligated to pay royalties on any sales of these products.
Marketing and Sales
The Company is developing a sales and marketing organization
which it believes is responsive to the increased importance of
managed care, the need to lower costs and the necessity to
provide quality service to its customers.
The Company's first product, CytoGam, was originally marketed by
a third party as the Company's exclusive distributor. In
December 1992, the Company reacquired marketing rights to CytoGam
and in January 1993, the Company commenced marketing of CytoGam
in the United States through its own 14-person sales force
focused on 250 leading transplantation hospitals. Sales outside
the United States are made through regional distributors.
After the expansion of the sales and marketing teams in January
1996, the Company now has approximately 70 people in these
groups. The Company has five regional business directors, each
with 15 or more years of sales, marketing or managed care
experience, to manage the regional business units. Approximately
45 sales and managed care representatives cover approximately 500
hospitals and clinics in the United States which specialize in
transplantation and/or pediatric/neonatal care for the promotion
of CytoGam and RespiGam, respectively. Each sales representative
is responsible for selling both CytoGam and RespiGam.
<PAGE>19
The Company's RespiGam sales effort is supplemented by the
approximately 300-person Wyeth-Lederle Vaccines and Pediatrics
sales force of the Wyeth-Ayerst Laboratories (a division of AHP).
While the Company focuses on the top 420 leading neonatal and
pediatric medical centers in the United States (accounting for
approximately 70% of potential RespiGam sales), AHP focuses on
smaller hospitals and pediatrician offices. AHP is among the
leading pharmaceutical companies focused on pediatric medicine.
The Company has established a collaboration with Baxter, one of
the leading producers and marketers of immune globulins
worldwide, to commercialize RespiGam outside North America, if
and when licensed for marketing by foreign regulatory
authorities. The Company has been advised that Baxter intends to
file European regulatory applications during 1997 to request a
license to market RespiGam in Europe. There can be no assurance
that such a license will be granted, or, if granted, that
licensure will occur in a timely manner.
Manufacturing and Supply
The Company has entered into manufacturing, supply and purchase
agreements in order to provide a supply of human plasma and
production capability for CytoGam and RespiGam. CytoGam and
RespiGam are produced from human plasma collected from donors who
have been screened to have higher concentrations of antibodies
against CMV and RSV, respectively. Human plasma for CytoGam and
RespiGam is converted to an intermediate raw material (Fraction
II+III paste) under a supply agreement with Baxter. The Company
has recently entered into an agreement with V.I. Technologies,
<PAGE>20
Inc. to supply additional Fraction II+III paste.
MPHBL processes the Fraction II+III paste into bulk product. The
Company has an informal arrangement with MPHBL for planned
production of bulk product for CytoGam and RespiGam. MPHBL holds
the sole product and establishment licenses for CytoGam and
RespiGam. The Company also has an agreement with Connaught
Laboratories, Inc. ("Connaught") to fill and package CytoGam and
RespiGam. If MPHBL, the suppliers of the Fraction II+III paste,
or Connaught is unable to satisfy the Company's product
requirements on a timely basis or is prevented for any reason
from manufacturing CytoGam or RespiGam, the Company may be unable
to secure an alternative supplier or manufacturer without undue
and materially adverse operational disruption and increased cost.
Currently, RespiGam finished product inventory is in short
supply, and no assurances can be given that an adequate supply
will be available to meet demand. Recently, the Company has
experienced product shortages which have limited product sales
without reducing sales and marketing costs.
In July 1996, the Company entered into an engineering,
procurement, construction and validation services agreement with
Fluor Daniel, Inc. ("Fluor") to design and construct a
manufacturing facility to be located on a 26 acre site in
Frederick, Maryland. The Company estimates the facility will cost
approximately $50 million to construct. The facility is planned
to be a multi-use biologics facility intended to provide
production capability for the manufacture of immune globulins
(CytoGam and RespiGam) and by-products from human plasma. In
addition, the facility is being designed to contain a cell
culture production
<PAGE>21
area for the manufacture of products, such as MEDI-493, MEDI-500
and BTI-322, if and when they are licensed for marketing by the
FDA. There can be no assurance that the facility will receive
regulatory approval for its intended purposes. Additionally,
construction and validation of manufacturing facilities can take
substantial time to complete. In order to produce RespiGam in the
manufacturing facility, the Company may need to obtain certain
rights from MPHBL. No assurances can be given that such rights
can be obtained. Additionally, no assurances can be given that
if the technology to manufacture CytoGam and/or RespiGam is
transferred to the Company from MPHBL, that the Company will
successfully be able to produce these products in the plant.
The Company produces materials for clinical trials in its pilot
plant facility in Gaithersburg, Maryland. Materials currently
being used in clinical trials for MEDI-490, MEDI-493, MEDI-491
and MEDI-500 have been produced at the Company's pilot plant.
Completion is expected in 1997 of an expansion of the Company's
pilot plant facility to support the production of materials for
Phase 3 clinical trials and market entry production requirements.
The Company estimates the cost of expanding this facility to be
approximately $6 million. There can be no assurance that when the
facility is completed, appropriate regulatory approvals will be
obtained to use the facility for market entry manufacturing.
Patents, Licenses and Proprietary Rights
Products currently being developed or considered for development
by the Company are in the area of biotechnology, an area in which
there are extensive patent filings. The patent position of
biotechnology firms generally is highly uncertain and involves
<PAGE>22>
complex legal and factual questions. To date, no consistent
policy has emerged regarding the breadth of claims allowed in
biotechnology patents. Accordingly, there can be no assurance
that patent applications owned or licensed by the Company will
result in patents being issued or that, if issued, such patents
will afford protection against competitors with similar
technology. In addition, there can be no assurance that products
covered by such patents, or any other products developed by the
Company or subject to licenses acquired by the Company, will not
be covered by third party patents, in which case continued
development and marketing of such products would require a
license under such patents. There can be no assurance that such
required licenses will be available to the Company or its
licensees on acceptable terms.
The Company is aware of several patents and patent applications
which may affect the Company's ability to make, use and sell the
Company's products or product candidates, including the
following: (i) three United States patents, directed to
intravenous immune globulin containing high concentrations of
either CMV or RSV antibodies, which have been issued to a major
pharmaceutical company having substantially greater financial
resources than the Company and (ii) United States patents,
directed to murine monoclonal antibodies against T cells and the
use thereof, which have been issued to another major
pharmaceutical company having substantially greater financial
resources than the Company. Although the Company believes that
neither its CytoGam and RespiGam technologies, which use
intravenous immune globulins containing high concentrations of
CMV or RSV antibodies, respectively, nor its MEDI-500 and BTI-322
technologies, which use monoclonal antibodies against T cells,
infringe any valid claims
<PAGE>23
of such patents, the Company can provide no assurances that if a
legal action based on such patents were brought against the
Company, such an action would be resolved in the Company's favor.
If such a dispute were resolved against the Company, in addition
to potential damages, the manufacturing and sale of such products
could be enjoined unless a license were obtained. There can be no
assurances that, if a license were required, such a license would
be made available on terms acceptable to the Company.
Additionally, the Company is aware of several patents covering
the composition of and process for making murine and humanized
monoclonal antibodies for which the Company may need a license or
licenses. If such a license or licenses were required, there can
be no assurance that companies holding such licenses would make
them available to the Company on terms acceptable to the Company.
While the Company has several licenses to issued patents and owns
or has licenses to pending patent applications with respect to
certain of its products, the Company believes that there are
other patents issued to third parties and/or patent applications
filed by third parties which could have applicability to each of
the Company's products and product candidates and which could
adversely affect the Company's freedom to make, use or sell such
products or use certain processes for their manufacture. The
Company is unable to predict whether it will ultimately be
necessary to seek a license from such third parties or, if such a
license were necessary, whether such a license would be available
on terms acceptable to the Company. The necessity for such a
license could have a material adverse effect on the Company's
business.
<PAGE> 24
There has been substantial litigation regarding patent and other
intellectual property rights in the biotechnology industry.
Litigation may be necessary to enforce certain intellectual
property rights of the Company. Any such litigation could result
in substantial cost to and diversion of effort by the Company.
Government Regulation
The production and marketing of the Company's products and
research and development activities are subject to regulation for
safety and efficacy by numerous governmental authorities in the
United States and other countries. In the United States,
vaccines, drugs and certain diagnostic products are subject to
FDA review and licensure. The federal Food, Drug and Cosmetics
Act, the Public Health Service Act and other federal statutes and
regulations govern or influence the testing, manufacture, safety,
labeling, storage, record keeping, licensure, advertising and
promotion of such products. No assurances can be given that any
products under development will be licensed for marketing by the
FDA or once approved, that the product will be successfully
commercialized or maintained in the marketplace. Non-compliance
with applicable requirements can result in fines, recall or
seizure of products, total or partial suspension of production,
refusal of the government to approve product license
applications, restrictions on the Company's ability to enter into
supply contracts and criminal prosecution. The FDA also has the
authority to revoke product licenses and establishment licenses
previously granted.
The FDA may designate a drug as an Orphan Drug for a particular
use, in which event the developer of the drug may be entitled to a
<PAGE>25
seven year marketing exclusivity period. CytoGam and RespiGam
have been designated as Orphan Drugs for certain indications by
the FDA. Accordingly, CytoGam and RespiGam have market
exclusivity for their currently licensed indications through
April 17, 1997 and January 17, 2003, respectively.
The Company is also subject to regulation by the Occupational
Safety and Health Administration ("OSHA") and the Environmental
Protection Agency ("EPA") and to regulation under the Toxic
Substances Control Act, the Resources Conservation and Recovery
Act and other regulatory statutes, and may in the future be
subject to other federal, state or local regulations. OSHA and/or
the EPA may promulgate regulations concerning biotechnology that
may affect the Company's research and development programs. The
Company is unable to predict whether any agency will adopt any
regulation which would have a material adverse effect on the
Company's operations. The Company voluntarily attempts to comply
with guidelines of the National Institutes of Health regarding
research involving recombinant DNA molecules. Such guidelines,
among other things, restrict or prohibit certain recombinant DNA
experiments and establish levels of biological and physical
containment that must be met for various types of research.
Sales of pharmaceutical and biopharmaceutical products outside
the United States are subject to foreign regulatory requirements
that vary widely from country to country. Whether or not FDA
licensure has been obtained, licensure of a product by comparable
regulatory authorities of foreign countries must be obtained
prior to the commencement of marketing the product in those
countries. The time required to obtain such licensure may be
longer or shorter than
<PAGE>26
that required for FDA approval, and no assurances can be given
that such approval will be obtained.
Competition
The biotechnology and pharmaceutical industries are characterized
by rapidly evolving technology and intense competition. The
Company's competitors include pharmaceutical, chemical and
biotechnology companies, many of which have financial, technical
and marketing resources significantly greater than those of the
Company. In addition, many specialized biotechnology companies
have formed collaborations with large, established companies to
support research, development and commercialization of products
that may be competitive with those of the Company. Academic
institutions, governmental agencies and other public and private
research organizations are also conducting research activities
and seeking patent protection and may commercialize products on
their own or through joint ventures.
The Company is aware of certain products manufactured by
competitors that are used for the prevention or treatment of
certain diseases the Company has targeted for product
development, including CMV, RSV, Lyme disease, HPV infections and
organ graft rejection. For example, in the prevention of CMV
disease, the Company's CytoGam competes with several other
products including intravenous ganciclovir, manufactured by
Hoffmann-La Roche Inc. The Company is aware that a number of
physicians have prescribed CytoGam in combination with
ganciclovir for the prevention of CMV disease in certain
patients. Recently, three new drugs have been launched relating
to CMV prophylaxis and treatment: 1) Hoffmann-La Roche Inc.
received an FDA license to market a more convenient
<PAGE>27
oral formulation of ganciclovir for prevention of CMV disease in
solid organ transplant recipients and individuals with advanced
HIV infection at risk for developing CMV disease, 2)Chiron
Corporation received an FDA license to market an implant that
would deliver ganciclovir directly to the eye to treat AIDS
patients with CMV retinitis, and 3)Gilead Sciences, Inc. received
an FDA license to market intravenous cidofovir for the treatment
of CMV retinitis in AIDS patients. The Company believes that for
the prevention of RSV disease, the Company's RespiGam does not
compete directly with any product; however, the Company is aware
of one product in the U. S., ribivirin, which is indicated for
the treatment of RSV disease. The existence of these products, or
other products or treatments of which the Company is not aware,
or products or treatments that may be developed in the future,
may adversely affect the marketability of products developed by
the Company. In addition, the Company is aware of other
companies, such as OraVax, Inc., which are developing products
for the treatment and prevention of RSV. These products may
compete directly with RespiGam and may offer relative benefits,
such as ease of administration.
The Company expects its products to compete primarily on the
basis of product efficacy, safety, patient convenience,
reliability, price and patent position. In addition, the first
product to reach the market in a therapeutic or preventive area
is often at a significant competitive advantage relative to later
entrants to the market. The Company's competitive position will
also depend on its ability to attract and retain qualified
scientific and other personnel, develop effective proprietary
products, implement
<PAGE>28
product and marketing plans, obtain patent protection and secure
adequate capital resources.
EXECUTIVE OFFICERS OF THE COMPANY
<TABLE>
<S> <C> <C> <C>
Officer
Name Age Position Since
- ---------------------------------------------------------------------
Wayne T. Hockmeyer, Ph.D. 52 Chairman and Chief Executive 1988
Officer
David M. Mott 31 President and Chief Operating 1992
Officer
Franklin H. Top, Jr., 61 Executive Vice President and 1988
M.D. Medical Director
David P. Wright 49 Executive Vice President- 1990
Sales and Marketing
Bogdan Dziurzynski 48 Senior Vice President 1994
Regulatory Affairs and
Quality Assurance
James F. Young, Ph.D. 44 Senior Vice President 1989
Research and Development
</TABLE>
Dr. Hockmeyer, prior to founding the Company in 1988, was Vice
President Research and Development at Praxis Biologics, Inc.
Mr. Mott, prior to joining the Company in 1992, was Vice
President in the Health Care Investment Banking Group at Smith
Barney, Harris Upham & Co., Inc.
Dr. Top, prior to joining the Company in 1988, was Senior Vice
President for Clinical and Regulatory Affairs at Praxis
Biologics, Inc.
<PAGE>29
Mr. Wright, prior to joining the Company in 1990, was President
of Pediatric Pharmaceuticals, Inc. (1989-1990) and Vice President
of the Gastrointestinal Business Group at Smith, Kline and French
Laboratories.
Mr. Dziurzynski, prior to joining the Company in 1994, was Vice
President of Regulatory Affairs and Quality Assurance at Immunex
Corporation.
Dr. Young, prior to joining the Company in 1989, was Director,
Department of Molecular Genetics at Smith, Kline and French
Laboratories.
EMPLOYEES
As of February 15, 1997, the Company had 252 full time employees.
These include 66 marketing and sales personnel, 31 clinical and
regulatory affairs personnel, and 98 research and development
personnel. The Company considers relations with its employees
to be good.
ITEM 2. PROPERTIES
The Company occupies, under a lease expiring in 2006, a facility
in Gaithersburg, Maryland, that contains approximately 71,000
square feet of research, development and administrative space.
In 1996, the Company acquired a 26 acre parcel of land in
Frederick, Maryland. The Company is constructing a 68,000 square
foot multi-use biologics facility on this site to provide for the
manufacture of immune globulins and by-products from human
plasma. In addition, the facility is designed to contain a cell
<PAGE>30
culture production area for manufacture of products such as MEDI-
493, if and when it is licensed by the FDA.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR MEDIMMUNE, INC.'S COMMON STOCK
AND RELATED SHAREHOLDER MATTERS
The Company's common stock trades on The Nasdaq Stock Market
under the symbol "MEDI". At February 28, 1997, the Company had
382 common stockholders of record. This figure does not
represent the actual number of beneficial owners of common stock
because shares are generally held in "street name" by securities
dealers and others for the benefit of individual owners who may
vote the shares. The following table shows the range of high and
low closing prices and year end closing prices for the common
stock for the two most recent fiscal years.
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C> <C> <C>
High Low High Low
---- ---- ---- ----
First Quarter $ 20 1/8 $ 14 $ 7 3/4 $3 1/2
Second Quarter 20 15 1/2 15 1/4 6 1/4
<PAGE> 31
Third Quarter 17 1/2 11 3/8 14 3/4 8
Fourth Quarter 17 3/4 14 21 1/2 9 1/2
Year End Close $ 17 $ 20
</TABLE>
ITEM 6. SELECTED FINANCIAL DATA
(in thousands, except per share data)
<TABLE>
<S> <C> <C> <C> <C> <C>
RESULTS FOR THE YEAR 1996 1995 1994 1993 1992
----- ---- ---- ---- ----
Product sales $35,782 $16,173 $12,054 $8,446 $2,560
Contract revenue 5,317 11,263 6,804 6,633 10,491
------- -------- ------- ------- -------
Total revenues 41,099 27,436 18,858 15,079 13,051
Research and develop-
ment expenses 32,192 26,417 21,939 14,936 11,260
Net loss (29,544) (22,671) (18,828) (13,217) (8,468)
Loss per common share (1.41) (1.41) (1.29) (0.96) (0.63)
YEAR END POSITION
Cash and
marketable
securities $114,765 $38,039 $22,527 $44,424 $46,860
Total assets 163,971 57,332 44,724 61,195 59,966
Long term debt 70,874 1,984 2,090 2,186 2,158
Shareholders' 72,865 43,779 34,194 53,021 46,752
equity
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This review contains management's discussion of the Company's
operational results and financial condition and should be read in
conjunction with the accompanying financial statements.
OVERVIEW
MedImmune commenced operations in April 1988 and, through
1990, revenue was generated solely from research and development
<PAGE>32
agreements and research grants. In 1991, contract revenues rose
substantially and the Company began selling its first product,
CytoGam, to an exclusive distributor. In December 1992, the
Company reacquired the CytoGam marketing rights from its
distributor and launched an expanded marketing program for this
product through its own sales force.
On January 18, 1996, the Company's second product, RespiGam
was licensed for marketing by the U.S. Food and Drug
Administration ("FDA") for the prevention of serious lower
respiratory tract infection caused by RSV in children under 24
months of age with BPD or a history of prematurity. AHP's Wyeth-
Lederle Vaccines and Pediatrics sales force co-promotes RespiGam
in the United States. Because of the seasonal nature of RSV,
limited sales, if any, are expected during the second and third
quarters.
To date, product sales have not produced sufficient revenues
to cover the Company's operating expenses. Consequently, the
Company has experienced substantial operating losses. While
results may vary significantly from quarter to quarter, the
Company does not expect to be profitable for the year at least
through 1998.
RESULTS OF OPERATIONS
1996 Compared to 1995
The increase in product sales for the year ended December
31, 1996 as compared to the year ended December 31, 1995 is due
to the commencement of sales of RespiGam in 1996 and a 14%
increase in CytoGam sales. RespiGam sales were $17.3 million in
1996, of which $13.9 million were generated in the fourth
quarter. CytoGam product sales increased to $18.4 million from
$16.2 million in 1995 due primarily to increased units sold.
CytoGam product sales were reduced by a $0.7 million reserve in
the 1996 third quarter for trade receivables due from a
pharmaceutical wholesaler which filed Chapter 11 bankruptcy in
August 1996. Although the Company markets directly to hospitals
and physicians, the Company sells its products through a limited
<PAGE>33
number of pharmaceutical wholesalers and a similar event with
another wholesaler could adversely affect operating income. The
level of future product sales will be dependent on several
factors, including, but not limited to, the timing and extent of
future regulatory approvals of the Company's products and product
candidates, availability of finished product inventory, approval
and commercialization of competitive products and the degree of
acceptance of the Company's products in the marketplace.
Currently, RespiGam finished product inventory is in short
supply, and no assurances can be given that an adequate supply
will be available to meet demand.
Contract revenue decreased to $5.3 million in 1996 from
$11.3 million in 1995, reflecting the completion of milestone and
research funding payments under the Company's strategic alliance
with AHP, formerly American Cyanamid Company. Under the terms of
the alliance, the Company and AHP will share in the profits or
losses of RespiGam; reimbursements or payments under this
arrangement are deducted from or added to operating expenses.
The level of contract revenues in future periods will depend
primarily upon the extent to which the Company enters into other
collaborative contractual arrangements, if any.
Cost of sales increased to $19.7 million in 1996 from $10.7
million in 1995, due to the initiation of sales of RespiGam in
1996. The gross margins for 1996 of 45% improved over 1995's
margins of 34% reflecting the addition of RespiGam as well as a
reduction in the royalty rate due to Connaught for CytoGam,
effective for the fourth quarter of 1995. The Company's products
are manufactured by third parties and future per-unit cost of
sales could increase if the Company is unable to negotiate
favorable pricing. The Company is currently constructing its own
manufacturing facility intended for some portion of the
production of its two approved products as well as other product
candidates. This facility is not expected to be completed until
1998 and then is subject to inspection and approval by the FDA.
Cost of sales could be impacted by the potential production in
this facility.
<PAGE>34
Research, development and clinical spending was $32.2
million in 1996 compared to $26.4 million in 1995, reflecting
increased expenditures of over $10 million for MEDI-493 RSV
Monoclonal Antibody clinical studies, including the start of a
1,502 patient Phase 3 clinical trial in the fourth quarter of
1996. This increase was offset by a decrease in clinical spending
for RespiGam, for which two Phase 3 trials were completed in mid-
1995 and licensing was received from the FDA in January 1996.
The level of the Company's total research and development
expenses in future periods will fluctuate depending on the extent
of clinical trial spending. The Company expects clinical trial
expenses for MEDI-493 to remain high through the first half of
1997.
Selling, administrative and general expenses increased to
$22.2 million in 1996 from $11.7 million in 1995, reflecting
primarily the launch of RespiGam in 1996. Approximately 45
additional sales and marketing personnel have been hired since
September 30, 1995, primarily in 1996, to staff for the launch of
RespiGam, resulting in an increase of over $5 million in
salaries, commissions, recruiting, travel and related costs. An
additional $5.2 million was spent on marketing and selling
programs for the launch of RespiGam in 1996. Sales detailing
costs to the Company's corporate partner for RespiGam, AHP,
approximated $1.8 million in 1996 and none in 1995. Offsetting
the increased costs in 1996 was a $4.3 million reimbursement from
AHP of their share of the product line loss on RespiGam for the
year, calculated under the terms of the strategic alliance. In
1997 and future years, AHP's share of RespiGam's potential
profits will result in an increase to selling expenses. General
and administrative expenses increased by $0.7 million reflecting
increased headcount and legal and other costs associated with the
new manufacturing facility.
In December 1995, the Company and Connaught entered into an
amendment to the agreement signed in 1992 in which the Company
reacquired the rights to market CytoGam. In connection with this
amendment, the Company made a lump sum payment of $2.7 million to
<PAGE>35
Connaught in the first half of 1996 upon completion of certain
modifications to Connaught's filling and packaging facility. The
$2.7 million charge was expensed as other operating expenses in
1995.
Interest income increased to $5.7 million in 1996 compared
to $1.7 million in 1995. The increase reflects the proceeds from
the Company's equity and convertible debt offerings in 1996,
resulting in higher cash balances available for investment,
partially offset by a decrease in interest rates which lowered
the overall portfolio yield.
Interest expense increased to $2.3 million in 1996 from $0.3
million in 1995, reflecting interest on the convertible
subordinated notes issued in July 1996. Interest expense in 1996
is net of $0.3 million of interest capitalized against the new
manufacturing facility and the pilot plant expansion.
The 1996 net loss of $29.5 million, or $1.41 per common
share, compared to a 1995 net loss of $22.7 million, or $1.41 per
common share. Shares used in computing loss per share were 21.0
million and 16.1 million, respectively. The Company does not
believe that inflation had a material effect on its financial
statements.
These results were consistent with the Company's objectives
for the year and with the continued development of its
immunotherapeutic and vaccine products. The factors affecting
1996 results may continue to affect near-term financial results.
1995 COMPARED TO 1994
Revenues in 1995 were $27.4 million compared to $18.9
million in 1994. Sales of CytoGam increased to $16.2 million in
1995 from $12.1 million in 1994, reflecting a 23% increase in
units sold as well as the impact of two price increases since
July 1, 1994. Contract revenues increased to $11.3 million from
$6.8 million in 1994, primarily reflecting funding provided under
the Company's strategic alliance with AHP.
Cost of sales for CytoGam rose to $10.7 million in 1995 from
$7.7 million in 1994, reflecting the increase in unit volume and
<PAGE>36
an increase in product unit costs, which include the addition of
a viral inactivation process, increased unit costs of plasma
paste and increased costs for finished product acquired from a
supplier. Research, development and clinical spending was $26.4
million in 1995 compared to $21.9 million in 1994, reflecting a
research license payment of $2.0 million to BioTransplant,
Incorporated ("BTI") for BTI-322, and increased expenditures for
RespiGam and MEDI-493 RSV Monoclonal Antibody clinical studies.
Selling, administrative and general expenses increased to $11.7
million in 1995 from $9.2 million in 1994, reflecting increased
marketing expenditures for RespiGam, a $0.6 million charge
recorded in the fourth quarter in connection with the settlement
of the securities class action lawsuit that had been filed
against the Company, and a $0.5 million charge recorded in the
fourth quarter relating to certain expenditures associated with
preparations for the construction of a manufacturing facility.
In December 1995, the Company entered into a Stipulation of
Settlement resolving a pending securities class action lawsuit
against the Company. The Company recorded a charge of
approximately $0.6 million in 1995 in connection with the
settlement. The Company's insurers contributed the remaining
$3.6 million in 1996, for a total settlement of $4.25 million.
Other operating expenses include the charge for
restructuring of the Connaught agreement as discussed above.
Interest income of $1.7 million was earned in the year ended
December 31, 1995 compared to $1.4 million in 1994, reflecting an
increase in interest rates which improved overall portfolio
yield. Interest expense of $0.3 million was incurred in both
1995 and 1994.
The 1995 net loss of $22.7 million, or $1.41 per common
share, compared to a 1994 net loss of $18.8 million, or $1.29 per
common share. Shares used in computing loss per share were 16.1
million and 14.6 million, respectively.
LIQUIDITY AND CAPITAL RESOURCES
<PAGE>37
Cash and marketable securities were $114.8 million at 1996
year end compared to $38.0 million at 1995 year end. Working
capital was $113.3 million at 1996 year end versus $38.0 million
at 1995 year end.
Net cash used in 1996 operating activities was $25.5 million
compared to $15.9 million used in 1995 and $20.3 million used in
1994. The cash outflow from operations in 1996 reflected the net
loss adjusted for depreciation and amortization and working
capital changes. Working capital changes include: 1) a $7.1
million increase in trade and contract receivables due to
significant fourth quarter sales of RespiGam; 2) a $5.6 million
increase in accounts payable and accrued expenses, reflecting
accrued costs associated with the MEDI-493 Phase 3 clinical
trial, accrued manufacturing costs for production of the
Company's two products, and accrued marketing and selling costs,
including commissions; and 3) a $2.1 million increase in accrued
interest reflecting interest due on the convertible subordinated
notes, paid January 1997. The cash outflow from operations in
1995 reflected the net loss adjusted for depreciation and
amortization and working capital changes, including a $1.9
million decrease in trade and contract receivables and a $2.2
million increase in accrued expenses primarily related to the
amendment to the Connaught agreement.
Cash flows from financing activities were $125.4 million in
1996 compared to $32.2 million in 1995. In February 1996, the
Company completed a public offering of 3.45 million shares of
common stock resulting in net proceeds of $58 million and in July
1996, the Company completed a private placement of $60 million
aggregate principal amount of 7% convertible subordinated notes
due 2003 for net proceeds of $58 million. Additionally, the
Company received $9 million of proceeds from state government
loans in connection with the financing of its new manufacturing
facility. In 1995, the Company received $7.7 million from a
private placement of the Company's common stock with a group of
foreign institutional investors, $9.5 million from a sale of the
Company's common stock to Baxter in connection with an alliance
<PAGE>38
entered into in June 1995, and $15.0 million through a sale of
the Company's common stock to AHP.
Capital expenditures in 1996 were $22.7 million compared to
$1.1 million in 1995. The 1996 expenditures include $17.5
million for the design and construction of the Company's new
manufacturing facility located in Frederick, Maryland and the
expansion of the pilot plant at the Gaithersburg headquarters.
Additional expenditures were for land, laboratory equipment and
administrative expansion. The 1995 expenditures included
expenditures for additional laboratory and office equipment as
well as initial design work for the new manufacturing facility.
Capital expenditures in 1997 are expected to approximate $34
million, due mostly to the construction of the manufacturing
facility and the expansion of the development pilot plant. These
two projects are anticipated to cost a total of $56 million and
are intended to be financed from the proceeds of the convertible
debt offering and state and local loans totaling $11.8 million.
The Company entered into an engineering, procurement,
construction and validation services agreement with Fluor Daniel
to design and construct the manufacturing facility in Frederick,
Maryland. The agreement provides for an early completion bonus
to Fluor Daniel if the facility is completed ahead of schedule or
liquidated damages paid to the Company for certain delays. The
facility, expected to employ 50 to 100 people, will provide
capacity for the Company's immune globulin products and
monoclonal antibody product candidates. The facility is expected
to be completed and initial production commenced during 1998.
There can be no assurance that when the facility is constructed
appropriate regulatory approvals will be obtained to enable the
use of the facility for production of the Company's products or
product candidates. The Company's pilot plant expansion is
intended to support the further production of materials for Phase
3 clinical trials and market entry requirements, if needed, for
MEDI-493.
In addition, the Company is obligated in 1997 to provide
$14.5 million in funding for various clinical trials, research
<PAGE>39
and development and license agreements with certain institutions.
The Company's existing funds, together with funds contemplated to
be generated from product sales and investment income are
expected to provide sufficient liquidity to meet the anticipated
needs of the business for at least the next 18 months, absent the
occurrence of any unforeseen events.
<PAGE>40
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
BALANCE SHEETS
(in thousands, except share data)
<S> <C> <C>
December 31, December 31,
1996 1995
---------- ----------
ASSETS
Cash and cash equivalents $12,629 $14,165
Marketable securities 102,136 23,874
Trade receivables, net 8,123 2,687
Contract receivables, net 2,164 1,210
Inventory, net 6,060 6,027
Other current assets 1,713 1,027
---------- ----------
Total Current Assets 132,825 48,990
Property and equipment, net 29,087 8,255
Other assets 2,059 87
---------- ----------
Total Assets $163,971 $57,332
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable, trade $3,942 $2,318
Accrued expenses 10,509 6,538
Accrued interest 2,057 --
Product royalties payable 2,559 1,776
Other liabilities 469 337
---------- ----------
Total Current Liabilities 19,536 10,969
Long term debt 70,874 1,984
Other liabilities 696 600
---------- ----------
Total Liabilities 91,106 13,553
---------- ----------
Commitments and Contingencies
SHAREHOLDERS' EQUITY
Preferred stock, $.01 par value; -- --
authorized 5,524,525 shares;
none issued or outstanding
Common stock, $.01 par value; 218 177
authorized 60,000,000 shares;
issued and outstanding 21,836,763
and 17,706,137 at December 31,
1996 and 1995, respectively
Paid-in capital 172,024 113,435
Accumulated deficit (99,377) (69,833)
---------- ----------
Total Shareholders' Equity 72,865 43,779
---------- ----------
Total Liabilities and $163,971 $57,332
Shareholders' Equity ========== ==========
The accompanying notes are an integral part of these financial
statements
</TABLE>
<PAGE>42
<TABLE>
<CAPTION>
Statements of Operations
(in thousands, except share data)
For the year ended December 31,
---------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
REVENUES
Product sales $35,782 $16,173 $12,054
Contracts 5,317 11,263 6,804
-------- -------- --------
Total Revenues 41,099 27,436 18,858
-------- -------- --------
COSTS AND EXPENSES
Cost of sales 19,678 10,678 7,724
Research and development 32,192 26,417 21,939
Selling, administrative 22,165 11,719 9,161
and general
Other operating expenses -- 2,700 --
-------- -------- --------
Total Expenses 74,035 51,514 38,824
-------- -------- --------
Operating Loss (32,936) (24,078) (19,966)
Interest income 5,655 1,657 1,394
Interest expense (2,263) (250) (256)
-------- -------- --------
Net Loss $(29,544) $(22,671) $(18,828)
======== ======== ========
Loss Per Common Share $(1.41) $(1.41) $(1.29)
======== ======== ========
Shares Used in Computing
Loss Per Common Share 21,019 16,061 14,614
======== ======== ========
The accompanying notes are an integral part of these financial statements
</TABLE>
<PAGE>43
<TABLE>
<CAPTION>
Statements of Cash Flows
(in thousands) For the year ended December 31,
--------------------------------
1996 1995 1994
-------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(29,544) $(22,671) $(18,828)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 1,843 1,554 1,487
Amortization of premium (discount) on
marketable securities 447 (418) 127
Bad debt expense 724 5 16
Inventory reserve (409) 417 --
Amortization of debt issue costs 155 -- --
Amortization of deferred rent 96 119 181
Increase(decrease) in cash due to
changes in assets and liabilities:
Trade receivables (6,160) (987) (843)
Contract receivables (954) 2,865 (3,119)
Inventory 376 (945) (2,029)
Other assets (641) 1,111 416
Accounts payable and accrued expenses 5,595 2,154 1,673
Product royalties payable 783 818 523
Accrued interest 2,057 -- --
Other liabilities 119 35 92
-------- -------- ---------
Net cash used in operating (25,513) (15,943) (20,304)
activities
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Investments in securities available (131,908) (38,587) (35,144)
for sale
Maturities of securities available 53,199 31,308 40,642
for sale
Capital expenditures (22,675) (1,116) (1,354)
-------- -------- ---------
Net cash (used in) provided by (101,384) (8,395) 4,144
investing activities
-------- -------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common 58,630 32,256 1
stock
Proceeds from issuance of long 69,000 -- --
term debt
Deferred costs from convertible (2,172) -- --
debt issuance
Decrease in long term debt obligations (97) (103) (113)
-------- -------- ---------
Net cash provided by (used in) 125,361 32,153 (112)
financing activities
-------- -------- ---------
Net (decrease) increase in cash and cash (1,536) 7,815 (16,272)
equivalents
Cash and cash equivalents at beginning 14,165 6,350 22,622
of year
-------- -------- ---------
Cash and cash equivalents at end of
year $12,629 $14,165 $6,350
======== ======== =========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>45
<TABLE>
<CAPTION>
Statements of Shareholders' Equity
(in thousands, except share data)
Common Stock,$.01 par
--------------- Paid-in Accumulated
Shares Amount Capital Deficit Total
--------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C>
Balance,
December 31, 1993 14,609,622 $146 $81,209 $(28,334) $53,021
Common stock options
exercised 8,420 -- 1 -- 1
Net loss -- -- -- (18,828) (18,828)
-------- ------- ------- -------- --------
Balance,
December 31, 1994 14,618,042 146 81,210 (47,162) 34,194
Common stock options
exercised 43,817 -- 92 -- 92
Private placement of
common stock, May
1995,at $6.85 per
share, net of under-
writing commissions
and expenses of $825 1,250,000 13 7,728 -- 7,741
Private placement of
common stock, June
1995,at $11.49 per
share, net of fees and
expenses of $40 826,536 8 9,452 -- 9,460
Private placement of
common stock, October
1995, at $15.50 per
share, net of fees and
expenses of $37 967,742 10 14,953 -- 14,963
Net loss -- -- -- (22,671) (22,671)
-------- ------- -------- -------- -------
Balance,
December 31, 1995 17,706,137 177 113,435 (69,833) 43,779
Common stock options
exercised 288,484 3 700 -- 703
Sale of common stock,
February 1996 public
offering at $18.00 per
share, net of under-
writing commissions
and expenses of $4,173 3,450,000 34 57,893 -- 57,927
Conversion of Series A
Convertible Preferred
Stock 392,142 4 (4) -- --
Net loss -- -- -- (29,544) (29,544)
-------- ------- -------- -------- --------
Balance,
December 31, 1996 21,836,763 $218 $172,024 $(99,377) $72,865
========== ======= ======== ========= ========
The accompanying notes are an integral part of these financial statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
(in thousands, except share and per share data)
1. ORGANIZATION
MedImmune, Inc. (the Company), a Delaware corporation, is a
biotechnology company focused on the development and marketing of
products for the prevention and treatment of infectious diseases
and for use in transplantation medicine. The Company was
originally incorporated on June 29, 1987 and commenced operations
on April 22, 1988.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies applied in the preparation
of these financial statements are as follows:
<PAGE>47
Cash and Cash Equivalents
The Company considers all highly liquid instruments
purchased with an original maturity of three months or less to be
cash equivalents.
Marketable Securities
Marketable securities include investments with original
maturities of greater than three months having a remaining
maturity of less than 24 months. The Company's securities are
held for an unspecified period of time and may be sold to meet
liquidity needs. The securities included as marketable
securities are considered available-for-sale as defined by
Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities".
Amortized cost of marketable securities approximates market;
therefore, no adjustment has been made to shareholders' equity as
a result of changes in market value to these securities.
Interest income is accrued as earned.
Concentration of Credit Risk
The Company has invested its excess cash generally in
securities of the U.S. Treasury, U.S. government agencies,
corporate debt securities, commercial paper and money market
funds with strong credit ratings and deposits with a major bank.
The Company has not experienced any significant losses on its
investments. The Company sells its products primarily to a
limited number of pharmaceutical wholesalers without requiring
collateral. The Company periodically assesses the financial
strength of these wholesalers and establishes allowances for
anticipated losses when necessary.
Inventory
Inventory is stated at the lower of cost or market. Cost is
<PAGE>48
determined using a weighted-average approach which approximates
the first-in, first-out method. The Company receives revenues
from sales of a by-product that results from production of the
Company's principal products. These sales are accounted for as a
reduction in the cost of the principal products.
Product Sales
Product sales are recognized upon shipment of the product to
wholesalers. Product sales are recorded net of reserves for
estimated chargebacks, returns, discounts, and Medicaid rebates.
The Company maintains reserves at a level which management
believes is sufficient to cover estimated future requirements.
Allowances for discounts, returns, bad debts, chargebacks and
Medicaid rebates, which are netted against accounts receivable,
totaled $2,170 and $330 at December 31, 1996 and 1995,
respectively. Product royalty expense is recognized concurrently
with the recognition of product revenue. Royalty expense,
included in cost of sales, was $4,282, $3,056 and $2,416 for the
years ended December 31, 1996, 1995 and 1994, respectively.
Contract Revenues
Contract revenues are recognized over the fixed term of the
contract or, where appropriate, as the related expenses are
incurred. Non-refundable fees or milestone payments in
connection with research and development or commercialization
agreements are recognized when they are earned in accordance with
the applicable performance requirements and contractual terms.
Payments received that are related to future performance are
deferred and recorded as revenues as they are earned over
specified future performance periods.
<PAGE>49
Property and Equipment
Property and equipment are stated at cost. Depreciation of
laboratory and computer equipment is computed on the straight-
line method based upon estimated useful lives ranging from 3 to 7
years. Amortization of leasehold improvements is computed on the
straight-line method based on the shorter of the estimated useful
life of the improvement or the term of the lease. Upon the
disposition of assets, the costs and related accumulated
depreciation are removed from the accounts and any resulting gain
or loss is included in the statements of operations. Repairs and
maintenance costs are expensed as incurred and were $537, $540
and $350 for the years ended December 31, 1996, 1995 and 1994,
respectively.
Lease Expense
Expense related to the facility lease is recognized on a
straight-line basis over the lease term. The difference between
rent expense incurred and the amount of rent paid is recorded as
deferred rent and is included in other liabilities on the balance
sheet.
Income Taxes
Deferred income taxes are recognized for the tax
consequences in future years of differences between the tax bases
of assets and liabilities and their financial reporting amounts
at each year end based on enacted tax laws and statutory tax
rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the
amount expected to be realized. Income tax expense is the tax
payable for the period and the change during the period in
deferred tax assets and liabilities.
<PAGE>50
Earnings (Loss) Per Common Share
Earnings (loss) per common share has been computed by
dividing net earnings (loss) by the weighted average number of
common shares and equivalents outstanding. Common share
equivalents, representing shares issuable upon assumed exercise
of stock options and warrants and conversion of debt, are
included in the computation in periods where there are earnings
and when common share equivalents would have a dilutive effect.
Common share equivalents are not included in the computation in
periods with a loss because they are antidilutive.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported
in the financial statements and accompanying notes. Actual
results could differ from those estimates.
3. INVENTORY
Inventory at December 31, is comprised of the following:
1996 1995
------ -----
Raw materials $2,073 $2,193
Work in process 2,758 2,510
Finished goods 1,229 1,324
------ -----
$6,060 $6,027
====== =======
4. PROPERTY AND EQUIPMENT
<PAGE>51
Property and equipment, stated at cost at December 31, is
comprised of the following:
<TABLE>
<S> <C> <C>
1996 1995
----- -----
Land $ 1,521 $ --
Leasehold improvements 6,860 6,099
Laboratory equipment 7,427 5,254
Office furniture, computers and equipment 3,235 1,854
Construction in progress 17,376 537
------- -------
36,419 13,744
Less accumulated depreciation and
amortization (7,332) (5,489)
------- -------
$29,087 $8,255
======= =======
</TABLE>
Construction in progress at December 31, 1996 includes $300 of
capitalized interest related to the design and construction of
the Company's manufacturing facility in Frederick, Maryland and
for expansion of its pilot plant in Gaithersburg, Maryland.
5. FACILITIES LEASES
The Company entered into a 15-year lease beginning in
November 1991, as amended in 1993 and 1996, for administrative
and laboratory facilities in Gaithersburg, Maryland. Under the
<PAGE>52
lease, the Company is obligated to pay a basic monthly rent which
will increase 3% each lease year and in 1996 totaled $855. The
lease also requires the Company to pay for utilities and its
proportionate share of taxes, assessments, insurance and
maintenance costs. Rent expense for the years ended December 31,
1996, 1995 and 1994 was $1,113, $946 and $882, respectively. The
1995 and 1994 expenses are net of sublease rental receipts of
approximately $140 per year from an affiliated company. The
sublease agreement was terminated in October 1995.
The Company's future minimum lease payments under the
facility operating lease are as follows:
Year ending December 31,
-----------------------
1997 $ 991
1998 1,021
1999 1,052
2000 1,084
2001 1,116
thereafter 6,008
--------
$ 11,272
========
6. LONG TERM DEBT
Long term debt at December 31, is comprised of the
following:
<PAGE>53
<TABLE>
<S> <C> <C>
1996 1995
----- -----
7% convertible subordinated notes, due
2003 $60,000 $ --
7.53% note due to Maryland Industrial
Development Finance Authority, due 2007 5,000 --
4% note due to Maryland Department of
Business and Economic Development, due
2016 4,000 --
Notes payable to landlord, due through
2006, interest 11.5%-13% 1,992 2,089
------- -------
70,992 2,089
Less current portion (118) (105)
------- -------
$70,874 $1,984
======= =======
</TABLE>
The convertible subordinated notes were issued in July 1996
and are convertible at the option of the holder into 3,038,780
shares of the Company's common stock at a conversion price of
$19.68 per share, subject to adjustments in certain events. The
notes are not redeemable by the Company prior to July 7, 1999.
After that date, the notes are redeemable with 30 days notice at
a declining premium until the due date, plus accrued interest.
The notes are subordinated to all senior debts of the Company
including the state loans and the loans from the landlord. The
<PAGE>54
Company may be required to redeem the notes at amounts up to 107%
of the principal amount in the event of a change in control of
the Company.
Principal and interest payments on the state notes begin in
1998. Pursuant to the terms of the agreements, the Company is
required to meet certain financial and non-financial covenants
including maintaining minimum cash balances and net worth ratios.
Cash and cash equivalents at December 31, 1996 include a $400
compensating balance related to the notes. The notes are
collateralized by the land, buildings and building fixtures of
the new manufacturing facility. Additional loans of $2.8 million
are also available and will be drawn down in 1997. The
agreements include a provision for early retirement of the notes
by the Company.
Maturities of long term debt for the next five years are as
follows: 1997, $118; 1998, $508; 1999, $678; 2000, $731 and 2001,
$789. Interest paid was $304, $250 and $256, for the years ended
December 31, 1996, 1995 and 1994, respectively. The fair value
of the Company's long term debt at December 31, 1996, based on
quoted market prices or discounted cash flows based on currently
available borrowing rates, was $74,040 compared to its carrying
value of $70,992.
7. EQUITY TRANSACTIONS
In August 1996, the shareholders of the Company approved an
increase in the authorized number of shares of common stock from
30 million shares to 60 million shares.
The holders of the Series A Convertible Preferred Stock
warrants agreed that if such warrants are exercised, the holders
thereof will simultaneously exercise their right to convert the
<PAGE>55
Series A Convertible Preferred Stock received upon exercise of
the warrants into 2,524,525 shares of common stock. The
warrants, which expire on January 12, 2000, are exercisable at
$1.00 per share. Pursuant to an amendment to the warrant
agreement, the holders may elect a cashless exercise of the
warrants for a reduced number of common shares based on a
calculation of the fair market value of the common stock on the
exercise date. During 1996, 415,873 of the Series A Convertible
Preferred Stock warrants were exercised and converted through a
cashless exercise into 392,142 shares of common stock. As of
December 31, 1996, the Company has reserved 2,108,652 shares of
common stock for issuance upon conversion of the Series A
Convertible Preferred Stock. The holders of common stock issued
upon conversion of the Convertible Preferred Stock have, subject
to certain limitations, piggyback and demand registration rights.
8. Common Stock Options
In April 1991, the Board of Directors adopted the 1991
Plan, amended in March 1992 and March 1995, under which 3,500,000
shares of common stock were reserved for issuance upon exercise
of options granted to employees, consultants and advisors of the
Company. In May 1993, a Non-Employee Directors Stock Option Plan
was approved by the shareholders under which 250,000 shares of
common stock were reserved for issuance upon exercise of options
granted to non-employee directors. The 1991 Plan provides for
the grant of incentive and nonqualified stock options and the Non-
Employee Directors Plan provides for the grant of nonqualified
stock options. Both Plans are administered by the Compensation
and Stock Committee of the Board of Directors. The maximum term
of each option granted is 10 years. The option
<PAGE>56
prices under the 1991 Plan and the Non-Employee Directors Plan
are equal to the closing market price on the day prior to the
date of grant.
Prior to the establishment of these plans, the Board of
Directors granted options and periodically set option prices.
The Board of Directors established option prices, prior to the
Company's initial public offering on May 8, 1991, based upon an
evaluation of the fair market value of the Company's stock.
Options normally vest on the anniversary date of the grant over a
three to five year period. The Company has reserved a total of
4,237,730 shares of common stock for issuance under these plans
as of December 31, 1996. Related stock option activity is as
follows:
<TABLE>
<CAPTION>
Options Granted
Prior to
Establishment of Non-Employee
the 1991 Plan 1991 Plan Directors Plan
------------------ ------------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
Wtd. Wtd. Wtd.
Avg. Avg. Avg.
Exercise Exercise Exercise
Price Price Price
Shares Per Per Per
Share Shares Share Shares Share
Balance, 845,985
Dec 31, 1993 1,243,367 10,000
Granted - 1,130,728 30,000
Exercised (8,420) - -
Cancelled (15,400) (920,113) -
-------- --------- -------
Balance,
Dec 31, 1994 822,165 1,453,982 40,000
Granted - $ - 1,175,600 $8.13 30,000 $12.58
Exercised (31,800) 6.90 (11,017) 7.60 - -
Cancelled (200) .80 (325,819) 11.46 - -
-------- --------- -------
Balance,
Dec 31, 1995 790,165 3.10 2,292,746 11.26 70,000 10.75
Granted - - 814,400 17.02 15,000 17.00
Exercised (232,804) .64 (55,680) 9.96 - -
Cancelled (2,000) 51.00 (109,407) 13.07 - -
-------- --------- -------
-
Balance,
Dec 31, 1996 555,361 $3.96 2,942,059 $12.81 85,000 $11.85
======== ========= =======
As of December 31, 1996:
Range of exercise
prices $.01 to 21.00 $3.50 to 43.75 $5.00 to 18.75
Wtd. Avg.
remaining
contractual life
for options
outstanding
(years) 5.4 8.0 8.1
Options
exercisable 555,361 1,056,105 30,000
Wtd. Avg.
exercise price of
options
exercisable $3.96 $13.30 $10.96
</TABLE>
In February 1994, the Board of Directors authorized a Stock
Option Exchange Program which offered participants in the 1991
Plan holding stock options with exercise prices of $15.00 or
higher the choice to exchange their existing stock options for a
lesser number of new stock options having an exercise price of
$11.75, the fair market value on the date of grant, and a term of
8 1/2 years. As a result of the exchange program, 813,800
<PAGE>58
options shares were exchanged for 564,478 new option shares which
resulted in the net cancellation of 249,322 option shares.
Total option grants outstanding for all plans as of
December 31, 1996 were 3,582,420. There were 490,310 and 165,000
shares available for future option grants at December 31, 1996
under the 1991 Plan and the Non-Employee Directors Plan,
respectively.
The Company has adopted the disclosure-only provisions of
Statement of Financial Accounting Standards No. 123 (SFAS 123) as
they pertain to financial statement recognition of compensation
expense attributable to option grants. As such, no compensation
cost has been recognized on the Company's option plans. If the
Company had elected to recognize compensation cost for the 1991
Plan and the Non-Employee Directors Plan consistent with SFAS
123, the Company's net loss and loss per share on a pro forma
basis would be:
1996 1995
----- -----
Net loss - as reported $29,544 $22,671
Net loss - pro forma $31,246 $23,850
Loss per share - as reported $1.41 $1.41
Loss per share - pro forma $1.49 $1.48
The pro forma expense related to the stock options is recognized
over the vesting period, generally five years. The fair value of
each option grant was estimated using the Black-Scholes option
pricing model with the following weighted average assumptions for
each year:
<PAGE>59
1996 1995
----- -----
Risk-free interest rate 6.09% 6.76%
Expected life of options - years 7 7
Expected stock price volatility 75% 75%
Expected dividend yield N/A N/A
The weighted average fair value of options granted during 1996
and 1995 was $12.63 and $6.02 respectively.
9. Co-Development and Co-Promotion Agreements
On November 8, 1993, the Company signed definitive
agreements with American Cyanamid Company to form an alliance in
the United States for the development and marketing of three
generations of products to prevent and treat respiratory
syncytial virus (RSV) and for the marketing of a new anti-
infective product, ZOSYN, developed by American Cyanamid. The
parties agreed to co-promote and share profits or losses on the
Company's RSV product, RespiGam, which was licensed for marketing
by the United States Food and Drug Administration on January 18,
1996. In 1994, AHP acquired American Cyanamid and in October
1995, AHP invested $15,000 in the Company through the purchase of
967,742 shares of common stock. In connection with this
investment, the Company and AHP agreed to amend certain terms of
agreements entered into concurrently with the formation of their
1993 alliance. Pursuant to these amendments, AHP's funding
obligations and co-promotion rights with respect to the second
generation RSV product being developed by the Company were
terminated, and the Company returned its right to co-promote
ZOSYN to AHP. In addition, the Company's obligation to co-fund
<PAGE>60
and to co-promote an RSV vaccine being developed by AHP was
converted into the right to receive royalties on any sales of
this vaccine, and AHP was granted the right to receive royalties
on any sales of the Company's second generation RSV product
currently under development. The obligations undertaken by AHP
in 1993 to fund certain costs related to RespiGam, to make
certain milestone payments, including $4.5 million upon licensure
by the FDA, and to co-promote RespiGam are unchanged. The $4.5
million milestone payment was received and recorded as contract
revenue in 1996. Revenue of $4,791, $10,744, and $6,173 earned
in 1996, 1995 and 1994, respectively, associated with these
agreements is included as contract revenue in the accompanying
statements of operations. Additionally, $4,299 of reimbursement
for co-promotion activity has been netted against selling,
general and administrative expense for the year ended
December 31, 1996.
10. Connaught Agreement
In December 1995, the Company and Connaught amended the
agreement originally signed in 1992 under which the Company
reacquired the rights to market CytoGam. The amendment provides
for a reduction in the royalty rate to be paid by the Company on
sales of CytoGam after September 30, 1995, and an agreement
pursuant to which Connaught will fill and package the Company's
immune globulin products through 1998. In connection with this
amendment, the Company made a lump sum payment of $2.7 million in
1996 to Connaught upon completion of certain modifications to
Connaught's filling and packaging facility. The $2.7 million
charge is included as other operating expense in the accompanying
statements of operations for the year ended December 31, 1995.
<PAGE>61
11. INCOME TAXES
The tax effects of the temporary differences giving rise to
the Company's deferred tax assets at December 31, are as follows:
1996 1995
------ -----
Net operating loss carryforwards $ 35,562 $ 24,924
Other 4,377 3,113
------- ------
39,939 28,037
Valuation allowance (39,939) (28,037)
------- ------
Net deferred taxes $ -- $ --
======== ========
Realization of net deferred tax assets at the balance sheet
date is dependent on future earnings which are uncertain.
Accordingly, a full valuation allowance was recorded against the
assets.
As of December 31, 1996, the Company had net operating loss
carryforwards available for federal income tax reporting expiring
in years 2003 through 2011 amounting to $111.7 million. In
addition, the Company has $2 million of general business credit
carryforwards expiring through 2011.
The total regular tax net operating loss available of $111.7
million includes $19.6 million which, when realized, will not
affect financial statement income but will be recorded directly
to shareholders' equity. The realization of net operating losses
may be limited by Internal Revenue Code, Section 382.
<PAGE>62
12. COMMITMENTS AND CONTINGENCIES
Research, Development and License Agreements
Baxter Healthcare Corporation. In June 1995 the Company
entered into an exclusive, royalty-bearing license agreement with
Baxter Healthcare Corporation ("Baxter") to commercialize
RespiGam outside North America. Within its territory, Baxter
will be responsible for funding clinical and regulatory
activities and for manufacturing and marketing RespiGam. Upon
the achievement of certain sales milestones, Baxter is obligated
to reimburse the Company for certain previously funded research
and development activities. Concurrent with the execution of the
license agreement, Baxter also purchased 826,536 shares of common
stock for $9.5 million.
BioTransplant, Incorporated. In October 1995, the Company
and BioTransplant, Incorporated ("BTI") formed a strategic
alliance for the development of products to treat and prevent
organ transplant rejection. The alliance is based upon the
development of products derived from BTI's anti-CD2 antibody BTI-
322, the Company's anti-T cell receptor antibody MEDI-500 and
future generations of products derived from these two molecules,
including, but not limited to, MEDI-507. Pursuant to the
alliance, the Company received an exclusive worldwide license to
develop and commercialize BTI-322 and any products based on BTI-
322, with the exception of the use of BTI-322 in kits for
xenotransplantation or allotransplantation. The Company has paid
BTI $4 million in license fees and research support through
December 31, 1996. The Company has assumed responsibility for
clinical testing and commercialization of any resulting products.
<PAGE>63
BTI will receive additional research support and milestone
payments which could total up to an additional $12 million, as
well as royalties on any sales of BTI-322, MEDI-500, MEDI-507 and
future generations of these products, if any.
Other Agreements. The Company has entered into research,
development and license agreements with various federal and
academic laboratories and other institutions to develop further
its products and technology and to perform clinical trials.
Under these agreements, the Company is obligated to provide
funding of approximately $14,530 and $406 in 1997 and 1998,
respectively. The Company has also agreed to make milestone
payments in the aggregate amount of $3,020 on the occurrence of
certain events such as the granting by the FDA of a license for
product marketing in the United States for some of the product
candidates covered by these agreements. In exchange for the
licensing rights for commercial development of proprietary
technology, the Company has agreed to pay royalties on sales
using such licensed technologies.
Construction Agreements
The Company entered into an engineering, procurement,
construction and validation services agreement with Fluor Daniel,
Inc. ("Fluor") in July 1996 to design and construct the Company's
manufacturing facility to be located on a 26 acre site in
Frederick, Maryland. The $42.5 million contract price is being
paid over an 18 month period based on achievement of certain
milestones. In addition, the contract provides for an early
completion bonus or liquidated damages if Fluor deviates from the
agreed upon schedule. The facility will provide capacity for the
production of the Company's immune globulin products; cell
<PAGE>64
culture for other product candidates, including MEDI-493; filling
and packaging; warehousing; laboratories and administration.
Manufacturing, Supply and Purchase Agreements
The Company has entered into manufacturing, supply and
purchase agreements in order to provide production capability for
CytoGam and RespiGam, and to provide a supply of human plasma for
production of both products. No assurances can be given that an
adequate supply of plasma will be available from the Company's
suppliers. Human plasma for CytoGam and RespiGam is converted to
an intermediate raw material (Fraction II+III paste) under a
supply agreement. This intermediate material is then supplied to
the manufacturer of the bulk product. The Company has an informal
arrangement with the bulk manufacturer for planned production
through June 1997 for $5,141, subject to production level
adjustments. If the bulk manufacturer, which holds the sole
product and establishment licenses from the FDA for the
manufacture of CytoGam and RespiGam, is unable to satisfy the
Company's requirements for both products on a timely basis or is
prevented for any reason from manufacturing CytoGam and RespiGam,
the Company may be unable to secure an alternative manufacturer
without undue and materially adverse operational disruption and
increased cost. The Company also has an agreement with Connaught
to fill and package the Company's immune globulin products
through 1998.
13. PENSION PLAN
The Company has a defined contribution 401(k) pension plan
available to all full time employees. Employee contributions are
voluntary and are determined on an individual basis subject to
<PAGE>65
the maximum allowable under federal tax regulations. Participants
are always fully vested in their contributions. There have been
no employer contributions under the plan.
<PAGE>66
Report of Independent Accountants
To the Board of Directors and Shareholders MedImmune, Inc.
We have audited the accompanying balance sheets of
MedImmune, Inc. (the Company) as of December 31, 1996 and 1995,
and the related statements of operations, shareholders' equity
and cash flows and financial statement schedule for each of the
three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on
our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of the Company as of December 31, 1996 and 1995, and the results
of its operations and its cash flows for each of the three years
in the period ended December 31, 1996 in conformity with
generally accepted accounting principles. In addition, in our
opinion the financial statement schedule referred to above, when
<PAGE>67
considered in relation to the basic financial statements taken as
a whole, presents fairly, in all material respects, the
information required to be included therein.
COOPERS & LYBRAND L.L.P.
Rockville, Maryland
February 6, 1997
<PAGE>68
Report of Management
The management of the Company is responsible for the
preparation of the financial statements and related financial
information included in this annual report. The statements were
prepared in conformity with generally accepted accounting
principles, and accordingly, include amounts that are based on
informed estimates and judgments.
Management maintains a system of internal controls to
provide reasonable assurance that assets are safeguarded and that
transactions are properly authorized and accurately recorded.
The concept of reasonable assurance is based on the recognition
that there are inherent limitations in all systems of internal
accounting control and that the costs of such systems should not
exceed the benefits expected to be derived. The Company
continually reviews and modifies these systems, where
appropriate, to maintain such assurance. The system of internal
controls includes careful selection, training and development of
operating and financial personnel, well defined organizational
responsibilities and communication of Company policies and
procedures throughout the organization.
The selection of the Company's independent accountants,
Coopers & Lybrand L.L.P., has been approved by the Board of
Directors and ratified by the shareholders. The Audit Committee
of the Board of Directors, composed solely of outside directors,
meets periodically with the Company's independent accountants and
management to review the financial statements and related
information and to confirm that they are properly discharging
their responsibilities. In addition, the independent accountants
and the Company's legal counsel meet with the Audit Committee,
without the presence of management, to discuss their findings and
<PAGE>69
their observations on other relevant matters. Recommendations
made by Coopers & Lybrand L.L.P. are considered and appropriate
action is taken to respond to these recommendations.
Wayne T. Hockmeyer, Ph.D. David M. Mott
Chairman and Chief Executive President and Chief Operating
Officer Officer
Lawrence C. Hoff
Chairman of the Audit Committee
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF MEDIMMUNE, INC.
Information with respect to directors is included in the
Company's Proxy Statement to be filed pursuant to Regulation 14A
(the "Proxy Statement") under the caption "Election of
Directors," and such information is incorporated herein by
reference. Set forth in Part I, Item 1, are the names and ages
(as of February 6, 1997), the positions and offices held by, and
a brief account of the business experience during the past five
years of each executive officer.
<PAGE>70
All directors hold office until the next annual meeting of
shareholders and until their successors are elected and
qualified. Officers are elected to serve, subject to the
discretion of the Board of Directors, until their successors are
appointed.
ITEM 11. EXECUTIVE COMPENSATION
The section entitled "Executive Compensation" and the
information set forth under the caption "Election of Directors-
Director Compensation" included in the Proxy Statement are
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The common stock information in the section entitled
"Principal Shareholders" of the Proxy Statement is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The section entitled "Certain Transactions" of the Proxy
Statement is incorporated herein by reference.
<PAGE>71
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON
FORM 8-K
The following documents or the portions thereof indicated
are filed as a part of this report.
a) Documents filed as part of the Report
1. Financial Statements and Supplemental Data
a. Balance Sheets at December 31, 1996 and 1995
b. Statements of Operations for the years ended
December 31, 1996, 1995 and 1994
c. Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994
d. Statements of Shareholders' Equity for the years
ended December 31, 1996, 1995 and 1994
e. Notes to Financial Statement
f. Report of Independent Accountants
g. Report of Management
2. Supplemental Financial Statement Schedule
Schedule I - Valuation and Qualifying Accounts Page S-1
b) Reports on Form 8-K
Date Filed Event Reported
10/4/96 MedImmune Reports 63 Percent Increase in
Product Sales
11/22/96 MedImmune Promotes William I. Braden to Vice
President, Engineering, Facilities and
Validation; MedImmune Commences Phase 3
Trial to Evaluate Respiratory Syncytial
Virus Monoclonal Antibody; MedImmune
appoints former Chiron Executive to Vice
President of Business Development
11/25/96 Complete H. Pylori Genome Sequence Licensed
to Oravax and Pasteur Merieux Connaught in
Exclusive Agreement with MedImmune and Human
Genome Sciences for Development of Novel
Vaccines
12/11/96 MedImmune Files IND to Begin Human Clinical
Trials for First Preventative Human
Papillomavirus Vaccine Candidate
12/17/96 MedImmune Announces Second U. S. Patent
Issued for RespiGam; MedImmune Completes
Patient Enrollment in Phase 3 Trial of
Monoclonal Antibody for Respiratory
Syncytial Virus
12/18//96 MedImmune and Biotransplant Begin Phase 2
Trial Evaluating BTI-322 in Treatment of
Graft-versus-Host Disease
C) ITEM 601 EXHIBITS
Those exhibits required to be filed by Item 601 of Regulation S-K
are listed in the Exhibit Index immediately preceding the
exhibits filed herewith and such listing is incorporated by
reference.
<PAGE>73
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: March 27, 1997 By: Wayne T. Hockmeyer
Chairman and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons in the
capacities and on the dates indicated.
Date: March 27, 1997 Wayne T. Hockmeyer
Chairman and
Chief Executive Officer
(Principal executive officer)
Date: March 27, 1997 David M. Mott
President and Chief
Operating Officer (Principal
financial and accounting officer)
Date: March 27, 1997 M. James Barrett, Director
Date: March 27, 1997 James H. Cavanaugh, Director
Date: March 27, 1997 Gordon S. Macklin , Director
Date: March 27, 1997 Franklin H. Top, Jr., Director
Date: March 27, 1997 Barbara Hackman Franklin, Director
<PAGE>74
Schedule I
MedImmune, Inc.
Valuation and Qualifying Accounts
(in thousands)
<TABLE>
<S> <C> <C> <C> <C>
Balance
at Balance
beginning at end
of of
Description period Additions Deductions period
- -------------------------- --------- ---------- ---------- -------
For the year ended
December 31, 1996
Trade and Contract
Receivables Allowance $309 $2,136 ($1,020) $1,425
Trade Receivables Bad
Debt Reserve 21 724 -- 745
Inventory Reserve 417 249 (658) 8
------ ------ ------ ------
$747 $3,125 ($1,694) $2,178
====== ====== ====== ======
For the year ended
December 31, 1995
Trade and Contract
Receivables Allowance $272 $498 ($461) $309
Trade Receivables Bad
Debt Reserve 16 5 -- 21
Inventory Reserve -- 500 (83) 417
------ ------ ------ ------
$288 $1,003 ($544) $747
====== ====== ====== ======
For the year ended
December 31, 1994
Trade and Contract
Receivables Allowance $344 $330 ($402) $272
Trade Receivables Bad
Debt Reserve -- 16 -- 16
Inventory Reserve -- -- -- --
------ ------ ------ ------
$344 $346 ($402) $288
====== ====== ====== ======
</TABLE>
S-1
c) Item 601 Exhibits
3.1(4) Restated Certificate of Incorporation, dated May 14, 1991
3.2(3) By-Laws, as amended
10.1(1)(3) License Agreement dated November 15, 1990 between the
Company and Merck & Co., Inc. ("Merck")
10.2(3) Plasma Supply Agreement dated May 31, 1990 between the
Company and Plasma Alliance, Inc.
10.3(3) Termination Agreement dated June 29, 1990 between the
Company and Pediatric Pharmaceuticals, Inc. ("PPI")
(formerly MedImmune, Inc.)
10.4(3) RSV Research Agreement dated August 1, 1989 between the
Company, PPI and the Massachusetts Health Research
Institute, Inc. ("MHRI")
10.5(3) RSV License Agreement dated August 1, 1989 between the
Company, PPI and MHRI
10.6(3) RSV Supply Agreement dated August 1, 1989 between the
Company, PPI, MHRI and the Massachusetts Public Health
Biologic Laboratory ("MPHBL")
10.7(3) CMV License Agreement dated April 23, 1990 between the
Company and MHRI
10.8(3) First Amendment to CMV License Agreement dated May 3, 1991
between the Company and MHRI
10.9(3) CMV Research Agreement dated April 23, 1990 between the
Company, MHRI and MPHBL
10.10(3) License Agreement dated November 8, 1989 between the
Company, PPI, and the Henry M. Jackson Foundation for the
Advancement of Military Medicine ("HMJ")
10.11(3) Research Agreement dated November 8, 1989 between the
Company, PPI and HMJ
10.12(1)(3) Research and License Agreement dated April 1, 1990 between
the Company and New York University
10.13(1)(3) Research and License Agreement dated January 2, 1991
between the Company and the University of Pittsburgh
10.14(3) Patent License Agreement between the Company and the
National Institutes of Health regarding parvovirus
10.15(3) License Agreement dated September 1, 1988 between the
Company and Albany Medical College of Union College
10.16(3) License Agreement dated July 5, 1989 between the Company,
Albert Einstein College of Medicine of Yeshiva University,
The Whitehead Institute and Stanford University
10.17(3) License Agreement dated July 1, 1989 between the Company
and the National Technical Information Service ("NTIS")
10.18(3) License Agreement dated September 1, 1989 between the
Company and NTIS
E-1
10.19(5) Form of Stock Option Agreement, as amended
10.20(3) Convertible Preferred Stock and Warrant Purchase Agreement
between HCV, Everest Trust and the Company dated January
12, 1990 with form of Warrant
10.21(3) Restated Stockholders' Agreement dated May 15, 1991
10.22(3) Lease Agreement between Clopper Road Associates and the
Company dated February 14, 1991
10.23(7) 1991 Stock Option Plan
10.24(3) Sublease between the Company and Pharmavene, Inc.
10.25(4) Agreement between New England Deaconess Hospital
Corporation and the Company, dated as of August 1, 1991
10.26(1)(4) Research Collaboration Agreement between Merck and the
Company effective as of November 27, 1991
10.27(1)(4) Co-promotion Agreement between Merck and the Company
effective as of November 27, 1991
10.28(1)(4) License Agreement between Merck and the Company effective
as of November 27, 1991
10.29(1)(5) Letter Agreement between Merck and the Company, dated
January 26, 1993
10.30(1)(5) Termination, Purchase and Royalty Agreement between CLI and
the Company, dated December 24, 1992
10.30.1(1)(12)Amendment to Termination, Purchase and Royalty
Agreement between Connaught Technology Corporation and
MedImmune, Inc. dated December 31, 1995
10.31(1)(5) Research and License Agreement between Cell Genesys, Inc.
and the Company, dated April 29, 1992
10.31(a)(5) Unredacted pages 2-5 of Exhibit 10.31
10.32(5) Form of 1993 Non-Employee Director Stock Option Plan
10.33(1)(8) Sponsored Research and License Agreement between Georgetown
University and the Company dated February 25, 1993
10.34(1)(8) License Agreement between Roche Diagnostic Systems, Inc.
and the Company dated March 8, 1993
10.35(1)(8) Pip/Tazo Co-Promotion Agreement between American Cyanamid
Company and the Company dated November 8, 1993
10.35.1(12) Agreement dated October 26, 1995 between American Cyanamid
Company and the Company
10.36(1)(8) RSVIG Co-Development and Co-Promotion Agreement between
American Cyanamid Company and the Company dated November 8,
1993
10.36.1(12) Agreement dated October 26, 1995 between American Cyanamid
Company and the Company
10.37(1)(8) RSV MAB Co-Development and Co-Promotion Agreement between
American Cyanamid Company and the Company dated November 8,
1993
E-2
10.37.1(12) Agreement dated October 26, 1995 between American Cyanamid
Company and the Company
10.38(1)(8) RSV Vaccine Co-Development and Co-Promotion Agreement
between American Cyanamid Company and the Company dated
November 8, 1993
10.38.1(12) Agreement dated October 26, 1995 between American Cyanamid
Company and the Company
10.39(1)(10)Fraction II + III Paste Supply Agreement between Baxter
Healthcare Corporation and the Company dated September 1,
1994
10.40(11) Employment Agreement between David P. Wright and the
Company dated January 2, 1995
10.41(11) Employment Agreement between Bogdan Dziurzynski and the
Company dated February 1, 1995
10.42(11) Employment Agreement between Wayne T. Hockmeyer and the
Company dated February 1, 1995
10.43(11) Employment Agreement between David M. Mott and the Company
dated February 1, 1995
10.44(11) Employment Agreement between Franklin H. Top, Jr. and the
Company dated February 1, 1995
10.45(11) Employment Agreement between James F. Young and the Company
dated February 1, 1995
10.46(1)(11)License Agreement between Symbicom AB and the Company dated
May 20, 1994
10.47(1)(11)License Agreement between the University of Kentucky
Research Foundation and the Company effective June 10,
1994
10.48(1)(11)Research and Development Agreement between the University
of Kentucky Research Foundation and the Company effective
June 10, 1994
10.49(1)(11)Research and License Agreement between Washington
University and the Company effective July 1, 1994
10.50(1)(11)Research and License Agreement between Washington
University and the Company effective March 1, 1995
10.51(1)(9) License Agreement between Baxter Healthcare Corporation and
MedImmune, Inc. effective June 2, 1995
10.52(1)(9) Stock Purchase Agreement between Baxter Healthcare
Corporation and MedImmune, Inc. dated June 22, 1995
10.53(1)(10) Alliance Agreement between BioTransplant, Inc. and
MedImmune, Inc. dated October 2, 1995
10.54(12) Stock Purchase Agreement dated October 25, 1995 between
MedImmune, Inc. And American Home Products
10.55(2)(12)Collaboration and License Agreement dated as of July 27,
1995 between MedImmune, Inc. And Human Genome Sciences,
Inc.
E-3
10.56(12) Stipulation of Settlement in reference to MedImmune, Inc.
Securities Litigation, Civil Action No. PJM93-3980
10.57(2)(13)Plasma Supply Agreement dated effective as of February 8,
1996, by and between DCI Management Group, Inc. and
MedImmune, Inc.
10.58(2)(13)License and Research Support Agreement dated as of April
16, 1996, between The Rockefeller University and MedImmune,
Inc.
10.59 First Amendment of Lease Between Clopper Road Associates
and MedImmune, Inc. dated June 8, 1993.
10.60 Second Amendment of Lease Between Clopper Road Associates
and MedImmune, Inc. dated June 30, 1993.
10.61 Third Amendment of Lease between Clopper Road Associates
and MedImmune, Inc. effective as of January 1, 1995.
10.62 Fourth Amendment of Lease between Clopper Road Associates
and MedImmune, Inc. dated October 3, 1996.
10.63 Fifth Amendment of Lease between Clopper Road Associates
and MedImmune, Inc. dated October 3, 1996.
10.64(2) Engineering, Procurement, Construction and Validation
Services Agreement between MedImmune, Inc. and Fluor
Daniel, Inc. effective as of July 31, 1996.
10.65(2) Research and License Agreement between OraVax Merieux Co.
and MedImmune, Inc. effective as of November 1, 1996.
23.1 Consent of Independent Accountants
______________
(1) Confidential treatment has been granted as to certain
portions by the SEC. The copy filed as an exhibit omits the
information subject to the confidentiality grant.
(2) Confidential treatment has been requested as to certain
portions. The copy filed as an exhibit omits the
information subject to the confidentiality request.
(3) Incorporated by reference to exhibit filed in connection
with the Company's Registration Statement No. 33-39579.
(4) Incorporated by reference to exhibit filed in connection
with the Company's Registration Statement No. 33-43816.
(5) Incorporated by reference to exhibit filed in connection
with the Company's Annual Report on Form 10-K for the year
ended December 31, 1992.
(6) Incorporated by reference to exhibit filed in connection
with the Company's Annual Report on Form 10-K for the year
ended December 31, 1991.
(7) Incorporated by reference to exhibit filed in connection
with the Company's Registration Statement No. 33-46165.
E-4
(8) Incorporated by reference to exhibit filed in connection
with the Company's Annual Report on Form 10-K for the year
ended December 31, 1993.
(9) Incorporated by reference to exhibit filed in connection
with the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995.
(10) Incorporated by reference to exhibit filed in connection
with the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995.
(11) Incorporated by reference to exhibit filed with the
Company's Annual Report on Form 10-K for December 31, 1994.
(12) Incorporated by reference to exhibit filed with the
Company's Annual Report on Form 10-K for December 31, 1995.
(13) Incorporated by reference to exhibit filed with the
Company's Quarterly Report on Form 10-Q for the Quarter
ended June 30, 1996.
E-5
EXHIBIT 10.59
FIRST AMENDMENT OF LEASE
BETWEEN
CLOPPER ROAD ASSOCIATES
AND
MEDIMMUNE, INC.
DATE: June 8, 1993
TABLE OF CONTENTS
Explanatory Statement Page No.
1. Effective Date of First Amendment 1
2. Capitalized Terms 1
3. Expansion Space 1
4. Shell Construction of Additional
Expansion Space 1
a. Shell Plans; Filing for Building Permit 1
b. Shell Completion 1
c. Landlord's Shell Warranty 2
5. Construction of Initial Improvements
to Expansion Space 2
a. Plans and Specifications; Long
Lead-Time Items 2
b. [Intentionally Deleted] 2
c. Third Party as Contractor 2
(i) Approval and Performance 2
(ii) Insurance 3
(iii)Manekin's observation 3
6. Expansion Space Contribution 3
7. The Expansion Space Loan 3
8. Construction Provisions of Original Leased
Premises Not Applicable to Expansion Space 4
9. Term of Expansion Space Lease 4
a. Expansion Space Commencement Date 5
b. Early Occupancy of Portion of Existing
Expansion Space 5
c. Possession of Expansion Space 5
d. Acceptance of Expansion Space 5
10. Cancellation Options 5
11. Basic Annual Rent for the Expansion Space 6
a. Commencement of Payment of Basic
Annual Rent for the Expansion Space 6
b. Amount of Basin Annual Rent
for Additional Expansion Space 7
c. Amount of Basin Annual Rent for
Existing Expansion Space 7
d. Payment of Basic Annual Rent
for Expansion Space 7
e. Security Deposit 7
12. Adjustments to Square Footages, Percentages
and Addresses 9
13. Environmental Assurances 10
14. Assignment/Subletting 11
15. Notices 11
16. Parking 11
17. Tenant Financing of Equipment, Fixtures, Etc. 11
18. Right of First Offer 11
19. Tenant Authorization 13
20. Lease as Amended 13
21. Tenant Reaffirmation of Lease 13
EXHIBIT A Description of Expansion Space
EXHIBIT B Description of Shell Plans
EXHIBIT C Description of Expansion Space Plans
EXHIBIT D Shell Construction Costs
EXHIBIT E List of Tenants With Superior Rights to Tenant to
Lease Available Space in First Phase of Project
FIRST AMENDMENT OF LEASE
THIS FIRST AMENDMENT OF LEASE (this "First Amendment") is
made this 8th day of June, 1993 by and between CLOPPER ROAD
ASSOCIATES, a Maryland general partnership ("LANDLORD") and
MEDIMMUNE, INC., a Delaware corporation ("TENANT").
EXPLANATORY STATEMENT
A. Landlord and Tenant entered into a Lease dated February
14, 1991 (the "Lease") for a portion of Building D (the
"Building") located at 35 West Watkins Mill Road in the
Bennington Corporate Center, which portion contains 40,843 square
feet (the "Original Leased Premises").
B . Landlord and Tenant now desire to expand the Building,
increase the square footage of the Original Leased Premises,
adjust the rent payable therefor, and make certain other changes
to the Lease, all as more specifically set forth below.
NOW, THEREFORE, in consideration of the Explanatory
Statement, which shall be deemed a substantive part of this First
Amendment, the covenants of the parties herein and in the Lease,
and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Landlord and Tenant
hereby agree as follows:
1. Effective Date of First Amendment. From and after
the date of this First Amendment, the Lease shall be amended as
set forth below.
2. Capitalized Terms. All capitalized terms in this
First Amendment shall have the same meanings as those in the
Lease, unless specifically set forth otherwise herein.
3. Expansion Space. Landlord hereby leases to Tenant,
and Tenant hereby leases from Landlord, in addition to the
Original Leased Premises, approximately Nine Thousand Seven
Hundred Ninety Two (9,792) rentable square feet of space,
consisting of Seven Thousand Five Hundred Fifty-Two (7,552)
existing square feet in the Building (the "Existing Expansion
Space"), and Two Thousand Two Hundred Forty (2,240) rentable
square feet of space which shall be added to the Building (the
"Additional Expansion Space") (collectively, the "Existing
Expansion Space and the Additional Expansion Space shall be
deemed the "Expansion Space"). The Expansion Space is shown more
particularly on Exhibit A attached hereto and made a part hereof.
4. Shell Construction of Additional Expansion Space.
a. Shell Plans; Filing for Building Permit. Landlord
shall cause the "Shell" for the Additional Expansion Space (the
"Shell Construction") to be constructed. Landlord has initially
designated as the general contractor to cause the Shell
construction, Riparius Construction, Inc. ("Riparius"). Landlord
shall provide all work, labor and materials in support of the
Shell construction in accordance with the plans and
specifications for the Shell (the "Shell Plans") , which Shell
Plans have been approved and initialed by the parties. The Shell
Plans are described more fully on Exhibit B attached hereto and
incorporated herein by reference.
Landlord shall file its application with Montgomery
County for the Shell Building Permit within five (5) days of the
execution and delivery of this Lease.
b. Shell Completion. Landlord shall complete the
Shell Construction so that the Shell is ready for construction of
the Initial Improvements to the Additional Expansion Space (as
defined below) no later than five (5) months after the date that
Montgomery County has issued a building permit for the Shell (the
"Shell Completion Date"). The Shell Completion Date shall be
pushed back one (1) day for each day that Shell Construction is
delayed due to (i) Tenant-generated change orders to the Shell
Plans; (ii) delays of any nature whatsoever caused by Tenant; and
(iii) Tenant negligence or willful misconduct.
Promptly upon Landlord's Completion of the Shell
Construction, Tenant's architect shall certify to Tenant that the
Shell Construction has been completed in accordance with the
Shell Plans.
c. Landlord's Shell Warranty. At the termination of
Landlord's Shell Warranty Period (as defined below), or upon the
transfer of fee simple title to the Property to Landlord's lender
(the "Permanent Lender") pursuant to a foreclosure of Landlord's
loan, a conveyance in lieu of foreclosure, or otherwise, Landlord
hereby agrees to and will assign to Tenant, to the extent they
are assignable, any and all written warranties and guarantees
from Landlord's contractors, subcontractors and suppliers of any
materials and labor to the Shell, for that portion, if any, of
the Lease Term that such warranties and guarantees are in effect.
Landlord hereby warrants ("Landlord's Shell Warranty") to Tenant
that Landlord will be responsible for a period ("Landlord's Shell
Warranty Period") of one (1) year from the Shell Completion Date
to repair or to have repaired all defects in the Shell
Construction, to the extent such defects are not caused by the
negligence of Tenant or any of its agents, servants, employees or
contractors (in which event such defects will be repaired at
Tenant's sole cost). To the extent that Landlord is obligated to
make repairs pursuant to Landlord's Shell Warranty, Tenant will
be relieved during Landlord's Shell Warranty Period of the
obligations imposed upon it pursuant to this Lease to make or pay
for such repairs to the Shell. Tenant agrees to and will give
Landlord prompt notice of the need for any such repairs.
5. Construction of Initial Improvements to Expansion Space.
a. Plans and Specifications; Long Lead-Time Items.
Tenant has caused the preparation of plans and specifications
(the "Expansions Space Plans") for the Initial Improvements with
respect to the Existing Expansion Space (the "Existing Expansion
Space Initial improvements") and for the Initial Improvements
with respect to the Additional Expansion Space (the "Additional
Expansion Space Initial Improvements") (the Existing Expansion
Space Initial Improvements and the Additional Expansion Space
Initial Improvements being collectively referred to as the
"Expansion Space Initial Improvements"). The Expansion Space
Plans have been approved and initialed by the parties. The
Expansion Space Plans are described more fully on Exhibit C
attached hereto and incorporated herein by reference.
b. [Intentionally Deleted.)
c. Third Party as Contractor.
(i) Approval and Performance. Tenant has
initially selected Riparius (the "Third Party Contractor") to
construct the Initial Improvements to the Expansion Space.
Landlord hereby approves of such selection. Tenant will not
change the Third Party Contractor from Riparius to another party
without the prior written consent of Landlord, which consent
shall not be unreasonably withheld or delayed. The Third Party
Contractor shall perform its work in strict compliance with all
laws rules, regulations, orders, codes and other requirements of
all governmental and quasi-governmental authorities having
jurisdiction with respect to the Expansion Space and/or the
performance of the Initial Improvements, and shall comply with
all of Landlord's reasonable rules and regulations provided to
the Third Party Contractor.
(ii) Insurance. In addition, the Third
Party Contractor shall obtain Builder's Risk insurance naming
Landlord, Tenant and Manekin Corporation as additional insureds
and public liability insurance with limits of $1,000,000/
$2,000,000 for the construction of the initial improvements, and
proof that it maintains a policy of Workmen's Compensation
Insurance in accordance with applicable law. No later than the
date of commencement of construction of the Initial Improvements
to the Expansion Space, the Third Party Contractor shall provide
original insurance certificates to Landlord evidencing all such
insurance policies.
(iii) Manekin's Observation. Manekin, on
behalf of Landlord, shall have the right to observe the Third
Party Contractor's work on the Initial Improvements to the
Expansion Space, and Tenant shall pay Manekin a fee (the "Fee")
equal to the lesser of (i) all of Manekin's out-of-pocket costs
for such observation, including, without limitation, the wages,
salaries or other compensation and any taxes, insurance or
benefits of its personnel performing such observation; and (ii)
three percent (3%) of the Existing Expansion Space Contribution
(as defined below), which three percent equals Six Thousand one
Hundred Seventeen Dollars and Twelve Cents ($6,117.12). Tenant
shall pay this Fee thirty (30) days after receipt of Landlord's
invoice therefor, together with all applicable supporting
documentation.
G. Expansion Space Contribution. Landlord shall
contribute to Tenant Twenty Seven Dollars ($27.00) per rentable
square foot of the Existing Expansion Space (as such square
footage may vary pursuant to Paragraph 12(c) below) (the
"Expansion Space contribution"), as an allowance for construction
of the Initial Improvements to the Existing Expansion Space.
Subject to Paragraph 7 below, Tenant shall pay all costs of any
nature which exceed the Expansion Space Contribution for
construction of the Initial Improvements to the Expansion Space.
Tenant shall send Landlord an invoice for each monthly
construction invoice Tenant must pay with respect to the Existing
Expansion Space Initial Improvements, and Landlord shall pay
Tenant one-half of each such invoice within thirty (30) days of
receipt thereof, until the Expansion Space Contribution has been
fully paid.
Landlord's obligation to make the payments set forth
above in this Paragraph 6 shall be subject to (i) certification
by Tenant's architect that the applicable stage of completion has
been achieved, and (ii) the receipt by Landlord of (A) (i) with
reference to all draws other than the final draw, duly executed
releases of liens with respect to the work by the Third Party
Contractor; and (ii) with reference to the final draw, duly
executed releases of liens with respect to the work by the Third
Party Contractor and all subcontractors; and (B) a written draw
request on AIA Form G702 with respect to the work for which
payment is being requested.
7. The Expansion Space Loan. Landlord shall loan
Tenant Fifty Dollars ($50.00) per rentable square foot of the
Additional Expansion Space, for a total of One Hundred Twelve
Thousand Dollars ($112,000.00) (the "Expansion Space Loan"). The
Expansion Space Loan shall be applied first to pay one hundred
percent of the invoices for the Shall Construction. If the Shell
Construction costs are greater that the amount of the Expansion
Space Loan. If the Shell Construction costs are less than the
Expansion Space Loan, the amount of the Expansion Space Loan in
excess of the Shell Construction costs shall be applied to the
costs of the Initial Improvements to the Existing Expansion
Space.
There is attached hereto as Exhibit D and incorporated
herein by reference the categories of items constituting the
Shell Construction costs and the estimated costs within each such
category. Within thirty (30) days after the Shell Completion
Date, Landlord shall provide to Tenant invoices substantiating
the full amount of the Shell Construction costs. Within twenty
(20) days thereafter: (a) if the Shell Construction costs are
more than $112,000, Tenant shall pay Landlord in cash the entire
amount of such costs over $112,000; and (b) if the Shell
Construction costs are less than $112,000, Landlord shall add the
amount by which $112,000 exceeds the Shell Construction costs to
the Expansion Space Contribution, and Landlord and Tenant
promptly shall execute an amendment to the Lease as amended
hereby setting forth the new Expansion Space Contribution.
Landlord agrees that it will not allow or permit the total costs
attributable to any category set forth on Exhibit D to exceed the
estimated amount for such respective category as set forth on
Exhibit D without first obtaining the prior written consent of
the Tenant.
Tenant shall repay the Expansion Space Loan to Landlord
at thirteen percent (13%) interest per year, over ten (10) years,
commencing on August 1, 1994 (the "Loan Repayment") which Loan
Repayment is incorporated into the Basic Annual Rent for the
Additional Expansion Space. In the event that the Lease, as
amended hereby or hereafter, terminates early for any reason
whatsoever, Tenant shall repay to Landlord no later than the date
of such early termination the then-outstanding balance of the
Expansion Space Loan.
Tenant shall have the option at any time during the
Lease Term, to prepay all or a portion of the then outstanding
balance of the Expansion Space Loan without any prepayment
penalty. In the event that the Tenant prepays all of the then-
outstanding balance of the Expansion Space Loan, then and in such
event, there shall be a reduction in the Basic Annual Rent for
the Additional Expansion Space and in the monthly installments of
the Basic Annual Rent for the Additional Expansion Space. In the
event that Tenant prepays a portion but not all of the then-
outstanding balance of the Expansion Space Loan, the Basic Annual
Rent for the Additional Expansion Space and the monthly
installments of such Basic Annual Rent shall not be reduced at
all, but shall remain the same as they were before any such
partial prepayment until the balance of the Expansion Space Loan
has been paid in full. Upon the payment in full of the Expansion
Space Loan, the Basic Annual Rent shall be reduced by the amount
of $1,672.27 per month.
For purposes of determining at any time the then unpaid
principal balance of the Expansion Space Loan, the same shall be
equal to (i) the then unpaid principal balance of a one Hundred
Twelve Thousand Dollar ($112.000.00) loan amortized at thirteen
percent (13%) interest per annum over one hundred twenty (120)
months with level equal monthly payments of principal and
interest and with the first payment having been made on August 1,
1994; and (ii) less prepayments theretofore made; and (iii) plus
any adjustments to the extent that Basic Annual Rent for the
Additional Expansion Space has not been paid in accordance with
its terms.
8. Construction Provisions of Original Leased Premises
Not Applicable to Expansion Space. Article I.B of the Lease
shall only apply to the Original Leased Premises, and shall not
apply to the Expansion Space except as specifically set forth in
this First Amendment.
9. Term of Expansion Space Lease. The Expansion Space
Term will commence on the Expansion Space Commencement Date and
will end on the last day of the Leased Term. From and after the
date of this First Amendment, the term "Leased Term" will include
the Expansion Space term. Upon the occurrence of the Expansion
Space Commencement Date, Landlord and Tenant shall execute in
writing a statement setting forth the Expansion Space
Commencement Date.
a. Expansion Space Commencement Date. The
Expansion Space Commencement Date shall be the date that Tenant
has obtained a temporary certificate of occupancy and all other
licenses and permits required with respect to construction-
related issues only, in order for Tenant to occupy the Expansion
Space.
b. Early Occupancy of Portion of Existing
Expansion Space. Notwithstanding subsection 9 (a) above, Tenant
shall have the right to occupy approximately One Thousand Two
Hundred (1,200) rentable square feet of the Existing Expansion
Space (the "Early Occupancy Space") as shown in red on Exhibit A,
on the date (the "Early Occupancy Date") that (i) the Initial
improvements for such Early Occupancy Space have been completed
subject only to minor punch list items; and (ii) a temporary
certificate of occupancy has been issued, together with all other
licenses and permits required with respect to construction-
related issues only, so that Tenant may occupy the Early
Occupancy Space. on or before the Early Occupancy Date, Tenant
shall have provided Landlord with all certificates of insurance
as required under the Lease with respect to the Early Occupancy
Space, and all aspects of the Lease as amended hereby, except for
the Basic Annual and Additional Rent provisions, shall apply to
Tenant's occupancy of the Early Occupancy Space.
c. Possession of Expansion Space. This First
Amendment will remain fully effective and Tenant may not cancel
or rescind it due to late possession, regardless of when
possession is actually delivered. Moreover, in no event will
Landlord be liable to Tenant for damages, if any, sustained by
Tenant as a result of Landlord's delay in delivering the
Expansion Space.
d. Acceptance of Expansion Space. Upon
Landlord's delivery of possession of the Expansion Space to
Tenant, Tenant will be deemed to have accepted the Expansion
Space subject to Landlord's duties otherwise provided herein.
10. Cancellation options.
a. Paragraph II.B(l) of the Lease shall apply to
the Expansion Space but shall be amended by (w) adding Ninety
Thousand Six Hundred Twenty-Four Dollars ($90,624.00) to each of
the First Fee and the Second Fee defined in the first paragraph
thereof so that the total First Fee shall equal Two Hundred
Fifteen Thousand Six Hundred Twenty-Four Dollars ($215,624.00)
and the total Second Fee shall equal Two Hundred Fifteen Thousand
Six Hundred Twenty-Four Dollars ($215,624.00); (x) adding the
underlined phrase to the end of subsection (b) (ii) of the first
paragraph thereof so that subsection (b)(ii) shall read "(ii) the
then-outstanding balance of the Loan Amount and the Expansion
Space Loan ..."; (y) substituting the numbers in the mathematical
example in the third to the last sentence in the first paragraph
thereof as follows: "... such that each Fee will equal One
Hundred Seventy-Four Thousand Six Hundred Twenty-Four Dollars
($174,624.00) ($215,624.00 - $41,000.00 = $174,624.00)."; and (z)
adding the underlined language in the last sentence in the first
paragraph thereof as follows: "... the then-outstanding balance
of the Loan Amount and the Expansion Space Loan upon the Lease
termination hereunder."
The second paragraph of Paragraph II.B(1) of the Lease
shall be amended by adding in the seventh line thereof the
following underlined language: "...shall set forth through the
Acquisition Termination Date the outstanding balance of the Loan
Amount and the Expansion Space Loan..."
b. Paragraph II.B(2) of the Lease shall apply to
the Expansion Space but shall be amended by (x) adding Ninety
Thousand Six Hundred Twenty-Four Dollars ($90,624.00) to each of
the First Five-Year Fee and the Second Five-Year Fee defined in
the first paragraph thereof so that the total First Five-Year Fee
shall equal Two Hundred Fifteen Thousand Six hundred Twenty-Four
Dollars ($215,624.00) and the total. Second Five-Year Fee shall
equal Two hundred Fifteen Thousand Six Hundred Twenty-Four
Dollars ($215,624.00); and (y) adding the underlined phrase to
the end of subsection (b) of the first paragraph thereof so that
subsection (b) shall read "(b) the then-outstanding balance of
the Loan Amount at-id the Expansion Space Loan".
The second paragraph of Paragraph II.B(2) of the Lease shall
be amended by adding in the seventh line thereof the following
underlined language: " ... which Five-Year Termination Rent
Statement shall set forth through the Five-Year Termination Date
the outstanding balance of the Loan Amount and the Expansion
Space Loan... "
c. Paragraph II.B(3) of the Lease shall apply to
the Expansion Space but shall be amended by adding the underlined
language to the end of the second sentence of the first paragraph
thereof as follows: "If Tenant exercises its right to terminate
this Lease under this Paragraph II.B.(3), Tenant shall pay by
certified or bank cashier's check made Payable to Landlord, or at
Landlord's option by wire transfer of immediately available funds
to Landlord's account, at the time Tenant gives Landlord notice
hereunder, a fee (the "First Ten-Year Fee") of Twenty-Two
Thousand Six Hundred Fifty-Six Dollars ($22,656.00). In addition,
Tenant shall pay to Landlord in the manner set forth in Paragraph
II.B(2) on or before the expiration of the one hundred nineteenth
(119th) month of the Lease Term, both (a) a second fee (the
"Second Ten-Year Feel") (collectively, the First and Second Ten-
Year Fees shall be called the "Ten-Year Fees") of Twenty-Two
Thousand Six Hundred Fifty-Six Dollars ($22,656.00) and (b) the
then-outstanding balance of the Loan Amount and the Expansion
Space Loan."
The second paragraph of Paragraph II.B(3) of the Lease
shall be amended by adding in the seventh line thereof the
following underlined language: "... which Ten-Year Termination
Rent Statement shall set forth through the Ten-Year Termination
Date the outstanding balance of the Loan Amount and the Expansion
Space Loan..."
In addition, the second paragraph of Paragraph II.B(3)
shall be amended by adding in the second sentence thereof the
following underlined language: "Notwithstanding anything set
forth above in this Paragraph - II.B(3), the termination of the
Lease pursuant to this Paragraph shall not be effective until
Landlord has received from Tenant all Ten-Year Fees and the
amount set forth in the Ten-Year Termination Rent Statement;
provided, however, that if Landlord fails to provide the Ten-Year
Termination Rent Statement to Tenant as and when required
hereunder, the termination of the Lease pursuant to this
Paragraph shall nevertheless be effective on the Ten-Year
Termination Date; provided that in such event, Tenant has timely
paid the Ten-Year Fees to Landlord."
Finally, the second paragraph of Paragraph II.B(3)
shall be amended by adding to the last sentence thereof the
following underlined language: "... Landlord shall have no
further right to make any claim for payment of any sums payable
by Tenant to landlord pursuant to this Lease other than the Fees
and the sums set forth ..."
11. Basic Annual Rent for the Expansion Space.
a. Commencement of Payments of Basic Annual Rent
for Expansion Space. Basic Annual Rent on the Expansion Space
shall be paid by Tenant, commencing as follows:
(1) Tenant's payment of Basic Annual Rent for
the Additional Expansion Space shall commence on August 1, 1994,
and Tenant's payment of Basic Annual Rent for the Existing
Expansion Space shall commence on September 1, 1994. These
payments shall commence on the dates set forth herein regardless
of when the Expansion Space Commencement Date occurs.
b. Amount of Basic Annual Rent for Additional
Expansion Space. Basic Annual Rent for the Additional
Expansion space, including, but not limited to, amortization of
the Expansion Space Loan, shall equal Twenty-Seven Thousand Three
Hundred Fifty Dollars and Forty Cents ($27,350.40) per annum,
payable in equal monthly installments of Two Thousand Two Hundred
Seventy-Nine Dollars and Twenty Cents ($2,279.20). Payment of the
first monthly installment hereunder shall commence on August 1,
1994 and shall continue for one hundred twenty (120) months of
the Lease Term; provided that if payment commences on a date that
is not the first day of a month, then payment shall continue for
one hundred twenty (120) months plus the partial first month in
which payment commences.
Commencing on the first day of the one hundred
twenty-first (121st) month after payment has commenced under
Paragraph 11(b) above, Tenant shall pay a reduced Basic Annual
Rent for the Additional Expansion Space equal to Four Dollars and
Forty Cents ($4.40) per square foot of the Additional Expansion
Space, for a total of Nine Thousand Eight Hundred Fifty-Six
Dollars ($9,856.00) per annum, in equal monthly installments of
Eight Hundred Twenty-One Dollars and Thirty-Three Cents $821.33),
for the remainder of the Initial Lease Term.
c. Amount of Basic Annual Rent for Existing
Expansion Space. Basic Annual Rent for the Existing Expansion
Space, including, but not limited to, repayment of the Expansion
Space Contribution, shall equal One Hundred Thousand Three
Hundred Sixty-Six Dollars and Eight Cents ($100,366.08) per
annum, payable in equal monthly installments of Eight Thousand
Three Hundred Sixty-Three Dollars and Eighty-Four Cents
($8,363.84), commencing oil September 1, 1994. Such Basic Annual
Rent for the Existing Expansion Space shall be increased Three
and One-half Percent (3.5%) per annum, compounded annually, on
each anniversary of the commencement of payment hereunder.
d. Payment of Basic Annual Rent for Expansion
Space. The above amounts of Basic Annual Rent for the Expansion
Space shall be paid at the time and in addition to the payment of
Basic Annual Rent for the Original Leased Premises, and otherwise
in the manner set forth in Article III.B of the Lease, commencing
on August 1, 1994 with respect to the Additional Expansion space,
and September 1, 1994 with respect to the Existing Expansion
Space.
e. Security Deposit. Contemporaneously with the
execution of this First Amendment, Tenant shall deposit with
Landlord the sum of Ten Thousand Six Hundred Forty-Three and
04/100 Dollars ($10,643.04), which amount shall be applied by
Landlord to the monthly installment of Basic Annual Rent for the
Expansion Space with respect to the month of September, 1994.
Paragraph III.A. of the Lease is hereby deleted and
there is inserted in lieu thereof the following:
A. Upon the occurrence of the Triggering Event prior
to December 31, 1996, the Tenant shall, upon twenty (20) days;
written notice from Landlord, provide to Landlord a Security
Deposit in the form of a Letter of Credit. The Letter of Credit
shall serve as a security deposit to guaranty Tenant's
performance of its monetary obligations under the Lease.
The Triggering Event shall be either (i) Tenant's Total
Shareholders' Equity as stated for the most recently completed
quarterly accounting period on Tenant's Balance Sheet is less
than Ten Million Dollars ($10,000,000.00), or (ii) Tenant's
Balance Sheet for Tenant's most recently completed quarterly
accounting period states with reference to Cash and Cash
Equivalents, Marketable Securities and Trade Receivables an
amount in the aggregate of less than Five Million Dollars
($5,000,000.00). For purposes of this lease, the term "quarterly
accounting period" shall mean calendar quarters ending March 31,
June 30, September 30 and December 31, respectively. For
purposes of this Lease, the term "Tenant's Balance Sheet" shall
mean that Balance Sheet prepared by the Certified Public
Accountant regularly servicing Tenant. Tenant shall provide
Landlord with a copy of its Balance Sheet no later than three (3)
days after Tenant's receipt thereof.
The principal amount of the Letter of Credit shall be
initially equal to Four Hundred Eighty-Six Thousand Six Hundred
Fifty-Six Dollars ($486,656.00) plus the then unpaid balance of
the Expansion Space Loan.
In the event a Letter of Credit is in fact posted, and
in the event that no event of default occurs pursuant to the
terms of this Lease, then the principal amount of the Letter of
Credit shall be reduced on the first day of the thirteenth
(13th), twenty-fifth (25th), thirty-seventh (37th) and forty-
third (43rd) months following the Triggering Event to the
respective amounts as follows:
Term of Letter of Credit Principal Amount of Letter of
Credit
Months 13 through 24 $364,992.00 plus the then unpaid
principal balance of the Expansion
Space Loan
Months 25 through 36 $243,328.00 plus the then unpaid
principal balance of the Expansion
Space Loan
Months 37 through 42 $121,664.00 plus the then-unpaid
principal balance of the Expansion
Space Loan
Month 43 and the No Letter of Credit shall be
remainder of the Lease required
Term
Each Letter of Credit shall have a term of twelve
(12) months commencing on the date of posting of the first Letter
of Credit, and each subsequent Letter of Credit will have a term
of twelve (12) months except the fourth Letter of Credit shall
have a term of six (6) months. Each Letter of Credit shall be
drawn by a commercial bank and in a form reasonably acceptable to
Landlord, provided, however, that it shall be a condition of each
Letter of Credit that (i) the holder must certify to the issuer
of the Letter of Credit that a monetary default has occurred
under the Lease and such monetary default has continued beyond
any applicable notice and cure period; and (ii) no draw against
the Letter of Credit shall be in an amount less than Five
Thousand Dollars ($5,000.00).
At least fifteen (15) days before the expiration
of the first Letter of Credit, Tenant shall provide Landlord with
a replacement Letter of Credit in the amount as provided above
and for a term to commence on the expiration date of the first
Letter of Credit and terminating on the last day of the twelfth
(12th) month thereafter, except for the fourth Letter of Credit
which shall have a term of six months. Each letter of Credit
shall be substantially similar to the prior Letter of Credit and
the replacement Letter of Credit (other than the term) must be
approved by Landlord, in its reasonable discretion, before the
commencement date of the replacement Letter of Credit.
The delivery of each replacement Letter of Credit
within fifteen (15) days before the expiration of each existing
Letter of Credit and the issuance of a new Letter of Credit every
twelve (12) months for a term of twelve (12) months (except with
respect to the fourth Letter of Credit as provided above) shall
continue for forty-two (42) months, and any reduction in the
amount of any replacement Letter of Credit after the first Letter
of Credit shall also be allowed as set forth above, as long as
there has been no uncured monetary default in the prior twelve
(12) months.
The fourth Letter of Credit shall expire on the
last day of the forty-second (42nd) month after the Triggering
Event. At the expiration of the forty-second (42nd) month after
the Triggering Event, Tenant shall no longer be required to
provide any further Letter of Credit pursuant to this paragraph
III.A. during the remainder of the Lease Term as it may be
extended. In addition to any and all other remedies available to
Landlord under this Lease, the Letter of Credit may be used at
any time by Landlord to cure or compensate Landlord for any
monetary default by Tenant under the Lease which continues
uncured beyond any applicable notice and cure period; provided
that no draw against any Letter of Credit shall be in an amount
less than Five Thousand Dollars ($5,000.00). To the extent
Landlord makes any such use of a Letter of Credit, Tenant will
immediately replenish it to its original amount. The Letter of
Credit may not be used or applied by Tenant in lieu of Basic
Annual Rent or any other rent provided hereunder.
Notwithstanding anything set forth above in this Paragraph III.A,
if within one (1) month before the expiration of the fourth
Letter of Credit there exists one or more monetary defaults by
Tenant under the Lease which have continued uncured beyond any
applicable notice and cure period, and which are in an amount of
less than Five Thousand Dollars ($5,000.00) in the aggregate,
Landlord shall have the right to draw against the fourth Letter
of Credit in an amount sufficient to compensate it for such
monetary default or defaults."
12. Adjustments to Square Footages, Percentages and
Addresses.
a. Paragraph III.C(l) (a) of the Lease shall be
amended by striking the parenthetical after "Phase 1" in its
entirety and replacing it with "25, 45 and 35 West Watkins Mill
Road, respectively".
b . Paragraph III.C(l) (b) of the Lease shall be
amended by striking the phrase "located at 25, 35 and 45 West
Watkins Mill Road, respectively" in the first sentence thereof
and replacing it with "located at 25, 45 and 35 West Watkins Mill
Road, respectively". In addition, the term "Rentable Area of the
Buildings" will be deemed to be 134,546 square feet rather than
132,306 square feet in this Paragraph III.C(l)(b) and throughout
the Lease so that the term includes the Additional Expansion
Space. Finally, the third, fifth and sixth sentences of
Paragraph III.C(l)(b) of the Lease will apply to the Building as
expanded by the Additional Expansion Space.
c. Paragraph III.C(l) (c) of the Lease shall be
amended so that the term "Rentable Area of the Leased Premises"
shall be deemed to be 50,635 square feet rather than 40,843
square feet so that the term includes the Expansion Space. This
amended square footage number shall apply throughout the Lease to
all references to the square footage of the Leased Premises. In
addition, the second through final sentences of Paragraph
III.C(1)(c) of the Lease shall apply to the Expansion Space, and
the parties hereto acknowledge that certification of 9,792 square
feet as the gross rentable area of the Expansion Space has
occurred before the date first written above.
d. Paragraph III.C(l)(d) of the Lease shall be
amended so that the term "Rentable Area of the Building"
shall be deemed to be 50,635 square feet rather than 48,395
square feet so that the term includes the Expansion Space. This
amended square footage number shall apply throughout the Lease to
all references to the square footage of the Building.
e. Paragraph III.C(l)(e) of the Lease shall be
amended as of June 1, 1993 so that the term "Tenant's Portion
(with respect to the payment of Common Area Expenses, Taxes and
Insurance)" will be thirty-seven and sixty-three one-hundredths
percent (37.63%)(50,635/134,546) rather than 30.87%
(40,843/132,306) so that the term includes the Expansion Space.
This amended Tenant's Portion shall apply throughout the Lease.
f. The estimated amounts set forth in Paragraph
III.C(2)(a) and (b) of the Lease shall be amended as of June 1,
1993 by adding thereto the estimated amounts of such Taxes,
Insurance and Common Area Expenses for the Expansion Space.
Therefore, commencing on June 1, 1993, Tenant shall pay to
Landlord, in addition to the amounts set forth in the Lease
sections listed above, with and at the same time as the monthly
payments of Basic Annual Rent, the following amounts with respect
to the Expansion Space:
(i) Eight Hundred Seventy-Three Dollars and
Twelve Cents ($873.12) per month as one-twelfth of Tenant's
estimated Portion of Common Area Expenses, which amount includes
One Hundred Twenty-Two Dollars and Forty Cents ($122.40) per
month as one-twelfth of Tenant's estimated Portion of the
Insurance Costs. The limitation on increases in Common Area
Expenses under the Lease shall apply to Tenant's Portion of
Common Area Expenses for the Expansion Space, except that the
Common Area Expenses for the Expansion Space for the first Lease
Year shall not be limited in any way. Therefore, the fifth
paragraph of Paragraph III.C(2) of the Lease (commencing with the
phrase "Notwithstanding anything to the contrary ... "), shall
not apply to the Expansion Space.
(ii) One Thousand Two Hundred Thirty-Two Dollars
and Sixteen Cents ($1,232.16) per month as one-twelfth of
Tenant's estimated Portion of Taxes.
Notwithstanding the foregoing, with reference to the
Tenant's Portion (estimated and actual) of Common Area Expenses,
Insurance Cost and Taxes, the same will not be charged with
respect to the Additional Expansion Space until the Additional
Expansion Space is completed and tendered to Tenant; provided,
however, that if prior to the date the Additional Expansion Space
is completed and tendered to Tenant, Montgomery County, Maryland
assesses Taxes with respect to the Additional Expansion Space,
then and in such event, the Tenant's Portion with respect to
Taxes shall be increased to include the Additional Expansion
Space effective as of the effective date of Montgomery County's
assessment of Taxes with respect to the Additional Expansion
Space.
13. Environmental Assurances. Paragraph IV.G of the
Lease shall be amended by adding a new subsection (5) as follows:
"Landlord shall have prepared, at its expense, at the expiration
or earlier termination of the Lease Term as herein provided, a
certification (the "Audit") from a reputable environmental
company to the effect that based upon an inspection conducted by
such environmental audit company not more than thirty (30) days
prior to the expiration or termination of the Lease Term, the
Leased Premises comply with the requirements set forth in
subsection IV.G.(2)(a) above. In the event such Audit shows that
additional tests are necessary in order to give the required
certification, such additional costs shall be paid by tenant as
additional rent within thirty (30) days of receipt of an invoice
therefor from Landlord. In the event such Audit and/or any
additional tests show that compliance work is necessary in order
for the required certification to be given, all such compliance
work paid shall be promptly undertaken by Tenant, at Tenant's
sole cost and expense, in order for such certification to be
obtained as promptly as possible. In addition, Tenant promptly
shall reimburse Landlord for the cost of the original Audit as
additional rent within thirty (30) days of receipt of an invoice
from Landlord."
14. Assignment/Subletting. Paragraph X.A of the Lease
shall be amended by striking the last sentence of the second
paragraph thereof in its entirety.
15. Notices. Paragraph X.G of the Lease shall be
amended by striking Landlord's address in subsection (i) and
replacing it with "c/o Manekin Corporation, 7165 Columbia Gateway
Drive, Columbia, Maryland 21046, Attn: General Counsel".
16. Parking. Paragraph X-0 of the Lease shall be
amended by adding Tenant's right to the non-exclusive use of an
additional three and one-half (3.5) parking spaces per one
thousand (1,000) square feet of the Existing Expansion Space for
a total of Twenty-Seven (27) parking spaces. Therefore, in
addition to the 163 non-exclusive and 13 exclusive parking spaces
set forth ill the Lease, Tenant shall have the exclusive use of 2
of the twenty-seven (27) additional parking spaces, and the non-
exclusive use of 25 of the 27 additional parking spaces in the
front and rear of Building D.
17. Paragraph X.Q(9) shall be stricken in its entirety
and replaced with the following: "Tenant Financing of Equipment,
Fixtures, Etc. Landlord hereby agrees to subordinate any liens
or rights it has during the Lease Term so that Tenant may finance
or refinance, from time to time, its equipment, fixtures and
inventory, and Landlord agrees to execute promptly upon request
any and all such documents and/or instruments which reasonably
may be requested and are reasonably satisfactory to Landlord in
order to effectuate such subordination. Tenant is hereby granted
the right to assign this Lease as security to a lender; provided
that Landlord's then-current lender approves of each and every
such assignment in writing. If Landlord's then-current lender
approves any such assignment, then Landlord agrees to execute any
and all documents and/or instruments as may reasonably be
requested by Tenant and as are reasonably satisfactory to
Landlord and Landlord's then-current lender in order to
effectuate such security. Tenant shall reimburse Landlord as
additional rent within thirty (30) days of receipt of an invoice
from Landlord for all Landlord's legal costs and any and all
legal costs Landlord must pay to its then-current lender in order
to review Tenant's proposed assignment and all documents and/or
instruments effectuating the assignment as follows: (i) with
reference to Landlord's legal fees, an amount not in excess of
Five Hundred Dollars ($500.00) per assignment; and (ii) with
reference to Landlord's then-current lender, there shall be no
fee or cost; and (iii) with reference to any lender after its
then-current lender, an amount which is commercially reasonable
for that lender's legal cost with reference to any such
assignment."
18. Right of First Offer.
a. If at any time during the Lease Term any
portion of the existing space in the first phase of the Project
i.e., 25, 35 and/or 45 West Watkins Mill Road (collectively, the
"First Offer Space") becomes available; i.e., unencumbered by a
lease with Landlord, then subject to the expansion rights of
other tenants in the Project as described on Exhibit E attached
hereto and made a part hereof, Tenant shall have the right of
first offer (the "First Offer Right") to lease such First Offer
Space. Landlord shall give Tenant prompt written notice of the
availability of the First Offer Space and the terms on which
Landlord is willing to lease it ("Landlord's Notice"); provided
that: (i) the basic annual rent for any such First Offer Space
shall equal ninety-five percent (95%) of the then-market rent for
such space, taking into consideration, among other things, the
cancellation options under Paragraph III.B of the Lease; (ii) in
no event shall the basic annual rent for any First Offer Space be
less than the Basic Annual Rent in effect during the immediately
preceding Lease Year; and (iii) the basic annual rent for any
First Offer Space shall increase by three and one-half percent
(3.5%) per annum compounded annually, on each anniversary of the
First Offer Commencement Date (as defined below). Market rent
shall be determined in the same manner as set forth in subsection
(iii) of Rider No. 1 of the Lease, taking into consideration the
cancellation options as set forth above.
Tenant's exercise of its First Offer Right shall
be effective only upon Tenant's written notice to Landlord
("Tenant's Notice") given five (5) days after Tenant's receipt of
Landlord's Notice. If Tenant does not duly exercise its First
Offer Right with respect to any particular First Offer Space,
Landlord shall be free to offer such Space for lease to any other
tenant on substantially the terms offered to Tenant hereunder.
If Landlord leases any such First Offer Space to another tenant
and such Space becomes available one or more times during the
Lease Term, Landlord shall not have to re-offer such space to
Tenant hereunder.
The first day of the lease term f or the First
Offer Space shall be the earlier to occur of (i) the ninetieth
(90th) day after Landlord provides Tenant access to the First
Offer Space in a broom-clean condition such that Tenant can
commence the construction of its improvements to the First Offer
Space; or (ii) the date Tenant begins to conduct its business
from the First Offer Space (the "First Offer Commencement Date").
b. Notwithstanding any other provision hereof,
the following provisions shall apply to the First Offer Right and
to Tenant's lease, if any, of the First Offer Space:
(i) Tenant shall not be entitled to exercise
the First Offer Right unless on the date Tenant gives Landlord
the First Offer Notice and on the First Offer Commencement Date:
(A) the Lease as hereby or hereafter amended, is in full force
and effect; (B) Tenant has paid to Landlord any and all amounts
which are then due from Tenant under this Lease and are in
arrears, including, without limitation, any and all late fees;
and (C) Tenant is not materially and/or substantially in default
beyond any applicable notice and cure period with reference to
any material or substantial non-monetary covenant in the Lease to
be performed, observed or complied with by Tenant;
(ii) Tenant's rental of the First Offer Space
shall be for a term commencing on the First Offer Commencement
Date and continuing through the balance of the Lease Term;
provided, however, that if on the First Offer Commencement Date
there are then less than five (5) full years remaining on the
Lease Term, then and in such event, the Lease Term (including the
First Offer Term) shall automatically be extended so as to expire
on the last day of the calendar month in which the fifth (5th)
annual anniversary of the First Offer Commencement Date occurs;
(iii) The First Offer Space shall be
delivered to Tenant in "as is" condition (i.e., there shall be no
Expansion Space Contribution or Expansion Space Loan with respect
thereto). Any improvements to the First Offer Space shall be
made by Tenant at Tenant's sole cost and expense and shall be
performed at Tenant's sole cost and expense and shall be
performed in accordance with drawings, plans and specifications
prepared by Tenant and approved by Landlord, such approval not to
be unreasonable withheld;
(iv) From and after the First Offer
Commencement Date, all references in the Lease and Riders thereto
to the Leased Premises shall refer to the aggregate Premises and
the First Offer Space and all references to the area or Rentable
Area of the Leased Premises shall, for all purposes of this
Lease, be deemed to include both the area of the Leased Premises
and of the First Offer Space. Tenant's Portion shall be adjusted
accordingly to reflect the leasing of the First Offer Space; and
(v) Except as otherwise expressly
provided in this Paragraph 18, from and after the First Offer
Commencement Date, all of the covenants and agreements set forth
in the Lease and Riders thereto shall apply to the First Offer
Space.
c. Time is of the essence with respect to Tenant's
exercise of its rights under this Paragraph 18. Tenant
acknowledges that Landlord requires strict adherence to the
requirement that Tenant's Notice be timely made and in writing.
19. Tenant Authorization. Tenant represents and
warrants to Landlord that this First Amendment has been validly
authorized and is executed by an authorized officer of Tenant and
that its terms are binding upon and enforceable against Tenant in
accordance Herewith.
20. Lease as Amended. From and after the full
execution of this First Amendment, the Lease shall be amended and
in full force and effect in such respects as are set forth in
this First Amendment, and all other provisions, terms, conditions
and riders of and to the Lease shall in all respects remain as
set forth in the Lease, in full force and effect and applicable
to the Expansion Space, except as specifically set forth in this
First Amendment.
21. Tenant Reaffirmation of Lease. Tenant hereby
reaffirms and restates, and agrees to be bound by, the covenants,
promises, representations and agreements set forth in the Lease
(except to the extent that they are expressly superseded by this
First Amendment) as if made herein.
LANDLORD:
WITNESS/ATTEST: CLOPPER ROAD ASSOCIATES,
a Maryland general partnership
By: M.O.R.M. Associates Limited
Partnership
By: RA & FM, Inc.
Bonnie J. Gottlieb By: Richard M. Alter(SEAL)
Name: Richard M. Alter
Title: President
TENANT:
WITNESS MEDIMMUNE, INC., a Delaware
Corporation
David M. Mott By: Emilio O. DiCataldo
Name: Emilio O. DiCataldo
Title: Senior Vice President
Finance and Administration
STATE OF MARYLAND )
)TO WIT:
COUNTY OF BALTIMORE )
I HEREBY CERTIFY that on this 8th day of June, 1993, before
me, the subscribed, a Notary Public of the State and county
aforesaid, personally appeared Richard M. Alter, President of RA
& FM, Inc., a general partnership of M.O.R.M. Associates Limited
Partnership, general partner of Clopper Road Associates, and he
acknowledged the foregoing Lease Agreement to be the act and deed
of said general partnership.
WITNESS my hand and Notarial Seal.
Diane J. Hopkins
Notary Public
Baltimore Co., MD
My Commission Expires: May 1, 1995
STATE/COMMONWEALTH OF MARYALND )
)TO WIT:
COUNTY OF MONTGOMERY )
I HEREBY CERTIFY that on this 7th day of June, 1993, before
me, the subscribed, a Notary Public of the State/Commonwealth and
County aforementioned, personally appeared Emilio O. DiCataldo of
MedImmune, Inc., Tenant, and he acknowledged the foregoing Lease
Agreement to be his/the act and deed of the corporation.
WITNESS my hand and Notarial Seal.
Carol A. Iorio
Notary public
My Commission Expires: July 11, 1994
EXHIBIT 10.60
SECOND AMENDMENT OF LEASE
BETWEEN
CLOPPER ROAD ASSOCIATES AND
MEDIMMUNE, INC.
DATE: June 30, 1993
SECOND AMENDMENT OF LEASE
THIS SECOND AMENDMENT OF LEASE (this "Second Amendment") is
made this 30th day of June, 1993, by and between CLOPPER ROAD
ASSOCIATES, a Maryland general partnership ("Landlord") and
MEDIMMUNE, INC., a Delaware corporation ("Tenant").
Explanatory Statement
A. Landlord and Tenant entered into a Lease dated February
14, 1991 (the "Original Lease") for a portion of Building D
located at 35 West Watkins Mill Road in the Bennington Corporate
Center, which portion contains 40,843 square feet (the "Original
Leased Premises").
B. Landlord and Tenant entered into a First Amendment of
Lease dated June 8, 1993 (the "First Amendment") (collectively,
the Original Lease and First Amendment shall be termed the
"Lease"), pursuant to which Building D was expanded, the square
footage of the Original Leased Premises was increased (the
"Expansion Space") (collectively, the Original Leased Premises
and Expansion Space shall be termed the "Expanded Leased
Premises"), and certain other changes were made to the Original
Lease.
C. Landlord and Tenant now desire to expand the square
footage of the Expanded Leased Premises by adding space in
Building B located at 25 West Watkins Mill Road, adjusting the
Rent payable therefor, and making certain other changes to the
Lease, all as more specifically set forth below.
NOW, THEREFORE, in consideration of the Explanatory
Statement, which shall be deemed a substantive part of this
Second Amendment, the covenants of the parties herein and in the
Lease, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Landlord and Tenant
hereby agree as follows:
1. Effective Date of Second Amendment. From and
after the date of this Second Amendment, the Lease shall be
amended as set forth below.
2. Capitalized Terms. All capitalized terms in this
Second Amendment shall have the same meanings as those in the
Lease, unless specifically set forth otherwise herein.
3. Second Expansion Space. Landlord hereby leases to
Tenant, and Tenant hereby leases from Landlord, in addition to
the Expanded Leased Premises, approximately Seven Thousand Four
Hundred Nineteen (7,419) rentable square feet of space in
Building B (the "Second Expansion Space"). The Second Expansion
Space is shown more particularly on Exhibit A attached hereto and
made a part hereof.
4. Second Expansion Space. Tenant shall lease the
Second Expansion Space in "As Is" condition.
5. Landlord's Contribution. Landlord shall pay Tenant
Eight Dollars ($8.00) per square foot of the Second Expansion
Space, for a total of Fifty-Nine Thousand Three Hundred Fifty-Two
Dollars ($59,352.00) ("Landlord's Contribution") as an allowance.
Landlord's Contribution shall be paid to Tenant in one lump sum
within thirty (30) days of the date on which the Lease is fully
executed by Landlord and Tenant.
6. Construction Provisions of Original Leased
Premises and Expansion Space Not Applicable to Second Expansion
Space. Article I.B of the Original Lease and Paragraphs 4
through 7 of the First Amendment shall only apply to the Original
Leased Premises and Expansion Space, respectively, and shall not
apply to the Second Expansion Space.
7. Term of Second Expansion Space Lease. The Second
Expansion Space Term will commence on the Second Expansion Space
Commencement Date and will end on the last day of the Lease Term.
From and after the date of this Second Amendment, the term "Lease
Term" will include the Second Expansion Space Term. Upon the
occurrence of the Second Expansion Space Commencement Date,
Landlord and Tenant shall execute in writing a statement setting
forth the Second Expansion Space Commencement Date.
a. Second Expansion Space Commencement Date.
The Second Expansion Space Commencement Date shall be the date
first written above.
b. Acceptance of Second Expansion Space. Upon
Landlord's delivery of possession of the Second Expansion Space
to Tenant, Tenant will be deemed to have accepted the Second
Expansion Space subject to Landlord's duties otherwise provided
herein.
8. Cancellation Option.
Paragraph I.B of the Lease shall only apply to the
Expanded Leased Premises and shall not apply to the Second
Expansion Space.
In addition to Tenant's rights under Paragraph I.B of
the Lease, Tenant shall have the right to terminate this Lease
with respect to the Second Expansion Space only (for purposes of
this paragraph 8 only, termination of the Lease shall be deemed
to be termination of the Lease with respect to the Second
Expansion Space only) at any time from and after the expiration
of the sixtieth (60th) month of the Second Expansion Space Lease
Term upon at least six (6) months' prior written notice to
Landlord, which notice may be delivered to Landlord at any time
from and after the expiration of the fifty-fourth (54th) month of
the Second Expansion Space Lease Term. If Tenant exercises its
right to terminate this Lease under this paragraph 8, Tenant
shall pay Landlord by certified or bank cashier's check made
payable to Landlord, or at Landlord's option, by wire transfer of
immediately available funds to Landlord's account, on or before
the month immediately preceding the proposed date of Lease
termination in Tenant's notice, a fee (the "Fee") of Fifteen
Thousand Dollars ($15,000.00), and as of the Lease termination
date hereunder, Tenant shall have cured any uncured monetary
default under the Lease, including any late fees due thereon,
without any obligation to pay any accelerated Rent.
Notwithstanding the immediately preceding sentence, the Fee shall
be reduced by Five Hundred Dollars ($500.00) per month commencing
upon the expiration of the sixtieth (60th) month of the Second
Expansion Space Lease Term, so that if Tenant's exercise of its
right to terminate the Lease under this paragraph 8 is effective
after the expiration of the ninetieth (90th) month of the Second
Expansion Space Lease Term, Tenant shall owe no Fee upon
termination of the Lease hereunder.
Landlord shall provide to the Tenant no less than
thirty (30) days before the last day of the Second Expansion
Space Lease Term pursuant to Tenant's notice of termination under
this paragraph 8 (the "Termination Date"), a termination rent
statement (the "Termination Rent Statement"), which Termination
Rent Statement shall set forth through the Termination Date all
then-uncured monetary defaults with respect to Basic Annual Rent,
including any previously-billed and unpaid late fees due on any
and all such late payments of Basic Annual Rent, and all Basic
Annual Rent which is then unpaid or which will be payable under
the Lease through and including the Termination Date.
Notwithstanding anything set forth above in this paragraph 8, the
termination of the Lease pursuant to this paragraph shall not be
effective until Landlord has received from Tenant the Fee, if
any, and the amount set forth in the Termination Rent Statement;
provided, however, that if Landlord fails to provide the
Termination Rent Statement to Tenant as and when required
hereunder, the termination of the Lease pursuant to this
paragraph shall nevertheless be effective on the Termination
Date; provided that in such event, Tenant has timely paid the
Fee, if any, to Landlord. If Landlord provides the Termination
Rent Statement to Tenant later than as set forth above, then
Tenant's failure to pay the amount set forth in the Termination
Rent Statement before the Termination Date shall not extend the
termination of this Lease pursuant to this paragraph beyond the
Termination Date, but Tenant shall nevertheless be required to
pay the amount set forth in the Termination Rent Statement within
thirty (30) days of receipt thereof. Landlord shall have the
right, for a period of one-hundred eighty (180) days after the
Termination Date (the "Post Termination Period"), to provide
Tenant with a statement setting forth any accrued and unpaid late
fees on sums due under the Lease other than Basic Annual Rent,
and Common Area Expenses, Taxes, Insurance, and any other amounts
other than those set forth in the Termination Rent Statement
which are due and owing by Tenant to Landlord through the
Termination Date (the "Post Termination Statement"). Tenant shall
pay the amount set forth in the Post Termination Statement within
twenty (20) days after receipt of the Post Termination Statement
from Landlord. If Landlord has not delivered to Tenant the
Termination Rent Statement and/or the Post Termination Statement
by the end of the Post Termination Period, Landlord shall have no
further right to make any claim for payment of any sums payable
by Tenant to Landlord pursuant to this Lease other than the Fee,
if any, and the sums set forth in whichever Statement, if any,
that has been delivered to Tenant by the end of the Post
Termination Period.
9. Basic Annual Rent for the Second Expansion Space.
a. Payment of Basic Annual Rent for the Second
Expansion Space. For a period of sixty (60) days beginning on
the Second Expansion Space Commencement Date (the "Free Rent
Period"), Tenant shall not have to pay any Basic Annual Rent for
the Second Expansion Space. Beginning on the first day after the
Free Rent Period and continuing through and including November
30, 1993, Tenant agrees to pay Landlord Basic Annual Rent of One
Dollar and Twenty-Three Cents ($1.23) per square foot, for a
total of Nine Thousand One Hundred Twenty-Five Dollars and Thirty
Seven Cents ($9,125.37) in equal monthly installments of Seven
Hundred Sixty Dollars and Forty-Five Cents ($760.45). Basic
Annual Rent will increase once annually on each succeeding
December 1 as set forth below in this paragraph 9(a) through
November 30, 1999. Commencing on December 1, 1999 and continuing
on each succeeding December 1, Basic Annual Rent will increase at
a fixed rate of three percent (3%) per year. A schedule of the
amounts of Basic Annual Rent due during each month of each Lease
Year of the Lease Term is as follows:
Annual Basic Monthly
Lease Year Sq. Ft. Rate Annual Rent Installment
Free Rent Period
Until 11/30/93 1.23 $ 9,125.37 $ 760.45
Until 11/30/94 11.72 86,960.58 7,245.89
Until 11/30/95 12.04 89,324.76 7,443.73
Until 11/30/96 12.38 91,847.22 7,653.94
Until 11/30/97 12.72 94,369.68 7,864.14
Until 11/30/98 13.07 96,966.33 8,080.53
Until 11/30/99 13.46 99,859.74 8,321.65
Until 11/30/00 13.86 102,827.34 8,568.95
Until 11/30/01 14.28 105,943.32 8,828.61
Until 11/30/02 14.71 109,133.49 9,094.46
Until 11/30/03 15.15 112,397.85 9,366.49
Until 11/30/04 15.60 115,736.40 9,644.70
Until 11/30/05 16.07 119,223.33 9,935.28
Until 11/30/06 16.55 122,784.45 10,232.04
b. Payment of Basic Annual Rent for Second
Expansion Space. The above amounts of Basic Annual Rent for the
Second Expansion Space shall be paid at the time and in addition
to the payment of Basic Annual Rent for the Expanded Leased
Premises, and otherwise in the manner set forth in Article III.B
of the Lease, commencing on July 1, 1993.
10. Security Deposit. Paragraph III.A. of the Lease
shall only apply to the Expanded Leased Premises and shall not
apply to the Second Expansion Space.
11. Adjustments to Square Footages, Percentages and
Addresses.
a. Paragraph III.C(1)(c) of the Lease shall be
amended in that the term "Rentable Area of the Leased Premises"
shall be deemed to be 58,054 square feet rather than 50,635
square feet so that the term includes the Second Expansion Space.
This amended square footage number shall apply throughout the
Lease to all references to the square footage of the Leased
Premises. The second through final sentence of Paragraph
III.C(1)(c) of the Lease shall not apply to the Second Expansion
Space.
b. Paragraph III.C(1)(d) of the Lease shall be
amended by adding a new sentence at the end thereof as follows:
"The "Rentable Area of Building B" will be deemed to be 32,306
square feet."
c. Paragraph III.C(1)(e) of the Lease shall be
amended as of the Second Expansion Commencement Date so that the
term "Tenant's Portion (with respect to the payment of Common
Area Expenses, Taxes and Insurance)" will be forty-three percent
(43%) (58,054/134,546) rather than 37.63% (50,635/134,546) so
that the term includes the Second Expansion Space. This amended
Tenant's Portion shall apply throughout the Lease.
d. Paragraph III.C(1)(f) of the Lease shall be
amended by adding the underlined language as follows:
"Landlord agrees that Common Area Expenses shall
not include: (i) a capital cost or depreciation thereon relating
to the construction of the buildings or the common areas; (ii)
all costs, charges or payments made pursuant to a deed of trust
or deed of trust note or other obligations secured by the
buildings or any of them, or any other note used to finance or
refinance the Leased Premises or the buildings or any part
thereof; (iii) any of Landlord's income, inheritance, estate or
transfer taxes; (iv) any costs, charges or expenses relating to
financing or refinancing the Leased Premises, the buildings or
any part thereof, or any cost relating to a tenant in particular
as contrasted to tenants in general including without limitation
build-out allowances, rent concessions, brokerage commission,
attorneys or other professional fees relating to the negotiation
of relationships with a tenant or a prospective tenant or
enforcement of rights pursuant to a lease or other obligation or
defense of any actions brought by a tenant or any other party
with respect to any lease or other contractual obligation between
Landlord and any other party; or (v) except with respect to on
site personnel who perform janitorial, maintenance and/or repair
services with reference to the Project, the wages, salaries or
other compensation or remuneration, and any taxes, insurance or
benefits relating thereto (collectively, the "Wages and
Benefits"), of any managing agent and any employees of any
managing agent as well as those who perform functions similar to
functions performed by managing agents (except for the Wages and
Benefits attributable to that portion of time that a managing
agent, employees of any managing agent, or those who perform
functions similar to functions performed by managing agents,
spend on-site)."
e. The estimated amounts set forth in Paragraph
III.C(2)(a) and (b) of the Lease shall be amended as of the
Second Expansion Commencement Date by adding thereto the
estimated amounts of such Taxes, Insurance and Common Area
Expenses for the Second Expansion Space. Therefore, commencing
on the Second Expansion Commencement Date, Tenant shall pay to
Landlord, in addition to the amounts set forth in the Lease
sections listed above, with and at the same time as the monthly
payments of Basic Annual Rent, the following amounts with respect
to the Second Expansion Space:
(i) Six Hundred Sixty-One Dollars and Fifty
Three Cents ($661.53) per month as one-twelfth of Tenant's
estimated Portion of Common Area Expenses, which amount includes
Ninety-Two Dollars and Seventy-Four Cents ($92.74) per month as
one-twelfth of Tenant's estimated Portion of the Insurance Costs.
The limitation on increases in Common Area
Expenses under the Lease shall apply to Tenant's Portion of
Common Area Expenses for the Second Expansion Space, except that
the Common Area Expenses for the Second Expansion Space for the
first Lease Year shall not be limited in any way. Therefore, the
fifth paragraph of Paragraph III.C(2) of the Lease (commencing
with the phrase "Notwithstanding anything to the contrary ...")
shall not apply to the Second Expansion Space.
(ii) Nine Hundred Thirty-Three Dollars and
Fifty-Six Cents ($933.56) per month as one-twelfth of Tenant's
estimated Portion of Taxes.
12. Use Restrictions and Rules. Paragraph IV.A of
the Lease shall be amended in that the bracketed language set
forth below shall only apply to the Expanded Leased Premises and
shall not apply to the Second Expansion Space:
Tenant agrees to use the Leased Premises only as an
office and a laboratory and for no other purpose. In addition,
Tenant agrees to be bound by all laws, requirements, rules,
orders, ordinances, zoning and restrictive covenants applicable
to the Building, Tenant's business conducted in the Leased
Premises and the Property, whether in force at the Commencement
Date of this Lease or thereafter, and by the Rules and
Regulations as announced by Landlord from time to time (including
those set forth in Exhibit D which shall be uniformly applied in
a nondiscriminatory manner in like or similar circumstances with
respect to all tenants in the Project) (collectively, the
"Restrictions"). Tenant hereby represents and warrants to
Landlord that as of the date of execution of the Lease by all
parties, Tenant has obtained [or is expending reasonable efforts
to obtain] all licenses and permits required from any and all
applicable governmental authorities due to the nature of Tenant's
business operations in the Leased Premises. [Tenant shall have no
obligation to commence litigation or to pay higher than normal
fees for the issuance of such licenses and/or permits in order to
obtain such licenses and/or permits.]
If Tenant's business is prohibited by any ordinance now
or [hereafter enacted or if, because of any applicable laws,
ordinances, rules, regulations, zoning ordinances or statutes of
any duly constituted public authority having jurisdiction over
the Leased Premises or the business of the Tenant, the licenses
and permits necessary for Tenant's business, including without
limitation, business licenses, cannot be obtained despite
Tenant's reasonable efforts (which efforts shall not include any
obligation by Tenant to pay higher than normal fees for the
issuance of such licenses and permits), or, if Tenant's business
is prohibited by any zoning or any use ordinance now or]
hereinafter enacted, Tenant, at its election, may, upon thirty
(30) days' prior written notice to Landlord, terminate this
Lease. In such event, the thirtieth (30th) day after Tenant's
notice date shall be the last date of the term of this Lease as
though set forth herein, and neither party shall have any further
obligations under this Lease[, except that: (i) Tenant shall,
within thirty (30) days of the Lease termination date, pay to
Landlord, by certified or bank cashier's check made payable to
Landlord, in one lump sum, the entire unamortized balance of the
Loan Amount; (ii) concurrently with Landlord's receipt of
Tenant's payment of the unamortized balance of the Loan Amount,
Tenant shall receive back its letter of credit required under
Paragraph III.A above; and (iii) concurrently with Tenant's
receipt of its letter of credit, Landlord shall receive back its
letter of credit required under Paragraph I.B(10) above, if such
letter of credit has not previously been returned to Landlord].
Notwithstanding the immediately preceding paragraph,
Tenant shall have the right to contest any zoning or use
ordinance [now or] hereafter enacted, at Tenant's sole expense,
and Landlord reasonably shall cooperate with Tenant, at no cost
to Landlord. Tenant shall have the right to select and control
its own counsel with respect to any litigation or administrative
proceeding instituted pursuant to such contest. [If Tenant
contests a zoning or use ordinance enacted or in existence on or
before the Commencement Date, Tenant shall pay Rent during the
entire period that Tenant pursues the contest from and after the
Commencement Date until thirty (30) days after Tenant gives
Landlord notice of Lease termination hereunder. If Tenant
contests a zoning or use ordinance enacted after the Commencement
Date,] Tenant shall continue to pay Rent during the entire
period that Tenant pursues the contest, until thirty (30) days
after Tenant gives Landlord notice of Lease termination
hereunder.
13. Improvements by Tenant. Subsection (i) of the
second paragraph of Paragraph IV.B of the Lease shall be stricken
in its entirety and replaced with the following:
"(i) the aggregate cost of the same does not
exceed One Hundred Thousand Dollars ($100,000)
with respect to the Expanded Leased Premises, or
Fifty Thousand Dollars ($50,000) with respect to
the Second Expansion Space...."
14. Insurance. The third through seventh paragraphs
of Paragraph IV.E of the Lease shall only apply to the Expanded
Leased Premises and shall not apply to the Second Expansion
Space.
15. Damage and Destruction. Article VI of the Lease
shall be amended by adding a new paragraph at the end thereof as
follows:
Notwithstanding the preceding three (3) paragraphs of
this Article VI, if Landlord or Tenant has the right to terminate
the Lease pursuant to this Article VI due to damage or
destruction to the Expanded Leased Premises only (excluding the
Second Expansion Space) by fire, other casualty, or any other
cause (except condemnation), then Landlord or Tenant
automatically shall have the right pursuant to this Article VI to
terminate the Lease with respect to the Second Expansion Space,
regardless of whether the Second Expansion Space has suffered any
damage or destruction. However, if Landlord or Tenant has the
right to terminate the Lease pursuant to this Article VI due to
damage or destruction to the Second Expansion Space only
(excluding the Expanded Leased Premises), Landlord or Tenant
shall not have any right to terminate the Lease with respect to
the Expanded Leased Premises. If Landlord or Tenant duly
terminates the Lease under Article VI with respect to the Second
Expansion Space, the Lease shall remain in full force and effect
with respect to the Expanded Leased Premises and the Second
Expansion Space shall be stricken from the definition of "Leased
Premises" under the Lease. Upon such damage or destruction to
the Second Expansion Space, the parties agree to enter into an
amendment to the Lease setting forth the reduced Leased Premises
and other related changes to the Lease, including, without
limitation, reduction of Basic Annual Rent and Tenant's Portion
of Common Area Expenses, Taxes and Insurance.
16. Condemnation. The last sentence of the second
paragraph of Article VII of the Lease shall only apply to the
Expanded Leased Premises, and shall not apply to the Second
Expansion Space. In addition, Article VII of the Lease shall be
amended by adding a new paragraph at the end thereof as follows:
Notwithstanding the preceding two (2) paragraphs of
this Article VII, if Landlord or Tenant has the right to
terminate the Lease pursuant to this Article VII due to taking or
condemnation of the Expanded Leased Premises only (excluding the
Second Expansion Space), then Landlord or Tenant automatically
shall have the right pursuant to this Article VII to terminate
the Lease with respect to the Second Expansion Space, regardless
of whether the Second Expansion Space has been condemned in whole
or in part. However, if Landlord or Tenant has any right to
terminate the Lease pursuant to this Article VII due to
condemnation or taking of the Second Expansion Space only
(excluding the Expanded Leased Premises), Landlord or Tenant
shall not have the right to terminate the Lease with respect to
the Expanded Leased Premises. If Landlord or Tenant duly
terminates the Lease under Article VII with respect to the Second
Expansion Space, the Lease shall remain in full force and effect
with respect to the Expanded Leased Premises, and the Second
Expansion Space shall be stricken from the definition of "Leased
Premises" under the Lease. Upon such condemnation of the Second
Expansion Space, the parties agree to enter into an amendment to
the Lease setting forth the reduced Leased Premises and other
related changes to the Lease, including, without limitation, a
reduction of Basic Annual Rent and Tenant's Portion of Common
Area Expenses, Taxes and Insurance.
17. Assignment/Subletting. The last paragraph of
Paragraph X.A of the Lease shall only apply to the Expanded
Leased Premises and shall not apply to the Second Expansion
Space.
18. Signage. Paragraph X.N of the Lease shall not
apply to the Second Expansion Space. Tenant shall nave no
exterior signage on Building B.
19. Parking. Paragraph X.O of the Lease shall be
amended by adding Tenant's right to the non-exclusive use of an
additional three and one-half (3.5) parking spaces per one
thousand (1,000) square feet of the Second Expansion Space for a
total of Twenty-Six (26) parking spaces. Therefore, in addition
to the 188 non-exclusive and 15 exclusive parking spaces set
forth in the Lease, Tenant shall have the non-exclusive use of 26
additional parking spaces in the front and rear of Building B.
If Tenant's loading requirements in the rear of Building B are
such that there is room for additional parking, then Tenant shall
have the non-exclusive use of additional parking space in the
rear of Building B.
20. Force Majeure. Paragraph X.P of the Lease shall be
amended by striking the last sentence thereof and adding a new
sentence as follows: "Notwithstanding the foregoing, except as
specifically provided in Paragraph II.C above with respect to the
Original Leased Premises, the provisions of this clause shall not
be construed as to allow, permit or authorize Landlord to deliver
(i) the Original Leased Premises in the condition required after
December 31, 1991; or (ii) the Second Expansion Space after July
31, 1993."
21. A new Paragraph X.Q(11) of the Lease shall be
added as follows: "Landlord and Tenant acknowledge that this
Second Amendment is contingent upon the full execution of an
agreement (the "Termination Agreement") between Landlord and
Nissei Sangyo America, Ltd. ("Hitachi"), satisfactory to both
Landlord and Hitachi, terminating the lease between Landlord and
Hitachi dated May 1, 1989, as amended, with respect to the Second
Expansion Space. If a Termination Agreement is not fully
executed and delivered to Landlord and Hitachi by June 30, 1993,
this Second Amendment automatically shall be null and void and of
no further force and effect, and neither Landlord nor Tenant
shall have any further obligations under this Second Amendment."
22. Tenant Authorization. Tenant represents and
warrants to Landlord that this Second Amendment has been validly
authorized and is executed by an authorized officer of Tenant and
that its terms are binding upon and enforceable against Tenant in
accordance herewith.
23. Lease as Amended. From and after the full
execution of this Second Amendment, the Lease shall be amended
and in full force and effect in such respects as are set forth in
this Second Amendment, and all other provisions, terms,
conditions and riders of and to the Lease shall in all respects
remain as set forth in the Lease, in full force and effect and
applicable to the Second Expansion Space, except as specifically
set forth in this Second Amendment.
24. Tenant Reaffirmation of Lease. Tenant hereby
reaffirms and restates, and agrees to be bound by, the covenants,
promises, representations and agreements set forth in the Lease
(except to the extent that they are expressly superseded by this
Second Amendment) as if made herein.
LANDLORD:
WITNESS/ATTEST: CLOPPER ROAD ASSOCIATES,
a Maryland general partnership
By: M.O.R.M. Associates Limited
Partnership
By: RA & FM, Inc.
Kay M. Mayo By: Richard M. Alter(SEAL)
Name: Richard M. Alter
Title: President
TENANT:
WITNESS/ATTEST: MEDIMMUNE, INC., a Delaware
corporation
Sandra K. Kinder By: Emilio O. DiCataldo SEAL)
Name: Emilio O. DiCataldo
Title: Senior Vice President
Finance and Administration
(notaries on following page)
STATE OF MARYLAND )
) TO WIT:
COUNTY OF Baltimore )
I HEREBY CERTIFY that on this 2nd day of July, 1993, before
me, the subscribed, a Notary Public of the State and county
aforesaid, personally appeared Richard Alter, President of RA &
FM, Inc., general partner of M.O.R.M. Associates Limited
Partnership, general partner of Clopper Road Associates, and he
acknowledged the foregoing Lease Agreement to be the act and deed
of said general partnership.
WITNESS my hand and Notarial Seal.
Diane J. Hopkins
Notary Public
Baltimore Co., MD
My Commission Expires May 1, 1995
STATE/COMMONWEALTH OF MARYLAND)
) TO WIT:
COUNTY OF MONTGOMERY )
I HEREBY CERTIFY that on this 30th day of June, 1993,
before me, the subscribed, a Notary Public of the
State/Commonwealth and County aforesaid, personally appeared
Emilio O. DiCataldo, of MedImmune, Inc., Tenant, and he
acknowledged the foregoing Lease Agreement to be his/the act and
deed of said corporation.
WITNESS my hand and Notarial Seal.
Carol A. Iorio
Notary Public
My Commission Expires: July 11, 1994
EXHIBIT A Description of Expansion Space
EXHIBIT B Description of Shell Plans
EXHIBIT C Description of Expansion Space Plans
EXHIBIT D Shell Construction Costs
EXHIBIT E List of Tenants With Superior Rights to
Tenant to Lease Available Space in First Phase of
Project
EXHIBIT 10.61
THIRD AMENDMENT OF LEASE
THIS THIRD AMENDMENT OF LEASE (this "Amendment") is
made this 15th day of April, 1996 but shall be deemed effective
as of January 1, 1995 (the "Effective Date") by and between
CLOPPER ROAD ASSOCIATES, a Maryland joint venture ("Landlord")and
MEDIMMUNE, INC., a Delaware corporation("Tenant").
INTRODUCTION
A. Landlord and Tenant entered into a Lease Agreement
dated February 14, 1991 (the "Original Lease") , whereby Tenant
agreed to lease from Landlord forty thousand eight hundred forty
three (40,843) square feet (the "Original Leased Premises") in
the building (the "Building") known as Building D, located at 35
West Watkins Mill Road, in the Bennington Corporate Center in
Gaithersburg, Maryland.
B. Landlord and Tenant entered into a First Amendment
of Lease dated June 8, 1993 (the "First Amendment") , pursuant to
which Building ID was expanded and the square footage of the
original Leased Premises was increased by the amount of such
expansion (the "Expansion Space") collectively, the Original
Leased Premises and the Expansion space shall be hereinafter
referred to be the "Expanded Leased Premises" . Certain other
changes were also made to the Original Lease as a result of the
First Amendment.
C. Landlord and Tenant entered into a Second Amendment
of Lease dated June 30, 1993 (the "Second Amendment") pursuant to
which the square footage of the Expanded Leased Premises was
increased by adding space (the "Additional Space") in Building B
located at 25 West Watkins Mill Road (collectively, the original
Leased Premises, the Expansion Space and the Additional Space are
hereinafter referred to as the "Leased Premises"); the Rent
payable was adjusted, and certain other changes were made to the
original Lease.
D. The Original Lease, the First Amendment and the
Second Amendment are herein collectively referred to as the
"Lease".
E. As a result of changes in the size of the Project,
Landlord and Tenant desire to adjust the square footages,
percentages and addresses in the Lease, and modify certain other
provisions of the Lease as more specifically set forth below.
NOW, THEREFORE, in consideration of the Introduction,
which is deemed a substantive part of this Amendment, the
covenants of the parties herein and in the Lease and other good
and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Landlord and Tenant hereby agree as follows:
1. Adjustments to Square Footages, Percentages and
Addresses
(a) Paragraph III.C.1(a) is amended by striking the
phrase after "Phase 3" in its entirety and replacing it with "
Buildings A and E (15 and 50 West Watkins Mill Road)."
(b) Paragraph III.C.l(b) is amended so that the term
"Rentable Area of the Buildings" will be deemed to be 137,222
square feet rather than 134,546 square feet in Paragraph
111.C.1(b) and throughout the Lease.
(c) Paragraph III.C.l(e) is amended so that the term
"Tenant's Portion" will be forty-two and thirty-one hundredths
percent (42.31%) (58,054/137,222), computed on the basis of the
ratio of the Rentable Area of the Leased Premises to the Rentable
Area of the Buildings. This amended Tenant's Portion shall apply
throughout the Lease.
2. Notices. Paragraph X.G. of the Lease is hereby
deleted in its entirety and replaced with the following new
section:
"X.G. Notices. Except as otherwise provided in this
Lease, any requirement for a notice, demand or request
under this Lease will be satisfied by a writing (a) hand
delivered with receipt; (b) mailed by United States
registered or certified mail or Express Mail, return
receipt requested, postage prepaid; or (c) sent by Federal
Express or any other nationally recognized overnight
courier service, and addressed: (i) if to Landlord, c/o
Manekin Corporation, 7470 New Technology Way, Frederick,
Maryland 21703, with copies to: Manekin Corporation, 7165
Columbia Gateway Drive, Columbia, Maryland 21046,
Attention: General Counsel and to Ann Clary Gordon,
Esquire c/o Shapiro and Olander, 36 South Charles Street,
Baltimore, Maryland 21201; and (ii) if to Tenant, at the
Leased Premises. All notices that are sent in accordance
with this Paragraph X.G. will be deemed received by the
other party on the earliest of the following applicable
time periods: (a) three business days after being mailed
in the aforesaid manner; (b) the date the return receipt
is executed; or, (c) the date delivered as documented by
the overnight courier service or the hand delivery
receipt. All rental payments and other charges payable
by Tenant under this Lease will be delivered to Landlord
at 7165 Columbia Gateway Drive, Columbia, Maryland 21046,
Attention: Accounting Department. Either party may
designate a change of address by written notice to the
other party."
3. Amendment. As of and after the date hereof, the Lease
shall be amended and in full force and effect in such respects as
are set forth in this Amendment, and all other provisions, terms,
conditions and riders of and to the Lease shall in all respects
remain in full force and effect as set forth in the Lease.
4. Reaffirmation. Tenant hereby reaffirms and restates,
and agrees to be bound by the covenants, promises,
representations and agreements set forth in the Lease (except to
the extent that they are expressly superseded by this Amendment)
as if made herein.
5. Defined Terms. Unless otherwise defined herein or
unless the context requires a contrary meaning, all capitalized
terms used in this Amendment shall have the meanings given to
them in the Lease.
6. Authority. Tenant represents and warrants to Landlord
that the Lease and this Amendment were approved by all necessary
parties, were validly executed by all necessary officers of
Tenant, and are and remain binding upon and enforceable against
Tenant in accordance with their terms, and that the name and
address of Tenant's resident agent in the State of Maryland are
The Corporation Trust Incorporated, 32 South Street, Baltimore,
Maryland 21202.
IN WITNESS WHEREOF, Landlord and Tenant have respectively
signed this Third Amendment of Lease under seal as of the day and
year first above written, intending to be bound as of the
Effective Date.
WITNESS/ATTEST: CLOPPER ROAD ASSOCIATES
By: M.O.R.M. Associates Limited
Partnership
By: RA & PM, Inc.
Barbara C. Slade By: Alton D. Fryer(SEAL)
Name: Alton D. Fryer
Title: Vice President
LANDLORD
WITNESS/ATTEST: MEDIMMUNE, INC.
Jayne L. Korolkoff By: David LeBuhn(SEAL)
Name: David LeBuhn
Title: Treasurer
TENANT
STATE OF MARYLAND )
) TO WIT:
COUNTY/CITY OF Frederick )
I HEREBY CERTIFY that on this 19th day of April, 1996,
before me, the subscriber, a Notary Public of the State of
Maryland and County/City of Frederick, personally appeared before
me Alton Fryer, Vice President, of RA & FM, Inc., a general
partner of M.O.R.M. Associates Limited Partnership, a general
partner of CLOPPER ROAD ASSOCIATES, Landlord, and s/he
acknowledged the foregoing Fourth Amendment of Lease to be the
act and deed of said joint venture.
WITNESS my hand and notarial seal.
Betty A. Frankel
Notary Public
Frederick Co., MD
My Commission Expires December 5, 1997.
STATE OF MARYLAND )
) TO WIT:
COUNTY/CITY OF MONTGOMERY/Gaithersburg)
I HEREBY CERTIFY that on this 15th day of April, 1996,
before me, the subscriber, a Notary Public of the State of
Maryland and County/City of Montgomery/Gaithersburg, personally
appeared before me David LeBuhn, who acknowledged her/himself to
be the Treasurer of MEDIMMUNE, INC., Tenant and she/he
acknowledged the foregoing Fourth Amendment of Lease to be the
act and deed of said corporation.
WITNESS my hand and notarial seal.
Carol A. Iorio
Notary Public
My Commission Expires: July 11, 1998
EXHIBIT 10.62
FOURTH AMENDMENT OF LEASE
THIS FOURTH AMENDMENT OF LEASE (this "Amendment") is
made this 3rd day of October, 1996 (the "Effective Date") by and
between CLOPPER ROAD ASSOCIATES, a Maryland joint venture
("Landlord"), and MEDIMMUNE, INC., a Delaware corporation
("Tenant").
EXPLANATORY STATEMENT
A. Landlord and Tenant entered into a Lease Agreement
dated February 14, 1991 (the "Original Lease"), whereby Tenant
agreed to lease from Landlord Forty Thousand Eight Hundred Forty-
Three (40,843) square feet (the "Original Leased Premises") in
the building (the "Building") known as Building D, located at
35 West Watkins Mill Road, in the Bennington Corporate Center in
Gaithersburg, Maryland.
B. Landlord and Tenant entered into a First Amendment of
Lease dated June 8, 1993 (the "First Amendment"), pursuant to
which Building D was expanded and the square footage of the
Original Leased Premises was increased by the amount of such
expansion (the "Expansion Space") (collectively, the Original
Leased Premises and the Expansion Space shall be hereinafter
referred to as the "Expanded Leased Premises"). Certain other
changes were also made to the Original Lease as a result of the
First Amendment.
C. Landlord and Tenant entered into a Second Amendment of
Lease dated June 30, 1993 (the "Second Amendment"), pursuant to
which the square footage of the Expanded Leased Premises was
increased by adding space (the "Second Expansion Space") in
Building B located at 25 West Watkins Mill Road in the Bennington
Corporate Center in Gaithersburg, Maryland (collectively, the
Original Leased Premises, the Expansion Space and the Second
Expansion Space are hereinafter referred to as the "Leased
Premises"); the Rent payable was adjusted, and certain other
changes were made to the Original Lease.
D. Landlord and Tenant entered into a Third Amendment of
Lease dated April 15, 1996, but effective as of January 1, 1995
(the "Third Amendment") to adjust square footages, percentages
and addresses set forth in the Original Lease as amended.
E. The Original Lease and the First, Second and Third
Amendments are herein collectively referred to as the "Lease."
F. As a result of the termination of a lease for space
adjoining the portion of the Leased Premises in Building B,
Landlord and Tenant desire to expand the Leased Premises in
Building B, adjust the square footages and percentages in the
Lease, and modify certain other provisions of the Lease, as more
specifically set forth below.
NOW, THEREFORE, in consideration of the Explanatory
Statement, which is deemed a substantive part of this Fourth
Amendment, the covenants of the parties herein and in the Lease
and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Landlord and Tenant
hereby agree as follows:
1. Effective Date of Fourth Amendment. From and after the
date of this Fourth Amendment, the Lease shall be amended as set
forth below.
2. Capitalized Terms. All capitalized terms in this Fourth
Amendment shall have the same meanings as those in the Lease,
unless specifically set forth otherwise herein.
3. VAD Space. Landlord hereby leases to Tenant, and
Tenant hereby leases from Landlord, in addition to the Leased
Premises, approximately Eleven Thousand Four Hundred Fifty-Five
(11,455) rentable square feet in Building B (the "VAD Space").
The VAD Space is shown more particularly on Exhibit A attached
hereto and made a part hereof.
4. Condition of VAD Space. The Tenant hereby accepts the
VAD Space in "AS-IS" condition, subject to the VAD Space
Construction as described below and subject to Landlord's duties
otherwise provided herein.
5. VAD Space Construction.
a. VAD Space Plans. Landlord shall cause the tenant
improvements for the VAD Space as defined below (the "VAD Space
Construction" ) to be constructed. Landlord shall provide all
work, labor and materials in support of the VAD Space
Construction in accordance with the plans and specifications for
the VAD Space (the "VAD Space Plans"), which VAD Space Plans have
been approved and initialed by the parties. The VAD Space Plans
are described more fully on Exhibit B attached hereto and made a
part hereof. Tenant may occupy the VAD Space during the VAD Space
Construction; provided that Tenant shall cooperate with Landlord
and Landlord's employees, contractors and subcontractors to
ensure that Tenant's occupancy shall not interfere with the VAD
Space Construction.
Landlord shall contribute a maximum of Eighty-Five
Thousand Nine Hundred Twelve Dollars and Fifty Cents ($85,912.50)
("Landlord's Contribution") toward the cost of the VAD Space
Construction. If the cost of such Construction exceeds Landlord's
Contribution, then Tenant shall pay the excess cost to Landlord
within thirty (30) days of receipt of an invoice or invoices
therefor from Landlord.
b. Change Orders. Any Tenant-generated change orders
to the VAD Space Plans shall be approved by Landlord, which
approval shall not be unreasonably withheld or delayed. If the
cost of the VAD Space Construction is increased due to any one or
more such change orders, Tenant shall pay Landlord such increased
cost within thirty (30) days of Tenant's receipt of an invoice
therefor from Landlord.
c. Landlord's VAD Space Warranty. At the termination of
Landlord's VAD Space Warranty Period (as defined below), Landlord
hereby agrees to and will assign to Tenant, to the extent they
are assignable, any and all written warranties and guarantees
from Landlord's contractors, subcontractors and suppliers of any
materials and labor to the VAD Space, for that portion, if any,
of the Lease Term that such warranties and guarantees are in
effect. Landlord hereby warrants ("Landlord's VAD Space
Warranty") to Tenant that Landlord will be responsible for a
period ("Landlord's VAD Space Warranty Period" ) of one (1) year
from the VAD Space Commencement Date (as defined below) to repair
or to have repaired all defects in the VAD Space Construction, to
the extent such defects are not caused by the negligence of
Tenant or any of its agents, servants, employees or contractors
(in which event such defects will be repaired at Tenant's sole
cost). To the extent that Landlord is obligated to make repairs
pursuant to Landlord's VAD Space Warranty, Tenant will be
relieved during Landlord's VAD Space Warranty Period of the
obligations imposed upon it pursuant to this Fourth Amendment to
make or pay for such repairs to the VAD Space. Tenant agrees to
and will give Landlord prompt notice of the need for any such
repairs.
6. Construction Provisions of Original Leased Premises Not
Applicable to Expansion Space. Article I.B of the Original Lease,
Paragraphs 4 through 7 of the First Amendment, and Paragraph 5 of
the Second Amendment shall not apply to the VAD Space, except as
specifically set forth in this Fourth Amendment.
7. Term of VAD Space Lease. The VAD Space Lease Term will
commence on the VAD Space Commencement Date, as defined below,
and will end on the last day of the Lease Term.
a. Cancellation Option. Paragraph II.B.(1)
(Acquisition Event Option) of the Original Lease, as amended by
the First and Second Amendments, shall apply to the VAD Space.
Paragraph II.B(2) and (3) of the Lease shall not
apply to the VAD Space.
The third paragraph of Paragraph 8 of the Second
Amendment shall not apply to the VAD Space.
In addition to Tenant's rights under Paragraph
II.B of the Lease as amended hereunder, Tenant shall have
the right to terminate this Lease with respect to the VAD
Space only (for purposes of this Paragraph 7 only,
termination of the Lease shall be deemed to be termination
of the Lease with respect to the VAD Space only) at any time
from and after June 30, 1998 through and including November
30, 2001, upon at least six (6) months' prior written notice
to Landlord, which notice may be delivered to Landlord at
any time from and after December 30, 1997 through and
including May 30, 2001. If Tenant exercises its right to
terminate this Lease under this Paragraph 7, Tenant shall
pay Landlord by certified or bank cashier's check made
payable to Landlord, or at Landlord's option, by wire
transfer of immediately available funds to Landlord's
account, on or before the month immediately preceding the
proposed date of Lease termination in Tenant's notice, a fee
(the "Fee") of Ninety Thousand Dollars ($ 90,000.00) and as
of the Lease termination date hereunder, Tenant shall have
cured any uncured monetary default under the Lease,
including any late fees due thereon, without any obligation
to pay any accelerated Rent. Notwithstanding the
immediately preceding sentence, the Fee shall be reduced by
One Thousand Seven Hundred Dollars ($1,700.00) per month
commencing on June 30, 1998. If Tenant's termination of the
Lease under this Paragraph is effective on November 30,
2001, Tenant shall owe no Fee upon termination of the Lease
hereunder.
The fourth paragraph of Paragraph 8 of the Second
Amendment shall apply to the VAD Space and shall be amended by
striking the first sentence thereof and substituting the
following:
"Landlord shall provide to the Tenant not later
than thirty (30) days before (a) the last day of the
Second Expansion Space Lease Term pursuant to
Tenant's notice of termination under this Paragraph
(the "Second Expansion Space Termination Date"); or
(b) the date of termination of the Lease set forth in
Tenant's notice to Landlord with respect to the VAD
Space (the "VAD Space Termination Date") (the term
"Termination Date" shall refer to the VAD Space or
Second Expansion Space Termination Date, as
applicable), a termination rent statement (the
"Termination Rent Statement"), which Termination Rent
Statement shall set forth through the Termination
Date all then-uncured monetary defaults with respect
to Basic Annual Rent, including any previously-billed
and unpaid late fees due on any and all such late
payments of Basic Annual Rent, and all Basic Annual
Rent which is then unpaid or which will be payable
under the Lease through and including the Termination
Date."
b. VAD Space Commencement Dates.
(i) The VAD Space Commencement Date for Phase I
shall be the date that (i) Phase I of the VAD Space
Construction, as shown on Exhibit A, is substantially complete,
as certified to Tenant by Landlord's architect for the VAD
Space Construction; (ii) Landlord has obtained a temporary
certificate of occupancy and all other licenses and permits
required with respect to construction-related issues only, for
Phase I of the VAD Space Construction; and (iii) the lease
between Landlord and VAD for the VAD Space has been terminated
pursuant to a fully-executed Termination of Lease Agreement
between VAD and Landlord. (Landlord and Tenant agree that
Landlord shall use best efforts to obtain such a Termination of
Lease Agreement by no later than 6 p.m. on Friday, September
13, 1996.) The VAD Space Commencement Date for Phase I shall be
pushed back one (1) day for each day that the VAD Space
Construction for Phase I is delayed due to (i) Tenant-generated
change orders to the VAD Space Plans; (ii) delays of any nature
whatsoever caused by Tenant; and/or (iii) Tenant negligence or
willful misconduct. Landlord shall give Tenant written notice
of the anticipated VAD Space Commencement Date for Phase I on
or about seven (7) days before such Date. Upon the occurrence
of the VAD Space Commencement Date for Phase I, Landlord and
Tenant shall execute a written statement setting forth such
Date.
(ii) The VAD Space Commencement Date for Phase
II shall be the date that Phase II of the VAD Space
Construction, as shown on Exhibit A, is substantially complete,
as certified to Tenant by Landlord's architect for the VAD
Space Construction, and the date that Landlord has obtained a
final certificate of occupancy and all other licenses and
permits required with respect to construction-related issues
only, for Phase II of the VAD Space Construction. The VAD Space
Commencement Date for Phase II shall be pushed back one (1) day
for each day that the VAD Space Construction for Phase II is
delayed due to (i) Tenant-generated change orders to the VAD
Space Plans; (ii) delays of any nature whatsoever caused by
Tenant; and/or (iii) Tenant negligence or wilful misconduct.
Landlord shall give Tenant written notice of the anticipated
VAD Space Commencement Date for Phase II on or about seven (7)
days before such Date. Upon the occurrence of the VAD Space
Commencement Date for Phase II, Landlord and Tenant shall
execute a written statement setting forth such Date.
c. Possession of VAD Space. This Fourth Amendment
will remain fully effective and Tenant may not cancel or
rescind it due to late possession, regardless of when
possession is actually delivered. Moreover, in no event will
Landlord be liable to Tenant for damages, if any, sustained by
Tenant as a result of Landlord's delay in delivering the VAD
Space, except damages sustained solely as a direct result of
Landlord's gross negligence or willful misconduct.
d. Acceptance of VAD Space. Upon Landlord's
delivery of possession of the VAD Space to Tenant, Tenant will
be deemed to have accepted the VAD Space, subject to Landlord's
duties otherwise provided herein.
8. Basic Annual Rent for VAD Space.
a. Amount of Basic Annual Rent for VAD Space. Basic
Annual Rent for the VAD Space shall equal One Hundred Forty-Six
Thousand Fifty-One Dollars and Twenty-Five Cents ($146,051.25)
per annum, payable in equal monthly installments of Twelve
Thousand One Hundred Seventy Dollars and Ninety-Four Cents
($12,170.94); provided, however, that for the period from the
VAD Space Commencement Date for Phase I through the VAD Space
Commencement Date for Phase II, the applicable monthly
installment of Basic Annual Rent shall equal Six Thousand
Eighty-Five Dollars an Forty-Seven Cents ($6,085.47). Payment
of the first monthly installment hereunder shall commence on
the VAD Space Commencement Date for Phase I; provided that if
payment commences on a date that is not the first day of a
month, then payment shall be pro-rated for the partial first
month in which payment commences. Basic Annual Rent shall
increase once annually on December 1, 1997 and on every
December 1 thereafter during the Lease Term at a fixed rate of
three percent (3%) per year.
b. Payment of Basic Annual Rent for VAD Space. The
above amounts of Basic Annual Rent for the VAD Space shall be
paid at the time and in addition to the payment of Basic Annual
Rent for the Leased Premises, and otherwise in the manner set
forth in Article III.B of the Lease.
c. Security Deposit. There shall be no Security
Deposit required hereunder for the VAD Space.
9. Adjustments to Square Footages and Percentages
a. Paragraph III.C(l)(c) of the Lease shall be
amended so that the term "Rentable Area of the Leased Premises"
shall be deemed to be Sixty-Nine Thousand Five Hundred Nine
(69,509) square feet rather than Fifty-Eight Thousand Fifty-
Four (58,054) square feet so that the term includes the VAD
Space. This amended square footage number shall apply
throughout the Lease to all references to the square footage of
the Leased Premises. However, the second through final
sentences of Paragraph III.C(l)(c) of the Lease, as amended
by this Fourth Amendment, shall not apply to the VAD Space.
There shall be no certification required of the gross Rentable
Area of the VAD Space.
b. Paragraph III.C(l)(e) of the Lease shall be
amended as of the VAD Space Commencement Date so that the term
"Tenant's Portion (with respect to the payment of Common
Area Expenses, Taxes and Insurance)" will be Fifty and Sixty-
Five One Hundredths Percent (50.65%) rather than Forty-Two
and Thirty-One One Hundredths Percent (42.31%), so that the
term includes the VAD Space. This amended Tenant's Portion
shall apply throughout the Lease.
c. The estimated amounts set forth in Paragraph
III.C(2) (a) and (b) of the Lease shall be amended as of the
VAD Space Commencement Date by adding thereto the estimated
amounts of such Taxes, Insurance and Common Area Expenses
for the VAD Space. Therefore, commencing on the VAD Space
Commencement Date, Tenant shall pay to Landlord, in
addition to the amounts set forth in the Lease sections
listed above, with and at the same time as the monthly payments
of Basic Annual Rent, the following amounts with respect to the
VAD Space:
(i) One Thousand Twenty-One Dollars and Forty
Cents ($1,021.40) per month as one-twelfth of Tenant's
estimated Portion of Common Area Expenses, which amount
includes One Hundred Forty-Three Dollars and Nineteen Cents
($143.19) per month as one-twelfth of Tenant's estimated
Portion of the Insurance Costs. The limitation on increases in
Common Area Expenses under the Lease shall apply to Tenant's
Portion of Common Area Expenses for the VAD Space, except that
the Common Area Expenses for the VAD Space for the first Lease
Year shall not be limited in any way.
(ii) One Thousand Four Hundred Forty-One
Dollars and Forty-Two Cents ($1,441.42) per month as
one-twelfth of Tenant's estimated Portion of Taxes.
10. Use Restrictions and Rules. Paragraph IV.A of the
Original Lease shall apply to the VAD Space.
11. Improvements by Tenant. Subsection (i) of the second
paragraph of Paragraph IV.B of the Lease shall be stricken in
its entirety and replaced with the following:
"(i) the aggregate cost of the same does not exceed
One Hundred Thousand Dollars ($100,000) with respect
to the Expanded Leased Premises, Fifty Thousand
Dollars ($50,000) with respect to the Second
Expansion Space, or Fifty Thousand Dollars ($50,000)
with respect to the VAD Space . . ."
12. Insurance. Paragraph IV.E of the Original Lease and
shall apply to the VAD Space.
13. Damage and Destruction. Article VI of the Lease shall
be amended by adding the underlined language to the last
paragraph thereof and adding a new paragraph at the end thereof
as follows:
Notwithstanding the preceding three (3) paragraphs of
this Article VI, if Landlord or Tenant has the right to
terminate the Lease pursuant to this Article VI due to damage
or destruction to the Expanded Leased Premises only (excluding
the Second Expansion Space and VAD Space) by fire, other
casualty, or any other cause (except condemnation), then
Landlord or Tenant automatically shall have the right pursuant
to this Article VI to terminate the Lease with respect to the
Second Expansion Space and VAD Space, regardless of whether the
Second Expansion Space and/or the VAD Space has suffered any
damage or destruction. In addition to the termination rights
with respect to the Second Expansion Space and VAD Space in the
immediately preceding sentence, Tenant shall have the right to
terminate the Lease with respect to the Second Expansion Space
and VAD Space within one (1) year of the date of damage or
destruction to the Expanded Leased Premises, upon thirty (30)
days' prior written notice to Landlord. In the event of such
termination, the same conditions shall apply as are set forth
in Article VI. If Landlord or Tenant has the right to terminate
the Lease pursuant to this Article VI due to damage or
destruction to the Second Expansion Space and/or VAD Space only
(excluding the Expanded Leased Premises), Landlord or Tenant
shall not have any right to terminate the Lease with respect to
the Expanded Leased Premises. If Landlord or Tenant duly
terminates the Lease under Article VI with respect to the
Second Expansion Space and/or VAD Space, the Lease shall remain
in full force and effect with respect to the Expanded Leased
Premises, and the Second Expansion Space and/or VAD Space shall
be stricken from the definition of "Leased Premises" under the
Lease. Upon such damage or destruction to the Second Expansion
Space and/or the VAD Space, the parties agree to enter into an
amendment to the Lease setting forth the reduced Leased
Premises and other related changes to the Lease, including,
without limitation, reduction of Basic Annual Rent and Tenant's
Portion of Common Area Expenses, Taxes and Insurance.
Notwithstanding anything set forth above in this
Article VI, if Landlord or Tenant has the right to terminate
the Lease pursuant to this Article VI due to damage or
destruction to one or the other of the Second Expansion Space
or the VAD Space, but not both Spaces, then Landlord or Tenant
shall not have the right to terminate the Lease under this
provision with respect to the non-damaged Space in Building B,
or with respect to the Expanded Leased Premises.
14. Condemnation. The last sentence of the second
paragraph of Article VII of the Lease shall only apply to the
Expanded Leased Premises, and shall not apply to the Second
Expansion Space and VAD Space. In addition, Article VII of the
Lease shall be amended by adding the underlined language to the
last paragraph thereof and adding a new paragraph at the end
thereof as follows:
Notwithstanding the preceding two (2) paragraphs of
this Article VII, if Landlord or Tenant has the right to
terminate the Lease pursuant to this Article VII due to taking
or condemnation of the Expanded Leased Premises only
(excluding the Second Expansion Space and VAD Space), then
Landlord or Tenant automatically shall have the right pursuant
to this Article VII to terminate the Lease with respect to the
Second Expansion Space and VAD Space, regardless of whether the
Second Expansion Space and/or the VAD Space has been condemned
in whole or in part. However, if Landlord or Tenant has any
right to terminate the Lease pursuant to this Article VII due
to condemnation or taking of the Second Expansion Space and/or
VAD Space only (excluding the Expanded Leased Premises),
Landlord or Tenant shall not have the right to terminate the
Lease with respect to the Expanded Leased Premises. If Landlord
or Tenant duly terminates the Lease under Article VII with
respect to the Second Expansion Space and/or VAD Space, the
Lease shall remain in full force and effect with respect to the
Expanded Leased Premises, and the Second Expansion Space and/or
VAD Space shall be stricken from the definition of "Leased
Premises" under the Lease. Upon such condemnation of the
Second Expansion Space and/or VAD Space, the parties agree to
enter into an amendment to the Lease setting forth the reduced
Leased Premises and other related changes to the Lease,
including, without limitation, a reduction of Basic Annual Rent
and Tenant's Portion of Common Area Expenses, Taxes and
Insurance.
Notwithstanding anything set forth above in this
Article VII, if Landlord or Tenant has the right to terminate
the Lease pursuant to this Article VII due to taking or
condemnation of one or the other of the Second Expansion Space
or the VAD Space, but not both Spaces, then Landlord or Tenant
shall not have the right to terminate the Lease under this
provision with respect to the non-condemned Space in Building
B, or with respect to the Expanded Leased Premises.
15. Parking. Paragraph X.O of the Lease shall be amended
by adding Tenant's right to the non-exclusive use of an
additional three (3) parking spaces per one thousand (1,000)
square feet of the VAD Space for a total of Thirty-Four (34)
parking spaces. Therefore, in addition to the 214 non-exclusive
and 15 exclusive parking spaces set forth in the Lease, Tenant
shall have the non-exclusive use of 34 additional parking
spaces in the front and rear of Building B. If Tenant's loading
requirements or other requirements in the rear of Building B
are such that there is room for additional parking, then Tenant
shall have the non-exclusive use of additional parking spaces
in the rear of Building B.
16. Rights of First Offer. The provisions of Paragraph 18
of the First Amendment shall be amended to the extent, and only
to the extent, set forth below:
a. (i) Tenant shall have the right of first offer
(the "Hitachi First Offer Right"), on the terms and conditions
hereinafter set forth, to lease that portion of Building B
contiguous to the VAD Space (the "Hitachi First Offer Space"),
as shown on Exhibit A, containing approximately Three Thousand
Three Hundred Seventy (3,370) rentable square feet, and as of
the date first set forth above, occupied by Nissei Sangyo
America, Ltd. ("Hitachi") under a lease between Landlord and
Hitachi (the "Hitachi Lease") at such time as such Space
becomes available after its initial leasing by Hitachi. Tenant
shall have the right to lease the Hitachi First Offer Space at
the then-current VAD Space Basic Annual Rent, with a tenant
improvement allowance of Seven Dollars and Fifty Cents ($7.50)
per square foot.
(ii) Tenant shall have the right of first offer
(the "Bodymasters First Offer Right"), on the terms and
conditions hereinafter set forth, to lease that portion of
Building B contiguous to the VAD Space (the "Bodymasters First
Offer Space"), as shown on Exhibit A, containing approximately
Ten Thousand Seventy-Three (10,073) rentable square feet, and
occupied as of the Effective Date by Healthco Fitness
("Bodymasters") under a lease between Landlord and Bodymasters
(the "Bodymasters Lease"). Tenant shall have the Bodymasters
First Offer Right at such time as the Bodymasters First Offer
Space becomes available, subject to any renewal options in the
Bodymasters Lease. Tenant shall have the right to lease the
Bodymasters First Offer Space at the then-current market rent
(as determined below), including, without limitation, then-
current market increases of basic annual rent for each lease
year of such lease. Market rent shall be determined based, in
part, upon a tenant improvement allowance for the Bodymasters
First Offer Space agreed upon by Landlord and Tenant.
Landlord and Tenant shall work together in good faith
to determine market rent for the Bodymasters First Offer Space,
based on the mutually-agreed tenant improvement allowance,
within ten (10) days after Landlord receives Tenant's First
Offer Notice (as defined below). However, if Landlord and
Tenant cannot agree on a market rent within such ten (10)-day
period, after diligent, good faith efforts, then market rent
for the Bodymasters First Offer Space, taking into
consideration the tenant improvement allowance established by
Landlord and Tenant, shall be determined by a three-broker
method conducted as follows:
(1) Within five (5) days after Landlord and
Tenant shall have failed to agree upon a market rent during the
ten (10)-day period set forth above, Landlord and Tenant shall
give written notice to the other that each, at its own expense,
has hired and appointed as a broker, a disinterested person of
recognized competence and professional experience as a broker
of comparable commercial and industrial real estate in the
Baltimore-Washington Metropolitan Area. The two (2) brokers
thus appointed shall diligently work together for fifteen (15)
days after their appointment to determine the market rent for
the Bodymasters First Offer Space. Landlord and Tenant shall
each be entitled to present evidence and argument to the two
(2) brokers. If the two brokers cannot agree on such a market
rent within such fifteen (15)-day period, they shall each
prepare a written report setting forth what each believes the
market rent to be and the supporting data therefor. They shall
then appoint a third broker who shall also be a disinterested
person of recognized competence and professional experience as
a broker of comparable commercial and industrial real estate in
the Baltimore-Washington Metropolitan Area (the "Broker"). In
the event that the two (2) brokers appointed as aforesaid shall
be unable to agree, within ten (10) days after their failure to
agree on a market rent, on the appointment of the Broker, they
shall give written notice of such failure to the parties
hereto, and the parties shall request that such appointment be
made by the then President of the Maryland/Washington, D.C.
Chapter of the Society of Industrial and Office Realtors (or
any organized successor thereto) within thirty (30) days after
such request. The Broker shall, as promptly as possible, but in
no event more than thirty (30) days after the date of his or
her selection, determine the market rent for the Bodymasters
First Offer Space, without having access to the reports of the
first two (2) brokers. Landlord and Tenant shall each be
entitled to present evidence and argument to the Broker. Once
the Broker has determined the market rent, the final market
rent shall be determined as follows: (a) if the Broker's
determination is higher than that of both of the first two
brokers, then the higher market rent as determined by the first
two brokers shall be conclusive and binding on Landlord and
Tenant; (b) if the Broker's determination is lower than that of
both of the first two brokers, then the lower market rent as
determined by the first two brokers shall be conclusive and
binding on Landlord and Tenant; and (c) if the Broker's
determination is between that of the first two brokers, then
the Broker's determination shall be conclusive and binding on
Landlord and Tenant.
(2) After the market rent has been
determined by the two (2) brokers, or determined by the method
involving the Broker, as applicable, written notice shall
immediately be given to Landlord and Tenant stating the
determination(s), and Landlord and Tenant shall be furnished a
copy of such determination(s) signed by the decision-maker(s).
If the Broker is utilized, Landlord and Tenant shall review all
three (3) determinations to arrive at the final market rent
pursuant to the method set forth above. Landlord and Tenant
shall each pay one-half (1/2) of the costs of the Broker, if
applicable.
(iii) Tenant shall exercise either of or both
its First Offer Rights only upon written notification to
Landlord of Tenant's exercise of any such First Offer Right
(the "First Offer Notice"). Such First Offer Notice must be
given to Landlord within five (5) business days after Tenant
receives Landlord's written notification to Tenant ("Landlord's
Offer") of the termination of the Hitachi and/or Bodymasters
Lease, as applicable.
(iv) Time is of the essence with respect to
Tenant's exercise of its rights under this Subparagraph, and
Tenant acknowledges that Landlord requires strict adherence to
the requirement that the applicable First Offer Notice be
timely made and in writing. Within ten (10) days after the
market rent for the Bodymasters First Offer Space has been
determined as provided above, Tenant shall have the right, by
written notice to Landlord, to rescind its exercise of its
Bodymasters First Officer Notice, as applicable.
(v) In the event Tenant fails to provide
Landlord with the applicable First Offer Notice within the five
(5) day period set forth in Subparagraph 16(a)(iii) above,
Landlord shall be free to offer said Hitachi or Bodymasters
First Offer Space to a third party on any terms whatsoever, and
the applicable First Offer Right shall be null and void and of
no further force and effect.
(vi) In the event that either one or both of
the First Offer Rights are exercised by Tenant, the rent
applicable to the applicable First Offer Space as set forth
above in this Paragraph 16, shall be payable in equal monthly
installments (and, where applicable, fractions thereof), at the
times and in the manner as provided with respect to, and in
addition to, the monthly installments of the Basic Annual Rent
as set forth in Article III.B. of the Lease.
b. Notwithstanding any other provision of this
Paragraph 16, the following provisions shall apply to the First
Offer Rights and to Tenant's lease, if any, of the applicable
First Offer Space.
(i) Tenant shall not be entitled to exercise
the rights accorded to Tenant in Subparagraph 16(a), unless on
the date Tenant gives Landlord notice of such exercise and on
the applicable First Offer Space Commencement Date, as
hereinafter defined, Tenant (for purposes of this subsection
only, the term "Tenant" shall be deemed to be MedImmune, Inc.
or an entity which succeeds to all or substantially all of the
assets of MedImmune, Inc.) is in possession of the Leased
Premises and Tenant is not in default of the Lease;
(ii) The lease by Tenant of the applicable
First Offer Space, if any, shall commence on the date set forth
in Landlord's Offer (the "Hitachi First Offer Space
Commencement Date" or the "Bodymasters First Offer Space
Commencement Date") and shall terminate on November 30, 2006,
under and subject to the terms of this Lease (except to the
extent modified by Landlord's Offer), with the same force and
effect as though this Lease had originally provided for the
rental of the Leased Premises and the applicable First Offer
Space, except that the Basic Annual Rent applicable to the
applicable First Offer Space shall be adjusted as set forth
above. Notwithstanding the immediately preceding sentence,
Tenant shall have the right to cancel the lease for the Hitachi
First Offer Space and/or the lease for the Bodymasters First
Offer Space on November 30, 2001 upon at least one hundred
eighty (180) days' prior written notice. Tenant shall owe a
penalty for canceling the leases for the Hitachi First Offer
Space and for the Bodymasters First Offer Space equal to, with
respect to each such lease, the unamortized portion of the
applicable tenant improvement costs and commissions, plus an
amount equal to three (3) months' basic annual rent then in
effect. The tenant improvement costs under the leases for both
the Hitachi and Bodymasters First Offer Spaces shall be
amortized at ten and one half percent (10.5%) per annum (pro-
rated on a monthly basis) over the term of each of the leases
for the Bodymasters and Hitachi First Offer Space, as
applicable. Landlord shall apply this formula to determine the
Bodymasters and Hitachi cancellation penalties hereunder upon
receipt of the applicable Tenant's First Offer Notice
hereunder, and shall notify Tenant in writing of the amount of
each such cancellation fee, and the calculations used to
determine it, within seven (7) days of receipt of the
applicable Tenant's First Offer Notice. If Tenant has any
questions or concerns about such calculations, Tenant shall
notify Landlord in writing within seven (7) days of receipt of
Landlord's calculations, and the parties shall use diligent,
good faith efforts to resolve all open issues promptly.
(iii) The applicable First Offer Space shall be
delivered to Tenant in "as is" condition, unless otherwise set
forth in Landlord's Offer.
(iv) From and after the applicable First Offer
Space Commencement Date, all references in the Lease to the
Leased Premises shall refer to both the area of the Leased
Premises and of the applicable First Offer Space. Tenant's
Portion shall be adjusted accordingly to reflect the leasing of
the applicable First Offer Space.
(v) Except as otherwise expressly provided in
this Paragraph 16, and after the applicable First Offer Space
Commencement Date, all of the covenants and agreements set
forth in the Lease, schedules and riders thereto shall apply to
the applicable First Offer Space.
17. Signage for the VAD Space. Paragraph 18 of the Second
Amendment shall be stricken in its entirety and replaced with
the following:
"As soon as reasonably possible after Landlord
and Tenant have approved of the location of Tenant's
signage, and as otherwise set forth below in this
Paragraph 17, Landlord shall construct, maintain,
repair and/or replace for Tenant exterior signage on
Building B displaying Tenant's name, logo, and/or any
other insignia generally used by Tenant. All costs
associated with maintenance, repair and replacement
of this exterior signage shall be treated as a Common
Area Expense. Tenant shall pay all costs associated
with the construction of such signage within thirty
(30) days of receipt of an invoice therefor from
Landlord. This signage shall be of identical size,
color and material as the size, color and material
used for similar signage on Building D, and this
signage on Building B shall be in such location as is
reasonably requested by Tenant and approved in
advance by Landlord, in Landlord's sole discretion."
18. Tenant Authorization. Tenant represents and
warrants to Landlord that this Fourth Amendment has been
validly authorized and is executed by an authorized officer of
Tenant and that its terms are binding upon and enforceable
against Tenant in accordance herewith.
19. Amendment. As of and after the date hereof, the Lease
shall be amended and in full force and effect in such respects
as are set forth in this Fourth Amendment, and all other
provisions, terms, conditions and riders of and to the Lease
shall in all respects remain in full force and effect as set
forth in the Lease.
20. Reaffirmation. Tenant hereby reaffirms and restates,
and agrees to be bound by, the covenants, promises,
representations and agreements set forth in the Lease (except
to the extent that they are expressly superseded by this Fourth
Amendment) as if made herein.
21. Authority. Tenant represents and warrants to Landlord
that the Lease and this Fourth Amendment were approved by all
necessary parties, were validly executed by all necessary
officers of Tenant, and are and remain binding upon and
enforceable against Tenant in accordance with their terms, and
that the name and address of Tenant's resident agent in the
State of Maryland are The Corporation Trust Incorporated, 32
South Street, Baltimore, Maryland 21202.
IN WITNESS WHEREOF, Landlord and Tenant have respectively
signed this Fourth Amendment of Lease under seal as of the day
and year first above written, intending to be bound as of the
Effective Date.
WITNESS/ATTEST: CLOPPER ROAD ASSOCIATES
By: M.O.R.M. Associates Limited
Partnership
By: RA & FM, Inc.
By: Alton D. Fryer(SEAL)
Name: Alton D. Fryer
Title: Vice President
LANDLORD
WITNESS/ATTEST: MEDIMMUNE, INC.
David LeBuhn By: David M. Mott(SEAL)
Name: David M. Mott
Title: President
TENANT
STATE OF MARYLAND )
) TO WIT:
COUNTY OF FREDERICK )
I HEREBY CERTIFY that on this 4th day of October, 1996,
before me, the subscriber, a Notary Public of the State of
Maryland and County/City of Baltimore, personally appeared
before me Alton D. Fryer, Vice President, of RA & FM, Inc., a
general partner of M.O.R.M. Associates Limited Partnership, a
general partner of CLOPPER ROAD ASSOCIATES, Landlord, and s/he
acknowledged the foregoing Fourth Amendment of Lease to be the
act and deed of said joint venture.
WITNESS my hand and notarial seal.
Mary Gail Peters
Notary Public
My Commission Expires: April 1, 1998
[Notaries cont'd]
STATE OF MARYLAND )
) TO WIT:
COUNTY/CITY OF MONTGOMERY )
I HEREBY CERTIFY that on this 3rd day of October 1996,
before me, the subscriber, a Notary Public of the State of
Maryland and County/City of Montgomery, personally appeared
before me David M. Mott, who acknowledged her/himself to be the
President and Chief Operating Officer of MEDIMMUNE, INC.,
Tenant and she/he acknowledged the foregoing Fourth Amendment
of Lease to be the act and deed of said corporation.
WITNESS my hand and notarial seal.
Carol A. Iorio
Notary Public
My Commission Expires: July 11, 1998
EXHIBIT A
Description of VAD Space
EXHIBIT B
VAD Space Plans
EXHIBIT 10.63
FIFTH AMENDMENT OF LEASE
THIS FIFTH AMENDMENT OF LEASE (this ("Amendment") is made
this 3rd day of October, 1996 (the "Effective Date") by and
between CLOPPER ROAD ASSOCIATES, a Maryland joint venture
("Landlord"), and MEDIMMUNE, INC., a Delaware corporation
("Tenant").
EXPLANATORY STATEMENT
A. Landlord and Tenant entered into a Lease Agreement dated
February 14, 1991 (the "Original Lease"), whereby Tenant agreed
to lease from Landlord forty thousand eight hundred forty-three
(40,843) square feet (the "Original Leased Premises") in the
building (the "Building") known as Building D, located at 35 West
Watkins Mill Road, in the Bennington Corporate Center in
Gaithersburg, Maryland.
B. Landlord and Tenant entered into a First Amendment of
Lease dated June 8,1993 (the "First Amendment"), pursuant to
which Building D was expanded and the square footage of the
Original Leased Premises was increased by the amount of such
expansion (the "Expansion Space") (collectively, the Original
Leased Premises and the Expansion Space shall be hereinafter
referred to as the "Expanded Leased Premises"). Certain other
changes were also made to the Original Lease as a result of the
First Amendment.
C. Landlord and Tenant entered into a Second Amendment of
Lease dated June 30,1993 (the "Second Amendment"), pursuant to
which the square footage of the Expanded Leased Premises was
increased by adding space (the "Second Expansion Space") in
Building B located at 25 West Watkins Mill Road (collectively,
the Original Leased Premises, the Expansion Space and the Second
Expansion Space are hereinafter referred to as the "Second
Expanded Leased Premises"); the Rent payable was adjusted, and
certain other changes were made to the Original Lease, as
amended.
D. Landlord and Tenant entered into a Third Amendment of
Lease dated April 15,1996, but effective as of January 1,1995
(the "Third Amendment") to adjust percentages and addresses set
forth in the Original Lease as amended.
E. Landlord and Tenant entered into a Fourth Amendment of
Leased dated September __, 1996 (the "Fourth Amendment") pursuant
to which the portion of the Second Expanded Leased Premises in
Building B was expanded by adding space adjacent thereto (the
"VAD Space") (the "Second Expanded Leased Premises," as
expanded, is hereafter referred to as the "Third Expanded Leased
Premises"), the Rent was adjusted, and certain other changes were
made to the Original Lease, as amended.
F. The Original Lease, the First, Second, Third and Fourth
Amendments are herein collectively referred to as the "Lease."
G. Landlord and Tenant now desire to expand Building D to
increase the square footage of the Third Expanded Leased
Premises, adjust the Rent payable therefor, and make certain
other changes to the Lease, all as more specifically set forth
below.
NOW, THEREFORE, in consideration of the Explanatory
Statement, which shall be deemed a substantive part of this Fifth
Amendment, the covenants of the parties herein and in the Lease,
and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Landlord and Tenant
hereby agree as follows:
1. Effective Date of Fifth Amendment. From and after
the date of this Fifth Amendment, the Lease shall be amended as
set forth below.
2. Capitalized Terms. All capitalized terms in this
Fifth Amendment shall have the same meanings as those in the
Lease, unless specifically set forth otherwise herein.
3. Building D Expansion Space. Landlord hereby leases
to Tenant, and Tenant hereby leases from Landlord, in addition to
the Third Expanded Leased Premises, approximately One Thousand
Seven Hundred Sixteen (1,716) rentable square feet of space,
which shall be added to Building D ("Building D Expansion Space")
(collectively, the Third Expanded Leased Premises and Building D
Expansion Space shall be deemed the "Leased Premises" ). The
Building D Expansion Space is shown more particularly on Exhibit
A attached hereto and made a part hereof.
4. Construction of Building D Expansion Space.
a. Building D Expansion Space Plans; Filing for
Building Permit. Tenant shall cause the Building D shell and
interior improvements for the Building D Expansion Space (the
"Building D Expansion Space Construction") to be constructed in
accordance with the plans and specifications for the Building D
Expansion Space (the "Building D Expansion Space Plans"). These
Plans shall be approved and initialed by the parties before
construction begins. Tenant shall provide Landlord one copy of
all such Plans, at Tenant's expense, before construction begins.
Tenant shall have received a building permit
from the City of Gaithersburg for the Building D Expansion Space,
and shall have provided a copy to Landlord, before Tenant shall
be authorized to begin construction under this Fifth Amendment.
b. Third Party as Contractor.
(i) Approval and Performance. Tenant
has initially selected Riparius Construction, Inc. (the "Third
Party Contractor" ) to construct the Building D Expansion Space
shell and interior improvements. Landlord hereby approves of such
selection. Tenant will not change the Third Party Contractor from
Riparius Construction, Inc. to another party without the prior
written consent of Landlord, which consent shall not be
unreasonably withheld or delayed. The Third Party Contractor
shall provide all work, labor and materials in support of the
Building D Expansion Space Construction in accordance with the
Building D Expansion Space Plans. The Third Party Contractor
shall also perform its work in strict compliance with all laws,
rules, regulations, orders, codes and other requirements of all
governmental and quasi-governmental authorities having
jurisdiction with respect to the Building D Expansion Space
and/or the performance of the Building D Expansion Space
Construction, and shall comply with all of Landlord's reasonable
rules and regulations provided to the Third Party Contractor.
(ii) Insurance. In addition, the Third
Party Contractor shall obtain Builder's Risk insurance naming
Landlord, Tenant and Manekin Corporation ("Manekin"), an
affiliate of Landlord, as additional insureds and public
liability insurance with limits of $1,000,000/$2,000,000 for the
Building D Expansion Space Construction and proof that it
maintains a policy of Workmen's Compensation Insurance in
accordance with applicable law. No later than the date of
commencement of the Building D Expansion Space Construction, the
Third Party Contractor shall provide original insurance
certificates to Landlord evidencing all such insurance policies.
(iii) Manekin's Observation. Manekin, on
behalf of Landlord, shall have the right to observe the Third
Party Contractor's work on the Building D Expansion Space
Construction. Tenant shall pay Manekin a fee (the "Fee") equal to
all of Manekin's out-of-pocket costs for such observation,
including, without limitation, the wages, salaries or other
compensation and any taxes, insurance or benefits of its
personnel performing such observation. The Fee shall not exceed
Three Thousand Dollars ($3,000). Tenant shall pay this Fee thirty
(30)days after receipt of Landlord's invoice therefor, together
with all applicable supporting documentation.
5. Reimbursement for Site Plan Amendment. As of the
date first set forth above, Landlord has obtained, at its sole
cost, the "Site Plan Manekin Gaithersburg Center," as revised
4/16/96 (Second Addition to Building D), as approved by the City
of Gaithersburg 4/26/96 (the "Site Plan Amendment") to allow the
Building D Expansion Space Construction. Tenant shall reimburse
Landlord for the entire cost of the Site Plan Amendment within
thirty (30) days of Tenant's receipt of an invoice therefor.
6. Construction Provisions of Revised Leased Premises
Not Applicable to Building D Expansion Space. Article I.B of the
Original Lease, Paragraphs 4 through 7 of the First Amendment,
and Paragraph 5 of the Second Amendment shall not apply to the
Building D Expansion Space, except as may be specifically set
forth in this Fifth Amendment.
7. Term of Building D Expansion Space Lease. The
Building D Expansion Space Lease Term will commence on the
Building D Expansion Space Commencement Date (as defined below)
and will end on the last day of the Lease Term, subject to
Paragraph 8 below. From and after the date of this Fifth
Amendment, the term "Lease Term" will include the Building D
Expansion Space Lease Term.
a. Building D Expansion Space Commencement
Date. The Building D Expansion Space Commencement Date shall be
the earlier of the date that Tenant receives an approved
temporary occupancy certificate for the Building D Expansion
Space, and January 1, 1997. Upon the occurrence of the Building D
Expansion Space Commencement Date, Landlord and Tenant shall
execute a written statement setting forth such Date.
b. Possession of Building D Expansion Space.
This Fifth Amendment shall remain fully effective and Tenant may
not cancel or rescind it due to late delivery of the Building D
Expansion Space, regardless of when delivery actually occurs.
Moreover, in no event will Landlord be liable to Tenant for
damages, if any, sustained by Tenant as a result of any delay in
delivery of the Building D Expansion Space.
c. Acceptance of Expansion Space. Upon the
Building D Expansion Space Commencement Date, Tenant will be
deemed to have accepted the Building D Expansion Space.
8. Cancellation Options.
Paragraph II.B of the Original Lease, as amended
by the First Amendment, and as amended by the Second Amendment
(with respect only to the Expanded Leased Premises (as defined in
the Second Amendment)) shall apply to the Building D Expansion
Space.
9. Basic Annual Rent for the Building D Expansion
Space.
a Amount of Basic Annual Rent for Building D
Expansion Space. Basic Annual Rent for the Building D Expansion
Space shall equal Five Thousand Five Hundred Ninety-Four Dollars
and Sixteen Cents ($5,594.16) per annum, payable in equal monthly
installments of Four Hundred Sixty-Six Dollars and Eighteen Cents
($466.18). Payment of the first monthly installment hereunder
shall commence on the Building D Expansion Space Commencement
Date; provided that if payment commences on a date that is not
the first day of a month, then payment shall be pro-rated for the
partial first month in which payment commences. This payment
of Basic Annual Rent shall continue until August 1, 2004, upon
which date the Basic Annual Rent for the Building D Expansion
Space shall increase to Four Dollars and Forty Cents ($4.40) per
square foot of the Building D Expansion Space, for a total of
Seven Thousand Five Hundred Fifty Dollars and Forty Cents
($7,550.40) per annum, in equal monthly installments of Six
Hundred Twenty-Nine Dollars and Twenty Cents ($629.20) for the
remainder of the Lease Term. As of August 1, 2004, the Basic
Annual Rent for the Building D Expansion Space on a per-square-
foot basis shall be the same as the Basic Annual Rent for the
Expansion Space (as defined in the First Amendment), on a per-
square-foot basis.
b. Payment of Basic Annual Rent for Building D
Expansion Space. The above amounts of Basic Annual Rent for the
Building D Expansion Space shall be paid at the time and in
addition to the payment of Basic Annual Rent for the Leased
Premises, and otherwise in the manner set forth in Article III.B
of the Lease.
c. Security Deposit. There shall be no Security
Deposit required hereunder for the Building D Expansion Space.
10. Adjustments to Square Footages and Percentages
a. In Paragraph III.(C)(1)(b) of the Lease and
throughout the Lease, the term "Rentable Area of the
Buildings" will be deemed to be 138,938 square feet rather than
137,222 square feet, so that the term includes the Building D
Expansion Space. This amended square footage number shall apply
throughout the Lease to all references to the Rentable Area of
the Buildings. Finally, the third, fifth and sixth
sentences of Paragraph III.C(l)(b) of the Lease, as amended by
this Fifth Amendment, will apply to the Building as expanded by
the Building D Expansion Space.
b. Paragraph III.C(l)(c) of the Lease shall be
amended so that the term "Rentable Area of the Leased Premises"
shall be deemed to be 71,225 square feet rather than 69,509
square feet so that the term includes the Building D Expansion
Space. This amended square footage number shall apply throughout
the Lease to all references to the square footage of the Leased
Premises. However, the second through final sentences of
Paragraph III.C(l)(c) of the Lease, as amended by this Fifth
Amendment, shall not apply to the Building D Expansion Space.
There shall be no certification required of the gross Rentable
Area of the Building D Expansion Space.
c. Paragraph III.C(l)(d) of the Lease shall be
amended so that the term "Rentable Area of the Building" shall be
deemed to be 52,351 square feet rather than 50,635 square feet so
that the term includes the Building D Expansion Space. This
amended square footage number shall apply throughout the Lease to
all references to the square footage of the Building.
d. Paragraph III.C(l)(e) of the Lease shall be
amended as of the Building D Expansion Space Commencement Date so
that the term "Tenant's Portion (with respect to the payment
of Common Area Expenses, Taxes and Insurance)" will be Fifty-
One and Twenty-Six One Hundredths Percent (51.26%)
(71,225/138,938) rather than Fifty and Sixty-Five One Hundredths
Percent (50.65%) so that the term includes the Building D
Expansion Space. This amended Tenant's Portion shall apply
throughout the Lease.
e. The estimated amounts set forth in Paragraph
III.C(2) (a) and (b) of the Lease shall be amended as the
Building D Expansion Space Commencement Date by adding thereto
the estimated amounts of such Taxes, Insurance and Common Area
Expenses for the Building D Expansion Space. Therefore,
commencing on the Building D Expansion Space Commencement Date,
Tenant shall pay to Landlord, in addition to the amounts set
forth in the Lease sections listed above, with and at the same
time as the monthly payments of Basic Annual Rent, the following
amounts with respect to the Building D Expansion Space:
(i) One Hundred Fifty-Three Dollars
($153.00) per month as one-twelfth of Tenant's estimated
Portion of Common Area Expenses, which amount includes Twenty-One
Dollars and Forty-Five Cents ($21.45) per month as one-twelfth of
Tenant's estimated Portion of the Insurance Costs. The
limitation on increases in Common Area Expenses under the Lease
shall apply to Tenant's Portion of Common Area Expenses for the
Building D Expansion Space, except that the Common Area Expenses
for the Building D Expansion Space for the first Lease Year shall
not be limited in any way.
(ii) Two Hundred Fifteen Dollars and Ninety-
Three Cents ($215.93) per month as one-twelfth of Tenant's
estimated Portion of Taxes.
Notwithstanding the foregoing, with reference to the
Tenant's Portion (estimated and actual) of Common Area Expenses,
Insurance Costs and Taxes, the same will not be charged with
respect to the Building D Expansion Space until the Building D
Expansion Space is completed; provided, however, that if prior
to the earlier of the date the Building D Expansion Space is
completed and tendered to Tenant, or one (1) year from the
Building D Expansion Space Commencement Date, Montgomery County,
Maryland assesses Taxes with respect to the Building D Expansion
Space, then and in such event, the Tenant's Portion with respect
to Taxes shall be increased to include the Building D Expansion
Space effective as of the effective date of Montgomery County's
assessment of Taxes with respect to the Building D Expansion
Space.
11. Use Restrictions and Rules. Paragraph IV.A of the
Original Lease shall apply to the Building D Expansion Space.
12. Improvements by Tenant. Subsection (i) of the
second paragraph of Paragraph IV.B of the Lease shall be stricken
in its entirety and replaced with the following:
"(i) the aggregate cost of the same does not
exceed One Hundred Thousand Dollars ($100,000)
with respect to the Expanded Leased Premises,
Fifty Thousand Dollars ($50,000) with respect to
the Second Expansion Space, Fifty Thousand Dollars
($50,000) with respect to the VAD Space, or Fifty
Thousand Dollars ($50,000) with respect to the
Building D Expansion Space . . ."
13. Insurance. Paragraph IV.E of the Original
Lease shall apply to the Building D Expansion Space.
14. Damage and Destruction. Article VI of the Lease
shall be amended by adding the underlined language to the
paragraph at the end thereof as follows:
Notwithstanding the preceding three (3) paragraphs
of this Article VI, if Landlord or Tenant has the right to
terminate the Lease pursuant to this Article VI due to damage or
destruction to the Expanded Leased Premises and Building D
Expansion Space only (excluding the Second Expansion Space and
the VAD Space) by fire, other casualty, or any other cause
(except condemnation), then Landlord or Tenant automatically
shall have the right pursuant to this Article VI to terminate the
Lease with respect to the Second Expansion Space and the VAD
Space, regardless of whether the Second Expansion Space and/or
the VAD Space has suffered any damage or destruction. However,
if Landlord or Tenant has the right to terminate the Lease
pursuant to this Article VI due to damage or destruction to the
Second Expansion Space and/or the VAD Space only (excluding the
Expanded Leased Premises and Building D Expansion Space),
Landlord or Tenant shall not have any right to terminate the
Lease with respect to the Expanded Leased Premises and Building D
Expansion Space. If Landlord or Tenant duly terminates the Lease
under Article VI with respect to the Second Expansion Space
and/or the VAD Space, the Lease shall remain in full force and
effect with respect to the Expanded Leased Premises and Building
D Expansion Space and the Second Expansion Space and/or the VAD
Space shall be stricken from the definition of "Leased Premises"
under the Lease. Upon such damage or destruction to the Second
Expansion Space and/or the VAD Space, the parties agree to enter
into an amendment to the Lease setting forth the reduced Leased
Premises and other related changes to the Lease, including,
without limitation, reduction of Basic Annual Rent and Tenant's
Portion of Common Area Expenses, Taxes and Insurance.
Notwithstanding anything set forth above in this
Article VI, if Landlord or Tenant has the right to terminate the
Lease pursuant to this Article VI due to damage or destruction to
one or the other of the Second Expansion Space or the VAD Space,
but not both Spaces, then Landlord or Tenant shall not have the
right to terminate the Lease under this provision with respect to
the non-damaged Space in Building B, or with respect to the
Expanded Leased Premises.
15. Condemnation. The last sentence of the second
paragraph of Article VII of the Lease shall only apply to the
Expanded Leased Premises and Building D Expansion Space, and
shall not apply to the Second Expansion Space or the VAD Space.
In addition, Article VII of the Lease shall be amended by adding
the underlined language to the paragraph at the end thereof as
follows:
Notwithstanding the preceding two (2) paragraphs
of this Article VII, if Landlord or Tenant has the right to
terminate the Lease pursuant to this Article VII due to taking or
condemnation of the Expanded Leased Premises and Building D
Expansion Space only (excluding the Second Expansion Space and
VAD Space), then Landlord or Tenant automatically shall have the
right pursuant to this Article VII to terminate the Lease with
respect to the Second Expansion Space and VAD Space, regardless
of whether the Second Expansion Space and/or the VAD Space has
been condemned in whole or in part. However, if Landlord or
Tenant has any right to terminate the Lease pursuant to this
Article VII due to condemnation or taking of the Second Expansion
Space and/or the VAD Space only (excluding the Expanded Leased
Premises and Building D Expansion Space), Landlord or Tenant
shall not have the right to terminate the Lease with respect to
the Expanded Leased Premises and Building D Expansion Space. If
Landlord or Tenant duly terminates the Lease under Article VII
with respect to the Second Expansion Space and/or the VAD Space,
the Lease shall remain in full force and effect with respect to
the Expanded Leased Premises and Building D Expansion Space, and
the Second Expansion Space and/or VAD Space shall be stricken
from the definition of "Leased Premises" under the Lease. Upon
such condemnation of the Second Expansion Space and/or the VAD
Space, the parties agree to enter into an amendment to the Lease
setting forth the reduced Leased Premises and other related
changes to the Lease, including, without limitation, a reduction
of Basic Annual Rent and Tenant's Portion of Common Area
Expenses, Taxes and Insurance.
Notwithstanding anything set forth above in this
Article VII, if Landlord or Tenant has the right to terminate the
Lease pursuant to this Article VI due to taking or condemnation
of one or the other of the Second Expansion Space or the VAD
Space, but not both Spaces, then Landlord or Tenant shall not
have the right to terminate the Lease under this provision with
respect to the non-condemned Space in Building B, or with respect
to the Expanded Leased Premises.
16. Parking. Parking under the Lease shall not be
modified pursuant to this Fifth Amendment.
17. Tenant Authorization. Tenant represents and
warrants to Landlord that this Fifth Amendment has been validly
authorized and is executed by an authorized officer of Tenant and
that its terms are binding upon and enforceable against Tenant in
accordance herewith.
18. Lease as Amended. From and after the full
execution of this Fifth Amendment, the Lease shall be amended and
in full force and effect in such respects as are set forth in
this Fifth Amendment, and all other provisions, terms, conditions
and riders of and to the Lease shall in all respects remain as
set forth in the Lease, in full force and effect and applicable
to the Expansion Space, except as specifically set forth in this
Fifth Amendment.
19. Tenant Reaffirmation of Lease. Tenant hereby
reaffirms and restates, and agrees to be bound by, the covenants,
promises, representations and agreements set forth in the Lease
(except to the extent that they are expressly superseded by this
Fifth Amendment) as if made herein.
LANDLORD:
WITNESS/ATTEST: CLOPPER ROAD ASSOCIATES,
a Maryland general partnership
By: M.O.R.M. Associates Limited
Partnership
By: RA & FM, Inc.
By: Alton D. Fryer(SEAL)
Name: Alton D. Fryer
Title: Vice President
TENANT:
WITNESS/ATTEST: MEDIMMUNE, INC.,
a Delaware corporation
David LeBUhn By: David M. Mott(SEAL)
Name: David M. Mott
Title: President
[Notaries cont'd next page]
STATE OF MARYLAND )
) TO WIT:
COUNTY OF FREDERICK )
I HEREBY CERTIFY that on this 4th day of October, 1996_,
before me, the subscribed, a Notary Public of the State and
county aforesaid, personally appeared Alton D. Fryer, Vice
President of RA & FM, Inc., general partner of M.O.R.M.
Associates Limited Partnership, general partner of Clopper Road
Associates, and he acknowledged the foregoing Fifth Amendment of
Lease to be the act and deed of said general partnership.
WITNESS my hand and Notarial Seal.
Mary Gail Peters
Notary Public
My Commission Expires: April 1, 1998
STATE/COMMONWEALTH OF MARYLAND )
) TO WIT:
COUNTY OF MONTGOMERY )
I HEREBY CERTIFY that on this 3rd day of October, 1996,
before me, the subscribed, a Notary Public of the
state/Commonwealth and County aforesaid, personally appeared
David M. Mott, President and Chief Operating Officer of
MedImmune, Inc., Tenant, and he acknowledged the foregoing Fifth
Amendment of Lease to be his/the act and deed of said
corporation.
WITNESS my hand and Notarial Seal.
Carol A. Iorio
Notary Public
My Commission Expires: July 11, 1998
EXHIBIT 10.64
PORTIONS OF THE FOLLOWING DOCUMENT HAVE DELETED
DUE TO THE CONFIDENTIAL NATURE OF THE
INFORMATION CONTAINED THEREIN.
SUCH DELETIONS ARE INDICATED AS FOLLOWS:
(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)
THE CONFIDENTIAL INFORMATION HAS BEEN FILED
SEPARATELY WITH THE COMMISSION
ENGINEERING, PROCUREMENT,
CONSTRUCTION AND VALIDATION SERVICES AGREEMENT
BETWEEN
MEDIMMUNE, INC.
AND
FLUOR DANIEL, INC.
TABLE OF CONTENTS
ARTICLE TITLE PAGE
INTRODUCTION 1
ARTICLE I DESCRIPTION OF AGREEMENT 1
ARTICLE II SCOPE OF SERVICES 2
ARTICLE III COMPENSATION 6
ARTICLE IV TERMS OF PAYMENT 8
ARTICLE V WARRANTIES AND GUARANTEES 12
ARTICLE VI INDEMNIFICATION 14
ARTICLE VII INSURANCE 16
ARTICLE VIII TERMINATION AND CANCELLATION 17
ARTICLE IX COMPLETION, START UP AND VALIDATION 19
ARTICLE X GENERAL PROVISIONS 22
SIGNATURE PAGE 28
EXHIBITS:
Exhibit "A" - Scope of Services/Facilities
Exhibit "B" - Schedule of Payments and Milestones
Exhibit "B-1" - Letter of Credit Draft In Lieu of Retention Sample
Exhibit "C" - Schedule of Reimbursable Costs
ENGINEERING, PROCUREMENT,
CONSTRUCTION AND VALIDATION SERVICES AGREEMENT
THIS AGREEMENT for the performance of services is executed on the
9th day of August, 1996 and made effective as of the 31st day of
July, 1996, between Fluor Daniel, Inc. ("Fluor Daniel") and
MedImmune, Inc. ("MedImmune").
IN CONSIDERATION of the covenants set forth herein, the parties
hereto mutually agree as follows:
ARTICLE I
DESCRIPTION OF AGREEMENT
1.1 Documents Included
This agreement consists of this contract document and the
following attached exhibits, as well as approved final
drawings and specifications (collectively the "Agreement"):
Exhibit "A" - Scope of Services/Facilities (including
engineering, design, construction and validation)
Exhibit "B" - Schedule of Payments and Milestones
Exhibit "C" - Schedule of Reimbursable Costs
1.2 Entire Agreement
This Agreement, as defined in Section 1.1, sets forth the
full and complete understanding of the parties with regard
to the subject matter hereof as of the date first above
stated, and it supersedes any and all agreements and
representations made or dated prior thereto with regard to
the same subject matter. For the sake of convenience, the
parties may, from time to time, issue purchase orders, work
orders, or other such forms. However, the contractual terms
and conditions of this Agreement may be supplemented,
deleted and/or changed only through formal written
amendments to this Agreement, and not through purchase
orders, work orders or any other or similar such documents
unless evidenced by a written change order signed by each of
the parties hereto; and any such terms or conditions
contained in purchase orders, work orders or any other or
similar such documents shall be void and of no force or
effect unless evidenced by such change orders.
1.3 Conflicting Provisions
In the event of any conflict between this contract document
and any of the Exhibits hereto, the terms and provisions of
this contract document shall control. In the event of any
conflict among the Exhibits, the Exhibit of the latest date
shall control.
ARTICLE II
SCOPE OF SERVICES
2.1 Description of Services
Fluor Daniel shall perform all design, engineering,
procurement, construction (including Punch List items, as
defined in Section 9.2b) and validation services as
described in Exhibit "A", (the "Project"). All goods,
materials, supplies and equipment to be procured,
transported, installed, or validated, and all services to be
performed by Fluor Daniel are hereinafter referred to as the
"Services".
2.2 Fluor Daniel's Responsibilities
As part of the Services, Fluor Daniel shall, subject to the
terms and provisions of this Agreement:
(a) Furnish the services of qualified supervisors,
engineers, designers, draftsmen and other personnel
necessary or appropriate for the preparation of
drawings, specifications and other such items necessary
or appropriate for the completion of the Services;
(b) Furnish the services of buyers, inspectors,
expediters, procurement and other personnel necessary
or appropriate to procure machinery, equipment,
materials, supplies, miscellaneous construction items
and related services necessary for the completion of
the Services;
(c) Furnish the services of procurement personnel,
construction managers, supervisors, engineers and other
personnel necessary or appropriate to place and
administer construction subcontracts, purchase orders
and other such agreements necessary for the completion
of the Services;
(d) Furnish the design and other services of other
managers, engineers, supervisors, foremen, construction
workers, skilled and unskilled labor and other
personnel necessary or appropriate for the completion
of the Services;
(e) Prepare drawings, specifications and other such
items necessary or appropriate for the completion of
the Services, the drawings or documents identified in
Exhibit "A" as requiring MedImmune approval shall be
submitted to MedImmune for approval; including
technical drawings, schedules, diagrams and
specifications, setting forth in detail the
requirements for construction of the Project, and
provide information customarily necessary for the use
of those in the building trades and include documents
customarily required for regulatory agency approvals;
(f) Procure machinery, equipment, materials, supplies
(other than ethanol, feedstock, and operational
supplies required beyond OQ (as hereafter defined),
miscellaneous construction items and services
(including transportation, utilities and other
facilities) necessary or appropriate for the proper
execution and completion of the Services;
(g) Place and administer construction subcontracts,
purchase orders and other such agreements necessary for
the completion of the Services and supervise and direct
the Services using its best skill and attention to
assure that the Project is completed in a good and
workmanlike manner;
(h) Perform the validation services described in
Exhibit "A";
(i) Supply the materials, small tools and consumables
necessary or appropriate for the completion of the
Services;
(j) Supply major construction tools and equipment
necessary or appropriate for the completion of the
Services;
(k) Prepare and furnish a Project Schedule and issue
updates thereof to MedImmune once per month;
(l) File all documents and obtain all permits and
licenses necessary for the Services, except those which
are required by Exhibit "A" to be obtained by
MedImmune; provided that MedImmune will cooperate with
Fluor Daniel and take any reasonable actions which are
required of MedImmune and/or reasonably requested by
Fluor Daniel;
(m) Except to the extent to be provided by MedImmune
pursuant to the express terms of this Agreement,
furnish the services of personnel, and provide the
tools and materials, necessary or appropriate to start
up the Project as provided in Exhibit "A";
(n) Furnish the services of all validation personnel
necessary or appropriate to validate the Project
through Installation Qualification ("IQ") and
Operational Qualification ("OQ"), as provided in
Exhibit "A";
(o) Pay all sales, consumer, use and similar taxes,
fees and import duties to the extent they were in
effect on the date hereof;
(p) Keep the premises free from accumulation of waste
materials or rubbish, and upon the completion of the
Services, remove from and about the Project its tools,
construction equipment, machinery, surplus materials,
waste materials and rubbish, and if Fluor Daniel fails
to clean up at the completion of the Services,
MedImmune may do so and the cost thereof shall be
charged to Fluor Daniel;
(q) Prepare Change Orders for approval and execution
by MedImmune in accordance with this Agreement;
(r) At reasonable times, during normal business hours,
provide access to shop drawings, product data, samples
and other technical data for review during construction
of the Project;
(s) Perform inspections, tests and approvals necessary
or appropriate for the Services;
(t) Provide operating manuals and written instructions
relating to the operation of all installed and portable
equipment provided hereunder; and
(u) Within five (5) days following execution of this
Agreement, appoint one or more individuals who shall be
authorized to act on behalf of Fluor Daniel and with
whom MedImmune may consult at all reasonable times, and
whose instructions, requests and decisions will be
binding upon Fluor Daniel as to all matters pertaining
to this Agreement and the performance of the parties
hereunder.
(v) Assign to this Project the team of Tom Trevithick,
Bob Green, John Sweet, Ken Simmons and on-site
supervisor, Charlie Rogers, who will be dedicated to
this Project as necessary or appropriate to effect its
completion.
2.3 MedImmune's Responsibilities
MedImmune shall at such times as may be required by Fluor
Daniel for the successful and expeditious completion of the
Services:
(a) Provide a site for the Services;
(b) Provide or cause others to provide Fluor Daniel
with the design criteria, surveys, soil test results,
and other information, listed in Exhibit "A";
(c) Cooperate with Fluor Daniel in its obtaining of
permits and licenses as specified in Section 2.2. (l);
and obtain, with Fluor Daniel's assistance and
cooperation, all permits and licenses which are listed
in Exhibit "A" as the responsibility of MedImmune;
(d) Provide, or cause others to provide, a designation
on an MedImmune supplied survey, together with a
physical marker at a specific location on the Project
site (or other nearby location readily accessible to
Fluor Daniel), showing the precise location of Fluor
Daniel's starting reference point;
(e) Obtain and pay all expenses involved in obtaining
the easements and rights of way necessary for Fluor
Daniel to perform the Services, as identified in
Exhibit "A";
(f) Provide interface with and coordination of all
work which is being performed by MedImmune or
contractors other than Fluor Daniel, if any;
(g) Provide ALTA survey showing all existing utilities
and other improvements at the Project site;
(h) Advise of the existence and location, and
undertake the abatement and disposal of all toxic
and/or hazardous materials at the Project site, which
are encountered by Fluor Daniel in the performance of
the Services;
(i) Furnish within ten (10) days of a written request
all required reviews and approvals (or other
appropriate action) with respect to all samples,
estimates, schedules, shop drawings, drawings,
specifications, purchase orders, contracts, and other
items submitted and/or proposed by Fluor Daniel;
(j) Provide appropriate on-site representatives and
all feed stock necessary or appropriate to start up the
Project;
(k) Appoint an individual who shall be authorized to
act on behalf of MedImmune, with whom Fluor Daniel may
consult at all reasonable times, and whose
instructions, requests and decisions will be binding
upon MedImmune as to all matters pertaining to this
Agreement and the performance of the parties hereunder.
MedImmune hereby appoints Bill Braden, but reserves the
right to substitute another person on ten (10) days
prior written notice.
ARTICLE III
COMPENSATION
3.1 Contract Price
Base Contract. In consideration of the undertakings by
Fluor Daniel pursuant to this Agreement (including the
performance of all the Services hereunder), MedImmune shall
pay Fluor Daniel a lump sum contract price (the "Contract
Price") of Forty Two Million Five Hundred Thousand Dollars
($42,500,000.00), which amount is subject to adjustment only
as expressly provided in this Agreement, and regardless of
Fluor Daniel's estimates or actual costs of labor,
materials, equipment, tools and supplies to perform the
Services.
3.2 Adjustments to the Contract Price and the Project Schedule
It is the desire of the parties to keep changes in the
Services at a minimum, but the parties recognize that such
changes may become necessary. The parties agree that
changes shall be handled as follows:
(a) MedImmune may initiate a change to the Services by
advising Fluor Daniel in writing of the change believed
to be necessary. As soon thereafter as practicable,
Fluor Daniel shall prepare and forward to MedImmune a
cost estimate of the change and the adjustment to the
Contract Price (upwards or downwards), the Project
Schedule, and any scheduled completion date(s)
applicable thereto. Fluor Daniel shall be reimbursed
for the costs incurred to prepare its estimate (the
"Estimate Costs") in the event of change orders
initiated by MedImmune. In the event of change orders
initiated by Fluor Daniel, the Estimate Costs shall be
borne by Fluor Daniel. MedImmune shall within ten
(10) days advise Fluor Daniel in writing of its
approval or disapproval of the change. If MedImmune
approves the change, Fluor Daniel shall perform the
Services as changed and the adjustments to the Contract
Price, the Project Schedule, and any completion date(s)
applicable thereto shall become effective. If Fluor
Daniel and MedImmune cannot agree upon the appropriate
changes to the Contract Price, the Project Schedule and
any scheduled completion date(s) applicable to a
change, but MedImmune approves or directs the change
anyway, or the change is of a type set forth in Section
3.2 (b) below, Fluor Daniel shall, provided MedImmune
makes payments in accordance with this Agreement,
continue the Services (including change order work)
without interruption, and the Contract Price, the
Project Schedule, and any scheduled completion date(s)
shall be equitably adjusted, by mutual agreement of the
parties if possible. If the parties cannot agree, the
cost of any increased or expanded Services provided by
Fluor Daniel shall be equal to the sum of reimbursable
costs in respect of such additional Services determined
in accordance with the Schedule of Reimbursable Costs
which is attached as Exhibit "C", plus an aggregate fee
to Fluor Daniel of five percent (5%) of such costs.
Fluor Daniel may initiate changes by advising MedImmune
in writing that in Fluor Daniel's opinion a change is
necessary. If MedImmune agrees, MedImmune shall
promptly advise Fluor Daniel in writing and,
thereafter, the change shall be handled as if initiated
by MedImmune (except for reimbursement of Estimate
Costs). If MedImmune rejects such change proposed by
Fluor Daniel, Fluor Daniel shall not perform the change
recommended by Fluor Daniel. Notwithstanding anything
in this Agreement to the contrary, in the event Fluor
Daniel requests any increase in the Contract Price or
extension of the scheduled completion date(s) by reason
of any Force Majeure event (subject to the limitations
set forth in Section 10.3 hereof) or MedImmune delay,
as a condition thereof, Fluor Daniel shall, within ten
(10) days after it becomes aware of the occurrence of
the event or circumstances giving rise to the alleged
Force Majeure event or MedImmune delay, notify
MedImmune of such events or circumstances in writing,
which notice shall identify with reasonable detail the
nature of the delay, its estimated impact on completion
dates and Contract Price, if any, and Fluor Daniel's
plan for mitigating such impact to the extent
practicable.
(b) Changes shall include, and the Contract Price, the
Project Schedule, and any scheduled completion date(s)
shall be equitably adjusted to reflect (1) the addition
to, modification of or deletion from the Services or
the items shown or described in Exhibit "A"; (2) an
approved change in the Project Schedule and/or any
scheduled completion date(s); (3) MedImmune's request
for performance of Services in excess of Fluor Daniel's
standard work day or work week or on a holiday
customarily observed by Fluor Daniel unless otherwise
required pursuant to Section 4; (4) the discovery of
any subsurface conditions which differ from (a) those
shown in or reasonably inferable from the Agreement (or
the documents known to both parties upon which the
Agreement is based), and (b) those ordinarily
encountered and generally recognized as inherent in
work of the type contemplated herein in the area of the
Project site, and (c) those reasonably apparent upon
customary inspection; (5) a modification of applicable
law (or a change in the interpretation thereof) after
the date hereof which substantially affects
(individually or in the aggregate) the cost of and/or
time required for performing the Services; (6) delay or
suspension of, or interference with, the Services by
MedImmune or by any other person or entity including,
but not limited to, national, state and local
governments, but excluding Fluor Daniel and any party
directly or indirectly under the control of Fluor
Daniel; provided, however, that delay by governmental
entities shall not be considered a Force Majeure event
if occasioned by a failure of Fluor Daniel to comply
with the standards of care and diligence set forth in
Section 5.1 of this Agreement; (7) the discovery of any
subsurface rock which is not "rippable" using
conventional rock ripping methods and which is not
disclosed by the soil report or reasonably apparent by
customary inspection; (8) errors or omissions in and/or
modifications made to and/or unreasonable delay in
furnishing any design criteria (as set forth in Exhibit
"A"), other information expressly required by this
Agreement to be supplied to Fluor Daniel by MedImmune,
or decisions by MedImmune; and (9) any other increase
in Fluor Daniel's costs, or the time required for
completion of the Services due to any Force Majeure
event as defined in Section 10.3 hereof.
ARTICLE IV
TERMS OF PAYMENT
4.1 Payments
Subject to Section 4.2 below, MedImmune shall pay Fluor
Daniel the Contract Price in monthly installments in the
amounts set forth in the Schedule of Payments and Milestones
which is attached hereto as Exhibit "B". Subject to Section
4.2 below, payments shall be made by wire transfer on the
scheduled dates, to a bank account designated by Fluor
Daniel in writing. Fluor Daniel's pay requests shall be
accompanied by Fluor Daniel's certificate indicating
progress with respect to each item of Services described in
the applicable Milestone and with respect to the Milestone
as a whole, and lien waivers for the work covered by such
pay request. MedImmune shall have the right to review and
approve all pay requests. Provided that MedImmune is not in
default of any payment obligation hereunder, Fluor Daniel
agrees to satisfy, remove or bond off any liens claimed by
it, its employees, subcontractors or suppliers, within
fifteen (15) days of its receipt of written notice thereof,
and Fluor Daniel's performance of this obligation shall be a
condition to MedImmune's obligation to make payments
hereunder. Any change in the Contract Price under this
Agreement shall be incorporated into the Schedule of
Payments and Milestones in an equitable manner.
4.2 Milestones
If and to the extent that Fluor Daniel does not achieve the
Milestones set forth in Exhibit "B", as modified by Change
Order, by the payment dates to which they correspond, for
other than a delay (beyond 10 days) by MedImmune in
approving submittals or making required decisions, MedImmune
may withhold an equitable amount of the corresponding
payment equal to the value of the incomplete portion until
Fluor Daniel does complete such incomplete portion and
achieve the missed Milestones. Fluor Daniel shall submit
invoices indicating its progress with respect to the
applicable Milestone and its proposed values for any
incomplete portions thereof. The parties agree, however,
that no payment shall be required with respect to any given
Milestone in the event that Fluor Daniel's progress toward
completion of the events included within such Milestone is
less than 75% of the aggregate value of such Milestone; in
addition, no payment shall be required with respect to any
item of Services within any Milestone if progress on that
item is less than 75% of the progress required to complete
such item within such Milestone. In the event that Fluor
Daniel fails to achieve any Milestone as a result of a Force
Majeure event, Fluor Daniel shall be entitled to partial
payment with respect to such Milestone whether or not its
progress meets or exceeds 75% of the value of such
Milestone, but (1) only Fluor Daniel's external out-of-
pocket costs and expenses (not to exceed the percentage of
progress achieved) with respect to such Milestone shall be
paid in the event of progress less than such 75% amount
(excluding overhead, general conditions, and all costs of
Fluor Daniel employees on site or in supervisory,
administrative, or executive roles); and (2) such expenses
shall be paid only if, but for such Force Majeure event,
Fluor Daniel would have achieved at least 75% completion of
such Milestone. Failure of Fluor Daniel to achieve
Milestones and the withholding by MedImmune of all or a
portion of the corresponding payment shall have no effect on
MedImmune's obligation to make future payments as long as
Fluor Daniel meets the requirements thereof and shall have
no effect on Fluor Daniel's obligations hereunder, except as
set forth in the next sentence. Whenever this Agreement
provides for the adjustment of the Project Schedule or any
scheduled completion date(s) (including, without limitation,
Sections 3.2, 6.2 and 10.3), the Milestone dates shall be
correspondingly adjusted; provided, however, that Fluor
Daniel and MedImmune expressly agree that in the event Fluor
Daniel is behind the Project Schedule (for reasons other
than a Force Majeure event or MedImmune default) to such an
extent that Fluor Daniel will not be able to achieve timely
Completion, or the applicable portion thereof by the
applicable Milestones, Fluor Daniel, as a cost which shall
not cause an adjustment to the Contract Price, shall employ
such additional forces or pay such additional overtime wages
and salaries as may be reasonably required to place the
progress of the Services in conformance with the Project
Schedule required to achieve timely Completion.
4.3 Other Payment Provisions
(a) Fluor Daniel shall promptly pay each subcontractor (and
require each subcontractor to promptly pay each sub-
subcontractor), upon receipt of payment from MedImmune, out
of the amount paid to Fluor Daniel on account of such
subcontractor's work, the amount to which said subcontractor
(or sub-subcontractor) is entitled in accordance with the
terms of Fluor Daniel's contract with such subcontractor.
Fluor Daniel shall, by appropriate agreement with each
subcontractor, require each subcontractor to make payments
to sub-subcontractors in similar manner.
(b) MedImmune shall have no obligation to pay or to be
responsible in any way for payment to a contractor of Fluor
Daniel.
(c) No progress payment or partial or entire use or occupancy of
the Project by MedImmune shall constitute an acceptance of
Services not in accordance with the Contract Documents.
(d) In lieu of having retainage withheld from its payments
hereunder, Fluor Daniel shall provide an escalating
irrevocable standby letter of credit in the ultimate amount
of Four Million Two Hundred Fifty Thousand Dollars
($4,250,000.00), with MedImmune as beneficiary, in the form
of Exhibit B-1 prior to payment by MedImmune of amounts due
at Milestone 3 (as set forth in Exhibit B attached hereto).
The cost of the Letter of Credit (priced at 15 basis points)
will be separately reimbursed and is not included in the
Contract Price. Fluor Daniel shall be provided 72 hours
advance written notice of any draw against the Letter of
Credit. Fluor Daniel hereby waives any right to seek an
injunction or other equitable relief to prohibit any such
draw after its receipt of the 72 hour advance written
notice.
In the event that Fluor Daniel (i) fails to complete its
Services by thirty (30) days after the scheduled Completion
date (as adjusted to the extent expressly permitted
hereunder), MedImmune may draw against the Letter of Credit
for the liquidated damages then accrued pursuant to the
terms of this Agreement or (ii) is in default hereunder,
MedImmune may draw against the Letter of Credit for any
damages then accrued pursuant to the terms of this
Agreement. MedImmune may, thereafter, make additional draws
every ten days for additional damages or liquidated damages
then accrued. MedImmune shall have no right to draw against
the Letter of Credit for prospective or anticipated damages
or liquidated damages, but only for damages or liquidated
damages after they have accrued. Fluor Daniel shall have no
right to dispute MedImmune's calculation of damages or
liquidated damages with respect to draws against its Letter
of Credit; however, Fluor Daniel may still dispute with
MedImmune the propriety or amount of damages or liquidated
damages subsequent to any such draw.
The escalation schedule shall be as follows:
Issuance $ 850,000.00
12/1/96 $1,700,000.00
4/1/97 $2,550,000.00
8/1/97 $3,400,000.00
12/1/97 $4,250,000.00
4.4 Final Payment
Notwithstanding the payment schedule set forth in Exhibit
"B", subject to the provisions of Section 9.4 hereof, the
final installment of the Contract Price, due at Completion,
together with all other amounts then due and owing by
MedImmune to Fluor Daniel pursuant to any change orders
effected in accordance with this Agreement, shall be paid if
and when Fluor Daniel has (a) completed the Services and OQ
has been achieved, including completion of all Punch List
items, issuance of a permanent Certificate of Occupancy or
its equivalent for the Project from the applicable
governmental authority having jurisdiction over the Project,
balancing of all the base building systems, delivery and
assignment to MedImmune of all Project permits and
manufacturers' warranties, and delivery to MedImmune of a
complete set of construction drawings red-lined on CAD to
reflect "as built" conditions, (b) certified that all bills
for labor and materials connected with the Project will be
fully paid from the proceeds of Final Payment and delivered
appropriate lien waivers, and (c) a full, clean title
insurance policy update has been obtained with affirmative
mechanic's lien insurance. Acceptance of final payment
shall constitute a waiver of all claims by Fluor Daniel.
4.5 Interest
Subject to Section 8.2 hereof, any payment not made within
five (5) business days of its due date under this Agreement
(including any disputed amounts which are ultimately paid)
shall bear interest at the rate of one percent (1%) per
annum above the prime rate then published in the Wall Street
Journal, until paid, but not to exceed the maximum rate
permitted by applicable law. The payment of interest shall
not excuse or cure any delinquent payment. If for any
reason, other than a default by Fluor Daniel, MedImmune
fails to pay Fluor Daniel in full as required by this
Agreement (subject to Sections 8.2 and 9.4), after notice
and failure to cure within ten (10) business days Fluor
Daniel may, without limitation, suspend its performance of
the Services until all outstanding amounts have been paid in
full by MedImmune and/or exercise its rights under Section
8.2; provided, however, that Fluor Daniel shall not suspend
its Services if any such non-payment arises from a good
faith, reasonable dispute between the parties.
ARTICLE V
WARRANTIES AND GUARANTEES
5.1 Fluor Daniel's Services
Fluor Daniel warrants and guarantees that (a) it will
perform the Services in a good and workmanlike fashion and
in accordance with the standards of care and diligence
normally practiced by recognized engineering and
construction firms in performing services of a similar
nature for similar projects at the time the Services are
performed; and (b) the materials, supplies and equipment
included within the Services (excluding the Listed
Equipment, as defined below) shall be new (except as
otherwise approved by MedImmune), free from defects in
design and workmanship (other than de minimus defects) and
in compliance with the design and procurement specifications
set forth in Exhibit A, which is attached hereto. Fluor
Daniel warrants the truth and accuracy of any of its written
communications to MedImmune containing representations of
fact. Review by MedImmune of any document submitted by
Fluor Daniel shall not constitute acceptance thereof and
shall not relieve Fluor Daniel of its obligations hereunder.
Fluor Daniel further warrants and guarantees that its
Services will comply with applicable laws, as provided in
Section 10.2 of this Agreement.
At the written request of MedImmune delivered at any time
prior to one (1) year after the earlier of: (i) Completion
of the Services pursuant to Section 9.2(c); or (ii)
scheduled Completion of the Services, in the event that the
Services are terminated pursuant to Article VIII; Fluor
Daniel shall, at its sole cost and expense, perform all
corrective Services within the scope of Services (including
any approved change orders) as are necessary to make the
Services conform to the foregoing warranty and guarantee.
Corrective Services shall be warranted, as provided herein,
for a period of one year following the completion of any
such item of corrective Service. Fluor Daniel's total
aggregate liability in connection with this warranty shall
in no event exceed Five Million Dollars ($5,000,000.00) of
external costs.
5.2 Third Party Items
Fluor Daniel shall, for the protection of MedImmune, obtain
from all vendors, suppliers, manufacturers and other
entities from whom Fluor Daniel purchases the machinery,
equipment, tools, and other items listed in the equipment
list appearing as Attachment 7 to Exhibit "A" (the "Listed
Equipment"), warranties and/or guarantees with respect
thereto, which shall be made available to MedImmune to the
full extent of the terms thereof. Fluor Daniel's liability
with respect to such Listed Equipment shall be limited to
procuring customary warranties and/or guarantees from such
vendors, suppliers, manufacturers and other entities (unless
otherwise specified) of at least one (1) year in duration
and rendering all reasonable assistance to MedImmune for the
purpose of enforcing the same; provided that Fluor Daniel's
warranty and guarantee shall apply to the installation of
such Listed Equipment, and to the assurance and warranty
that such Listed Equipment is new and in compliance with the
specifications set forth in Exhibit "A" attached hereto.
Except for installation, no warranty shall apply to used
equipment that may be purchased, so long as the purchase of
such used equipment is authorized by the terms of this
Agreement. MedImmune shall notify Fluor Daniel in the event
that it desires longer warranties on any of the Listed
Equipment, in which event Fluor Daniel shall obtain pricing
for such longer warranties from the vendors, and MedImmune
shall approve a change order increasing the Contract Price
by such amount in the event it elects to obtain such longer
warranty.
5.3 Title
Fluor Daniel warrants that title to the work, material and
equipment (including the Listed Equipment) will pass to
MedImmune upon receipt of payment by Fluor Daniel for such
work, material or equipment. Provided that MedImmune makes
proper payment in accordance with the terms of this
Agreement, such work, material and equipment shall be free
of any liens, claims, security interests or encumbrances.
5.4 Limitations
The obligations contained in this Article V are Fluor
Daniel's sole warranty and guarantee obligations and the
exclusive remedy of MedImmune in respect of the quality of
the Services. As used in this Articles, the quality of the
Services includes, without limitation, any requirement that
the Services (or any product thereof including the Project)
comply with laws, codes, standards, rules, regulations,
specifications, drawings or other criteria. Fluor Daniel
makes no warranties or guarantees relating to the staffing,
performance or cost of operation of the Project, nor makes
any other warranties or guarantees, expressed or implied,
which are not expressly set forth herein. ALL IMPLIED
WARRANTIES, INCLUDING BUT NOT LIMITED TO WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, ARE
EXPRESSLY DISCLAIMED AND WAIVED, IT BEING ACKNOWLEDGED AND
AGREED THAT THE ONLY WARRANTIES AFFORDED HEREUNDER ARE THOSE
EXPRESSLY SET FORTH HEREIN. The failure of MedImmune to (a)
properly operate and maintain the Project or (b) allow Fluor
Daniel to promptly make such tests and perform such
reasonable corrective Services as Fluor Daniel may deem
appropriate, shall relieve Fluor Daniel of its warranty and
guarantee obligations relative to such improper operation
and maintenance or the subject of such test or corrective
Service, but only to the extent that such failure shall have
resulted in damage to the Project which otherwise would not
have occurred. Fluor Daniel shall have no liability for
defects in the Services attributable to Fluor Daniel's use
of and/or reliance upon data, design criteria, drawings,
specifications, reports or other information furnished by or
on behalf of MedImmune as provided in Exhibit A unless Fluor
Daniel knew or, employing the standards set forth in Section
5.1 hereof, should have known of such defects. MedImmune is
responsible for the design criteria set forth in Exhibit A
as being MedImmune's responsibility and for the design of
its processes related to product manufacturing and Fluor
Daniel does not warrant or guarantee such process or the
design associated therewith. This Article V governs,
modifies and supersedes any other terms in this Agreement
which address warranties or guarantees or the quality of the
Services.
ARTICLE VI
INDEMNIFICATION
6.1 Bodily Injury and Property Damage Liability
Fluor Daniel shall indemnify, defend and hold MedImmune
harmless from any and all claims, liabilities and causes of
action for bodily injury to and/or death of any person, and
for damage to and/or destruction of property (excluding,
however, the property for which MedImmune assumes the risk
of loss and/or damage in Section 6.2 below) to the extent
resulting from the negligent acts or omissions of Fluor
Daniel, its agents and subcontractors.
6.2 Protection of the Project
Fluor Daniel shall, before it constructs any significant
improvements at the site, purchase and maintain a Builder's
"All-Risk" Insurance Policy in the amount of the full
replacement cost of the Project from an insurance company
reasonably acceptable to MedImmune, insuring against risk of
loss and/or damage to the Project constructed by Fluor
Daniel (including all materials, machinery, equipment and
other items to be incorporated into the Project by Fluor
Daniel while the same are in transit, at the Project site,
during erection and otherwise but excluding, without
limitation, items furnished by MedImmune or others not
within Fluor Daniel's control), and all construction tools
and equipment used by Fluor Daniel in constructing the
Project which are in the custody of Fluor Daniel. MedImmune
shall reimburse Fluor Daniel for the cost of this policy,
and such cost is not included in the Contract Price.
MedImmune shall be made co-loss payee as its interests may
appear under this policy. Fluor Daniel shall have the right
to adjust Builder's "All Risk" Insurance claims, with
participation by MedImmune, and, subject to the provisions
of the Loan Documents, the proceeds of such insurance shall
be paid to Fluor Daniel as the Services and repair,
replacement or reconstruction progresses. Fluor Daniel
shall be obligated to repair, replace or reconstruct any
portion of the Project which is lost, damaged or destroyed,
prior to Completion or any transfer of care, custody and
control of the Project agreed to in writing by MedImmune.
MedImmune assumes all responsibility for such loss, damage
and destruction after Completion or such transfer of care,
custody and control to MedImmune agreed to in writing by
MedImmune. Any agreed upon completion dates and Milestone
dates shall be equitably adjusted to account for the time
required for any such repair, replacement and/or
reconstruction. Fluor Daniel's liability in connection with
repair, replacement and/or reconstruction of the Project or
any portion thereof, shall in no event exceed the sum of (1)
the proceeds to Fluor Daniel of the Builder's "All-Risk"
Insurance; plus (2) the amount of any deductible under such
Builder's "All-Risk" Insurance (if and to the extent such
loss was caused by the negligence or breach of contract by
Fluor Daniel or its subcontractors); plus (3) repair,
replacement or reconstruction costs arising from Fluor
Daniel's gross negligence or willful misconduct.
6.3 MedImmune's Property
Except as provided in Section 6.2 above, MedImmune assumes
all risk of and responsibility for all loss of, damage to
and/or destruction of the Project and all property owned by
or in the custody of MedImmune, including its affiliates,
however such loss, damage or destruction shall occur.
Except as provided in Section 6.2 hereof, MedImmune waives
any recovery rights it may have against Fluor Daniel for any
such loss, damage or destruction and agrees to obtain a
waiver of subrogation rights of its insurers against Fluor
Daniel for any such loss, damage or destruction. If
MedImmune is not the sole owner of the Project site and all
property thereat, MedImmune shall obtain an undertaking from
the other owners thereof sufficient to provide to Fluor
Daniel the same protection from liability for loss or damage
as would be afforded to Fluor Daniel under this Agreement if
MedImmune were the sole owner.
6.4 Mutual Waiver of Subrogation
MedImmune and Fluor Daniel hereby waive all rights against
each other and any of their subcontractors, sub-
subcontractors, agents, affiliates, assigns and employees,
each of the other, for damages caused by fire or other
perils to the extent covered by property insurance obtained
in accordance with the terms of Section 6.2 and 6.3 above or
any other property insurance obtained by the injured party.
All such insurance policies shall provide waivers of
subrogation by the insurance carrier by endorsement or
otherwise. A waiver of subrogation shall be effective as to
a person or entity, even though that person or entity would
otherwise have a duty of indemnification, contractual or
otherwise, did not pay the insurance premium directly or
indirectly, and whether or not the person or entity had an
insurable interest in the property damaged. Fluor Daniel
shall require from its subcontractors and subcontractors
similar waivers in favor of Fluor Daniel and MedImmune.
6.5 Limitations
Fluor Daniel shall have no obligation to MedImmune with
respect to any damage to or loss of property caused by the
perils of war, insurrection, revolution, nuclear reaction or
other like perils as may be excluded under the scope and
limits of the insurance coverage provided pursuant to
Sections 6.2, 6.3 and 7.1. MedImmune shall have no
liability to Fluor Daniel with respect to such excluded
risks; provided, however, that Fluor Daniel shall have no
obligation to repair or rebuild the facilities
(notwithstanding any provision to the contrary in Section
6.2) as a result of damage caused by such excluded risk
unless and to the extent that MedImmune agrees by change
order to pay Fluor Daniel for such repairs or rebuilding.
6.6 Safety
Fluor Daniel shall be responsible for initiating,
maintaining and providing supervision of safety precautions
and programs in connection with the Services. Fluor Daniel
shall take reasonable precautions for safety of, and shall
provide reasonable protection to prevent damage, injury or
loss to (1) employees on the Services and other persons who
may be affected thereby; (2) the Services and materials and
equipment to be incorporated therein whether in storage on
or off site; and (3) other property at or adjacent to the
site. Fluor Daniel shall give notices and comply with
applicable laws, ordinances, rules, regulations and orders
of public authorities bearing on the safety of persons and
property and their protection from damage, injury or loss.
Fluor Daniel shall require and be responsible for the
erection and maintenance as required by existing conditions
and progress of the Services, of all reasonable safeguards
for safety and protection, including posting danger signs
and other warnings against hazards, promulgating safety
regulations and notifying owners and users of adjacent
facilities. The parties agree that this Section 6.6 shall
neither enlarge nor limit Fluor Daniel's indemnity
obligations, nor the parties' allocation of risk concerning
property damage, all as set out in Sections 6.1 through 6.5
above.
ARTICLE VII
INSURANCE
7.1 Fluor Daniel's Commitment
Commencing with the performance of its Services hereunder,
and continuing during the performance of any such Services,
Fluor Daniel shall maintain in force standard insurance
policies from reputable insurance carriers reasonably
acceptable by MedImmune authorized to do business in the
State of Maryland, as follows:
(a) Worker's Compensation and/or all other disability
benefit or Social Insurance in accordance with the
statutory requirements of the state, province or
country having jurisdiction over Fluor Daniel's
employees who are engaged in the Services, with
Employer's Liability of One Million Dollars
($1,000,000).
(b) Commercial General Liability, including
Contractual Liability and Products/Completed Operations
coverage, covering bodily injury, sickness, disease
and/or death of persons and loss of and/or damage to
property. Such insurance shall be provided in a
Combined Single Limit of Five Million Dollars
($5,000,000).
(c) Automobile Liability insurance covering owned, non-
owned and hired vehicles, with a combined single limit
of One Million Dollars ($1,000,000), covering bodily
injury to and/or death of persons and loss of and/or
damage to property.
(d) Excess Umbrella Liability covering (b) and (c) and
the Employer's Liability part of (a), above, with a
combined single limit of Ten Million Dollars
($10,000,000.00).
7.2 Certificates
The foregoing insurance shall be maintained with carriers
reasonably satisfactory to MedImmune, and the terms of
coverage shall be as evidenced by certificates to be
furnished to MedImmune. Such certificates shall provide
that thirty (30) days' written notice shall be given to
MedImmune prior to cancellation or material alteration of
any policy.
7.3 Subrogation
The parties each agree to cause their respective insurers to
waive rights of subrogation against the other in any
policies of insurance that may apply with respect to claims
arising out of or relating to this Agreement.
ARTICLE VIII
TERMINATION AND CANCELLATION
8.1 Termination by MedImmune
Should Fluor Daniel become insolvent or bankrupt, or should
Fluor Daniel refuse or neglect to supply a sufficient number
of properly skilled workmen, equipment, tools or material
within Fluor Daniel's control, or should Fluor Daniel fail
to timely pay its subcontractors, or should Fluor Daniel
commit a substantial breach of this Agreement, and should
Fluor Daniel thereafter fail to commence proceedings in good
faith to remedy such within ten (10) days after written
demand by MedImmune and to effect a cure within a reasonable
time, MedImmune may terminate this Agreement and enter upon
the premises and take possession thereof and at the same
time instruct Fluor Daniel to remove from the premises all
of its tools, equipment and supplies, or MedImmune may take
possession of Fluor Daniel's tools and equipment for the
purpose of completing the Services. Upon any such
termination, Fluor Daniel shall be liable to MedImmune for
the direct costs incurred by MedImmune to complete the
Project (including soft costs and reasonable attorneys' fees
incurred in placing the completion contract and the rental
costs of Fluor Daniel's tools and equipment as assessed
pursuant to this Section 8.1) to the extent such costs,
together with the amounts previously paid to Fluor Daniel,
are in excess of the Contract Price provided in Paragraph
3.1 (subject to adjustment as provided herein). MedImmune
agrees to act in good faith and to take all reasonable steps
to mitigate the cost to complete the Project. If Completion
is delayed, Fluor Daniel shall be responsible for liquidated
damages, as provided in Section 9.4(b), for the portion of
such delay attributable to Fluor Daniel's demobilization,
the placement of a completion contract, and the mobilization
of the completing contractor.
In the event that MedImmune uses any of Fluor Daniel's
equipment or tools, MedImmune shall return the same to Fluor
Daniel in good condition and repair, reasonable wear and
tear excepted, and shall pay Fluor Daniel for the use
thereof at Fluor Daniel's standard rental rates then in
effect. If and to the extent such costs of completing the
Project are less than the balance of the Contract Price,
Fluor Daniel shall be paid the difference, not to exceed the
total actual cost (excluding home office overhead and
profit) incurred by Fluor Daniel under this Agreement as of
the date of termination which remains unpaid.
8.2 Termination by Fluor Daniel
Should MedImmune become insolvent or bankrupt or commit a
substantial breach or default of any of the covenants or
obligations hereunder and (a) fail to remedy the same within
ten (10) days after written notice thereof from Fluor
Daniel, if the breach constitutes a failure to pay money, or
(b) fail to commence in good faith to remedy the same within
ten (10) days after written notice thereof from Fluor Daniel
and thereafter to effect a cure within a reasonable time, if
the breach is other than to pay money, then Fluor Daniel may
terminate this Agreement. Should Fluor Daniel so terminate
this Agreement, it shall be paid for all costs incurred for
Services performed through the date of termination, all
termination charges by vendors, subcontractors and others,
an equitable portion of any fees and/or profit, and the cost
of all demobilization expenses, in accordance with the
provisions of Article III; provided, however, that no
demobilization costs shall be reimbursable in the event that
such termination occurs after Fluor Daniel has been paid, or
is entitled to be paid, 50% of the Contract Price. Fluor
Daniel agrees to act in good faith and to take all
reasonable steps to mitigate such costs. Notwithstanding
any of the foregoing to the contrary, in the event
MedImmune, in good faith, contests the amount of payment
claimed by Fluor Daniel to be owing to Fluor Daniel under
this Agreement, Fluor Daniel shall continue performance of
the Services pending resolution of such dispute provided
that MedImmune pays to Fluor Daniel all amounts (and
portions thereof) which are not subject to a good faith
dispute, and provided, further, that the Disputed Amount (as
defined below) does not exceed Three Million Dollars
($3,000,000.00) in the aggregate. The difference between
the amount paid by MedImmune and the amount claimed in good
faith by Fluor Daniel to be owing is referred to herein as
the "Disputed Amount." Notwithstanding the foregoing, in
the event that the Disputed Amount at any time exceeds Three
Million Dollars ($3,000,000.00) in the aggregate for more
than thirty (30) days, the parties shall be entitled to
exercise any remedies they may have under this Agreement,
including without limitation, those under Section 8.2. In
the event of termination for events of default other than
the failure to pay money, Fluor Daniel and MedImmune agree
to submit the issue of the validity of such termination to
binding arbitration within 30 days of Fluor Daniel's notice
of default.
8.3 Cancellation
MedImmune reserves the right to cancel the Services without
cause upon ten (10) days' written notice to Fluor Daniel,
unless Fluor Daniel agrees in writing to a shorter notice
period. Should the Services be so cancelled by MedImmune,
Fluor Daniel shall be paid for all for Services performed
through the date of cancellation, all proven cancellation
charges by vendors, subcontractors and others, an equitable
portion of any fees and/or profit, and the cost of all
demobilization expenses, in accordance with the provisions
of this Agreement.
ARTICLE IX
COMPLETION, START UP AND VALIDATION
9.1 Scheduled Completion
Fluor Daniel shall commence the Services immediately after
the date of this Agreement and shall prosecute the Services
continuously, expeditiously and with adequate forces and due
diligence. TIME IS OF THE ESSENCE with respect to the date
scheduled for Completion, but not with respect to other
scheduled dates or Milestones. The Project is scheduled to
be Complete on or before December 31, 1997, which scheduled
date is subject to adjustment only as expressly provided
herein.
9.2 Acceptance
(a) Mechanical Completion When Fluor Daniel deems it
has achieved Mechanical Completion with respect to the
Project as defined in Exhibit A, it shall so notify
MedImmune in writing. At MedImmune's option and sole
discretion, Fluor Daniel shall notify MedImmune
regarding Mechanical Completion of specific portions of
the Project. Within ten (10) days thereafter,
MedImmune shall advise Fluor Daniel in writing of any
defects in the Services or incomplete items for which
Fluor Daniel is responsible under this Agreement which
prevent achievement of Mechanical Completion. As soon
as such defects and incomplete items are corrected (or
as soon as the ten (10) day period for such notice has
expired if MedImmune does not advise Fluor Daniel of
any such defects or incomplete items within the
period), Fluor Daniel shall be deemed to have achieved
Mechanical Completion with respect to all or the
specific portion of the Project.
(b) Start Up and Validation Following Mechanical
Completion, Fluor Daniel will complete all remaining
Services, provide personnel, tools and equipment, and
materials necessary or appropriate to start up the
Project (with "water runs" and not actual feedstock),
and shall Validate the Project through IQ and OQ, all
as described in more detail in Exhibit "A". Validation
of the Project following IQ and OQ shall be within the
discretion of, and shall be the responsibility of
MedImmune.
(c) Completion "Completion" shall have occurred when
Fluor Daniel has fully and finally completed all the
Services and OQ has been achieved, provided that (i)
Fluor Daniel shall provide to MedImmune thirty (30) day
advance notice prior to the estimated date of
Completion; (ii) Fluor Daniel shall have complied with
the requirements of Section 4.4, and (iii) the
appropriate governmental authorities shall have issued
a certificate of occupancy or its equivalent for the
Project (unless the nonissuance thereof is for reasons
related solely to bureaucratic delay notwithstanding
Fluor Daniel's timely compliance with its obligations
hereunder).
9.3 Nonwaiver
No acceptance or deemed acceptance of the Services by
MedImmune under Paragraph 9.2 shall (1) affect any warranty
of Fluor Daniel hereunder, (2) modify or impair the
obligation of Fluor Daniel to perform the Services in
accordance with this Agreement, including, without
limitation, the obligation to construct the Project in
accordance with MedImmune-approved plans and specifications
and applicable Laws or (3) otherwise constitute a waiver or
acceptance of any defective or nonconforming work other than
nonconforming work specifically acknowledged and approved in
writing by MedImmune.
9.4 Early Completion Bonus/Liquidated Delay Damages
(a) Early Completion Bonus If Fluor Daniel achieves
Completion prior to December 15, 1997 (as such date may be
hereafter adjusted as provided in this Agreement), MedImmune
will pay Fluor Daniel an early completion bonus of $250,000
per week for each week of early Completion with a cap not to
exceed Four Million Dollars ($4,000,000.00).
(b) Liquidated Delay Damages If Fluor Daniel does not
achieve Completion until after December 31, 1997 (as such
date may be hereafter adjusted, but only as expressly
provided in this Agreement), Fluor Daniel shall pay
MedImmune as liquidated damages (and not as a penalty) One
Hundred Thousand Dollars ($100,000.00) per week for the
first four weeks; Four Hundred Thousand Dollars
($400,000.00) per week for the next eight weeks and Fifty
Thousand Dollars ($50,000) per week after March 31, 1998.
In no event shall Fluor Daniel's total aggregate liability
under this Agreement for liquidated damages exceed Four
Million Dollars ($4,000,000.00). The parties hereby agree
that in the event that Fluor Daniel does not achieve
Completion by the date scheduled for Completion (as such
date may be hereafter adjusted, but only as expressly
provided in this Agreement), MedImmune will suffer damages
which will be difficult to calculate and the parties agree
that the liquidated damages provided in this Section 9.4(b)
are a fair and reasonable estimate thereof and shall not be
viewed as a penalty.
(c) For purposes of this Article 9, the figures for Early
Completion Bonuses and/or Liquidated Delay Damages shall be
pro-rated on a daily basis for partial weeks of early
completion or delay.
(d) Exclusive Remedy The parties hereby agree that the
Liquidated Damages provided in Section 9.4(b) (and the
rights as referenced in Section 8.1) of this Agreement,
shall be the sole and exclusive remedies of MedImmune
against Fluor Daniel and the sole and exclusive liabilities
of Fluor Daniel to MedImmune in connection with any failure
or alleged failure to timely perform and/or complete any of
its obligations under this Agreement, and Fluor Daniel shall
not have any other or further liabilities in connection with
the timeliness of its performance under this Agreement.
ARTICLE X
GENERAL PROVISIONS
10.1 Independent Contractor
Fluor Daniel shall be an independent contractor with respect
to the Services to be performed hereunder. Except as
hereinabove noted, neither Fluor Daniel nor its
subcontractors, nor the employees of either, shall be deemed
to be the servants, employees or agents of MedImmune.
10.2 Safety, Environmental and Legal Compliance
(a) Fluor Daniel shall perform all Services and give
all notices in compliance in all material respects with
all applicable federal, state and local laws, rules,
regulations, permits, approvals and ordinances
including, without limitation, the Food, Drug &
Cosmetic Act and the rules and regulations promulgated
thereunder and all environmental laws, rules and
regulations ("Laws").
(b) Anything herein to the contrary notwithstanding,
title to, ownership of, and legal responsibility and
liability for any and all "Pre-Existing Contamination"
shall at all times remain with MedImmune. Pre-Existing
Contamination is any hazardous or toxic substance
present at the Project site which was not brought onto
such site by Fluor Daniel, its agents or
subcontractors. MedImmune releases, and agrees to
defend, indemnify and hold Fluor Daniel harmless from
and against any and all liability which may in any
manner arise or in any way be directly or indirectly
caused by such Pre-Existing Contamination.
(c) Notwithstanding Sections 5.1 and 10.2(a), and any
other provisions to the contrary, the parties recognize
that certain legal requirements (including, without
limitation, environmental, validation, health and
safety requirements) are imprecise and subject to
varied interpretation and that therefore Fluor Daniel's
obligation of designing in accordance with and
otherwise complying with Laws shall be limited to its
obligation to design the Project in accordance with
and/or to otherwise comply with Laws and
interpretations thereof which are generally known or
should be known by engineering and construction
contractors of Fluor Daniel's size, sophistication and
experience (inclusive, without limitation, experience
in the design, engineering, procurement, construction
and validation of biotechnology and/or bioprocessing
manufacturing facilities) at the effective date of
this Agreement (the "Recognized Laws"). Fluor Daniel
shall modify the Services as necessary to comply with
changes in the Recognized Laws, provided, however, that
such modification shall be considered a change in the
Services under Section 3.2.
10.3 Force Majeure
Any delays in or failure of performance by MedImmune or
Fluor Daniel, other than payment of money, shall not
constitute default hereunder if and to the extent such
delays or failures of performance are caused by occurrences
which are unforeseen and are beyond the control of MedImmune
or Fluor Daniel, as the case may be (after diligence to
overcome or prevent such occurrences) including, but not
limited to: acts of God or the public enemy; expropriation
or confiscation of facilities; compliance with any order or
request of any governmental authority, unless such order is
reasonably foreseeable or arises in connection with a
default hereunder; act of war or rebellion or sabotage or
damage resulting therefrom; unavoidable fires, floods,
explosions, or accidents not caused by the negligence or
willful misconduct of the party seeking force majeure
treatment; adverse weather patterns which are abnormal for
the geographic area in which the project is located; or
riots or strikes or other concerted acts of workmen, whether
direct or indirect; or any causes, whether or not of the
same class or kind as those specifically above named, which
are not reasonably foreseeable at the time the Services were
commenced and which are not within the control of MedImmune
or Fluor Daniel respectively, and which by the exercise of
reasonable diligence, MedImmune or Fluor Daniel are unable
to prevent. The Contract Price, the Project Schedule, if
any, and any scheduled completion date(s) shall be equitably
adjusted to account for any force majeure event and Fluor
Daniel shall be reimbursed by MedImmune only for all
external costs (excluding overhead, general conditions, and
all costs of Fluor Daniel employees on site or in
supervisory, administrative, or executive roles) incurred in
connection with or arising from a force majeure event
including, but not limited to, those external costs incurred
in the exercise of reasonable diligence to avoid or mitigate
a force majeure event. Fluor Daniel will use reasonable
efforts to exclude reimbursement of force majeure costs in
the subcontracts it places on this Project. Notwithstanding
any of the foregoing to the contrary, Fluor Daniel hereby
acknowledges that it is experienced in the construction of
projects similar to the Project, and that, based on such
experience, it believes that the Project can be completed
within the time frame set forth in this Agreement, taking
into account normal and foreseeable delays in processing
permits by governmental authorities, normal delays in
deliveries of materials, normal weather patterns for the
geographic area in which the Project is located and similar
occurrences for similar types of projects in the geographic
area in which the Project is located. Fluor Daniel may
terminate this Agreement pursuant to the terms of Section
8.2 in the event any force majeure event continues for more
than 90 days (but shall not be paid any of its remaining
fees or profit in such instance).
10.4 Title to Plans and Specifications
All drawings and specifications prepared by Fluor Daniel
pursuant to this Agreement which Fluor Daniel supplies to
MedImmune in accordance with this Agreement shall become the
property of MedImmune. MedImmune shall indemnify, defend
and hold Fluor Daniel harmless from and against all losses,
expenses, claims and damages which result from any
disclosure, use or reuse of any such items other than in
connection with completing construction, maintenance,
operation, modification and/or repair of the subject
Project.
10.5 Patents
Fluor Daniel agrees to include, as a term or condition of
each purchase order or other agreement employed by it in the
performance of the Services, a patent indemnification
provision extending from the vendor under such purchase
order or other agreement to MedImmune and Fluor Daniel, and
to render such assistance to MedImmune as may be reasonably
required to enforce the terms of such indemnification.
10.6 Secrecy Agreements
Any agreements or representations between Fluor Daniel and
MedImmune entered into prior to the effective date hereof
relating to secrecy or confidentiality of information
exchanged between Fluor Daniel and MedImmune shall survive
any completion of the Services hereunder, or any other
termination or cancellation of this Agreement, in accordance
with the respective terms and conditions of such other
agreement or agreements.
10.7 Representations and Remedies
Fluor Daniel and MedImmune make no representations,
covenants, warranties or guarantees, express or implied,
other than those expressly set forth herein. The parties'
rights, liabilities, responsibilities and remedies with
respect to the Services, whether in contract, tort,
negligence or otherwise, shall be exclusively those
expressly set forth in this Agreement.
10.8 Damages
Except only for: (i) the liquidated damages provided in
Section 9.4(b); (ii) those damages or obligations expressly
set forth in Sections 8.1; and (iii) such damages that may
arise from Fluor Daniel's fraud, gross negligence or willful
misconduct; Fluor Daniel shall in no event be responsible or
held liable for any indirect, incidental, special or
consequential damages of any nature whatsoever, including,
without limitation, liability for loss of use of property,
loss of profits or other revenue, interest, loss of product,
increased expenses or business interruption, however the
same may be caused and in no event shall Fluor Daniel's
total aggregate liability to MedImmune in connection with
the Services and/or this Agreement (including any breach
thereof) exceed the Contract Price.
10.9 Audit and Maintenance of Records
MedImmune shall have the right to audit and inspect Fluor
Daniel's records and accounts covering costs reimbursable
hereunder at all reasonable times during the course of the
Services and for a period of one (1) year after the earlier
of (i) acceptance thereof pursuant to Section 9.2, or (ii)
termination thereof pursuant to Article VIII; provided,
however, no audit rights shall extend to the make-up of
fixed rates, unit rates, or of costs which are expressed in
terms of percentages of other costs.
10.11 Assignment
This Agreement shall not be assignable by either party
without the prior written consent of the other party hereto,
except that (a) it may be assigned without such consent to
the legal successor of either party, or to a person, firm or
corporation acquiring all or substantially all of the
business assets of such party or to a wholly owned
subsidiary of either party, but any such assignment shall
not relieve the assigning party of any of its obligations
under this Agreement. No assignment of this Agreement shall
be valid until this Agreement shall have been assumed by the
assignee. When duly assigned in accordance with the
foregoing, this Agreement shall be binding upon and shall
inure to the benefit of the assignee.
10.12 Subcontracts
Fluor Daniel may subcontract portions of the Services
required to be performed by Fluor Daniel to an independent
subcontractor, provided that such subcontract shall not
relieve Fluor Daniel of any of its obligations under this
Agreement. Fluor Daniel may have portions of the Services
performed by its affiliated entities or their employees, in
which event Fluor Daniel shall be responsible for such
Services and MedImmune shall look solely to Fluor Daniel as
if the Services were performed by Fluor Daniel. Each
subcontract shall be expressly assignable to MedImmune,
their successors and assigns.
10.13 Notices
All notices pertaining to this Agreement shall be in writing
and, if to MedImmune, shall be sufficient when sent
guaranteed overnight delivery by a nationally recognized
reputable courier to MedImmune at the following address:
MedImmune, Inc.
35 West Watkins Road
Gaithersburg, MD 20878
Attention: David Mott
With a copy to:
Dewey Ballantine
1775 Pennsylvania Ave., N.W.
Washington, D.C. 20006
Attention: Howard J. Rosenstock
All notices to Fluor Daniel shall be sufficient when sent
guaranteed overnight delivery by a nationally recognized
reputable courier to Fluor Daniel at the following address:
Fluor Daniel, Inc.
301 Lippincott Centre
P.O. Box 950
Marlton, NJ 08053
Attention: Tom Trevithick
Notices shall be deemed sent when received.
10.14 Miscellaneous
(a) This Agreement shall be governed by and
interpreted in accordance with the laws of the State of
Maryland.
(b) Headings and titles of Articles, Sections,
Paragraphs and other parts and subparts of this
Agreement are for convenience of reference only and
shall not be considered in interpreting the text of
this Agreement. Modifications or amendments to this
Agreement must be in writing and executed by duly
authorized representatives of each party.
(c) Except as expressly stated to the contrary herein,
indemnities against, releases from, assumptions of and
limitations on liability expressed in this Agreement,
as well as waivers of subrogation rights, shall apply
even in the event of the fault, negligence or strict
liability of the party indemnified or released or whose
liability is limited or assumed or against whom rights
of subrogation are waived and shall extend to the
officers, directors, employees, licensors, agents,
affiliates, partners and related entities of such
party.
(d) In the event that any portion or all of this
Agreement is held to be void or unenforceable, the
balance of this Agreement shall remain effective and
the parties agree to negotiate in good faith to reach
an equitable agreement as to the unenforceable or void
provision which shall effect the original intent of the
parties as set forth in this Agreement.
(e) The parties agree to look solely to each other and
to their permitted assigns under Section 10.11, with
respect to the performance of this Agreement and the
Services to be provided hereunder. This Agreement and
each and every provision hereof is for the exclusive
benefit of MedImmune and Fluor Daniel and not for the
benefit of any third party, and no third party shall be
entitled to rely upon or enforce the terms of this
Agreement, or to be a third party beneficiary thereof,
except to the extent expressly provided in Section
10.14 (c).
(f) The provisions of this Agreement which by their
nature are intended to survive the termination,
cancellation, completion or expiration of the
Agreement, including, but not limited to, indemnifies
and any expressed limitations of or releases from
liability, shall continue as valid and enforceable
obligations of the parties notwithstanding any such
termination, cancellation, completion or expiration.
(g) No failure by either party to insist on
performance of any term, condition, or instruction, or
to exercise any right or privilege included in this
Agreement, shall construe a waiver of any breach hereof
unless waived in writing by such party and no such
written waiver of any breach shall constitute a waiver
of any subsequent breach of any other term, condition,
instruction, breach, right or privilege.
(h) All claims, disputes and other matters in question
which arise out of or relate to this Agreement
(including any breach thereof) shall be decided by a
court of competent jurisdiction without a jury, in the
state or federal courts in the State of Maryland.
(i) The parties hereby agree that regardless of any
statute of limitations period or any other time within
which a party is allowed to commence an action under
Maryland or other applicable law, any legal action or
proceeding commenced by any party under this Agreement
against another party in connection with this Agreement
(including, without limitation, any breach thereof),
other than an action premised on fraud, must be
commenced no later than three (3) years after the
earlier of (i) Completion or (ii) termination or
cancellation of the Services under Article VIII.
10.15 Fluor Daniel Representations and Warranties
Fluor Daniel hereby represents and warrants that prior to
entering into this Agreement, it has examined and inspected
the site at which the Project will be located and has
satisfied itself as to the conditions thereof, and reviewed
all available data and reports pertaining to the site,
including any environmental reports, soil samples and
related studies. Fluor Daniel hereby represents and
warrants that it possesses the experience, expertise and
resources necessary to perform the Services under this
Agreement and to otherwise design, engineer, construct and
validate the Project. Fluor Daniel shall employ an
experienced (in comparable projects) and competent Project
construction team. If MedImmune reasonably requests that a
member of the Project construction team be removed for
cause, then Fluor Daniel shall make such change promptly.
10.16 Work by MedImmune
MedImmune shall have access to the Project at all times.
MedImmune reserves the right to perform work related to, but
not part of, the Project and to award separate contracts in
connection with other work at the site. Fluor Daniel shall
afford MedImmune's separate contractors reasonable
opportunity for introduction and storage of their materials
and equipment for execution of their work. Any material
interference with the progress of Fluor Daniel's Services by
MedImmune or its separate contractors after notice and
failure to cure within twenty-four hours shall give rise to
a change order adjusting the Contract Price and Schedule for
the effects of such interference.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first above written.
MedImmune, Inc. Fluor Daniel, Inc.
By: Wayne T. Hockmeyer By: Tom Trevithick
Name Printed: Wayne T. Hockmeyer Name Printed: Tom Trevithick
Title: Chairman and Chief Title: Vice President,
Executive Officer General Manager
Exhibit "A"
SCOPE OF SERVICES/FACILITIES
(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR ENTIRE EXHIBIT A)
Exhibit B
Contract: 23619800
MedImmune, Inc.
Frederick, MD - Manufacturing Facility
Fluor Daniel Milestone Payment Schedule Blood
Fractionation, Cell Culture, Sterile Fill & Utilities
ACCELERATED PROJECT SCHEDULE
Activity Total
Invoice # Through Activities Value Invoice $
- ------------- -------- ---------------------------- ----------- ----------
Previous 6/30/96 Flour Daniel Preliminary
Engineering/Subcontracts/ 1,313,359 1,313,359
Equipment(invoiced or paid
to date- 5/31/96)
Milestone-0 Contract Closing 3,500,000 3,500,000
Milestone-1 7/31/96 Release Mill Order for
Structural Steel 200,000 1,063,085
Deep Foundations Package
Issued for Bid 200,000
Obtain Mass Grading Permit 200,000
Substantial Start of P&ID's 263,085
Site Preparation Package
Issued for Bid 200,000
Milestone-2 8/31/96 Site Civil Construction
Plans Complete 300,000 1,670,780
Foundation Package Issued
for Bid 350,000
Construction Management
Mobilized to Project Site 320,780
Award Site Preparation
Contract 300,000
Substantial Start of Rough
Grading 400,000
Milestone-3 9/30/96 Issue P&ID's for Approval
500,000 2,710,610
Building Foundations
Contract Awarded 460,610
Structural Steel Fabrication
Drawings Issued 600,000
Bid & Award Bioreactors 550,000
Rough Grading Completed 600,000
Milestone-4 10/31/96 Roofing Contract Awarded 600,000 3,068,753
Moblization Complete 600,000
Substantial Start of
Structural Steel 600,000
Deep Foundations Completed 668,753
Site Preparation Complete 600,000
Milestone-5 11/30/96 Substantial Start of U/G
Piping 653,678 3,053,678
Substantial Start of Struct-
ural Steel for Elevated
Slabs 600,000
Substantial Start of U/G
Electrical 600,000
Masonry Contract Awarded 600,000
Substantial Start of Roofing 600,000
Milestone-6 12/31/96 Building Foundations 3,470,623
Complete 700,000
Structural Steel for
Elevated Slabs Complete 700,000
Substantial Start of
Exterior Siding 700,000
Substantial Start of
Elevated Slabs 670,623
Substantial Start of Slab on
Grade 700,000
Milestone-7 1/31/97 Substantial Start of
Building Electrical 750,000 3,735,216
Substantial Start of
Equipment Installation 750,000
Substantial Start of
Interior Finishes 750,000
Substantial Start of
Instrumentation 750,000
Substantial Start of HVAC
Ductwork Installation 735,216
Milestone-8 2/28/97 Structural Steel Complete 750,000 3,700,699
Slab On Grade Complete 750,000
U/G Piping Complete 750,000
Elevated Slabs Complete 750,000
Equipment Foundations &
Platforms Complete 700,699
Milestone-9 3/31/97 Roofing Complete 600,000 3,027,993
Exterior Finishes Complete 600,000
Building Dried In 600,000
Substantial Start of Fire 627,993
Protection IQ/OQ Development
Complete 600,000
Milestone-10 4/30/97 Paving/Landscaping Contract
Awarded 600,000 2,894,999
HVAC Ductwork 50% Complete 600,000
Fire Protection 50% Complete 600,000
Building Electrical 50% Complete 600,000
Substantial Start of Cold
Boxes Installation 494,999
Milestone-11 5/31/97 Fire Protection Complete -
Except Heads 550,000 2,407,894
Process Electrical 50%
Complete 550,000
Equipment Installation 50%
Complete 507,894
Process & Utility Piping 50%
Complete 500,000
Instrumentation Installation
50% Complete 300,000
Milestone-12 6/30/97 Substantial Start of 600,000 2,439,936
Painting
Landscape/Site Paving
Contract Awarded 500,000
Interior Architectural 50%
Awarded 500,000
Installation of "Cold Boxes"
Complete 539,936
Equipment Installation 75%
Complete 300,000
Milestone-13 7/31/97 Substantial Start of
Validation Field Service 553,032 2,353,032
Building Electrical Complete 500,000
Substantial Start of 500,000
Landscape/Site Paving
HVAC Installation Complete 500,000
Substantial Start of
Insulation 300,000
Milestone-14 8/31/97 Equipment Installation
Complete 200,000 1,142,674
Process Electrical Complete 200,000
Validation Services - I/Q/OQ
20% Complete 242,674
Substantial Start of Start-
Up Services 300,000
HVAC Testing And Balancing
Complete 200,000
Milestone-15 9/30/97 Manufacturing Facility
Mechanically Complete 90,000 404,876
Insulation Complete 90,000
Instrumentation Complete 90,000
Interior Architectural
Finishes Complete 90,000
Validation Services IQ/OQ
40% Complete 44,876
Milestone-16 10/31/97 Validation Services - IQ/OQ
60% Complete 92,994 185,988
Start-Up 50% Complete
92,994
Milestone-17 11/30/97 Validation Services - IQ/OQ
80% Complete 176,251 176,251
Start-up Services Complete
Milestone-18 12/31/97 Project Validation Complete 179,554 179,554
----------
42,500,000
==========
EXHIBIT B-1
LETTER OF CREDIT DRAFT IN LIEU OF RETENTION SAMPLE
ISSUING BANK: A1 CREDIT BANK
COMPLETE ADDRESS
BENEFICIARY: FULL CLIENT NAME
COMPLETE ADDRESS
ATTN: CONTACT NAME
AT THE REQUEST AND FOR THE ACCOUNT OF (FLUOR ENTITY),
_____________________, WE HEREBY ISSUE THIS IRREVOCABLE STANDBY
LETTER OF CREDIT IN THE AMOUNT OF __________________________
($________), WHICH IS AVAILABLE AGAINST SIGHT DRAFT(S) OF THE
BENEFICIARY BEARING THE CLAUSE "DRAWN UNDER IRREVOCABLE STAND-BY
LETTER OF CREDIT NUMBER _______________" AND ACCOMPANIED BY THE
FOLLOWING DOCUMENTS:
1. A CERTIFICATE DATED AND SIGNED BY A PURPORTED AUTHORIZED
OFFICER OF THE BENEFICIARY STATING: "WE CERTIFY THAT THE
AMOUNT OF OUR DRAWING UNDER LETTER OF CREDIT NUMBER
______________ IS DUE US AS (FLUOR ENTITY) IS IN DEFAULT OF
ITS OBLIGATIONS WITH US UNDER CONTRACT NO. ____________
DATED _________________________."
2. A CERTIFICATE DATED AND SIGNED BY A PURPORTED AUTHORIZED
OFFICER OF THE BENEFICIARY STATING: "WE CERTIFY THAT THE
AMOUNT OF THE DRAFT PRESENTED DOES NOT EXCEED THE GREATER OF
THE AMOUNT ALLOWED PURSUANT TO ARTICLE _____, PARAGRAPH ____
OF SAID CONTRACT OR THE AMOUNT IN DISPUTE LESS ANY AMOUNTS
PREVIOUSLY DRAWN UNDER THIS LETTER OF CREDIT.
3. A COPY OF THE LETTER DATED AT LEAST SEVENTY-TWO (72) HOURS
PRIOR TO THE DRAWING UNDER THIS LETTER OF CREDIT ADDRESSED
TO (FLUOR ENTITY) READING AS FOLLOWS: "WE HEREBY INDICATE
OUR INTENTION TO DRAW UNDER ___________ BANK LETTER OF
CREDIT NO. ___________."
WE ENGAGE WITH YOU THAT ALL DRAFTS DRAWN UNDER AND IN COMPLIANCE
WITH THE TERMS OF THIS LETTER OF CREDIT WILL BE DULY HONORED UPON
DELIVERY OF DOCUMENTS AS SPECIFIED IF PRESENTED AT THIS OFFICE ON
OR BEFORE DECEMBER 31, 1998.
PARTIAL DRAWINGS ARE PERMITTED.
ALL AMOUNTS DRAWN IN COMPLIANCE WITH THE TERMS AND CONDITIONS OF
THIS LETTER OF CREDIT WILL BE TRANSFERRED BY WIRE TRANSFER INTO
THE BENEFICIARY'S ACCOUNT NUMBER _____________ IN
_____________________________(BANK). ABA
NO.______________________________________(CITY),_________________
____(STATE).
THIS LETTER OF CREDIT IS SUBJECT TO THE UNIFORM CUSTOMS AND
PRACTICES FOR DOCUMENTARY CREDITS (1983 REVISION). INTERNATIONAL
CHAMBER OF COMMERCE PUBLICATION 500.
EXHIBIT "C"
SCHEDULE OF REIMBURSABLE COSTS
I. LABOR AND CERTAIN OVERHEAD COSTS
A. Home Office and Validation Personnel
The services of all Fluor Daniel personnel, including of
Engineering, Validation, and Home Office Support for
Construction [other than (i) Field Salaried Personnel and
(ii) Field Craft Personnel], which personnel are
hereinafter referred to as "Home Office Personnel", will be
invoiced on an hourly basis at the billing rates set forth
in the attached Home Office Labor Rate Schedule. These
rates will increase by six percent (6%) on June 1, 1997,
and will be subject to further revision on each year
thereafter.
B. Field Personnel
1. Field Salaried Personnel
The services of all Fluor Daniel salaried and contract
agency personnel who are permanently assigned to the
Project site, which personnel are hereinafter referred to
as "Field Salaried Personnel", will be invoiced on an
hourly basis at their actual base compensation multiplied
by a multiplier of (CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED). This multiplier will be subject to revision on
June 1, 1997 and on each year thereafter.
2. Field Craft Personnel
The services of all of Fluor Daniel's hourly personnel
who are permanently assigned to the Project Site, which
personnel are hereinafter referred to as "Field Craft
Personnel", will be invoiced on an hourly basis at their
actual base compensation multiplied by a multiplier of
(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED). This
multiplier will be subject to revision on June 1, 1997 and
on each year thereafter.
C. Certain Home Office Overhead Costs
The costs set forth above for Home Office Personnel
include the following overhead costs:
Payroll taxes and insurance;
Group hospitalization insurance;
Employer's liability insurance;
Vacation, holiday and sick leave time;
Normal home and branch office rents;
Home Office personnel administration;
Home Office light, heat, water, local telephone;
Home Office furniture and equipment;
Home Office general office supplies;
Home Office general business taxes and licenses; and
Non-project accounting and in-house legal
services rendered by internal Fluor Daniel personnel.
An additional charge of $(CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED) per hour will be billed for all hours worked at the
home office by Home Office Personnel to cover the following home
office overhead costs:
Word Processing equipment
Blueprinting and other reproductions
Shipping and postage costs
Personal computer time and program charges
Telegrams, teletype, facsimiles and long
distance telephone calls
Consumable engineering supplies
II. OTHER REIMBURSABLE COSTS (NON-LABOR)
Owner shall pay Fluor Daniel, at actual or scheduled cost,
for the following costs reasonably incurred by Fluor Daniel
in connection with the Purchasing Agreement:
i) Materials and Equipment. The cost of materials,
machinery, equipment, supplies, parts and miscellaneous
services purchased by Fluor Daniel.
ii) Transportation of Materials, Machinery and
Equipment. The cost of all transportation expenses for
materials, machinery, tools and equipment including the
cost of loading, hauling, unloading and insurance.
iii) Travel and Relocation Expenses. The cost of
transportation, travel, relocation and/or per diem
expenses and other related expenses for Fluor Daniel
personnel in accordance with Fluor Daniel=s established
policies.
iv) Taxes. The cost of any duties, taxes or licenses,
other than taxes on Fluor Daniel's net income.
v) Compliance With Laws. All costs (including
attorneys fees) incurred in connection with compliance
with statutes, rules, regulations, ordinances, orders and
other laws.
vi) Purchase Orders and Contracts. All costs of and
arising out of subcontracts, purchase orders, contracts
and other agreements entered into by Fluor Daniel.
vii) Audits, Monitoring and Accounting. The cost of
audits and similar programs monitoring the financial or
other aspects of the Purchase Agreement.
viii)Litigation and Related Costs. The cost of
attorneys' fees, costs, settlements and judgements
incurred in connection with any labor or commercial
matters, litigation, claims or disputes (except between
Owner and Fluor Daniel) arising out of or in connection
with the Purchase Agreement.
ix) Miscellaneous Expense. Miscellaneous expenses,
such as custom forms, freight, express, duties, and other
costs and expenses incurred in connection with the
Purchasing Agreement.
HOME OFFICE LABOR RATE SCHEDULE
The services of Home Office Personnel utilized for the Services
will be invoiced on an hourly basis at the following hourly
billing rates:
General Hourly Description Billing Rates
---------------------------------------------------------------
Billing
Code Billing Classification Labor Rate
01 Information Records Clerk* *
02 Word Processing Technician I* *
03 Engineering Aide I* *
04 Secretary II* *
05 Industrial Relations Tech II* *
06 Lead Data Control Tech* *
07 Procurement Specialist I* *
08 Sr. Engineering Technician II* *
09 Procurement specialist II* *
10 Construction Technician II* *
11 Senior Inspector* *
13 Accountant I *
14 Associate Engineer I *
15 Engineering coordinator I *
16 Associate Engineer II *
17 Administrative Manager *
18 Engineer *
19 Architect II *
20 Engineer II *
21 Senior Engineer *
22 Principal Engineer *
23 Director *
90 Drafter I* *
91 Drafter II* *
92 Drafter III* *
93 Drafter IV* *
94 Designer I* *
95 Designer II* *
96 Senior Designer II* *
97 Principal Designer* *
98 Design Supervisor *
99 Senior Design Supervisor *
Hours worked for the project in excess of 8 hours per day or 40
hours per week by an individual in classifications with a billing
code with an asterisk will be invoiced at the rate shown above
plus of (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) percent; all
hours worked for the project by individuals in other
classifications will be invoiced at the rate shown above.
Contract agency employees will be billed at a of (CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED) multiplier of the actual amount
invoiced to Fluor Daniel.
*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
EXHIBIT 10.65
PORTIONS OF THE FOLLOWING DOCUMENT HAVE DELETED
DUE TO THE CONFIDENTIAL NATURE OF THE
INFORMATION CONTAINED THEREIN.
SUCH DELETIONS ARE INDICATED AS FOLLOWS:
(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)
THE CONFIDENTIAL INFORMATION HAS BEEN FILED
SEPARATELY WITH THE COMMISSION
RESEARCH AND LICENSE AGREEMENT
This Agreement, effective as of November 1, 1996 ("EFFECTIVE
DATE"), by and between OraVax Merieux Co. ("O-M") having an
address at 38 Sidney Street, Cambridge, MA 02139, Merieux OraVax
S.N.C. ("M-O") having an address at 58. avenue Leclerc, 69007
Lyon, France ("O-M" and "M-O" are individually and collectively
referred to as "HPC") and MedImmune, Inc., a Delaware Corporation
having offices at 35 West Watkins Mill Road, Gaithersburg, MD
20878 ("MEDIMMUNE") and Human Genome Sciences, Inc., a Delaware
corporation having offices at 9410 Key West Avenue, Rockville, MD
20850 ("HGS").
WHEREAS, HPC, MEDIMMUNE and HGS each have substantial
knowledge and expertise in and own or have rights to certain
technology relating to vaccines, genes, gene sequencing, protein
expression and purification; and
WHEREAS, the PARTIES desire to enter into a research and
licensing arrangement in an effort to develop vaccines against
Helicobacter pylori ("H. pylori").
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" shall mean, with respect to any person or
entity, (i) any other person or entity of which the
securities or other ownership interests representing fifty
per cent (50%) or more of the equity or fifty percent (50%)
or more of the ordinary voting power or fifty percent (50%)
or more of the general partnership interest are, at the
time such determination is being made, owned, Controlled or
held, directly or indirectly, by such person or entity, or
(ii) any other person or entity which, at the time such
determination is being made, is Controlling, Controlled by
or under common Control with, such person or entity. As
used herein, the term "Control" whether used as a noun or
verb, refers to the possession, directly or indirectly, of
the power to direct, or cause the direction of, the
management or policies of a person or entity whether
through the ownership of voting securities, by contract or
otherwise.
1.2 "CONFIDENTIAL INFORMATION" shall mean know-how, technology,
inventions, technical information, software, data,
biological materials and the like which are owned or
controlled by the disclosing PARTY or which that PARTY is
obligated to maintain in confidence, provided, however,
that information disclosed by Dr. J.F. Tomb during a
presentation at the "9th International Workshop on
Gastroduodenal Pathology and Helicobacter pylori" held
October 16-19, 1996 in Copenhagen (the "TOMB DISCLOSURE")
will be excluded from the definition of CONFIDENTIAL
INFORMATION.
1.3 "FIELD" means the treatment or prevention of infection or
disease caused by H. pylori by use of a VACCINE.
1.4 "GENE" means DNA (or a portion thereof) of H. pylori.
1.5 "HGS" shall mean Human Genome Sciences, Inc.
1.6 "JOINT INVENTIONS" shall mean inventions conceived and
reduced to practice during the term of this Agreement
jointly by employees or others acting on behalf of HPC or
its AFFILIATES and by employees or others acting on behalf
of MEDIMMUNE or HGS, as the case may be, or their
AFFILIATES.
1.7 "JOINT PATENTS" shall mean (a) all patent applications
hereafter filed or having legal force in any country owned
jointly by MEDIMMUNE or HGS as the case may be and HPC,
which claim a composition, method or process relating to a
JOINT INVENTION, together with any and all patents that
have issued or in the future issue therefrom, and (b) all
related divisionals, continuations, continuations-in-part,
reissues, renewals or extensions or foreign counterparts to
any such patents and patent applications.
1.8 "HGS PATENTS" shall mean all patents and patent
applications which claim HGS TECHNOLOGY owned by HGS or
which has been licensed to HGS or JOINT PATENTS in which
HGS has an ownership interest. Included within the
definition of HGS PATENTS are all continuations,
continuations-in-part, divisions, reissues, renewals,
extensions or foreign counterparts thereof.
1.9 "HGS TECHNOLOGY" shall mean (i) GENES and/or expression
products thereof (including sequence and function) and (ii)
biological and genomic information with respect to GENES in
each case which have been developed by or on behalf of HGS
prior to or within one year after the EFFECTIVE DATE and
which is owned by HGS in whole or in part, provided,
however, that for the purposes of determining the royalty
due under Section 3.2(b) hereof, HGS TECHNOLOGY shall not
include such GENES, expression products, or biological and
genomic information with respect to such GENES that were
developed by or otherwise known to HPC prior to the
EFFECTIVE DATE.
1.10 "LICENSED PATENTS" means MEDIMMUNE PATENT(S) and/or HGS
PATENT(S) and/or JOINT PATENTS.
1.11 "LICENSED TECHNOLOGY" means MEDIMMUNE TECHNOLOGY and/or HGS
TECHNOLOGY and/or JOINT INVENTIONS.
1.12 "LICENSED TERRITORY" means all countries of the world.
1.13 "MEDIMMUNE PATENT(S)" shall mean all patents and patent
applications which claim MEDIMMUNE TECHNOLOGY owned by
MEDIMMUNE or which MEDIMMUNE has licensed from HGS or JOINT
PATENTS in which MEDIMMUNE has an ownership interest.
Included within the definition of MEDIMMUNE PATENTS are all
continuations, continuations-in-part, divisions, reissues,
renewals, extensions or foreign counterparts thereof.
1.14 "MEDIMMUNE TECHNOLOGY" shall mean (i) GENES and/or
expression products thereof (including sequence and
function) and (ii) biological and genomic information with
respect to GENES in each case which has been developed by
or on behalf of MEDIMMUNE prior to or within one year after
the EFFECTIVE DATE and which is owned by MEDIMMUNE in whole
or in part and/or which have been licensed by MEDIMMUNE
from HGS, provided, however, that for the purposes of
determining the royalty due under Section 3.2(b) hereof,
MEDIMMUNE TECHNOLOGY shall not include such GENES,
expression products, or biological and genomic information
with respect to such GENES that were developed by or
otherwise known to HPC prior to the EFFECTIVE DATE.
1.15 "NET SALES PRICE" means the total amount invoiced by HPC,
its AFFILIATES or its licensees for sale of PRODUCT, less
transportation charges and insurance, sales taxes, use
taxes, excise taxes, value added taxes, customs duties or
other imposts, in each case as separately invoiced, normal
and customary quantity and cash discounts, rebates granted
and disallowed reimbursements and allowances and credit on
account of rejection or return of PRODUCT.
In the event a sale is made between HPC and an AFFILIATE(S)
for re-sale then NET SALES PRICE for determining a payment
under this Agreement shall be the higher of (i) net sales
to the AFFILIATES calculated in the manner of NET SALES
PRICE, or (ii) the NET SALES PRICE of the AFFILIATE(S) to
an independent third party.
1.16 "PARTY" shall mean O-M, M-O, MEDIMMUNE or HGS.
1.17 "PATENT(S)" means individually and collectively MEDIMMUNE
PATENTS, HPC PATENTS, HGS PATENTS and JOINT PATENTS.
1.18 "HPC PATENT(S)" shall mean all patents and patent
applications which claim HPC TECHNOLOGY owned by HPC or
JOINT PATENTS in which HPC has an ownership interest.
Included within the definition of HPC PATENTS are all
continuations, continuations-in-part, divisions, reissues,
renewals, extensions or foreign counterparts thereof.
1.19 "HPC TECHNOLOGY" means GENES and/or expression products
thereof (including sequence and function), any process,
use, article of manufacture, composition of matter,
information (including biological and genomic information
with respect to GENES), data and materials, whether
patentable or not, which incorporates or is based on or
uses or is derived by use of LICENSED TECHNOLOGY and which
is developed by or on behalf of HPC or any of their
collaborators or licensees during the term of this
Agreement, provided, however, that for the purposes of
determining the royalty due under Section 3.2(b) hereof,
HPC TECHNOLOGY shall not include any GENE, expression
product, process, use, article of manufacture, composition
of matter, information, data or materials that were
developed by or otherwise known to HPC prior to the
EFFECTIVE DATE.
1.20 "PRODUCT(S)" shall mean any product, process, method,
substance, device, composition, or service which (i)
incorporates or is based on or uses or is derived by use of
LICENSED TECHNOLOGY and/or HPC TECHNOLOGY and/or (ii) is
covered by a LICENSED PATENT and/or (iii) is covered by a
HPC PATENT. An incidental or insubstantial use of LICENSED
TECHNOLOGY or HPC TECHNOLOGY shall not cause a product,
process, method, substance, device, composition or service
to become a PRODUCT.
1.21 "VACCINE" means a substance(s) utilized for active
immunization against infectious agents.
1.22 "VALID CLAIM" means (i) a claim of a pending patent
application or, (ii) a claim of an issued patent which has
not lapsed or become abandoned or been declared invalid or
unenforceable by a court of competent jurisdiction or an
administrative agency from which no appeal can be or is
taken.
SECTION 2 - GRANTS AND COVENANTS
2.1 Subject to the terms and conditions of this Agreement,
MEDIMMUNE grants to HPC an exclusive, worldwide royalty
free (except for the license fee payments set forth in
Section 3.1) license under MEDIMMUNE TECHNOLOGY, MEDIMMUNE
PATENTS and MEDIMMUNE'S ownership interest in JOINT
INVENTIONS and JOINT PATENTS to perform research and
development of PRODUCTS for use in the FIELD. HPC shall
have the right to grant sublicenses only as provided in
Paragraph 2.6.
2.2 Subject to the terms and conditions of this Agreement,
MEDIMMUNE grants to HPC an exclusive, sublicensable,
worldwide royalty-bearing license in the FIELD under
MEDIMMUNE TECHNOLOGY, MEDIMMUNE PATENTS and MEDIMMUNE'S
ownership interest in JOINT INVENTIONS and JOINT PATENTS to
make, have made, use, sell, import and export PRODUCTS in
the FIELD. HPC shall have the right to grant sublicenses
only as provided in Paragraph 2.6.
2.3 Subject to the terms and conditions of this Agreement, HGS
grants to HPC an exclusive, worldwide, royalty free (except
for the license fee payments set forth in Section 3.1)
license under HGS TECHNOLOGY, HGS PATENTS and HGS'
ownership interest in JOINT INVENTIONS and JOINT PATENTS,
to perform research and development of PRODUCTS for use in
the FIELD. HPC shall have the right to grant sublicenses
only as provided in Paragraph 2.6.
2.4 Subject to the terms and conditions of this Agreement, HGS
grants to HPC an exclusive, sublicensable, worldwide
royalty-bearing license in the FIELD under HGS TECHNOLOGY,
HGS PATENTS and HGS' ownership interest in JOINT INVENTIONS
and JOINT PATENTS to make, have made, use, sell, import and
export PRODUCTS in the FIELD. HPC shall have the right to
grant sublicenses only as provided in Paragraph 2.6
2.5 (a) During the term of this Agreement, HPC agrees to use
and to grant rights to HPC TECHNOLOGY and HPC PATENTS, in
each case and with respect to HPC'S interest in JOINT
INVENTIONS and JOINT PATENTS only in the FIELD or only as
otherwise permitted by this Agreement.
(b) During the term of this Agreement, HGS agrees to use
and to grant rights to HGS TECHNOLOGY and HGS PATENTS, in
each case and with respect to HGS' interest in JOINT
INVENTIONS and JOINT PATENTS, only outside the FIELD and
only as permitted by this Agreement.
(c) During the term of this Agreement, MEDIMMUNE agrees to
use and to grant rights to MEDIMMUNE TECHNOLOGY and
MEDIMMUNE PATENTS, in each case and with respect to
MEDIMMUNE'S interest in JOINT INVENTIONS and JOINT PATENTS,
only outside the FIELD and only as permitted by this
Agreement.
(d) During and after the term of this Agreement, HPC
agrees to use MEDIMMUNE TECHNOLOGY and MEDIMMUNE PATENTS
and HGS TECHNOLOGY and HGS PATENTS and JOINT INVENTIONS and
JOINT PATENTS only as licensed and permitted hereunder.
(e) Except as set forth in Section 9.1(b) of this
Agreement, neither PARTY will use, license or sublicense
their respective interest in the JOINT INVENTIONS or JOINT
PATENTS outside the FIELD without the express written
consent of the other PARTY having an interest in such JOINT
INVENTION or JOINT PATENT.
2.6 The rights and licenses granted to HPC by MEDIMMUNE and HGS
under this Agreement, and rights to HPC TECHNOLOGY and HPC
PATENTS, JOINT INVENTIONS and JOINT PATENTS are licensable
and/or transferable by HPC to a third party only with
respect to a PRODUCT in the FIELD, and, except for any
implied sublicense attaching to the commercial sale or
distribution of the PRODUCTS, pursuant to an agreement in
which the third party(ies) agree(s) (i) to covenants and
obligations which limit the use of PRODUCTS, MEDIMMUNE
TECHNOLOGY, MEDIMMUNE PATENTS, HGS TECHNOLOGY, HGS PATENTS,
JOINT INVENTIONS, JOINT PATENTS, HPC TECHNOLOGY and HPC
PATENTS which are essentially identical to the covenants
and obligations of HPC to MEDIMMUNE and HGS under this
Agreement and (ii) to obligations identical to Sections 5,
6 and 8 of this Agreement. Upon termination of this
Agreement for any reason, any sublicense granted by HPC
hereunder not then in default shall remain in force and
effect in accordance with its terms, provided, however,
that any sublicenses granted by HPC under this Agreement
shall provide for termination or assignment to MEDIMMUNE
and/or HGS, as the case may be, upon termination of this
Agreement.
2.7 HPC shall be solely responsible for the licensing,
manufacturing, marketing and sale of all PRODUCTS in the
FIELD.
SECTION 3 - PAYMENTS
3.1 In partial consideration of the rights granted to HPC
hereunder, HPC shall pay to MEDIMMUNE as a license fee of up to
(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) U.S. dollars ($U.S.
(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)) which shall be due
and payable in three payments as follows: (i) a payment of
$(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) which is due and
payable on or before December 6, 1996; (ii) a second payment of
$(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) which is due and
payable five (5) months after the EFFECTIVE DATE (the "SECOND
PAYMENT DATE"), provided, however, that such second payment of
$(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) shall be pro-rated
at a rate of $(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) per
month for each month, or part thereof, prior to the SECOND
PAYMENT DATE that any of the HGS TECHNOLOGY or MEDIMMUNE
TECHNOLOGY no longer qualifies as CONFIDENTIAL INFORMATION due to
disclosure of such HGS TECHNOLOGY or MEDIMMUNE TECHNOLOGY by HGS,
MEDIMMUNE or TIGR, with it being expressly understood that the
TOMB DISCLOSURE is not a disclosure of such HGS TECHNOLOGY or
MEDIMMUNE TECHNOLOGY; and (iii) a final payment of $(CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED) which is due and payable upon the
issuance of the first United States, Japanese or European Union
country PATENT. All payments to be made hereunder are payable
within 10 days of its due date and shall be by wire transfer or
other commercially reasonable method of transfer of immediately
available funds to an account designated by MEDIMMUNE.
3.2 HPC shall pay to MEDIMMUNE a royalty on the NET SALES PRICE
of PRODUCTS sold by HPC, its AFFILIATES or its licensees as
follows:
(a)For PRODUCTS covered by a VALID CLAIM of the PATENTS
where manufactured, used or sold, the royalty shall be
(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)% of NET
SALES PRICE. No royalty shall be due under this
Section 3.2(a) on any PRODUCTS covered only by a VALID
CLAIM of a pending PATENT which has not issued seven
(7) years following its earliest priority date (the
"CUT-OFF DATE"), provided, however, that royalties
shall continue to accrue for up to three (3) years
after the CUT-OFF DATE while such PATENT remains
pending, and such accrued royalty shall become payable
only upon the issuance of such pending PATENT within
such 3-year period.
(b)For PRODUCTS which are not covered by a VALID CLAIM of
PATENTS where manufactured, used or sold, the royalty
shall be (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)%
of NET SALES PRICE.
3.3 HPC shall make the following milestone payments to
MEDIMMUNE for PRODUCTS, which milestone payment shall be
due and payable within thirty (30) days after the milestone
event is achieved by or on behalf of HPC or an AFFILIATE of
HPC or a licensee of HPC:
(i) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)U.S.
Dollars ($(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)) upon
the first filing of a Product License Application in the
United States or equivalent outside the United States for
the first PRODUCT;
(ii) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)U.S.
Dollars ($(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)) when
cumulative NET SALES PRICE of PRODUCT(S) sold by HPC and/or
its AFFILIATES and/or licensees exceed (CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED) U.S. Dollars ($(CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED)); and
(iii) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)U.S.
Dollars ($(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)) when
cumulative NET SALES PRICE of PRODUCT(S) sold by HPC and/or
its AFFILIATES and/or licensees exceed (CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED) U.S. Dollars ($(CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED)). The milestone payments
provided in this Section 3.3 shall only be made once and
shall not be creditable or refundable.
3.4 Royalty obligations under this Agreement and any agreements
that HPC shall enter into with a licensee with respect to
PRODUCT shall terminate on a country-by-country and PRODUCT-
by-PRODUCT basis on the later of (i) ten (10) years after
first country-wide launch of the first PRODUCT in each
country or (ii) expiration of the last to expire PATENT
which covers the making, having made, importing, exporting,
offering to sell or using or selling of each PRODUCT in
each country.
3.5 All payments to be made hereunder shall be in United States
Dollars and by wire transfer, or other commercially
reasonable method of transfer, of immediately available
funds to an account designated by MEDIMMUNE.
3.6 No multiple royalties shall be payable because any PRODUCT,
or its manufacture or sale are or shall be covered by more
than one PATENT licensed under this Agreement.
SECTION 4 - TRANSFER OF LICENSED TECHNOLOGY
4.1 MEDIMMUNE and HGS, as the case may be, shall promptly
transfer the LICENSED TECHNOLOGY described in Exhibit A,
attached hereto and made a part hereof which is
CONFIDENTIAL INFORMATION to HPC.
4.2 During the first year of this Agreement MEDIMMUNE or HGS as
the case may be, at HPC's reasonable request and expense
shall provide to HPC reasonable technical assistance with
respect to LICENSED TECHNOLOGY in order to assure that HPC
is able to access and use the LICENSED TECHNOLOGY
transferred under Section 4.1.
4.3 HPC agrees to maintain security measures for LICENSED
TECHNOLOGY which are similar to the measures currently
employed by HPC to safeguard its own CONFIDENTIAL
INFORMATION.
4.4 For the purpose of facilitating an understanding of the
research activities in the FIELD conducted by each party
hereunder, the PARTIES will permit duly authorized
employees or representatives of the other to visit its
facilities where the research is conducted, at reasonable
times and with reasonable notice.
4.5 The transfer of one PARTY's materials to the other PARTY
pursuant to this Section shall not be considered to
transfer title to the materials or their progeny, but shall
be considered a bailment for the benefit of both PARTIES.
SECTION 5 - CONFIDENTIALITY.
5.1 During the term of this Agreement, it is contemplated that
each PARTY will disclose to the other CONFIDENTIAL
INFORMATION. Each PARTY agrees to retain the other party's
CONFIDENTIAL INFORMATION in confidence and not to disclose
any such CONFIDENTIAL INFORMATION to a third PARTY without
the prior written consent of the disclosing PARTY and to
use the other PARTY's CONFIDENTIAL INFORMATION only for the
purposes of this Agreement. In addition to the obligations
of confidentiality set forth above in this Section 5.1, HPC
and MEDIMMUNE each agree (i) not to publish LICENSED
TECHNOLOGY or HPC TECHNOLOGY which is CONFIDENTIAL
INFORMATION prior to a publication of HGS TECHNOLOGY by
TIGR, and (ii) that investigators from TIGR shall be
included as co-authors of such publications by HPC or
MEDIMMUNE if reasonably warranted.
5.2 The obligations of confidentiality of Section 5.1 and the
definition of CONFIDENTIAL INFORMATION will not apply to
data, information and materials that:
(a)was known to the receiving PARTY or generally known to
the public prior to its disclosure hereunder; or
(b)subsequently becomes known to the public by some means
other than a breach of this Agreement, or, with respect
to HGS TECHNOLOGY and MEDIMMUNE TECHNOLOGY,
subsequently becomes known to the public by disclosure
or publication by HGS, MEDIMMUNE or The Institute for
Genomic Research ("TIGR");
(c)is subsequently disclosed to the receiving PARTY by a
third party having a lawful right to make such
disclosure;
(d)is required by law or bona fide legal process to be
disclosed, provided that the PARTY required to make the
disclosure takes all reasonable steps to restrict and
maintain confidentiality of such disclosure and
provides reasonable notice to the PARTY providing the
disclosure; or
(e)is approved for release by the PARTIES, or
(f)is independently developed by the employees or agents
of either PARTY without any knowledge of the
CONFIDENTIAL INFORMATION provided by the other PARTY.
5.3 Notwithstanding Paragraph 5.1, HPC may disclose and/or
provide LICENSED TECHNOLOGY to a third party who (i)
receives a license from HPC to LICENSED TECHNOLOGY in
conjunction with a license to a PRODUCT in the FIELD as
permitted under this Agreement, or (ii) is a third party
contractor assisting HPC with respect to research and
development of a PRODUCT in the FIELD, provided that such
third party agrees to confidentiality and non-use
obligations essentially identical to Paragraph 5.1, and
further provided that such third party agrees to be bound
by the obligations of Paragraph 2.6. It is expressly
understood that inventions and developments of any such
third party shall be HPC TECHNOLOGY to the extent that they
fall within the definition thereof.
5.4 All CONFIDENTIAL INFORMATION disclosed by one PARTY to
another PARTY shall remain the intellectual property of the
disclosing PARTY. In the event that a court or other legal
or administrative tribunal, directly or through an
appointed master, trustee or receiver, assumes partial or
complete control over the assets of a PARTY to this
Agreement based on the insolvency or bankruptcy of such
PARTY, the bankrupt or insolvent PARTY shall promptly
notify the court or other tribunal (i) that CONFIDENTIAL
INFORMATION received from another PARTY under this
Agreement remains the property of the other PARTY and (ii)
of the confidentiality obligations under this Agreement.
In addition, the bankrupt or insolvent PARTY shall, to the
extent permitted by law, take all steps necessary or
desirable to maintain the confidentiality of the other
PARTY's CONFIDENTIAL INFORMATION and to insure that the
court, other tribunal or appointee maintains such
information in confidence in accordance with the terms of
this Agreement.
5.5 Neither HPC, MEDIMMUNE nor HGS shall, without the prior
written consent of the others, issue any press release or
make any other public announcement or furnish any statement
to any person (other than either PARTIES' respective
AFFILIATES) concerning the existence of this Agreement and
the transactions contemplated by this Agreement, except for
(i) disclosures made in compliance with Sections 5.1, 5.2
and 5.3, hereof, (ii) attorneys, consultants, and
accountants retained to represent them in connection with
the transactions contemplated hereby and (iii) occasional,
brief comments by the respective officers of HPC, MEDIMMUNE
and HGS consistent with such guidelines for public
statements as may be mutually agreed by HPC, MEDIMMUNE and
HGS made in connection with routine interviews with
analysts or members of the financial press. In addition,
each PARTY (after consultation with counsel) in its own
right may make such further announcements and disclosures,
if any, as may be required by applicable law, rule or
regulation in which case the PARTY making the announcement
or disclosure shall use its best efforts to give advance
notice to, and discuss such announcement or disclosure
with, the other PARTIES.
SECTION 6 - ROYALTY PAYMENTS AND RECORDS
6.1 HPC shall keep, and shall cause each of its AFFILIATES and
licensees to keep, full and accurate books of account
containing all particulars that may be necessary for the
purpose of calculating all royalties payable to MEDIMMUNE.
Such books of account shall be kept at their principal
place of business and, with all necessary supporting data
shall, for the three (3) years next following the end of
the calendar year to which each shall pertain be open for
inspection by an independent certified accountant
reasonably acceptable to HPC upon reasonable notice during
normal business hours at MEDIMMUNE' 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 HPC CONFIDENTIAL INFORMATION subject to the
obligations of this Agreement. In the event that such
inspection shall indicate that in any calendar year that
the royalties which should have been paid by HPC are at
least (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) percent
((CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)%) greater than
those which were actually paid to MEDIMMUNE, then HPC shall
pay the cost of such inspection and shall immediately pay
any royalty deficiency.
6.2 In each year the amount of royalty due shall be calculated
quarterly as of March 31, June 30, September 30 and
December 31 (each as being the last day of an "ACCOUNTING
PERIOD") and shall be paid quarterly within the following
sixty days, every such payment shall be supported by the
accounting prescribed herein and shall be made in United
States dollars. For the purpose of calculating royalties
conversion from any foreign currency, such conversion shall
be at the Exchange Rate published in the Wall Street
Journal under "Currency Trading," for the last business day
of the applicable ACCOUNTING PERIOD.
6.3 With each quarterly payment, HPC shall deliver to MEDIMMUNE
a full and accurate accounting to include at least the
following information on a country-by-country basis:
(a)Quantity of each PRODUCT subject to royalty sold (by
country) by HPC, its AFFILIATES and licensees.
(b)Total invoice and receipts for each PRODUCT subject to
royalty (by country);
(c)Calculation of NET SALES PRICE;
(d)Any other information reasonably requested by MEDIMMUNE
to permit MEDIMMUNE to determine royalties owed;
(e)Total royalties payable to MEDIMMUNE.
6.4 Any tax required to be withheld by HPC under the laws of
any foreign country for the account of MEDIMMUNE shall be
promptly paid by HPC for and on behalf of MEDIMMUNE to the
appropriate governmental authority, and HPC shall furnish
MEDIMMUNE with proof of payment of such tax. Any such tax
actually paid on MEDIMMUNE's behalf shall be deducted from
royalty payments due MEDIMMUNE.
SECTION 7 - REPRESENTATIONS AND WARRANTIES.
7.1 MEDIMMUNE represents and warrants that:
(a)the execution and delivery of this Agreement and the
performance of the transactions contemplated hereby
have been duly authorized by all appropriate MEDIMMUNE
corporate action;
(b)the performance by MEDIMMUNE of any of the terms and
conditions of this Agreement on its part to be
performed does not and will not constitute a breach or
violation of any other agreement or understanding,
written or oral, to which it is a PARTY;
(c)it has the full right and legal capacity to provide the
rights to the MEDIMMUNE PATENTS and MEDIMMUNE
TECHNOLOGY granted to HPC hereunder, and the rights to
provide rights to information and access granted under
Section 2;
(d)there are no outstanding agreements, assignments and
encumbrances to which MEDIMMUNE is a PARTY inconsistent
with the provisions of this Agreement;
(e)there are no adverse proceedings, claims or actions
pending, or to the best knowledge of MEDIMMUNE,
threatened, relating to the MEDIMMUNE PATENTS or
MEDIMMUNE TECHNOLOGY, and at the time of disclosure and
delivery thereof to HPC, to the best knowledge of
MEDIMMUNE it shall have the full right and legal
capacity to disclose and deliver the MEDIMMUNE PATENTS
or MEDIMMUNE TECHNOLOGY without violating the rights of
third parties.
(f)as of the EFFECTIVE DATE it has maintained the
MEDIMMUNE TECHNOLOGY as CONFIDENTIAL INFORMATION
consistent with the provisions of Section 5 hereof, it
will continue to maintain the MEDIMMUNE TECHNOLOGY as
CONFIDENTIAL INFORMATION until publication as provided
for herein, as of the EFFECTIVE DATE it has not
submitted any of the MEDIMMUNE TECHNOLOGY for
publication, and it will not publish any of the
MEDIMMUNE TECHNOLOGY prior to five months from the
EFFECTIVE DATE.
7.2 HPC represents and warrants that:
(a)the execution and delivery of this Agreement and the
performance of the transactions contemplated hereby
have been duly authorized by all appropriate HPC
corporate action;
(b)the performance by HPC of any of the terms and
conditions of this Agreement on its part to be
performed does not and will not constitute a breach or
violation of any other agreement or understanding,
written or oral, to which it is a party;
(c)it has the full right and legal capacity to provide the
rights to the HPC PATENTS and HPC TECHNOLOGY granted to
MEDIMMUNE hereunder;
(d)there are no outstanding agreements, assignments and
encumbrances to which HPC is a PARTY inconsistent with
the provisions of this Agreement; and
(e)there are no adverse proceedings, claims or actions
pending, or to the best knowledge of HPC, threatened,
relating to the HPC PATENTS or HPC TECHNOLOGY, and at
the time of disclosure and delivery thereof to
MEDIMMUNE, to the best knowledge of HPC it shall have
the full right and legal capacity to disclose and
deliver the HPC PATENTS or HPC TECHNOLOGY without
violating the rights of third parties.
7.3 HGS represents and warrants that:
(a)the execution and delivery of this Agreement and the
performance of the transactions contemplated hereby
have been duly authorized by all appropriate HGS
corporate action;
(b)the performance by HGS of any of the terms and
conditions of this Agreement on its party to be
performed does not and will not constitute a breach or
violation of any other agreement or understanding,
written or oral, to which it is a PARTY:
(c)HGS has provided MEDIMMUNE with the full right and
legal capacity under HGS intellectual property rights
necessary for MEDIMMUNE to provide the rights to the
MEDIMMUNE PATENTS and MEDIMMUNE TECHNOLOGY granted to
HPC hereunder;
(d)there are no outstanding agreements, assignments and
encumbrances to which HGS is a party inconsistent with
the provisions of this Agreement;
(e)there are no adverse proceedings, claims or actions
pending, or to the best knowledge of HGS, threatened,
relating to HGS' intellectual property interests in the
MEDIMMUNE PATENTS or MEDIMMUNE TECHNOLOGY, and at the
time of disclosure and delivery thereof to HPC, to the
best knowledge of HGS it shall have the full right and
legal capacity to disclose and deliver the HGS
intellectual property interests in the MEDIMMUNE
PATENTS or MEDIMMUNE TECHNOLOGY without violating the
rights of third parties.
(f)as of the EFFECTIVE DATE it has maintained the HGS
TECHNOLOGY as CONFIDENTIAL INFORMATION consistent with
the provisions of Section 5 hereof, it will continue to
maintain the HGS TECHNOLOGY as CONFIDENTIAL INFORMATION
until publication as provided for herein, as of the
EFFECTIVE DATE it has not submitted any of the HGS
TECHNOLOGY for publication, and it will not publish any
of the HGS TECHNOLOGY prior to five months from the
EFFECTIVE DATE.
7.4 EXCEPT AS OTHERWISE EXPRESSLY PROVIDED FOR IN THIS
AGREEMENT, NO PARTY TO THIS AGREEMENT MAKES ANY
REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND,
EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO,
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, NON-INFRINGEMENT OR VALIDITY OF ANY INTELLECTUAL
PROPERTY RIGHTS.
SECTION 8 - INDEMNIFICATION.
8.1 HPC shall defend, indemnify and hold harmless MEDIMMUNE,
HGS, licensors of MEDIMMUNE and HGS and each of their
respective directors, officers, shareholders, agents and
employees (each an "Indemnitee"), from and against any and
all liability, loss, damages and expenses (including
reasonable attorneys' fees) as the result of claims,
demands, costs or judgments which may be made or instituted
against any of them arising out of the manufacture,
possession, distribution, use, testing, sale or other
disposition of any PRODUCT by or through or on behalf of
HPC or any third party granted rights by HPC under this
Agreement or any third party that obtains PRODUCT from HPC.
HPC's obligation to defend, indemnify and hold harmless
shall include claims, demands, costs or judgments, whether
for money damages or equitable relief by reason of alleged
personal injury (including death) to any person or alleged
property damage, provided, however, the indemnity shall not
extend to any claims against an indemnified party which
result from the gross negligence or willful misconduct of
such indemnified party. The provisions of this paragraph
shall survive and remain in full force and effect after any
termination, expiration or cancellation of this Agreement
and the obligation hereunder shall apply whether or not
such claims are rightfully brought.
8.2 To the extent that HPC grants a license to MEDIMMUNE and/or
HGS pursuant to Section 9.1(b) hereof, then MEDIMMUNE
and/or HGS, as the case may be, (the "Indemnitor(s)") shall
defend, indemnify and hold harmless HPC, licensors of HPC
and each of their respective directors, officers,
shareholders, agents and employees (each an "Indemnitee"),
from and against any and all liability, loss, damages and
expenses (including reasonable attorneys' fees) as the
result of claims, demands, costs or judgments which may be
made or instituted against any of them arising out of the
manufacture, possession, distribution, use, testing, sale
or other disposition of any PRODUCT outside the FIELD by or
through or on behalf of the Indemnitor(s) or any third
party granted rights by the Indemnitor(s) or any third
party that obtains such PRODUCT from the Indemnitor(s).
The Indemnitor(s)' obligation to defend, indemnify and hold
harmless shall include claims, demands, costs or judgments,
whether for money damages or equitable relief by reason of
alleged personal injury (including death) to any person or
alleged property damage, provided, however, the indemnity
shall not extend to any claims against an indemnified party
which result from the gross negligence or willful
misconduct of such indemnified party. The provisions of
this paragraph shall survive and remain in full force and
effect after any termination, expiration or cancellation of
this Agreement and the obligation hereunder shall apply
whether or not such claims are rightfully brought.
8.3 An Indemnitee shall promptly notify the Indemnitor(s) of
any loss, claim, damage, liability, or action in respect of
which the Indemnitee intends to claim such indemnification,
and the Indemnitor, shall assume the defense thereof;
provided, however, that an Indemnitee shall have the right
to retain its own counsel, with the fees and expenses to be
paid by the Indemnitor if Indemnitor does not assume the
defense; or, if representation of such Indemnitee by the
counsel retained by the Indemnitor would be inappropriate
due to actual or potential differing interests between such
Indemnitee and any other party represented by such counsel
in such proceedings. The indemnity agreement in this
Section 8 shall not apply to amounts paid in settlement of
any loss, claim, damage, liability or action if such
settlement is effected without the consent of the
Indemnitor, which consent shall not be withheld
unreasonably. The failure to deliver notice to the
Indemnitor within a reasonable time after the commencement
of any such action, if prejudicial to its ability to defend
such action, shall relieve such Indemnitor of any liability
to the Indemnitee under this Section 8, but the omission so
to deliver notice to the Indemnitor will not relieve it of
any liability that it may have to any Indemnitee otherwise
than under this Section 8. The Indemnitee under this
Section 8, its employees and agents, shall cooperate fully
with the Indemnitor and its legal representatives in the
investigations of any action, claim or liability covered by
this indemnification.
SECTION 9 - PATENTS
9.1 (a) Each party shall have and retain sole and exclusive
title to all inventions, discoveries, designs, works of
authorship and other know-how which are made, conceived,
reduced to practice or generated by its employees, agents,
or other persons acting under its authority. As to all
inventions, discoveries, designs, works of authorship and
other know-how made, conceived, reduced to practice or
generated jointly by employees, agents, or other persons
acting under the authority of MEDIMMUNE and/or HGS and HPC,
the parties shall own an equal undivided interest therein.
HPC shall be responsible for the filing, prosecution and
maintenance of HPC PATENTS and LICENSED PATENTS including
JOINT PATENTS which do not have significant commercial
utility outside the FIELD, but excluding (i) JOINT PATENTS
which do have significant commercial utility outside the
FIELD and (ii) those which are owned solely by HGS, and
shall be responsible for the cost and expense thereof. HGS
shall be responsible for the filing, prosecution and
maintenance of JOINT PATENTS which have significant
commercial utility outside the FIELD and LICENSED PATENTS
solely owned by HGS. HPC shall consult with MEDIMMUNE with
respect to strategies for filing, prosecution and
maintenance of patents and patent applications for which
HPC bears responsibility under this Section 9.1, and shall
keep MEDIMMUNE informed with regard to filing, prosecution
and maintenance activity for such patents and patent
applications, and with respect to such patents or patent
applications which are solely owned by MEDIMMUNE or which
are owned in part by MEDIMMUNE, HPC shall provide MEDIMMUNE
with proposed patent applications and responses to office
actions and official letters prior to filing thereof and in
sufficient time to permit MEDIMMUNE to provide comments
thereto. Similarly, HGS and HPC shall consult with and
keep each other informed as aforesaid with respect to JOINT
PATENTS for which it bears responsibility. HPC shall not
allow any MEDIMMUNE PATENT to lapse or become abandoned
without the written approval of MEDIMMUNE, which approval
shall not be unreasonably withheld. With respect to any
MEDIMMUNE PATENT which is jointly owned by HPC and as to
which HPC elects not to effect filing thereof or to
continue prosecution or maintenance thereof, HPC shall
assign HPC's interest therein to MEDIMMUNE as the case may
be. If HPC does not desire to file, prosecute or maintain a
patent or patent application to an invention, HPC shall
assign its ownership interest therein to MEDIMMUNE and
shall no longer be responsible for the cost and expense
thereof, and shall have no right to consult, review or
comment with respect to the filing, prosecution and
maintenance of said patent or patent application.
(b) In the case of JOINT INVENTIONS and JOINT PATENTS
which have significant commercial utility outside the
FIELD, and in the event that HGS or MEDIMMUNE intends to
use, license or sublicense rights to such JOINT INVENTIONS
or JOINT PATENTS outside the FIELD, then HPC hereby grants
to HGS or MEDIMMUNE, as the case may be, a sole and
exclusive, worldwide, sublicensable license of HPC'S
interest therein outside the FIELD, and HGS or MEDIMMUNE,
as the case may be, does hereby agree to pay HPC:
(i) A royalty of (CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED)percent ((CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED)%) of the NET SALES of PRODUCTS sold by HGS
or MEDIMMUNE or their AFFILIATES which are covered in
the country where manufactured, used or sold by a VALID
CLAIM of any JOINT PATENT which is licensed by HPC to
HGS or MEDIMMUNE hereunder; and
(ii)A royalty of (CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED) percent ((CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED)%) of any
royalties received by HGS or MEDIMMUNE for
PRODUCTS sold by a licensee or sublicensee
which in the country where manufactured, used
or sold are covered by a VALID CLAIM of any
JOINT PATENT which is licensed by HPC to HGS
or MEDIMMUNE hereunder.
9.2In the event of the institution of any suit by a third
party against MEDIMMUNE or HGS or its respective
licensees for patent infringement involving the
manufacture, use, import, export, offer for sale, sale,
distribution or marketing of a PRODUCT outside the
FIELD, MEDIMMUNE or HGS, as the case may be, shall
promptly notify HPC in writing. As between MEDIMMUNE
and/or HGS and HPC, MEDIMMUNE and/or HGS (but not HPC)
shall be solely or jointly responsible, as the case may
be, for the cost and expense of such action and any
liability which results therefrom.
9.3In the event that MEDIMMUNE or HPC becomes aware of
actual or threatened infringement of a LICENSED PATENT
anywhere in the LICENSED TERRITORY by the sale of
PRODUCT in the FIELD, that party shall promptly notify
the other party in writing. HPC shall have the first
right but not the obligation to bring, at its own
expense, an infringement action against any THIRD PARTY
with respect to a LICENSED PATENT as to which HPC
retains a license hereunder. If HPC does not commence
a particular infringement action within ninety (90)
days of such notice, MEDIMMUNE or HGS, as the case may
be, shall be entitled to bring such infringement
action, at its own expense. The PARTY conducting an
action under this Paragraph 9.3 shall have full control
over its conduct, including settlement thereof provided
such settlement shall not be made without MEDIMMUNE'S
or HGS' prior written consent if the action is brought
by HPC, which consent shall not be unreasonably
withheld, provided, however, that in any action brought
by HGS or MEDIMMUNE, such PARTY shall in good faith
consult with HPC regarding such litigation and consider
HPC's reasonable commercial interest in any settlement
of such litigation. The parties shall reasonably
assist one another and cooperate in any such litigation
at the other's request, each such party paying its own
costs and expenses. The party conducting the
litigation shall periodically reimburse the other
party for its reasonable and actual out-of-pocket
expenses for assisting in the litigation, which
reimbursement shall be made within thirty (30) days of
receipt by the party conducting the litigation of
itemized invoices from the assisting party documenting
such expenses.
9.4 Any recovery made by a party as the result of an action for
patent infringement it has conducted under Paragraph 9.3
shall be distributed as follows:
(i)The party conducting the action shall recover its
actual out -of-pocket expenses.
(ii) To the extent that the recovery exceeds the
total of item (i), the excess shall be kept by the
party conducting the action, provided, however, that to
the extent that (a) a recovery is made by HPC and is
based on an award of lost sales/profits, and (b) HPC
would have incurred a royalty obligation to MEDIMMUNE
based upon such sales, MEDIMMUNE shall receive a
proportion of the excess recovery corresponding to the
royalty percentage it would have otherwise been due.
9.5 The parties shall periodically keep one another reasonably
informed of the status of and of, their respective
activities regarding, any such litigation or settlement
thereof.
SECTION 10 - DUE DILIGENCE
10.1 HPC shall select and use commercially reasonable efforts
and diligence to research, develop and then sell at least
one PRODUCT. The efforts of a sublicensee and/or an
AFFILIATE of HPC shall be considered as efforts of HPC.
(b)In the event that MEDIMMUNE reasonably believes that HPC
is not making reasonable efforts under the circumstances to
research, develop and then sell a selected PRODUCT in the
FIELD then MEDIMMUNE shall provide written notice to HPC.
Upon receipt of such written notice, HPC shall submit a
reasonable development and/or marketing plan for PRODUCT in
the FIELD.
(c) In the event that HPC does not plan to research and
develop in good faith at least one PRODUCT in the FIELD,
HPC agrees to notify MEDIMMUNE in writing thereof.
(d)If HPC fails to submit a plan as required by Section
10.1(b) and/or exert the efforts set forth in the plan
MEDIMMUNE, in addition to any other remedy it may have,
shall have the option to terminate the Agreement and
licenses granted hereunder, pursuant to Section 12.2, which
termination shall take effect sixty (60) days after written
notice to HPC unless HPC submits a plan or exerts the
required efforts, as the case may be, prior to expiration
of such sixty (60) day period.
(e) Within sixty (60) days after the end of each calendar
year, HPC shall provide MEDIMMUNE with a written report
with respect to its efforts to research, develop &
commercialize PRODUCT in the FIELD for in such calendar
year.
SECTION 11 - ASSIGNMENT; SUCCESSORS.
11.1 This Agreement shall not, be assignable by either of the
parties without the prior written consent of the other
party (which consent shall not be unreasonably withheld),
except that either party may assign this Agreement to an
AFFILIATE or to a successor in interest or transferee of
all or substantially all of the portion of the business to
which this Agreement relates.
11.2 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
HPC Any such successor or assignee of a party's interest
shall expressly assume in writing the performance of all
the terms and conditions of this Agreement to be performed
by said party and such Assignment shall not relieve the
Assignor of any of its obligations under this Agreement.
SECTION 12 - TERM AND TERMINATION.
12.1 This Agreement, unless earlier termination as provided
herein shall remain in full force and effect until HPC's
obligations to pay royalties hereunder terminate pursuant
to Section 3.4, at which time HPC shall have a fully paid
up, non-cancelable license with respect to all PRODUCTS
manufactured, used, sold, imported or exported by HPC.
This Agreement may be extended or terminated, at any time,
by mutual agreement by the PARTIES in writing.
12.2 In the event that HPC fails to meet its obligations under
Sections 3 or 6, and such failure is not cured within sixty
(60) days after written notice to HPC. MEDIMMUNE, in
addition to any other remedy it may have, at its sole
option may terminate this Agreement.
12.3 Termination of this Agreement under Paragraph 12.2 shall be
without prejudice to any other rights or remedies which
MEDIMMUNE may have hereunder, whether or not such rights or
remedies arise from such breach which results in
termination.
12.4 A PARTY may terminate this Agreement upon notice to the
other PARTIES in the event of the filing by any other PARTY
of a petition in bankruptcy or for liquidation; the request
for or appointment of a receiver; execution upon any
portion of the relevant PARTY'S business or assets; the
relevant PARTY'S arrangement with or assignment for the
benefit of creditors; or the relevant PARTY'S becoming
unable to meet its obligations as they become due.
12.5 HPC's obligation to pay royalties hereunder shall survive
termination of this Agreement. In addition, the
obligations of Sections 5, 6 and 8 and of Paragraphs 2.3,
2.4, 12.3, 12.5 and 13.3 of this Agreement shall survive
any termination of this Agreement.
12.6 Upon termination of this Agreement for any reason, nothing
herein shall be construed to release either party from any
obligation that matured prior to the date of such
termination.
SECTION 13 - GENERAL PROVISIONS.
13.1 The relationship between MEDIMMUNE, HGS and HPC is that of
independent contractors. MEDIMMUNE, HGS and HPC are not
joint venturers, partners, principal and agent. master and
servant, employer or employee, and have no relationship
other than as independent contracting parties. MEDIMMUNE
shall have no power to bind or obligate HPC in any manner.
Likewise, HPC shall have no power to bind or obligate
MEDIMMUNE in any manner.
13.2 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.
13.3 This Agreement shall be construed and enforced in
accordance with the laws of the State of Maryland without
reference to its choice of law principles.
13.4 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.
13.5 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.
13.6 Notices. Any notices given pursuant to this Agreement
shall be in writing and shall be deemed to have been given
and delivered upon the earlier of (i) when received at the
address set forth below. or (ii) three (3) business days
after mailed by certified or registered mail postage
prepaid and property addressed, with return receipt
requested, or (iii) on the day when sent by facsimile as
confirmed by certified or registered mail. Notices shall
be delivered to the respective parties as indicated:
To MEDIMMUNE: MedImmune, Inc.
35 West Watkins Mill Road
Gaithersburg, MD 20878
ATTN: CEO
Copy to: Carella, Byrne, Bain, Gilfillan,
Cecchi, Stewart & Olstein
6 Becker Farm Road
Roseland, NJ 07068
Fax No. (201) 597-0250
ATTN: Elliot M. Olstein, Esq.
To HGS: Human Genome Sciences, Inc.
9410 Key West Avenue
Rockville, MD 20850
ATTN: CEO
To OraVax Merieux Co.: OraVax Merieux Co.
38 Sidney Street
Cambridge, MA 02139
ATTN: Lance Gordon
To Merieux OraVax S.N.C.: Merieux OraVax S.N.C.
58 Avenue Leclerc
69007 Lyon, France
ATTN: HervJ Tainturier
Copy to: Palmer & Dodge
One Beacon Street
Boston, MA 02108
Fax No. (617) 227-4420
ATTN: Michael Lytton
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date set forth above.
For MEDIMMUNE, INC. For MERIEUX ORAVAX S.N.C.
By: David M. Mott By: Paul Kirkconnell
David M. Mott Paul Kirkconnell
(Printed Name) (Printed Name)
President and
Operating Officer
(Title)
For ORAVAX MERIEUX CO. For HUMAN GENOME SCIENCES,
INC.
By: Thomas Monath
Thomas Monath
(Printed Name) (Printed Name)
(Title) (Title)
OraVax, Inc. and Pasteur Merieux SJrums & Vaccins S.A each hereby
guarantee that their respective AFFILIATES, including but not
limited to OraVax Merieux Co. and Merieux OraVax S.N.C. will
perform all obligations under this Agreement.
For ORAVAX, INC. For PASTEUR MERIEUX
SERUMS & VACCINS S.A.
By: Lance Gordon By: A. Lindberg
Lance Gordon A. Lindberg
(Printed Name) (Printed Name)
(Title) (Title)
EXHIBIT A
Specification for LICENSED TECHNOLOGY and Software Deliverables
(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statements of MedImmune, Inc. on Form S-3 (Registration No. 333-
13373) and Forms S-8 (Registration Nos. 99540, 33-46165 and 33-
50678) of our report dated February 6, 1997 on our audits of the
financial statements and financial statement schedule of
MedImmune, Inc., as of December 31, 1996 and 1995, and for each
of the years ended December 31, 1996, 1995 and 1994, which report
is included in this Annual Report on Form 10-K.
Coopers & Lybrand L. L. P.
Rockville, Maryland
March 27, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MEDIMMUNE,
INC.'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996 AND IS
QUALIFIED IN ITS ENTIRETY TO REFERENCE TO SUCH FILING.
</LEGEND>
<S> <C>
<MULTIPLIER>1,000
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 12,629
<SECURITIES> 102,136
<RECEIVABLES> 10,287
<ALLOWANCES> 0
<INVENTORY> 6,060
<CURRENT-ASSETS> 1,713
<PP&E> 29,087
<DEPRECIATION> 0
<TOTAL-ASSETS> 163,971
<CURRENT-LIABILITIES> 19,536
<BONDS> 70,874
0
0
<COMMON> 218
<OTHER-SE> 72,647
<TOTAL-LIABILITY-AND-EQUITY> 163,971
<SALES> 35,782
<TOTAL-REVENUES> 41,099
<CGS> 19,678
<TOTAL-COSTS> 74,035
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,263
<INCOME-PRETAX> (29,544)
<INCOME-TAX> 0
<INCOME-CONTINUING> (29,544)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (29,544)
<EPS-PRIMARY> (1.41)
<EPS-DILUTED> (1.41)
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