RESEARCH, DEVELOPMENT AND LICENSE AGREEMENT BETWEEN NEOSE TECHNOLOGIES, INC. AND MACROGENICS, INC. DATED April 26, 2004

Exhibit 10.6

CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND
SEPARATELY FILED WITH THE COMMISSION

RESEARCH, DEVELOPMENT AND LICENSE AGREEMENT

BETWEEN

NEOSE TECHNOLOGIES, INC.

AND

MACROGENICS, INC.

DATED  April 26, 2004

Table of Contents

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RESEARCH, DEVELOPMENT AND LICENSE AGREEMENT

          This RESEARCH, DEVELOPMENT AND LICENSE AGREEMENT (“Agreement”) , is dated April 26, 2004, between Neose Technologies, Inc., a Delaware corporation (“Neose”) , and MacroGenics, Inc ., a Delaware corporation  (“MacroGenics”) .

BACKGROUND

          Neose has developed and continues to develop proprietary technologies and related know-how for the glycosylation, design and remodeling of proteins, peptides and antibodies.  MacroGenics has developed and continues to develop proprietary technologies and related know-how for developing, manufacturing and commercializing biotechnology products, including immunotherapeutics, for cancer, infectious diseases, and autoimmune disorders.

          Neose and MacroGenics wish to conduct collaborative research and development activities  to evaluate the effects of glycosylation and pegylation on antibodies **** using their respective technologies and materials, and, further, to provide MacroGenics certain rights and options to use Neose’s proprietary technologies.

TERMS

           NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants contained in this Agreement, and intending to be legally bound hereby, MacroGenics and Neose agree as follows:

           1.       DEFINITIONS.   Capitalized terms not otherwise defined shall have the meaning set forth in this Section 1 .

                   1.1.       “Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person.  Without limiting the foregoing, a Person shall be regarded as in control of another Person if it owns, or directly or indirectly controls, more than 50% of the voting stock or other ownership interest of the other Person.

                   1.2.       “Antibody” means (i) a ****, (ii) a **** described in clause (i) above, and/or (iii) a **** described in clause (i) above or **** described in clause (ii) above.

                   1.3.       “Calendar Quarter” shall mean the respective periods of three (3) consecutive calendar months ending on March 31, June 30, September 30 or December 31 for so long as this Agreement is in effect.

                   1.4.       “Categories” means the categories of Potential Products on which work may be conducted under the Research Plan, as determined from time to time after taking into account the substitutions made in accordance with this Agreement and excluding all Deleted Categories.  As of the Effective Date, the Categories include:

                               1.4.1.     ****

**** Material has been omitted and filed separately with the Commission.

                               1.4.2.     ****

                              1.4.3.     ****

                              1.4.4.     ****; and

                               1.4.5.     ****

                   1.5.     “Category” means any of the Categories, as determined from time to time.

                   1.6.     “Collaboration” means the work conducted by either or both of the Parties during the Research Period in furtherance of the Research Plan.

                   1.7.     “Collaboration Products” means any and all Potential Products that have been modified, to any extent, in the Collaboration or by MacroGenics by use of the Neose Technology under any license granted hereunder, excluding Deleted Products.

                   1.8.     “Collaboration Technology” means the Patent Rights, Know-How and Improvements created by either or both Parties, in the Collaboration.

                   1.9.     “Commercially Reasonable Efforts” shall mean efforts and resources normally used by a Party in similar undertakings, taking into account the proprietary position of the product or technology involved, the regulatory structure involved, the profitability of such undertaking, the competitiveness of the relevant marketplace, and other relevant factors.

                   1.10.     “Commercial Sale” means any sale of a Licensed Product by MacroGenics, its Affiliates, or Sublicensees to a Person other than their respective Affiliates or Neose.

                   1.11.     “Confidential Information” means any information, technical data, trade secrets or know-how, including, but not limited to, research, product plans, products, service plans, services, customer lists and customers, markets, software, developments, inventions, processes, formulas, technology, processes, designs, drawings, engineering, marketing, distribution and sales methods and systems, sales and profit figures, finances and other business information which a Party treats as its confidential and/or proprietary information.

                   1.12.     “Control” or “Controlled” means possession of the ability to grant a license or sublicense as provided for herein without violating the terms of an agreement or other arrangement with a Third Party existing before or after the Effective Date.

                   1.13.     “Deleted Category” means a Category that is deleted from the Research Plan and this Agreement as a result of the permitted substitution of another Category or the failure to satisfy applicable commercial diligence milestones under Section 6 .

**** Material has been omitted and filed separately with the Commission.

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                   1.14.     “Deleted Product” means a Collaboration Product in a Deleted Category which Collaboration Product is not covered by a ****.

                   1.15.     “Designated Representative” means, in the case of Neose, its Executive Vice President, Commercial and Clinical Development, or such other person designated by Neose in writing from time to time to MacroGenics, and, in the case of MacroGenics, its Chief Operating Officer, or other such other person designated by MacroGenics in writing from time to time to Neose.

                   1.16.     “Designation Period” means the period beginning on the Effective Date and ending on the fifth anniversary of the Effective Date.

                   1.17.     “Effective Date” means the date of execution of this Agreement by both parties, as first set forth above.

                   1.18.     “FDA” means the United States Food and Drug Administration and any successor agency.

                   1.19.     “Field of Use” means the treatment and/or prevention of a disease or disorder in humans.

                   1.20.     “First Licensed Products” means each of the first two Collaboration Products in a Licensed Category with respect to which an IND is filed, or any Collaboration Product in a Licensed Category thereafter substituted for a First Licensed Product by MacroGenics, provided that there shall be no more than two First Licensed Products at any time during the Term.

                   1.21.     “GMPs” shall mean current good manufacturing practices for the methods to be used in, and the facilities and controls to be used for, the manufacture, processing, packing and holding of biological products, all as set forth from time to time by the FDA, including all amendments and supplements thereto throughout the term of this Agreement.

                   1.22.     “HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

                   1.23.     “Joint Improvements” means Improvements owned jointly by the Parties, as described in Section 4.2.3 .

                   1.24.     “Improvements” means any and all developments, discoveries, inventions, additions, amendments, modifications, ideas, processes, methods, compositions, formulae, techniques, information and data, whether or not patentable, conceived, developed or reduced to practice, that improve or beneficially change, or enhance the economic and technical attributes of, any Know-How or Patent Rights or any process, device or composition.

**** Material has been omitted and filed separately with the Commission.

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                   1.25.     “IND” means an application for an Investigational Exemption for a New Drug filed with the FDA, or any comparable filing made with a regulatory authority outside the United States.

                   1.26.     “Know-How” means any and all formulae, procedures, processes, methods, designs, know-how, show-how, trade secrets, discoveries, inventions (whether or not patentable), patent applications, licenses, software and source code, programs, prototypes, designs, discoveries, techniques, methods, ideas, concepts, data, engineering and manufacturing information, electronic control circuits, specifications, diagrams, drawings, schematics, blueprints and parts lists and other proprietary information, rights and works of authorship, whether or not reduced to writing.

                   1.27.     “License Effective Date” shall mean, with respect to a license to be granted hereunder with respect to a Category, the later of (i) the first date on which MacroGenics designates the Category as a Licensed Category under Section 3.2 or (ii) if notification is required to be made under the HSR Act in respect of such grant, the expiration or earlier termination of any notice and waiting period under the HSR Act.

                   1.28.     “Licensed Categories” means each of the Categories designated as such in MacroGenics’ exercise of the Option in accordance with Section 3.2 , as determined from time to time after taking into account the substitutions made in accordance with this Agreement and excluding all Deleted Categories.

                   1.29.     “Licensed Products” means each and every First Licensed Product, Second Licensed Product and Subsequent Licensed Product, with respect to which a license has been granted by Neose hereunder and remains in effect at the time of such determination.

                   1.30.     “MacroGenics Improvements” means any and all Collaboration Technology (i) constituting or claiming the composition of any Potential Product in a Licensed Category or any Collaboration Product; (ii) constituting Improvements to MacroGenics ****; and/or (iii) constituting Improvements to Know-How owned or Controlled by MacroGenics on the Effective Date, except, in each case, Collaboration Technology constituting or claiming the composition of any Deleted Product.

                   1.31.     “MacroGenics Patents” means (i) all Patent Rights owned or Controlled by MacroGenics on the Effective Date, (ii) all Patent Rights relating to the Collaboration that are acquired by MacroGenics after the Effective Date and owned or Controlled by MacroGenics during the Research Term; (iii) all Patent Rights in the MacroGenics Improvements; and (iv) MacroGenics’ interest in and to any Patent Rights in Joint Improvements.

                   1.32.     “MacroGenics Technology” means MacroGenics Patents and  MacroGenics Improvements and MacroGenics undivided interest in any and all Joint Improvements.

**** Material has been omitted and filed separately with the Commission.

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                   1.33.     “Material” means any and all of the materials transferred by one Party to the other for the purposes of this Agreement, as contemplated in Section 2.9 .

                   1.34.     “Mutual Confidentiality Agreement” means the Mutual Confidentiality Agreement between the Parties dated June 20, 2003.

                   1.35.     “Neose Improvements” means any and all Collaboration Technology (i) constituting Improvements to the Neose Patents owned or Controlled by Neose on the Effective Date; (ii) constituting Improvements to the Patent Rights acquired by Neose after the Effective Date and owned or Controlled by Neose during the Research Term; (iii) constituting or claiming the composition of any Deleted Product; and/or (iv) constituting Improvements to Know-How owned or Controlled by Neose on the Effective Date, except, in each case, any Collaboration Technology constituting or claiming the composition of any Potential Product in a Licensed Category or any Collaboration Product.

                   1.36.     “Neose Patents” means (i) all Patent Rights owned or Controlled by Neose on the Effective Date and all Patent Rights acquired by Neose after the Effective Date and owned or Controlled by Neose during the Term, which Patent Rights relate to methods and processes for glycosylation, pegylation, design and remodeling of proteins, peptides or Antibodies (including, without limitation, Neose’s GlycoAdvance™, GlycoPEGylation™ and GlycoConjugation™ technologies), and other carbohydrate synthesis processes and resulting products; (ii) all Patent Rights in the Neose Improvements; and (iii) Neose’s interest in and to any Patent Rights in Joint Improvements.

                   1.37.     “Neose Technology” means the Neose Patents, Know-How Controlled by Neose on the Effective Date, Know-How resulting from work conducted by Neose under the Research Plan, Neose Improvements, Neose’s undivided interest in any and all Joint Improvements; and Neose’s rights under the license agreements listed on Exhibit 1.37 .

                   1.38.     “Net Sales” means proceeds received from Commercial Sales of Licensed Products by MacroGenics, its Affiliates or Sublicensees to Third Parties, after deducting (to the extent actually incurred or reasonably estimated and accrued in accordance with Generally Accepted Accounting Principles in the United States and to the extent not already deducted in the amount invoiced): (i) reasonable trade, cash and quantity discounts or rebates (other than price discounts granted at the time of sale), reasonable service allowances and reasonable required agent’s commissions, if any, allowed or paid, (ii) credits or allowances actually given or made for rejection or return of previously sold products or for retroactive price reductions (including Medicare, Medicaid, and/or discounts and similar types or rebates and/or discounts), (iii) taxes, duties or other governmental charges levied on or measured by the billing amount (excluding income and franchise taxes), as adjusted for rebates and refunds, and (iv) charges actually incurred for freight and insurance directly related to the distribution of Licensed Products (excluding amounts reimbursed by Third Party customers).  A Commercial Sale of a Licensed Product is deemed to occur when the invoice is issued, or if no invoice is issued, upon the earlier of shipment or transfer of title in the Licensed Product to a Third Party.

                   1.39.     “Option” means the option granted to MacroGenics in Section 3.1 .

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                   1.40.     “Ownership Rights” means any and all right, title and interest under patent, copyright, trade secret and trademark law, or any other intellectual property or other law, in and to any Know-How, Patent Rights, or Improvements.

                   1.41.     “Parties” means MacroGenics and Neose, collectively.

                   1.42.“Party” means MacroGenics or Neose, as the context requires, or each of MacroGenics and Neose, individually.

                   1.43.     “Patent Rights” means any patents or patent applications, including all corresponding foreign patents and patent applications, all divisions, continuations, continuations-in-part, reissues, renewals, extensions or additions to any such patents and patent applications.

                   1.44.     “Permit” means any governmental or regulatory filing, submission, approval, permit or license that is required by applicable law in any jurisdiction worldwide for clinical trials, Commercial Sales or other use of any of the Licensed Products.

                   1.45.     “Person” means an individual, corporation, partnership, trust, business trust, association, joint stock company, joint venture, pool, syndicate, sole proprietorship, unincorporated organization, government, governmental agency, authority or instrumentality, or any other form of entity not specifically listed in this Agreement.

                   1.46.     “Potential Products” means each and every potential product or product within any of the Categories, as determined from time to time, excluding Deleted Products.

                   1.47.     “Project Manager” means the project managers described in Section 2.5 .

                   1.48.     “Reagents” means the enzymes and sugar nucleotides required for the use of the Neose Technology in the manufacture of Licensed Products.

                   1.49.     “Regulated Market” means any jurisdiction worldwide that requires a Permit for clinical trials, Commercial Sales or any other use of a Licensed Product.

                   1.50.     “Regulatory Approval” means any marketing authorization (including authorizations approving a Biologics License Application) required for a Licensed Product, exclusive of any pricing or third-party reimbursement approval.

                   1.51.     “Required Agreement” means the form of agreement with a Sublicensee required under Section 3.4 .

                   1.52.     “Research Period” means the **** during which the Parties conduct activities under the Research Plan, which may be extended by amendment of this Agreement.

                   1.53.     “Research Plan” means the Research Plan attached as Exhibit 2.1 , as amended from time to time in accordance with this Agreement.

**** Material has been omitted and filed separately with the Commission.

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                   1.54.     “Royalty Period” means, with respect to a Licensed Product in a country, the period beginning on Commercial Sale of the Licensed Product in the country and ending ****, provided however, that the period shall continue thereafter for a Licensed Product sold in a country for as long as the Licensed Product in such country infringes a Valid Claim of a Neose Patent in such country.

                   1.55.     “Second Licensed Products” means each of the third and fourth Collaboration Products in a Licensed Category with respect to which an IND is filed, or any Collaboration Product in a Licensed Category substituted for a Second Licensed Product by MacroGenics, provided that there shall be no more than two Second Licensed Products at any time during the Term.

                   1.56.     “Sublicense” means a sublicense of any or all of MacroGenics’ rights under the Neose Technology granted in accordance with Section 3 .

                   1.57.     “Sublicensee” means a sublicensee under a Sublicense.

                   1.58.     “Subsequent Licensed Products” means each of the fifth and any subsequent Collaboration Products in a Licensed Category with respect to which an IND is filed.

                   1.59.     “Territory” means the world.

                   1.60.     “Term” means the term of this Agreement, which shall commence on the Effective Date and shall expire or terminate as described in Section 10 .

                   1.61.     “Third Party” means any Person other than MacroGenics, Neose, or their respective Affiliates.

                   1.62.     “Valid Patent Claim” means a claim of an issued and unexpired patent forming part of the Neose Patents that has not been held revoked, unenforceable or invalid by a decision of a court or other government agency of competent jurisdiction, or that is unappealable or unappealed within the time allowed for appeal, or which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise.  For the purposes of determining royalties due and payment obligations under this Agreement, any claim being prosecuted in a pending patent application included in the Licensed Patents shall be deemed a Valid Patent Claim for a period ending six (6) years after the earliest priority date to which the pending patent application is entitled.

**** Material has been omitted and filed separately with the Commission.

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           2.       CONDUCT OF THE PROJECT AND DEVELOPMENT EFFORTS

                   2.1.     Conduct and Goal.   Commencing promptly after the Effective Date, Neose and MacroGenics will use Commercially Reasonable Efforts to carry out their respective obligations under the Research Plan attached as Exhibit 2.1 .  The goal of the Research Plan is to achieve proof of concept.  The Research Plan sets forth a **** summary and timetable for the research and development activities to be conducted by the Parties under this Agreement.  The Research Plan may be amended or modified from time to time, but only in a writing signed by each Party’s Designated Representative.

                   2.2.     Selection and Substitution of Potential Products during Research Period.   The Research Plan sets forth the Potential Products contemplated by the Parties to be included in the Collaboration on the Effective Date.  MacroGenics shall have the right, from time to time, and on one or more occasions during the Research Period, to substitute for any Potential Product included in the Research Plan another Potential Product within the same Category.  Any such substitution shall be made by an amendment of this Agreement, which shall include, without limitation, the funding of any additional work to be conducted by Neose beyond the scope of the original Research Plan, as provided in Section 2.4 .

                   2.3.     Substitution of Categories.   At any time during the Designation Period, MacroGenics shall have the right, in up to two instances, to request the substitution of a new category for a Category or a Licensed Category.  MacroGenics shall request any such substitution by providing notice to Neose of the proposed new category and the Category proposed to be deleted. Such a request by MacroGenics shall be granted by Neose unless Neose:

                               2.3.1.      is developing or contemplating development of a protein in the proposed category;

                               2.3.2.      has granted a Third Party a license to develop a protein or product in the proposed category; or

                               2.3.3.      is in discussions with a Third Party to develop or to license rights to develop a protein in the proposed category.

Neose shall provide notice to MacroGenics responding to such request within thirty (30) days after receipt of MacroGenics’ notice. Upon notice from Neose accepting the proposed substitution or the failure by Neose to give the required notice within thirty (30) days: (i) the proposed category, thereafter, shall be deemed one of the Categories (as defined in Section 1.4) or a Licensed Category , as the case may be, and the Category proposed to be deleted, thereafter, shall be deemed a Deleted Category.  Notwithstanding any other provision of this Section 2.3, the new Category shall not be included in the Research Plan unless Neose shall have received notice thereof during the Research Term prior to the commencement of work by Neose on the Category proposed to be deleted.

**** Material has been omitted and filed separately with the Commission.

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                   2.4.     Funding.   Each Party shall be responsible for funding its own activities under the Research Plan. If the Research Plan is amended to increase the work of Neose thereunder or if MacroGenics undertakes the further development of any Licensed Product beyond the scope of the Research Plan, MacroGenics shall be solely responsible for such activities and the costs thereof.  By mutual agreement, with each Party acting in its sole discretion with respect thereto, Neose may provide additional research and development services to MacroGenics (e.g., to support the supply and scale-up of Reagents for such further development), and MacroGenics would reimburse Neose for its fully allocated costs associated with any such services.

                   2.5.     Coordination of the Collaboration by Project Managers.   Within 30 days after the Effective Date, each of the Parties shall appoint a Project Manager, who will be its primary contact regarding the Collaboration.  The Project Managers shall keep each other reasonably informed of the progress under the Research Plan.  The Project Managers shall have appropriate authority and decision-making power to carry out their respective responsibilities hereunder.  The Project Managers shall be responsible for overseeing and directing the research under and in accordance with the Research Plan.  A Party may change its Project Manager at any time, and from time to time, effective upon notice to the other Party of such change.

                   2.6.     Cooperation.   Throughout the Collaboration, the Parties shall work together in fulfilling their roles and responsibilities under the Research Plan, including the generation, exchange, and sharing of all resulting data and technical reports.

                   2.7.     Dispute Resolution.   If the Project Managers are unable to resolve, after 30 days, a dispute regarding any issue presented to them or arising in connection with the Collaboration, such dispute shall be referred to the Designated Representatives for good faith resolution pursuant to Section 11.1 .

                   2.8.     Permits.   With respect to any clinical trials, Commercial Sales or other use of any Licensed Product in a Regulated Market, MacroGenics shall be responsible at its expense for obtaining all Permits required for such activity in the applicable jurisdictions.  MacroGenics shall be responsible for the submission of all applications for Permits for the Licensed Products, which shall be obtained and held in the name of MacroGenics or its Affiliate(s) or Sublicensee(s), as appropriate. Neose, at MacroGenics’ expense, shall provide reasonable assistance and technical support to MacroGenics in obtaining the Permits for the Licensed Products.  MacroGenics shall pay all expenses with respect to obtaining the Permits for the Licensed Products including, without limitation, the cost of clinical trials and preparation and prosecution of permit applications.  MacroGenics shall be solely responsible for renewing any Permits at its expense.

                   2.9.     Transfer of Materials.   From time to time during the Term, each Party may transfer to the other Party certain materials for use in performing its obligations under the Research Plan.  It is contemplated that Neose will provide to MacroGenics one or more of the following materials:  ****. It is also contemplated that MacroGenics will provide to Neose one

**** Material has been omitted and filed separately with the Commission.

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or more of the following materials:  ****.  All Materials shall be transferred and received by the Parties subject to following terms and conditions.

                               2.9.1.      The Party receiving Material (“Recipient”) agrees to defend, indemnify, and hold harmless the Party providing such Material (“Provider”) from any Third Party loss, claim, damage, or liability of any kind whatsoever, which may arise from Recipient’s use, storage, or disposal of the Material, and Recipient assumes liability for claims or damages which may arise from its use, storage or disposal of such Material, except to the extent that such liability may arise from gross negligence or malfeasance on the part of the Provider.

                               2.9.2.      The Recipient shall use the Material received hereunder solely for the purpose of performing its obligations under this Agreement and subject to its terms.  The Recipient shall not transfer any of the Material received hereunder, or any progeny, derivatives, or modifications thereof, to any Person other than its employees who require such access for the purpose of performing its obligations under this Agreement, except with the prior written consent of the Provider.  In no event shall the Recipient use any Material received hereunder in human beings (including for diagnostic purposes).

                               2.9.3.      Any research involving the Material received hereunder (including but not limited to research involving the use of animals and recombinant DNA) shall be conducted in accordance with all federal, state, local, and other laws, regulations and ordinances governing such research including applicable NIH guidelines.

                               2.9.4.      Upon expiration or termination of this Agreement, each Recipient will immediately discontinue its use of the Material received hereunder and will, upon direction of the Provider, return or destroy such Material.

                   2.10.     Additional Development Activities.   Except as set forth in the Research Plan, Neose shall not have any obligation to perform any further research, development, scale-up services, technology transfer, technical support, improvements, modifications, or any other activities under this Agreement.  If MacroGenics undertakes the development of any Collaboration Product after the expiration or termination of the Research Plan, MacroGenics will assume the full responsibility and costs thereof.  MacroGenics acknowledges that it does not have, and shall not acquire hereunder, any rights under the Neose Technology to develop any Collaboration Product other than a Collaboration Product in a Licensed Category. 

                   2.11.     Additional ****.****.   Except for the licenses to be granted by Neose under Section 3 , **** that may be **** in connection with the development and/or commercialization of Licensed Products.

           3.     OPTION AND INTELLECTUAL PROPERTY GRANTS

                   3.1.     Option.   Neose hereby grants to MacroGenics a sole and exclusive right and option to obtain an exclusive license under the Neose Technology to develop and commercialize Collaboration Products in each of two Categories.  The Option may be exercised

**** Material has been omitted and filed separately with the Commission.

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as set forth in Section 3.2.  Neose covenants and agrees that during the Designation Period: (i) Neose will not grant any rights or licenses to any Third Party with respect to any Potential Product in any Category, and (ii) except for the Collaboration, Neose will not perform any work or research with any Potential Product in any Category.

                   3.2.     Option Exercise.   On one or two occasions during the Designation Period, by notice from MacroGenics to Neose, MacroGenics shall have the right to designate up to two Categories as Licensed Categories, and, in each instance, upon the License Effective Date, Neose shall grant a license with respect to the Licensed Category as provided in Section 3.3 .

                   3.3.     Exclusive License With Respect to Two Categories.   Subject to the terms and conditions of this Agreement, Neose hereby agrees to grant to MacroGenics, with respect to each of two Licensed Categories, as of the respective License Effective Date, an exclusive, royalty-bearing license (or sublicense) under the Neose Technology ****, (i) to make, have made, use, sell, offer to sell and import Potential Products in the Licensed Category in the Field of Use in the Territory, and (ii) to make, have made and use Reagents in the Territory solely for the purpose of making and having made Potential Products in the Licensed Category.  The licenses granted pursuant to this Section 3.3 shall include a right to grant Sublicenses in accordance with Section 3.4 .

                   3.4.     Sublicense Rights.   Prior to the earlier of entering into a Sublicense or providing a proposed Sublicensee with Confidential Information of Neose, MacroGenics shall give notice to Neose identifying, and seeking Neose’s approval of, the proposed Sublicensee.  Neose shall have the right to deny such approval, by notice to MacroGenics within twenty (20) days after receipt of MacroGenics’ notice, if Neose demonstrates that the proposed Sublicensee:  (i)****.  If Neose approves a proposed Sublicensee or does not respond to MacroGenics’ notice regarding a proposed Sublicensee within the twenty (20)-day period, MacroGenics shall be entitled:  (x) to provide Confidential Information of Neose to the proposed Sublicensee after delivering to Neose an original non-disclosure and non-use agreement substantially in the form attached hereto as Exhibit 3.4 which has been duly executed by the proposed Sublicensee; and/or (y) to enter into a Sublicense with the proposed Sublicensee, which Sublicense shall contain provisions requiring the Sublicensee to comply with the provisions of this Agreement relating to Confidential Information and the ownership of intellectual property (including, without limitation, the provisions of Section 4 of this Agreement applicable to MacroGenics), which provisions shall be provided to Neose by MacroGenics at least five (5) business days before the execution of the Sublicense.  If Neose duly denies approval of a proposed Sublicensee, MacroGenics shall not provide the proposed Sublicensee any Confidential Information of Neose and shall not enter into a Sublicense with the proposed Sublicensee.

                   3.5.     Liability.   MacroGenics shall remain primarily liable to Neose for the performance by each Affiliate and Sublicensee in accordance with the terms and conditions of this Agreement that are applicable to an Affiliate or Sublicensee, as the case may be.

                     3.6.     Reservation of Rights.   Neose hereby reserves to itself all right, title and interest in and to the Neose Technology not expressly granted in any license that may be granted

**** Material has been omitted and filed separately with the Commission.

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pursuant to Section 3.3 .  Without limiting the foregoing, in no event shall this Agreement be construed to prohibit Neose from engaging in any of the following activities: (a) practicing the processes, methods and Know-How of the Neose Technology outside of the Categories at any time, or outside of the Licensed Categories at any time following the Designation Period, in each case, within the Field of Use or otherwise and including, without limitation, with potential products or products that may be considered competitive with any of the Licensed Products; (b) developing, making, using or selling proteins or Reagents, whether in conjunction with the Neose Technology or otherwise, for any use except in connection with the development or commercialization of Potential Products in any Category during the Designation Period, or in any Licensed Category at any time following the Designation Period; or (c) entering into and performing agreements with Third Parties regarding any of the foregoing including, without limitation, research agreements, development agreements and licensing agreements.

                   3.7.     MacroGenics Technology.   Subject to the terms and conditions of this Agreement, and solely to the extent necessary to enable Neose to carry out its obligations under the Research Plan, MacroGenics hereby grants to Neose, for the Research Period, a non-exclusive, royalty-free, license under the MacroGenics Technology to use such MacroGenics Technology for the sole purpose of carrying out its obligations under the Research Plan.  MacroGenics shall retain at all times all of its rights, title and interest to the MacroGenics Technology.

                   3.8.     No Other Right or Licenses.   Except for the rights and licenses expressly granted in this Agreement or granted upon the exercise of the Option, nothing in this Agreement shall be deemed to grant to any Party or Person any other rights or licenses, including, without limitation, any implied licenses.

                   3.9.     Restriction on Exercise of License Rights.   Under the licenses granted to MacroGenics pursuant to Section 3.3 , MacroGenics shall not, and shall not grant to any Third Party the right to, make, have made, use, sell, offer to sell, or import any Potential Product in any Licensed Category that would result in there being more than two First Licensed Products and two Second Licensed Products at any time during the Term, unless and until the Parties shall have negotiated the fees, milestones, royalties, and any other special terms applicable to the exercise of any such rights with respect to Subsequent Licensed Products, with each Party acting in its sole discretion with respect to such negotiations.

                   3.10.     Compliance with Sublicenses.   From and after the License Effective Date of a license granted in accordance with Section 3.3 , except for the payment provisions, MacroGenics shall comply with the terms and conditions of each license under which Neose is the licensee, which license is included in the Neose Technology licensed to MacroGenics with respect to Potential Products in the Licensed Category in the Field of Use.  ****

                   3.11.     Technology Transfer.   Promptly following the License Effective Date of a license granted in accordance with Section 3.3 , Neose shall use Commercially Reasonable Efforts to transfer to MacroGenics the Know-How owned or Controlled by Neose that is useful

**** Material has been omitted and filed separately with the Commission.

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in connection with the exercise by MacroGenics of its rights under such license with respect to Potential Products in the Licensed Category in the Field of Use.

           4.     OWNERSHIP OF INTELLECTUAL PROPERTY

                   4.1.     Intellectual Property Rights.   All Ownership Rights in and to the Neose Technology shall remain at all times with Neose.  All Ownership Rights in and to the MacroGenics Technology shall remain at all times with MacroGenics, subject to the Parties’ obligations to assign certain Ownership Rights to the other Party under Sections 4.3 and 4.4 .

                   4.2.     Improvements

                              4.2.1.     Neose Improvements.   Any and all Neose Improvements shall be owned solely by Neose and shall be deemed to be part of the Neose Technology for all purposes, including, without limitation, the licenses to be granted under Section 3.3 .  Except as provided in Section 4.4 , any and all Collaboration Technology constituting Improvements made, conceived, or reduced to practice solely by Neose shall be owned by Neose.

                               4.2.2.     MacroGenics Improvements.  Any and all Collaboration Technology constituting MacroGenics Improvements shall be owned solely by MacroGenics for all purposes, including, without limitation, the license granted under Section 3.7 .  Except as set forth in Section 4.3 , any and all Improvements made, conceived, or reduced to practice, solely by MacroGenics shall be owned by MacroGenics.

                               4.2.3.     Joint Improvements.   Except as otherwise provided in this Section 4.2.1 or 4.2.2 , each of Neose and MacroGenics shall own a one-half undivided interest in any Collaboration Technology constituting Improvements made, conceived, or reduced to practice jointly by Neose and MacroGenics, whether patentable or not, provided, however, that a Party shall lose its one-half undivided interest in any Patent Rights included in Joint Improvement with respect to which it does not fund patent prosecution and maintenance costs, as provided in Section 4.5 .

                   4.3.     Assignment by MacroGenics.   To the extent that MacroGenics may obtain or retain any Ownership Rights in any Neose Improvements, MacroGenics hereby irrevocably assigns and transfers, and agrees to assign and transfer, to Neose any and all such Ownership Rights, in perpetuity or for the longest period otherwise permitted by law, without the necessity of further consideration, and Neose shall be entitled to receive and hold in its own name all such Ownership Rights.  With respect to any Ownership Rights that MacroGenics is required to assign and transfer to Neose under this Section 4.3 , at the request of Neose and at Neose’s expense, either before or after termination of the Term, MacroGenics shall assist Neose in acquiring and maintaining patent, copyright, trade secret and trademark protection upon, and confirming Neose’s title in and to, any such respective Ownership Rights, and MacroGenics shall provide Neose appropriate documentation evidencing Ownership Rights to which Neose is entitled.  MacroGenics’ assistance shall include, but shall not be limited to, signing all applications, and any other documents and instruments for patent, copyright and any other proprietary rights, providing executed license documents, cooperating in legal proceedings, and taking any other actions considered necessary or desirable by Neose.  For the purpose of

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facilitating the above assignments, MacroGenics agrees that any and all employees and contractors employed or engaged by MacroGenics and providing any service in connection with the Collaboration, prior to providing such service, shall have agreed in writing to covenants consistent with MacroGenics’ covenants set forth in this Section 4.3 .

                   4.4.     Assignment by Neose.   To the extent that Neose may obtain or retain any Ownership Rights in any MacroGenics Improvements, Neose hereby irrevocably assigns and transfers to MacroGenics any and all such Ownership Rights, in perpetuity or for the longest period otherwise permitted by law, without the necessity of further consideration, and MacroGenics shall be entitled to receive and hold in its own name all such Ownership Rights.  With respect to any Ownership Rights that Neose may assign and transfer to MacroGenics under this Section 4.4 , at the request of MacroGenics, and at MacroGenics’ expense, either before or after termination of this Agreement, Neose shall assist MacroGenics in acquiring and maintaining patent, copyright, trade secret and trademark protection upon, and confirming MacroGenics’ title in and to, any such respective Ownership Rights.  Neose’s assistance shall include, but shall not be limited to, signing all applications, and any other documents and instruments for patent, copyright and any other proprietary rights, cooperating in legal proceedings, and taking any other actions considered necessary or desirable by MacroGenics.  For the purpose of facilitating the above assignments, Neose agrees that any and all employees and contractors employed or engaged by Neose and providing any service in connection with the Collaboration, prior to providing such service, shall have agreed in writing to covenants consistent with Neose’s covenants set forth in this Section 4.4 .

                   4.5.     Prosecution and Maintenance of Patent Rights in Collaboration Technology.   Each Party shall have the right, in its sole discretion and at its sole expense, to prepare, file, prosecute and maintain all Patent Rights covering Collaboration Technology that the Party solely owns, as determined in accordance with Section 4 .  With respect to Joint Improvements, the Parties shall meet to determine whether patent protection is appropriate and, if so, in which countries, if any, patent applications claiming such joint inventions and discoveries should be filed.  The Parties shall jointly file, prosecute, and maintain, such patent applications, with each Party funding one-half of the costs thereof.  Either Party may at any time, in its sole discretion, discontinue funding the preparation, prosecution or maintenance of any Patent Rights covering Joint Improvements, in which case the Party discontinuing such support shall provide notice thereof to the other Party.  The Parties shall retain undivided equal interests in and to all Patent Rights covering Joint Improvements for as long as they are sharing the costs of prosecuting and maintaining such Patent Rights.  If a Party discontinues funding the preparation, prosecution or maintenance of any Patent Rights covering Joint Improvements, the other Party shall, thereafter, have sole rights in and to such Patent Rights.

                   4.6.     Use and Sublicensing of Joint Improvements.   Subject to the exclusive rights granted to MacroGenics under this Agreement, the exclusive Ownership Rights of the Parties under this Section 4 , and the funding obligations of the Parties under Section 4.5 , each Party shall be entitled to use its rights to Joint Improvements (including joint Patent Rights and joint Know-How) to develop, use, make, have made, import, offer to sell and sell products. Except for a Sublicense granted by MacroGenics in accordance with Section 3 , if either Party wishes to sublicense any of its rights in and to Joint Improvements, it shall provide notice thereof to the other Party requesting its consent to grant the proposed sublicense, which consent shall not

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be unreasonably withheld.  The notice shall identify the proposed sublicensee, field of use, territory and other relevant factors.  Except for a Sublicense granted by MacroGenics in accordance with Section 3 , if a proposed sublicense would permit a Third Party to develop a Potential Product, then a Party shall be entitled to withhold consent and the sublicense shall not be granted.  If a Party consents to the grant of any such proposed sublicense, the sublicensor Party shall pay the other Party a royalty of 1.5% of (i) net sales under the sublicense and (ii) any other revenues received by the sublicensor Party from the sublicensee. 

                   4.7.     Enforcement of Ownership Rights

                               4.7.1.     Reports of Infringement.   MacroGenics shall promptly report in writing to Neose during the Term any infringement or misappropriation or suspected infringement or misappropriation of any Neose Technology of which MacroGenics becomes aware and shall provide Neose with its full cooperation in the protection and enforcement of the Neose Technology and all available evidence supporting said infringement, misappropriation, suspected infringement or unauthorized use or misappropriation.  Neose shall reimburse MacroGenics for its reasonable, documented costs of such cooperation, unless such infringement or misappropriation is caused by an Affiliate or Sublicensee of MacroGenics.

                               4.7.2.     Right to Institute Suit.   Except as set forth in Sections 4.8 and 4.9 , Neose shall have the first right to initiate an infringement or other appropriate suit against any Third Party who at any time has infringed or is suspected of infringing or misappropriating, the Neose Technology with respect to a Potential Product in a Licensed Category in the Field of Use.  MacroGenics shall have the right to participate in and be represented by counsel in any such suit at MacroGenics’ expense, and Neose shall control any such suit initiated by Neose.  Neose shall not enter into any settlement, consent judgment or other voluntary final disposition of such suit that would adversely affect MacroGenics’ rights under this Agreement or that would adversely affect the scope, validity or enforceab