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EXHIBIT 10.16
TAX SHARING AGREEMENT
THIS AGREEMENT is made and entered into as of July 15, 1996 by and between
CELL GENESYS, INC. ("CGI"), a Delaware corporation and ABGENIX, INC.
("Abgenix"), a Delaware corporation.
B A C K G R 0 U N D
1. CGI owns all of the outstanding capital stock of Abgenix and expects to
own at least 80 percent of such stock for an extended period. In consequence,
CGI and Abgenix are members of an affiliated group (the "Affiliated Group")
within the meaning of Section 1504(1) of the Internal Revenue Code that is
eligible to file United States federal income tax returns on a consolidated
basis.
2. CGI intends to elect on behalf of itself and Abgenix to file
consolidated federal income tax returns and intends to file corresponding state
franchise and income tax returns on a consolidated or combined basis.
3. This Agreement is intended to provide for the allocation of federal and
state tax liabilities between CGI and Abgenix and to provide for the
reimbursement of Abgenix for tax benefits used by CGI under applicable tax
rules.
A G R E E M E N T
ACCORDINGLY, the parties agree as follows:
1. Consolidated Return Election. At CGI's election, CGI and Abgenix will
join in -- the filing of consolidated federal income tax returns and/or state
combined franchise or income tax returns, beginning with such tax year or years
as CGI may properly select. Abgenix agrees to file such consents, elections, and
other documents and to take such other action as may be necessary or appropriate
to carry out the purpose of this Section 1. Any period for which Abgenix is
included in a consolidated federal income tax return or a combined state
franchise or income tax return is referred to in this Agreement as a
"Consolidated Return Year."
2. Abgenix Liability to CGI for Consolidated Return Years. Within 30 days
after the end of each Consolidated Return Year, Abgenix shall pay to CGI the
amount of the federal and state income and franchise tax liability, reduced by
all available tax credits of Abgenix (to the extent such credits are used in
consolidation or combination) that Abgenix records as its annual current tax
provision as if it were filing a separate federal or state consolidated or
combined income or franchise tax return for such Consolidated Return Year.
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3. CBI Liability to Abgenix for Consolidated Return Years. If for any
Consolidated Return Year, Abgenix realizes a loss or credit that reduces the
consolidated tax liability of CGI and or any other members of the consolidated
or combined group below the amount that would have been payable if Abgenix had
not realized such loss or credit, then CGI shall pay the amount of the reduction
so computed to Abgenix within 30 days after the end of such year.
4. Interim Estimated Payments. Before the end of any Consolidated Return
Year, Abgenix shall advance to CGI (by such tine as estimated tax payments would
otherwise be due if separate estimated tax payments were required to be paid by
Abgenix) amounts necessary to reimburse CGI for that portion of any estimated
federal and state income and franchise tax payments attributable to the
inclusion of Abgenix in the consolidated or combined filing group of CGI., Any
amounts so paid in any Consolidated Return Year shall reduce the amount payable
to CGI pursuant to Section 2.
5. Audits and Adjustments. In the event of any adjustment of the tax
liability of the Affiliated Group by reason of an amended return, claim for
refund, or audit by the Internal Revenue Service or any state tax authority, the
liability of CGI and Abgenix to each other and to the Internal Revenue Service
for any period covered by this Agreement shall be redetermined after giving full
effect to any such adjustments as if such adjustments had been made as part of
the original return of such period. Payments or' credits between CGI and Abgenix
shall be made at the time of any payment of tax or receipt of refund or credit
to or from the Internal Revenue Service or state tax authority with respect to
such adjustments, and such payments or credits shall include any interest
attributable to such adjustments,,. If any penalties (including penalties for
failure to pay estimated taxes) are asserted with respect to the filing of any
consolidated return, the penalty shall be shared appropriately between CGI and
Abgenix based upon whose action or inaction (such as understating taxable
income) contributed to the penalty. CGI and Abgenix shall indemnify each other
against any claim by the Internal Revenue Service or state tax authority of tax
due from the Affiliated Group that exceeds the separately computed tax liability
of either.
6. Governing Law. This Agreement is governed by the laws of the State of
California.
7. Successors. This Agreement shall be binding upon and inure to the
benefit of any successors to any of the parties hereto. In the event any
corporation subsequently becomes an includible corporation of the Affiliated
Group, the parties agree to use their best efforts to cause such corporation to
become a party to this Agreement and to be subject to all the terms and
conditions hereof.
8. Duration. This Agreement shall remain in effect with respect to any
taxable year hereof for which consolidated or confined returns are filed by CGI
as a common parent coporation and such party is an includible corporation in
such consolidated return.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
that appears in its first paragraph.
CELL GENESYS, INC. ABGENIX, INC.
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ R. Xxxxx Xxxxx
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Xxxxxxx X. Xxxxxxx X. Xxxxx Xxxxx
President and President and
Chief Executive Officer Chief Executive Officer
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