AMENDED AND RESTATED WORLDWIDE AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and the mutual promises and covenants set forth below, PDL and Roche mutually agree to amend and restate the 1999 Agreements in this single Amended and Restated Worldwide Agreement as follows:

 

I.   DEFINITIONS

 

For the purposes of this Amended and Restated Worldwide Agreement, the following terms, when written with an initial capital letter, shall have the meaning ascribed to them below.  All references to particular Appendices, Articles and Sections shall mean the Appendices to, and Articles and Sections of, this Amended and Restated Worldwide Agreement, unless otherwise specified.

 

1.1                                  “AAGS” shall mean the average annualized Roche Adjusted Gross Sales of Daclizumab calculated according to the following:

 

[*]

 

where [*] is the [*] for the period from [*] through the most recent [*] ended [*] the [*] of (i) the date of [*] that [*] the [*] ; or (ii) the date of [*] that [*] the [*] ;

 

[*] is that portion of [*] that [*] , to [*] reasonable satisfaction, to be [*] to [*] for [*] in [*] or [*] ; and

 

[*] is the [*] of [*] from (and including) [*] through the end of the [*] ended [*] to the [*] of (i) the date of [*] that [*] the [*] ; or (ii) the date of [*] that [*] the [*] .

 

By way of illustration and without limitation, [*]

 

1.2                                  “Acting Party” has the meaning set forth in Section 12.1(c).

 

1.3                                  “Affiliates” means any corporation or other business entity controlled by, controlling, or under common control with another entity, with “control” meaning direct or indirect beneficial ownership of more than fifty percent (50%) of the voting stock of, or more than a fifty percent (50%) interest in the income of, such corporation or other business entity.  Anything to the contrary in this paragraph notwithstanding, [*]

 

1.4                                  “AI Trademarks” means all trademarks used in connection with the marketing, promotion, and sale of Daclizumab by PDL or its sublicensee(s) and all trademark registrations and applications therefor, and all goodwill associated therewith.

 

1.5                                  “Application” means a new application, or a supplement or an amendment to an existing application, for marketing approval for an Autoimmune Indication in the Territory.

 

1.6                                  “Autoimmune Indications” or “AI” means all indications that involve pathogenic consequences, including tissue injury, produced by autoantibodies or autoreactive T lymphocytes interacting with self epitopes, i.e., autoantigens.  Autoimmune Indications shall

 

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include, without limitation, asthma, psoriasis, rheumatoid arthritis, systemic lupus erythematosus, scleroderma, juvenile rheumatoid arthritis, polymytosis, Type I diabetes, sarcoidosis, Sjogrens syndrome, chronic active non-pathogenic hepatitis, non-infectious uveitis (Behcets), aplastic anemia, regional non-pathogenic enteritis (including ulcerative colitis, Crohn’s Disease and inflammatory bowel disease), Kawasaki’s disease, post-infectious encephalitis, multiple sclerosis, and tropic spastic paraparesis.

 

1.7                                  “Change of Control” means a transaction in which Roche either (a) sells, conveys or otherwise disposes of all or substantially all of its property or business; or (b) either (i) merges or consolidates with any other entity (other than a wholly-owned subsidiary of Roche); or (ii) effects any other transaction or series of transactions, in each case of clause (i) or (ii), such that the voting stockholders of Roche immediately prior thereto, in the aggregate, no longer own, directly or indirectly, beneficially or legally, at least fifty percent (50%) of the outstanding voting securities or capital stock of the surviving entity following the closing of such merger, consolidation, other transaction or series of transactions.

 

1.8                                  “Combination Product” means any product containing both an ingredient that causes it to be considered a Licensed Product and one or more other therapeutically active ingredients.

 

1.9                                  “Commercialization Term” means the period commencing on the Effective Date and ending on the earliest of (a) the Reversion Effective Date; (b) the Put Right Effective Date; and (c) if Roche does not exercise the Roche Put Right and the Exercise Period ends without PDL exercising the Transplant Reversion, the date Roche ceases to sell Daclizumab in every country in the Roche Territory, as permitted under this Amended and Restated Worldwide Agreement.

 

1.10                            “Controlled” means, with respect to any intellectual property right, that the party has a license to such intellectual property right and has the ability to grant to the other party a sublicense to such intellectual property right as provided for herein without violating the terms of any agreement or other arrangements with any Third Party existing at the time such party would be first required hereunder to grant the other party such sublicense.

 

1.11                            “Cost of Goods” means the manufacturing cost of either (a) unformulated bulk Daclizumab, or (b) finished Daclizumab product made from unformulated bulk, as the case may be, calculated in accordance with internal cost accounting methods consistently applied by a party for its other biologics pharmaceutical products, provided that such methods comply with [*] .  Cost of Goods shall include [*] . As used in this Amended and Restated Worldwide Agreement, the Cost of Goods shall not exceed [*]

 

1.12                            “Cover” (including variations thereof such as “Covering” or “Covered”), means that the manufacture, use, sale, offer for sale, or importation of a particular product would infringe a Valid Claim of a patent in the absence of rights under such patent.  The determination of whether a particular product is Covered by particular Valid Claims shall be made on a country-by-country basis.

 

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1.13                            “Daclizumab” means any product that contains humanized anti-Tac (as defined under “Field”).

 

1.14                            “Daclizumab Assets” means all assets owned by Roche or its Affiliates and relevant solely to the development or commercialization of Daclizumab, other than the Trademarks and the Roche Owned Patents.  Daclizumab Assets include, without limitation:

 

(a)                                   domain names used in connection with the sale or promotion of Daclizumab;

 

(b)                                  all then current promotional materials, including brochures, leave-behind materials, product fact sheets, advertisements in all media;

 

(c)                                   all then current packaging art copy, and all trade dress rights thereto;

 

(d)                                  rights to any “look and feel” of any materials referenced in (a) through (c) above and used in connection with the marketing, sale or promotion of Daclizumab and any and all copyrights or other intellectual property rights appurtenant thereto;

 

(e)                                   all then current sales training materials and medical education materials;

 

(f)                                     copies of market research surveys, analyses, and reports;

 

(g)                                  then current customer lists, sales records, lists of distributors;

 

(h)                                  regulatory filings, INDs, agreements related to physician sponsored INDs (to the extent assignable), CTXs, BLAs, and foreign equivalents of the foregoing, and all associated communications with regulatory authorities in the Roche Territory (excluding manufacturing approvals); and

 

(i)                                      then current contracts with managed care groups, hospitals, transplant centers, pharmaceutical benefit managers, distributors and other similar Third Parties.

 

1.15                            “Excluded Field” means [*] that (a)  [*] to the [*] of [*] , (b)  [*] the [*] of [*] , and (c) may also [*] .  The Parties agree that Daclizumab is not in the Excluded Field.

 

1.16                            “Excluded Product” means any product in the Excluded Field, including any Combination Product, that contains an [*] that was [*] by [*] on behalf of [*] pursuant to the [*] .  [*] shall be deemed to be an Excluded Product.

 

1.17                            “Exercise Period” has the meaning set forth in Section 5.2(a).

 

1.18                            “FDA” means the United States Food and Drug Administration and any successor agency thereto, and/or any equivalent foreign governmental agency, depending on the context.

 

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1.19                            “Field” means any humanized or chimeric antibody that binds to IL-2R, where “humanized” means a genetically engineered combination of a substantially human framework region and constant region, and complementarity determining regions from non-human antibodies, and where “chimeric” means a genetically engineered combination of human constant region and non-human variable region.  “Antibodies in the Field ” means humanized and chimeric antibodies that bind to IL-2R.  It is believed that these Antibodies in the Field may be useful for therapeutic, diagnostic, imaging and similar purposes.  It is understood that the Field includes, but is not limited to, that certain humanized murine monoclonal antibody prepared against the p55 component of IL-2R ( “humanized anti-Tac” ). Furthermore, the Field includes, but is not limited to, all improvements relating to humanized anti-Tac, including without limitation modifications in structure introduced by genetic engineering, or by chemical or enzymatic cleavage.  Also included within the Field shall be alternate hosts for producing humanized anti-Tac, methods for purification, formulations incorporating humanized anti-Tac, and uses and methods of use for humanized anti-Tac in human medicine.

 

1.20                            “Joint Inventions” means any inventions in the Field, whether patented or not, that are jointly made during the period beginning on January 31, 1989 and continuing until the end of the Commercialization Term by at least one (1) PDL employee or person contractually required to assign or license patent rights covering such inventions to PDL and at least one (1) Roche-Nutley or F. Roche employee or person contractually required to assign or license patent rights covering such inventions to Roche-Nutley or F. Roche.

 

1.21                            “Licensed Product” means any product, other than an Excluded Product, in the Field, including any Combination Product, the making, importation, use, offer for sale, or sale of which utilizes Roche Know-How, Roche Patents, or Joint Inventions or would, in the absence of this Amended and Restated Worldwide Agreement, infringe a Valid Claim of a Roche Patent.  Daclizumab shall be deemed to be a Licensed Product.

 

1.22                            “Major Country” means the United States, United Kingdom, France, Italy and Germany.

 

1.23                            “Other Indications” means all indications other than Transplant Indications and Autoimmune Indications.

 

1.24                            “ Other Licensed Products” means all Licensed Products other than Daclizumab.

 

1.25                            “PDL Adjusted Gross Sales” means the gross invoice price of Daclizumab sold or otherwise disposed of for consideration in the Roche Territory by PDL, its Affiliates or sublicensees (other than Roche and its Affiliates hereunder) to independent Third Parties not an Affiliate of the seller, reduced by the following amounts: (a) the amounts actually allowed as volume or quantity discounts, rebates, price reductions, returns (including withdrawals and recalls); and (b) sales, excise and turnover taxes imposed directly on and actually paid by PDL, its Affiliates or sublicensees.

 

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When calculating the PDL Adjusted Gross Sales, the amount of such sales in foreign currencies shall be converted into U.S. dollars at the average rate of exchange at the time for the applicable calendar quarter in accordance with PDL’s then-current standard practices.

 

In the case of Combination Products for which Daclizumab and each of the other therapeutically active ingredients contained in the Combination Product have established market prices when sold separately, PDL Adjusted Gross Sales shall be determined by multiplying the PDL Adjusted Gross Sales for each such Combination Product by a fraction, the numerator of which shall be the established market price for the form and formulation of Daclizumab contained in the Combination Product, and the denominator of which shall be the sum of the established market prices for such form and formulation of Daclizumab plus the other active ingredients contained in the Combination Product.  When such separate market prices are not established, then the parties shall negotiate in good faith to determine the method of calculating PDL Adjusted Gross Sales for Combination Products.

 

If PDL or its Affiliates or sublicensees receive non-cash consideration for Daclizumab sold or otherwise transferred to an independent Third Party not an Affiliate of the seller or transferor, the fair market value of such non-cash consideration on the date of the transfer as known to PDL, or as reasonably estimated by PDL if unknown, shall be deemed the PDL Adjusted Gross Sales for such Daclizumab sold or otherwise transferred.

 

1.26                            PDL Know-How” means, except as otherwise set forth in this Section 1.26, all inventions, discoveries, trade secrets, information, experience, data, formulas, procedures and results in the Field, and improvements thereon, including any information regarding the physical, chemical, biological, toxicological, pharmacological, clinical, and veterinary data, dosage regimens, control assays and specifications of Daclizumab (collectively, “Know-How in the Field” ), that is owned or Controlled by PDL or its Affiliates as of the Effective Date or that is developed or Controlled by PDL or its Affiliates during the term of this Amended and Restated Worldwide Agreement, and which Know-How in the Field is reasonably required or useful for manufacturing, using or selling Daclizumab; provided, however, that PDL Know-How excludes any Know-How in the Field of any kind concerning generic methods of manufacturing, designing, developing or preparing antibodies including, but not limited to, methods of humanizing antibodies, methods of reducing the immunogenicity of antibodies, and methods of increasing the affinity of antibodies.

 

1.27                            “PDL Net Sales” means the amount determined by deducting [*] from PDL Adjusted Gross Sales to cover all other expenses or discounts, including but not limited to cash discounts, custom duties, transportation and insurance charges and other direct expenses, to the extent not already deducted from the amount invoiced.

 

1.28                            “PDL Patents” means all patent applications owned or Controlled by PDL alone or with a Third Party ( “Sole PDL Patents” ) and all patent applications resulting from Joint Inventions ( “Joint Roche-PDL Patents” ) Covering Daclizumab, which are filed prior to or during the term of the 1989 Agreements, the 1999 Agreements or this Amended and Restated Worldwide Agreement in the United States or any foreign jurisdiction, including any addition,

 

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continuation, continuation-in-part or division thereof or any substitute application therefor; any patent issued with respect to such patent application, any reissue, extension or patent term extension of any such patent, and any confirmation patent or registration patent or patent of addition based on any such patent; and any other United States or foreign patent or inventor’s certificate covering products in the Field.

 

1.29                            “ PDL Sole Territory ” means all countries of the world, as listed in Appendix C (which the parties may agree to update from time to time), with respect to which Roche has granted an exclusive license to PDL, in connection with the previous return or reversion of Roche’s rights under the 1999 Agreements.

 

1.30                            “Product Operating Committee” or “POC” has the meaning set forth in Section 6.2(a).

 

1.31                            “Put Exercise Fee” has the meaning set forth in Section 5.3(b).

 

1.32                            “Put Right Effective Date” has the meaning set forth in Section 5.3(a).

 

1.33                            “Queen et al. Patents” means those Sole PDL Patents in the Territory claiming priority under 35 USC 120 to U.S. Patent Application Serial No. 290,975, filed December 28, 1988.

 

1.34                            “Reasonable Diligence” means the same level of effort used by Roche in developing, registering, marketing and selling its own protein-based products that must be approved by the FDA before they can be sold in the Roche Territory.  The parties acknowledge that Roche does not develop, register, market and sell its own protein-based products in every country within the Roche Territory, and it is understood that the exercise by Roche of reasonable diligence shall be determined by judging its efforts in the Roche Territory taken as a whole.

 

1.35                            “Regulatory Approval” means the granting of all governmental regulatory approvals required, if any, for the sale of a Licensed Product in a given country or jurisdiction within the Territory.

 

1.36                            “Reversion Effective Date” has the meaning set forth in Section 5.2(b).

 

1.37                            “Reversion Exercise Fee” has the meaning set forth in Section 5.2(c).

 

1.38                            “Roche Adjusted Gross Sales” means the gross invoice price of Daclizumab sold or otherwise disposed of for consideration by Roche, its Affiliates or sublicensees (other than PDL and its Affiliates hereunder) to independent Third Parties not an Affiliate of the seller, reduced by the following amounts: (a) the amounts actually allowed as volume or quantity discounts, rebates, price reductions, returns (including withdrawals and recalls); and (b) sales, excise and turnover taxes imposed directly on and actually paid by Roche, its Affiliates or sublicensees.

 

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When calculating the Roche Adjusted Gross Sales, the amount of such sales in foreign currencies shall be converted into U.S. dollars at the average rate of exchange at the time for the applicable calendar quarter in accordance with Roche’s then-current standard practices.

 

In the case of Combination Products for which Daclizumab and each of the other therapeutically active ingredients contained in the Combination Product have established market prices when sold separately, Roche Adjusted Gross Sales shall be determined by multiplying the Roche Adjusted Gross Sales for each such Combination Product by a fraction, the numerator of which shall be the established market price for the form and formulation of Daclizumab contained in the Combination Product, and the denominator of which shall be the sum of the established market prices for such form and formulation of Daclizumab plus the other active ingredients contained in the Combination Product.  When such separate market prices are not established, then the parties shall negotiate in good faith to determine the method of calculating Roche Adjusted Gross Sales for Combination Products.

 

If Roche or its Affiliates or sublicensees receive non-cash consideration for Daclizumab sold or otherwise transferred to an independent Third Party not an Affiliate of the seller or transferor, the fair market value of such non-cash consideration on the date of the transfer as known to Roche, or as reasonably estimated by Roche if unknown, shall be deemed the Roche Adjusted Gross Sales for such Daclizumab sold or otherwise transferred.

 

1.39                            “Roche Commercialization Activities” has the meaning set forth in Section 4.1(a).

 

1.40                            “Roche Controlled Patents” means all patent applications Controlled by Roche or its Affiliates and not Controlled by PDL or its Affiliates Covering inventions in the Field that are filed prior to or during the term of this Amended and Restated Worldwide Agreement in the United States or any foreign jurisdiction, including any addition, continuation, continuation-in-part or division thereof or any substitute application therefor; any patent issued with respect to such patent application, any reissue, extension or patent term extension of any such patent, and any confirmation patent or registration patent or patent of addition based on any such patent; and any other United States or foreign patent or inventor’s certificate covering inventions in the Field.  Roche Controlled Patents are, specifically, those listed on Schedule 2.8(b).

 

1.41                            “Roche Inventions” means any inventions in the Field that are made prior to or during the term of this Amended and Restated Worldwide Agreement by employees of Roche or persons contractually required to assign or license patent rights covering such inventions to Roche.

 

1.42                            “Roche Know-How” means all Know-How in the Field that is owned or Controlled by Roche or its Affiliates as of the Effective Date, or that is developed or Controlled by Roche or its Affiliates during the Commercialization Term and which Know-How in the Field is reasonably required or useful for seeking registration of, manufacturing, using or selling Daclizumab, as the case may be, provided, however, that this portion of Roche Know-How excludes any Know-How in the Field of any kind concerning generic methods of manufacturing,

 

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designing, developing or preparing antibodies including, but not limited to, methods of humanizing antibodies, methods of reducing the immunogenicity of antibodies, and methods of increasing the affinity of antibodies.  For clarity, Roche Know-How includes all Know-How in the Field provided to PDL by Roche or its Affiliates under the 1989 Agreements and 1999 Agreements.

 

1.43                            “ Roche Licensed Know-How” means that portion of Roche Know-How that is reasonably required or useful for seeking registration of, manufacturing, using or selling Daclizumab for Autoimmune Indications or any Other Indication, but shall not include [*] .

 

1.44                            “Roche Licensed Patents” means those Roche Patents that Cover in whole or in part the manufacture, importation, offer for sale or sale of Daclizumab or any Other Licensed Products, or the use of Daclizumab or any Other Licensed Products in Autoimmune Indications or Other Indications.

 

1.45                            “Roche Net Sales” means the amount determined by deducting [*] from Roche Adjusted Gross Sales to cover all other expenses or discounts, including but not limited to cash discounts, custom duties, transportation and insurance charges and other direct expenses, to the extent not already deducted from the amount invoiced.  Notwithstanding the foregoing, “Roche Net Sales of Excluded Products” shall be calculated in the same manner as Roche Net Sales, except that for the purpose of such calculation, Roche Adjusted Gross Sales shall be based on the gross invoice price of Excluded Products.

 

1.46                            “Roche Owned Patents” means all patent applications owned by Roche or its Affiliates ( “Sole Roche Patents” ) alone or with a Third Party, and all patent applications resulting from Joint Inventions ( “Joint Roche-PDL Patents” ) covering inventions in the Field that are filed prior to or during the term of this Amended and Restated Worldwide Agreement in the United States or any foreign jurisdiction, including any addition, continuation, continuation-in-part or division thereof or any substitute application therefor; any patent issued with respect to such patent application, any reissue, extension or patent term extension of any such patent, and any confirmation patent or registration patent or patent of addition based on any such patent; and any other United States or foreign patent or inventor’s certificate covering inventions in the Field.  Roche Owned Patents as of the Effective Date are, specifically, those listed on Schedule 2.8(a).

 

1.47                            “Roche Patents” means both the Roche Owned Patents and the Roche Controlled Patents.

 

1.48                            “Roche Products” means Daclizumab and any Excluded Products.

 

1.49                            “Roche Put Right” has the meaning set forth in Section 5.3(a).

 

1.50                            “Roche Territory” means, collectively, (a) the United States of America (“ U.S. ” or “ U.S.A. ” or “ United States ”) and its territories and possessions where the patent laws of the

 

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United States are in force and (b) all other countries in the Territory, excluding the PDL Sole Territory (the “ Roche ROW Territory ”).

 

1.51                            “Territory” means all the countries of the world.

 

1.52                            “Third Party” means any person or entity other than PDL, Roche, and their respective Affiliates.

 

1.53                            “Third Party License” means (a) any of the license agreements set forth on Appendix B that were entered into by either party, prior to the Effective Date, in order for Roche or PDL to manufacture, use, import, offer for sale or sell Daclizumab or (b) any license agreement entered into with a Third Party by either party in accordance with Section 7.4(b).

 

1.54                            “Trademarks ” means the trademark “Zenapax®,” and all trademark registrations and applications therefor, and all goodwill associated therewith, and all other trademarks owned by Roche (except for any Roche housemarks or trade names) and used in connection with the sale or promotion of Daclizumab in the Roche Territory.

 

1.55                            “Transplant Foreign Filing Expenses” means ex parte out-of-pocket expenses (a) incurred by PDL after January 31, 1989, but prior to the Effective Date, in connection with the prosecution and maintenance in the Roche ROW Territory of patent applications and patents included within the PDL Patents or Joint Roche-PDL Patents and (b) reimbursed by Roche pursuant to Section 7.2(a) of the 1999 PDL/Roche Agreement or Section 5.3(a) of the F. Roche Agreement.

 

1.56                            “Transplant Indications” means all indications that involve the suppression of rejection of transplanted organs, bone marrow or other tissue, including, without limitation, solid organ transplantation (including tolerance induction and xenotransplantation), bone marrow transplantation, graft versus host disease and cell transplantation.  In any event, if a given indication satisfies the criteria for both an Autoimmune Indication and a Transplant Indication, such indication shall be deemed a Transplant Indication and not an Autoimmune Indication, provided that an Autoimmune Indication shall not be deemed a Transplant Indication merely because it may cause the need for a transplant (e.g., Type I diabetes, even if it causes the need for an organ transplant).

 

1.57                            “Transplant Reversion” has the meaning set forth in Section 5.2(a).

 

1.58                            “Valid Claim” means a claim in any issued patent that has not been disclaimed or held unenforceable or invalid by a decision of a court or governmental agency of competent jurisdiction by a decision beyond right of review.

 

II.   LICENSE GRANTS

 

2.1                                  License Grant to PDL On Effective Date.

 

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(a)                                   Subject to the terms and conditions of this Amended and Restated Worldwide Agreement, Roche grants to PDL and to PDL’s Affiliates the worldwide right and license under the Roche Licensed Know-How and Roche Licensed Patents, to (i) develop, use, market, promote, and detail Daclizumab in the Territory solely for use in Autoimmune Indications and/or the Other Indications, and (ii) sell and offer for sale Daclizumab in the Territory, under the AI Trademarks.

 

(b)                                  The licenses set forth in Sections 2.1(a)(i) and 2.1(a)(ii) shall be exclusive (even as to Roche) with respect to the Roche Licensed Know-How and Roche Licensed Patents that Roche or its Affiliate solely owns or has an exclusive license.  With respect to the Roche Licensed Know-How and Roche Licensed Patents to which Roche or its Affiliate has a non-exclusive license, such licenses shall be sole, non-exclusive licenses.  With respect to the Roche Licensed Know-How and Roche Licensed Patents that Roche or its Affiliate jointly owns, such licenses shall be sole licenses under Roche’s interest in such Roche Licensed Know-How and Roche Licensed Patents.  As used in this Section 2.1(b) a “sole” license means that the Roche will not grant to any Third Party a license that overlaps with the scope of the licenses granted to PDL under Section 2.1(a).

 

(c)                                   Roche grants to PDL and to PDL’s Affiliates, the nonexclusive right under the Roche Licensed Know-How and Roche Licensed Patents to make, have made, and import Daclizumab.

 

(d)                                  PDL and its Affiliates may sublicense the rights and licenses granted to them under Sections 2.1(a) and (c) to any Affiliate or Third Party, with the right to further sublicense; provided, however, that without Roche’s written consent, PDL shall not have the right to sublicense, during the Commercialization Term, any of the [*] rights or licenses in Section 2.1(a) to any other entity, that is, as of the time of such sublicensing, [*] in the [*] (in at least one [*] with [*] ), or [*] in the [*] any [*] for the [*] of [*] in any [*] .  It is expressly understood and agreed by Roche that PDL shall have the right to sublicense its rights under Sections 2.1(a) and (c) to [*] .  Notwithstanding the preceding limitation on sublicensing, PDL and its Affiliates may use Third Party distributors in accordance with their customary practices.

 

(e)                                   Subject to the terms and conditions of this Amended and Restated Worldwide Agreement, Roche grants to PDL and to PDL’s Affiliates a worldwide right and license (or sublicense, as the case may be) under the Roche Licensed Know-How received by PDL pursuant to the 1989 Agreements, 1999 Agreements or Section 2.4 hereof, the Roche Controlled Patents and only those Roche Owned Patents listed in Schedule 2.8(a), to (i) develop, use, market, promote, and detail Other Licensed Products in the Territory solely for use in Autoimmune Indications and/or the Other Indications; (ii) sell and offer for sale Other Licensed Products in the Territory; and (iii) to make, have made, and import Other Licensed Products in the Territory.

 

(f)                                     The license set forth in Section 2.1(e) shall be exclusive (even as to Roche) with respect to the Roche Controlled Patents that Roche or its Affiliate solely owns or has an exclusive license.  With respect to the Roche Controlled Patents to which Roche or its Affiliate has a non-exclusive license, such license shall be a sole, non-exclusive license.  With respect to

 

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the Roche Owned Patents that Roche or its Affiliate jointly owns, such license shall be a sole license under Roche’s interest in such Roche Owned Patents.  PDL and its Affiliates shall have the right freely to sublicense, through multiple tiers, the rights and licenses granted to them under Section 2.1(e).  Notwithstanding anything to the contrary in Section 2.1(e), the license to Roche Licensed Know-How shall be non-exclusive.  Roche hereby covenants that, until the termination, pursuant to Section 2.2(a), of the license set forth in Section 2.1(e), it will not grant to any Third Party any right or license under the (i) Roche Controlled Patents to which Roche or its Affiliate has a non-exclusive license or (ii) Roche Owned Patents that Roche or its Affiliate jointly owns , to (A) develop, use, market, promote, and detail Other Licensed Products in the Territory for use in Autoimmune Indications and/or the Other Indications; (B) sell and offer for sale Other Licensed Products in the Territory; and (C) make, have made, and import Other Licensed Products in the Territory.

 

(g)                                  If PDL wishes to receive a license with respect to Other Licensed Products in Autoimmune Indications and/or Other Indication, under any Roche Owned Patents that are not listed in Schedule 2.8(a), it shall [*] and Roche shall [*] .

 

2.2                                  License Grant to PDL On Reversion Effective Date or Put Right Effective Date.

 

(a)                                   Effective only on the Reversion Effective Date or the Put Right Effective Date, Roche hereby grants the following license to PDL: subject to the terms and conditions of this Amended and Restated Worldwide Agreement, Roche grants to PDL and to PDL’s Affiliates a worldwide right and license under the Roche Know-How and Roche Patents, to develop, use, manufacture, have manufactured, market, promote, import, offer for sale, sell and have sold Daclizumab and all Other Licensed Products in the Field and in the Territory.  On the effectiveness of the license set forth in this Section 2.2(a), the licenses granted in Section 2.1(a), (c) and (e) shall terminate.  PDL and its Affiliates shall have the right freely to sublicense, with the right to further sublicense, the right and license granted to them under this Section 2.2(a).

 

(b)                                  For Daclizumab, the license set forth in Section 2.2(a) shall be exclusive (even as to Roche) with respect to the Roche Know-How and Roche Patents that Roche or its Affiliate solely owns or has an exclusive license.  With respect to the Roche Know-How and Roche Patents to which Roche or its Affiliate has a non-exclusive license, the license set forth in Section 2.2(a) shall be a sole, non-exclusive license.  With respect to the Roche Know-How and Roche Patents that Roche or its Affiliate jointly owns, the license set forth in Section 2.2(a) shall be a sole license under Roche’s interest in such Roche Know-How and Roche Patents.  Roche hereby covenants that it will not grant to any Third Party any right or license, under (i) the Roche Know-How and Roche Patents to which Roche or its Affiliate has a non-exclusive license or (ii) the Roche Know-How and Roche Patents that Roche or its Affiliate jointly owns, to develop, use, manufacture, have manufactured, market, promote, import, offer for sale and sell Daclizumab in the Field and in the Territory.

 

(c)                                   For Other Licensed Products, the license set forth in Section 2.2(a) shall be non-exclusive.  Notwithstanding the preceding sentence, Roche hereby covenants that it will not

 

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grant licenses to any Third Party under the Roche Patents to make, have made, use, sell, offer for sale or import any Other Licensed Product.

 

2.3                                  Certain [*] To PDL of [*] Intellectual Property.   PDL acknowledges and understands that [*] are [*] as to [*] (a) Roche has received, prior to the Effective Date, a [*] license under certain [*] of [*] that [*] cover the manufacture, use, importation, offer for sale or sale of humanized antibodies against IL-2R, including Daclizumab and any Other Licensed Products, and/or (b)  [*] Roche has the right to [*] such licensed [*] , to the extent granted to Roche.   In the event that the parties agree that Roche is [*] such license [*] , PDL shall be deemed to have been [*] pursuant to the [*] , as applicable, and such [*] will be deemed part of the [*] licensed thereunder.  In the event that the parties agree that Roche [*] such rights, and/or that Roche [*] such rights to PDL as part of the [*] , Roche agrees to use diligent efforts to itself secure or assist PDL in securing from [*] , a license to such [*] from [*] , which license rights will be documented under a separate agreement from this Amended and Restated Worldwide Agreement.  If [*] obtains [*] consent to the terms of such separate agreement, then it shall be deemed a [*] and [*] shall [*] the costs of such license rights, in the manner and as set forth in Section 7.4, [*] the [*] the costs and royalties owed to [*] shall be as follows: [*] shall bear [*] of the cost of such license rights and [*] shall bear [*] of the costs of such license rights; and provided, however, that this addition or offset shall not cause the amount to be paid by PDL to Roche pursuant to Section 7.2(c), in the aggregate and after payment to [*] , to be less than [*] of [*] in [*] .  On either the [*] or the [*] , [*] shall be [*] responsible for paying the prospective costs of such license from that date forward, as further detailed in Section 7.4(e).  If the Exercise Period expires without [*] or [*] , then the parties will proceed as detailed in Section 7.4(f) with respect to Third Party Licenses.

 

2.4                                  Transfer of Roche Licensed Know-How to PDL . Promptly after the Effective Date, Roche shall transfer all Roche Licensed Know-How to PDL in the manner in which and to the extent to which the parties, prior to the Effective Date, have transferred know-how under the Joint Development Committee or the Joint Commercialization Committee under the 1999 Agreements.  Thereafter, and until the Reversion Effective Date or the Put Right Effective Date, if Roche develops or gains Control of additional Roche Licensed Know-How, Roche shall promptly provide such additional Roche Licensed Know-How to PDL through the parties’ participation in the POC.  On either the Reversion Effective Date or the Put Right Effective Date, Roche shall transfer to PDL any Roche Know-How not previously transferred to PDL, including in particular, any Roche Know-How related to the Transplant Indications.

 

2.5                                  License Grants to Roche.

 

(a)                                   Subject to the terms and conditions of this Amended and Restated Worldwide Agreement, PDL grants to Roche and to Roche’s Affiliates, during the Commercialization Term, the exclusive (even as to PDL) right and license under the PDL Know-How and PDL Patents to (i) market, promote, and detail Daclizumab in the Roche Territory solely for use in the Transplant Indications, and (ii) to sell and offer for sale Daclizumab in the Roche Territory under the Trademarks.   In addition, PDL grants to Roche and to Roche’s Affiliates, the nonexclusive right under the PDL Know-How and PDL Patents to make, have made and import

 

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Daclizumab, but only to the extent reasonably necessary for Roche to carry out its rights and obligations under this Amended and Restated Worldwide Agreement.  Roche may sublicense the rights and licenses granted to Roche under this Section 2.5, subject to PDL’s written consent, which consent PDL may not unreasonably withhold.  It shall be deemed reasonable for PDL to withhold consent with respect to sublicense by Roche of any of the rights or licenses to any other entity that is [*] (in at least one [*] with [*] ), or [*] in a [*] any [*] for the [*] of any [*] .  Notwithstanding the preceding sentence, Roche and its Affiliates may use Third Party distributors in accordance with their customary practices. All sublicenses granted by Roche or its Affiliates of the licenses set forth in this Section 2.5(a) shall automatically terminate on the Reversion Effective Date or Put Right Effective Date.

 

(b)                                  Subject to the terms and conditions of this Amended and Restated Worldwide Agreement, in particular the restrictions set forth in Section 3.1(b), PDL grants to Roche and to Roche’s Affiliates the exclusive (even as to PDL) right and license, including the right to grant sublicenses, under the PDL Know-How and PDL Patents to use, develop, make, have made, sell, offer for sale, and import the Excluded Products in the Roche Territory; provided, however that the license granted under this Section 2.5(b) under [*] shall be nonexclusive.

 

(c)                                   PDL hereby covenants that, until the expiration of [*] , it will not make, have made, use, sell, offer for sale or import any product in the Excluded Field Covered by [*] in the Roche Territory, and it will not grant to any Third Party any right or license under [*] the right to make, have made, use, sell, offer for sale or import any product in the Excluded Field in the Roche Territory.

 

(d)                                  If during the term of this Amended and Restated Worldwide Agreement, Roche or its Affiliate challenges the validity or enforceability in any jurisdiction of [*] , then PDL shall have the right to [*] to Roche under this Amended and Restated Worldwide Agreement to PDL Patents that include [*] .

 

(e)                                   Roche hereby covenants that it shall not, nor shall it cause any Affiliate or sublicensee to:

 

(i)                                      knowingly use or practice, directly or indirectly, any PDL Know-How or PDL Patents for any other purposes other than those expressly permitted by this Amended and Restated Worldwide Agreement or any other written agreements in the Field between the Parties currently in existence and not expressly superceded by this Amended and Restated Worldwide Agreement, or which may later be entered into by the Parties;

 

(ii)                                   market, promote, detail, sell or offer for sale Daclizumab, during the Commercialization Term, in any manner outside the scope of the licenses set forth in Section 2.5(a), including, in particular, for any use in the treatment of Autoimmune Indications or Other Indications; or

 

(iii)                                use, develop, make, have made, sell, offer for sale or import Excluded Products in any manner outside the scope of the licenses set forth in Section 2.5(b).

 

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(f)                                     PDL hereby covenants that it shall not, nor shall it cause any Affiliate or sublicensee to market, promote, detail, sell or offer for sale Daclizumab, during the Commercialization Term, in any manner outside the scope of the licenses set forth in Sections 2.1 and 2.2.

 

2.6                                  Identification of the Queen et al Patents .  Set forth on Appendix A is a list identifying patents or patent applications that comprise the Queen et al. Patents in the Roche Territory as of the Effective Date.   If there are any changes, PDL shall update this list by delivering a supplement to Roche no less frequently than once per year during the term of this Amended and Restated Worldwide Agreement.

 

2.7                                  Cooperation Regarding Third Party Licenses.    In the event Roche negotiates and intends to enter into a license agreement with a Third Party with respect to the right to make, use, sell, import, offer for sale or sale of any [*] under such Third Party’s intellectual property, it shall so inform PDL and provide PDL the opportunity to participate in such negotiations and enter into such license agreement or take a sublicense thereunder with respect to [*] , on such terms as are agreed by the parties.

 

2.8                                  Roche Representations, Warranties and Covenants .  Roche hereby represents and warrants as of the Effective Date as follows:

 

(a)                                   To the best of Roche’s knowledge, Schedule 2.8(a) identifies the Roche Owned Patents existing as of the Effective Date.  To the extent that it is not prohibited from doing so, Roche agrees to make available to PDL copies of such Roche Owned Patents promptly following the Effective Date. Roche covenants that, to the extent any additional Roche Owned Patents are identified by Roche subsequent to the Effective Date and to the extent that it is not prohibited from doing so, it shall promptly inform PDL, and Schedule 2.8(a) shall be revised to so reflect such additional Roche Owned Patents.

 

(b)                                  Schedule 2.8(b) identifies all of the license agreements under which Roche has rights to Roche Controlled Patents existing as of the Effective Date (other than the license rights from Genentech referred to in Section 2.3).  Roche agrees to make available to PDL copies of such license agreements pursuant to which the Roche Controlled Patents were licensed to Roche promptly following the Effective Date, to the extent not already in PDL’s possession and to the extent that Roche has a right to do so.  [*] further covenants that, where it is not [*] to [*] to [*] such [*] , it will [*] to [*] from the [*] its [*] to do so. Roche shall not, without the prior written consent of PDL, terminate any agreement that grants Roche a license under a Roche Controlled Patent.  Roche covenants that, to the extent any additional licenses under which Roche has rights to Roche Controlled Patents are identified by Roche or come into existence subsequent to the Effective Date, Roche shall promptly inform PDL, and Schedule 2.8(b) shall be revised to so reflect such additional licenses; provided, however, that in the event any royalty or other payment is owed to the licensor of any such Roche Controlled Patent [*] PDL, [*] shall not be responsible for any such royalty payments, and [*] shall so notify [*] in writing and [*] shall have a period of ninety (90) days to evaluate whether it desires that such [*] be included within the [*]

 

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licensed to [*] under [*] and if so, the mechanism for payment to the [*] thereunder.  Where [*] elects not to [*] to such Roche Controlled Patent, it agrees to [*]

 

(c)                                   Roche has not granted any Third Party a license or other right that is currently in effect under any of the Roche Owned Patents for any purpose.

 

(d)                                  To Roche’s knowledge, Roche has complied with its obligation under 37 CFR §1.56(a) to disclose to the United States Patent and Trademark Office, during the pendency of each United States patent application included in the Roche Owned Patents, information known to Roche to be material to the patentability of the pending claims in such application.  None of the Roche Owned Patents is involved in any interference or opposition proceeding, and, to Roche’s knowledge, no such proceeding is being threatened with respect to any of the Roche Owned Patents.

 

(e)                                   [*]

 

(f)                                     [*]

 

(g)                                  Roche and its Affiliates have not granted to any Third Party in any Major Country, any sublicense, under the license(s) to the PDL Know-How and PDL Patents that Roche and its Affiliates received pursuant to the 1999 Agreements, to: (i) promote and sell Daclizumab generally, and/or for use in Autoimmune Indications or the Other Indications; or (ii) develop, make, use, import, offer for sale and sell Other Licensed Products for any indication in the Field.  Roche shall, prior to the [*] , disclose in writing to PDL all sublicenses that Roche or its Affiliate have granted, under the PDL Know-How and PDL Patents, to develop, make, use, import, promote, offer for sale and sell Daclizumab and Other Licensed Products for any indication in the Field.  If any such sublicenses exist at such time, the parties, through the POC, will work together to [*] (including [*] , where practicable) such sublicense.

 

(g)                                  Roche covenants that, in the event that Roche [*] of the [*] of the [*] of [*] , through whatever means, on PDL’s request, Roche will within [*] days of such request, meet and discuss with PDL the impact of such event on the relationship between PDL and Roche at such time, and modify this Amended and Restated Worldwide Agreement to the extent deemed appropriate by both parties.

 

2.9                                  Termination of Certain Sublicenses.   If, prior to the Effective Date, PDL and Roche or an Affiliate of Roche entered into any agreement(s), other than the 1999 Agreements, wherein PDL granted Roche or such Affiliate a sublicense with respect to Daclizumab or Other Licensed Product(s), under any Third Party intellectual property rights licensed by PDL, then such sublicenses are hereby terminated and replaced by the licenses set forth in Section 2.5.

 

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III.   DEVELOPMENT; REGULATORY ISSUES

 

3.1                                  Development by Roche .

 

(a)                                   Development of Daclizumab .  Following the Effective Date, [*] after the Effective Date.  In addition, to the extent Roche receives any data or other results of any clinical trials pursuant to ongoing physician sponsored trials, Roche will update the POC with respect to such trial results and data.  Further, Roche shall promptly forward to PDL any requests for new [*] studies involving Daclizumab that Roche receives after the Effective Date.

 

(b)                                  Development of Excluded Products .  Roche shall be solely responsible, at its sole cost and expense and at its sole discretion, for the non-clinical, clinical, and regulatory development of any Excluded Product.  Notwithstanding the foregoing, it is understood and agreed that [*] for any indication other than [*] without the written consent of PDL, such consent not to be unreasonably withheld.  The Parties recognize that it may be desirable to develop the Excluded Products for [*] , in which case the POC shall discuss and recommend to the parties whether [*] .  Following the Effective Date, Roche shall use Reasonable Diligence in proceeding with the development and registration of Excluded Products in the Roche Territory, to the extent permitted under this Section 3.1(b).  If Roche fails to exercise such diligence, PDL may terminate the license granted to Roche under Section 2.5(b), but shall not be obligated to do so.

 

3.2                                  Development by PDL .

 

(a)                                   General .  Following the Effective Date, PDL shall be solely responsible, at its sole cost and expense and at its sole discretion, for the non-clinical, clinical, and regulatory development of Daclizumab for all indications in the Territory, other than those trials referenced in Section 3.1(a), subject to the restrictions set forth in Section 3.2(b).  All data and information generated by PDL development activities pursuant to this Section 3.2(a) shall be PDL Know-How.

 

(b)                                  Restriction on PDL Development .  During the period commencing on the Effective Date and ending at the end of the Commercialization Term, PDL agrees not to pursue the clinical or regulatory development of Daclizumab for use in the [*] in the Roche Territory.

 

3.3                                  Assistance by Roche .  At no cost to PDL (except as provided in the following sentence), Roche will allow PDL to cross-reference Roche regulatory filings and clinical data with respect to Daclizumab and will grant PDL reasonable access during normal business hours to such regulatory filings and clinical data.  To the extent Roche is required under applicable law, rule or regulation, Roche, at PDL’s cost, shall promptly make all filings reasonably required or useful to permit the use of the clinical materials, if any, supplied pursuant to Section 4.5(a) (e.g., preparation and filing of required technical reports, data summaries, or a regulatory dossier).

 

3.4                                  Adverse Event Reporting .  Each party shall notify the other of all information coming into its possession concerning any and all side effects, injury, toxicity, pregnancy or sensitivity event associated with commercial or clinical uses, studies, investigations or tests with Daclizumab, throughout the world, whether or not determined to be attributable to Daclizumab ( “Adverse Event Reports” ).  The parties shall each identify a person to coordinate the exchange of Adverse Event Reports ( “Report Coordinators” ) so as to enable timely reporting of such Adverse Event Reports to appropriate governmental and regulatory authorities consistent with all

 

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laws, rules and regulations. The parties, through their Report Coordinators, have agreed in writing on formal procedures for such exchange, which are embodied in the PDL-Roche Procedure for the Exchange of Daclizumab Adverse Event Reports, dated December 2000 ( “Pharmacovigilance Agreement” ).  Promptly after the Effective Date, Roche and PDL agree to cause their Report Coordinators (a) to review the Pharmacovigilance Agreement and (b) to negotiate in good faith an amendment to the Pharmacovigilance Agreement to reflect the terms of this Amended and Restated Worldwide Agreement, if the Report Coordinators agree that such an amendment is required.  Such Pharmacoviligance Agreement (as amended, if applicable) shall survive the end of the Commercialization Term.

 

3.5                                  Copies of Responses .  Within a reasonable time frame prior to submission of responses to any regulatory authority on product safety issues regarding Daclizumab, a copy of a near final draft response will be provided to the other party for review.  Final copies of responses submitted to any regulatory authority will be provided to the other party within five (5) business days of document finalization.

 

3.6                                  Regulatory Actions .  The party responsible to interact with regulators on a specific safety issue regarding Daclizumab must communicate action requested by regulators to the other party without delay.  Such actions may include, for example, change in label, Dear Doctor letter, trial on hold for clinical safety reasons and the like.

 

3.7                                  Other Safety Issues .  Either party may request that specific safety issues be discussed, and the parties will establish a Joint Safety Committee ( “JDSC” ), consisting of an equal number of representatives from each party, for such purpose. JDSC discussion on such issues will be for the purpose of advising each party concerning the collection and evaluation of safety data, and responding to any significant safety issues raised, or requests made, by regulatory authorities.

 

3.8                                  Registration .  PDL shall notify Roche in writing if PDL determines that clinical trial results for Daclizumab justify filing an Application.  Roche shall provide cross reference letters reasonably required or useful to allow PDL to make any such filing and to allow PDL to carry out without delay any related clinical trial in the Territory.  PDL shall be responsible for preparing periodic reports required by the FDA related to any such Applications and for timely filing such periodic reports with the FDA.  Through the POC, each party shall advise and consult with the other with respect to any significant issues or questions raised by any regulatory authorities with respect to Daclizumab.

 

IV.   COMMERCIALIZATION AND MANUFACTURING

 

4.1                                  Commercialization By Roche.

 

(a)                                   Commercialization of Daclizumab by Roche .  The parties intend that, following the Effective Date, Roche will continue to market and sell Daclizumab in the Transplant Indications in the Roche Territory for the duration of the Commercialization Term, under the Trademarks.  In particular, and without limitation, during the Commercialization Term

 

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and in the Roche Territory, Roche shall be responsible, at its sole cost and as permitted by applicable law, for (i) the marketing, promotion, and detailing of Daclizumab for use in the Transplant Indications; (ii) accepting and filling orders for Daclizumab received by it or its Affiliates, including the distribution of Daclizumab to fill such orders; (iii) booking all sales of Daclizumab attributable to such orders; and (iv) any other activities reasonably related to Daclizumab that are permitted under the license granted in Section 2.5(a) (the “Roche Commercialization Activities” ).  As provided in Article VII, Roche shall pay royalties to PDL on Roche Net Sales.

 

(b)                                  Commercialization of Excluded Products by Roche .  Roche, its Affiliates, or sublicensees shall be solely responsible for, at its or their sole cost and as permitted by law, all aspects of the commercialization of Excluded Products in the Roche Territory, including but not limited to the booking of all sales of Excluded Products in the Roche Territory.  Roche shall use commercially diligent efforts to develop and commercialize such Excluded Products. Following receipt of regulatory approval, Roche shall use Reasonable Diligence in proceeding with the marketing, promotion and sale of Excluded Products in the Roche Territory.   If Roche fails to exercise such diligence, PDL may terminate the license granted to Roche under Section 2.5(b), but shall not be obligated to do so.  As provided in Article VII, Roche shall pay royalties to PDL on Roche Net Sales of Excluded Products.

 

4.2                                  Commercialization by PDL.

 

(a)                                   Commercialization by PDL During Commercialization Term .  In the Roche Territory, PDL, its Affiliates, or sublicensees shall have the right, but not the obligation, at its or their sole cost and as permitted by law, to pursue all aspects of the commercialization of Daclizumab and any Other Licensed Products, excluding the Roche Commercialization Activities.  Without limiting the generality of the foregoing, in the Roche Territory and during the Commercialization Term, PDL, its Affiliates, or sublicensees shall have the right, but not the obligation, to commercialize Licensed Products in Autoimmune Indications and Other Indications and to commercialize Other Licensed Products in any indication.  In particular, in the Roche Territory, PDL shall be responsible, at its sole cost and as permitted by applicable law, for (i) the marketing, promotion, and detailing of Daclizumab for use in the Autoimmune Indications or Other Indications; (ii) accepting and filling orders for Daclizumab received by it or its Affiliates, including the distribution of Daclizumab to fill such orders; (iii) booking all sales of Daclizumab attributable to such orders; and (iv) any other activities reasonably related to Daclizumab that are permitted under the license granted in Section 2.1.  As provided in Article VII, PDL shall pay royalties to Roche on PDL Net Sales during the Commercialization Term.

 

(b)                                  Commercialization by PDL Following Reversion Effective Date or Put Right Effective Date .  Following the Reversion Effective Date or the Put Right Effective Date, PDL, its Affiliates, or sublicensees shall have the right, but not the obligation, to pursue, at its or their sole cost and as permitted by law, all aspects of the commercialization of Daclizumab for all indications and for all Other Licensed Products.  Following the Reversion Effective Date or the Put Right Effective Date, in no event shall PDL owe any royalties or any other compensation to

 

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Roche on sales of Daclizumab under Section 7.2(c) in the Territory, whether by PDL, its Affiliates, or their sublicensees.

 

4.3                                  Commercialization in the PDL Sole Territory .  PDL, its Affiliates, or sublicensees shall have the right, but not the obligation, to pursue, at its or their sole cost and as permitted by law, all aspects of the commercialization of Licensed Products in the PDL Sole Territory, including but not limited to the booking of all sales of Licensed Products in the PDL Sole Territory.

 

4.4                                  Pricing .  As between the parties, PDL has the sole right to determine the price for Daclizumab or any Other Licensed Product that it sells and distributes.  As between the parties, Roche has the sole right to determine the price for any Excluded Product that it sells and distributes, and the sole right during the Commercialization Term to determine the price for Daclizumab that it sells and distributes; provided, however, that until the earlier of (a)  [*] or (b) PDL’s receipt of a [*] from [*] having the power to grant [*] , stating that [*] will grant [*] for Daclizumab in [*] , Roche shall provide PDL with [*] of any [*] in the [*] of Daclizumab and shall give [*] to any [*] or [*] by PDL regarding the [*] of Daclizumab whether [*] .  It is expressly understood that following the date which is the earliest of (i)  [*] , (ii) the receipt of [*] for Daclizumab in [*] , or (iii) the Reversion Effective Date or Put Right Effective Date, the obligations of either party in the foregoing sentence shall terminate, and PDL shall have sole control regarding the price of Daclizumab that it sells and distributes.

 

4.5                                  Manufacturing .  References to Roche in Sections 4.5(a) and 4.5(b) shall include Roche, its Affiliates [*] and any sublicensees manufacturing Daclizumab for Roche or its Affiliates.

 

(a)                                   Clinical Manufacturing .

 

(i)                                      Supply .  Subject to Section 4.5(a)(ii) and until [*] , Roche shall use commercially reasonable efforts to supply to PDL, [*] Daclizumab and placebo [*] for the development of Daclizumab for AI in the [*] and [*] specified by PDL.  Notwithstanding the above, Roche shall not be obligated to [*] (A) any amount of Daclizumab or placebo not in accordance with the AI Development plan, (B) a number of units of placebo in excess of the units of Daclizumab supplied by Roche, or (C) any form or formulation of Daclizumab [*] for the [*] .  In the event PDL requests Daclizumab in a form or formulation [*] for the [*] , Roche shall be obligated to supply to PDL [*]   All Daclizumab for the development of Daclizumab for AI, regardless of form or formulation, shall be manufactured in accordance with cGMPs and any other applicable regulatory or legal requirements.  Through the POC, the parties shall meet periodically and discuss the availability and timing of delivery of Daclizumab hereunder.  [*] .  At PDL’s cost, PDL shall perform any bridging studies that are necessary to enable PDL to use PDL-manufactured Daclizumab to satisfy its clinical development requirements.  On [*] , and any time thereafter, PDL shall have the sole responsibility for the manufacture of all Daclizumab and placebo required by PDL for the development of Daclizumab for AI.

 

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(ii)                                   Limitations .  From the Effective Date until [*] , Roche shall supply to PDL [*] up to [*] of Daclizumab and an equivalent number of units of placebo.   For supplies in excess of such maximum amount [*] , PDL shall pay to Roche for such additional supplies an amount equal to [*] of [*]   (including for [*] ) for such supplies up to [*] of [*] per gram].  Notwithstanding anything to the contrary herein, from the Effective Date until [*] , the [*] of Daclizumab that Roche shall be obligated to supply to PDL shall be [*] of Daclizumab.

 

(iii)                                Procedures .  During the period commencing on the Effective Date and ending on [*] , PDL shall provide Roche with [*] purchase orders, or such other procedures as the POC determines, each setting forth the amount of Daclizumab and placebo to be supplied by Roche to PDL.  To the extent that such purchase orders are consistent with the terms and conditions of this Section 4.5, Roche agrees to honor all such purchase orders and to deliver to PDL the amount of Daclizumab and placebo specified therein as soon as practicable but in any event not later than [*] days following Roche’s receipt of each such purchase order, or under such other procedures as the POC determines.

 

(b)                                  Commercial Manufacturing .  Effective on the Effective Date and subject to Section 4.5(c) and this Section 4.5(b), each party shall each be solely responsible for the manufacturing of all Daclizumab necessary to satisfy the commercial requirements of itself, its Affiliates and its sublicensees.  [*] shall keep [*] reasonably informed, via the POC, regarding its progress in [*] for its [*] to [*] for [*] .  As needed, the parties shall discuss and agree upon a plan of action to address, among other things, [*] that could arise if [*] progress in [*] is delayed, which plan could include for [*] to supply commercial requirements to [*] on a [*] basis.

 

(c)                                   Commercial Manufacturing Following Exercise of the Roche Put Right .  In the event that Roche exercises the Roche Put Right, [*] shall [*] to supply [*] for Daclizumab in the Territory for the period commencing on [*] and ending on [*] unless PDL has not, despite [*] to [*] for [*] to [*] Daclizumab for sale in the United States, [*] at such time, in which case such period shall end on [*] of such [*] .  In the event that Roche exercises the Roche Put Right, the parties shall negotiate in good faith a separate supply agreement that shall provide for procedures for PDL to submit to Roche [*] for Daclizumab and Roche supplying Daclizumab thereafter at a price equal to [*] .  Such procedures shall include PDL providing (i)  [*] of [*] and (ii) firm purchase commitments no less than [*] prior to the time the order must be delivered to [*] by [*] .

 

4.6                                  Roche Diligence .  Following the Effective Date, Roche shall use Reasonable Diligence in proceeding with the manufacturing, marketing and sale of Daclizumab for use in the Transplant Indications in the Territory as contemplated by this Amended and Restated Worldwide Agreement, and in a manner comparable to its conduct of the manufacturing, marketing and sale of Daclizumab [*] during the [*] prior to the Effective Date.  If Roche fails to exercise such diligence, PDL may exercise its rights hereunder pursuant to Section 13.3 below, but shall not be obligated to do so. Roche’s diligence obligations under this Section 4.6 shall expire on, (i) if PDL exercises the Transplant Reversion or Roche exercises the Roche Put Right, the completion of all activities and undertakings set forth in Sections 5.4(b), (c), (e) and (f), or (ii) if the Exercise Period expires without PDL exercising the Transplant Reversion.  In the event of a dispute as to whether Roche has used Reasonable Diligence, the party that loses on this issue

 

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in an arbitration brought pursuant to Article XV shall reimburse all of the other party’s arbitration expenses, including reasonable attorneys’ fees relating to such arbitration.

 

V.   PDL RIGHT TO ACQUIRE TRANSPLANT BUSINESS FROM ROCHE

 

5.1                                  General .   The parties intend that, subject to the terms and conditions of this Amended and Restated Worldwide Agreement, the commercialization of Daclizumab in the Transplant Indications in the Roche Territory will continue to be an exclusive Roche responsibility unless and until PDL decides to undertake commercialization of Daclizumab in the Transplant Indications under the terms provided in this Article V.  Subject to the limitations set forth below, PDL shall have the option to terminate Roche’s rights with respect to Daclizumab, which, if exercised, would allow PDL to replace Roche as the party responsible for the promotion, sales, distribution and manufacturing of Daclizumab for use in the Transplant Indications in the Roche Territory.  In the ev