PATENT LICENSE AGREEMENT

Exhibit 10.42

PATENT LICENSE AGREEMENT

dated

December 31, 2008

between

PDL BIOPHARMA, INC.

and

ALEXION PHARMACEUTICALS, INC.

 

[*] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

TABLE OF CONTENTS

 

 

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TABLE OF CONTENTS

(continued)

 

 

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PATENT LICENSE AGREEMENT

This Patent License Agreement (this “ Agreement ”), effective as of December 31, 2008 (“ Effective Date ”), is made by and between PDL BioPharma, Inc., a Delaware corporation having offices at 932 Southwood Boulevard, Incline Village, NV 89451 (“ PDL ”), and Alexion Pharmaceuticals, Inc., a Delaware corporation having offices at 352 Knotter Drive, Cheshire, CT 06410 (“ Alexion ”).

RECITALS

A. PDL and Alexion are parties to that certain Settlement Agreement, dated of even date herewith (“ Settlement Agreement ”), pursuant to which, among other matters, PDL and Alexion have agreed to settle the Litigation (as defined in the Settlement Agreement) and enter into this Agreement; and

B. Alexion desires non-exclusive licenses to the PDL Queen Patent Family (as defined below) to make, have made, use, sell, offer for sale, import and export the Licensed Homology Product (as defined below) and Other Licensed Products (as defined below), and PDL is willing to grant such non-exclusive licenses to Alexion under the terms and conditions of this Agreement.

AGREEMENT

NOW THEREFORE, in consideration of the mutual covenants herein contained and intending to be legally bound, PDL and Alexion agree as follows:

 

1.	DEFINITIONS

Except as otherwise expressly provided herein, the following terms used in this Agreement shall have the definitions assigned to them in this Section 1 and shall include the singular as well as the plural.

1.1. “ Affiliate. ” Any corporate or other entity which, directly or indirectly, controls, is controlled by, or is under common control with a Party during the term of this Agreement, where “control” means the ownership of more than fifty percent (50%) of the voting shares of a corporation or other entity, or of decision-making authority as to an unincorporated entity; provided , however , that such corporation or other entity shall be an Affiliate only so long as such control exists.

1.2. “ Agreement. ” The meaning specified in the Preamble to this Agreement.

1.3. “ Alexion. ” The meaning specified in the Preamble to this Agreement.

1.4. “ Antibody Person. ” The meaning specified in the Settlement Agreement.

 

[*] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

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1.5. “ Asserted Homology Claims. ” Claims 1, 2, 6, 8, 17, 18, 26, 33 and 35 of U.S. Patent No. 5,693,761; claims 1, 2, 3 and 10-19 of U.S. Patent No. 5,693,762; and claims 1, 2, 5, 6 and 25-28 of U.S. Patent No. 6,180,370.

1.6. “ Bulk Product. ” An Other Licensed Product supplied in a form other than a Finished Product that can be converted into a Finished Product.

1.7. “ Combination Product. ” Any product containing both a pharmaceutically active agent or ingredient that constitutes an Other Licensed Product and one or more other pharmaceutically active agents or ingredients that do not constitute Other Licensed Products.

1.8. “ Confidential Information. ” The meaning specified in Section 6.1.

1.9. “ Controlled Affiliate. ” Any Affiliate which, directly or indirectly, is controlled by a Party (where “controlled” has the meaning specified in Section 1.1).

1.10. “ Discloser. ” The meaning specified in Section 6.2(a).

1.11. “ Effective Date. ” The meaning specified in the Preamble to this Agreement.

1.12. “ Finished Product. ” Any Other Licensed Product in a form for use by an end user and not intended for further chemical or genetic manipulation or transformation.

1.13. “ Foreign Homology-Only Claims. ” Any claim of the PDL Foreign Queen Patents that does not require, either through the text on its face or by operation of applicable foreign law, that (a) one or more framework amino acid(s) be replaced or substituted, or (b) the sequence of the acceptor immunoglobulin heavy and/or light chain variable region framework be a consensus sequence of human immunoglobulin heavy and/or light chain variable region frameworks.

1.14. “ Independent Third Party. ” Any Person that is not (a) Alexion, (b) an Affiliate of Alexion, (c) a Sublicensee, or (d) an Affiliate of a Sublicensee.

1.15. “ Licensed Homology Product. ” The antibody known generically as eculizumab, identified in Biologics License Application No. 125166/0, Figure 3.2.S.1.2.2 (currently marketed by Alexion under the name Soliris ^® ) and any antibody that has the same variable region amino acid sequences as the variable region amino acid sequences of eculizumab.

1.16. “ Licensed Products. ” Collectively, the Licensed Homology Product and the Other Licensed Products.

1.17. “Net Sales.” The aggregate gross revenues received from the sale or other disposition of Other Licensed Products by Alexion or any of its Affiliates or Sublicensees to an Independent Third Party, less deductions for the following to the extent pertaining to Other Licensed Products: (a) discounts, credits or allowances, if any, actually granted on account of price adjustments, recalls, rejection or return of items previously sold; (b) excise and sales taxes,

 

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duties or other taxes and other governmental charges imposed on and paid with respect to such sales (excluding income or franchise taxes of any kind); (c) outer packing, transport, freight, insurance, handling and other freight-related costs; (d) trade, quantity and cash discounts and rebates, charge-backs and retroactive price reductions (including, without limitation, Medicaid rebates and rebates to social and welfare systems and to governmental agencies, or any payor, administrator or contractor (including, without limitation, managed health organizations)); (e) allowances, charge-backs, refunds and credits on account of rejected, damaged, outdated, returned, withdrawn or recalled Other Licensed Product or on account of retroactive price reductions affecting an Other Licensed Product; and (f) up to five percent (5%) of such aggregate gross revenues for co-pay assistance amounts and other payment assistance amounts actually provided by Alexion or its Affiliates or Sublicensees pursuant to any of their respective patient access or similar programs for the benefit of patients who are not covered by insurance (but only such portion of such amounts that are applicable to an Other Licensed Product).

If Alexion or any of its Affiliates or Sublicensees receives any non-cash consideration for any Other Licensed Product sold or otherwise disposed of to such an Independent Third Party, the reasonable fair market value of such non-cash consideration on the date of such sale or disposition shall be mutually agreed upon by the Parties.

Net Sales for Bulk Products shall be calculated by multiplying the units of Finished Product to which such Bulk Product is reasonably anticipated to be converted by the established market price of the Finished Product on the date of sale or disposition of such Bulk Product. By way of example and without limitation, units of Finished Product may be measured in grams or doses, as appropriate.

If Alexion or any of its Affiliates or Sublicensees receive any consideration for the sale or other disposition of any Other Licensed Product as part of a set of bundled products, Net Sales for such Other Licensed Product shall be calculated by reference to the average non-discounted unit price for such Other Licensed Product when sold or otherwise disposed of for cash other than as part of a set of bundled products. Net Sales for Combination Products shall be calculated as set forth in Section 3.4.

Net Sales shall not include the disposition of any Other Licensed Product in connection with any of the following so long as no consideration is received by Alexion or any of its Affiliates or Sublicensees in connection with such disposition: (i) any clinical trials or phase IV or other studies; (ii) any regulatory or governmental purposes; or (iii) any patient assistance programs or charitable or promotional purposes.

Net Sales shall be determined in accordance with U.S. generally accepted accounting principles consistently applied.

1.18. “ No Contest Covenant. ” The meaning specified in the Settlement Agreement.

1.19. “ Other Licensed Product. ” Each product listed on Exhibit A (as such list may be modified from time to time by Alexion in accordance with Section 2.3), the manufacture, use, sale, offer for sale, importation or exportation of which in a particular country would, but for the license granted in Section 2.1(b), infringe a Valid Claim.

 

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1.20. “ Other PDL Patents. ” The issued patents and patent applications (a) owned by PDL or any of its Affiliates as of the Effective Date of this Agreement that are not included in the PDL Queen Patent Family or (b) exclusively licensed to PDL or any of its Affiliates and in respect of which license it is reasonable to conclude that PDL or any such Affiliate has standing to sue any other Person for infringement (or in respect of which PDL or any of its Affiliates otherwise has the right to assert infringement against any other Person) as of the Effective Date of this Agreement that are not included in the PDL Queen Patent Family.

1.21. “ Parties. ” PDL and Alexion.

1.22. “ Party. ” Either PDL or Alexion.

1.23. “ PDL Foreign Queen Patents. ” The meaning specified in the Settlement Agreement.

1.24. “ PDL Queen Patent Family. ” The meaning specified in the Settlement Agreement.

1.25. “ PDL Queen Patent Family Assignee. ” The meaning specified in Section 2.6(a).

1.26. “ Person. ” An individual, partnership, limited liability company, corporation, joint stock company, trust (including, without limitation, a business trust), unincorporated association, joint venture, firm, enterprise or other entity.

1.27. “ PTO. ” The U.S. Patent and Trademark Office.

1.28. “ Recipient. ” The meaning specified in Section 6.2(a).

1.29. “ Settlement Agreement. ” The meaning set forth in the Recitals to this Agreement.

1.30. “ Soliris. ” The meaning specified in the Recitals to the Settlement Agreement.

1.31. “ Sublicensee. ” Any sublicensee to which Alexion has, pursuant to and in accordance with Section 2.2, granted a sublicense under the license granted to Alexion in Section 2.1(a), Section 2.1(b) and/or, if applicable, Section 2.6(b) (a “ Primary Sublicensee ”); and any sublicensee to which a Primary Sublicensee has, pursuant to and in accordance with Section 2.2, granted a further sublicense under the sublicense granted to such Primary Sublicensee by Alexion pursuant to Section 2.1(a), Section 2.1(b) and/or, if applicable, Section 2.6(b), respectively.

1.32. “ Sublicensee Covenant. ” The meaning specified in Section 2.2(c).

 

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1.33. “ Third Party. ” A Person that is not a Party or an Affiliate of a Party.

1.34. “ Valid Claim. ” Any claim included in the PDL Queen Patent Family, which claim has not expired or been disclaimed or been held unenforceable or invalid by a governmental agency or court of competent jurisdiction by a decision from which no appeal has been timely taken or may be taken.

 

2.	LICENSE AND OTHER RIGHTS

2.1. License Grant. Subject to the terms and conditions of this Agreement, PDL hereby grants to Alexion and Alexion hereby accepts:

(a) a worldwide, non-transferable (except as provided in Section 8.1), non-exclusive license under the Asserted Homology Claims and the Foreign Homology-Only Claims to make, have made, use, sell, offer for sale, import and export the Licensed Homology Product for all indications (which license shall become fully paid-up upon Alexion’s payment in full of the payments pursuant to Section 3.1); and

(b) a worldwide, royalty-bearing, non-transferable (except as provided in Section 8.1), non-exclusive license under all claims of the PDL Queen Patent Family to make, have made, use, sell, offer for sale, import and export Other Licensed Products.

2.2. Sublicense Rights.

(a) Subject to Section 2.2(c) and Section 2.2(d), Alexion shall have the right to grant sublicenses under the license granted to Alexion in Section 2.1(a) in its sole discretion. Subject to Section 2.2(c) and Section 2.2(d), Alexion may grant any of its Affiliates or Sublicensees the right to grant further sublicenses under the sublicense granted to such Affiliate or Sublicensee pursuant to this Section 2.2(a) without PDL’s prior written consent.

(b) Subject to Section 2.2(c) and Section 2.2(d), Alexion shall have the right to grant sublicenses under the license granted to Alexion in Section 2.1(b) with respect to an Other Licensed Product solely to (i) any Person to which Alexion also licenses other issued patents or patent applications necessary for the research, development, manufacture, use, marketing or sale of such Other Licensed Product, or (ii) any of Alexion’s Affiliates; provided , however , that Alexion or any of its Affiliates (A) has, itself or through a contractor engaged by Alexion or such Affiliate for Alexion’s or its Affiliate’s benefit, undertaken substantial development efforts in connection with such Other Licensed Product that is the subject of any such sublicense, and/or (B) owns or has exclusive rights to such Other Licensed Product. Subject to Section 2.2(c) and Section 2.2(d), Alexion may grant any of its Affiliates or Sublicensees the right to grant further sublicenses under the sublicense granted to such Affiliate or Sublicensee pursuant to this Section 2.2(b) without PDL’s prior written consent. Alexion does not have the right to grant any other sublicenses under the license granted to Alexion in Section 2.1(b) without PDL’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed).

 

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(c) Each sublicense granted under the license(s) granted to Alexion in Section 2.1(a), Section 2.1(b) and/or, if applicable, Section 2.6(b) (and each sublicense granted under such sublicense) shall be in writing and shall (i) be subject to all applicable terms and conditions of this Agreement (including, without limitation, with respect to each sublicense granted under the license granted to Alexion in Section 2.1(b) (and each sublicense granted under such sublicense), the right of Alexion to terminate such sublicense in the event of an uncured payment breach or other uncured material breach of such sublicense agreement by the Sublicensee of such sublicense agreement), in respect of which PDL shall expressly be named as a third party beneficiary of such agreement with the right to fully enforce its rights with respect to such applicable terms and conditions of this Agreement (including, without limitation, the right to fully enforce the Sublicensee Covenant (as defined below in this Section 2.2(c)) with respect to such Sublicensee and to terminate such sublicense agreement if such Sublicensee breaches such Sublicensee Covenant), provided that PDL shall only exercise its third party beneficiary rights after (x) it has notified Alexion that it plans to exercise such rights and has given Alexion a reasonable period of time to, as applicable, enforce Alexion’s rights or terminate such sublicense agreement, and (y) PDL and Alexion have reasonably coordinated with each other in connection with the timing and exercise of such rights by PDL (and in the event PDL exercises such rights, it will keep Alexion reasonably apprised of the status of its efforts in connection therewith (including, without limitation, by promptly providing Alexion with copies of written communications with any Sublicensees)), and (ii) include a covenant in such sublicense agreement with such Sublicensee that such Sublicensee shall not (A) intentionally provide direct monetary assistance to any Third Party to Challenge (as such term is defined in the Settlement Agreement) any of the PDL Queen Patent Family or (B) intentionally file or otherwise initiate any lawsuit, arbitration, interference, reexamination or opposition or any other proceeding in which such Sublicensee alleges or seeks a determination that any of the PDL Queen Patent Family is invalid or unenforceable (the “ Sublicensee Covenant ”); provided , however , that if a court of competent jurisdiction holds in a decision from which no appeal may be taken or has been timely taken that the Sublicensee Covenant is unenforceable or invalid under applicable law, such Sublicensee shall not be bound by the Sublicensee Covenant solely in the jurisdiction to which such court decision applies. If a Sublicensee breaches the Sublicensee Covenant by intentionally filing or otherwise initiating any lawsuit, arbitration, interference, reexamination or opposition proceeding or any other proceeding in which such Sublicensee alleges or seeks a determination that any of the PDL Queen Patent Family is invalid or unenforceable, Alexion shall immediately notify PDL in writing thereof and shall immediately terminate such sublicense agreement, provided , however , that Alexion has the right to so terminate such agreement under applicable law. Notwithstanding the foregoing in this Section 2.2(c), a Sublicensee shall not be obligated to covenant and agree not to file or otherwise initiate or participate in any lawsuit, arbitration, interference, reexamination or opposition or any other proceeding that alleges or seeks a determination that one or more claims of an issued patent within the PDL Queen Patent Family is invalid or unenforceable, provided that no Licensed Product forms any jurisdictional basis on which such lawsuit, arbitration, interference, reexamination or opposition or any other proceeding is filed or continued. In addition to, and without limiting, Section 3.5(f) of the Settlement Agreement, if a Sublicensee is an Antibody Person that has an antibody that is not a Licensed Product and that is in Phase III development or later, such Sublicensee shall not, for so long as such Person is an Antibody Person (that has an antibody that is not a Licensed Product

 

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and that is in Phase III development or later), be obligated to covenant and agree not to file or otherwise initiate or participate in any lawsuit, arbitration, interference, reexamination or opposition or other proceeding that seeks a determination that one or more claims of an issued patent within the PDL Queen Patent Family is invalid or unenforceable, provided that no Licensed Product forms any jurisdictional basis on which such lawsuit, arbitration, interference, reexamination or opposition or other proceeding is filed or continued or thereafter becomes a subject of such lawsuit, arbitration, interference, reexamination or opposition or other proceeding.

(d) Alexion shall provide a written summary to PDL within forty-five (45) days following the end of each calendar quarter during the term of this Agreement specifying the name of each Sublicensee, territory and scope of the rights sublicensed under this Agreement (or further sublicensed under any sublicense agreement granted under this Agreement) during such quarter; provided , however , that no such written summary shall be required for a calendar quarter in the event that, during such calendar quarter, there are (i) no rights sublicensed under this Agreement by Alexion and (ii) no rights further sublicensed by any Sublicensee under any sublicense granted to such Sublicensee under this Agreement. For the avoidance of doubt, Alexion shall remain liable for all obligations under this Agreement with respect to sales and other dispositions of Other Licensed Products under each sublicense granted under the license granted to Alexion (and each sublicense granted under such sublicense) in Section 2.1(b) (including, without limitation, royalty payment obligations under Section 3.2).

2.3. Additional Other Licensed Products. Alexion may, in its sole discretion, add any product to Exhibit A from time to time, provided that Alexion or any of its Affiliates (a) has performed, itself or through a contractor engaged by Alexion or such Affiliate for Alexion’s benefit, substantial development work with respect to such product, (b) owns or has the exclusive rights to manufacture, use, sell, offer for sale, import, export and/or otherwise exploit such product ( provided that, with respect to any such product for which Alexion has any such exclusive rights only for a particular geographic territory, Alexion’s corresponding license rights under Section 2.1(b) with respect to such product shall be limited to such geographic territory) and/or (c) owns or has the non-exclusive rights to manufacture, use, import or export such product in order to support regulatory filings or sales in countries or geographic territories in which Alexion or such Affiliate has the exclusive right to sell or offer for sale such product. In the event Alexion desires to add any such product to Exhibit A , Alexion shall so notify PDL in writing and, upon PDL’s receipt of such written notification, such product shall be deemed to be added to Exhibit A and shall be an Other Licensed Product hereunder. For each Other Licensed Product added to Exhibit A by Alexion pursuant to this Section 2.3 after the first three (3) Other Licensed Products added to Exhibit A by Alexion hereunder, in addition to the royalties Alexion is obligated to pay pursuant to Section 3.2, Alexion shall pay to PDL a one-time, non-refundable, lump-sum payment pursuant to Section 3.2. Notwithstanding anything in this Agreement, in the event that Alexion breaches the No Contest Covenant and fails to cure such breach as provided in Section 6.2 of the Settlement Agreement, then PDL may, subject to all of the terms and conditions set forth in the Settlement Agreement, invoke its right under Section 6.2 of the Settlement Agreement to terminate Alexion’s right under this Section 2.3 of this Agreement to add any products to Exhibit A of this Agreement.

 

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2.4. Alexion Right of First Refusal. Subject to the exclusive licenses and rights set forth on Exhibit C that PDL has granted to a Third Party prior to the Effective Date, in the event that PDL determines in good faith to offer any exclusive license(s) to any claim(s), issued patent(s) or patent applications included in the PDL Queen Patent Family, PDL shall first notify Alexion in writing of (a) the type of transaction that PDL is planning on pursuing, (b) the field (including, without limitation, the specific target or indication, if applicable) and the geographic territory of such proposed exclusive license and the relevant issued patent(s), patent applications or claim(s) to be exclusively licensed, and (c) the general economic terms proposed by PDL for such license (a “ PDL Notice ”). If Alexion is interested in obtaining an exclusive license under the claim(s), issued patent(s) or patent applications included in the PDL Queen Patent Family in the field and geographic territory, and on the general economic terms, described in the PDL Notice, then Alexion shall so notify PDL in writing (an “ Alexion Notice ”) within thirty (30) days from Alexion’s receipt of such PDL Notice. In such event, Alexion and PDL each hereby agree to exclusively negotiate in good faith the terms and conditions of such license for a period of ninety (90) days from the date of such Alexion Notice (a “ Negotiation Period ”). If the Parties agree on all of the terms and conditions of the exclusive license agreement during the Negotiation Period, then the Parties shall execute a written exclusive license agreement containing such terms and conditions. If the Parties are unable to agree on all of the terms and conditions of such exclusive license within the Negotiation Period, then PDL shall thereafter be free to enter into an agreement for the exclusive license described in the PDL Notice with any Third Party on terms and conditions that, in the aggregate and taken as a whole, are in PDL’s good faith judgment more advantageous to PDL than the terms and conditions last offered to PDL by Alexion.

2.5. No Other License. Alexion expressly acknowledges and agrees that, except for the licenses expressly granted to Alexion in Section 2.1 and Section 2.6(b), no licenses to the PDL Queen Patent Family and no licenses to any Other PDL Patents, or to any know-how, trade secrets or other intellectual property, are included in this Agreement or granted by implication, estoppel or otherwise. As between Alexion and PDL, subject to the licenses granted to Alexion in Section 2.1 and Section 2.6(b), PDL retains all right, title and interest in and to all of the PDL Queen Patent Family and Other PDL Patents.

2.6. Covenant Not to Sue with Respect to PDL Queen Patent Family.

(a) PDL covenants and agrees not to, and to cause its Controlled Affiliates and each of its and their respective exclusive licensees (to the extent it is reasonable to conclude that such licensee has standing to sue any other Person for infringement of any PDL Queen Patent Family that is not an Asserted Homology Claim or a Foreign Homology-Only Claim) not to, assert, initiate, file or otherwise commence anywhere in the world any proceeding or action (including, without limitation, any litigation, arbitration, interference or other proceeding), at law or in equity, against Alexion or any of Alexion’s Affiliates or any successors or assigns of Alexion or any of Alexion’s Affiliates or any Sublicensee to which Alexion has granted a sublicense under the license granted to Alexion in Section 2.1(a) and/or, if applicable, Section 2.6(b) (but only for so long as such Sublicensee has an effective sublicense granted under and in accordance with this Agreement) claiming that the manufacture, use, sale, offer for sale,

 

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importation or exportation of the Licensed Homology Product infringes any claim of the PDL Queen Patent Family that is not an Asserted Homology Claim or a Foreign Homology-Only Claim. Prior to any sale, assignment or other transfer by PDL or any of its Controlled Affiliates of all or substantially all of its rights (which, for the avoidance of doubt, does not include any grant of a non-exclusive license) in and to (or any grant by PDL or any of its Controlled Affiliates of any exclusive license, in respect of which license it is reasonable to conclude that such exclusive licensee has standing to sue for infringement of any patent included in the PDL Queen Patent Family that includes a claim that is not an Asserted Homology Claim or a Foreign Homology-Only Claim, under) any issued patent or patent application included in the PDL Queen Patent Family that includes a claim that is not an Asserted Homology Claim or a Foreign Homology-Only Claim to any other Person (each such other Person, a “ PDL Queen Patent Family Assignee ”), PDL shall, and shall cause its Controlled Affiliates (and its and their exclusive licensees to the extent it is reasonable to conclude that such licensee has standing to sue any other Person for infringement of any PDL Queen Patent Family that is not an Asserted Homology Claim or a Foreign Homology-Only Claim) to: (i) require each PDL Queen Patent Family Assignee to acknowledge and agree in writing (A) to be bound by this Section 2.6(a) with respect to such issued patent or patent application, (B) that Alexion (or its successor, assign or Sublicensee, as applicable) is a third party beneficiary of such agreement with the right to fully enforce its rights set forth in this Section 2.6(a) and (C) to require and obligate any Person to whom such PDL Queen Patent Family Assignee subsequently sells, assigns or otherwise transfers ownership of such issued patent or patent application (or grants an exclusive license under such issued patent or patent application, in respect of which license it is reasonable to conclude that such exclusive licensee has standing to sue for infringement of such issued patent or patent application) to acknowledge and agree in writing to be bound by this Section 2.6(a) in connection with any subsequent sale(s), assignment(s) or other transfer(s) of such issued patent or patent application; and (ii) provide Alexion (or its successor or assign, as applicable) with a certification executed by PDL and such PDL Queen Patent Family Assignee, confirming that the obligations set forth above in subclause (i) of this Section 2.6(a) have been, with respect to PDL and such PDL Queen Patent Family Assignee, fully complied with.

(b) Without limiting the foregoing in Section 2.6(a), and subject to the terms and conditions of this Agreement, PDL hereby grants to Alexion and Alexion hereby accepts a worldwide, non-transferable (except as provided in Section 8.1), non-exclusive, sublicensable (but only to the same extent that the license under Section 2.1(a) is sublicensable under Section 2.2(c), and subject to Section 2.2(c) and Section 2.2(d)) license under all claims of the PDL Queen Patent Family that are not Asserted Homology Claims or Foreign Homology-Only Claims to make, have made, use, sell, offer for sale, import and export the Licensed Homology Product for all indications, which license shall be effective as of the Effective Date and shall become fully paid-up upon Alexion’s payment in full of the payments pursuant to Section 3.1, but Alexion may only exercise its rights under the foregoing license in this Section 2.6(b) solely in the event and solely to the extent that:

(i) the covenant set forth in Section 2.6(a) is held to be unenforceable or invalid under, or in contravention of, applicable law by any court of competent jurisdiction, provided that Alexion may only exercise its rights under the foregoing license in this Section 2.6(b)

 

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as a result of such court decision solely with respect to any patents issued by, or patent applications pending in, a patent office or similar governmental agency with effect in the jurisdiction to which such court decision applies; or

(ii) (A) PDL and/or any of its Controlled Affiliates, and/or any PDL Queen Patent Family Assignee does not comply with Section 2.6(a) (including, without limitation, (1) in connection with any sale, assignment or other transfer of all or substantially all of its rights in and to (or any grant by PDL or any of its Controlled Affiliates of any exclusive license, in respect of which license it is reasonable to conclude that such exclusive licensee has standing to sue for infringement of any patent included in the PDL Queen Patent Family that includes a claim that is not an Asserted Homology Claim or a Foreign Homology-Only Claim, under) any issued patent or patent application included in the PDL Queen Patent Family that includes a claim that is not an Asserted Homology Claim or a Foreign Homology-Only Claim, or (2) any PDL Queen Patent Family Assignee (including, without limitation, any exclusive licensee of any such issued patent or patent application to the extent it is reasonable to conclude that such exclusive licensee has standing to sue any other Person for infringement of any PDL Queen Patent Family that is not an Asserted Homology Claim or a Foreign Homology-Only Claim) does not agree in writing prior to or effective as of the closing of such sale, assignment, acquisition, exclusive license or other transfer (or thereafter fails to comply with such agreement) to comply with Section 2.6(a) with respect to such issued patent or patent application or such agreement with a PDL Queen Patent Family Assignee is held to be unenforceable or invalid under, or in contravention of, applicable law by any court of competent jurisdiction), provided that Alexion may only exercise its rights under the foregoing license in this Section 2.6(b) as a result of such non-compliance with respect to such issued patent or patent application; and/or (B) an Affiliate of PDL that is not a Controlled Affiliate of PDL commits an act or omission that, if it was an act or omission of PDL or its Controlled Affiliate, would not comply with Section 2.6(a); and/or (C) any exclusive licensee under any claim of the PDL Queen Patent Family that is not an Asserted Homology Claim or a Foreign Homology-Only Claim (regardless of whether it is reasonable to conclude that such licensee has standing to sue any other Person for infringement of any PDL Queen Patent Family that is not an Asserted Homology Claim or a Foreign Homology-Only Claim) commits an act or omission that, if it was an act or omission of PDL or its Controlled Affiliate, would not comply with Section 2.6(a); or

(iii) this Agreement or the covenant set forth in Section 2.6(a) is rejected by a trustee in connection with a bankruptcy proceeding and the bankruptcy court (or any other court of competent jurisdiction) has determined that Section 365(n) of the U.S. Bankruptcy Code does not apply to such a covenant; or

(iv) any issued patent or patent application included in the PDL Queen Patent Family subject to the covenant set forth in Section 2.6(a) is transferred, assigned or otherwise disposed of in connection with a bankruptcy proceeding free and clear of such covenant, provided that Alexion may only exercise its rights under the foregoing license in this Section 2.6(b) as a result of such disposition only with respect to such issued patent or patent application; or

 

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[*] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

C ONFIDENTIAL

E XECUTION C OPY

 

(v) any patent included in the PDL Queen Patent Family subject to the covenant set forth in Section 2.6(a) is asserted against (or any proceeding or action is otherwise initiated, filed or otherwise commenced anywhere in the world, at law or in equity, against) Alexion, any of Alexion’s Affiliates, any successors or assigns of Alexion or any of Alexion’s Affiliates, or any Sublicensee to which Alexion has granted a sublicense under the license granted to Alexion in Section 2.1(a) and/or, if applicable, Section 2.6(b), or any Sublicensee of any such Sublicensee (but, with respect to any of the foregoing Sublicensees, only if such Sublicensee, at the time of such assertion, has an effective sublicense granted under and in accordance with this Agreement), in each of the foregoing cases, with respect to the Licensed Homology Product; provided that this subsection (v) only entitles Alexion to exercise the foregoing license in this Section 2.6(b) as a result of such assertion only with respect to such patent.

(c) Each Party agrees, covenants, represents and warrants, and shall cause its Affiliates (and with respect to Alexion, its Sublicensees (and all Sublicensees of such Sublicensees), and with respect to PDL, its exclusive licensees of any patent included in the PDL Queen Patent Family that includes a claim that is not an Asserted Homology Claim or a Foreign Homology-Only Claim in respect of which it is reasonable to conclude that such exclusive licensees have standing to sue any other Person for infringement of such patent) to agree, covenant, represent and warrant, that it will not challenge the validity or enforceability of the covenant set forth in Section 2.6(a) or any of the other provisions set forth in this Section 2.6.

(d) For the avoidance of doubt, notwithstanding anything contained herein, nothing in this Section 2.6 limits the license grant set forth in Section 2.1(a).

(e) If any patent included in the PDL Queen Patent Family subject to the covenant set forth in Section 2.6(a) is asserted by a Person with standing against (or any proceeding or action is otherwise initiated, filed or otherwise commenced by a Person with standing anywhere in the world, at law or in equity, asserting any such patent) against Alexion or any of Alexion’s Affiliates (or any successors or assigns of Alexion or any of Alexion’s Affiliates or any Sublicensee to which Alexion has granted a sublicense under the license granted to Alexion in Section 2.1(a)) with respect to the Licensed Homology Product, then, notwithstanding anything contained in this Agreement or the Settlement Agreement, and solely with respect to such patent, neither Alexion nor its Affiliates (nor any of its or their successors or assigns nor any Sublicensee to which Alexion has granted a sublicense under the license granted to Alexion in Section 2.1(a)) shall be bound by or otherwise have any obligation under the No Contest Covenant or any other provision set forth in Section 3 of the Settlement Agreement (and such provisions shall be of no force and effect) solely in connection with such proceeding or action and solely for the period of time beginning on the date such proceeding or action is filed or otherwise commences and ending on the date of a final decision by a relevant court of competent jurisdiction or arbitral body, as applicable, in connection with such proceeding or action from which no appeal has been timely taken or may be taken.

 

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[*] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

C ONFIDENTIAL

E XECUTION C OPY

 

2.7. Covenant Not to Sue with Respect to Other PDL Patents. PDL covenants and agrees not to, and to cause its Affiliates not to, assert, initiate, file or otherwise commence anywhere in the world any proceeding or action (including, without limitation, any litigation, arbitration, interference or other proceeding), at law or in equity, against Alexion or any of Alexion’s Affiliates or any successors or assigns of Alexion or any of Alexion’s Affiliates or any Sublicensee to which Alexion has granted a sublicense under the license granted to Alexion in Section 2.1(a), or any Sublicensee of any such Sublicensee (but with respect to any of the foregoing Sublicensees, only for so long as such Sublicensee has an effective sublicense granted under and in accordance with this Agreement), claiming that the manufacture, use, sale, offer for sale, importation or exportation of the Licensed Homology Product infringes any claim of any Other PDL Patent.

 

3.	PAYMENTS; ROYALTIES; REPORTS

3.1. Lump-Sum Payments. In consideration of the licenses granted to Alexion in Section 2.1(a) and Section 2.6(b), the cov