SECOND AMENDED AND RESTATED WORLDWIDE AGREEMENT

EXHIBIT 10.55

Exhibit 10.55 to Form 10-K

CONFIDENTIAL PROVISIONS REDACTED

SECOND AMENDED AND RESTATED WORLDWIDE AGREEMENT

This Second Amended and Restated Worldwide Agreement is entered into as of October 28, 2005 (the “ Amendment Effective Date ”), by and among, on the one hand, HOFFMANN-LA ROCHE INC., a New Jersey corporation having offices at 340 Kingsland Street, Nutley, New Jersey 07110 (“ Roche-Nutley ”) and F. HOFFMANN-LA ROCHE LTD of Basel, Switzerland (“ F. Roche ”) (Roche-Nutley and F. Roche are hereinafter individually and collectively referred to as “ Roche ”) and, on the other hand, PROTEIN DESIGN LABS, INC., a Delaware corporation having offices at 34801 Campus Drive, Fremont, California 94555 (“ PDL ”).

RECITALS

PDL originally licensed to Roche, on an exclusive basis, rights to a humanized antibody now known by the generic name daclizumab, which binds to the interleukin-2 receptor ( “IL-2R” ).

Roche is currently marketing daclizumab under the trademark Zenapax® for the prevention of acute organ rejection in patients undergoing kidney transplants.

Roche and PDL are parties to that certain Amended and Restated Worldwide Agreement (the “Agreement” ), dated October 1, 2003 (the “Effective Date” ), under which PDL (1) reacquired all IL-2R antibody rights originally licensed by PDL to Roche, subject to Roche’s continuing exclusive license to market and sell daclizumab for transplant indications throughout most of the world and to develop and to commercialize products based on [****] that [****] to the [****] of [****]; and (2) obtained the right to purchase, upon payment of an additional fee, all of Roche’s remaining rights to daclizumab, subject to Roche’s right to retain its exclusive license from PDL to develop and commercialize products based on [****] that [****] to the [****] of [****].

Roche and PDL now desire to amend the Agreement to allow PDL to reacquire all remaining rights to daclizumab, subject to Roche’s exclusive right to continue to commercialize Zenapax® in its current form for as long as Roche desires to do so.

 

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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 Agreement in this Second Amended and Restated Worldwide Agreement as follows:

I. DEFINITIONS

For the purposes of this Second 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 Second Amended and Restated Worldwide Agreement, unless otherwise specified.

1.1 “1989 Agreements” means the agreements between Roche and PDL dated January 31, 1989, as amended.

1.2 “1999 Agreements” means the two agreements executed by Roche and PDL in 1999 to replace the 1989 Agreements. Such agreements, as amended, are known separately as the “1999 PDL/Roche Agreement” and the “F. Roche Agreement,” respectively.

1.3 “1999 PDL/Roche Agreement” has the meaning set forth in Section 1.2.

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

1.5 “ 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, [****].

1.6 “ 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.

1.7 “Asthma/Transplant Agreement” means that certain Amended and Restated Co-Development and Commercialization Agreement, dated as of October 29, 2005.

1.8 “ 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 include, without limitation, asthma, psoriasis, rheumatoid arthritis, systemic lupus erythematosus, scleroderma, juvenile rheumatoid arthritis, polymytosis, Type I diabetes,

 

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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.

1.9 “ 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.

1.10 “ 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.

1.11 “ Commercialization Term ” means the period commencing on the Effective Date and ending on the date that Roche ceases to sell Nutley Dac throughout the Roche Territory, as permitted under this Second Amended and Restated Worldwide Agreement.

1.12 “ 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.

1.13 “ 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 Second Amended and Restated Worldwide Agreement, the Cost of Goods shall not exceed [****].

1.14 “ 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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1.15 “ Daclizumab ” means any product that contains humanized anti-Tac (as defined under “Field”).

1.16 “ Excluded Field ” means [****] that (a) [****], (b) [****] and (c) [****]. The parties agree that Daclizumab is not in the Excluded Field.

1.17 “ Excluded Product ” means any product in the Excluded Field, including any Combination Product, that contains an [****]. [****] shall be deemed to be an Excluded Product.

1.18 “F. Roche Agreement” has the meaning set forth in Section 1.2.

1.19 “ 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.

1.20 “ 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.

1.21 “ 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.

1.22 “JSC” means the committee formed by the parties pursuant to Section 3.1 of the Asthma/Transplant Agreement.

 

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1.23 “ 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 Second Amended and Restated Worldwide Agreement, infringe a Valid Claim of a Roche Patent. Daclizumab shall be deemed to be a Licensed Product.

1.24 “ Major Country ” means the [****].

1.25 “ Nutley Dac ” shall mean the FDA-approved form of Daclizumab manufactured at Roche’s Nutley, New Jersey facility as of the Amendment Effective Date.

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

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

1.28 “ PDL Know-How ” means, except as otherwise set forth in this Section 1.28, 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 Second 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.

1.29 “ 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 Second 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 products in the Field.

 

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1.30 “ 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.

1.31 “ Product Operating Committee ” or “ POC ” means the product operating committee formed by the parties pursuant to Section 6.2(a) of the Agreement.

1.32 “ Queen et al. Patents ” means those Sole PDL Patents in the Territory claiming priority to U.S. Patent Application Serial No. 07/290,975, filed December 28, 1988.

1.33 “ 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.

1.34 “ 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.

1.35 “ 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) [****]; and (b) [****].

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 [****] by [****]. 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.

 

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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, [****], or [****], shall be deemed the Roche Adjusted Gross Sales for such Daclizumab sold or otherwise transferred.

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

1.37 “ 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 Second 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 as of the Effective Date are, specifically, those listed on Schedule 2.8(b).

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

1.39 “ 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, 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.

1.40 “ 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 [****].

 

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1.41 “ 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.

1.42 “ 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.

1.43 “ 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 Second 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).

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

1.45 “ Roche Products ” means Nutley Dac and any Excluded Products.

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

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

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

1.49 “ Third Party License ” means any of the license agreements set forth on Appendix B.

 

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1.50 “ 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 Nutley Dac in the Roche Territory.

1.51 “Transplant JDC” means the committee formed by the parties pursuant to Section 3.12 of the Asthma/Transplant Agreement.

1.52 “ 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).

1.53 “ Transplant Induction ” shall mean the Transplant Indication involving the prophylaxis of acute organ rejection in patients receiving renal transplants and undergoing an immunosuppressive regimen that includes cyclosporine and corticosteroids.

1.54 “ 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 [Reserved]

2.2 License Grant to PDL .

(a) Subject to the terms and conditions of this Second Amended and Restated Worldwide Agreement, Roche hereby 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 for use in all indications (but excluding, during the Commercialization Term, Nutley Dac for use in Transplant Induction). 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 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 [Reserved]

2.4 Transfer of Roche Licensed Know-How to PDL . Until the end of the Commercialization Term, if Roche develops or Controls Roche Licensed Know-How that it has not previously provided to PDL, Roche shall promptly provide such Roche Licensed Know-How to PDL through the parties’ participation in the POC. Following the end of the Commercialization Term, 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 Second 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 Nutley Dac in the Roche Territory solely for use in Transplant Induction, and (ii) to sell and offer for sale Nutley Dac 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, use and import Nutley Dac, but only to the extent reasonably necessary for Roche to carry out its rights and obligations under this Second 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 [****], or [****]. 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 at the end of the Commercialization Term.

 

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(b) Subject to the terms and conditions of this Second 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 the [****] shall be nonexclusive.

(c) PDL hereby covenants that, until the expiration of the [****], it will not make, have made, use, sell, offer for sale or import any product in the Excluded Field Covered by the [****] in the Roche Territory, and it will not grant to any Third Party any right or license under the [****] 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 Second 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 Second 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 Second Amended and Restated Worldwide Agreement or any other written agreements in the Field between the parties currently in existence and not expressly superseded by this Second 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).

(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 Section 2.2.

 

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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 Second 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. 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. Roche further covenants that, [****]. 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 [****], [****] shall not be responsible for any such royalty payments, and [****] shall so notify [****] in writing and [****] shall have a period of [****] to evaluate whether it desires that such [****] be included within the [****] licensed to [****] under Section [****] and if so, the mechanism for payment to [****] thereunder. Where [****] elects not to [****] to such [****], it [****].

 

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(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.

(h) Roche covenants that, in the event that Roche [****], through whatever means, on PDL’s request, Roche will within [****] 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 Second Amended and Restated Worldwide Agreement to the extent deemed appropriate by both parties.

(i) To Roche’s knowledge, neither Roche nor its Affiliates own any assets relevant solely to the development or commercialization of Daclizumab, other than the Daclizumab Assets (as defined in the Agreement), the Trademarks, and the Roche Owned Patents.

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 by Roche . Unless [****], Roche shall have no right under this Second Amended and Restated Worldwide Agreement to [****]. Roche shall have the right to continue to [****] ongoing as of the Effective Date, which such [****] shall be disclosed in writing by Roche to PDL within [****] after the Effective Date. In addition, to the extent Roche receives any data or other results of any [****] pursuant to [****], Roche will update the POC with respect to such [****]. 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 [****] 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 . Following the Amendment Effective Date, PDL shall be solely responsible, [****] at its sole discretion, for the non-clinical, clinical, and regulatory development of Daclizumab (other than Nutley Dac) for all indications in the Territory, other than those trials referenced in Section 3.1(a) and except as otherwise provided in the Asthma/Transplant Agreement. All data and information generated by PDL development activities pursuant to this Section 3.2 shall be PDL Know-How.

3.3 Assistance by Roche . [****] 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, [****], 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). 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.

 

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3.4 Adverse Event Reporting . Subject to Section 3.7, 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 have each identified 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 laws, rules and regulations. The parties, through their Report Coordinators, shall continue exchanging information in accordance with the then current pharmacovigilance agreement. Upon the expiration or termination of the Asthma/Transplant Agreement, Roche and PDL shall promptly meet, together with any PDL licensee that is a party to the pharmacovigilance agreement then in effect, and negotiate in good faith an amendment to such pharmacovigilance agreement that takes into account the expiration or termination of the Asthma/Transplant Agreement. Such amended pharmacovigilance agreement (and any future amendments thereof) shall survive the end of the Commercialization Term.

3.5 Copies of Responses . Subject to Section 3.7, 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 [****] of document finalization.

3.6 Regulatory Actions . Subject to Section 3.7, 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 Asthma/Transplant Agreement . During the term of the Asthma/Transplant Agreement, the terms of Sections 5.3, 5.4 and 5.5 of the Asthma/Transplant Agreement shall take precedence over the terms Sections 3.4, 3.5 and 3.6 of this Second Amended and Restated Worldwide Agreement. The terms of Sections 3.4, 3.5 and 3.6 of this Second Amended and Restated Worldwide Agreement shall regain full force and effect upon the expiration or termination of the Asthma/Transplant Agreement.

IV. COMMERCIALIZATION AND MANUFACTURING

4.1 Commercialization By Roche .

(a) Commercialization of Nutley Dac by Roche . The parties intend that Roche will continue to market and sell Nutley Dac for Transplant Induction in the Roche Territory for the duration of the Commercialization Term, under the Trademarks. In particular, and without limitation, during the Commercialization Term and in the Roche Territory, Roche shall be

 

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responsible, at its sole cost and as permitted by applicable law, for (i) the marketing, promotion, and detailing of Nutley Dac for use in Transplant Induction; (ii) accepting and filling orders for Nutley Dac received by it or its Affiliates, including the distribution of Nutley Dac to fill such orders; (iii) booking all sales of Nutley Dac attributable to such orders; and (iv) any other activities reasonably related to Nutley Dac 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. Roche may, in its sole discretion, discontinue marketing Nutley Dac at any time.

(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 . 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 (other than Nutley Dac) for all indications and for all Other Licensed Products. In no event shall PDL owe under this Second Amended and Restated Worldwide Agreement any royalties or any other compensation to Roche on sales of Daclizumab 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 and Marketing Strategy .

(a) 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 Nutley Dac that it sells and distributes, subject to Sections 4.4(b)-(d).

 

(b) The parties desire to contribute their respective product and marketing expertise to best position Nutley Dac competitively. To that end, the parties agree [****] in accordance with this Section 4.4. In order to facilitate these discussions, Roche shall, until the end of the Commercialization Term, provide PDL with [****] and shall give due consideration to any recommendations or opinions offered by PDL regarding [****] whether directly or through the POC.

(c) In addition, if Roche desires to implement a significant change in the existing marketing strategy (as defined in Section 4.4(c)(iii)) for Nutley Dac in the U.S. Territory, then the following procedures shall apply:

(i) Roche shall notify PDL immediately in writing and the parties shall meet in person within a reasonable time period following notification to discuss the proposed changes. Roche shall give due consideration to any recommendations or opinions offered by PDL regarding the impact of the proposed changes. The parties shall have a period of up to [****] to further confer, but Roche shall have the right to effect such proposed change unless PDL notifies Roche in writing, supported by a rationale for such change, of its request for further consideration pursuant to subparagraph (ii) below.

(ii) If PDL notifies Roche in writing that it wishes further consideration of its views, then the parties shall refer the matter for discussion by a specially constituted subcommittee of the Transplant JDC consisting of [****] from each of PDL and Roche with experience in sales and marketing in the Transplant Indications (the “JDC Special Committee”). The JDC Special Committee shall prepare an analysis of the impact on the Licensed Product of the proposed significant change in the existing marketing strategy for Nutley Dac. The JDC Special Committee shall have access to information and personnel from both parties reasonably required to prepare its analysis and assessment for review by the full Transplant JDC. The analysis shall be prepared as soon as practically feasible, in no event later than [****] of the date of notification from Roche hereunder. The full Transplant JDC shall consider such analysis and assessment and agree upon a recommendation to the JSC within a reasonable period of time after receipt of such analysis and assessment. Thereafter, the JSC shall review and consider the recommendation of the Transplant JDC. If the JSC is unable to agree on the proposed significant change in the existing marketing strategy, then the matter shall be submitted for discussion and resolution by [****] ([****] The JSC shall within [****] prepare an executive summary for submission to the Officers. The Officers shall then, within a reasonable period of time, meet to resolve the matter. If the Officers are unable to agree on appropriate resolution within [****] thereafter, then [****] shall have the sole right to effect the proposed significant change in the existing marketing strategy for Nutley Dac.

 

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(iii) The term “significant change in the existing marketing strategy” in this Section 4.4(c) shall mean proposals to: change the wholesale acquisition cost for the U.S. Territory by more than [****], other than in response to a pricing move by a directly competitive product or in response to parallel importation or other governmental action; use a new trademark for Nutley Dac other than Zenapax; or change in marketing targeting a new indication or use outside of the Transplant Indications.

(d) In the event that [****], the parties will promptly seek [****] and, [****], to [****]e. The parties shall [****] with such procedures until (i) [****] or (ii) [****].

4.5 Manufacturing .

(a) Clinical Manufacturing .

(i) Supply . On January 1, 2005, 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.

(b) Commercial Manufacturing . PDL shall be solely responsible for the manufacturing of all Daclizumab, except that Roche shall be solely responsible for the manufacturing of all Nutley Dac, necessary to satisfy the commercial requirements of itself, its Affiliates and its sublicensees.

V. EFFECT OF END OF COMMERCIALIZATION TERM

5.1 General . The parties intend that, subject to the terms and conditions of this Second Amended and Restated Worldwide Agreement, the commercialization of Nutley Dac for Transplant Induction in the Roche Territory will continue to be an exclusive Roche responsibility unless and until Roche decides to cease commercialization of Nutley Dac for Transplant Induction and thereby causes the Commercialization Term to end.

5.2 Effect on Nutley Dac Rights . Effective immediately upon the expiration of the Commercialization Term:

(a) the license granted to Roche under Section 2.5(a) shall terminate, all such rights shall revert to PDL, and Roche shall no longer book sales of Nutley Dac for any indication or under any Trademark;

(b) PDL shall have the right to purchase all or any portion of Roche’s then existing inventory of bulk and/or finished Nutley Dac, and Roche agrees to so sell such bulk and/or finished Nutley Dac, at a price equal to [****] for same, as necessary to meet commercial requirements; and

 

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(c) PDL may thereafter commence booking all sales