Confidential Treatment Requested
PATENT LICENSING MASTER AGREEMENT
This PATENT LICENSING MASTER AGREEMENT (the "Agreement") is entered into as
of September 25, 1998 (the "Effective Date") by and between Protein Design
Labs, Inc., a corporation organized and existing under the laws of the State
of Delaware and having its principal office at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to as "PDL"), and Genentech, Inc., a
corporation organized and existing under the laws of the State of Delaware and
having its principal office at ▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ (hereinafter referred to as "GNE").
RECITALS
WHEREAS, PDL has exclusive rights to certain patents designated as the
Queen patents;
WHEREAS, GNE has exclusive rights to certain patents designated as the
Cabilly patents;
WHEREAS, GNE desires to obtain certain nonexclusive license rights under
the Queen patents for the development, manufacture and commercialization of
antibody products directed against up to six [ ] antigens under the terms
and conditions set forth below;
WHEREAS, PDL desires to obtain certain nonexclusive license rights under
the Cabilly patents for the development, manufacture and commercialization of
antibody products directed against up to six [ ] antigens under the terms
and conditions set forth below.
AGREEMENT
NOW, THEREFORE, the parties agree as follows:
1. DEFINITIONS
All references to particular Exhibits, Articles and Sections shall mean the
Exhibits to, and Articles and Sections of, this Agreement, unless otherwise
specified. References to this "Agreement" include the Exhibits. For the
purposes of this Agreement the following words and phrases shall have the
following meanings:
1.1 "Affiliate" 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 such corporation, or more than a fifty percent
(50%) interest in the decision-making authority of such other unincorporated
business entity; and a corporation in which the maximum amount of stock
permitted by law to be held by another entity is beneficially owned by such
other entity. Notwithstanding the foregoing, the term "Affiliate" under this
Agreement with respect to GNE shall not include Roche Holdings, Inc.,
including its affiliated companies ("Roche"), until assignment of this
Agreement to a member of such enterprise in accordance with Section 11.1.
1.2 "Antibody" means any antibody directed against an Antigen and shall
include, without limitation, monospecific and bispecific antibodies (but a
separate license shall be required for the antigen involved for each arm of a
bispecific antibody); less than full-length antibody forms such as Fv, Fab,
and F(ab')2; single-chain antibodies; and antibody conjugates bound to a
toxin, label or other moiety. The term "Antibody" shall include any and all
such constructs directed against any particular Antigen.
1.3 "Antigen" means a target molecule, usually a protein, to which an
Antibody specifically binds and includes all epitopes on that target molecule.
1.4 "Europe" means the European Patent Convention Member Countries,
including any successor organization and any additional countries that may
join such organization from time to time during the term of this Agreement.
1.5 "GNE Antigen Extension Fee" means the fee defined in Section 3.4(a).
1.6 "GNE Double Up Fee" means the fee defined in Section 3.4(b).
1.7 "GNE License Agreement(s)" means the form of GNE License Agreement
attached as Exhibit A.
1.8 "GNE Licensed Patents" mean the following patents and patent
applications known generally as the Cabilly patents and patent applications:
(a) U.S. Patent No. 4,816,567 and the claims relating to chimeric
antibodies found in patents or patent applications arising from
divisionals, continuations or continuations-in-part of any application from
which U.S. Patent No. 4,816,567 claims priority or any substitute
applications therefor, any patent issued with respect to any 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 as well as the foreign counterparts of
the foregoing and any and all reissues, reexaminations or extensions of the
foregoing (but in any event excluding U.S.S.N. 07/205,419 and foreign
counterparts thereof) ("Chimera Patents") and
(b) any patent issuing based on U.S.S.N. 07/205,419 (a continuation of the
application maturing into U.S. Patent No. 4,816,567) relating to the
coexpression of immunoglobulin chains in recombinant host cells, as well as
the divisionals, continuations or continuations-in-part of such U.S.S.N.
07/205,419, the issued foreign counterparts of such U.S.S.N. 07/205,419 and
any and all reissues, reexaminations or extensions or patent term extension
of any such patent, and any confirmation patent or registration patent or
patent of addition based on any such patent ("Coexpression Patents").
Attached hereto as Exhibit B is a list of patents and patent applications
that GNE in good faith believes represents GNE Licensed Patents as of
the Effective Date.
1.9 "GNE Licensed Product" means an Antibody with respect to which GNE has
either significant marketing rights or has done significant development (e.g.,
created, humanized or conducted preclinical or clinical development), the
manufacture, import, use, offer to sell or sale of which would infringe, if
not licensed under this Agreement, one or more claims of a PDL Licensed Patent
which have neither expired nor have been disclaimed nor have been held invalid
or unenforceable by a court or other body of competent jurisdiction from which
no appeal has been or may be taken.
1.10 "GNE Named Antigen(s)" means the following Antigens: [ ].
1.11 "Opposition Proceedings" means the legal proceedings at the European
Patent Office ("EPO") initiated against EP patent 451,216B1 and terminating at
the decision (oral and/or written)rendered by the Opposition Division ("OD")
of the EPO, but excluding any proceedings resulting from the filing of an
appeal to the OD's decision.
1.12 "PDL Antigen Extension Fee" means the fee defined in Section 6.4(a).
1.13 "PDL Double Up Fee" means the fee defined in Section 6.4(b).
1.14 "PDL License Agreement(s)" means the form of PDL License Agreement
attached as Exhibit C.
1.15 "PDL Licensed Patents" means the patents and patent applications
identified on Exhibit D and including any applications filed as of the
Effective Date in the United States or any foreign jurisdiction. Licensed
Patents shall include U.S. or foreign patents or patent applications which
claim priority to any application to which a listed U.S. patent also claims
priority. PDL Licensed Patents shall also include any foreign equivalents,
addition, continuation, continuation-in-part or division of such patents or
patent applications or any substitute applications therefor, any patent issued
with respect to any 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. Attached hereto as
Exhibit D is a list of patents and patent applications that PDL in good faith
believes represents PDL Licensed Patents as of the Effective Date.
1.16 "PDL Licensed Product" means an Antibody with respect to which PDL
either has significant marketing rights or has done significant development
(e.g., created, humanized or conducted preclinical or clinical development),
the manufacture, import, use, sale or offer to sell of which would infringe,
if not licensed under this Agreement, one or more claims of a GNE Licensed
Patent which have neither expired or have been disclaimed nor have been held
invalid or unenforceable by a court or other body of competent jurisdiction
from which no appeal has been or may be taken.
1.17 "PDL Named Antigen(s)" means the following Antigens: [ ].
2. GNE'S RIGHTS TO LICENSES
2.1 Election. Subject to the terms and conditions of this Agreement and
in partial consideration of the rights granted to PDL in Section 5 below, PDL
hereby grants to GNE (a) through the period and subject to the limitation on
the number of Antigens provided in Section 2.2, the right to receive for each
Antigen designated by GNE, a nonexclusive, worldwide (except as provided in
Section 3.2(a)(ii)) license under the PDL Licensed Patents to make, have made,
use, import, offer to sell and sell Antibodies pursuant to a PDL License
Agreement. This right shall not extend to the PDL Named Antigens. The rights
of GNE under the PDL License Agreements shall include the right to grant
sublicenses for Antibodies in accordance with the terms of the applicable PDL
License Agreement. Each license elected by GNE hereunder shall be pursuant to
a separate PDL License Agreement and effective as of the date of execution by
both parties.
2.2 Number of Licensed Antigens; Term of Rights.
(a) Limit on Number of Antigens. Except as provided in Section 2.2(c),
GNE's right to obtain licenses pursuant to Section 2.1 may be exercised for
Antibodies directed against a maximum total of six (6) Antigens.
(b) Expiration of Rights to Elect. Except as provided in Section 2.2(c),
GNE's right to obtain licenses pursuant to Section 2.1 shall expire on the
[ ] anniversary of the Effective Date; provided that GNE may elect to
extend the expiration period for each license right under Section 2.1 not
exercised by the [ ] anniversary for an additional [ ] period by
written notice and payment of the GNE Antigen Extension Fee to PDL prior to
the [ ] anniversary of the Effective Date as provided in Section
3.4(a).
(c) Double Up Right. Upon written notice to PDL and payment of the GNE
Double Up Fee at any time prior to the [ ] anniversary of the Effective
Date, GNE may elect up to an additional [ ] Antigens under Section 2.1
for a period of [ ] years following the date of such notice; provided
that rights to elect licenses with respect to the first [ ] Antigens
shall expire as of the [ ] anniversary of the Effective Date unless
otherwise extended pursuant to Section 2.2(b). By way of illustration and
without limitation, if GNE elects to exercise its right hereunder but has
exercised rights to licenses with respect to only [ ] Antigens under
Section 2.1 as of the [ ] anniversary of the Effective Date (and has
not extended the designation of the remaining [ ] Antigens pursuant to
Section 2.2(b)), then the cumulative number of Antigens subject to election
by GNE under this Agreement through the [ ] anniversary shall be [
] Antigens.
2.3 Procedure for Exercise of License Rights.
GNE shall provide PDL with written notice identifying the Antigen for
which GNE desires to enter into a PDL License Agreement pursuant to the
provisions of Section 2.1. Within fifteen (15) business days of the
written notice, GNE shall pay the applicable License Exercise Fee specified
in Section 3.2(a). PDL shall promptly review and respond in writing to the
request by GNE for a license within ten (10) business days of receipt of
the written request. PDL may deny GNE's request for a license grant only
if PDL has previously granted an exclusive or co-exclusive license or an
unexpired option for an exclusive or co-exclusive license with respect to
Antibodies to the identical Antigen or is then actively engaged in bona
fide negotiations for such an exclusive or co-exclusive license or option
for an exclusive or co-exclusive license; provided, however, that with
respect to each of the GNE Named Antigens and [ ], PDL shall provide
GNE written notice prior to entering into an exclusive or co-exclusive
license or option with any third party with respect to that GNE Named
Antigen and shall permit GNE the opportunity to exercise its rights under
Section 2.1 for a period not to exceed fifteen (15) days for a license for
such GNE Named Antigen prior to the conclusion of an agreement with such
third party for such a license or option. In the event that PDL denies
GNE's request for a PDL License Agreement, GNE's right under Section 2.1
shall not be considered exercised. If PDL affirms GNE's request or has not
responded within ten (10) business days of receipt of GNE's request under
this Section 2.3(b), then GNE and PDL shall enter into a PDL License
Agreement with respect to the Antigen.
3. GNE'S PAYMENTS
3.1 Initial Fees. Within ten (10) days of the Effective Date, GNE shall
pay an initial nonrefundable, noncreditable fee of Six Million Dollars
($6,000,000) for the right to obtain nonexclusive licenses pursuant to Section
2.1. In recognition of the value of the license rights hereunder attributable
to Licensed Products that have received regulatory approval, the parties agree
that Five Million Dollars ($5,000,000) of the Six Million Dollars ($6,000,000)
payable under this Section 3.1 shall be considered payment attributable to the
first license hereunder.
3.2 License Exercise Fees.
(a) License Exercise Fee. Within fifteen (15) business days after the
delivery of a written notice to PDL for a nonexclusive license for
Antibodies for one (1) Antigen under Section 2.1. GNE shall pay to PDL an
exercise fee ("GNE License Exercise Fee") of either:
(i) One Million Dollars ($1,000,000)[ ]
[ ]
[ ] provided further that such amounts shall be increased annually
beginning January 1, 1999 and on each January 1 thereafter by an amount equal
to the Consumer Price Index-U (or its successor) published by the U.S. Bureau
of Labor Statistics ("CPI-U") for the prior year. All adjustments hereunder
shall be payable within fifteen (15) days of the publication of the CPI-U
for the applicable year. [ ]. All such deductions
shall be documented with any payments made hereunder.
(b) Credits. [ ].
3.3 Annual Maintenance Fees. Each PDL License Agreement shall provide for
the payment to PDL of an annual maintenance fee beginning on the [ ]
anniversary of each PDL License Agreement of either:
(a) [ ]
(b) [ ]
The PDL License Agreement shall further provide that annual maintenance
fees shall be [ ] against royalties payable in the year with
respect to which such annual maintenance fee is paid.
3.4 Antigen Extension Fee; Double Up Fee.
(a) Antigen Extension Fee. Concurrent with the delivery of the written
notice of election to extend the expiration period of an exercise right
under Section 2.2(b), GNE shall pay to PDL for each Antigen with respect to
which GNE desires to extend such exercise period, a
nonrefundable, noncreditable extension fee of [ ].
(b) Double Up Fee. Concurrent with the delivery of the written notice of
election of the "double up" right under Section 2.2(c), GNE shall pay to
PDL a nonrefundable, noncreditable fee of [ ].
4. GNE'S ROYALTIES
4.1 Royalty Rates. GNE will pay royalties to PDL under the PDL License
Agreements at the rate of [ ] of net sales by GNE, its Affiliates and
sublicensees and Roche of each GNE Licensed Product. In the case of a GNE
Licensed Product that is a bispecific antibody, to the extent a license is
required under the PDL Licensed Patents each arm shall require a separate
license, provided that even if two licenses are required, the bispecific
antibody shall be considered one GNE Licensed Product and bear a royalty of [
] of net sales by GNE, its Affiliates and sublicensees and Roche of that GNE
Licensed Product.
4.2 Royalties to Third Parties. GNE acknowledges and agrees that other
licenses may be required from third parties with respect to the development,
manufacture, use and sale of any products licensed under the PDL License
Agreements, and that GNE shall be responsible for any royalties and other
payments with respect to those license rights. In no event shall GNE have a
right to credit against, reduce or otherwise offset any royalty or payment
obligations to such third parties against royalty amounts payable to PDL under
the PDL License Agreements.
5. PDL'S RIGHTS TO LICENSES
5.1 Election. Subject to the terms and conditions of this Agreement, and
in partial consideration of the rights granted to GNE in Section 2, GNE hereby
grants to PDL through the period and subject to the limitation on the number
of Antigens provided in Section 5.2, the right to receive for each Antigen
designated by PDL, a nonexclusive, worldwide license under the GNE Licensed
Patents to make, have made, use, import, offer to sell and sell Antibodies
pursuant to a GNE License Agreement. This right shall not extend to the GNE
Named Antigens. The rights of PDL under the GNE License Agreements shall
include the right to grant sublicenses for Antibodies in accordance with the
terms of the applicable GNE License Agreement. Each license elected by PDL
hereunder shall be pursuant to a separate GNE License Agreement and effective
as of the date of execution by both parties.
5.2 Number of Licensed Antigens; Term of Rights.
(a) Limit on Number of Antigens. Except as provided in Section 5.2(c),
PDL's right to obtain licenses pursuant to Section 5.1 may be exercised for
Antibodies directed against a maximum total of six (6) Antigens.
(b) Expiration of Rights to Elect. Except as provided in Section 5.2(c),
PDL's right to obtain licenses pursuant to Section 5.1 shall expire on the
later to occur of the [ ] anniversary of the Effective Date or [ ]
from the date of issuance in the United States of the Coexpression Patent
(the "Expiration Date"), provided, however, that PDL may elect to extend
the expiration period for each license right under Section 5.1 not
exercised by the Expiration Date for an additional [ ] period by written
notice and payment of the PDL Antigen Extension Fee to GNE prior to the
Expiration Date as provided in Section 6.4(a).
(c) Double Up Right. Upon written notice to GNE and payment of the PDL
Double Up Fee at any time prior to the Expiration Date, PDL may elect up to
an additional [ ] Antigens under Section 5.1 for a period of [ ]
following the date of such notice; provided that rights to elect licenses
with respect to the first [ ] Antigens shall expire as of the
Expiration Date unless otherwise extended pursuant to Section 5.2(b). By
way of illustration and without limitation, if PDL elects to exercise its
right hereunder but has exercised rights to licenses with respect to only [
] Antigens under Section 5.1 as of the Expiration Date (and has not
extended the designation of the remaining [ ] Antigens pursuant to
Section 5.2(b)), then the cumulative number of Antigens subject to election
by PDL under this Agreement through the [ ] anniversary of the
Expiration Date shall be [ ] Antigens.
5.3 Procedure for Exercise of License Rights.
PDL shall provide GNE with written notice identifying the Antigen for
which PDL desires to enter into a GNE License Agreement pursuant to the
provisions of Section 5.1. Within fifteen (15) business days of the
written notice, PDL shall pay the applicable License Exercise Fee specified
in Section 6.2. GNE shall promptly review and respond in writing to the
request by PDL for a license within ten (10) business days of receipt of
the written request. GNE may deny PDL's request for a license grant only
if GNE has previously granted an exclusive or co-exclusive license or an
unexpired option for an exclusive or co-exclusive license with respect to
Antibodies to the identical Antigen to either (a) a non-affiliate or (b)
Roche under that certain agreement dated October 15, 1995, as such
agreement is in effect on the Effective Date, or is then actively engaged
in bona fide negotiations for such an exclusive or co-exclusive license or
option for an exclusive or co-exclusive license; provided, however, that
with respect to each of the PDL Named Antigens and [ ], GNE shall
provide PDL written notice prior to entering into an exclusive or co-
exclusive license or option with any third party with respect to that PDL
Named Antigen and shall permit PDL the opportunity to exercise its rights
under Section 5.1 for a period not to exceed fifteen (15) days for a
license for such PDL Named Antigen prior to the conclusion of an agreement
with such third party for such a license or option. In the event that GNE
denies PDL's request for a GNE License Agreement, PDL's right under Section
5.1 shall not be considered exercised. If GNE affirms PDL's request or has
not responded within ten (10) business days of receipt of PDL's request
under this Section 5.3, then PDL and GNE shall enter into a GNE License
Agreement with respect to the Antigen.
6. PDL'S PAYMENTS
6.1 Initial Fees. Within ten (10) days of the Effective Date, PDL shall
pay (a) an initial nonrefundable, noncreditable fee of One Million Dollars
($1,000,000) for the right to obtain nonexclusive licenses pursuant to Section
5.1.
6.2 License Exercise Fee. Within fifteen (15) business days after the
delivery of a written notice to GNE for a nonexclusive license for Antibodies
for one (1) Antigen under Section 5.1, PDL shall pay to GNE an exercise fee
("PDL License Exercise Fee") of :
(i) Five Hundred Thousand Dollars ($500,000) for a license under the
Chimera Patents; and/or
(ii) Five Hundred Thousand Dollars ($500,000) for a license under the
Coexpression Patents.
provided further that such amounts shall be increased annually beginning
January 1, 1999 and on each January 1 thereafter by an amount equal to the
CPI-U. All adjustments hereunder shall be payable within fifteen (15) days
of the publication of the CPI-U for the applicable year.
6.3 Annual Maintenance Fees. Each GNE License Agreement shall provide for
the payment to GNE of an annual maintenance fee beginning on the [ ]
anniversary of each GNE License Agreement of:
(a) [ ] under the license for the Chimera Patents; and/or
(b) [ ] under the license for the Coexpression Patents.
The GNE License Agreement shall further provide that annual maintenance
fees shall be fully creditable against royalties payable in the year with
respect to which such annual maintenance fee is paid.
6.4 Antigen Extension Fee; Double Up Fee.
(a) Antigen Extension Fee. Concurrent with the delivery of the written
notice of election to extend the expiration period of an exercise right
under Section 5.2(b), PDL shall pay to GNE for each Antigen with respect to
which PDL desires to extend such exercise period, a nonrefundable,
noncreditable extension fee of [ ].
(b) Double Up Fee. Concurrent with the delivery of the written notice of
election of the "double up" right under Section 5.2(c), PDL shall pay to
GNE a nonrefundable, noncreditable fee of [ ].
7. PDL'S ROYALTIES
7.1 Royalty Rates. PDL will pay royalties to GNE under the GNE License
Agreements at the rate of [ ] of net sales by PDL, its Affiliates and
sublicensees of each PDL Licensed Product. In the case of a PDL Licensed
Product that is a bispecific antibody, to the extent a license is required
under the PDL Licensed Patents each arm shall require a separate license,
provided that even if two licenses are required, the bispecific antibody shall
be considered one PDL Licensed Product and bear a royalty of [ ] of net
sales by PDL, its Affiliates and Designees of that PDL Licensed Product.
7.2 Royalties to Third Parties. PDL acknowledges and agrees that other
licenses may be required from third parties with respect to the development,
manufacture, use and sale of any products licensed under the GNE License
Agreements, and that PDL shall be responsible for any royalties and other
payments with respect to those license rights. In no event shall PDL have a
right to credit against, reduce or otherwise offset any royalty or payment
obligations to such third parties against royalty amounts payable to GNE under
the GNE License Agreements.
8. REPRESENTATIONS, DISCLAIMERS
8.1 Representations of PDL. PDL represents and warrants to GNE that:
(a) The execution, delivery and performance of this Agreement by PDL will
not, with or without notice, the passage of time or both, result in any
violation of, be in conflict with, or constitute a default under any
material contract, obligation or commitment to which PDL is a party or by
which it is bound, or to PDL's knowledge, violate any statute, rule or
governmental regulation applicable to PDL.
(b) PDL has all requisite legal and corporate power and authority to enter
into this Agreement and to carry out and perform its obligations under the
terms of this Agreement.
(c) The PDL Licensed Patents constitute all of the patents and
patent applications owned by PDL as of the Effective Date which relate
generally to the humanization of antibodies.
8.2 Representations of GNE. GNE represents and warrants to PDL that:
(a) The execution, delivery and performance of this Agreement by GNE will
not, with or without notice, the passage of time or both, result in any
violation of, be in conflict with, or constitute a default under any
material contract, obligation or commitment to which GNE is a party or by
which it is bound, or to GNE's knowledge, violate any statute, rule or
governmental regulation applicable to GNE.
(b) GNE has all requisite legal and corporate power and authority to enter
into this Agreement and to carry out and perform its obligations under the
terms of this Agreement.
(c) With the exception of [ ] (including any divisionals,
continuations or continuations-in-part of such applications, the issued
foreign counterparts of such applications and any and all reissues,
reexaminations or extensions or patent term extension of any such patent,
and any confirmation patent or registration patent or patent of addition
based on any such patent), the GNE Licensed Patents constitute all of the
patents and patent applications owned by GNE as of the Effective Date which
relate generally to chimeric and/or humanized antibodies and to the
coexpression of immunoglobulin chains in recombinant host cells.
8.3 No Warranty of Validity, Non-Infringement. Nothing in this Agreement
shall be construed as (a) a warranty or representation by PDL as to the
validity or scope of any PDL Licensed Patents; (b) a warranty or
representation by GNE as to the validity or scope of any GNE Licensed Patents;
or (c) a warranty or representation that anything made, used, sold or
otherwise disposed of under any PDL License Agreement or GNE License Agreement
is or will be free from infringement of patents, copyrights, trademarks, trade
secrets or other rights of third parties.
8.4 Disclaimer of Warranties. EXCEPT AS SPECIFICALLY SET FORTH IN
SECTIONS 8.1 AND 8.2 ABOVE, NEITHER PDL NOR GNE MAKE TO THE OTHER ANY
REPRESENTATIONS OR EXTEND ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED. FURTHER, NEITHER PDL NOR GNE MAKE TO THE OTHER ANY IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR THAT
PRACTICE UNDER ITS LICENSED PATENTS UNDER A LICENSE AGREEMENT WILL NOT
INFRINGE ANY THIRD PARTY RIGHTS.
9. CONFIDENTIALITY; DISCLOSURE
9.1 Prior Agreement. This Agreement supersedes any and all previous
agreements and understandings, whether oral or written, between the parties
regarding the treatment of confidential information, including without
limitation that certain Confidentiality Agreement entered into between PDL and
GNE as of September 4, 1997.
9.2 Confidentiality. During the term of this Agreement and for a period
of five (5) years following expiration or termination of this Agreement, each
party shall maintain in confidence all information and materials disclosed by
the other party in writing and marked as confidential or disclosed orally or
otherwise and which has been denominated in writing by the disclosing party to
be confidential within 30 days after such disclosure, including, without
limitation, information relating to the PDL Licensed Patents or GNE Licensed
Patents, PDL Licensed Products or GNE Licensed Products, and the business
plans of the other party, including information provided by either party to
the other party prior to the Effective Date, and shall not use such trade
secrets or proprietary information for any purpose except as permitted by this
Agreement or disclose the same to anyone other than those of its Affiliates,
sublicensees, employees, consultants, agents or subcontractors as are
necessary in connection with such party's activities as contemplated in this
Agreement. Each party shall obtain an appropriate enforceable agreement from
any sublicensees, employees, consultants, agents and subcontractors, prior to
disclosure, to hold in confidence and not make use of such trade secrets or
proprietary information for any purpose other than those permitted by this
Agreement.
9.3 Exceptions. The obligation of confidentiality contained in this
Agreement shall not apply to the extent that (a) either party (the
"Recipient") is required to disclose information by order or regulation of a
governmental agency or a court of competent jurisdiction, provided that the
Recipient shall not make any such disclosure (other than a filing of
information or materials with the U.S. Securities and Exchange Commission made
with a request for confidential treatment for portions of such material for
which such treatment may reasonably be expected to be granted) without first
notifying the other party and allowing the other party a reasonable
opportunity to seek injunctive relief from the obligation to make such
disclosure or (b) the Recipient can demonstrate that (i) the disclosed
information was at the time of such disclosure to the Recipient already in the
public domain other than as a result of actions of the Recipient, its
Affiliates, employees, sublicensees, agents or subcontractors in violation
hereof; (ii) the disclosed information was rightfully known by the Recipient
or its Affiliates (as shown by its written records) prior to the date of
disclosure to the Recipient in connection with the negotiation, execution or
performance of this Agreement; or (iii) the disclosed information was received
by the Recipient or its Affiliates on an unrestricted basis from a source
unrelated to any party to this Agreement and not under a duty of
confidentiality to the other party, (c) disclosure is made to a government
regulatory agency as part of such agency's biological product license approval
process or (d) the amount of royalties paid or received is disclosed in a
party's financial statements or reports.
9.4 Public Disclosure. The parties will issue a press release concerning
the parties' entry into this Agreement in the form attached hereto as Exhibit
E. Other than the foregoing and except as required by law or regulation,
neither party shall publicly disclose the terms and conditions of this
Agreement unless expressly authorized to do so by the other party, which
authorization shall not be unreasonably withheld. In the event that
disclosure shall be agreed upon then the parties will work together to develop
a mutually acceptable disclosure. In any event, each party shall be entitled
to identify the number of licenses with respect to which a party has exercised
its rights hereunder, licensed Antigens if such Antigens have been previously
publicly identified, and the number of Antigens with respect to which a party
may obtain a license hereunder.
10. TERM AND TERMINATION
10.1 Term. Unless earlier terminated in accordance with this Article 10,
this Agreement shall remain in effect until the expiration of the last GNE
License Agreement or PDL License Agreement.
10.2 Default. If either party defaults in the performance of, or fails to
be in compliance with, any material agreement, condition or covenant of this
Agreement, the party not in default may provide notice of such default to the
defaulting party. The provisions for resolution of a default are limited to
those set forth in Section 11.6 below.
10.3 Rights and Obligations Upon Termination or Expiration. Upon
expiration or termination of this Agreement for any reason, nothing herein
shall be construed to release either party from any obligation that matured
prior to the effective date of such termination. In addition, the obligations
set forth in Articles 9 and 11 shall survive the expiration or termination of
this Agreement. Upon termination of this Agreement, each party shall return
to the other party any Confidential Information disclosed by the other party
under this Agreement.
11. MISCELLANEOUS
11.1 Assignment. This Agreement may not be assigned by either party
without the prior written consent of the other, except that either may assign
this Agreement without consent to a party which acquires all or substantially
all of that portion of the business to which this Agreement pertains, whether
by merger, sale of assets or otherwise. A merger or consolidation shall be
deemed to constitute an assignment.
11.2 Entire Agreement; Amendment. This Agreement, including Exhibits
hereto, constitutes the entire agreement between the parties hereto with
respect to the within subject matter and supersedes all previous agreements,
whether written or oral. This Agreement shall not be changed or modified
orally, but only by an instrument in writing signed by both parties.
11.3 Severability. If any provision of this Agreement is declared invalid
by any court of competent jurisdiction from which an appeal is not taken
within the time provided by law, then and in such event, this Agreement will
be deemed to have been terminated only as to the portion thereof which relates
to the provision invalidated by that decision and only in the relevant
jurisdiction, but this Agreement, in all other respects and all other
jurisdictions, will remain in force; provided, however, that if the provision
so invalidated is essential to this Agreement as a whole, then the parties
shall negotiate in good faith to amend the terms hereof as nearly as practical
to carry out the original interest of the parties.
11.4 Notices. Any notice or report required or permitted to be given
under this Agreement shall be in writing and shall be sent by express courier
or facsimile and confirmed by mailing, as follows (or at such other address as
PDL or GNE shall have furnished to the other in writing) and shall be
effective three (3) days business after such mailing:
If to PDL: Protein Design Labs, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇
If to GNE: Genentech, Inc.
▇ ▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
Facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇
11.5 Choice of Law. The validity, performance, construction, and effect
of this Agreement and any arbitration conducted under section 11.6 below shall
be governed by the laws of the State of California which are applicable to
contracts between California residents to be performed wholly within
California.
11.6 Dispute Resolution.
(a) Negotiations. Any dispute, controversy or claim arising out of or
relating to any provision of this Agreement or a GNE License Agreement or a
PDL License Agreement or the interpretation, enforceability, performance,
breach, termination or validity hereof or thereof, including without
limitation, this dispute resolution provision, shall be subject to the
procedures set forth in this Section 11.6. A designated representative of
PDL and GNE will meet as reasonably requested by either party to review any
dispute, controversy or claim arising out of or relating to any provision
of this Agreement or a GNE License Agreement or a PDL License Agreement.
If the disagreement is not resolved by the designated representatives by
mutual agreement within thirty (30) days after a meeting to discuss the
disagreement, either party may at any time thereafter provide the other
written notice specifying the terms of such disagreement in reasonable
detail. Upon receipt of such notice, the chief executive officers of PDL
and GNE shall meet at a mutually agreed upon time and location for the
purpose of resolving such disagreement. They will discuss the problems
and/or negotiate for a period of up to sixty (60) days in an effort to
resolve the disagreement or negotiate an acceptable interpretation or
revision of the applicable portion of this Agreement mutually agreeable to
both parties, without the necessity of formal procedures relating thereto.
During the course of such negotiations, the parties will reasonably
cooperate and provide information that is not materially confidential in
order that each of the parties may be fully informed with respect to the
issues in dispute. The institution of a formal legal proceeding under
Section 11.6(a) or (b) to resolve the disagreement may occur by written
notice to the other party only after the earlier of: (a) the chief
executive officers mutually agreeing that resolution of the disagreement
through continued negotiation is not likely to occur, or (b) following
expiration of the sixty (60) day negotiation period. Participation in the
Opposition Proceedings shall not be subject to the provisions of this
Section 11.6.
(b) Arbitration. Subject to Section 11.6(a), any dispute, controversy or
claim arising out of or in connection with or relating to this Agreement or
the breach or alleged breach thereof, but not including any dispute,
controversy or claim concerning the validity of any GNE Licensed Patent or
PDL Licensed Patent, shall be submitted by the parties to arbitration in
Santa ▇▇▇▇▇ County, California in accordance with the then-current
commercial arbitration rules of the American Arbitration Association
("AAA") except as otherwise provided herein. If the dispute, controversy
or claim concerns the validity of any GNE Licensed Patent or PDL Licensed
Patent, all matters subject to dispute, controversy or claim hereunder
shall be removed to Federal District Court as provided in Section 11.6(c).
Any arbitration proceeding hereunder shall be held in English and a
transcribed record prepared in English. The parties shall choose, by
mutual agreement, one (1) neutral arbitrator within thirty (30) days of
receipt of notice of the intent to arbitrate. If no arbitrator is
appointed within the times herein provided or any extension of time which
is mutually agreed upon, the AAA shall make such appointment of a person
who shall devote substantial time to arbitrating within thirty (30) days of
such failure. Discovery permitted by the arbitrator shall be pursuant to
California Code of Civil Procedure Sections 1283.05 and 1283.1, provided
that all discovery shall be completed within sixty (60) days of the
appointment of such arbitrator and the decision rendered by such arbitrator
shall thereafter be delivered in writing setting forth the basis therefor
within thirty (30) days after the completion of discovery. The award
rendered by the arbitrator shall include costs of arbitration, reasonable
attorneys' fees and reasonable costs for expert and other witnesses, and
judgment on such award may be entered in any court having jurisdiction
thereof. Nothing in this Agreement shall be deemed as preventing either
party from seeking injunctive relief (or any other provisional remedy) from
any court having jurisdiction over the parties and the subject matter of
the dispute but only to the extent necessary to protect either party's
name, proprietary information, trade secrets, know-how or any other similar
proprietary rights. If the issues in dispute involve scientific or
technical matters related to monoclonal antibody technology, any arbitrator
chosen hereunder shall have not less than five (5) years of educational
training and/or experience sufficient to demonstrate a reasonable level of
relevant scientific and/or technical knowledge related to monoclonal
antibody technology. If the issues in dispute involve patent matters
(other than validity of a GNE Licensed Patent or PDL Licensed Patent), then
such arbitrator shall also be a licensed patent attorney or otherwise
knowledgeable about patent law matters and to the extent possible, with
monoclonal antibody technology. The decision of the arbitrator shall be in
writing and shall set forth the basis therefor. The arbitrator shall have
the authority to award such remedies as he or she believes appropriate in
the circumstances, including, but not limited to, compensatory damages
subject to the Three Percent (3%) royalty maximum set forth herein,
consequential and incidental damages, interest, tort damages (but not
punitive or similar damages) and specific performance and other equitable
relief.
(c) Patent Validity. Subject to Section 11.6(a), any dispute, controversy
or claim (i) which involves the validity of a GNE Licensed Patent or PDL
Licensed Patent issued in the United States shall be subject to actions
before the United States Patent and Trademark Office and/or adjudicated in
Federal District Court, Central District, Santa ▇▇▇▇▇ County in the State
of California and (ii) which involves the validity of a GNE Licensed Patent
or PDL Licensed Patent issued in any other country shall be brought before
an appropriate regulatory or administrative body or court in that country.
The prevailing party shall be entitled to recover from the other party, the
reasonable attorneys' fees, costs and expenses incurred by such prevailing
party in connection with any action or proceeding under this Section
11.6(c).
11.7 Waiver. The failure of either party to assert a right hereunder or
to insist upon compliance with any term or condition of this Agreement shall
not constitute a waiver of that right or excuse a similar subsequent failure
to perform any such term or condition by the other party. None of the terms,
covenants and conditions of this Agreement can be waived except by the written
consent of the party waiving compliance.
11.8 Headings. The captions used herein are inserted for convenience of
reference only and shall not be construed to create obligations, benefits, or
limitations.
11.9 Counterparts. This Agreement may be executed in counterparts, all of
which taken together shall be regarded as one and the same instrument.
Execution and delivery of this Agreement by exchange of facsimile copies
bearing the facsimile signature of a party hereto shall constitute a valid and
binding execution and delivery of this Agreement by such party. Such
facsimile copies shall constitute enforceable original documents.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
PDL: GNE:
Protein Design Labs, Inc. Genentech, Inc.
By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title Chairperson & CEO Title President & CEO
Exhibits
Exhibit A- Form of GNE License Agreement
Exhibit B- GNE Licensed Patents
Exhibit C - Form of PDL License Agreement
Exhibit D - PDL Licensed Patents
Exhibit E - Form of Joint Press Release
Exhibit A
Form of GNE License Agreement
Confidential Treatment Requested
GNE LICENSE AGREEMENT
This GNE License Agreement ("Agreement"), dated as of
, is between Genentech, Inc., a Delaware corporation, having a
principal place of business at ▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ (hereinafter "GNE") and Protein Design Labs, Inc., a Delaware
corporation, having a place of business at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter "PDL").
WHEREAS:
A. GNE and PDL have entered into a Patent Licensing Master Agreement
effective September __, 1998 (the "Master Agreement"), pursuant to which PDL
may enter into this Agreement with respect to a license under either or both
of the Chimera Patents or Coexpression Patents (as defined below), commonly
referred to as the "Cabilly Patents," for PDL's antibody products and
services.
B. The Master Agreement provides PDL with the right to obtain a
nonexclusive, worldwide, royalty-bearing license under the Cabilly Patents
under the terms and conditions of this Agreement.
NOW, THEREFORE, the parties agree as follows:
Article I
DEFINITIONS
All references to Exhibits, Articles and Sections shall mean the
Exhibits to, and Articles and Sections of, this Agreement, unless otherwise
specified. Unless otherwise specifically set forth herein, the following
terms shall have the following meanings:
1.01. "Affiliate" 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 such corporation, or more than a fifty
percent (50%) interest in the decision-making authority of such other
unincorporated business entity; and a corporation in which the maximum amount
of stock permitted by law to be held by another entity is beneficially owned
by such other entity.
1.02. "Antibody" means any antibody directed against an Antigen and
shall include, without limitation, monospecific and bispecific antibodies (but
only with respect to the Antigen for a bispecific antibody); less than full-
length antibody forms such as Fv, Fab, and F(ab')2; single-chain antibodies,
and antibody conjugates bound to a toxin, label or other moiety, as well as
any and all such constructs directed against the Antigen.
1.03. "Antigen" means the target molecule: _____________________.
1.04. "Bulk Product" means Licensed Product supplied in a form other
than Finished Product which can be converted into Finished Product.
1.05. "Combination Product(s)" means any product containing both a
pharmaceutically active agent or ingredient which constitutes a Licensed
Product and one or more other pharmaceutically active agents or ingredients
which do not constitute Licensed Products.
1.06. "Designee" means a Sublicensee or other person or entity
designated by a Party to exercise the rights of and perform obligations
hereunder in place of that Party in the Territory or a portion thereof.
1.07. "Effective Date" means the date of this Agreement as set forth
above.
1.08. "Finished Product" means any and all Licensed Products in form
for use by an end user and not intended for further chemical or genetic
manipulation or transformation.
1.09. "Licensed Patents" means either or both of the following, as
elected by PDL pursuant to Section 2.01 hereof and set forth on Exhibit A
known generally as the Cabilly patents and patent applications:
(a) U.S. Patent No. 4,816,567 and the claims relating to chimeric
antibodies found in patents or patent applications arising from
divisionals, continuations or continuations-in-part of any
application from which U.S. Patent No. 4,816,567 claims
priority or any substitute applications 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 as well as the foreign
counterparts of the foregoing (but in any event excluding
U.S.S.N. 07/205,419 and foreign counterparts thereof) ("Chimera
Patents") and
(b) any patent issuing based on U.S.S.N. 07/205,419 (a
continuation of the application maturing into U.S. Patent No.
4,816,567) relating to the coexpression of immunoglobulin
chains in recombinant host cells, as well as the divisionals,
continuations or continuations-in-part of such U.S.S.N.
07/205,419, the issued foreign counterparts of such U.S.S.N.
07/205,419 and any and all reissues, reexaminations or
extensions or patent term extension of any such patent, and any
confirmation patent or registration patent or patent of
addition based on any such patent ("Coexpression Patents").
1.10. "Licensed Product(s)" means an Antibody with respect to which PDL
has either significant marketing rights or has done significant development
(e.g., created, humanized or conducted preclinical or clinical development),
the manufacture, import, use, offer to sell or sale of which would infringe,
if not licensed under this Agreement, a Valid Claim.
1.11. "Net Sales" means the gross invoice or contract price to third
party customers for Finished Products. Finished Products used or
consumed by PDL or its Affiliates or Designees as part of the delivery
of services to customers shall be considered Net Sales at the gross
invoice or contract price of like Finished Products which are sold to
customers. If Licensed Product is sold in combination with one or more
active ingredients, Net Sales shall be calculated by multiplying Net Sales
of the Combination Product by the fraction A/(A+B) where A is the
sales price of the Finished Product in the Combination Product
when sold separately and B is the total sales price of all other active
ingredients in the Combination Product when sold separately. If the Finished
Product and the other active ingredients are not sold separately, the portion
of the total cost of the Combination Product attributed to Finished Product
shall be a fraction, the numerator of which shall be the cost of the Finished
Product and the denominator of which shall be the total cost of the
Combination Product. The fraction shall be multiplied times the sales price
of the Combination Product to arrive at Net Sales. For all Licensed Product
used or consumed by others than PDL, PDL shall be entitled to deduct [ ]
from Net Sales in lieu of all other deductions such as taxes, shipping
charges, allowances and the like prior to calculating royalties due. If PDL or
any of its Affiliates or Sublicensees receive non-cash consideration for any
Licensed Product 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 such transfer as known to PDL, or as
reasonably estimated by PDL if unknown, shall be included in the definition of
Net Sales. Net Sales shall not include Licensed Product provided for bona
fide clinical trial, evaluation, research or development purposes.
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 of the Bulk Product. By way of example and without limitation, units
of Finished Product may be measured in grams or doses, as appropriate.
The method of calculating Net Sales of materials in form other than
Finished Product or Bulk Product that can be converted into Finished Product
shall be established by the Parties prior to the first sale or transfer of any
such material by PDL to a non-affiliated third party.
1.12. "Party" means GNE or PDL and when used in the plural shall mean
GNE and PDL.
1.13. "Sublicensee" means any person or entity granted a sublicense by
PDL under this Agreement.
1.14. "Territory" means worldwide.
1.15. "Valid Claim" means any claim in any Licensed Patents which claim
has neither expired or been disclaimed nor has been held invalid or
unenforceable by a court or other body of competent jurisdiction from which no
appeal has been or may be taken.
Article II
GRANT
2.01. License. With respect to each Licensed Product, PDL shall
provide written notice to GNE of its election to have either or both of the
Chimera Patents and/or Coexpression Patents designated as Licensed Patents
hereunder, and the Licensed Patents elected by PDL shall be specified in
Exhibit A. Subject to the fulfillment by PDL of all the terms and conditions
of this Agreement, GNE hereby grants to PDL and PDL hereby accepts a
nonexclusive license, together with the right to sublicense, under Licensed
Patents for the term thereof to make, have made, use, import, offer to sell
and sell Licensed Products in the Territory. GNE shall be free at its
discretion to enter into agreements with additional licensees at any time and
on terms solely of its choosing.
2.02. Right to Appoint Designee. PDL shall have the right to
sublicense all of its rights hereunder for all or part of the Territory
(including on a country-by-country basis) to one or more Designees of its
choosing, provided that PDL agrees that it will indemnify GNE for any failure
of performance on the part of such Designee. An entity that simply acts to
co-promote or to co-market a Licensed Product supplied by PDL shall not be
considered a Designee and PDL may co-promote or co-market such Licensed
Product with such entity in a given country or countries, provided that PDL
shall be responsible for the payment of royalties on Net Sales of Licensed
Products by such entity and for all other acts of such entity as if such acts
were those of the PDL. Promptly following the execution of any sublicense
hereunder, PDL shall notify GNE of the identity of the Designee and the scope
of the sublicense.
2.03. No Other License. PDL understands and agrees that no license
under any patent or application other than Licensed Patents is or shall be
deemed to have been granted under this Agreement, either expressly or by
implication.
2.04 Updates to List of Licensed Patents. A list of all Chimera and
Coexpression Patents is set forth on Exhibit B attached hereto. Exhibit B is
a list of patents and patent applications that GNE in good faith believes
represents the Chimera and Coexpression Patents as of the Effective Date.
Upon written request of PDL (which request shall not be made more than once
per calendar year), GNE agrees to provide a written update listing the
Licensed Patents, and such update shall constitute an amendment to Exhibit B.
GNE may, at its option, furnish such update to PDL from time to time during
the term of this Agreement as part of an update to the Master Agreement.
Article III
FEES AND ROYALTIES
3.01 License Exercise Fee. Within fifteen (15) business days after
the Effective Date of this Agreement, PDL shall pay to GNE a non-creditable,
non-refundable license exercise fee of [One Million United States Dollars (US
$1,000,000) for a license under the Chimera and
Coexpression Patents][ ] for a license under the [Chimera] [Coexpression]
Patents]. [Drafting note: Amount will depend on whether PDL takes a
license under the Chimera Patents, the Coexpression Patents, or both.]
Such amounts shall be increased annually beginning on January 1,
1999 and on each January 1 thereafter by an amount equal to the Consumer
Price Index-U (or its successor) published by the U.S. Bureau of Labor
Statistics ("CPI-U") for the prior year.
3.02. Annual Maintenance Fees. In further consideration of the license
granted in Article II, within fifteen (15) business days of the [ ]
anniversary of the Effective Date and each anniversary thereafter, PDL shall
pay to GNE a nonrefundable annual maintenance fee of [ ] under the license
for the Chimera and Coexpression Patents] [ ] under the license for the
[Chimera] [Coexpression] Patents]. [Drafting note: Amount will depend on
whether PDL takes a license under the Chimera Patents, the Coexpression
Patents, or both.] The annual maintenance fees paid by PDL hereunder shall be
fully creditable against royalties payable for the year with respect to which
such annual maintenance fees are paid.
3.03. Earned Royalties. In further consideration of the rights and
licenses granted under Article II, PDL shall pay to GNE a royalty of [ ]
of Net Sales of Licensed Products sold by PDL, its Affiliates and its
Sublicensees under the Licensed Patents in each country in the Territory until
the later of the last date on which there is a Valid Claim that, but for the
licenses granted to PDL under this Agreement, would be infringed by the
making, using, importation, having made, offering for sale or sale of that
Licensed Product in such country in the Territory or by the manufacture of
Licensed Product in the country of manufacture. [Drafting Note: Include the
following sentence if the licensed Antibody is a bispecific antibody: "If the
Antigen is the target of one arm of a bispecific antibody, then both arms
shall be considered one Licensed Product for purposes of calculating royalties
with respect to such Licensed Product, and PDL shall pay a royalty of [ ]
of Net Sales by PDL, its Affiliates and Designees."]
3.04. Sales To and Between Affiliates, Etc. No royalties shall be due
upon sales of Licensed Products by and between PDL, its Affiliates, its
Designees, co-promoting parties or co-marketing parties as permitted under
Section 2.02; provided, however, that the royalty hereunder shall be payable
upon the final sale of such Licensed Product by any of the foregoing to a non-
Affiliate.
3.05 Royalties to Third Parties. PDL acknowledges and agrees that
other licenses may be required from third parties with respect to the
development, manufacture, importation, use, and sale of any Licensed Product
under this Agreement, and that PDL shall be responsible for any royalties and
other payments with respect to those license rights. In no event shall PDL
have a right to credit against, reduce or otherwise offset any royalty or
payment obligations to such third parties against royalty amounts payable to
GNE under the this Agreement.
Article IV
RECORDS, REPORTS AND PAYMENTS
4.01. Records Retention. PDL shall keep and shall cause its
Sublicensees to keep records of the sales of all Licensed Products in
sufficient detail to permit GNE to confirm the accuracy of PDL's royalty
calculations for a period of at least three (3) years after each reporting
period in which Net Sales occur. At GNE's request and expense not more than
once per year, PDL shall permit an independent certified public accountant
appointed by GNE and acceptable to PDL to examine, upon reasonable notice and
at reasonable times, such records solely to the extent necessary to verify
PDL's calculations. Such examination shall be limited to a period of time no
more than three (3) years immediately preceding the request for examination.
If PDL's royalties are found to be in error such that royalties to GNE were
underpaid then PDL shall promptly pay any deficiency, plus interest at the
prime rate, to GNE and if the deficiency is more than [ ] then PDL shall
reimburse GNE for its costs in examining such records. Any overpayment by PDL
will be promptly corrected by a refund.
4.02. Reports. Within sixty (60) days after the end of each calendar
quarter following PDL's or its Designee's first commercial sale of a Licensed
Product, PDL shall furnish to GNE a written report of all sales of Licensed
Products subject to royalty under Section 3.03 during the calendar quarter
most recently ended, provided that reports with respect to sales by Designees
shall include only those sales for which royalty reports were received by PDL
during such calendar quarter. Such report shall include (i) the determination
of Net Sales as specified in Section 1.11; and (ii) the royalty payment then
due by PDL to GNE. PDL agrees to notify GNE in writing within sixty (60) days
after the date on which PDL, its Affiliates or Sublicensees obtain marketing
approval of a Licensed Product in any country in the Territory. Such notice
shall specify the country in which marketing approval was obtained and the
date of such approval.
4.03 Payments. Concurrently with each report pursuant to Section 4.02,
PDL shall make the royalty payment then due. Payments shall be in United
States dollars and, unless otherwise agreed in writing, shall be made by wire
transfer to such bank as GNE may from time to time designate in writing,
without set-off and free and clear of and without any deduction or withholding
for or on account of any taxes, duties, levies, imposts, fees or charges
except for withholding required by tax authorities for income or withholding
taxes on royalties actually payable to GNE. PDL shall make any withholding
payments due on behalf of GNE and shall promptly provide GNE with official tax
receipts or other written documentation sufficient to enable GNE to satisfy
the United States tax authorities with respect to GNE's application for a
foreign tax credit for such payment. GNE agrees to reasonably cooperate with
PDL in obtaining a refund of any withholding taxes or levies paid by PDL, if
any, with respect to any payments to GNE hereunder. In the event that GNE is
successful in obtaining any refund of tax withholding amounts paid by PDL
under this Agreement, GNE agrees to promptly remit such refund amount to PDL.
PDL shall be liable for interest on any overdue royalties at the rate of ten
percent (10%) per annum, or the highest rate allowed by law, whichever is
less, commencing on the date such royalties are due until paid.
4.04. Currency Conversion. Royalties due on Net Sales of Licensed
Products made in currency other than United States dollars shall first be
calculated in the foreign currency and then converted to United States dollars
using the average of the daily exchange rates for such currency quoted by
Citibank, N.A. for each of the last five (5) banking days of each calendar
quarter.
Article V
LIABILITY, REPRESENTATIONS
5.01. Indemnification. PDL shall defend, indemnify and hold GNE
harmless against any and all liability, damage, loss, cost or expense
resulting from any third party claim, suit or other action arising out of or
based on the manufacture, use or sale of any Licensed Product by PDL, its
Sublicensees or co-promoting or co-marketing entities pursuant to Section
2.02; provided, however, that GNE shall promptly notify PDL of such claim or
action and PDL, at PDL's cost, shall have sole control over the defense,
including any settlement of any claim or action, with full cooperation from
GNE.
5.02. Representations of GNE. GNE represents and warrants to PDL that:
(a) The execution, delivery and performance of this Agreement by
GNE will not, with or without notice, the passage of time or
both, result in any violation of, be in conflict with, or
constitute a default under any material contract, obligation or
commitment to which GNE is a party or by which it is bound, or
to GNE's knowledge, violate any statute, rule or governmental
regulation applicable to GNE.
(b) GNE has all requisite legal and corporate power and authority
to enter into this Agreement on behalf of itself and its
Affiliates and to carry out and perform its obligations under
the terms of this Agreement.
5.03. Representations of PDL. PDL represents and warrants to GNE that:
(a) The execution, delivery and performance of this Agreement by
PDL will not, with or without notice, the passage of time or
both, result in any violation of, be in conflict with, or
constitute a default under any material contract, obligation or
commitment to which PDL is a party or by which it is bound, or
to PDL's knowledge, violate any statute, rule or governmental
regulation applicable to PDL.
(b) PDL has all requisite legal and corporate power and authority
to enter into this Agreement and to carry out and perform its
obligations under the terms of this Agreement.
Article VI
PATENT INFRINGEMENT
6.01. Notification of Infringement. PDL shall promptly notify GNE in
writing of any actual or suspected infringement by third parties of any patent
within the Licensed Patents of which PDL is aware, which notification shall
specify in reasonable detail the nature of such actual or suspected
infringement, and shall provide GNE with the available evidence, if any, of
such infringement.
6.02. Enforcement of Licensed Patents. GNE shall retain the sole
right, at its sole discretion and expense, to enforce Licensed Patents against
third party infringers.
6.03. No Warranty of Non-Infringement. Nothing in this Agreement shall
be construed as a representation made or warranty given by GNE that the
practice by PDL or its Sublicensees of the license granted hereunder will not
infringe the patent rights of any third party.
Article VII
CONFIDENTIALITY
The provisions of Article 9 of the Master Agreement are incorporated by
reference as if set forth in their entirety herein.
Article VIII
TERM AND TERMINATION
8.01. Term. This Agreement shall come into force as of its Effective
Date and shall continue in full force and effect on a country by country
basis, unless earlier terminated as provided herein, until the expiration of
the last to expire of the Licensed Patents.
8.02. Termination for Breach. GNE shall have the right to terminate
this Agreement and the licenses granted hereunder upon thirty (30) days' prior
written prior notice to PDL for PDL's material breach of this Agreement if PDL
has failed to cure such breach within thirty (30) days of notice thereof; it
being understood, however, that if within thirty (30) days after receipt of
any such notice PDL shall have initiated and actively pursued remedy of its
default, then the rights and licenses herein granted shall remain in force as
if no breach or default had occurred on the part of PDL, unless such breach or
default is not in fact remedied within a reasonable period of time. If PDL
disputes the existence of a material breach on its part or the failure to cure
such breach within the period for cure, the provisions for resolution of a
default shall be limited to those set forth in Section 11.6 of the Master
Agreement.
8.03. Insolvency. Either Party may terminate this Agreement if, at any
time, the other Party shall file in any court pursuant to any statute of any
individual state or country, a petition in bankruptcy, insolvency or for
reorganization or for an agreement among creditors or for the appointment of a
receiver or trustee of the Party or of its assets, or if the other Party
proposes a written agreement of composition or extension of its debts, or if
the other Party shall be served with an involuntary petition against it filed
in any insolvency proceeding, and such petition shall not be dismissed within
sixty (60) days after the filing thereof, or if the other Party shall propose
or be a Party to any dissolution or liquidation, or if the other Party shall
make an assignment for the benefit of creditors.
8.04. Termination by PDL. PDL may terminate this Agreement at any time
upon sixty (60) days' prior written notice to GNE.
8.05. Effect of Termination. Termination of this Agreement in whole or
in part for any reason shall not relieve PDL of its obligations to pay all
fees and royalties that shall have accrued hereunder prior to the effective
date of termination. Termination of this Agreement as to PDL shall result in
the termination of the licenses of PDL and all Sublicensees of PDL.
Article IX
MISCELLANEOUS PROVISIONS
9.01. Limitations on Assignments. Neither this Agreement nor any
interests hereunder shall be assignable by either Party without the written
consent of the other; provided, however, that either Party may assign this
Agreement to any corporation or entity with which it may merge or consolidate,
or to which it may transfer substantially all of its assets or all of its
assets to which this Agreement relates without obtaining the consent of the
other Party.
9.02. Jurisdiction and Choice of Laws. This Agreement shall be
interpreted and construed under the laws of California, and PDL agrees to
submit to the jurisdiction of California.
9.03. Disputes. The provisions of Section 11.6 of the Master
Agreement are incorporated by reference as if set forth in their entirety
herein.
9.04. Relationship of the Parties. Nothing in this Agreement is
intended or shall be deemed to constitute a partnership, agency, employer-
employee, or joint venture relationship between the Parties.
9.05. Further Acts and Instruments. Each Party hereto agrees to
execute, acknowledge and deliver such further instruments and to do all such
other acts as may be necessary or appropriate to effect the purpose and intent
of this Agreement.
9.06. Entire Agreement. This Agreement and the Master Agreement,
constitute and contain the entire agreement of the Parties with respect to the
Antigen and supersede any and all prior negotiations, correspondence,
understandings and agreements between the Parties respecting the subject
matter hereof. In the event of any conflict between the terms of this
Agreement and the Master Agreement with respect to the subject matter herein,
the terms of this Agreement shall govern. This Agreement may be amended or
modified or one or more provisions thereof waived only by a written instrument
signed by both of the Parties.
9.07. Severability. If in any jurisdiction any one or more of the
provisions of this Agreement should for any reason be held by any court or
authority having jurisdiction over this Agreement or any of the Parties hereto
to be invalid, illegal or unenforceable, such provision or provisions shall be
validly reformed to as nearly approximate the intent of the Parties as
possible and if unreformable, the Parties shall meet to discuss what steps
should be taken to remedy the situation; in other jurisdictions, this
Agreement shall not be affected.
9.08. Captions. The captions to this Agreement are for convenience
only and are to be of no force or effect in construing and interpreting the
provisions of this Agreement.
9.09. WARRANTIES. The Parties represent and warrant that they have the
power to enter into this agreement. OTHERWISE, THE PARTIES EXPRESSLY DISCLAIM
ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT.
9.10. Notices. Any notice, request, approval or other document
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been sufficiently given when delivered in person,
transmitted by telex, telecopier, telegraph or deposited in the mail, postage
prepaid, for mailing by first class, certified or registered mail, return
receipt
requested, addressed as follows:
If to PDL, addressed to:
Protein Design Labs, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
Facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇
If to GNE, addressed to:
Genentech, Inc.
▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Corporate Secretary
Facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or addresses as may be specified from time to time in
a written notice.
9.11. Wire Transfer of Funds. Unless otherwise specified in writing,
all payments by PDL required hereunder shall be made by wire transfer at the
written direction of GNE.
IN WITNESS WHEREOF, GNE and PDL have caused this Agreement to be
executed by their duly authorized representatives.
PROTEIN DESIGN LABS, INC.
By:
Title:
Date:
GENENTECH, INC.
By:
Title:
Date:
EXHIBIT A
Antigens
Licensed Patents
[Chimera Patents/Coexpression Patents]
[Both Chimera and Coexpression Patents]
EXHIBIT B
Chimera and Coexpression Patents and Patent Applications
Country Appln. Dt Appln. No. Patent No. Patent Date
[ ]
EXHIBIT B
GNE Licensed Patents
The following are patents and patent applications (also known as the "Cabilly
Patents") issued and filed in certain countries in the world and licensed as
part of the GNE Licensed Patents under the Agreement:
Chimera and Coexpression Patents and Patent Applications
Country Appln. Dt Appln. No. Patent No. Patent Date
[ ]
Exhibit C
Form of PDL License Agreement
Confidential Treatment Requested
PDL LICENSE AGREEMENT
between
PROTEIN DESIGN LABS, INC.
and
GENENTECH, INC.
This PDL License Agreement ("Agreement"), effective as of
_____________ ("Effective Date"), is made by and between PROTEIN DESIGN
LABS, INC., a Delaware corporation, having offices at ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (hereinafter "PDL") and GENENTECH, INC., a
Delaware corporation, having offices at ▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇ (hereinafter "GNE").
RECITALS
A. GNE and PDL have entered into a Patent Licensing Master Agreement
effective September __, 1998 (the "Master Agreement"), pursuant to which
GNE may enter into this Agreement with respect to a license under the
"Queen Patents" for GNE's antibody products.
B. The Master Agreement provides GNE with the right to obtain a
nonexclusive, worldwide, royalty-bearing license under the PDL Licensed
Patents 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, the parties agree as
follows:
1. DEFINITIONS
All references to Exhibits, Articles and Sections shall be
references to Exhibits, Articles and Sections of this Agreement. In
addition, except as otherwise expressly provided herein, the following
terms in this Agreement shall have the following meanings:
1.01 "Affiliate" 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 such corporation, or
more than a fifty percent (50%) interest in the decision-making
authority of such other unincorporated business entity; and a
corporation in which the maximum amount of stock permitted by law to be
held by another entity is beneficially owned by such other entity.
Notwithstanding the foregoing, the term "Affiliate" under this Agreement
with respect to GNE shall not include Roche Holdings, Inc., including
its affiliated companies ("Roche"), until assignment of this Agreement
to a member of such enterprise in accordance with Section 8.01.
1.02 "Antibody" means any antibody directed against an Antigen and
shall include, without limitation, monospecific and bispecific
antibodies (but only with respect to the Antigen for a bispecific
antibody); less than full-length antibody forms such as Fv, Fab, and
F(ab')2, single-chain antibodies and antibody conjugates bound to a
toxin, label or other moiety, as well as any and all such constructs
directed against the Antigen.
1.03 "Antigen" means the target molecule:
_________________________________.
1.04 "Bulk Product" means Licensed Product supplied in a form other
than Finished Product which can be converted into Finished Product.
1.05 "Combination Product(s)" means any product containing both a
pharmaceutically active agent or ingredient which constitutes a Licensed
Product and one or more other pharmaceutically active agents or
ingredients which do not constitute Licensed Products.
1.06 "Europe" means the European Patent Convention Member Countries,
including any successor organization and any additional countries that
may join such organization from time to time during the term of this
Agreement.
1.07 "Finished Product(s)" means any and all Licensed Products in
form for use by an end user and not intended for further chemical or
genetic manipulation or transformation.
1.08 "Licensed Product(s)" means an Antibody with respect to which
GNE has either significant marketing rights or has done significant
development (e.g., created, humanized or conducted preclinical or
clinical development), the manufacture, import, use, offer to sell or
sale of which would infringe, if not licensed under this Agreement, a
Valid Claim.
1.09 "Net Sales" means the aggregate gross revenues, whether in cash
or in kind, derived by or payable from or on account of the sale or
other transfer of Finished Products by GNE, Affiliates of GNE, GNE's
sublicensees, Roche or Affiliates of GNE's sublicensees to an
independent third party not an Affiliate of GNE, a sublicensee of GNE,
Roche, or an Affiliate of a sublicensee of GNE, less [ ] to cover
the following: (a) 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, duties or other taxes
imposed on and paid with respect to such sales (excluding income or
franchise taxes of any kind) and (c) outer packing, freight and freight
insurance costs. For all Finished Product(s) used or consumed by others
than GNE, GNE shall be entitled to deduct [ ] from Net Sales in lieu
of all other deductions such as taxes, shipping charges, packing,
allowances and the like prior to calculating royalties due. If GNE or
any of its Affiliates or sublicensees receive non-cash consideration for
any Finished Product sold or otherwise transferred to an independent
third party not Roche or an Affiliate of the seller or transferor, the
fair market value of such non-cash consideration on the date of such
transfer as known to GNE, or as reasonably estimated by GNE if unknown,
shall be included in the definition of Net Sales. Net Sales shall not
include Finished Products provided for bona fide clinical trial,
evaluation, research or development purposes.
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 of the Bulk Product. By way of
example and without limitation, units of Finished Product may be
measured in grams or doses, as appropriate.
The method of calculating Net Sales of materials in form other
than Finished Product or Bulk Product that can be converted into
Finished Product shall be established by good faith discussion between
PDL and GNE prior to the first sale or transfer of any such material by
GNE to a non-Affiliate.
1.10 "Opposition Proceedings" means the legal proceedings at the
European Patent Office ("EPO") initiated against EP patent 451,216B1 and
terminating at the decision (oral and/or written) rendered by the
Opposition Division ("OD") of the EPO, but excluding any proceedings
resulting from the filing of an appeal to the OD's decision.
1.11 "PDL Licensed Patents" means the patents and patent
applications identified on Exhibit A, and including any applications
filed as of the Effective Date in the United States or any foreign
jurisdiction. PDL Licensed Patents shall include U.S. or foreign
patents or patent applications which claim priority to any application
to which a listed U.S. Patent also claims priority. PDL Licensed
Patents shall also include any foreign equivalents, addition,
continuation, continuation-in-part or division of such patents or patent
applications or any substitute applications therefor, any patent issued
with respect to any 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.
[Drafting Note: Update by PDL prior to delivery.]
1.12 "Territory" means either (a) worldwide, or (b) [ ]
1.13 "Valid Claim" means any claim in any PDL Licensed Patents which
claim has neither expired or been disclaimed nor been held invalid or
unenforceable by a court or other body of competent jurisdiction from
which no appeal has been or may be taken.
2. LICENSE
2.01 License Grant. Subject to the fulfillment by GNE of all of the
terms and conditions of this Agreement, PDL hereby grants to GNE and GNE
hereby accepts a nonexclusive license in the Territory under the PDL
Licensed Patents, including the right to grant sublicenses in accordance
with Section 2.02, to make, have made, import, use, offer to sell and
sell Licensed Products in the Territory. PDL shall be free at its
discretion to enter into additional agreements with additional licensees
at any time and on terms solely of its choosing.
2.02 Limitation on Sublicenses; Notification. GNE shall have the
right to grant sublicenses of its rights under Section 2.01 with respect
to Licensed Products, provided that GNE shall grant such sublicenses
only in connection with the assignment or license by GNE to such
sublicensee of the right to use, make, have made, sell or otherwise
transfer the Licensed Products. GNE shall notify PDL of the identity of
the sublicensee and scope of such sublicense promptly following the
grant of a sublicense hereunder. Notwithstanding the assignment or
grant of a sublicense by GNE hereunder, GNE shall remain obligated to
pay all royalties due to PDL with respect to the sale of Licensed
Products by its assignee or sublicensee. In addition, the grant
of any sublicenses under Section 2.01 shall be on terms and conditions
which are subject to and subordinate to the terms of this Agreement and
GNE shall remain fully responsible to PDL for the performance of any and
all such terms by its sublicensees.
2.03 Updates to List of PDL Licensed Patents. Upon written request
of GNE (which request shall not be made more than once per calendar
year), PDL agrees to provide a written update listing the PDL Licensed
Patents, and such update shall constitute an amendment to Exhibit A.
PDL may, at its option, furnish such update to GNE from time to time
during the term of this Agreement as part of an update to the Master
Agreement.
2.04 No Other Rights. GNE acknowledges and agrees that, except for
the license expressly granted under Section 2.01, no rights to any other
PDL patents or patent applications, or to any know-how, trade secrets or
licenses are included in this Agreement or granted by implication,
estoppel or otherwise.
2.05 [ ]
3. PAYMENTS, ROYALTIES, REPORTS
3.01 Signing Fee. In consideration for the license granted by PDL
under Article 2 of this Agreement, GNE shall pay to PDL, within fifteen
(15) business days of the Effective Date of this Agreement, a
nonrefundable signing and licensing fee in the sum of [One Million] [
] United States Dollars (US$ [1,000,000] [ ]), increased annually
beginning on January 1, 1999 and on each January 1 thereafter by an
amount equal to the Consumer Price Index-U (or its successor) published
by the U.S. Bureau of Labor Statistics ("CPI-U") for the prior year. GNE
shall be entitled to deduct from the signing and licensing fee under
this Agreement any amounts not previously credited and subject to credit
under Section 3.03(a). All such deductions shall be documented with any
payments hereunder. [ ]
3.02 Annual Maintenance Fee. In further consideration of the
license granted under Article 2, within fifteen (15) business days of
the [ ] anniversary of the Effective Date and each anniversary
thereafter, GNE shall pay PDL a nonrefundable annual maintenance fee in
the amount of [ ]. Such annual maintenance shall be fully creditable
against royalties payable by GNE for the year with respect to which such
annual maintenance fee is paid. [ ]
3.03 Credits; Reductions. [ ]
3.04 Royalties to PDL. In further consideration of the rights and
licenses granted under Article 2, GNE shall pay to PDL a royalty of [
] of the Net Sales of all GNE Licensed Products sold by GNE or its
Affiliates or sublicensees or Roche in each country in the Territory
until the later of the last date on which there is a Valid Claim that,
but for the licenses granted to GNE under this Agreement, would be
infringed by the making, using, importation, having made or sale of that
Licensed Product in such country in the Territory or by the manufacture
of Licensed Product in the country of manufacture. [Drafting Note:
Include the following sentence if the licensed Antibody is a bispecific
antibody: "If the Antigen is the target of one arm of a bispecific
antibody, then both arms shall be considered one Licensed Product for
purposes of calculating royalties with respect to such Licensed Product,
and GNE shall pay a royalty of [ ] of Net Sales GNE, its Affiliates
or sublicensees or Roche."]
3.05 Sales Among Affiliates. Sales or other transfers of Licensed
Products between and among GNE and any of its Affiliates, its
sublicensees or Roche which are subsequently resold or to be resold by
such Affiliates, sublicensees or Roche shall not be subject to royalty,
but in such cases royalties shall accrue and be calculated on any
subsequent sale or other transfer of such Licensed Products to a non-
Affiliate.
3.06 Combination Products. Net Sales in a particular country in the
Territory, in the case of Combination Products for which the
pharmaceutically active agent or ingredient constituting a Licensed
Product and each of the other pharmaceutically active agents or
ingredients not constituting Licensed Products have established market
prices in that country in the Territory when sold separately, shall be
determined by multiplying the Net Sales for each such Combination
Product by a fraction, the numerator of which shall be the established
market price for the Finished Product(s) contained in the Combination
Product and the denominator of which shall be the sum of the established
market prices for the Finished Product(s) plus the established market
prices for the other pharmaceutically active agents or ingredients
contained in the Combination Product. When such separate market prices
are not established in that country in the Territory, then the parties
shall negotiate in good faith to determine a fair and equitable method
of calculating Net Sales in that country for the Combination Product in
question.
3.07 Currency Conversion. All amounts payable to PDL under this
Agreement shall be payable in U.S. Dollars by wire transfer to a bank
account designated by PDL. In the case of royalties on Net Sales, all
amounts payable shall first be calculated in the currency of sale and
then converted into U.S. Dollars using the average of the daily exchange
rates for such currency quoted by Citibank, N.A. for each of the last
five (5) banking days of each calendar quarter.
3.08 Reports.
(a) Current Reports. GNE agrees to make written reports and royalty
payments to PDL within sixty (60) days after the close of each calendar
quarter during the term of this Agreement, beginning with the calendar
quarter in which the date of first commercial sale or other transfer of
a Licensed Product by GNE, its Affiliates. Sublicensees or Roche,
provided that reports with respect to sales by sublicensees or Roche
shall include only those sales as to which royalty reports were received
by GNE during such calendar quarter. These reports shall be certified
by an officer of GNE and shall state for the calendar quarter in
question: (1) Identification on a country-by-country basis of the
Licensed Product, (2) Net Sales in the Territory, (3) the quantities of
Licensed Products sold or manufactured in such quarter in the Territory,
(4) applicable offsets and (5) the net royalty due to PDL thereon
pursuant to this Article 3. No later than at the time of the making of
each such report, GNE shall make any payment due to PDL of royalties for
the period covered by such report.
(b) Termination Report. For each Licensed Product, GNE also agrees
to make a written report to PDL within ninety (90) days after the date
on which GNE, its Affiliates or sublicensees last sell or otherwise
transfer that Licensed Product in the Territory stating in such report
the same information required by quarterly reports for all such Licensed
Products made, sold or otherwise disposed of which were not previously
reported to PDL.
(c) Notification of Marketing Approval. GNE agrees to notify
PDL in writing within sixty (60) days after the date on which GNE,
its Affiliates or sublicensees or Roche obtain marketing approval of
a Licensed Product in any country in the Territory. Such notice
shall specify the country in which marketing approval was obtained
and the date of such approval.
3.09 Inspection. GNE agrees to keep, and to require any of its
Affiliates or sublicensees to keep, clear, accurate and complete records
for a period of at least three (3) years for each reporting period in
which Net Sales occur showing the sales of Licensed Products in the
Territory in sufficient detail to enable the royalties payable hereunder
to be determined, and further agrees to permit its books and records,
and to require any of its Affiliates or sublicensees to permit their
books and records, to be examined by an independent accounting firm
selected by PDL and reasonably satisfactory to GNE from time-to-time,
but not more than once a year. Such examination is to be made at the
expense of PDL, except in the event that the results of the audit reveal
that GNE underpaid PDL by [ ] or more, then GNE shall pay any
deficiency plus interest for such overdue royalties in accordance with
Section 3.11 hereof, and the audit fees shall be paid by GNE. Any such
discrepancies will be promptly corrected by a payment or refund, as
appropriate.
3.10 Withholding.
(a) Fees. The amounts payable under Sections 3.01 and 3.02 shall
represent the actual proceeds to be received by PDL, net of any
withholding or other taxes or levies that may be applicable to such
payments. PDL agrees to reasonably cooperate with GNE in obtaining a
refund of any withholding taxes or levies paid by GNE, if any, with
respect to any payments to PDL hereunder. In the event that PDL is
successful in obtaining any refund of tax withholding amounts paid by
GNE under this Agreement, PDL agrees to promptly remit such refund
amount to GNE.
(b) Royalty Payments. GNE may withhold from royalties due to PDL
amounts for payment of any income or withholding tax that GNE has
actually paid to any taxing authority with respect to royalty amounts
due to PDL hereunder in the Territory. GNE shall promptly provide PDL
with official tax receipts or other documentation sufficient to enable
PDL to satisfy U.S. tax authorities with respect to PDL's application
for a for-tax credit. GNE agrees to reasonably cooperate with PDL in
obtaining a foreign tax credit in the U.S. with respect to royalties due
to PDL on the sale or manufacture of Licensed Products.
3.11 Interest on Overdue Royalties. GNE shall be liable for interest
on any overdue royalties, at the rate of ten percent (10%) per annum, or
the highest rate allowed by law, whichever is less, commencing on the
date such royalties are due until paid.
3.12 Royalties to Third Parties. GNE acknowledges and agrees that
other licenses may be required from third parties with respect to the
development, manufacture, importation, use, and sale of any Licensed
Product under this Agreement, and that GNE shall be responsible for any
royalties and other payments with respect to those license rights. In
no event shall GNE have a right to credit against, reduce or otherwise
offset any royalty or payment obligations to such third parties against
royalty amounts payable to PDL under the this Agreement.
4. INFRINGEMENT OF PDL LICENSED PATENTS
4.01 Suits. PDL shall have no obligation hereunder to institute any
action, suit or other proceeding against third parties for infringement
of any PDL Licensed Patents or to defend any action, suit or proceeding
brought by a third party which challenges or concerns the validity or
enforceability of any PDL Licensed Patents in the Territory. Any monies
recovered from alleged infringers shall be retained by PDL.
4.02 Notification of Third Party Infringements. GNE shall promptly
notify PDL in writing of any actual or suspected infringement by third
parties of any PDL Licensed Patent, which notification shall specify in
reasonable detail the nature of such actual or suspected infringement of
which GNE is aware and shall provide PDL with the available evidence, if
any of such infringement.
5. REPRESENTATIONS AND WARRANTIES; DISCLAIMERS;
INDEMNIFICATION
5.01 Representations of GNE. GNE represents and warrants to PDL
that:
(a) The execution, delivery and performance of this Agreement by GNE
will not, with or without notice, the passage of time or both, result
in any violation of, be in conflict with, or constitute a default
under any material contract, obligation or commitment to which GNE is
a party or by which it is bound, or to GNE's knowledge, violate any
statute, rule or governmental regulation applicable to GNE.
(b) GNE has all requisite legal and corporate power and authority to
enter into this Agreement on behalf of itself and its Affiliates and
to carry out and perform its obligations under the terms of this
Agreement.
5.02 Representations of PDL. PDL represents and warrants to GNE
that:
(a) The execution, delivery and performance of this Agreement by PDL
will not, with or without notice, the passage of time or both, result
in any violation of, be in conflict with, or constitute a default
under any material contract, obligation or commitment to which PDL is
a party or by which it is bound, or to PDL's knowledge, violate any
statute, rule or governmental regulation applicable to PDL.
(b) PDL has all requisite legal and corporate power and authority to
enter into this Agreement and to carry out and perform its
obligations under the terms of this Agreement.
5.03 Disclaimers. Nothing in this Agreement shall be construed as
(a) a warranty or representation by PDL as to the validity,
enforceability or scope of any PDL Licensed Patents; (b) a requirement
that PDL file any patent application, or to secure any patent or patent
rights, or maintain any patent in force, or to provide copies of patent
applications to GNE or its Affiliates or sublicensees, or to disclose
any inventions described or claimed in such patent applications; or (c)
a warranty or representation by PDL that any Licensed Product made,
used, imported, sold or otherwise disposed of under the license granted
in this Agreement is or will be free from infringement of patents,
copyrights, trademarks, trade secrets or other rights of third parties.
GNE acknowledges and agrees that any royalties or payments that may be
due to third parties in order for GNE to make, have made, import, use,
sell or otherwise dispose of Licensed Products shall be the sole
responsibility of GNE.
5.04 No Other Warranties. EXCEPT AS SPECIFICALLY SET FORTH IN
ARTICLE 5, PDL MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND,
EITHER EXPRESS OR IMPLIED, WITH RESPECT TO PDL LICENSED PATENTS OR ANY
CELL LINES, ANTIBODIES OR LICENSED PRODUCTS DEVELOPED BY GNE UNDER THE
LICENSE SET FORTH IN THIS AGREEMENT AND PDL FURTHER MAKES NO EXPRESS OR
IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, OR THAT THE USE OF OR PRACTICE UNDER PDL LICENSED PATENTS OR
ANY CELL LINES, ANTIBODIES, LICENSED PRODUCTS OR OTHER MATERIALS
DEVELOPED BY GNE UNDER THE LICENSE SET FORTH IN THIS AGREEMENT WILL NOT
INFRINGE ANY THIRD PARTY RIGHTS.
5.05 Indemnification. GNE shall at all times, during the term of
this Agreement and thereafter, indemnify and hold harmless PDL and its
Affiliates, sublicensees, directors, officers, agents and employees from
any claim, proceeding, loss, expense, and liability of any kind
whatsoever (including but not limited to those resulting from death,
personal injury, illness or property damage and including legal expenses
and reasonable attorneys' fees) arising out of or resulting from (a) any
claim of patent infringement (direct or contributory) or inducing patent
infringement with respect to the activities of GNE or its Affiliates or
sublicensees, and (b) the development, manufacture, holding, use,
testing, advertisement, sale or other disposition by GNE, its Affiliates
or sublicensees, or any distributor, customer or representative thereof
or any one in privity therewith, of any Licensed Product; provided,
however, that PDL shall promptly notify GNE of such claim, proceeding,
loss, expense or liability and GNE, at GNE's cost, shall have sole
control over the defense, including settlement of any claim or action,
with full cooperation from PDL.
6. CONFIDENTIALITY
The provisions of Article 9 of the Master Agreement are incorporated
by reference as if set forth in their entirety herein.
7. TERM AND TERMINATION
7.01 Term. Unless earlier terminated as provided in this Article 7,
this Agreement shall come into force on the Effective Date and shall
continue until the last to expire of the PDL Licensed Patents.
Thereafter, this Agreement shall terminate and all licenses or
sublicenses granted hereunder shall become fully-paid licenses.
7.02 Termination.
(a) This Agreement may be terminated on sixty (60) days prior
written notice by GNE.
(b) If GNE shall at any time default in the payment of any royalty,
or the making of any report hereunder, or shall commit any material
breach of any covenant or agreement herein contained or shall make any
false report, and shall fail to have initiated and actively pursued
remedy of any such default or breach within thirty (30) days after
receipt of written notice thereof by the other party, PDL may, at its
option, cancel this Agreement and revoke any rights and licenses herein
granted and directly affected by the default or breach by notice in
writing to such effect, but such act shall not prejudice PDL's rights to
recover any royalty or other sums due at the time of such cancellation,
it being understood, however, that if within thirty (30) days after
receipt of any such notice GNE shall have initiated and actively pursued
remedy of its default, then the rights and licenses herein granted shall
remain in force as if no breach or default had occurred on the part of
GNE, unless such breach or default is not in fact remedied within a
reasonable period of time. If GNE disputes the existence of a default
or material breach or making a false report or the failure to pursue a
remedy or to remedy the default or breach, the provisions for resolution
of a default shall be limited to those set forth in Section 11.6 of the
Master Agreement.
(c) This Agreement may be terminated by either party upon the
occurrence of any of the following which is not stayed or vacated within
sixty (60) days of such occurrence: (i) petition in bankruptcy filed by
or against the other party; (ii) adjudication of the other party as
bankrupt or insolvent; (iii) appointment of a liquidator, receiver or
trustee for all or a substantial part of the other party's property; or
(iv) an assignment for the benefit of creditors of the other party.
(d) With the exception of GNE's participation in the Opposition
Proceedings, in the event that GNE challenges a PDL Licensed Patent in
any country the license granted under this Agreement may be terminated
by PDL, to the extent permitted under applicable law, upon thirty (30)
days prior written notice and the Territory shall exclude a license in
such country effective as of the date of PDL's written notice.
7.03 No Waiver. The right of either party to terminate this
Agreement as provided herein shall not be affected in any way by its
waiver of any previous failure to perform hereunder or by its failure to
take action with respect thereto.
7.04 Survival. Termination for any reason hereunder shall not affect
any accrued rights or obligations of the parties arising in any manner
under this Agreement as of the date of termination. In any event, the
rights and obligations, including without limitation any accrued payment
obligations, under Articles 3, 5 and 6 shall survive any termination of
this Agreement.
8. MISCELLANEOUS
8.01 Assignment. This Agreement may not be assigned by either party
without the prior written consent of the other, except that either may
assign this Agreement without consent to a party which acquires all or
substantially all of that portion of the business to which this
Agreement pertains, whether by merger, sale of assets or otherwise. A
merger or consolidation shall be deemed to constitute an assignment.
8.02 Disputes. The provisions of Section 11.6 of the Master
Agreement are incorporated by reference as if set forth in their
entirety herein.
8.03 Severability. If any provision of this Agreement is declared
invalid by a court of law resort or by any court, the decision of which
an appeal is not taken within the time provided by law, then and in such
event, this Agreement will be deemed to have been terminated only as to
the portion thereof which relates to the provision invalidated by that
decision and only in the relevant jurisdiction, but this Agreement, in
all other respects and all other jurisdictions, will remain in force;
provided, however, that if the provision so invalidated is essential to
the Agreement as a whole, then the parties shall negotiate in good faith
to amend the terms hereof as nearly as practical to carry out the
original interest of the parties, and, failing such amendment, either
party may submit the matter to a court of competent jurisdiction for
resolution.
8.04 Notices. Any notice or report required or permitted to be given
under this Agreement shall be in writing and shall be sent by expedited
delivery or telecopied and confirmed by mailing as follows (or to such
other address as may be specified in writing) and shall be effective
three (3) days after such delivery:
If to PDL: Protein Design Labs, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇
Attention: General Counsel
Facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇
If to GNE: Genentech, Inc.
▇ ▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
Attn: Corporate Secretary
Facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇
8.05 Choice of Law. The validity, performance, construction, and
effect of this Agreement shall be governed by the laws of the State of
California which are applicable to contracts between California
residents to be performed wholly within California.
8.06 Waiver. None of the terms, covenants and conditions of this
Agreement can be waived except by the written consent of the party
waiving compliance.
8.07 Force Majeure. Neither party shall be responsible to the other
for failure or delay in performing any of its obligations under this
Agreement or for other non-performance hereof provided that such delay
or non-performance is occasioned by a cause beyond the reasonable -
control and without fault or negligence of such party, including, but
not limited to earthquake, fire, flood, explosion, discontinuity in the
supply of power, court order or governmental interference, act of God,
strike or other labor trouble and provided that such party will inform
the other party as soon as is reasonably practicable and that it will
entirely perform its obligations immediately after the relevant cause
has ceased its effect.
8.08 Headings. The captions used herein are inserted for convenience
of reference only and shall not be construed to create obligations,
benefits, or limitations.
8.09 Entire Agreement. This Agreement and the Master Agreement
constitute the entire Agreement between the parties hereto with respect
to the Antigen and supersede all previous Agreements, whether written or
oral. In the event of any conflict between the terms of this Agreement
and the Master Agreement with respect to the subject matter herein, the
terms of this Agreement shall govern. This Agreement shall not be
changed or modified orally, but only by an instrument in writing signed
by both parties.
8.10 Counterparts. This Agreement may be executed in counterparts,
all of which taken together shall be regarded as one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
PROTEIN DESIGN LABS, INC. GENENTECH, INC.
By: By:
Title:______________________ Title:______________________
Confidential Treatment Requested
Exhibit A
PDL Licensed Patents
The following are patents and patent applications (also known as the
"Queen Patents") issued and filed in certain countries in the world and
licensed as part of the PDL Licensed Patents under the Agreement:
1. The following issued U.S. patents and U.S. patent applications:
No. 5,693,089, "Humanized Immunoglobulins," issued December 17,
1996.
No. 5,693,761, "Polynucleotides Encoding Improved Humanized
Immunoglobulins," issued December 2, 1997.
No. 5,693,762, "Humanized Immunoglobulins," issued December 2,
1997.
[ ]
2. The following foreign patents and patent applications (as of August
1998):
Patent No. Country Title*
Issued 647383 Australia "Novel Immunoglobulins,
Their Production and Use"
Issued 0451216 Austria "
Issued 0451216 Belgium "
Issued ▇▇▇▇▇▇ ▇▇▇▇▇▇ "
Issued ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ "
Issued ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ "
Issued ▇▇▇▇▇▇▇▇▇ France "
Issued GB 0451216 Great Britain "
Issued 1001050 Greece "
Issued ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ "
Issued IT O451216 Italy "
Issued LU O451216 Luxembourg "
Issued 92.2146 Monaco "
Issued NL 0451216 Netherlands "
Issued 231984 New Zealand "
Issued ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ "
Issued ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ "
Issued ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ "
Issued ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ "
Issued ▇▇/▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ "
Issued 2081974 T3 Spain "
Issued SE O451216 Sweden "
Issued CHO ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ "
Issued ▇▇▇▇▇ ▇▇▇▇▇▇ "
[ ]
Issued 671949 Australia "Humanized Immunoglobulins,
Their Production and Use"
Issued 0451 216B1 European "
[ ]
*Exact titles may differ in different countries.
Exhibit D
PDL Licensed Patents
The following are patents and patent applications (also known as the
"Queen patents") issued and filed in certain countries in the world and
licensed as part of the PDL Licensed Patents under the Agreement:
1. The following issued U.S. patents and U.S. patent applications:
No. 5,693,089, "Humanized Immunoglobulins," issued December 17,
1996.
No. 5,693,761, "Polynucleotides Encoding Improved Humanized
Immunoglobulins," issued December 2, 1997.
No. 5,693,762, "Humanized Immunoglobulins," issued December 2,
1997.
[ ]
2. The following foreign patents and patent applications (as of August
1998):
Patent No. Country Title*
Issued 647383 Australia "Novel Immunoglobulins,
Their Production and Use"
Issued 0451216 Austria "
Issued 0451216 Belgium "
Issued ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ "
Issued ▇▇▇▇▇▇ ▇▇▇▇▇▇ "
Issued ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ "
Issued ▇▇▇▇▇▇▇▇▇ France "
Issued GB 0451216 Great Britain "
Issued 1001050 Greece "
Issued ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ "
Issued IT O451216 Italy "
Issued LU O451216 Luxembourg "
Issued 92.2146 Monaco "
Issued NL 0451216 Netherlands "
Issued 231984 New Zealand "
Issued ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ "
Issued ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ "
Issued ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ "
Issued ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ "
Issued ▇▇/▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ "
Issued 2081974 T3 Spain "
Issued SE O451216 Sweden "
Issued CHO ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ "
Issued ▇▇▇▇▇ ▇▇▇▇▇▇ "
[ ]
Issued 671949 Australia "Humanized Immunoglobulins,
Their Production and Use"
Issued 0451 216B1 European "
[ ]
Exhibit E
Form of Press Release
For Immediate Release
Contacts:
Protein Design Labs, Inc.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D.
Vice President, Business Development and
Corporate Communications
▇▇▇-▇▇▇-▇▇▇▇
Genentech, Inc.
▇▇▇▇▇ ▇▇▇▇▇ (media contact)
▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ (investor contact)
▇▇▇-▇▇▇-▇▇▇▇
PROTEIN DESIGN LABS AND GENENTECH ANNOUNCE AGREEMENT FOR ANTIBODY
PATENTS
Fremont, CA and South San Francisco, CA [September 28, 1998]
Protein Design Labs, Inc. (PDL) (Nasdaq: PDLI) and Genentech, Inc.
(NYSE: GNE) today announced an innovative agreement to cross-license
rights to certain intellectual property in the field of monoclonal
antibodies. Under the agreement, Genentech will pay a $6.0 million
upfront, non-creditable, non-refundable fee to PDL, and PDL will pay
Genentech a $1.0 million upfront, non-creditable, non-refundable fee,
for rights to license particular antibodies under specified patents and
patent applications held by the other company.
"This unique agreement between two leading biotechnology companies
demonstrates that intellectual property rights can be used in a positive
manner in the competitive pharmaceutical environment," said ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, Ph.D., Genentech President and Chief Executive Officer, and
▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, Ph.D, PDL Chief Executive Officer and Chairperson, in
a joint statement. "Rather than create new obstacles, our agreement
addresses potential proprietary rights issues and allows each company to
pursue development of new products to meet important medical needs."
PDL has U.S. and European patents and patent applications which it
believes cover most humanized antibodies and has granted licenses under
its patents to numerous pharmaceutical and biotechnology companies.
Genentech has patents and patent applications in the U.S. and elsewhere
which it believes cover the expression of recombinant antibodies and
certain chimeric and humanized antibodies, and also has issued licenses
under these patents and patent applications to numerous other companies.
Under the agreement, Genentech and PDL each may obtain nonexclusive
licenses under the other company's relevant patents or applications upon
payment of a license fee of at least $1.0 million per antibody. Licensed
antibodies will bear royalties on sales, if any. Initially, each
company may select up to six antibodies. The number of licensed
antibodies and the term of the agreement may be increased for additional
fees.
Genentech has several monoclonal antibodies in its development
portfolio. Herceptin[R] (trastuzumab), Genentech's humanized anti-HER2
antibody for the treatment of breast cancer, was recently recommended
for approval by a U.S. Food and Drug Administration advisory committee.
Other humanized antibodies in clinical development at Genentech include
anti-IgE for allergic asthma and allergic rhinitis (Phase III), anti-
VEGF for cancer (Phase II), anti-CD18 for acute myocardial infarction
(Phase II), and anti-CD11a for psoriasis (Phase II).
PDL antibodies in clinical development include ▇▇▇▇▇▇ (humanized) Anti-
CD3 for transplantation and autoimmune disease (Phase I), OstavirT for
chronic hepatitis B (Phase IIa) and SMART M195 for myeloid leukemias
(Phase II/III). Zenapax[R] (daclizumab), a humanized antibody created by
PDL, is currently marketed in the U.S. and several other countries by
PDL corporate partner ▇▇▇▇▇▇▇▇-▇▇ ▇▇▇▇▇ Inc. and affiliates (Roche) for
the prophylaxis of acute organ rejection in patients receiving renal
transplants. PDL receives royalties on Zenapax sales. Independently from
this agreement, Roche has obtained a royalty-free license from Genentech
under certain patents for Zenapax.
Genentech, Inc. is a leading biotechnology company that discovers,
develops, manufactures and markets human pharmaceuticals for significant
unmet medical needs. Eleven of the currently marketed biotechnology
products stem from Genentech science, six of which Genentech markets
directly in the U.S.
Protein Design Labs, Inc. is a leader in the development of
humanized and human antibodies to prevent or treat various disease
conditions. PDL currently has antibodies under development in the areas
of transplantation, autoimmunity and inflammatory conditions, cancer and
infectious disease. PDL also has a program to develop novel
antimicrobial agents based on the identification of microbial genes
expressed when microbes infect a host.
Protein Design Labs, SMART, Ostavir and the PDL logo are registered U.S.
trademarks of Protein Design Labs, Inc. Herceptin is a registered U.S.
trademark of Genentech, Inc. Zenapax is a registered U.S. trademark of
▇▇▇▇▇▇▇▇-▇▇ ▇▇▇▇▇ Inc.
