Exhibit 10.3

 

Tax Sharing and Indemnification Agreement

 

THIS TAX SHARING AND INDEMNIFICATION AGREEMENT (this “Agreement”) dated as of
December 18, 2008 (the “Distribution Date”), is entered into by and between PDL
BioPharma, Inc., a Delaware corporation (“PDL”), and Facet Biotech Corporation,
a Delaware corporation (“Facet”) (each a “Party” and collectively, the
“Parties”). Capitalized terms not defined herein shall have the meaning set
forth in the Separation Agreement.

 

Recitals

 

WHEREAS, PDL and Facet have entered into a Separation and Distribution
Agreement, dated as of December 17, 2008, (the “Separation Agreement”), relating
to the separation by PDL of the PDL Business and the Facet Business (as defined
below) into PDL and Facet, respectively.

 

WHEREAS, prior to the separation, PDL will (i) transfer the Facet Assets (as
defined below) and Facet Employees (as defined below) to Facet and Facet will
assume the Facet Liabilities (as defined below) (the “Contribution”), and
(ii) distribute on a pro rata basis all of the issued and outstanding shares of
common stock of Facet to the holders of PDL common stock (the “Distribution”).

 

WHEREAS, in connection with the Contribution and the Distribution, the Parties
wish to provide for the payment of Taxes (as defined below) and entitlement to
refunds thereof, allocate responsibility and provide for cooperation in
connection with the filing of returns in respect of Taxes, and provide for
certain other matters relating to Taxes.

 

NOW, THEREFORE, in consideration of the foregoing and the terms, conditions,
covenants and provisions of this Agreement, PDL and Facet mutually covenant and
agree as follows:

 

Article I

 

Definitions

 

1.1           “Code” means the U.S. Internal Revenue Code of 1986, as amended.

 

1.2           “Contribution” shall have the meaning the meaning set forth in the
recitals hereto.

 

1.3           “Distribution Date” shall have the meaning set forth in
Section 1.13 of the Separation Agreement.

 

1.4           “Distribution” shall have the meaning set forth in the recitals
hereto.

 

1.5           “Facet” shall have the meaning set forth in the preamble hereto.

 

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1.6           “Facet Assets” shall have the meaning set forth in Section 1.22 of
the Separation Agreement.

 

1.7           “Facet Business” shall have the meaning set forth in Section 1.24
of the Separation Agreement.

 

1.8           “Facet Employees” shall have the meaning set forth in Section 1.25
of the Separation Agreement.

 

1.9           “Facet Indemnitees” shall have the meaning set forth in
Section 3.1 of this Agreement.

 

1.10         “Facet Liabilities” shall have the meaning set forth in
Section 1.26 of the Separation Agreement.

 

1.11         “Facet U.S. Subsidiaries” shall mean Fremont Management, Inc. and
Fremont Holdings, LLC. For clarity, Fremont Management, Inc. is a member of the
PDL Consolidated Group prior to the Distribution.

 

1.12         “Final Determination” means any final determination of a liability
in respect of Taxes that, under applicable Tax Law, is no longer subject to
further appeal, review or modification through proceedings or otherwise
(including the expiration of the statute of limitations or a period for the
filing of claims for refunds, amended Tax Returns or appeals from adverse
determinations).

 

1.13         “Indemnitee” means any Person entitled to indemnification pursuant
to the provisions of this Agreement.

 

1.14         “Indemnifying Party” means any Party required to provide
indemnification pursuant to the provisions of this Agreement.

 

1.15         “IRS” means the U.S. Internal Revenue Service or any successor
thereto, including its agents, representatives, and attorneys.

 

1.16         “Law” shall have the meaning set forth in Section 1.41 of the
Separation Agreement.

 

1.17         “Party” shall have the meaning set forth in the preamble hereto.

 

1.18         “PDL” shall have the meaning set forth in the preamble hereto.

 

1.19         “PDL Consolidated Group” means PDL and, with respect to the federal
Taxes, the other members of the affiliated group of corporations (within the
meaning of Section 1504(a) of the Code) of which PDL is the common parent, and
with respect to state or local Taxes, any other corporations with which PDL
filed or files a consolidated, combined or unitary Tax Return with PDL as the
common parent.

 

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1.20         “PDL Consolidated Return Period” means a taxable period that ends
on or before, or includes, the Distribution Date for which a consolidated,
combined or unitary (as applicable) federal, state or local Tax Return is filed
or required to be filed by the PDL Consolidated Group.

 

1.21         “PDL France” shall have the meaning set forth in Section 2.1(a) of
this Agreement.

 

1.22         “PDL Indemnitees” shall have the meaning set forth in Section 3.2
of this Agreement.

 

1.23         “PDL Returns” shall have the meaning set forth in Section 2.1(a) of
this Agreement.

 

1.24         “PDL Tax Liability” means the consolidated, combined or unitary Tax
Liability of the PDL Consolidated Group.

 

1.25         “Person” means any individual, partnership, joint venture, limited
liability company, corporation, association, joint stock company, trust,
unincorporated organization or similar entity or a governmental authority or any
department or agency or other unit thereof.

 

1.26         “Post-Distribution Taxable Period” means a taxable period (and in
the case of a Straddle Period, the portion of a taxable period) that, to the
extent it relates to Facet and its Subsidiaries, begins after midnight on the
Distribution Date.

 

1.27         “Pre-Distribution Taxable Period” means a taxable period (and in
the case of a Straddle Period, the portion of a taxable period) ending on or
before midnight on the Distribution Date.

 

1.28         “Proceeding” means any audit or other examination, judicial or
administrative proceeding relating to liability for, or Refunds or adjustments
with respect to, Taxes.

 

1.29         “Refund” means any refund of Taxes, including any reduction in Tax
Liabilities by means of a credit, offset, use of an overpayment or otherwise.

 

1.30         “Straddle Period” means any taxable period that begins on or before
and ends after the Distribution Date.

 

1.31         “Subsidiary” shall have the meaning set forth in Section 1.61 of
the Separation Agreement.

 

1.32         “Tax” means any tax, charge, fee, impost, levy or other assessment
imposed by any federal, state, local or foreign Taxing Authority, including
income, gross receipts, excise, property, sales, use, license, capital stock,
transfer, franchise, payroll, withholding, social security, value added and
other taxes, and any interest, penalties or additions attributable thereto.

 

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1.33         “Tax Item” means any item of income, gain, loss, deduction or
credit or other attribute that may have the effect of increasing or decreasing
any Tax.

 

1.34         “Tax Liability” means all liabilities for Taxes.

 

1.35         “Tax Return” means any return, report, certificate, filing,
statement, questionnaire, declaration, form or similar statement or document
(including any related or supporting information or schedule attached thereto
and any information return, amended tax return, claim for refund or declaration
of estimated tax) required to be supplied to, or filed with, a Taxing Authority
or jurisdiction (foreign or domestic) in connection with the determination,
assessment or collection of any Tax or the administration of any Laws,
regulations or administrative requirements relating to any Tax.

 

1.36         “Taxing Authority” means any governmental authority or any
subdivision, agency, commission or authority thereof or any quasi-governmental
or private body, whether domestic or foreign, having jurisdiction over the
assessment, determination, collection or imposition of any Tax (including the
IRS).

 

1.37         “Treasury Regulation” means the final and temporary (but not
proposed) income tax regulations promulgated under the Code, as such regulations
may be amended from time to time (including corresponding provisions of
succeeding regulations).

 

Article II

 

Preparation and Filing of Tax Returns; Payment of Tax

 

2.1           Tax Returns of PDL.

 

(a)           Except as provided herein, PDL shall have sole and exclusive
responsibility for the preparation and filing, on a timely basis of all Tax
Returns (the “PDL Returns”) for any taxable period that ends on or before the
Distribution Date as are required to be filed of (i) PDL, which, for the
avoidance of doubt, includes the Facet Business prior to the Distribution Date,
(ii) each member of the PDL Consolidated Group and (iii) PDL BioPharma France
S.A.S. (“PDL France”). PDL shall have the right to: determine the manner in
which all such returns shall be filed; make any elections in connection with any
such returns; contest, compromise and settle any adjustments of deficiency
proposed, asserted or assessed in connection with any such returns; file,
pursue, compromise or settle any claim for refund; and determine whether any
refunds to which PDL is entitled shall be paid by way of a refund or credit.

 

(b)           To the extent an election, return position, or amendment to a Tax
Return filed by PDL or a member of the PDL Consolidated Group relates to an item
of income, gain, loss or deduction of Facet, the Facet Business or PDL France
accruing in a Post-Distribution Taxable Period, Facet and PDL shall cooperate
with each other reasonably and in good faith to determine a mutually acceptable
election, return position, or amendment to such Tax Return. Notwithstanding the
foregoing, if such election, return position, or amendment to such Tax Return
solely affects Facet, the Facet Business

 

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or PDL France, such election, return position, or amendment to such Tax Return
shall be determined by Facet in its sole discretion, reasonably and in good
faith.

 

(c)           Facet shall prepare and file all Tax Returns for all Straddle
Periods (i) of PDL France and (ii) that include solely Facet or the Facet
Business. PDL and Facet shall execute such consents, elections and other
documents as may be required to provide for the proper filing of each Tax Return
relating to a Straddle Period.

 

2.2           Tax Liability.

 

(a)           PDL shall be liable for all Taxes due in respect of all PDL
Returns and all Taxes imposed on or with respect to PDL or any of its
Subsidiaries (including Facet, the Facet Business, the Facet U.S. Subsidiaries
and PDL France) for all Pre-Distribution Taxable Periods.

 

(b)           Facet shall be liable for all Taxes of Facet, PDL France, the
Facet U.S. Subsidiaries or relating to the Facet Business due in respect of all
Post-Distribution Taxable Periods.

 

(c)           For purposes of this Section 2.2, any Tax Liability for a Straddle
Period shall be apportioned between the portion of the taxable period ending on
the Distribution Date and the portion of the taxable period beginning after the
Distribution Date. Such apportionments shall be made on a per diem basis for
(i) real and personal property Taxes and similar Taxes, including Taxes based on
net-worth capital, intangibles or similar items, and (ii) exemptions, allowances
or deductions that are calculated on an annual basis (such as the deduction for
depreciation). Such apportionment shall be made for all other Taxes on the basis
of a “closing of the books” as of the end of the day of the Distribution Date.

 

Article III

 

Indemnification for Taxes

 

3.1           Indemnification by PDL. Except as otherwise provided in this
Article III, PDL shall indemnify and hold Facet, the Facet U.S. Subsidiaries and
PDL France and their successors and assigns (collectively, the “Facet
Indemnitees”) harmless from and against (i) the PDL Tax Liability, including any
Taxes that are imposed on PDL, any member of the PDL Consolidated Group, Facet
or PDL France as a result (in whole or in part) of the Contribution or
Distribution, (ii) any Tax Liability for Taxes as a result of Treasury
Regulation Section 1.1502-6 or any analogous or similar provision under state or
local Law or regulation, of any Person which is or has ever been a member of the
PDL Consolidated Group, (iii) all Tax Liabilities that PDL is required to pay
under Article II hereof and (iv) any costs and expenses related to any of the
foregoing (including reasonable legal, accounting, appraisal, consulting or
similar fees and expenses), provided, however, that this Section 3.1 shall not
apply to any portion of the Tax Liability of Facet described in Section 3.2. For
the avoidance of doubt, PDL shall not be required to indemnify or otherwise
compensate Facet for any net operating losses, credits, refunds, deductions,
depreciation, amortization, allowance or other tax items accrued by Facet or

 

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the Facet Business in the Pre- Distribution Taxable Period whether or not such
tax item is used to reduce or offset a Tax Liability of PDL.

 

3.2           Indemnification by Facet. Except as otherwise provided in this
Article III, Facet shall indemnify and hold each member of the PDL Consolidated
Group (other than Facet and the Facet U.S. Subsidiaries, if applicable) and
their successors and assigns (collectively, the “PDL Indemnitees”) harmless from
and against (i) all Tax Liabilities that Facet is required to pay under
Article II and (ii) any costs and expenses related to Tax Liabilities described
in clause (i) (including reasonable legal, accounting, appraisal, consulting or
similar fees and expenses).

 

3.3           Indemnification Payments. PDL and Facet agree that any
indemnification payment made pursuant to this Article III or Article V of the
Separation Agreement, shall be paid free and clear of any Tax deduction or
withholding. If any deduction or withholding is required by applicable Law to be
made from any indemnification payment made pursuant to this Article III or
Article V of the Separation Agreement, the amount of the payment will be
increased by such additional amount as is necessary to ensure that the net
amount received by the Indemnitee (after taking account of all such deductions
and withholdings) is equal to the amount which it would have received had the
payment in question not been subject to any deductions or withholdings.
Notwithstanding the foregoing, the Parties agree to use commercially reasonable
efforts (to the extent such efforts will not result in materially adverse
consequences to a Party) to mitigate or avoid such deductions and withholdings.

 

Article IV

 

Tax Contests

 

4.1           Notification. Facet shall promptly upon receipt of notice thereof
notify PDL in writing of any communication with respect to any pending or
threatened Proceeding in connection with a Tax Liability (or an issue related
thereto) for which PDL may be responsible pursuant to this Agreement. Facet
shall include with such notification (and thereafter provide to PDL) a true,
correct and complete copy of any written communication, and an accurate and
complete written summary of any oral communication, received by Facet with
respect to any such Proceeding. The failure of Facet to timely forward such
notification or further communication in accordance with the immediately
preceding sentence shall not relieve PDL of its obligation to pay such Tax
Liability or indemnify Facet therefor, except and to the extent that the failure
to timely forward such notification or further communication actually prejudices
the ability of PDL to contest such Tax Liability or increases the amount of such
Tax Liability. Similarly, PDL shall promptly upon receipt of notice thereof
notify Facet in writing of any communication with respect to any pending or
threatened Proceeding in connection with a Tax Liability (or an issue related
thereto) for which Facet may be responsible pursuant to this Agreement. PDL
shall include with such notification (and thereafter provide to Facet) a true,
correct and complete copy of any written communication, and an accurate and
complete written summary of any oral communication, received by PDL

 

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with respect to any such Proceeding. The failure of PDL to timely forward such
notification or further communication in accordance with the immediately
preceding sentence shall not relieve Facet of its obligation to pay such Tax
Liability or indemnify PDL therefor, except and to the extent that the failure
to timely forward such notification or further communication actually prejudices
the ability of Facet to contest such Tax Liability or increases the amount of
such Tax Liability.

 

4.2           Proceedings Involving PDL. Except as limited in Section 4.2(a),
(b), and (c), PDL (or such member of the PDL Consolidated Group as PDL shall
designate) shall be entitled to control, settle, contest and designate counsel
with respect to any Proceeding with respect to a Tax Return filed by PDL or a
member of the PDL Consolidated Group (which, for the avoidance of doubt, shall
not include Facet or any Facet Subsidiary subsequent to the Distribution Date)
or which Proceeding relates to items for which PDL is responsible hereunder, and
PDL shall have the right to resolve any such Proceeding in its sole discretion.

 

(a)           PDL shall allow Facet and its counsel to participate at its own
expense in any Proceeding relating to a Tax Return filed for a PDL Consolidated
Return Period, solely to the extent that such Proceeding relates to Tax for
which Facet would be liable under Section 2.2.

 

(b)           Facet shall be entitled to control, settle, contest and designate
counsel with respect to any Proceeding with respect to a Tax Return that
includes solely Facet, the Facet U.S. Subsidiaries or PDL France and relates
solely to items for which Facet is responsible hereunder, and Facet shall have
the right to resolve any such Proceedings in its sole discretion.

 

(c)           Facet shall allow PDL and its counsel to participate at its own
expense in any Proceeding relating to a Tax Return filed by Facet, to the extent
that such Proceeding relates to Tax for which PDL would be liable under this
Agreement.

 

Article V

 

Refunds and Tax Sharing Agreements

 

5.1           Refunds. Except as set forth in this Section 5.1, PDL shall be
entitled to all Refunds (and any interest thereon received from the applicable
Taxing Authority) in respect of Taxes for all PDL Returns or Taxes which relate
to items for which PDL is responsible hereunder. Facet shall be entitled to all
Refunds (and any interest thereon received from the applicable Taxing Authority)
in respect of Taxes paid by Facet, the Facet U.S. Subsidiaries and PDL France
for all Post-Distribution Taxable Periods. A party receiving a Refund to which
another party is entitled, in whole or in part, pursuant to this Section 5.1
shall pay the amount to which such other party is entitled within ten (10) days
after such Refund is received or used, as the case may be. PDL shall be
permitted to file, and Facet shall fully cooperate with PDL in connection with,
any claim for Refund in respect of a Tax for which PDL is responsible hereunder.

 

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5.2           Tax Sharing Agreements. Any tax sharing agreement (other than this
Agreement) that includes any member of the PDL Consolidated Group, on the one
hand, and Facet on the other hand shall be terminated as of the Distribution
Date and will have no further effect for any taxable year (whether the current
year, a future year, or a past year).

 

5.3           Compensation Deductions. PDL (or the appropriate member of the PDL
Consolidated Group) shall claim all Tax deductions arising by reason of the
exercise of options on, or receipt or vesting of restricted shares of, PDL
stock.

 

Article VI

 

COOPERATION AND EXCHANGE OF INFORMATION

 

6.1           Cooperation and Exchange of Information.

 

(a)           Facet, on behalf of itself and each of its affiliates, agrees to
provide PDL (or its designee), at PDL’s expense, with such cooperation or
information as PDL (or its designee) reasonably shall request in connection with
the determination of any other calculations described in this Agreement, the
preparation or filing of any Tax Return or claim for Refund, or the conduct of
any Proceeding. Such cooperation and information shall include (i) promptly
forwarding copies of appropriate notices and forms or other communications
(including information document requests, revenue agent reports and similar
reports, notices of proposed adjustments and notices of deficiency) received
from or sent to any Taxing Authority or any other administrative, judicial or
governmental authority, (ii) upon reasonable notice, providing copies of all
relevant Tax Returns, together with accompanying schedules and related
workpapers, documents relating to rulings or other determinations by taxing
authorities, and such other records concerning the ownership and tax basis of
property, or other relevant information that Facet or its affiliates may
possess, (iii) upon reasonable notice, providing of such additional information
and explanations of documents and information provided under this Agreement
(including statements, certificates and schedules delivered by either Party) as
shall be reasonably requested by PDL (or its designee), (iv) upon reasonable
notice, the providing of any document that may be necessary or reasonably
helpful in connection with the filing of a Tax Return, a claim for a Refund, or
in connection with any Proceeding, including such waivers, consents or powers of
attorney as may be necessary for PDL to exercise its rights under this
Agreement, and (v) upon reasonable notice, using reasonable efforts to obtain
any documentation from a governmental authority or a third party that may be
necessary or reasonably helpful in connection with any of the foregoing. Upon
reasonable notice, Facet shall make its, or shall cause its affiliates to make
their, employees and facilities available on a mutually convenient basis to
provide explanation of any documents or information provided hereunder. Any
information obtained under this Section 6.1(a) shall be kept confidential,
except as otherwise reasonably may be necessary in connection with the filing of
Tax Returns or claims for Refund or in conducting any Proceeding.

 

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(b)           PDL, on behalf of itself and each member of the PDL Consolidated
Group (including Facet), agrees to provide Facet (or its designee) with such
cooperation or information as Facet (or its designee), at Facet’s expense,
reasonably shall request in connection with the determination of any other
calculations described in this Agreement, the preparation or filing of any Tax
Return or claim for Refund, or the conduct of any Proceeding.  Such cooperation
and information shall include and upon reasonable notice, promptly forwarding
copies of appropriate notices and forms or other communications (including
information document requests, revenue agent’s reports and similar reports,
notices of proposed adjustments and notices of deficiency) received from or sent
to any Taxing Authority or any other administrative, judicial or governmental
authority, (ii) upon reasonable notice, providing copies of all relevant Tax
Returns, together with accompanying schedules and related workpapers, documents
relating to rulings or other determinations by taxing authorities, and such
other records concerning the ownership and tax basis of property, or other
relevant information that PDL or any member of the PDL Consolidated Group may
possess, (iii) upon reasonable notice, the provision of such additional
information and explanations of documents and information provided under this
Agreement (including statements, certificates and schedules delivered by either
Party) as shall be reasonably requested by Facet (or its designee), (iv) upon
reasonable notice, the providing of any document that may be necessary or
reasonably helpful in connection with the filing of a Tax Return, a claim for a
Refund, or in connection with any Proceeding, including such waivers, consents
or powers of attorney as may be necessary for Facet to exercise its rights under
this Agreement, and (v) the use of PDL’s reasonable efforts to obtain any
documentation from a governmental authority or a third party that may be
necessary or reasonably helpful in connection with any of the foregoing. Upon
reasonable notice, PDL shall make, or shall cause each member of the PDL
Consolidated Group to make, its employees and facilities available on a mutually
convenient basis to provide explanation of any documents or information provided
hereunder.  Any information obtained under this Section 6.1(b) shall be kept
confidential, except as otherwise reasonably may be necessary in connection with
the filing of Tax Returns or claims for Refund or in conducting any Proceeding.

 

6.2           Retention of Records.  Facet and PDL agree to retain all Tax
Returns, related schedules and workpapers, and all material records and other
documents as required under Code Section 6001 and the Treasury Regulations
promulgated thereunder (and any similar provision of state, local, or foreign
Tax Law) existing on the Distribution Date or created in respect of (i) any
taxable period that ends on or before or includes the Distribution Date or
(ii) any taxable period that may be subject to a claim hereunder, in each case
until the later of (x) the expiration of the statute of limitations (including
extensions) for the taxable periods to which such Tax Returns and other
documents relate and (y) the Final Determination of any payments that may be
required in respect of such taxable periods under this Agreement.  From and
after the end of the period described in the preceding sentence of this
Section 6.2, if Facet wishes to dispose of any such records and documents, then
Facet shall provide written notice thereof to PDL and shall provide PDL the
opportunity to take possession of any such records and documents within ninety
(90) days after such notice is delivered; provided, however, that if PDL does
not, within such ninety (90) day period, confirm its intention to take
possession of such records and documents,

 

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Facet may destroy or otherwise dispose of such records and documents.  From and
after the end of the period described above in this Section 6.2, if PDL wishes
to dispose of any such records and documents, then PDL shall provide written
notice thereof to Facet and shall provide Facet the opportunity to take
possession of any such records and documents within ninety (90) days after such
notice is delivered; provided, however, that if Facet does not, within such
ninety (90) day period, confirm its intention to take possession of such records
and documents, PDL may destroy or otherwise dispose of such records and
documents.

 

Article VII

 

Payments

 

7.1           Method of Payment.  All payments required by this Agreement shall
be made by (a) wire transfer to the appropriate bank account as may from time to
time be designated by the Parties for such purpose; provided that, on the date
of such wire transfer, notice of the transfer is given to the recipient thereof
in accordance with Section 8.4, or (b) any other method agreed to by the
Parties.  All payments due under this Agreement shall be deemed to be paid when
available funds are actually received by the payee.

 

7.2           Interest.  Any payment required by this Agreement that is not made
on or before the date required hereunder shall bear interest, from and after
such date through the date of payment, at the underpayment rate as in effect at
such time under Section 6621 of the Code.

 

7.3           Characterization of Payments.  For all tax purposes, the Parties
agree to treat, and to cause their respective affiliates to treat, (i) any
payment required by this Agreement as a contribution by PDL to Facet or
distribution from Facet to PDL, as the case may be, occurring immediately prior
to the Distribution and (ii) any payment of interest or non-federal Taxes by or
to a Taxing Authority, as taxable to or deductible by, as the case may be, the
party entitled under this Agreement to receive such payment or required under
this Agreement to make such payment, in either case except as otherwise mandated
by applicable Law.  In the event it is determined as a result of a Final
Determination that any treatment described under clause (i) or (ii) hereof is
not permissible, the payment in question shall be adjusted to place the Parties
in the same after-tax position they would have enjoyed absent such Final
Determination.

 

7.4           Time of Indemnification Payment.  To the extent an indemnification
obligation arises, the Indemnitee shall, upon at least ten (10) days’ prior
notice, make payment pursuant to such indemnification obligation no later than
five (5) days prior to the date the Indemnitee makes a payment of Taxes,
interest, or penalties with respect to such Tax Liability, including a proposed
adjustment of Taxes or an assessment of Tax deficiency asserted or made by any
Taxing Authority that is premised in whole or part on such Tax Liability, or a
payment made in settlement of an asserted Tax deficiency.

 

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Article VIII

 

MISCELLANEOUS PROVISIONS

 

8.1           Governing Law; Jurisdiction.  This Agreement shall be deemed to
have been made in the State of Delaware and its form, execution, validity,
construction and effect shall be determined in accordance with the Laws of the
State of Delaware, without giving effect to the principles of conflicts of Law
thereof.

 

8.2           Assignability.  The provisions of this Agreement and the
obligations and rights hereunder shall be binding upon, inure to the benefit of
and be enforceable by (and against) the Parties and their respective successors
and permitted transferees and assigns.  Notwithstanding the foregoing, this
Agreement shall not be assignable, in whole or in part, by any Party without the
prior written consent of the other Party, and any attempt to assign any rights
or obligations arising under this Agreement without such consent shall be null
and void; provided, that (i) a Party may assign this Agreement in connection
with a merger transaction in which such Party is not the surviving entity or the
sale by such Party of all or substantially all of its assets, and upon the
effectiveness of such assignment the assigning Party shall be released from all
of its obligations under this Agreement if the surviving entity of such merger
or the transferee of such assets shall agree in writing, in form and substance
reasonably satisfactory to the other Party, to be bound by all terms of this
Agreement as if named as a “Party” hereto.

 

8.3           Third Party Beneficiaries.  Except for the indemnification rights
under this Agreement of any PDL Indemnitee or Facet Indemnitee in their
respective capacities as such, (i) the provisions of this Agreement are solely
for the benefit of the Parties and are not intended to confer upon any Person
except the Parties any rights or remedies hereunder, and (ii) there are no third
party beneficiaries of this Agreement and this Agreement shall not provide any
third party with any remedy, claim, liability, reimbursement, claim of action or
other right in excess of those existing without reference to this Agreement.

 

8.4           Notices.  All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed effectively given: 
(i) upon personal delivery to the Party to be notified, (ii) when sent by
confirmed facsimile, (iii) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid or (iv) one (1) day
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt.  All communications shall be
sent to the respective Parties at the addresses set forth below (or at such
other addresses as shall be specified by notice given in accordance with this
Section):

 

If to PDL, to:

 

PDL BioPharma, Inc.

 

 

Attention: General Counsel

 

 

932 Southwood Boulevard

 

 

Incline Village, NV 89451

 

 

Facsimile: 775-832-8501

 

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with a copy to:

 

Shearman & Sterling LLP

(not to constitute notice)

 

Attention: Peter Lyons

 

 

599 Lexington Avenue

 

 

New York, NY 10022

 

 

Facsimile: 212-848-7179

 

 

 

If to Facet, to:

 

Facet Biotech Corporation

 

 

Attention: General Counsel

 

 

1400 Seaport Boulevard

 

 

Redwood City, CA 94063

 

 

Facsimile: 650-454-1468

 

 

 

with a copy to:

 

DLA Piper LLP (US)

(not to constitute notice)

 

Attention: Howard Clowes

 

 

153 Townsend Street, Suite 800

 

 

San Francisco, CA 94107-1957

 

 

Facsimile: 415- 659-7410

 

8.5           Severability.  If any provision of this Agreement or the
application thereof to any Person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof or thereof, or the application of such provision to Persons or
circumstances or in jurisdictions other than those as to which it has been held
invalid or unenforceable, shall remain in full force and effect and shall in no
way be affected, impaired or invalidated thereby, so long as the economic or
legal substance of the transactions contemplated hereby or thereby, as the case
may be, is not affected in any manner adverse to any Party. Upon such
determination, the Parties shall negotiate in good faith in an effort to agree
upon such a suitable and equitable provision to affect the original intent of
the Parties.

 

8.6           Waivers of Default.  The failure of either Party to require strict
performance by the other Party of any provision in this Agreement will not waive
or diminish such Party’s right to demand strict performance thereafter of that
or any other provision hereof.

 

8.7           Amendments.  This Agreement may not be modified or amended except
by an agreement in writing signed by each of the Parties.

 

8.8           Construction.

 

(a)           This Agreement has been prepared jointly and shall not be strictly
construed against either Party.

 

(b)           For purposes of this Agreement, whenever the context requires: 
the singular number shall include the plural, and vice versa; the masculine
gender shall include the feminine and neuter genders; the feminine gender shall
include the masculine

 

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and neuter genders; and the neuter gender shall include the masculine and
feminine genders.

 

(c)           Except as otherwise indicated, all references in this Agreement to
“Articles” and “Sections” are intended to refer to Articles, Sections, Exhibits
and Attachments to this Agreement.

 

(d)           The words “include” and “including,” and variations thereof, shall
not be deemed to be terms of limitation, but rather shall be deemed to be
followed by the words “without limitation.”

 

(e)           The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.

 

8.9           Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.  Any executed counterpart
delivered by facsimile or other means of electronic transmission shall be deemed
an original for all purposes.

 

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IN WITNESS WHEREOF, the Parties have caused this Tax Sharing and Indemnification
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.

 

 

 

PDL BioPharma, Inc.,

 

a Delaware corporation

 

 

 

 

 

By: 

/s/ John P. McLaughlin

 

Name:

John P. McLaughlin

 

Title:

President and Chief Executive Officer

 

 

 

 

 

Facet Biotech Corporation,

 

a Delaware corporation

 

 

 

 

 

By: 

/s/ Faheem Hasnain

 

Name:

Faheem Hasnain

 

Title:

President and Chief Executive Officer

 

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