Exhibit 10.3

July 27, 2009

PDL BioPharma, Inc.

932 Southwood Blvd.

Incline Village, NV 89451

Attention: Mr. Chris Stone, General Counsel

Re: Amendments to Product Licenses and Settlement Agreement.

Dear Mr. Stone:

The following three paragraphs provide background information for this letter
agreement (this “Letter Agreement”) between Genentech, Inc. (“Genentech”) and
PDL BioPharma, Inc. (“PDL”):

 

A. WHEREAS, Genentech and PDL are parties to the following agreements:

 

  (i) PDL License Agreement between PDL and Genentech, dated as of November 3,
1998, as amended, re: HER-2/neu/erbB2 (the “HER-2 License”);

 

  (ii) PDL License Agreement between PDL and Genentech, dated as of March 5,
2004 re: VEGF (the “VEGF License”);

 

  (iii) PDL License Agreement between PDL and Genentech, dated as of
December 18, 2003 re: CD11a (the “CD11a License”);

 

  (iv) PDL License Agreement between PDL and Genentech, dated as of December 18,
2003 re: IgE (the “IgE License”) ((i) – (iv), collectively the “Product
Licenses”); and

 

  (v) Settlement Agreement between PDL and Genentech, dated as of December 18,
2003 (the “Settlement Agreement”); and

 

B. WHEREAS, as of the date hereof, Genentech and PDL have entered into the
Amended and Restated Patent Licensing Master Agreement (Queen Patents) (the
“Master Agreement”); and

 

C. WHEREAS, in view of the foregoing, Genentech and PDL now wish to amend the
Product Licenses and the Settlement Agreement so that certain provisions of such
agreements conform to the corresponding provisions in the Master Agreement.

 

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NOW THEREFORE, Genentech and PDL agree, effective as of June 29, 2009 (the
“Effective Date”), as follows:

 

1. Recital A of each Product License is hereby deleted in its entirety and
replaced with the following sentence:

 

     GNE and PDL have entered into a Patent Licensing Master Agreement effective
September 25, 1998, as amended by Amendment No. 1 To The Patent Licensing Master
Agreement dated September 18, 2003 and Amendment No. 2 To The Patent Licensing
Master Agreement dated December 18, 2003 and as amended and restated by the
Amended and Restated Patent Licensing Master Agreement (Queen Patents) effective
July 27, 2009 (such amended and restated agreement, 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.

 

2. The last sentence of Section 1.01 of each Product License is hereby deleted
in its entirety and replaced with the following two sentences:

 

     Notwithstanding the foregoing, for purposes of this Agreement, Roche
Holdings, Inc. and its affiliates (other than GNE and its subsidiaries) shall
not be deemed Affiliates of GNE unless and until GNE opts to include Roche
Holdings, Inc. or such an affiliate as an Affiliate of GNE by giving written
notice to PDL. For purposes of this Agreement, “Roche” shall mean Roche
Holdings, Inc. together with its affiliated companies (other than GNE and its
subsidiaries).

 

3. In Article 6 of each Product License, the reference to “Article 9 of the
Master Agreement” is hereby changed to “Article 6 of the Master Agreement.”

 

4. In Section 7.02(b) of each Product License, the reference to “Section 11.6 of
the Master Agreement” is hereby changed to “Section 8.6 of the Master
Agreement.”

 

5. In Section 8.02 of each Product License, the reference to “Section 8.02 of
the Master Agreement” is hereby changed to “Section 8.6 of the Master
Agreement.”

 

6. In Section 8.04 of each Product License, the reference to PDL’s name, address
and facsimile number is hereby deleted in its entirety and replaced with the
following:’

 

If to PDL:

   PDL BioPharma, Inc.       932 Southwood Blvd.       Incline Village, NV 89451
      Attention: General Counsel       Facsimile number: (775) 832-8501   

 

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7. The third WHEREAS clause of the Settlement Agreement is hereby deleted in its
entirety and replaced with the following sentence:

WHEREAS PDL and Genentech are parties to that certain Patent Licensing Master
Agreement dated September 25, 1998, as amended by Amendment No. 1 To The Patent
Licensing Master Agreement dated September 18, 2003 and Amendment No. 2 To The
Patent Licensing Master Agreement dated December 18, 2003 and as amended and
restated by the Amended and Restated Patent Licensing Master Agreement (Queen
Patents) effective July 27, 2009 (such amended and restated agreement, the
“PLMA”), and are parties to that certain PDL License Agreement dated November 3,
1998, as amended by Amendment No. 1 To The Herceptin License Agreement dated
December 18, 2003 and the Letter Agreement between Genentech and PDL dated
July 29, 2009 (collectively, the “Herceptin License Agreement”) under which PDL
licensed the PDL Patents to Genentech for the Herceptin antibody product;

 

8. Section 1.9 of the Settlement Agreement is hereby deleted in its entirety and
replaced with the following three sentences:

“Third Party” means a person or entity that is not Genentech or a Genentech
Affiliate. For purposes of this Settlement Agreement, “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, for purposes of this Settlement Agreement, Roche Holdings, Inc. and
its affiliates (other than GNE and its subsidiaries) shall not be deemed
Affiliates of GNE unless and until GNE opts to include Roche Holdings, Inc. or
such an affiliate as an Affiliate of GNE by giving written notice to PDL.

As of the Effective Date, each reference in a Product License, or the Settlement
Agreement to “this Agreement,” “this Settlement Agreement,” “hereunder,”
“hereof” or words of like import referring to such Product License or the
Settlement Agreement shall mean and be a reference to such Product License or
the Settlement Agreement, as applicable, as amended by this Letter Agreement.
Each Product License and the Settlement Agreement, as amended by this Letter
Agreement, is and shall continue to be in full force and effect.

 

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If PDL is in agreement with the terms and conditions of this Letter Agreement,
please have an authorized representative sign the originals in the space
provided below, and return one signed original to the attention of Mr. Nicholas
Galli, M/S 49, Genentech, Inc., 1 DNA Way, South San Francisco, CA 94080.

[SIGNATURE PAGE FOLLOWS]

 

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Sincerely,

Genentech, Inc.

By:

 

/s/ Sean Johnston

Name:

  Sean Johnston

Title:

  Senior Vice President and General
Counsel

 

AGREED:

PDL BioPharma, Inc.

By:

 

/s/ Christopher Stone

Name:

  Christopher Stone

Title:

  VP, General Counsel and Secretary

 

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