Exhibit 10.18


 


CONFIDENTIAL PROVISIONS REDACTED


 


 


	
   

  



 


 


CLINICAL DRUG SUBSTANCE SUPPLY AGREEMENT


 


by and between


 


GMN, INC.


 


and


 


PDL BIOPHARMA, INC.


 


 


	
   

  



 


CONFIDENTIAL
TREATMENT REQUESTED


 

















 


TABLE OF
CONTENTS


 


	
  1.

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  SUPPLY

  	
  5

  
	
   

  	
   

  	
   

  
	
  3.

  	
  PURCHASE
  AND DELIVERY

  	
  7

  
	
   

  	
   

  	
   

  
	
  4.

  	
  STANDARD
  OF PERFORMANCE, TECHNICAL INFORMATION, SPECIFICATIONS

  	
  9

  
	
   

  	
   

  	
   

  
	
  5.

  	
  QUALITY
  CONTROL, ACCEPTANCE AND REJECTION, FAILURE TO SUPPLY

  	
  9

  
	
   

  	
   

  	
   

  
	
  6.

  	
  FACILITIES
  AND INSPECTIONS

  	
  12

  
	
   

  	
   

  	
   

  
	
  7.

  	
  PRICING

  	
  13

  
	
   

  	
   

  	
   

  
	
  8.

  	
  SAFETY,
  ADVERSE EVENT REPORTING, RECALLS AND REGULATORY MATTERS

  	
  15

  
	
   

  	
   

  	
   

  
	
  9.

  	
  INTELLECTUAL
  PROPERTY

  	
  16

  
	
   

  	
   

  	
   

  
	
  10.

  	
  REPRESENTATIONS,
  WARRANTIES AND OTHER MATTERS

  	
  16

  
	
   

  	
   

  	
   

  
	
  11.

  	
  CONFIDENTIAL
  INFORMATION

  	
  17

  
	
   

  	
   

  	
   

  
	
  12.

  	
  INDEMNIFICATION

  	
  19

  
	
   

  	
   

  	
   

  
	
  13.

  	
  TERM
  AND TERMINATION

  	
  20

  
	
   

  	
   

  	
   

  
	
  14.

  	
  LIMITATION
  OF LIABILITY

  	
  21

  
	
   

  	
   

  	
   

  
	
  15.

  	
  DISPUTE
  RESOLUTION

  	
  22

  
	
   

  	
   

  	
   

  
	
  16.

  	
  MISCELLANEOUS

  	
  23

  



 


i

















 


CLINICAL DRUG SUBSTANCE SUPPLY AGREEMENT


 


THIS CLINICAL DRUG SUBSTANCE SUPPLY AGREEMENT (this “Agreement”)
is effective as of the Effective Date (as defined below) and is by and between
GMN, Inc., a Delaware corporation and a wholly owned subsidiary of Genmab
A/S, a corporation organized under the laws of Denmark, having its principal
place of business at 9450 Winnetka Avenue N, Brooklyn Park, MN (“GMN”)
and PDL BioPharma, Inc., a corporation organized under the laws of
Delaware, having its principal place of business at 1400 Seaport Boulevard,
Redwood City, CA  94063 (“PDL”).


 


RECITALS


 


WHEREAS, the parties have entered into that certain Asset
Purchase Agreement dated as of February 21, 2008 (the “Purchase
Agreement”) relating to the purchase by GMN of PDL’s manufacturing assets
and facilities in Minnesota, including the Facilities (as defined herein); and


 


WHEREAS, the Purchase Agreement contemplates that the
parties shall enter into this Agreement to provide, among other things, for the
supply of the Products (as defined below) by GMN to PDL for the purposes of the conduct of
clinical trials by PDL.


 


AGREEMENT


 


NOW, THEREFORE, for
and in consideration of the above-described recitals, the mutual promises and
covenants of the parties hereinafter contained and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged by
the parties, the parties hereto (the “Parties”), intending to be legally
bound, enter into the agreements contained herein.


 


1.                                      DEFINITIONS


 


For purposes of this Agreement, the following terms
shall have the meanings set forth below:


 


“Act” shall mean the United States Food, Drug and Cosmetic
Act and applicable regulations promulgated thereunder, as they may be amended
or supplemented from time to time, or an equivalent application under any
successor laws or regulations.


 


“Adverse Event” shall mean any untoward medical occurrence in a patient or clinical
investigation subject temporally associated with the use of a Product whether
or not considered related to the Product.


 


“Affiliate” shall
mean, with respect to either Party, any person or entity which, directly or
indirectly, controls, is controlled by, or is under common control with, the
specified Party.  For the purposes of
this definition, the term “control”, as applied to any person or entity,
means the ownership or control, directly or indirectly, of more than the lesser
of (a) fifty percent (50%) or (b) the maximum percentage allowed by
law in the country of the controlled person or entity, of all of the voting
power of the shares (or other securities or rights) entitled to vote for the
election of directors or other governing authority giving the Party the power
to direct or cause the direction of the management and policies of the person
or other entity or the power to elect or appoint fifty percent (50%) or more of
the members of the governing body of the person or other entity; provided
that such person or entity shall be considered an “Affiliate” only during the
time that such “control” exists.


 


“Agreement”
shall have the meaning set forth in the Preamble.


 


1

















 


“Batch
Records” shall mean the documentation of all steps related to the
manufacture of a Product.  The documentation includes but is not limited
to records of the dispensing, weighing, mixing, and processing of a Product,
the release documents of the Raw Materials used in the manufacture of a Product
and the Product release testing documentation.


 


“Claim”
shall mean any charge, allegation, notice, civil, criminal or administrative
claim, demand, complaint, cause of action, suit, proceeding, arbitration,
hearing or investigation.


 


“Commercially Reasonable Efforts” shall mean that level of effort as is customary
in the specialty biotechnology pharmaceutical industry for carrying out a
particular task or obligation in relation to the manufacture of antibody
products for clinical trials in accordance with GMP.


 


“Dispute”
shall have the meaning set forth in Section 15.1.


 


“Drug
Master File” or “DMF” shall mean the drug master file for a Product
and the drug master file(s) for any excipients for that Product held by a
Raw Materials manufacturer filed with the FDA (if any) as of the Effective Date
in accordance with 21 CFR (chapter 314.420), and as subsequently supplemented
from time to time.


 


“Engineering
Runs” shall have the meaning set forth in Section 2.9.


 


“Effective
Date” shall mean the date upon which the Closing (as that term is defined
in the Purchase Agreement) of the transactions contemplated by the Purchase
Agreement shall have been consummated.


 


“EMEA”
shall mean the European Medicines Agency and any successor agencies.


 


“Facility” shall mean the Brooklyn Park
biologic manufacturing facility located at 9450 Winnetka Avenue N, Brooklyn
Park, MN acquired by GMN from PDL pursuant to the Purchase Agreement.


 


“FDA”
shall mean the U.S. Food and Drug Administration of the U.S. Department of
Health and Human Services and any successor agencies.


 


“Force
Majeure Event” shall mean any cause or contingency beyond a Party’s
reasonable control, including, riots, quarantines, communicable disease
outbreaks, wars, acts of terrorism, fires, floods or storms.


 


“Fully
Burdened Cost” shall mean: in connection with the manufacture, testing and
storage of any Product, or in
connection with the performance or provision of a service hereunder, all
costs (full cost) incurred by GMN, including,
without limitation, labor, material costs, allocable amortization and
depreciation, product quality assurance/control costs, allocable facilities
costs (e.g. sewer, water, property taxes), insurance and other support costs
borne by GMN.  In order to minimize large
swings in the overhead allocation based on production volume, overhead
allocations shall be made on the basis of a practical plant capacity of [****]*
for the Transition Product, the Initial Purchase Order, the Second Purchase
Order and the Third Purchase Order, respectively, and [****]* for the
Engineering Runs, 


 






* Certain information on this page has
been omitted and filed separately with the SEC. Confidential treatment has been
requested with respect to the omitted portions.


 


2

















 


adjusted for changeovers in production.  All allocable costs shall be allocated on a
percentage of effort basis.  Direct costs
(e.g. materials and production labor) will be based on actual costs incurred
for each production run and will include any variances from the production
standard.  Such Fully Burdened Cost
calculations shall be evidenced by reasonably detailed supporting documentation
and shall be prepared consistently from period to period.


 


“GMP” shall mean (a) “current Good Manufacturing Practices” or “cGMP”
as specified at 21 Code of Federal Regulations (CFR) (chapters 210 and 211) as
amended from time-to-time, and (b) “Good Manufacturing Practices” or “EU
GMP” as specified in the EU Guidelines to Good Manufacturing Practice:
Medicinal Products for Human or Veterinary Use, as amended from time-to-time.


 


“GMN
Indemnitee” shall have the meaning set forth in Section 12.2.


 


“Indemnifying
Party” shall have the meaning set forth in Section 12.3.


 


“Indemnitee”
shall have the meaning set forth in Section 12.3.


 


“Initial
Term” shall mean the twenty-four (24) months immediately following the
Effective Date.


 


“Initial
Purchase Order” shall have the meaning set forth in Section 3.1.1.


 


“Intellectual
Property Rights” shall mean patents, trade marks,
service marks, rights (registered or unregistered) in any designs, applications
for any of the foregoing, trade or business names, copyright (including rights
in computer software) and topography rights, know-how, secret formulae and
processes, and other proprietary knowledge and information; internet domain
names, rights protecting goodwill and reputation, database rights and all
rights and forms of protection of a similar nature to any of the foregoing or
having equivalent effect anywhere in the world and all rights under licences
and consents in respect of any of the rights and forms of protection mentioned
in this definition.


 


“Law”
shall mean any federal, state or local law, statute or ordinance, or any rule,
regulation, or published guidelines promulgated by any governmental authority,
including a Regulatory Authority, as in effect on the Effective Date or adopted
thereafter which are applicable to a Party’s activities hereunder, including
the Act.


 


“Out
of Freeze Date” shall mean the date on which [****]*.


 


“Party” shall have the meaning set forth in the
Preamble.


 


“PDL Indemnitee” shall have the meaning set
forth in Section 12.1.


 


“PDL-Provided Material” shall have the meaning
set forth in Section 2.6.


 


“Preliminary Purchase Price” shall mean the
estimated purchase price for a batch of Product.  The Preliminary Purchase Price for the
Initial Purchase Order, the Second Purchase Order and the Third Purchase Order
is set forth in Annex E hereto.  After
the Initial Term and for any purchase order during 


 






* Certain information on this page has been omitted and filed
separately with the SEC. Confidential treatment has been requested with respect
to the omitted portions.


 


3

















 


the Initial Term other than the Initial Purchase Order, the Second
Purchase Order and the Third Purchase Order, the Preliminary Purchase Price
shall be renegotiated by the parties in good faith on an annual basis during
the Term hereof.  The parties shall agree
on, and shall enter into a written amendment to this Agreement setting forth,
the new Preliminary Purchase Price no later than [****]* prior to the end of
each year.


 


“Products” shall mean the humanized antibody
products set forth on Annex A hereto each as drug substance and each in
the same form as manufactured immediately before the Effective Date by PDL at
the Facility, and each as intended to be used by PDL in clinical trials
investigating the safety or efficacy of the aforementioned humanized antibody
products, as Annex A may be amended from time to time by the prior
written agreement of the Parties in accordance with Section 2.4.


 


“Raw Materials” shall mean, either individually
or collectively as the context requires under this Agreement, all raw
materials, including media, resins, stability pools and retains, excipients,
components, work in progress, supplies and packing as indicated in the
Specifications, which are utilized in the manufacture or filling of the
Products, as applicable, other than the master cell banks and working cell
banks for the Products.  PDL shall
provide the master cell banks and/or working cell banks to GMN as described in Section 2.5.


 


“Recall” shall mean (i) a recall (as defined in 21
CFR (chapter 7)), field
correction, clinical withdrawal, stock recovery, or other similar action with
respect to a Product; and/or (ii) any decision by PDL not to sell
or ship a Product to
third parties which would have been subject to recall (as defined in 21 CFR (chapter
7)), field correction,
clinical withdrawal, stock recovery, or other similar action if it had
been sold or shipped, in each case taken in the good faith belief that such
action was appropriate under the circumstances.


 


“Regulatory Approval” shall mean with respect
to any Product, any approval required under the Act and any similar
governmental approvals of any Regulatory Authority required to Exploit such
Product.  For this purpose, “Exploit”
shall mean to formulate, develop, seek Regulatory Approval for, make, have
made, use, sell, have sold, offer for sale, market, promote, import, export,
display, distribute, out-license or otherwise commercialize or dispose of.


 


“Regulatory Authority” shall mean the FDA, and
any similar governmental authority, administrative agency or commission of any
region, country, state, province, county, city or other political subdivision
in the Territory, including, without limitation, the EMEA.


 


“Second Purchase Order” shall have the meaning
set forth in Section 3.1.2.


 


“Seizure” shall mean any action by any
Regulatory Authority or other government agency to detain or destroy a Product.


 


“Specifications” shall mean the specifications
for each Product as set forth in Annex B, as such specifications may be
changed from time to time by written agreement of the Parties as set forth in Section 5
below.


 






* Certain information on this page has been omitted and filed
separately with the SEC. Confidential treatment has been requested with respect
to the omitted portions.


 


4

















 


 “Technical
Agreement” shall mean a technical agreement regarding the quality and
testing of Product between the Parties in substantially the form given in Annex
D.


 


“Technical Information” shall mean all relevant
information regarding the manufacture and testing of the Products (including
the approved methods of manufacture and testing of the Products and information
relating to Raw Materials), as applicable, provided by PDL to GMN and set out
in Annex B as updated from time to time.


 


“Term” shall have the meaning set forth in Section 13.1.


 


“Territory” shall mean the world.


 


“Third Party” shall mean any person or entity
other than GMN, PDL, or their respective Affiliates.


 


“Third
Party Losses” shall mean all liabilities, losses and damages finally
awarded to a Third Party by a court, arbitration tribunal or other entity of
competent jurisdiction that result from any Claim made or brought against an
Indemnitee by or on behalf of such Third Party. Third Party Losses shall
include any reasonable direct out-of-pocket costs and expenses (including
reasonable attorneys’ fees) incurred by that Indemnitee while investigating or
conducting the defense of such Third Party Claim, regardless whether such Claim
is successful.


 


“Third
Purchase Order” shall have the meaning set forth in Section 3.1.3.


 


Unless the context of this Agreement otherwise
requires: (a) words of any gender include each other gender; (b) words
using the singular or plural number also include the plural or singular number,
respectively; (c) the terms “hereof,” “herein,” “hereby,” and derivative
or similar words refer to this entire Agreement; (d) the terms “Section”
or “Annex” refer to the specified Section or Annex of this Agreement; (e) the
term “or” has, except where otherwise indicated, the inclusive meaning
represented by the phrase, “and/or”; (f) the term “including” means “including,
without limitation”; (g) “days” refers to calendar days; and (h) the
term “not to unreasonably withhold approval” and words of similar import
includes not to unreasonably delay or condition such approval.  All references to “$” amounts hereunder shall
be deemed to be United States Dollars, and all payments due hereunder shall be
made in United States Dollars.


 


“[****]* Successful Batches” means, with
respect to each Product, the manufacture at the Facility of [****]* batches of
such Product that conform to the Specifications, whether manufactured by PDL
prior to the Effective Date or by GMN on or after the Effective Date.


 


“Transition Product” shall have the meaning set
forth in Section 2.8.


 






* Certain information on this page has been omitted and filed
separately with the SEC. Confidential treatment has been requested with respect
to the omitted portions.


 


5

















 


2.                                      SUPPLY


 


2.1           Clinical
Supply Initial Term.  During the
Initial Term of this Agreement GMN shall manufacture the Product at the
Facility in accordance with this Agreement in order to supply PDL 


 


with Product to meet PDL’s requirements for its clinical development
programs as specified in the Initial Purchase Order, the Second Purchase Order
and the Third Purchase Order. Furthermore, PDL shall be entitled to purchase
and GMN shall be obligated to supply during the Initial Term the number of
batches of Product as set forth in Sections 3.1.1, 3.1.2 and 3.1.3.


 


2.2           Other
Clinical Supply.  Supply of Product
with an Out of Freeze Date outside the Initial Term or above the number of
batches GMN has committed to during the Initial Term may be requested by PDL in
accordance with the procedure in Section 3 during the Term of the
Agreement. GMN shall use Commercially Reasonable Efforts to accommodate such
request taking into account the then current operation of the Facility and GMN’s
plans, but shall have no obligation to provide such additional supply of
Product.


 


2.3           Adequate
Reserves.  GMN shall maintain at all
times during the Term an inventory of Raw Materials sufficient in GMN’s
reasonable judgment to maintain continuity of supply of Product to PDL, based
on the accepted purchase orders, provided that GMN shall use up the
PDL-Provided Materials listed in Annex G.  All PDL-Provided Materials provided to GMN
from PDL to perform GMN’s obligations under the Agreement shall be licensed or
otherwise provided to GMN cost-free.


 


2.4           Amendments
to Products.  During the Term, PDL
may request the addition or substitution of additional humanized antibodies
products to Annex A by written notice to GMN.  Upon receipt of such notice, GMN shall
promptly consider such request in good faith and shall use Commercially
Reasonable Efforts to accommodate such request taking into account the then
current operation of the Facility and GMN’s plans, but shall have no obligation
to amend Annex A as requested by PDL. 
If the Parties agree to PDL’s request, they shall promptly agree in
writing on an amendment to this Agreement setting forth pricing and such other
commercially reasonable terms as are equitably required for GMN to manufacture
the additional products pursuant to this Agreement.


 


2.5           Master
Cell Banks/Working Cell Banks.  PDL
shall deliver the master cell banks and/or working cell banks for the Products
to GMN, [****]* for use by GMN in manufacturing the Product pursuant to this
Agreement.  GMN shall maintain the master
cell banks and working cell banks in accordance with written instructions
provided by PDL, and shall return the master cell banks and working cell banks
to PDL promptly after the termination of this Agreement.  The master cell banks and working cell banks
shall remain the property of PDL at all times.


 


2.6           PDL-Provided
Materials.  PDL shall deliver to GMN,
[****]* the supplies of Raw Materials listed in Annex G hereto (the “PDL-Provided
Materials”) solely for use by GMN in manufacturing the Products pursuant to
this Agreement.  GMN shall return said
PDL-Provided Materials to PDL promptly after the termination of this
Agreement.  Such PDL-Provided Materials
shall remain the property of PDL at all times.


 






* Certain information on this page has been omitted and filed
separately with the SEC. Confidential treatment has been requested with respect
to the omitted portions.


 


6

















 


2.7           Batch
Adjustments.  During the Initial
Term, PDL shall have the right on not less than [****]* prior written notice to
GMN, to adjust the batch sizes and number of batches between and among the
Products set forth in Annex A, provided that the total number of [****]*
batches for the applicable period remain unchanged.


 


2.8           Transition
Product.  GMN acknowledges that prior
to the Effective Date, PDL was in the process of manufacturing up to [****]*
batches of [****]* at the Facility (the “WIP”).  Commencing on the Effective Date, GMN hereby
agrees to complete the manufacture of the WIP at the Facility and deliver the
completed Products (the “Transition Product”) to PDL in accordance with
this Agreement.  Within [****]* after the
Effective Date, the Parties shall conduct a mutual assessment of the
manufacturing process completed by PDL as of the Effective Date as a percentage
of the total manufacturing process, in order to determine the remaining
percentage of the manufacturing process required to be carried out by GMN in
order to complete the manufacture of each batch of the Transition Product (the “GMN
Completion Percentage”).  The GMN
Completion Percentage shall be used in determining the Preliminary Purchase
Price for each batch of the Transition Product as set forth in Section 7.1.  Notwithstanding anything in this Agreement to
the contrary, GMN shall have no liability to PDL for any non-conformance of the
Transition Product to the Specifications, unless such non-conformance is due to
the gross negligence or willful misconduct of GMN.


 


2.9           Engineering
Runs.  PDL shall have the right to
request that GMN manufacture at the Facility engineering runs of Product (“Engineering
Runs”).  The Engineering Runs shall
only be used for internal purposes.  All
requests for Engineering Runs shall be subject to acceptance by GMN pursuant to
Section 3.1.4 and 3.2.  GMN shall
consider all such requests in good faith and shall use Commercially Reasonable
Efforts to accommodate all such requests.


 


3.                                      PURCHASE AND DELIVERY


 


3.1           Purchase
Orders


 


3.1.1        Initial
Purchase Order.  On the Effective
Date PDL shall place and GMN shall accept an initial purchase order covering
PDL’s requirement for Product covering
the period from the Effective Date through [****]*, which initial purchase
order shall contain no fewer than [****]* batches of Product and no more than [****]*
batches of Product (the “Initial Purchase Order”).


 


3.1.2        Second Purchase Order.  No later than [****]*, PDL shall place and GMN shall accept a second purchase
order covering the period of from [****]*
through [****]*, which purchase order
shall contain no fewer than [****]* batches of Product and no more than [****]*
batches of Product (the “Second Purchase Order”).


 


3.1.3        Third
Purchase Order. No later than [****]*,
PDL shall place and GMN shall accept a third purchase order covering the period
of from [****]* through [****]*, which purchase order shall contain
no fewer than [****]* batches of Product and no more than [****]* batches of
Product (the 


 






* Certain information on this page has been omitted and filed
separately with the SEC. Confidential treatment has been requested with respect
to the omitted portions.


 


7

















 


“Third Purchase Order”); provided
that the Second Purchase Order and the Third Purchase Order shall contain an
aggregate minimum order of no fewer than [****]* batches of Product.


 


3.1.4        Other Purchase Orders.  PDL and/or its Affiliates may place one or
more further purchase orders with GMN for Products for its clinical development
programs.  Such purchase order shall be
sent to GMN no later than [****]*
before the Out of Freeze Date.


 


3.1.5        Contents
of Purchase Orders.  Each purchase
order under this Agreement shall as a minimum specify the number of batches and
the estimated delivery dates for each Product ordered.  All purchase orders shall be in substantially
the form mutatis mutandis as set
out in Annex C as provided on the Effective Date.


 


3.2           Acceptance.  Within [****]* of receipt of a purchase order
(other than the Initial Purchase Order, the Second Purchase Order and the Third
Purchase Order) by GMN, GMN shall notify PDL in writing whether it intends to
accept or reject such purchase order.


 


3.3           Terms
of Agreement Govern.  No modification
or amendment to this Agreement shall be effected by or result from the receipt,
acceptance, signing or acknowledgement of a purchase order, quotations,
invoices, shipping terms or other document submitted pursuant to this Agreement
or any other document passing between the Parties which contains terms or
conditions in addition to or inconsistent with the terms of this Agreement. The
terms of this Agreement shall control and prevail and such additional or
inconsistent terms are hereby expressly rejected.


 


3.4           Delivery


 


3.4.1        GMN
shall deliver to PDL each order of Product, packed for shipment in accordance
with the applicable purchase order, EXW (Incoterms 2000) at the Facility or at
another location as otherwise agreed in writing.  Risk of loss and damage to each shipment of
Product shall pass to PDL when the Product is [****]*, as specified in the
accepted purchase order.  If PDL and/or
its designee does not pick-up the Product on the delivery date GMN shall use
Commercially Reasonable Efforts to ensure proper storage of such Product until
such time as the Product is finally loaded by PDL or its designated carrier and
PDL shall reimburse GMN the cost of the storage in accordance with Section 7.
For the avoidance of doubt, [****]*. 
Prior to shipment, all Products must be approved by GMN in accordance
with its internal QA release process and each shipment of Product must be
accompanied by a Certificate of Conformance confirming the same.


 


3.4.2        GMN
shall ensure that Product is delivered to PDL by the date for delivery, as
specified in the accepted purchase order or as subsequently revised by the
parties in writing.  [****]*.


 






* Certain information on this page has been omitted and filed
separately with the SEC. Confidential treatment has been requested with respect
to the omitted portions.


 


8

















 


3.4.3        Title
to any Product shall not pass to PDL until payment in full of the relevant
invoice issued by GMN in respect of such Product.


 


4.                                      STANDARD OF PERFORMANCE, TECHNICAL
INFORMATION, SPECIFICATIONS


 


4.1           GMN
Standard of Performance. During the Term GMN shall manufacture the Products
at the Facility in accordance with the Technical Information and supply the
Product in accordance with the purchase orders accepted under the terms of this
Agreement. GMN shall adhere to GMP and applicable Laws but, except for the
obligation to test in accordance with Section 5, GMN shall have no
obligation and makes no warranty or representations with respect to the
conformity with the Specifications of the Products and Raw Materials not
provided by PDL, except to the extent that failure to meet the Specifications
is due to the gross negligence or willful misconduct of GMN or, GMN’s failure
to follow the procedures set forth in the Technical Information after [****]*
Successful Batches, other than non-material deviations from the Technical
Information.  [****]*.


 


4.2           Technical
Information. PDL shall provide GMN with updates to Technical Information
from time to time as they become available, and shall provide GMN with
reasonable support with respect to such updates, [****]* if necessary.


 


4.3           Specifications.
The Specification for each Product is set forth in Annex B based on PDL’s
manufacture of the Products at the Facility prior to the Effective Date.  GMN makes no warranty or representations with
respect to the Specifications or the Technical Information as received by GMN
on the Effective Date.


 


4.4           Mandated
Changes to Specifications.  If: (i) any
Regulatory Authority having jurisdiction requires either Party to implement any
changes to the Specifications; (ii) any changes to the Specifications are
required in order to comply with changes to applicable Law; or (iii) any
changes to the Specifications are required in order to obtain Regulatory
Approval, the Parties shall use their Commercially Reasonable Efforts to agree
upon amended Specifications accordingly. GMN shall promptly advise PDL as to
any lead-time changes or other terms that may result from a change to the
Specifications, including price adjustments necessary to enable GMN to recover
costs it incurred for materials already purchased by GMN expressly for PDL and rendered
unusable by PDL due to such a change. 
PDL shall bear the costs incurred to generate and implement modified
Specifications (including any modifications or changes to the equipment or
processes involved in the manufacture of the Product).  If GMN is not able, using Commercially
Reasonable Efforts, to change the Specifications as requested by PDL, then such
inability shall be deemed to be a Force Majeure event affecting GMN.


 






* Certain information on this page has been omitted and filed
separately with the SEC. Confidential treatment has been requested with respect
to the omitted portions.


 


9

















 


5.                                      QUALITY
CONTROL, ACCEPTANCE AND REJECTION, FAILURE TO SUPPLY


 


5.1           Batch
Records.  GMN shall prepare and maintain
Batch Records with respect to each production lot of Product, including
information relating to the manufacturing, quality control testing and analysis
in accordance with applicable Laws. Such Batch Records and all other records
relating to production hereunder shall be retained by GMN in accordance with
the Technical Agreement.  In addition,
GMN shall make available such Batch Records, as well as updates to the
validation package for Product, to PDL during any audit or site visit in
accordance with Section 6.2.


 


5.2           Quality
Control and Testing.  GMN shall
conduct quality control testing of Product prior to release and delivery of the
Product in accordance with quality control testing procedures identified in the
applicable Specifications and the Technical Agreement or as required in order
to comply with any GMPs and applicable Law,[****]*.


 


5.3           Stability
Testing.  In accordance with Annex
F, GMN shall conduct stability tests on the Products and on the other
materials listed on Annex F (the “Additional Samples”).  [****]*. 
In the event that any lot of Products fails stability testing, GMN and
PDL shall jointly investigate the causes of such failure.  Upon request, GMN shall provide PDL any and all
data and results in its possession relating to the stability testing.  GMN obligations under this paragraph shall
survive any termination of this Agreement for a period of [****]* from [****]*.  During such survival period and for the
Additional Samples during the Term of the Agreement, [****]*.


 


5.4           Acceptance
Testing; Rejection.  PDL may inspect
or cause to be inspected all shipments of Product supplied by GMN hereunder
promptly after delivery of such shipment. Within [****]* after delivery of such
shipment, PDL may reject any shipment or part thereof which fails to conform
with the Specifications, provided the non-conformity is caused by the
gross negligence or willful misconduct of GMN or, GMN’s failure to follow the
procedures set forth in the Technical Information after [****]* Successful
Batches, other than non-material deviations from the Technical
Information.  If tests show that Products
fail to meet Specifications and PDL believes this to be caused by the gross
negligence or willful misconduct of GMN or, GMN’s failure to follow the
procedures set forth in the Technical Information after [****]* Successful
Batches, other than non-material deviations from the Technical Information, PDL
shall provide GMN with a notice of the shipment or batch numbers of the
rejected Product, together with notification as to the basis for the rejection
and a secured
representative sample of the rejected shipment.  If PDL does not provide GMN with such notice
of rejection, upon the expiry of the applicable [****]* period, PDL shall be
deemed to have accepted the shipment of Product.


 


5.5           Confirmation.  After its receipt of a notice of rejection
and samples of the rejected shipment from PDL pursuant to Section 5.3
above, GMN shall have [****]* within which to re-test the rejected samples
against appropriate retained samples, and to notify PDL whether it accepts PDL’s
basis for rejection. PDL shall cooperate with GMN in determining whether such
rejection was necessary or justified. Any Product that GMN agrees was defective
or non-conforming at the time of delivery due to the gross negligence or


 






* Certain information on this page has been omitted and filed
separately with the SEC. Confidential treatment has been requested with respect
to the omitted portions.


 


10

















 


willful misconduct of GMN or, GMN’s failure to follow the procedures
set forth in the Technical Information after [****]* Successful Batches, other
than non-material deviations from the Technical Information, shall be returned
or destroyed by PDL in accordance with Section 5.5 in return for a refund
or replacement in respect of such Product by GMN in accordance with Section 5.6.  If the Parties are unable to agree as to
whether a shipment of Product or part thereof fails to meet Specifications,
such Product in question shall be submitted to an independent quality control
laboratory mutually agreed upon by the Parties.  The findings of such independent
laboratory shall be binding upon the Parties. 
The cost of the independent quality control laboratory shall be borne by
the Party whose position is shown by such laboratory to have been
incorrect.  If the laboratory agrees that
the Product does not meet Specifications, the Product shall be returned or
destroyed by PDL in accordance with Section 5.5 in return for a refund or
replacement in respect of such Product by GMN in accordance with Section 5.6.


 


5.6           Return
or Destruction of Rejected Product. 
PDL shall not return or destroy any batch of Product until GMN has
accepted PDL’s basis for rejection as set forth in Section 5.4 above.  Upon written authorization from GMN to do so,
or if the independent lab described in 5.4 above agrees that the Product does
not meet Specifications, PDL shall promptly destroy the rejected batch of
Product, at GMN’s expense, and provide GMN with written certification of such
destruction.  Upon receipt of GMN’s
request for return, PDL shall promptly return the rejected batch of Product to
GMN or its designee, at GMN’s expense.


 


5.7           Refund
or Replacement of Rejected Product. 
PDL shall be entitled, upon confirmation that (a) such Product
failed to meet the applicable Specification and (b) that the
non-conformity was caused by the gross negligence or willful misconduct of GMN
or, GMN’s failure to follow the procedures set forth in the Technical
Information after [****]* Successful Batches, other than non-material
deviations from the Technical Information, to require GMN, at PDL’s discretion,
either to refund the part of the purchase price paid relating to the rejected
Product or to replace such rejected Product at no additional cost to PDL. If
PDL elects replacement GMN shall then use its Commercially Reasonable Efforts
to replace the rejected Product as soon as reasonably practicable after the
rejection. For the avoidance of doubt, the foregoing shall represent PDL’s sole
remedy in relation to the rejected Product, and GMN shall have no further
obligations in respect of the rejected Product and the replacement thereof.


 


5.8           Replacement
of Non-Conforming Product.  In the
event that PDL requests GMN to replace a non-conforming batch of Product which
is not rejected pursuant to Section 5.7, GMN shall investigate in good
faith whether such request can be accommodated taking into account the then
current operation of the Facility and GMN’s production plans, but shall have no
obligation to provide such additional supply of Product.


 


5.8.1        In
case GMN agrees to provide such additional supply of Product it shall be at PDL’s
cost on the same terms as the original purchase order for the Product.  The price of the non-conforming batch of
Product shall be borne by PDL based on [****]* of the actual costs incurred until the 


 






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to the omitted portions.


 


11

















 


point of identified failure plus [****]*, plus in addition thereto [****]*, less any amounts paid by PDL pursuant to Section 7
with respect to such non-conforming batch.


 


5.8.2        In
case GMN does not agree to provide such additional supply of Product, the price
of the non-conforming batch of Product shall
be borne by PDL based on [****]*
plus [****]*, plus in addition
thereto [****]*, less any
amounts paid by PDL pursuant to Section 7 with respect to such
non-conforming batch.


 


5.8.3        In case PDL does not request GMN to replace
such Product, PDL shall pay to GMN [****]*.


 


5.9           Failure
to Supply.  PDL shall not be entitled
to cancel any unfulfilled part of a purchase order or to refuse to accept the
Product on grounds of late performance, late delivery or failure to produce the
estimated quantities (if any) of Product for delivery, provided,
however, that the Parties shall negotiate in good faith in an attempt to
resolve the issue in a commercially reasonable way (e.g. by rescheduling the
delivery or discounting the purchase price).


 


6.                                      FACILITIES AND INSPECTIONS


 


6.1           Facilities
and Inspections.


 


6.1.1        GMN
shall permit PDL authorized representatives, during normal working hours and
upon reasonable written notice to GMN to (a) inspect that portion of its
facilities utilized and records maintained for the manufacture, preparation,
processing, storage or quality control of any Product and (b) be on-site at GMN during the manufacture of Product.  PDL’s authorized representatives shall
be accompanied by personnel of GMN at all times, shall be qualified to conduct
such manufacturing audits or be present during manufacturing, and shall comply
with all applicable rules and regulations relating to facility security,
health and safety.  PDL shall ensure that
such authorized representatives shall comply with the confidentiality
provisions of this Agreement and shall conduct each manufacturing audit and
site visit in such a manner as to not interfere with the normal and ordinary
operation of GMN.  PDL acknowledges and
agrees that it shall remain fully liable to GMN in respect of any negligent
acts or omissions of its authorized representatives during the conduct of such
audits or site visits.  PDL’s audit
rights shall be limited as follows: (i) [****]* per year without cause, (ii) [****]*
per batch of Products without cause, and (iii) [****]* audits per year for
cause.


 


6.1.2     GMN shall make its facilities available for
inspection by representatives of Regulatory Authorities in compliance with all
applicable Laws.  GMN will, to the extent
permitted by applicable Laws, promptly, and in any event within [****]*, notify
PDL in writing of its receipt of any correspondence, notice or any other
indication whatsoever of any FDA or other Regulatory Authority inspection,
investigation or other inquiry, or other notice or communication from any
Regulatory Authority of any type, that could reasonably be expected to affect
the continuity of supply of Product to PDL hereunder in a material way.  Such notice shall include a copy of any
related correspondence.  PDL 


 






* Certain information on this page has
been omitted and filed separately with the SEC.  Confidential treatment
has been requested with respect to the omitted portions.


 


12

















 


shall have the right to be present at the inspection as permitted by
applicable Law.  PDL’s representative shall not interact with
the Regulatory Authorities during such inspection unless permitted by GMN.


 


7.                                      PRICING


 


7.1           Pricing.  The purchase price for Products (including
Transition Products) shall equal [****]* of GMN’s Fully Burdened Costs
therefor.  The Preliminary Purchase Price
for the Initial Purchase Order, Second Purchase Order, Third Purchase Order and
the Engineering Runs is set forth in Annex E.  The Preliminary Purchase Price for each batch
of Transition Product shall be equal to the [****]*.  By way of example, but not by limitation, if
the GMN Completion Percentage for a batch of Transition Product is [****]*
percent [****]*, the Preliminary Purchase Price for that batch shall be US$[****]*.  All other services rendered by GMN to PDL
under this Agreement or costs to be reimbursed, refunded or otherwise finally
borne by PDL in accordance with this Agreement shall be paid by PDL at a price
equal to [****]* of GMN’s Fully Burdened Costs therefore.


 


7.2           Invoicing;
Payment.  GMN shall be entitled to
invoice PDL for Product as follows:


 


·                  [****]* of the
Preliminary Purchase Price at acceptance of the relevant purchase order, provided
that the Preliminary Purchase Price for the Transition Product shall be paid
within [****]* of the determination of the Completion Percentage pursuant to Section 2.8
; and


 


·                  The balance of
the Preliminary Purchase Price on acceptance of the Product covered by the
relevant purchase order;


 


provided,
however, that [****]* of the purchase price related to Raw Materials (unless
such Raw Materials are provided by PDL [****]*) may in any event be invoiced [****]*
before the anticipated Out of Freeze Date set forth in the accepted purchase
order.


 


Furthermore, if for any reason, other than GMN’s gross
negligence or willful misconduct or, GMN’s failure to follow the procedures set
forth in the Technical Information after [****]* Successful Batches, other than
non-material deviations from the Technical Information, PDL instructs GMN to
cancel the manufacture of a batch under an accepted purchase order, GMN may
invoice the full Preliminary Purchase Price at the date of such decision, which
shall be non-refundable.


 


GMN shall prepare a final statement of the actual
purchase price and send to PDL a final invoice or credit note, as applicable,
with regard to the balance between the Preliminary Purchase Price and the final
purchase price, provided that in no event shall the final purchase price exceed
[****]* of GMN’s Fully Burdened Costs therefor. 
GMN shall use Commercially Reasonable Efforts to send such final


 






* Certain information on this page has been omitted and filed
separately with the SEC.  Confidential treatment has been requested with
respect to the omitted portions.


 


13

















 


invoice or credit note to PDL within [****]*, but in no event later
than [****]*, of PDL’s receipt of the final certificate of analysis for the
applicable Product.  Such final invoice
or credit note shall be accompanied by detailed supporting documentation
setting forth the basis for the final invoice and reasonably acceptable to PDL.


 


With respect to other services to be rendered to PDL
or costs to be reimbursed, refunded or otherwise finally borne by PDL, GMN
shall be entitled to invoice PDL on [****]*. PDL shall pay, or cause to be
paid, such invoice within [****]* after receipt of the invoice.


 


All invoices shall be sent to the address specified in
the applicable purchase order.  PDL shall
pay, or cause to be paid, all invoices within [****]* after receipt. Subject to
Section 7.5 all payment by PDL shall be made without deduction, deferment,
set-off, lien or counterclaim of any nature.


 


7.3           Currency;
Late Payments.  All amounts due
hereunder are stated in, and shall be paid in, U.S. dollars.  The rate of interest applicable to late
payments is [****]*.  Interest due for
late payments shall be calculated [****]*.


 


7.4           Books
and Records.  GMN shall keep, and
shall cause its Affiliates to keep, complete and accurate books of accounts of
record in connection with its manufacture and supply of Product to permit
verification of payments made and the obligations owed hereunder.  Such records shall be maintained for a period
of at least (i) [****]* from the date on which they were generated; or (ii) as
otherwise required by applicable Law, which ever is later.


 


7.5           Audit
Rights.  PDL shall have the right to
have an independent nationally-recognized accounting firm reasonably acceptable
to GMN access the books and records of GMN and its Affiliates solely to the
extent necessary to verify GMN’s Fully Burdened Cost described in Section 7.1.  Such audit shall be conducted upon at least [****]*
advanced written notice to GMN and shall commence on a date reasonably
acceptable to both Parties, not to be later than [****]* after PDL’s
notice.  Such audit shall only be during
GMN’s normal business hours.  Such audit
shall not be more frequent than [****]*, may occur only with respect to the
immediately preceding [****]*, may not audit less than [****]*, and may not be
conducted more than [****]* with respect to any particular [****]*.  The auditing party shall be required to sign
a confidentiality agreement for the benefit of, and in a form reasonably
acceptable to, GMN and/or its Affiliates. 
GMN shall be provided the opportunity to discuss any discrepancies found
during such audit with the auditors prior to such auditor issuing its final
report.  The final report shall be shared
with both of the Parties, after PDL has reviewed and discussed the report with
its accounting firm.  If any audit
discloses any underpayments by PDL to GMN, then unless contested by PDL within [****]*
after receipt of the necessary documentation of the amount owed, any
underpayment shall be paid by PDL to GMN within [****]* of it being so
disclosed.  If any audit discloses any
overpayments by PDL to GMN, then unless contested by GMN within [****]* after
receipt of the necessary documentation of the amount owed, PDL shall have the
right to credit the amount of the


 






* Certain Information on this page has been omitted
and filed separately with the SEC. 
Confidential treatment has been requested with respect to the omitted
portions.


 


14

















 


overpayment together with any interest thereon calculated in accordance
with Section 7.3, against subsequent payment due to GMN under this
Agreement or have any such overpayment and interest refunded to it.  If any audit discloses any overcharges by GMN
in excess of [****]*, GMN shall pay the costs of the accounting firm.


 


8.                                      SAFETY, ADVERSE EVENT REPORTING, RECALLS
AND REGULATORY MATTERS


 


8.1           Drug
Master Files.  GMN shall grant PDL a
right of reference to their applicable Drug Master Files to the extent
necessary to enable PDL to apply for, obtain and maintain Regulatory Approvals
for any of the Products.  Such Drug Master
Files shall be maintained by GMN with the FDA and any other applicable
Regulatory Authorities during the Term consistent with applicable Law.


 


8.2           Material
Safety; Facility Safety.  It is
agreed that PDL shall have the responsibility to provide GMN with all
information necessary for the manufacture of the Products, including all
chemical or biological compositions thereof and the impact and interactions
thereof on all other materials to be used in the manufacture of the Products as
well as information regarding handling precautions, toxicity and hazards with
respect to any of the Products and to promptly update this information during
the Term of the Agreement if changes occur. If the provision of such
information requires, in GMN’s reasonable opinion after good faith consultation
with PDL, additional safety measures to be taken, including tests, PDL shall
refund the GMN the reasonable cost hereof in accordance with Section 7.


 


8.3           Adverse
Event Reporting.  The Parties shall
comply with the provisions of the Technical Agreement in relation to
pharmacovigilance and applicable Law as they relate to the reporting and
investigation of any Adverse Event.


 


8.4           Product
Recalls.


 


8.4.1        In
the event that either Party believes it may be necessary to conduct a Recall of
any Product, it shall notify the other Party thereof as soon as reasonably
practicable, and the Parties shall promptly consult with each other as to how
best to proceed and use Commercially Reasonable Efforts in assisting one
another; it being understood and agreed that the final decision as to any
Recall of any Product shall be made by PDL; provided that, neither Party
shall be prohibited hereunder from taking any action that it is required to
take by applicable Law. The Parties shall establish and maintain a system for
implementing any such Recall and managing all related communication and/or
correspondence with the relevant Regulatory Authorities.


 


8.4.2        To
the extent any Recall or Seizure does not arise out of, or relate to, or occur
as a direct result of any breach of any representation, warranty or covenant of
GMN herein, or a breach of this Agreement by GMN, or the gross negligence or
willful misconduct of GMN or, GMN’s failure to follow the procedures set forth
in the Technical Information after [****]* Successful Batches, other than


 






* Certain information on this page has been omitted
and filed separately with the SEC.  Confidential treatment has been requested with
respect to the omitted portions.


 


15

















 


non-material deviations from the Technical
Information, PDL shall reimburse GMN for its reasonable costs related
thereto.  To the extent any Recall or
Seizure arises out of, or relates to, or occurs as a direct result of any
breach of any representation, warranty or covenant of GMN herein, or a breach
of this Agreement by GMN, or the gross negligence or willful misconduct of GMN,
or, GMN’s failure to follow the procedures set forth in the Technical
Information after [****]* Successful Batches, other than non-material
deviations from the Technical Information, GMN shall reimburse PDL for its
reasonable costs related thereto.


 


 


9.                                      INTELLECTUAL PROPERTY


 


9.1           License
to GMN.  PDL grants to GMN a [****]* license,
[****]* under any and all Intellectual Property Rights owned or controlled by
PDL necessary for GMN to fulfill its obligations under this Agreement, and for
use by GMN only for that purpose.


 


9.2           Improvements.  GMN will disclose promptly to PDL any and all
inventions, discoveries and improvements to PDL’s Intellectual Property Rights
related to the Products and the manufacture thereof, including the Technical
Information, whether or not patentable, conceived, made or reduced to practice
by GMN in connection with this Agreement (the “Improvements”).  GMN shall be the sole owner of such
Improvement, provided that GMN hereby irrevocably grants to PDL, its
successors and assigns, a non-exclusive, perpetual, worldwide, irrevocable,
fully-paid, royalty-free, sublicensable and assignable right and license to use
and exploit the Improvements for any and all purposes.


 


10.                               REPRESENTATIONS, WARRANTIES AND OTHER
MATTERS


 


10.1         Corporate
Existence and Power.  Each Party
represents and warrants to the other that: (a) it is and as of the
Effective Date will be a corporation duly organized, validly existing and in
good standing under the Laws of the state or jurisdiction in which it is
incorporated or organized; and (b) it has and as of the Effective Date
will have full power and authority and the legal right to own or license and
operate its property and assets and to carry on its business as it is now being
conducted and as contemplated in this Agreement.


 


10.2         Authority.  Each Party represents and warrants to the
other that: (a) it has and as of the Effective Date will have the power
and authority and the legal right to enter into this Agreement and perform its
obligations hereunder; (b) it has and as of the Effective Date will have
taken all necessary action on its part required to authorize the execution and
delivery of this Agreement and the performance of its obligations hereunder; (c) this
Agreement has been duly executed and delivered on behalf of such Party, and
constitutes a legal, valid and binding obligation of such Party and is
enforceable against it in accordance with its terms; (d) all necessary
consents, approvals and authorizations of all governmental authorities and
other persons or entities required to be obtained by such Party in connection
with entry into this Agreement have been or as of the Effective Date will have
been obtained; provided, however, that with respect to GMN it is
understood and agreed that some of such consents, approvals and authorizations
cannot reasonably have been obtained prior to the Effective Date and that with
respect to such consents, GMN shall undertake Commercially Reasonable Efforts
to obtain same; (e) the execution and delivery of this Agreement and the
performance of such Party’s obligations hereunder (i) do not and as of the
Effective Date will not conflict with or violate any requirement of applicable
Law or any provisions 


 






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separately with the SEC. Confidential treatment has been requested with respect
to the omitted portions.


16

















 


of such Party’s charter documents in any material way, and (ii) do
not and as of the Effective Date will not conflict with, violate or breach or
constitute a default or require any consent under, any contractual obligation
or court or administrative order by which such Party is bound.


 


10.3         PDL’s
Warranties.  PDL represents and
warrants to GMN that:


 


10.3.1      GMN’s
production of the Products in accordance with the Technical Information and the
fulfillment of its other obligations as contemplated hereunder will not, to PDL’s
knowledge, infringe the Intellectual Property Rights of any Third Party in the
United States.


 


10.4         GMN’s
Warranties.


 


GMN
represents and warrants to PDL that:


 


10.4.1.     All
Product sold to PDL hereunder shall be manufactured, tested, stored and handled
in conformance with the Technical Information, GMP, this Agreement and all
applicable Laws, provided, however, that GMN may rely on that PDL’s
written instructions, including the procedures set out in the Technical
Information, the Technical Agreement and the Specifications do not contravene
GMP and applicable Law.


 


10.4.2      GMN represents and warrants that it is not, and
that it shall not during the Term hereof use the services of any person or
entity debarred or suspended under 21 U.S.C. §335a(a) or (b) in any capacity
associated with or related to the manufacture of Products or any other services
provided to PDL hereunder.  GMN further
represents and warrants that it shall not during the Term hereof hire or retain
as an officer or employee any person who has been convicted of a felony under
the laws of the United States for conduct relating to the regulation of any
drug product under the United States Food, Drug, and Cosmetic Act.  If at any time any of the foregoing representations
and warranties are no longer accurate, GMN shall immediately notify PDL of such
fact.


 


10.5         Disclaimer.  THE EXPRESS WARRANTIES IN THIS SECTION 10
ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, AND EXCEPT AS SET
FORTH HEREIN, EACH PARTY EXPRESSLY DISCLAIMS ANY AND ALL OTHER WARRANTIES OF
ANY KIND, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR ARISING FROM A
COURSE OF DEALING, USAGE OR TRADE PRACTICES.


 


11.                               CONFIDENTIAL INFORMATION


 


11.1         Confidentiality.  PDL agrees to maintain secret and confidential all confidential
information that it may acquire or has acquired from GMN under this Agreement (“GMN
Confidential Information”), to use the same exclusively as permitted under
this Agreement, and to disclose the same only and to the extent that such
disclosure is reasonably necessary for the purposes of this Agreement.  GMN agrees to maintain secret and
confidential all confidential information that it may acquire or has acquired
from PDL under this Agreement (“PDL Confidential Information”) and to
disclose the same only to the extent that such disclosure is reasonably
necessary for the purposes of this Agreement. 
The foregoing obligations of this Section 11.1 shall not apply to
information which:


 


17














 


11.1.1                  prior to receipt thereof from one Party was in the
rightful possession of the recipient Party and at its free disposal, as can be
demonstrated by the recipient Party through written evidence;


 


11.1.2                  is subsequently disclosed to the recipient Party
without any obligations of confidence by a third party who has not derived it
directly or indirectly from the disclosing Party;


 


11.1.3                  is or becomes generally available to the public
through no act or default of the recipient Party or its Affiliates, employees,
contractors, agents, or sublicensees;


 


11.1.4                  is independently developed by the receiving Party
without the benefit of any disclosure hereunder, as demonstrated by documented
evidence prepared contemporaneously with such independent development;


 


11.1.5                  is required to be disclosed by Law, regulation or
action of any governmental agency or authority
or to comply with the requirements of any securities exchange or to any
governmental or Regulatory Authority, provided that the recipient Party
shall provide the other Party with prompt written notice of such requirement in
order to allow the other Party to limit or prevent disclosure to the extent
permitted by applicable Law (and the recipient Party shall reasonably cooperate
in such efforts), and provided further that any such information
required to be disclosed shall continue to be “Confidential Information” for
all other purposes.


 


11.2                           Publicity.  No Party to this Agreement shall originate
any publicity, news release or other public announcement, written or oral,
whether relating to this Agreement or the existence of any arrangement between
the Parties, without the prior written consent of the other Party whether named
in such publicity, news release or other public announcement or not, except
where such publicity, news release or other public announcement is required by
law or by the rules or regulations of any stock exchange on which any
security of Seller or Buyer is listed for trading (“Stock Exchange”); provided
that in such event, the Party issuing same shall still be required to consult
with the other Party whether named in such publicity, news release or public
announcement or not, a reasonable time prior to its release to allow the other
Party to comment thereon and, after its release, shall provide the other Party
with a copy thereof.  Each Party shall
use Commercially Reasonable Efforts to provide reasonable advance notice of and
to respond to and cooperate with the other Party in connection with any such
publicity.  If the Party whose comments
are solicited fails to comment within [****]* from the initial consultation
with respect to any pending disclosure (or such shorter period of time as may
be necessary for the Party proposing to issue such publicity or its Affiliates
to avoid a violation of any applicable Law or any rule or regulation of any
Stock Exchange). The other Party shall be free to issue its publicity, news
release or other public announcement.  If
either Party, based on the advice of its counsel, determines that this
Agreement, or any of the other documents executed in connection herewith, must
be filed with the U.S. Securities and Exchange Commission (the “SEC”) or
any Stock Exchange, then such Party, prior to making any such filing, shall
provide the other Party and its counsel with a redacted version of this
Agreement (or any other related documents) which it intends to file, and will
give due consideration to any comments provided by the


 






* Certain information on this page has been omitted and filed
separately with the SEC.  Confidential
treatment has been requested with respect to the omitted portions.


 


18

















 


other Party or its counsel and use reasonable efforts to ensure the
confidential treatment by the SEC or any applicable Stock Exchange of those
sections specified by the other Party or its counsel.


 


12.                               INDEMNIFICATION.


 


12.1                           Indemnification
by GMN.  GMN shall indemnify and hold
harmless PDL and each of its respective employees, officers, directors and
agents (each a “PDL Indemnitee”) from and against any Third Party Losses
arising out of (a) the breach by
GMN of this Agreement, including, without limitation, the breach of any
representation, warranty or covenant contained herein; (b) GMN’s gross
negligence or willful misconduct in connection with this Agreement, or (c) any
Claim that a Product or the production of any Product infringes the
Intellectual Property Rights of such Third Party; provided, however,
that such indemnification right shall not apply to any Claims or Third Party
Losses to the extent directly attributable to the gross negligence or willful
misconduct of a PDL Indemnitee, or, for the avoidance of doubt, to the extent
such Claims or Third Party Losses arises out of circumstances under which PDL
would be obliged to indemnify GMN in accordance with Section 12.2.


 


12.2                           Indemnification
by PDL.  PDL shall indemnify and hold
harmless GMN, its Affiliates, and each of their respective employees, officers,
directors and agents (each a “GMN Indemnitee”) from and against any
Third Party Losses arising out of (a) the breach by PDL of this Agreement,
including, without limitation, any representation, warranty or covenant
contained herein; (b) any Claim that a Product or the production of any
Product infringes the Intellectual Property Rights of such Third Party; (c) any
Claim related to [****]*; (e) [****]*;
(f) PDL’s gross negligence or willful misconduct in connection with this
Agreement; provided, however, that such indemnification right shall not
apply to any Claims or Third Party Losses 
to the extent directly attributable to the gross negligence or willful
misconduct of GMN or GMN’s failure, with respect to Product for which [****]*
have been manufactured without failure, to follow the procedures set forth in
the Technical Information, or, for the avoidance of doubt, to the extent such
Claims or Third Party Losses arises out of circumstances under which GMN would
be obliged to indemnify PDL in accordance with Section 12.3.


 


12.3                           Indemnification
Procedures.  Promptly after receipt
by a Party seeking indemnification under this Section 12 (an “Indemnitee”)
of notice of any pending or threatened Claim against it, such Indemnitee shall
give written notice thereof to the Party from whom the Indemnitee is entitled
to seek indemnification pursuant to this Section 12 (the “Indemnifying
Party”); provided that the failure so to notify the Indemnifying
Party shall not relieve it of any liability that it may have to any Indemnitee
hereunder, except to the extent the Indemnifying Party demonstrates that it is
materially prejudiced thereby.  The Indemnifying Party shall be entitled to
participate in the defense of such Claim and, to the extent that it elects
within [****]* of its receipt of notice of the Claim from the Indemnitee, to
assume control of the defense of such Claim (unless (i) the Indemnifying
Party is also a party to such proceeding and the Indemnifying Party has
asserted a cross claim against the Indemnified Party or a court has otherwise
determined that such that joint


 






* Certain information on this page has been omitted and filed
separately with the SEC.  Confidential treatment has been requested with
respect to the omitted portions.


 


19

















 


representation would be inappropriate, or (ii) the
Indemnifying Party fails to provide reasonable assurance to the Indemnitee of
its financial capacity to defend the Indemnitee in such Proceeding) with
counsel reasonably satisfactory to the Indemnitee and, after notice from the
Indemnifying Party to the Indemnitee of its election to assume the defense of
such Claim, the Indemnifying Party shall not, as long as it diligently conducts
such defense, be liable to the Indemnitee for any out-of-pocket costs
subsequently incurred by the Indemnitee in investigating or defending such
Claim.  No compromise or
settlement of any Claim which is to be indemnified may be effected by either
Party without the other Party’s written consent, which consent shall not be
unreasonably withheld or delayed.


 


12.4                           Insurance.
 During and after the Term, each of GMN
and PDL shall have and maintain such type and amounts of liability insurance
covering its activities under this Agreement as is normal and customary in the
pharmaceutical industry generally for parties similarly situated.  Each Party shall, upon request of the other
Party, provide the requesting Party with a Certificate of Insurance for the
foregoing policies of insurance. [****]*.


 


13.                               TERM AND TERMINATION.


 


13.1                           Term.  This Agreement shall become effective and the
term of this Agreement shall begin upon the Effective Date (for the avoidance
of doubt the Parties expressly acknowledge that unless the Closing (as that
term is defined in the Purchase Agreement) of the transactions contemplated by
the Purchase Agreement shall have been consummated, this Agreement shall be
void and without any force or effect) and shall continue in full force and
effect until termination as hereinafter provided in this Section 13 (the “Term”).  In the event that the Purchase Agreement is
terminated prior to the Effective Date, this Agreement shall automatically
terminate without any further action required by either Party.


 


13.2                           Termination.  Either Party may terminate this Agreement
upon not less than twelve (12) months’ prior written notice to the other Party,
provided, however, that such termination shall not be effective prior to
the expiration of the Initial Term. Termination in accordance with this Section 13.2
shall not affect the Parties’ obligations in relation to purchase orders
already accepted by GMN.


 


13.3                           Termination
for Cause  13.3.1   Either
Party may terminate this Agreement upon sixty (60) days written notice to the
other if the other Party breaches any term of this Agreement and does not cure
such breach within such sixty (60) day period following receipt of such notice,
except in the case of a payment default as to which PDL shall have only a
[****]* notice and cure period.


 


13.3.2                  Either Party may
terminate this Agreement upon the occurrence of one or more of the following
immediately upon written notice to the other Party in the event that:


 






* Certain information on this page has been omitted and filed
separately with the SEC.  Confidential treatment has been requested with
respect to the omitted portions.


 


20

















 


(a)                                  the other Party initiates a voluntary proceeding in
bankruptcy or insolvency or for reorganization or arrangement under the
bankruptcy laws of the United States or under any insolvency act of any state,
or is dissolved, or makes an assignment for the benefit of creditors; or


 


(b)                                 becomes
the subject of an involuntary proceeding under any bankruptcy law or insolvency
act or for its dissolution, or a receiver or trustee is appointed for all or
substantially all of its property and such proceeding is not dismissed or the
receivership or trusteeship is not vacated within ninety (90) days after
institution or appointment.


 


13.4                           Procedure
upon Termination or Expiration of Agreement.


 


13.4.1                  Termination shall not relieve either
Party of any obligations (including payment obligations) which have accrued
prior to the effective date of such termination.  In the case of any breach of the terms of
this Agreement, a decision not to terminate does not reduce or eliminate any
recourse otherwise available to either Party.


 


13.4.2                  Upon
any termination of this Agreement, PDL shall reimburse GMN for the cost of any
inventory of Product, or Raw Materials or other supplies or services purchased
or irrevocable committed to by GMN for producing the Product to the extent (i) GMN
or its Affiliates reasonably acquired and held such inventory or purchased or
committed to such services consistent with accepted purchase orders, and (iii) with
respect to inventory, GMN delivers (at PDL’s cost) such inventory to PDL.


 


13.4.3                  At
PDL’s request following the service of any notice of termination by PDL or GMN,
GMN shall use its Commercially Reasonable Efforts to provide such services as
PDL may reasonably request in respect of the transfer of the manufacturing of
the Products to PDL or its designee, but subject always to:


 


(a)                                  payment of
a transfer fee of $[****]* per
Product for the transfer of which GMN’s services are required plus the
reimbursement by PDL of [****]* of GMN’s Fully Burdened Costs in providing such
services in accordance with Section 7; and


 


(b)                                 nothing in
this Section 13.4.3 shall require GMN to assign or to license to PDL any
Intellectual Property Rights owned or controlled by GMN, except as required b y
Section 10.2.


 


13.5                           Survival.  Except as expressly provided herein, Sections
[****]* and [****]*, and any other provisions hereof which by their nature are
intended to survive expiration or early termination shall survive the
expiration of the Term or any termination of this Agreement, provided that
[****]* shall survive for a period of [****]*.


 






* Certain information on this page has been omitted and filed
separately with the SEC.  Confidential treatment has been requested with
respect to the omitted portions.


 


21

















 


14.                               LIMITATION
OF LIABILITY.


 


EXCEPT FOR GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, OR
WITH RESPECT TO ANY INDEMNIFICATION OBLIGATION OWED WITH RESPECT TO A THIRD
PARTY LOSS (BUT NOT OTHER LOSS), NEITHER PARTY SHALL BE LIABLE TO THE OTHER
PARTY UNDER ANY CIRCUMSTANCES OR ANY LEGAL OR EQUITABLE THEORY, WHETHER IN
CONTRACT, STRICT LIABILITY OR OTHERWISE, FOR ANY SPECIAL, CONSEQUENTIAL OR
INDIRECT DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT, EVEN IF ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES. THESE LIMITATIONS SHALL APPLY
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OR ANY LIMITED REMEDY.


 


NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT,
THE TOTAL LIABILITY OF GMN FOR ANY LOSS OR DAMAGE SUFFERED BY PDL AS A RESULT
OF ANY BREACH OF THIS AGREEMENT OR OF ANY OTHER LIABILITY OF GMN, AS APPLICABLE
(INCLUDING WITH RESPECT TO ANY INDEMNIFICATION OBLIGATION OWED HEREUNDER) SHALL
BE LIMITED TO THE SUM OF US$[****]*, EXCEPT THAT THE TOTAL LIABILITY OF GMN SHALL BE LIMITED TO THE
GREATER OF (A) US$[****]* OR (B) [****]* IN THE EVENT THAT SUCH
LIABILITY IS DUE TO THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF GMN; AND
EXCEPT THAT THE TOTAL LIABILITY OF GMN SHALL BE LIMITED TO THE SUM OF US$[****]* TO THE EXTENT THAT SUCH LIABILITY IS DUE
TO GMN’S FAILURE TO FOLLOW THE PROCEDURES SET FORTH IN THE TECHNICAL
INFORMATION AFTER [****]* SUCCESSFUL BATCHES, OTHER THAN NON-MATERIAL
DEVIATIONS FROM THE TECHNICAL INFORMATION.


 


15.                               DISPUTE
RESOLUTION.


 


This Agreement shall be deemed to have been made in
the State of New York and its form, execution, validity, construction and
effect shall be determined in accordance with the laws of the State of New
York, without giving effect to the principles of conflicts of law thereof.  Disputes arising out of, relating to or in connection with this
Agreement, or in relations between the parties with respect to the subject
matter hereof, for any reason or under any circumstances, will be finally
settled by a single arbitrator in a binding arbitration in accordance with the Judicial
Arbitration and Mediation Services (“JAMS”) Comprehensive Arbitration Rules and Procedures (the “JAMS
Rules”).  Upon receipt of written
notice of the existence of a dispute by one Party hereto to the other, the
Parties shall, within thirty (30) days conduct a meeting of one or more senior
executives of each Party, with full settlement authority, in an attempt to
resolve the dispute.  Each Party
shall make available appropriate personnel to meet and confer with the other
Party reasonably within the 30-day period. 
Upon the expiration of the
30-day period, or upon the termination of discussions between the senior
executives, either Party may elect arbitration of any dispute by written notice
to the other (the “Arbitration  Notice”).  The  arbitration shall be held in Minneapolis,
Minnesota before one (1) arbitrator from JAMS having substantial
experience as a jurist and mediator with significant disputes in the
biotechnology and/or pharmaceuticals industry selected by the mutual agreement
of GMN and PDL; provided, however, that if such Parties cannot agree on
an arbitrator within thirty (30) days of the Arbitration Notice, either Party
may request JAMS select the arbitrator, and JAMS shall select an arbitrator
pursuant to the procedure set out by the JAMS rules, provided, however, that
the arbitrator selected be a former judge with at least fifteen (15) years
experience addressing as a jurist and/or mediator significant disputes in the
biotechnology and or 






* Certain information on this page has been omitted and filed
separately with the SEC.  Confidential treatment has been requested with
respect to the omitted portions.


 


22

















 


pharmaceutical industry.  The
arbitration shall be administered by JAMS pursuant to its AAA Rules.  Judgment on the arbitration award may be
entered in any court having jurisdiction. 
The arbitrator may, in the arbitration award, allocate for payment by
the non-prevailing Party all or part of the costs of the arbitration, including
fees of the arbitrator and the reasonable attorneys’ fees and costs incurred by
the prevailing Party.  This Section shall
not preclude the Parties from seeking provisional remedies in aid of
arbitration from a court of appropriate jurisdiction.  In respect of any actions for injunctive or
other equitable relief hereunder, any action or proceeding may be brought
against any Party in the state and federal courts located in the city of
Minneapolis, Minnesota and each of the parties consents to the jurisdiction of
such courts in any such action or proceeding and waives any objection to venue
laid therein.


 


16.                               MISCELLANEOUS.


 


16.1                           Unenforceability.
 Both Parties hereby expressly state that
it is the intention of neither Party to violate any Law.  If any of the provisions of this Agreement
are held to be void or unenforceable, then such void or unenforceable
provisions shall be replaced by valid and enforceable provisions which will
achieve as far as possible the economic business intentions of the Parties.


 


16.2                           No
Waiver.  The failure by either Party
to take any action or assert any right hereunder shall in no way be construed
to be a waiver of such right, nor in any way be deemed to affect the validity
of this Agreement or any part hereof, or the right of a Party to thereafter
enforce each and every provision of this Agreement.


 


16.3                           Drafting.  This Agreement shall not be construed more
strictly against one Party than the other because it may have been drafted by
one of the Parties or its counsel, each Party having contributed through its
counsel substantially and materially to the negotiation and drafting thereof.


 


16.4                           Assignment.  This
Agreement and the Parties’ rights and obligations hereunder shall not be
assignable except with the prior written consent of the other Party, not to be
unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing, (a) GMN may transfer to
any Affiliate all or part of its obligations hereunder without the consent of
PDL, and (b) PDL may assign this Agreement to an Affiliate or to a Third
Party that acquires all or substantially all of the assets of PDL related to
this Agreement or one or more Products, whether by sale, merger,
consolidation, acquisition, transfer, operation of Law or otherwise, without
the consent of GMN [****]*.


 






* Certain information on this page has been omitted and filed
separately with the SEC.  Confidential treatment has been requested with
respect to the omitted portions.


 


23

















 


16.5                           Relationship
of the Parties.  In making and
performing this Agreement, the Parties are acting, and intend to be treated, as
independent contractors and nothing contained in this Agreement shall be
construed or implied to create an agency, partnership, joint venture, or
employer and employee relationship between or among any of the Parties.  Except as otherwise provided herein, no Party
may make any representation, warranty or commitment, whether express or
implied, on behalf of or incur any charges or expenses for or in the name of
any other Party.  No Party shall be
liable for the act of any other Party unless such act is expressly authorized
in writing by such Party.


 


16.6                           Notices.


 


16.7                           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), other than notices and communications related to technical and
manufacturing matters, which shall be sent to the responsible persons
identified in the Technical Agreement:


 


	
  If to PDL:

  	
   

  	
  If to GMN:

  
	
   

  	
   

  	
   

  
	
  PDL BioPharma, Inc.

  	
   

  	
  Prior to the Effective Date:

  
	
  Attention: General Counsel

  	
   

  	
  GMN, Inc.

  
	
  1400 Seaport Boulevard

  	
   

  	
  Attention: President

  
	
  Redwood City, CA 94063

  	
   

  	
  c/o Genmab, Inc.

  
	
  Facsimile: 650-454-1468

  	
   

  	
  457 North Harrison Street

  
	
  E-mail:
  francis.sarena@pdl.com

  	
   

  	
  Princeton, NJ 08540

  
	
   

  	
   

  	
  Facsimile: +1 609-430-2482

  
	
   

  	
   

  	
   

  
	
  with a copy to: (not to constitute notice)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  DLA Piper US LLP

  	
   

  	
  After the Effective Date:

  
	
  Attention: Howard Clowes

  	
   

  	
  GMN, Inc.

  
	
  153 Townsend Street, Suite 800

  	
   

  	
  Attention: President

  
	
  San Francisco, CA 94107-1957

  	
   

  	
  9450 Winnetka Avenue N

  
	
  Facsimile: 415- 659-7410

  	
   

  	
  Brooklyn Park, MN 554443

  
	
  E-mail:
  howard.clowes@dlapiper.com

  	
   

  	
   

  
	
   

  	
   

  	
  with copies at all times to: (not to constitute notice)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Lisa Drakeman, President

  
	
   

  	
   

  	
  Genmab A/S

  
	
   

  	
   

  	
  c/o Genmab, Inc.

  
	
   

  	
   

  	
  457 North Harrison Street

  
	
   

  	
   

  	
  Princeton, NJ 08540

  
	
   

  	
   

  	
  Facsimile: +1 609-430-2482

  



 


24

















 


16.8                           Entire
Agreement; Amendments.  This
Agreement and its Annexes contain the entire understanding between the Parties
relating to the subject matter hereof and supersedes any and all prior
agreements, understandings and arrangements, whether written or oral, between
the Parties relating to such subject matter and to the extent relating to
Product.  No amendments, changes,
modifications, waivers or alterations of the terms and conditions of this
Agreement shall be binding upon either Party hereto unless in writing and
signed by both Parties.


 


16.9                           Force
Majeure.  If and to the extent that either Party is
prevented or delayed by a Force Majeure Event which is not reasonably
preventable by taking industry standard precautions (provided that such
industry standard precautions shall not require GMN to have Product
manufactured at other facilities or by a third party manufacturer) from
performing any of its obligations under this Agreement and promptly so notifies
the other Party, specifying the matters constituting a Force Majeure Event
together with such evidence in verification thereof as it can reasonably give
and specifying the period for which it is estimated that the prevention or
delay will continue, then the Party so affected shall be relieved of liability
to the other for failure to perform or for delay in performing such obligations
(as the case may be), but shall nevertheless use its best endeavours to resume
full performance thereof, provided that if the Force Majeure Event
continues for a period of [****]* days or more following
notification, the Party not affected by the Force Majeure Event may terminate
this Agreement by giving not less than [****]* days prior
notice to the other Party and the provisions of Section 13.4 shall then
apply.


 


16.10                     Headings.  The captions to the Sections hereof are not a
part of this Agreement, but are merely guides or labels to assist in locating
and reading the several Sections hereof.


 


16.11                     Counterparts.  This Agreement may be executed in
counterparts and each such counterpart shall be deemed an original hereof.


 






* Certain information on this page has been omitted and filed
separately with the SEC.  Confidential treatment has been requested with
respect to the omitted portions.


 


25

















 


IN WITNESS WHEREOF, the parties hereto have executed this CLINICAL DRUG SUBSTANCE SUPPLY
AGREEMENT with effect from the Effective Date.


 


 


GMN, INC.


 


 


	
  By:

  	
  /s/ Torben
  Lund-Hansen

  	
   

  
	
  Name:

  	
  Torben
  Lund-Hansen

  	
   

  
	
  Title:

  	
  President

  	
   

  
				



 


 


PDL BIOPHARMA, INC.


 


 


	
  By:

  	
  /s/ Andrew
  Guggenhime

  	
   

  
	
  Name:

  	
  Andrew
  Guggenhime

  	
   

  
	
  Title:

  	
  Senior Vice
  President and Chief Financial Officer

  	
   

  
				



 


 


SIGNATURE PAGE


TECHNICAL AGREEMENT


 

















 


ANNEX A


 


PRODUCTS


 


[****]*


 






* Certain information on this page has been omitted and filed
separately with the SEC.  Confidential treatment has been requested with
respect to the omitted portions.


 














 


ANNEX
B


 


PRODUCT SPECIFICATIONS
AND TECHNICAL INFORMATION


 

















 


[****]* Specifications


 


1.0                                Formulated Drug
Substance


 


1.1 Formulated Drug Substance
Profile


[****]*


 


1.1.1      [****]*


 


1.1.2      Manufacturer and Location


[****]*


 


1.1.3      Formulation


[****]*


 


1.1.4      Container Closure System


[****]*


 


1.1.5      Storage Conditions


[****]*


 


1.1.6      Shelf Life / Retest Date


[****]*


 


1.2         Shelf
Life / Retest Date


[****]*


 


Table
1: Required Testing for Identity and for the Presence of Adventitious Agents


[****]*


 


1.3         Formulated
Drug Substance Manufacture


[****]*


 


1.3.1      List of Raw Materials /
Components


[****]*


 


1.3.2      Specifications Product


[****]*


 


Production and control
related documents


[****]*


 


1.3.3      Quality Control
Requirements


[****]*


 


Table 2: [****]* Specification & Test


[****]*


 


Table 3: Drug Substance In-Process Controls


[****]*


 


1.3.4      [****]* Storage
Conditions


 






* Certain
information on this page has been omitted and filed separately with the
SEC.  Confidential treatment has been requested with respect to the
omitted portions.


 

















 


[****]*


 


1.3.5      Other Documentation


[****]*


 


2.0                                Finished Drug
Product


 


2.1         Finished
Drug Product Profile


[****]*


 


2.1.1      Formulation


[****]*


 


2.1.2      Container Closure System


[****]*


 


2.1.3      Storage Conditions


[****]*


 


2.2         Storage
Conditions


[****]*


 


Table 4: Raw Material/Component List and Procedures


[****]*


 


2.2.1      Product Specification


[****]*


 


2.2.2      Quality Control


[****]*


 


Table 5: [****]* Specification and Test Methods


[****]*


 


Table 6: [****]* Drug Product In-Process Controls


[****]*


 


2.2.3      Storage Conditions


[****]*


 






* Certain
information on this page has been omitted and filed separately with the
SEC.  Confidential treatment has been requested with respect to the
omitted portions.


 

















 


[****]* Specifications


 


.1.0                             Formulated Drug Substance


 


1.1  Formulated Drug Substance Profile


[****]*


 


1.1.2  Manufacturer and Location


[****]*


 


1.1.3  Formulation


[****]*


 


1.1.4  Container Closure System


[****]


 


1.1.5  Storage Conditions


[****]*


 


1.1.6  Shelf Life / Retest Date


[****]*


 


1.2  Cell Bank Manufacture


[****]*


 


Table 1: Required Testing for
Identity and for the Presence of Adventitious Agents


[****]*


 


1.3         Formulated Drug Substance Manufacture


 


1.3.1 List of Raw Materials /
Components


[****]*


 


1.3.2      Product
Specifications


[****]*


 


Quality Control Requirements


[****]*


 


Table 2: [****]* Specification & Test


[****]*


 


Table 3: [****]* Specification & Test


[****]*


 


Table 4: Drug Substance
In-Process Controls - [****]*


[****]*


 


Table 5: Drug Substance
In-Process Controls - [****]*


 






* Certain information on this page has been
omitted and filed separately with the SEC.  Confidential treatment has
been requested with respect to the omitted portions.


 

















 


[****]*


 


1.3.3  Storage Conditions


[****]*


 


1.3.4      Other Documentation


[****]*


 


2.0           Finished Drug Product


 


2.1  Finished Drug Product Profile


[****]*


 


2.1.2      Formulation


[****]*


 


2.1.3  Container Closure System


[****]*


 


2.1.4  Storage Conditions


[****]*


 


2.2
Drug Product Manufacture


[****]*


 


Table
6: Raw Material/Component List and Procedures, [****]*


[****]*


 


Table
7: [****]* Material/Com


[****]*


 


2.2.2  Product Specification


[****]*


 


2.2.3 Quality Control


[****]*


 


Table 8: [****]* Specification and Test Methods


[****]*


 


Table 9: [****]* Specification and Test Methods


[****]*


 


Table 10: [****]*, In-Process Controls


[****]*


 


Table 11: [****]*, In-Process Controls


 


2.2.4      Storage
Conditions


[****]*


 






* Certain information on this page has been
omitted and filed separately with the SEC.  Confidential treatment has
been requested with respect to the omitted portions.


 

















 


[****]* Specifications


 


1.0           Formulated Drug Substance


 


1.1          Formulated Drug Substance Profile


[****]*


 


1.1.2        Manufacturer and Location


[****]*


 


1.1.3        Formulation


[****]*


 


1.1.4        Container Closure System


[****]*


 


1.1.5         Storage Conditions


[****]*


 


1.1.6        ShelfLife/RetestDate


[****]*


 


1.2           Cell Bank Manufacture


[****]*


 


Table 1: Required Testing for Identity and for the
Presence of Adventitious Agents


[****]*


 


1.3           Formulated Drug
Substance Manufacture


 


1.3.1 List of Raw Materials / Components


[****]*


 


1.3.2        Product
Specifications


[****]*


 


1.3.3  Quality
Control Requirements


[****]*


 


Table 2: [****]* Specification & Test


[****]*


 


Table 3: Drug Substance In-Process Controls


[****]*


 


1.3.4        Storage Conditions


[****]*


 


1.3.5        Other Documentation


[****]*


 






* Certain information on this page has been
omitted and filed separately with the SEC.  Confidential treatment has
been requested with respect to the omitted portions.


 


CONFIDENTIAL TREATMENT REQUESTED


 

















 


2.0           Finished Drug Product


 


2.1           Finished Drug
Product Profile


[****]*


 


2.1.2        Formulation


[****]*


 


2.1.3        Container Closure System


[****]*


 


2.1.4        Storage Conditions


[****]*


 


2.2           Drug Product
Manufacture


[****]*


 


Table 4: Raw Material/Component List and Procedures


[****]*


 


2.2.2        Product Specification


[****]*


 


2.2.3        Quality Control


[****]*


 


Table 5: [****]* Specification and Test Methods


[****]*


 


Table
6: [****]* In-Process Controls


[****]*


 


2.2.4 Storage Conditions


[****]*


 






* Certain information on this page has been omitted and filed
separately with the SEC.  Confidential treatment has been requested with
respect to the omitted portions.


 

















 


[****]* Specifications


 


1.0           Formulated Drug Substance


 


1.1           Formulated
Drug Substance Profile


[[****]*


 


1.1.2        Manufacturer
and Location


[****]*


 


1.13         Formulation ([****]*)


[****]*


 


1.1.4        Container Closure System


[****]*


 


1.1.5        Storage Conditions


[****]*


 


1.1.6        Shelf Life / Retest Date


[****]*


 


1.2           Cell
Bank Manufacture


[****]*


 


Table 1:  Required
Testing for Identity and for the Prescence of Adventitious Agents


[****]*


 


1.3           Formulation Drug Substance
Manufacturer


 


1.3.1 List of Raw Materials / Components


[****]*


 


1.3.2        Product Specifications


[****]*


 


1.3.3        Quality Control Requirements


[****]*


 


Table
2:     [****]* Specification and Test Methods


[****]*


 


Table
3: [****]*Drug Substance
In-Process Controls


[****]*


 


1.3.4        Storage
Conditions


[****]*


 






* Certain information on
this page has been omitted and filed separately with the SEC. 
Confidential treatment has been requested with respect to the omitted portions.


 

















 


1.3.5        Other
Documentation


[****]*


 


2.0           Finished
Drug Product


 


2.1           Finished
Drug Product Profile


[****]*


 


2.1.2        Formulation


[****]*


 


2.1.3        Container Closure System


[****]*


 


2.1.4        Storage Conditions


[****]*


 


Table 4: [****]* Raw Material/Component List


[****]*


 


2.2.2        Product Specification


[****]*


 


2.2.3        Quality Control


[****]*


 


Table 5:  [****]* Specification and Test Methods


[****]*


 


Table 6: [****]*In-Process Controls


[****]*


 


2.2.4  Storage Conditions


[****]*


 






* Certain information on this page has been
omitted and filed separately with the SEC.  Confidential treatment has
been requested with respect to the omitted portions.


 

















 


ANNEX C


 


FORM OF PURCHASE
ORDER


 

















 


PURCHASE ORDER NO


 


PDL
hereby places Purchase Order No. [      ]
pursuant to Section 3.1 of the Clinical Drug Substance Supply Agreement
effective as of the Effective Date by and between Genmab MN, Inc.
(formerly, GMN, Inc.) and PDL BioPharma, Inc. (the “Agreement”), as
follows:


 


Product:


 


Number
of batches:


 


	
  Batch #

  	
   

  	
  Scale

  	
   

  	
  Out of
  Freeze Date

  	
   

  	
  Estimated
  delivery date

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


This
Purchase Order is subject to the terms and conditions of the Agreement.  Capitalized terms not otherwise defined
herein shall have the meaning ascribed to them in the Agreement.  In the event of a conflict between the
provisions of this Purchase Order and the Agreement, the Agreement shall
govern.


 


Comments:


 


Product
shall be prepared in accordance with the Specifications.


 


[...]


 


 


PDL
BioPharma, Inc.


 


 


	
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  Date:

  	
   

  	
   

  
					



 


 


Accepted
by Genmab MN, Inc.


 


	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
  Print
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  
					



 














 


ANNEX D


 


TECHNICAL AGREEMENT


 

















 


TECHNICAL AGREEMENT


 


between


 


GMN, Inc.


c/o Genmab, Inc.


457 North Harrison Street, Princeton, NJ 08540


 


-
hereinafter referred to as “GMN” -


 


and


 


PDL
BioPharma Inc.,


1400
Seaport Boulevard, Redwood City, CA 
94063


 


-
hereinafter referred to as “PDL” -


 


Whereas this Technical Agreement forms an integral
part of that certain Clinical Drug Substance Supply Agreement effective as of
the Effective Date between the Parties (“CDSSA”), pursuant to which the Parties
wish to contract with each other with respect to the manufacture and quality
control of certain humanized antibody products;


 


Whereas the Parties are aware of the fact that
abidance to generally accepted pharmaceutical principles and rules in the
production, manufacture and quality control of humanized antibody products as
well as the pharmaceutical-technical quality of said products are of vital
importance;


 


Whereas the parties intend to determine their
obligations and responsibilities with regard to their co-operation in
manufacturing and controlling pharmaceutical products recognizing that it is
imperative to clearly define the responsibilities of each party and to define,
in particular, the observance of GMP as defined in the CDSSA.


 


Now, therefore, for and in consideration of the
above-described recitals, the mutual promises and covenants of the parties
hereinafter contained and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged by the parties, the parties
hereto (the “Parties”), intending to be legally bound, enter into the
agreements contained herein:


 

















 


1.             Subject of this Agreement


 


1.1           This Technical Agreement is an Annex to that certain CDSSA concerning
the production of the Products at the Facility in order to supply PDL with
Products for its clinical development programs.


 


1.2           All defined terms within the CDSSA shall, unless specifically stated
otherwise, have the same meaning when used in this Technical Agreement.


 


1.3           The obligations and responsibilities of each Party hereto with regard
to the manufacture and quality control of the Products are specified in Annex
1 hereto.


 


1.4           The names of contact persons are listed in Annex 2 hereto.


 


1.5           The Technical Information necessary for proper manufacture, quality
control and storage of the Products are supplied by PDL.


 


2.             Manufacturing, Quality Control


 


Subject to the terms of the
CDSSA, the Parties shall ensure that the Products are manufactured and quality
controlled in compliance with the Technical Information, the Specifications,
GMP and applicable Laws.


 


Appendix 1
contains a detailed outline of the duties and obligations of GMN and PDL with
respect to manufacture and quality control.


 


3.             Changes, Deviations


 


Any changes or deviations
from the content of the Technical Information may be performed only after prior
written approval by PDL. GMN will undertake the following items:


 


·      Evaluate and define follow up actions and
final approval of deviations and failure investigations


 


·      Notify PDL of all critical deviations within [****]* of the event being
assigned as critical, or in emergency situations where prior notice is not
practicable, within [****]* after such deviation.  (A critical deviation is defined as one which
may affect Product quality or requires additional processing steps, testing or
monitoring to ensure Product quality is not affected)


 


·      Provide a list of all other Product related
deviations with the consolidated Batch Record


 


·      Notify PDL of failed runs within [****]* of
failure being identified


 


·      Notify PDL of any events which may materially
impact batches previously shipped as soon as possible after the event has been
identified.


 


4.             Responsible Persons


 


Either Party shall notify
the other of the persons responsible for the manufacturing and/or the quality
control of the Products, such persons to meet legally required qualifications,
and shall keep the other Party informed of changes in such persons.


 






* Certain information on
this page has been omitted and filed separately with the SEC.  Confidential treatment has been requested
with respect to the omitted portions.


 

















 


5.             Product Release


 


Complete copies of the completed
Batch Record, along with supporting documents (including in-process and raw
material test results and product release results) produced in accordance with
current procedures, as requested by PDL, will be provided by GMN to PDL within [****]* after final release of Product. GMN shall furnish PDL for each batch of
the corresponding Product with a certificate of analysis, a certificate of
conformance and, on request of PDL, with samples and further information and
documentation regarding the manufacture and quality control of the
Products.  The certificate of analysis
shall be signed by the person responsible for the release of the Product.  The certificate of analysis and certificate
of conformance shall serve as evidence for the proper release of such batch and
shall state that the Product meets the Specifications and was manufactured in
accordance with GMP. The certificates may be electronically signed.


 


Annex 2 specifies the responsibilities in relation to
release of Products.


 


6.             Facilities and Inspections


 


GMN shall permit PDL
authorized representatives, during normal working hours and upon reasonable
written notice to GMN to (a) inspect that portion of its facilities
utilized and records maintained for the manufacture, preparation, processing,
storage or quality control of any Product and (b) be on-site at GMN during
the manufacture of Product.  PDL’s authorized representatives shall be
accompanied by personnel of GMN at all times, shall be qualified to conduct
such manufacturing audits or be present during manufacturing, and shall comply
with all applicable rules and regulations relating to facility security,
health and safety.  PDL shall ensure that
such authorized representatives conduct each manufacturing audit and site visit
in such a manner as to not interfere with the normal and ordinary operation of
GMN.  PDL acknowledges and agrees that it
shall remain fully liable to GMN in respect of any negligent acts or omissions
of its authorized representatives during the conduct of such audits or site
visits.  PDL’s audit rights shall be
limited as follows: (i) [****]* without cause, (ii) [****]* per batch
of Products without cause, and (iii) [****]* audits per year for cause.


 


GMN shall make its
facilities available for inspection by representatives of Regulatory
Authorities in compliance with all applicable Laws.  GMN will, to the extent permitted by
applicable Laws, promptly, and in any event within [****]*, notify PDL in
writing of its receipt of any correspondence, notice or any other indication whatsoever
of any FDA or other Regulatory Authority inspection, investigation or other
inquiry, or other notice or communication from any Regulatory Authority of any
type, that could reasonably be expected to affect the continuity of supply of
Product to PDL hereunder in a material way. 
Such notice shall include a copy of any related correspondence.  PDL shall have the right to be present at the
inspection as permitted by applicable Law. 
PDL’s representative shall not interact with the Regulatory Authorities
during such inspection unless permitted by GMN.


 


GMN shall provide written notice to PDL of any use of
animal-sourced raw materials in the Facility (such as, without limitation,
serum, BSA, etc.).  GMN shall also
provide written notice of any observed “in-process” contamination within the
Facility (such as, without limitation, microbial, mycoplasma, spiroplasma,
virus), or during tests of cell banks or EPC tests of 


 






* Certain information on this page has been omitted and filed
separately with the SEC.  Confidential treatment has been requested with
respect to the omitted portions.


 

















 


material manufactured at the Facility, provided that
such notification shall only be made in those cases where such contamination
has not been previously disclosed in the environmental reports provided to PDL.


 


7.             Drug Safety, Complaints


 


Subject to applicable Law,
GMN shall promptly inform PDL, and vice-versa, on any peculiar event, finding
and/or complaint which may have a bearing on drug safety or pharmaceutical
quality in relation to the Products, and supply all necessary information and
co-operation for the investigation of such events.  In cases where patient or investigative staff
safety may be concerned, GMN shall inform PDL immediately by telephone and in
writing, and vice-versa.


 


8.             Validations


 


GMN is responsible
for providing validated or qualified equipment, facilities and utilities for
the manufacture of the Products per GMP.


 


9.             Miscellaneous


 


This Agreement and its
annexes supplement the CDSSA and the provisions of the CDSSA are hereby
incorporated by reference.  To the extent
that any inconsistencies exist between the quality and GMP contents of this
Technical Agreement and the CDSSA, the stipulations in this Technical Agreement
shall prevail. In all other matters the CDSSA shall prevail.


 


10.           Term, Termination, Effects Upon
Termination


 


This Agreement shall enter
into force upon signature by the last Party to do so and shall remain valid for
an indefinite period of time.  Either
Party shall be entitled to terminate this Agreement according to the CDSSA.


 

















 


In
Witness whereof this Technical Agreement has been duly executed in two
originals.


 


 


	
   

  	
  GMN INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PDL
  BIOPHARMA INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name: L. Patrick Gage

  	
   

  
	
   

  	
  Title: Chief Executive
  Officer

  	
   

  
						



 

















 


Annex 1


 


Responsibilities


 


[****]*


 






* Certain information on this page has
been omitted and filed separately with the SEC.  Confidential treatment
has been requested with respect to the omitted portions.


 

















 


Annex 2


 


Key Contacts


 


	
  GMN [Name] Inc

  	
   

  	
  Name

  	
   

  	
  Contact
  Details

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Project Manager

  	
   

  	
  [****]*

  	
   

  	
  [****]*

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Analytical Development

  	
   

  	
  [****]*

  	
   

  	
  [****]*

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Process Technology

  	
   

  	
  [****]*

  	
   

  	
  [****]*

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  QA and Regulatory

  	
   

  	
  [****]*

  	
   

  	
  [****]*

  



 


	
  PDL BIOPHARMA INC.

  	
   

  	
  Name

  	
   

  	
  Contact
  Details

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Analytical and Process Development

  	
   

  	
  [****]*

  	
   

  	
  [****]*

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  QA and Regulatory Affairs

  	
   

  	
  [****]*

  	
   

  	
  [****]*

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Others (please specify)

  	
   

  	
  [****]*

  	
   

  	
  [****]*

  



 






* Certain information on this page has
been omitted and filed separately with the SEC.  Confidential treatment
has been requested with respect to the omitted portions.


 

















 


ANNEX E


 


PRELIMINARY PURCHASE
PRICE


 


[****]*


 






* Certain information on this page has been omitted and filed
separately with the SEC.  Confidential treatment has been requested with
respect to the omitted portions.


 

















 


ANNEX F


STABILITY TESTING


 


[****]*


 






* Certain information on this page has been omitted and filed
separately with the SEC.  Confidential treatment has been requested with
respect to the omitted portions.


 

















 


ANNEX G


 


PDL-PROVIDED MATERIALS


 


[****]*


 






* Certain information on this page has been omitted and filed
separately with the SEC.  Confidential treatment has been requested with
respect to the omitted portions.