Document:

Prepared by MERRILL CORPORATION

[ * ] = CERTAIN CONFIDENTIAL

INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED

AND FILED SEPARATELY  WITH THE

SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE

ACT OF 1934, AS AMENDED.

 

Exhibit 10.19

 

LICENSE AND RESEARCH AGREEMENT

(Amended and Restated)

 

 

This License And Research Agreement (the

“Agreement”) is made and entered into as of September 2, 1999, (the “Effective

Date”), as first amended and restated on March 26, 2001 and again amended and

restated on July 1, 2001 (the “Restatement Date”), by and between Rigel

Pharmaceuticals, Inc., a corporation organized under the laws of Delaware and

having a principal place of business at 240 East Grand Avenue, South San

Francisco, CA 94080 (“Rigel”) and Cell Genesys, Inc., a corporation organized

under the laws of Delaware and having a principal place of business at 342

Lakeside Drive, Foster City, CA 94404 (“CG”). 

Rigel and CG may be referred to collectively as the “Parties,” or

individually as a “Party.”

 

Recitals

 

Whereas, CG controls rights to certain

patents relating to [ * ] cell lines [ * ] and [ * ]

cell lines (Rockefeller), and related technology;

 

Whereas, Rigel has a license to the [ * ]

cell lines, associated vectors and vector libraries under intellectual property

rights owned by Stanford University;

 

Whereas, CG and Rigel desire to enter into

an agreement granting each other licenses under such patents and other

intellectual property rights as provided herein;

 

Whereas, Rigel is in the business of, among

other things, providing services for identifying molecules which bind together

in intracellular signaling pathways, and CG desires that Rigel perform such

services for CG to identify peptides, proteins and/or Genetic Material (as

defined below) that modulate angiogenesis in endothelial tissues;

 

Whereas, Rigel wishes to perform additional

research in the Field of Research (as defined below) for CG and Novartis Pharma

AG (“Novartis”) funded by Novartis, as a combined program of research expanding

upon the research that Rigel has already as of the Restatement Date conducted,

such that Rigel will be able to continue its research effort in the Field of

Research and the overall resources that Rigel will be able to devote to

identifying peptides, proteins and/or Screened Genetic Material (as defined

below) that modulate angiogenesis in endothelial tissues will be increased; and

 

Whereas, The Parties wish to confirm CG

rights to all Therapeutic Candidates (as defined below) that Rigel identifies in

the combined research program, but Rigel needs, in order to make such

arrangement acceptable to Novartis, the unambiguous right pursuant to this

Agreement to grant Novartis certain rights with respect to all Targets (as

defined below) for Novartis’s use as targets in Novartis’s drug discovery

efforts, and CG is willing to waive certain of its rights and to amend and

restate this Agreement to assure Rigel such unambiguous right;

 

Now THEREFORE, in consideration of the

foregoing premises and the covenants and promises contained in this Agreement,

the Parties agree as follows:

 

ARTICLE

1

 

DEFINITIONS

 

1.1          “Affiliate”

shall mean, with respect to a Party to this Agreement, any

other entity, whether de jure or de facto, which directly or indirectly

controls, is controlled by, or is under common control with, such Party.  A business entity or Party shall be regarded

as in control of another business entity if it owns, or directly or indirectly

controls, at least fifty percent (50%) (or such lesser percentage which is the

maximum allowed to be owned by a foreign entity in a particular jurisdiction)

of the voting stock or other ownership interest of the other entity, or if it

directly or indirectly possesses the power to direct or cause the direction of

the management and policies of the other entity by any lawful means whatsoever.

 

1.2           “CG

Collaboration Partners” means those third parties which enter

into a research or development agreement with CG under which CG conducts

substantial research or development activities in collaboration with such third

party and grants a license to such third party under patents and/or know-how

owned or controlled by CG in addition to a sublicense under the Rigel

Biological Materials or Rigel Know-How, which licenses and sublicense are for

the further development and commercialization of the results of such

collaborative research or development.

 

1.3          “CG [ * ]

Field” means human Gene Therapy and animal Gene Therapy.

 

1.4          “CG

Know-How” means all Information Controlled by CG as of the Effective

Date that is necessary or useful for practicing the CG Patents.

 

1.5          “CG

License” means the license agreement between CG and

Rockefeller University as in effect as of the Effective Date and attached

hereto as Appendix A.

 

1.6          “CG

Patents” means the Patents and applications listed on

Appendix B, to the extent the same are Controlled by CG.

 

1.7          “CG Program

Field” means the research, development or commercialization

of human or animal therapeutic products and services, which products and/or

services are comprised of peptides, proteins or Gene Therapy.

 

1.8          “Control”

or “Controlled” means ownership of, or a license to, a

particular item, material or intellectual property right with the ability to

grant to the other Party access to and/or a license or sublicense as provided

for herein without violating the terms of any agreement with a Third Party

under which such rights were acquired from such Third Party.

 

1.9          “Field

of Research” means identification of peptides, proteins

and/or Genetic Material that modulate angiogenesis in endothelial tissues.

 

1.10        “FTE”

means a full-time employee or consultant of Rigel or the equivalent thereof.

 

1.11        “FTE Year”

means the amount of time one FTE would spend working during one (1) calendar

year.

 

1.12        “Gene

Therapy” means a product or service for the treatment or

prevention of a disease that utilizes ex vivo or in vivo delivery (via viral

or nonviral gene transfer methods or systems) of Genetic Material, including

any cell incorporating Genetic Material.

 

1.13        “Genetic

Material” means a nucleotide sequence, including DNA, RNA and

complementary and reverse complementary nucleotide sequences thereto, whether

coding or noncoding and whether intact or a fragment.

 

1.14        “Information”

means any and all information, including without limitation techniques,

inventions, practices, methods, knowledge, know-how, skill, experience, test

data, analytical and quality control data, compositions and assays, and any

business, marketing, personnel or financial information or matters.

 

1.15        “Novartis

Angiogenesis Collaboration” means Rigel’s Collaboration

Agreement with Novartis dated May 29, 1999, as amended, but solely to the

extent covering a program of research directed to the field of target

identification and validation as they relate to the role of endothelial cell

function in angiogenesis, together with such research program and results

obtained therein, but specifically excluding Novartis’s research and research

results using Targets identified by Rigel (or jointly by Rigel and Novartis)

pursuant to such research program.

 

1.16        “Patent” means

an issued, valid, unexpired patent, including any extension, registration,

confirmation, reissue, re-examination or renewal thereof, or a pending

application for a patent, in any country, region or jurisdiction.

 

1.17        “Program

Know-How” shall mean any Information developed in the

Research relating to the development of Therapeutic Candidates, excluding

Information relating to Targets that are not Therapeutic Candidates.

 

1.18        “Program

Patent” shall mean a Patent claiming inventions or

discoveries in the Program Know-How.

 

1.19        “Program

Technology” shall mean Program Know-How and Program Patents.

 

1.20        “Research” shall

have the meaning provided in Section 3.1(a). 

For purposes of this Agreement, Rigel’s activities in the Field of

Research under the Novartis Angiogenesis Collaboration shall be included within

“Research.”

 

1.21        “Research

Plan” shall have the meaning provided in Section 3.1(a).

 

1.22        “Rigel

Biological Materials” means the [ * ] cell lines, associated

vectors and vector libraries set forth in Appendix C.

 

1.23        “Rigel

Collaboration Partners” means those third parties which enter

into a research or development agreement with Rigel under which Rigel conducts

substantial research or development activities in collaboration with such third

party and grants a license to such third party under patents and/or know-how

owned or controlled by Rigel in addition to a sublicense under CG Patents

and/or CG Know-How, which licenses and sublicense are for the further

development and commercialization of the results of such collaborative research

or development.

 

1.24        “Rigel

Field” means the creation and use of virally produced peptide

and protein libraries for the screening of transdominant effector peptides and

RNA molecules as claimed in the patent applications set forth on Appendix D as

well as any processes, techniques and applications disclosed in the foregoing

patent applications; it is understood that the foregoing technology is to be

used for (a) the discovery, validation and development of targets for human or

animal therapeutics, including without limitation Targets, and (b) the

discovery, testing, development and commercialization of therapeutic,

diagnostic and drug delivery products other than Therapeutic Candidates.  For the purposes of this Section 1.23,

“disclosed in” shall mean disclosed in the specifications of such patent

applications as necessary to practice the invention claimed and not solely as part

of the description of the prior art.

 

1.25        “Rigel

Know-How” means all Information Controlled by Rigel as of the

Effective Date necessary or useful for the use or modification of the Rigel

Biological Materials.

 

1.26        “Rigel

License” means the license agreements between Rigel and

Stanford University as in effect as of the Effective Date and attached hereto

as Appendix E.

 

1.27        “RMC” shall

have the meaning provided in Section 3.2.

 

1.28        “Screened

Genetic Material” shall mean Genetic Material identified via

screening against a Target, but which Genetic Material is not a Therapeutic

Candidate.

 

1.29        “Success

Criteria” shall have the meaning provided in Section 3.1(b).

 

1.30        “Tail End

Period” shall mean the period of six (6) months after the end

of the Research Period, the purpose of which is to permit the RMC to identify

Therapeutic Candidates; provided, however, that if this Agreement is terminated

prior to or during the Tail End Period, the Tail End Period shall be deemed to

end upon such termination date.

 

1.31        “Target” shall

mean a molecule occurring naturally in the body that is shown in the Research

(whether pursuant to this Agreement or the Novartis Angiogenesis

Collaboration), to directly or indirectly cause or impede angiogenesis in

endothelial tissue, to the extent such molecule (or its binding to another

molecule) is agonized or antagonized by a Therapeutic Candidate.  It is understood that a particular protein,

peptide or Genetic Material could be both a Therapeutic Candidate and a Target,

and in such case such molecule shall be treated as a “Target” hereunder to the

extent that such molecule is used as a drug discovery target, and shall at the

same time be treated as a “Therapeutic Candidate” hereunder to the extent such

molecule is used as a drug or therapy. 

The rights of the Parties with respect to Targets that are also

Therapeutic Candidates are as set forth in Section 2.4.  Rigel's rights to grant Novartis sublicense

rights hereunder to use Targets are as set forth in Section 2.1(b).  The exclusion of Novartis' research and

research results using Targets from the Novartis Angiogenesis Collaboration

(and therefore the provisions of this Agreement) are as set forth in Section

1.15.

 

1.32        “Therapeutic

Candidate” shall mean a peptide, protein or Genetic Material

discovered, identified, produced or tested during the Research Period pursuant

to the Research (whether pursuant to this Agreement or pursuant to the Novartis

Angiogenesis Collaboration), or identified during the Tail End Period, by  either Party, which meets the Success

Criteria, and any homologues or derivatives thereof.  For such purposes, it is understood that if a protein or peptide

meets the Success Criteria, Genetic Material that codes for such protein or

peptide (or homologues or derivatives of such Genetic Material) shall be within

the definition of Therapeutic Candidate (and vice-versa). The rights of the

Parties with respect to Therapeutic Candidates that are also Targets are as set

forth in Section 2.4.

 

1.33        “[ * ]

Patents” means the patents listed in Appendix F.

 

ARTICLE 2

 

LICENSES

 

2.1          CG License

Grants.

 

(a)           Subject

to the terms of the CG License, CG hereby grants to Rigel a royalty-free,

non-exclusive, worldwide license, with the right to sublicense to Rigel

Collaboration Partners, under and to CG’s right, title and interest in the CG

Patents and CG Know-How, and under and to CG’s right, title and interest in any

Program Technology owned solely by CG, all for purposes solely within the Rigel

Field; and hereby waives any claims against Rigel for the practice and use of the

CG Patents and CG Know-How within the Rigel Field prior to the Effective

Date.  Any sublicense granted hereunder

to Rigel Collaboration Partners shall be limited to the purposes of such

collaboration (as such purposes are described in Section 1.22 above).

 

(b)           Subject

to Section 2.4 below, CG hereby grants to Rigel:

 

(i)            a

royalty-free, exclusive, worldwide license, with the right to grant and

authorize sublicenses, under CG’s right, title and interest in the Program

Technology that is owned jointly by the Parties under Section 4.1(d) below, and

Targets that are similarly owned jointly with Rigel, all to make and use the

Targets for purposes outside the CG Program Field; and

 

(ii)           a royalty-free,

exclusive, worldwide license, under CG’s right, title and interest in the

Program Technology that is owned jointly by the Parties under Section 4.1(d)

below, and Targets that are similarly owned jointly with Rigel, all to make and

use the Targets as targets for the purposes of elucidating protein pathways  and identifying, researching, developing

and/or commercializing proteins, peptides, antibodies, Screened Genetic

Material, other biological agents and synthetic organic molecules that are not

themselves Therapeutic Candidates but that modulate angiogenesis in endothelial

tissues solely in connection with the Novartis Angiogenesis Collaboration.  Such license does not extend to the making

or use of Targets for the purposes of development and/or commercialization of

Therapeutic Candidates in the CG Program Field.

 

It is understood and

agreed that the licenses granted above in this Section 2.1(b) shall

specifically exclude the right to make or use any Target or Therapeutic

Candidate as a therapeutic agent or for purposes relating to delivery of a

Target or Therapeutic Candidate via Gene Therapy.  The license set forth in Section 2.1(b)(ii) above shall include

the right to grant a sublicense solely to Novartis under the Novartis

Angiogenesis Collaboration and to authorize further sublicenses by Novartis

solely in connection with Novartis’s research and development programs; provided

that any sublicense from Rigel to Novartis under the rights licensed to Rigel

pursuant to Section 2.1(b)(ii) (and any further sublicense by Novartis under

such rights) shall not exceed the scope of the license granted Rigel pursuant

to Section 2.1(b)(ii).  Rigel shall

retain the right to grant to CG the licenses set forth in Section 2.2 of this

Agreement.  If Rigel fails to retain

such right under the Novartis Angiogenesis Collaboration, the license granted

Rigel under Section 2.1(b)(ii) shall terminate.

 

(c)           CG

has entered into a license agreement with the [ * ] concerning the [ * ]

Patents which includes the right to sublicense (the “[ * ] Agreement”); as of the

Effective Date, however, the terms under which CG may grant sublicenses under

the [ * ]

Agreement make impractical a sublicense to Rigel under the [ * ] Patents for purposes of

the Rigel Field.  In the event that CG

successfully renegotiates the terms of the [ * ] Agreement such that such sublicense

would be practical, CG agrees to discuss in good faith the grant of a

sublicense to Rigel under the [ * ] Patents.  The Parties understand and agree, however, that CG is not and

shall not be obligated to enter into any agreement with Rigel concerning the [ * ]

Patents, that failure to reach such an agreement for any reason shall not be

deemed a breach of this Agreement and that this Section 2.1(c) shall not be

deemed to preclude CG from entering into an agreement with a third party of any

type or at any time concerning the [ * ] Patents.

 

2.2          Rigel

License Grants.

 

(a)           Subject

to the terms and prior to the termination or expiration of the Rigel License,

the Parties agree that Rigel shall grant to CG, at CG’s sole option and upon

CG’s request, a royalty-free, non-exclusive, worldwide license, without the

right to sublicense, under Rigel’s right, title and interest in the Rigel

Know-How and Rigel Biological Materials, to make, have made, use, sell, offer

for sale and import products in the CG [ * ] Field.  It is understood that in no event will CG have any obligation to

obtain such license from Rigel.  Rigel

will give CG thirty (30) days prior written notice of the termination of the

Rigel License by Rigel.

 

(b)           Rigel

hereby grants to CG:

 

(i)            subject

to Section 2.1(b) above, (y) a royalty-free, exclusive, worldwide license, with

the right to grant and authorize sublicenses, under Rigel’s right, title and

interest in the Program Technology (including without limitation the

Therapeutic Candidates) owned solely by Rigel or jointly with CG, to make, have

made, use, sell, offer for sale and import products, and otherwise exploit the

Program Technology, in each case for purposes solely within the CG Program

Field, and (z) a royalty-free, exclusive, worldwide license, with the right to

grant and authorize sublicenses, under any Information and intellectual

property created by Rigel (solely or jointly with Novartis) under the Novartis

Angiogenesis Collaboration, to make, have made, use, sell, offer for sale and

import Therapeutic Candidates within the CG Program Field; and

 

(ii)           subject

to rights previously granted to third parties, a royalty-free, non-exclusive,

worldwide license, with the right to grant sublicenses, under Rigel’s right,

title and interest in and to all Patents with priority dates prior to the

Effective Date that claim Therapeutic Candidates, or the manufacture or use

thereof, to make, have made, use and sell products in Gene Therapy

incorporating such Therapeutic Candidates.

 

(c)           In

addition, Rigel hereby grants to CG (i) a royalty-free, non-exclusive license,

with the right to sublicense to CG Collaboration Partners, under Rigel’s right,

title and interest in the Targets to make and use the Targets solely for the

research and development of the Therapeutic Candidates in the Field of

Research, and (ii) a royalty-free, non-exclusive license, with the right to

sublicense to CG Collaboration Partners, under any Information and intellectual

property created by Rigel (solely or jointly with Novartis) under the Novartis

Angiogenesis Collaboration, to make and use the Targets solely for the research

and development of the Therapeutic Candidates in the Field of Research.  For clarity, it is understood and agreed

that the licenses granted to CG under this Section 2.2 specifically exclude the

performance by CG of research on or with a Target which is outside the Field of

Research. Any sublicense granted hereunder to CG Collaboration Partners shall

be limited to the purposes of such collaboration.

 

2.3          Rigel

Covenant.  Rigel

hereby covenants that neither Rigel nor its Affiliates will make any claims

against CG, its permitted sublicensees, distributors and customers in the chain

of title with CG or its permitted sublicensees for Patent infringement as a result

of activities which are explicitly permitted under the terms of this Agreement,

nor shall Rigel or its Affiliates authorize a third party to make such a claim,

and Rigel agrees to cooperate with CG in the defense against any such claim by

licensees of Rigel.

 

2.4          Molecules

That Are Both Targets and Therapeutic Candidates.  With respect to each particular protein,

peptide or Genetic Material that is both a Target and a Therapeutic Candidate

(each a “Dual Molecule”), the parties agree that (i):  CG shall have (y) the exclusive right to research, develop, make,

have made, use, sell, offer for sale and import such Dual Molecule (including

homologues and derivatives of such Genetic Material) as a therapeutic agent or

such Dual Molecule (including homologues and derivatives of such Genetic

Material) for Gene Therapy, and (z) to make and use such Dual Molecule in

accordance with Sections 2.2(b) and (c); and (ii) Rigel shall have the

exclusive right to research, develop, make, have made and use such Dual Molecule

for the purposes set forth in Section 2.1(b)(i); and (iii) Rigel shall have the

exclusive right to research, develop, make, have made and use such Dual

Molecule for the purposes set forth in Section 2.1(b)(ii).  For the sake of clarity, CG’s exclusive rights

as described in this Section 2.4 shall not be construed to exclude Rigel or its

permitted licensees from making and using such molecule as a target in research

to elucidate protein or other signal transduction pathways in which such Dual

Molecule is involved, or to discover, generate, develop and commercialize

proteins, peptides, antibodies, Screened Genetic Material, other biological

agents and synthetic organic molecules that may or may not modulate the

activity of such Target or pathways but are not themselves Therapeutic

Candidates.  All activities of Rigel

with respect to the use of Targets shall remain subject to the provisions of

Section 3.5.

 

2.5          No Other

License.  No right or

license is granted by either Party to the other under any other intellectual

property other than those items expressly included in the licenses granted in

this Article 2. Accordingly, no license shall be deemed granted by implication,

estoppel or otherwise, if such license is not expressly and specifically

granted in this Article 2.

 

ARTICLE

3

 

RESEARCH

3.1          Research.

 

(a)           Rigel

agrees to (i) use diligent efforts to conduct research within the Field of

Research (the “Research”), in accordance with the research plan (the “Research

Plan”) incorporated hereby in, and appended to, this Agreement as Appendix G,

as amended from time to time by written agreement of the Parties; and (ii) use

diligent efforts to meet the goals of the Research Plan according to the

timetables set forth therein.  Without

limiting the foregoing, the Research shall commence on the Effective Date and

terminate upon the earlier of three (3) years after the Effective Date or the

termination of the Agreement (the “Research Period”).  Rigel will commit [ * ] during each year of the Research

Period, or such other allocation as the RMC may decide, provided that in the

event the RMC decides to reallocate FTEs between years, Rigel shall have no

obligation to commit more than [ * ] in total over the entire Research

Period.  It is understood and agreed

that the scope of CG’s licenses under Section 2.2 shall not be limited by (x)

the number of FTEs performing the Research, (y) whether such FTEs are

performing research in accordance with the Research Plan or under the Novartis

Angiogenesis Collaboration, or (z) whether such FTEs are funded by Rigel,

Novartis, or some other entity.  The

individual FTEs who will initially conduct the Research are listed in Appendix

H and may be replaced by Rigel, as reasonably agreed by the Parties, with other

FTEs of comparable skill and expertise. 

Rigel agrees to test against the Success Criteria during the Research

Period any proteins, peptides and Genetic Material produced or evaluated in

connection with the Research as contemplated in the Research Plan.

 

(b)           The

Parties shall reasonably establish criteria for determining whether a

particular peptide, protein or Genetic Material modulates angiogenesis in

endothelial tissue in assays performed at Rigel, as such criteria are

contemplated in the Research Plan (the “Success Criteria”).

 

3.2          Research

Management Committee. 

The Parties shall form a research management committee (the “RMC”)

comprised of four (4) individuals, two (2) being Rigel employees appointed and

replaced by Rigel at its discretion, and two (2) being CG employees appointed

and replaced by CG at its discretion. 

The size and composition of the RMC may be modified by mutual agreement

of the Parties.  The RMC shall evaluate

the results of the Research set forth in the research reports pursuant to

Section 3.4(a) to assess whether a peptide, protein or Genetic Material is a

Therapeutic Candidate, and perform such other duties as specifically delegated

to the RMC by mutual written agreement of the Parties.

 

3.3          RMC

Meetings and Actions. 

RMC meetings shall take place at such times and places as shall be

determined by the RMC in order for the RMC to fulfill its obligations under

Section 3.2.  It is expected that the

meetings will alternate between appropriate offices of each Party, or at such

other convenient locations as agreed.  If

agreed by its members, the RMC may conduct meetings by telephone or video

conference or other acceptable electronic means, provided that any decisions

made during such meeting are recorded in writing and confirmed by signature of

at least one (1) of the RMC members from each of the Parties.  All decisions of or actions taken by the RMC

shall be by unanimous approval of all the members of the RMC, and voting on any

matters shall be reflected in the minutes of the meeting at which the vote was

taken. If the RMC is unable to reach unanimous decision on any particular

matter or issue, such matter or issue shall be referred to the chief executive

officer of each Party or their designees for resolution.  It is understood that, for purposes of

determining the Parties’ rights and obligations under this Agreement, the

authority of the RMC shall be limited to deciding those specific issues

specifically delegated to the RMC in other Articles of this Agreement (i.e.,

other than the general matters described in this Article 3).

 

3.4          Reports;

Disclosure.

 

(a)           Rigel

shall keep CG fully informed of the progress and results of the Research

(including the discovery of Targets and/or Therapeutic Candidates made through

its Research under the Novartis Angiogenesis Collaboration) and shall provide

written reports at or before each RMC meeting describing its activities, the

level of effort applied to, and the results of, the Research, specifically

including Rigel’s determination as to which peptides, proteins or Genetic

Material as of the date of such report meet the Success Criteria.  Such RMC reports shall be in such form and

contain such detail as the RMC shall determine.  Rigel agrees to fully disclose to CG the Program Technology and

the Targets, and to provide CG with reasonable quantities of Targets and

Therapeutic Candidates generated or utilized in connection with the Research.

 

(b)           Rigel

agrees to maintain records of its activities in performing the Research, in

good scientific manner, and to permit CG to have access to such records upon

ten (10) days written notice to Rigel and during regular business hours, to the

extent reasonably necessary to verify that Rigel has met its obligations under

this Section 3.4.

 

3.5          Exclusivity

of Efforts.  Except as

explicitly set forth in this Section 3.5, Rigel agrees that neither Rigel nor

any of its Affiliates shall directly or indirectly conduct or sponsor any

research, develop or otherwise commercialize any products or technologies

within the Field of Research, other than pursuant to the Research Plan, during

the Research Period and for a period of one (1) year following the Research

Period.  Without limiting the foregoing,

Rigel shall not appoint or license any third party to develop, market, sell or

otherwise distribute such products until after the expiration of one (1) year

following the Research Period. 

Notwithstanding the foregoing in this Section 3.5 and subject toSection

2.1(b), Rigel shall be entitled to enter into the Novartis Angiogenesis

Collaboration.

 

ARTICLE 4

 

INTELLECTUAL PROPERTY MATTERS

 

4.1          Ownership

and Prosecution. 

Subject to the terms of this Agreement, as between the Parties hereto:

 

(a)           It

is understood that CG retains its entire right, title and interest in the CG

Patents and CG Know-How, subject only to the rights expressly granted to Rigel

hereunder, and shall have the right, but not the obligation, to file, prosecute

and maintain any Patents related thereto at its expense.

 

(b)           It

is understood that Rigel retains its entire right, title and interest in the

Rigel Biological Materials and Rigel Know-How, subject only to the rights

expressly granted to CG hereunder, and shall have the right, but not the

obligation, to file, prosecute and maintain any Patents related thereto at its

expense.

 

(c)           It

is understood that, subject only to the rights expressly granted to the other

Party hereunder, each Party retains its entire right, title and interest in and

to any inventions, discoveries, know-how, trade secrets, and other information

made or developed solely by such Party and/or its consultants in the course of

the performance of this Agreement (“Sole Inventions”), and, subject to

subsection (e) below, shall have the right, but not the obligation, to file,

prosecute and maintain any Patents claiming its Sole Inventions (“Sole

Patents”) in all countries of the world.

 

(d)           Both

Parties shall jointly own any inventions, discoveries, know-how, trade secrets,

and other information, that are made jointly by the Parties in the course of

the performance of this Agreement (“Joint Inventions”).  Subject to subsection (e) below, the RMC

shall designate the Party which shall be responsible for filing, prosecuting

and maintaining Patents claiming Joint Inventions (“Joint Patents”).  All costs and expenses of filing,

prosecuting and maintaining such Joint Patents will be borne equally by the

Parties.  The Party designated by the

RMC to perform patenting activities shall seek the comments of the other Party

and shall keep the other informed of the progress of such prosecution by providing

quarterly status reports and copies of all correspondence between their patent

counsel and the patent offices of the countries where such applications were

filed.  Such other Party shall

reasonably assist the Party designated by the RMC in the prosecution of Joint

Patents, including, without limitation, by executing any necessary powers of

attorney.  Subject to the rights and

licenses granted to the other Party in Section 2.1(b) and 2.2(b), it is

understood that neither Party shall have any obligation to account to the

other, or obtain the consent of the owner, with respect to the

commercialization, licensing or enforcement of any Joint Inventions or Joint

Patents, and hereby waives any right it may have under the laws of any country

to require such accounting or consent.

 

(e)           CG

shall have the right but not the obligation (either itself or through its

designee) to file, prosecute and maintain Patents claiming Therapeutic

Candidates (“Candidate Patents”); provided, however, that for any molecule that

is a Therapeutic Candidate and a Target: (i) CG shall have the right but not

the obligation (either itself or through its designee) to file, prosecute and

maintain Patents claiming uses of such molecule in the CG Program Field and

such Patents also shall be Candidate Patents; and (ii) Rigel shall have the

right, but not the obligation, to file, prosecute and maintain any Patents

claiming the composition of matter of such molecule or claiming any use of the

molecule outside the CG Program Field or in the Rigel Field.  All costs and expenses of filing,

prosecuting and maintaining Candidate Patents will be borne by the Party that

undertakes such prosecution.  The Party

undertaking such prosecution shall seek the comments of the other Party and

shall keep the other Party informed of the progress of such prosecution by

providing quarterly status reports and copies of all correspondence between

their patent counsel and the patent offices of the countries where such

applications were filed.  Each Party

shall reasonably assist the other Party in the prosecution of Candidate

Patents, including, without limitation, by executing any necessary powers of

attorney and other documents necessary for such prosecution.

 

(f)            Each

Party agrees to keep the other Party fully informed as to prosecution and

maintenance (including without limitation any interference, opposition or other

prosecution or other proceedings) with respect to patents claiming and

disclosing subject matter within the Program Technology.  In the event that a Party elects not to

prosecute or maintain any patent rights in a Sole Invention comprising Program

Technology, it shall promptly notify the other Party and authorize the other

Party to seek or continue such prosecution and maintenance at such other

Party’s expense.  In such case the owner

of such Sole Invention shall cooperate fully with the other Party to facilitate

such prosecution and maintenance.

 

4.2          Infringement

and Similar Actions. 

As between the Parties hereto:

 

(a)           CG

shall have the sole and exclusive right, at its expense, to prosecute any and

all infringement or wrongful use of the CG Patents and CG Know-How, and

(subject to paragraph (c) below) Sole Patents owned by CG and/or to enter

settlements, judgments or other arrangements respecting such infringement or

wrongful use.  CG may retain all damages

and other amounts recovered as a result of any such action, settlement,

judgment or other arrangement.

 

(b)           Rigel

shall have the sole and exclusive right, at its expense, to prosecute any and

all infringement or wrongful use of the Rigel Know-How, the Rigel Biological

Materials, and (subject to paragraph (c) below) Sole Patents owned by Rigel

and/or to enter settlements, judgments or other arrangements respecting such

infringement or wrongful use.  Rigel may

retain all damages and other amounts recovered as a result of any such action,

settlement, judgment or other arrangement.

 

(c)           With

respect to infringement of any Program Patents in the CG Program Field, CG

shall have the right, but not the obligation, (directly or through designees)

to institute, prosecute and control at its own expense and for its own benefit,

any action or proceeding with respect to such infringement.  With respect to other infringement of any

Program Patents (i.e., outside the CG Program Field), Rigel shall have the

right, but not the obligation, (directly or through designees) to institute,

prosecute and control, at its own expense and for its own benefit, any action

or proceeding with respect to such infringement.  If a Party with the right to do so fails to bring an action or

proceeding against a suspected infringer within a reasonable period after

receiving a written request by the other Party to do so, such other Party shall

have the right to bring and control an action against such infringer by counsel

of its own choice and retain for its own account any amounts recovered from

third parties.  If one Party brings any

such action or proceeding, the other Party agrees to be joined as a Party

plaintiff if necessary to prosecute the action and to give the first Party

reasonable assistance and authority to file and prosecute the suit.

 

(d)           Each

Party shall promptly notify the other in writing of any alleged or threatened

infringement of Joint Patents of which it becomes aware and which may adversely

impact the rights of the Parties hereunder. 

Promptly upon such notification, the Parties shall meet to discuss the

strategy and appropriate steps to be taken to deal with such infringement. Any

recovery obtained by settlement or otherwise shall be disbursed as follows:

first, any reasonable expenses incurred in connection with such action

(including counsel fees) by both Parties are reimbursed; thereafter, the net

recovery shall be shared between the Parties according to the ratio of their

respective contributions to the litigation costs.  This paragraph shall not be deemed to limit the Parties’

respective rights to enforce Joint Patents, or to limit the rights granted

under paragraph (c) above.

 

4.3          Third

Party Claims.

 

(a)           Except

to the extent expressly warranted in Article 7, and subject to the

indemnification obligation in Article 5, CG shall have no liability to Rigel

with respect to any claim, suit or action alleging that the practice of the

license rights granted by CG under Section 2.1 infringes any intellectual

property or other right of a third party. Except to the extent expressly

warranted in Article 7, and subject to the indemnification obligation in

Article 5, Rigel shall have no liability to CG or its Affiliates with respect to

any claim, suit or action alleging that the practice of the license rights

granted under Section 2.2 infringes any intellectual property or other rights

of a third party.

 

(b)           Rigel

hereby agrees to provide reasonable assistance to CG, at its request, in

defending any action or claim initiated by a third party against CG arising

from any claim that the use or practice of the Rigel Know-How, Rigel Biological

Materials or the Target by CG or its Affiliates infringes that third party’s

proprietary rights.  CG hereby agrees to

provide Rigel reasonable assistance, at its request and expense, in defending

any action or claim initiated by a third party against Rigel or its Affiliates

arising from any claim that the use or practice of the CG Patents or CG Know-How

by Rigel or its Affiliates infringes that third party’s proprietary rights.

 

(c)           If

a third party asserts against CG that a patent, trademark or other intangible

right owned by it is infringed by any product in the CG Program Field derived

or resulting from or incorporating Program Technology, CG will be solely

responsible for defending against any such assertions at its cost and

expense.  Each Party will give prompt

written notice to the other of any such claim. 

Rigel will assist in the defense of any such claim as reasonably

requested by CG, at CG’s expense, and may retain separate counsel at its own

expense at any time.

 

(d)           Neither

Party shall enter into any settlement of any claim which would admit the

invalidity of Patents within the Program Technology without the other Party’s

prior written consent, which consent shall not be unreasonably withheld or

delayed.

 

4.4          Pass-Through

Royalties.  In

consideration for the licenses granted herein:

 

(a)           Rigel

agrees to pay any amounts which CG is required to pay to Rockefeller University

under the CG License as a result of CG’s grant to Rigel of license rights to CG

Patents or CG Know-How to Rigel or the exercise of the license rights granted

by CG under the CG License.

 

(b)           Rigel

agrees to pay CG (i) [ * ] for the license granted to Rigel

hereunder to the CG Patents related to the [ * ] cell lines, and (ii) [ * ]

for each sublicense granted by Rigel under this Agreement.

 

(c)           CG

agrees that in the event CG exercises its option to obtain a license pursuant

to Section 2.2(a) above, CG will pay any amounts which Rigel is required to pay

to Stanford University under the Rigel License as a result of Rigel’s grant to

CG of license rights to Rigel Biological Materials or Rigel Know-How to CG or

the exercise of the license rights granted by Rigel under the Rigel

License.  It is understood that unless

and until CG obtains such license rights from Rigel, CG shall not be obligated

to pay to Rigel or to Stanford University any amounts that Rigel is required to

pay to Stanford University under the Rigel License.

 

ARTICLE

5

 

INDEMNIFICATION

 

5.1          CG

Indemnity.  CG agrees

to indemnify, hold harmless and defend Rigel, its Affiliates, agents and

employees from and against any and all liabilities, losses, damages, costs,

fees and expenses, including reasonable legal expenses and attorneys’ fees

(collectively, “Losses”) arising out of suits, claims, actions, or

demands,  brought or made by a third

party (“Third Party Claim”) against Rigel, its Affiliates, agents and

employees, based on (i) CG’s use and practice of the Rigel Know-How, Rigel

Biological Materials, the Program Technology or the Targets, or (ii) breach of

CG’s warranties under Article 7 below, or (iii) the manufacture, use, handling,

storage, sale or other disposition of Rigel Biological Materials, Program

Technology, the Targets or any products resulting or derived from the Rigel

Biological Materials or the Program Technology by CG, its Affiliates, agents,

employees or sublicensees, all except to the extent such Losses or Third Party

Claims result from the negligence or willful misconduct of Rigel or a breach of

Rigel’s warranties under Article 7 below.

 

5.2          Rigel

Indemnity.  Rigel

agrees to indemnify, hold harmless and defend CG, its Affiliates, agents and

employees from and against any and all Losses arising out of any Third Party

Claims against CG, its Affiliates, agents and employees based on (i) Rigel’s

use or practice of the CG Patents the CG Know-How or the Program Technology,

(ii) breach of Rigel’s warranties under Article 7 below, or (iii) the

manufacture, use, handling, storage, sale or other disposition of Program

Technology, the Targets or any products resulting or derived from the Program

Technology by Rigel, its Affiliates, agents, employees or sublicensees, all except

to the extent such Losses or Third Party Claims result from the negligence or

willful misconduct of CG, or a breach of CG’s warranties under Article 7 below.

 

5.3          In

the event that a Party is seeking indemnification under this Article 5, it

shall inform the other Party of a claim or suit as soon as reasonably

practicable after it receives notice of the claim or suit, shall permit the

indemnifying Party to assume direction and control of the defense of the claim

or suit (including the right to settle the claim or suit solely for monetary

consideration), and shall cooperate as reasonably requested (at the expense of

the indemnifying Party) in the defense of the claim or suit.  Neither Party will enter into any settlement

or claim pursuant to this Section 5.3 which is materially adverse to the rights

of the other Party herein, without the other Party’s prior written consent,

which will not be unreasonably withheld or delayed.

 

ARTICLE

6

 

CONFIDENTIALITY

 

6.1          Confidentiality.  Except to the extent expressly authorized by

this Agreement or otherwise agreed in writing, the Parties agree that, for the

term of this Agreement and for five (5) years thereafter, the Party receiving

any Information or materials furnished to it by the other Party pursuant to

this Agreement (collectively, “Confidential Information”) shall keep

confidential and shall not publish or otherwise disclose or use such

Confidential Information for any purpose other than as provided for in this

Agreement.

 

6.2          Exceptions.  The obligations in Section 6.1 shall not

apply to any Information or materials to the extent that the receiving Party

can establish by competent proof that such Information or materials:

 

(a)           was

already known to the receiving Party, other than under an obligation of confidentiality,

at the time of disclosure by the other Party;

 

(b)           was

generally available to the public or otherwise part of the public domain at the

time of its disclosure to the receiving Party;

 

(c)           became

generally available to the public or otherwise part of the public domain after

its disclosure and other than through any act or omission of the receiving

Party in breach of this Agreement; or

 

(d)           was

disclosed to the receiving Party, other than under an obligation of

confidentiality, by a Third Party who had no obligation to the disclosing Party

not to disclose such information to others.

 

6.3          Authorized

Disclosure.  Each

Party may disclose the other’s Confidential Information to the extent such

disclosure is reasonably necessary (i) to exercise the rights granted to such

Party hereunder (including the right to grant sublicenses as permitted by this

Agreement provided that prior to any disclosure to a sublicensee, such

sublicensee has executed a confidentiality agreement with terms corresponding

to this Article 6); and (ii) to file or prosecute patent applications, to

prosecute or defend litigation, to comply with applicable governmental

regulations or to conduct preclinical or clinical trials; provided that if a

Party is required by law or regulation to make any such disclosure of the other

Party’s Confidential Information it will, except where impracticable for

necessary disclosures, for example in the event of medical emergency, give

reasonable advance notice to the other Party of such disclosure requirement

and, except to the extent inappropriate in the case of patent applications,

will use its best efforts to secure confidential treatment of such Confidential

Information required to be disclosed.

 

6.4          Survival.  This Article 6 shall survive the termination

or expiration of this Agreement for a period of five (5) years.

 

ARTICLE

7

 

WARRANTY MATTERS

 

7.1          Limited Warranties.  CG hereby represents and warrants to Rigel

that CG has the full right and power to grant the licenses granted to Rigel

under Section 2.1(a).  Rigel hereby

represents and warrants to CG that Rigel has the full right and power to grant

the licenses granted to CG under Section 2.2.

 

7.2          General Warranties.  Each of the Parties hereby represents and

warrants to the other that (i) it is a corporation duly organized and validly

existing in good standing under the laws of its state of incorporation, (ii) it

is duly qualified and authorized to enter into and perform its obligations

under this Agreement, (iii) it has full power, authority and legal right to

enter into and perform this Agreement, and (iv) the execution, delivery, and

performance of this Agreement has been duly authorized by all necessary

corporate action on the part of each Party and does not contravene any law

binding on it, its Articles of Incorporation or Bylaws, any indenture,

mortgage, contract or other agreement to which it is a Party or by which it is

bound or any laws, governmental rule, regulation or order.

 

7.3          Intellectual Property Warranties.

 

(a)           Each

of the Parties hereby represents and warrants to the other that (i) it does not

Control any Patents that would dominate the Patents licensed to the other Party

hereunder, (ii) it is not aware of any claims of a third party which would call

into question the rights of such Party in the licensed subject matter or its

right to grant the licenses granted to the other Party hereunder, (iii) it has

provided the other Party with all information concerning royalty obligations

pertinent to the licenses granted to the other Party hereunder; and (iv) it

will use commercially reasonable efforts to keep in force any license agreement

from which the license or sublicense granted to the other Party under this

Agreement is derived to the extent that such license agreement does not provide

for a survival of any sublicenses granted by such Party.

 

(b)           Rigel

further warrants to CG that as of the Effective Date (i) to the best of its

knowledge, Rigel’s conduct of the Research, and the manufacture, sale and use

of Therapeutic Candidates will not infringe any third party intellectual

property rights, and without limiting the foregoing, Rigel warrants that

Rigel’s conduct of the Research will not infringe any of the patents listed in

Appendix I hereto; (ii) Rigel does not know of any third party other than

Stanford University having a claim in the Rigel Biological Materials; and (iii)

Rigel has the right to grant to CG a license under the Rigel Biological

Materials and the Rigel Know-How to make, use and sell products in the CG [ * ]

Field.

 

(c)           CG

further warrants to Rigel that CG has the right to grant to Rigel a license

under the CG Patents and CG Know-How to make, use and sell products within the

Rigel Field.

 

(d)           Rigel

warrants that it has not as of the Effective Date entered into an agreement

with any third party licensing or granting rights to Rigel technology in the

Field of Research.

 

7.4          Limitation

on Warranties.  EXCEPT

AS PROVIDED IN SECTIONS 7.1, 7.2, AND 7.3 ABOVE, NEITHER PARTY MAKES ANY

WARRANTIES TO THE OTHER PARTY, WHETHER EXPRESS OR IMPLIED, INCLUDING WITHOUT

LIMITATION ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE

AS TO ANY PRODUCT OR PROCESS, OR AS TO THE VALIDITY OR SCOPE OF ANY PATENTS, OR

THAT ANY LICENSED BIOLOGICAL MATERIALS, PATENTS OR KNOW-HOW WILL BE FREE FROM

INFRINGEMENT OF PATENTS OF ANY THIRD PARTY, OR THAT NO THIRD PARTIES ARE

INFRINGING SAME.

 

ARTICLE

8

 

TERM

AND TERMINATION

 

8.1          Term of

Agreement.  Unless

earlier terminated as otherwise provided in this Article 8, this Agreement

shall remain in effect until the expiration of the last to expire of the CG

Patents or Program Patents.

 

8.2          Termination

for Breach.  A Party

may terminate this Agreement prior to the expiration of the Agreement in the

event that the other Party is in breach of or default under a material term of

the Agreement, and the breaching Party does not cure such breach or default

within thirty (30) days of written notice thereof from the non-breaching

Party.  Subject to Section 8.3 below,

upon any such termination, all the licenses granted by and between the Parties

herein shall terminate; provided that any sublicense granted by a Party

hereunder to a third party prior to such termination shall survive such

termination, so long as the sublicensee agrees to be bound by the applicable terms

of this Agreement.

 

8.3          Survival.  Upon expiration or termination of this

Agreement, the rights and obligations under Articles 5 and 6 and Sections 7.4,

8.3, 9.2, 9.3, 9.7 and 9.10 shall continue. 

In addition, upon expiration or termination of this Agreement after the

end of the Research Period, the licenses granted under Article 2 above and the

rights and obligations under Article 4 shall survive.  Further, subject to Sections 2.1(b) and 2.2(b) if they survive the

termination or expiration of this Agreement as provided above, neither Party

shall have any obligation to account to the other, or obtain the consent of the

owner, with respect to the commercialization, licensing or enforcement of any

Joint Patents, and hereby waives any right it may have under the laws of any

country to require such accounting or consent.

 

ARTICLE

9

 

MISCELLANEOUS

 

9.1          Relationship

of the Parties.  This

Agreement creates only licensor-licensee and sublicensor-sublicensee

relationships between Rigel and CG.  No

partnership or other legal relationship is created hereunder.  Neither Party is, or will be deemed to be,

an agent or legal representative of the other Party for any purpose.  Neither Party will be entitled to enter into

any contracts in the name of or on behalf of the other Party, and neither Party

will be entitled to pledge the credit of the other Party in any way or hold

itself out as having authority to do so.

 

9.2          Assignment.  This Agreement may not be assigned by either

Party without the prior written consent of the other Party, which consent shall

not be unreasonably withheld; provided, however, that a Party may assign this

Agreement without such consent to any Affiliate or to a successor in interest

by way of merger, acquisition, sale or transfer of substantially all of its

business or assets pertaining to the subject matter of this Agreement.  The Agreement will be binding upon and inure

to the benefit of all permitted successors and assignees of the Parties

hereunder, and the name of each Party appearing herein will be deemed to

include the names of such Party’s successors and assignees.

 

9.3          Use of

Names.  No Party

hereto may use the name of the other Party in public announcements without the

prior consent of the other Party as required by law or regulation.

 

9.4          Amendment.  No amendment, modification or supplement of

any provision of the Agreement will be valid or effective unless made in

writing and signed by a duly authorized officer of each Party.

 

9.5          Waiver.  No provision of the Agreement will be waived

by any act, omission or knowledge of a Party or its agents or employees except

by an instrument in writing expressly waiving such provision and signed by a

duly authorized officer of the waiving Party.

 

9.6          Headings.  The headings for each article and section in

this Agreement have been inserted for the convenience of reference only and are

not intended to limit or expand on the meaning of the language contained in the

particular article or section.

 

9.7          Notices.  Any notice or other communication required

or permitted to be given to either Party hereto shall be in writing unless

otherwise specified and shall be deemed to have been properly given and to be

effective on the date of delivery if delivered in person or by facsimile or

three (3) days after mailing by registered or certified mail, postage paid, to

the other Party at the following address:

 

	

  If to Rigel:

  	

  Rigel, Inc.

  
	

   

  	

  240 East Grant Avenue

  
	

   

  	

  South San Francisco, CA  94080

  
	

   

  	

  Attn: 

  Secretary

  
	

   

  	

  Fax: 

  650.624.1101

  
	

   

  	

   

  
	

  Copy to:

  	

  Cooley Godward, LLP

  
	

   

  	

  Five Palo Alto Square, 4th Floor

  
	

   

  	

  3000 El Camino Real

  
	

   

  	

  Palo Alto, CA 

  94306

  
	

   

  	

  Attn: Robert L. Jones, Esq.

  
	

   

  	

  Fax: 650.849.7400

  
	

   

  	

   

  
	

  If to CG:

  	

  Cell Genesys, Inc.

  
	

   

  	

  342 Lakeside Drive

  
	

   

  	

  Foster City, CA 94404

  
	

   

  	

  Attn:  Chief

  Executive Officer

  
	

   

  	

  Fax: 

  650.358.0803

  

 

9.8          Severability.  Whenever possible, each provision of the

Agreement will be interpreted in such manner as to be effective and valid under

applicable law, but if any provision of the Agreement is held to be prohibited

by or invalid under applicable law, such provision will be ineffective only to

the extent of such prohibition or invalidity, without invalidating the

remainder of the Agreement.

 

9.9          Entire

Agreement of the Parties. 

The Agreement will constitute and contain the complete, final and

exclusive understanding and agreement of the Parties with respect to the

subject matter hereof and cancels and supersedes any and all prior

negotiations, correspondence, understandings and agreements, whether oral or

written, between the Parties respecting the subject matter.  Each Party hereto was represented by counsel

in drafting and negotiating this Agreement, and all Parties are deemed to have

contributed to the drafting hereof.

 

9.10        Governing

Law.  This Agreement

shall be governed by and construed in accordance with the laws of the State of

California excluding only laws and rules relating to “choice of law”.  All Parties to this Agreement hereby consent

to the jurisdiction of the courts of the State of California and the Federal

District Court for the Northern District of California for resolution of any

disputes that arise hereunder.

 

9.11        Counterparts.  This Agreement may be executed in any number

of counterparts, each of which shall be an original, but all of which together

shall constitute one instrument.

 

In Witness

Whereof, the Parties hereto have amended and restated this

Agreement as of July 1, 2001.

 

	

  Cell Genesys, Inc.

  	

   

  	

  Rigel Pharmaceuticals, Inc.

  	 

	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  By:

  	

  /s/ Robert Tidwell

  	

   

  	

  By:

  	

  /s/ Raul R. Rodriguez

  	 

	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Name:

  	

  Robert Tidwell

  	

   

  	

  Name:

  	

  Raul R. Rodriguez

  	 

	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	 

	

  Title:

  	

  VP Corporate Dev.

  	

   

  	

  Title:

  	

  VP Business Dev.

  	 

																

 

APPENDIX A

EXCLUSIVE LICENSE AGREEMENT

 

Exclusive License Agreement made as of

January 31, 1996 (the “Effective Date”), by and between Cell Genesys, Inc.

(“Company”), a corporation organized and existing under the laws of the State

of Delaware, having an office at 322 Lakeside Drive, Foster City, California

94404, and The Rockefeller University (“Rockefeller”),

a nonprofit education corporation organized and existing under the laws of the

State of New York, having an office at 1230 York Avenue, New York, New York

10021-6395.

 

Witnesseth:

 

Whereas, Rockefeller is the owner by

assignment from Warren S. Pear, Martin L. Scott, Garry M. Nolan and David

Baltimore (“Inventors”) of the entire right, title and interest in United

States Patent Application Serial No. 08/023,909, filed February 22, 1993,

entitled Production of High Titer Helper-Free Retroviruses by Transient

Transfection, and in the inventions described and claimed therein (“Licensed Patent

Rights”), and in the Biological Materials and related Know-How, as defined

below;

 

Whereas, Rockefeller and the Company

entered into a license agreement effective as of October 25, 1994 (the “Prior

Agreement”), pursuant to which Rockefeller granted to the Company a

non-exclusive license to use the Licensed Patent Rights, Know-How and

Biological Materials for research and commercial purposes;

 

Whereas, the parties have agreed to expand

the scope of the license and rights granted to the Company and therefore have

agreed to terminate the Prior Agreement as of the Effective Date, and enter

into this Agreement;

 

Whereas, Rockefeller wishes to offer and

grant the Company an exclusive license with regard to the Licensed Patent

Rights, Know-How and the Biological Materials for research and commercial

purposes, and seeks to be compensated for the transfer and use of such rights;

and

 

Whereas, the Company wishes to license from

Rockefeller the Licensed Patent Rights, Biological Materials and Know-How for

commercial development and application as herein defined.

 

Now, Therefore, in consideration of the

mutual benefits to be derived hereunder, the parties hereto agrees as follows:

 

1.      Definitions.

 

The following terms will have the meanings assigned to them below when

used in this Agreement.

 

        1.1         

“Affiliate” shall mean:

 

(a)           any entity owning or controlling,

directly or indirectly, at least forty-nine percent (49%) of the stock normally

entitled to vote for election of directors of a party; or

 

(b)           any entity at least forty-nine

percent (49%) of whose stock normally entitled to vote for election of

directors is owned or controlled, directly or indirectly, by a party.

 

        1.2          “Biological

Materials” shall mean (i) the ecotropic producer cell line named

[

* ]

which producer cell line was deposited with the American Type Culture

Collection as of [ * ] and has been assigned Accession No. [

* ],

and any viruses produced thereby; (ii) {Not disclosed by Cell Genesys} Biological

Materials shall also include any direct progeny, mutant, or derivatives of the [ * ]

{Not

disclosed by Cell Genesys} cell lines and the viruses produced

thereby.

 

        1.3          “Improvement

Technology” means all patent and other intellectual property

rights, and materials relating to inventions, discoveries or improvements to

the Licensed Technology licensed to Rockefeller by any academic institution,

governmental and other not-for-profit entity to which Rockefeller grants a

non-exclusive research license with regard to the Licensed Technology pursuant

to Section 6.3 herein.

 

        1.4          “Know-How”

shall mean information and data not generally known which are

owned and in the possession of or available to Rockefeller and which it is free

to divulge as of the Effective Date regarding the preparation and use of

Biological Materials, and pharmacological, biological and clinical properties

of Biological Materials. It is understood that Know-How shall not include any

information or data known by the Company prior to receipt of such information

or data from Rockefeller, as shown by reasonable evidence.

 

        1.5          “Licensed

Patent Rights” shall mean:

 

(a)           the patent application(s) concerning

the subject matter of this Agreement which are listed on Exhibit A attached

hereto;

 

(b)           all patent applications which are

divisions, substitutions, continuations, continuations-in-part, renewals, or

additions of the patent applications described in (a) hereof,

 

(c)           all foreign counterparts of the

applications listed in (a) and (b) hereof; and

 

(d)           all patents, including reissues,

re-examinations and extensions, which may issue on any of the preceding.

 

        1.6          “Licensed

Products” shall mean any and all products the manufacture, use

or sale of which but for the license granted herein would infringe a Valid

Claim or are within the scope of a Pending Claim in the country in which such

products are made or sold.

 

        1.7          “Licensed

Technology” shall mean the Licensed Patent Rights, Biological

Materials and Know-How.

 

        1.8          “Net

Sales” shall mean [ * ], where [ * ] shall mean the amount

invoiced by the Company or its sublicensees to customers for Licensed Products

less: (i) all trade, cash and quantity credits, discounts, refunds or

government rebates, (ii) amounts for claims, allowances or credits for returns;

retroactive price reductions; chargebacks or the like; (iii) packaging,

handling fees and prepaid freight, sales taxes, duties and other governmental

charges (including value added tax), but excluding what is commonly known as

income taxes; and (iv) provisions for uncollectible accounts determined in accordance

with reasonable accounting practices, consistently applied to all products of

the selling party. [ * ] shall not include sales by the Company to

its Affiliates for resale, provided that if the Company sells a Licensed

Product to an Affiliate for resale, [ * ] shall include the amounts invoiced by

such Affiliate to third parties on the resale of such Licensed Product.

Notwithstanding the foregoing.  [

* ]

shall include charges for the separation, transduction and/or expansion of

cells comprising Licensed Products, but notwithstanding any of the foregoing,

shall not include charges for apheresis, reinfusion, surgical procedures,

hospital stays or other charges not directly attributed to the Licensed Product

or to the ex vivo preparation of the Licensed Product.

 

        1.9          “Party”

shall mean the Company or Rockefeller, and “Parties” shall mean

both the Company and Rockefeller.

 

        1.10        “Pending

Claim” shall mean a claim of a pending patent application within

the Licensed Patent Rights.

 

        1.11        “Territory”

shall mean the entire world.

 

        1.12        “Valid

Claim” shall mean a claim of an issued and unexpired patent

included within the Licensed Patent Rights, which has not been held

unenforceable or invalid by a court or other governmental agency of competent

jurisdiction, and which has not been admitted to be invalid or unenforceable

through reissue, disclaimer or otherwise.

 

2.     Licensed Rights

 

        2.1          Subject to Section 2.2 below,

Rockefeller grants to the Company and its Affiliates the following licenses:

 

(a)           an exclusive, worldwide,

royalty-bearing license under the Licensed Technology, with the right to grant

and authorize sublicenses, to make, have made, import, have imported, use,

sell, offer for sale and otherwise exploit the Licensed Products in any country

of the Territory; and

 

(b)           a non-exclusive, worldwide,

royalty-free, irrevocable license under the Improvement Technology, with the

right to grant and authorize sublicenses, to make, have made, import, have

imported, use, sell, offer for sale and otherwise commercialize products and

services in any country of the Territory.

 

        2.2          The licenses granted by Rockefeller in

Section 2.1 (a) above are subject to any limitations on Rockefeller’s rights

arising under the provisions of the following:

 

(a)           35 United States, Section 201 et

seq., and regulations and rules promulgated thereunder and any agreements

implementing the provisions thereof, or

 

(b)           other applicable laws or regulations

to which Rockefeller may be subject; or

 

(c)           Rockefeller’s Institutional Patent

Agreement with the United States Department of Health and Human Services, dated

June 15, 1973, as amended, which is its formal agreement with the United States

Government to implement the cited provisions of the U.S. Code.

 

        2.3          Rockefeller shall promptly notify the Company

of any Improvement Technology of which it acquires knowledge and provide the

Company all available information relating thereto.

 

        2.4          The licenses herein granted shall

continue for the lives of any issued patents hereunder as the same or the effectiveness

thereof may be extended by any governmental authority, rule or regulation

applicable thereto.

 

3.     Transfer Of

Biological Materials And Know-How

 

        3.1          The parties acknowledge that pursuant

to the Prior Agreement, Rockefeller transferred to the Company a quantity of

Biological Materials and such Know-How to allow the Company to establish a

viable cell culture of said Biological Materials for the Company’s purposes.

The Company is permitted to cultivate and use said Biological Materials,

subject to the terms and conditions of this Agreement. On the Effective Date,

Rockefeller shall notify the American Type Culture Collection (“ATCC”) that the

Company is authorized to receive samples of the Biological Materials deposited

with the ATCC and to deliver such materials to the Company at the Company’s

request, and that the Company has the right to authorize third parties to

receive one or more samples of the Biological Materials, on such terms as the

Company may indicate to the ATCC.

 

        3.2          Should the Company exhaust the

quantity of Biological Materials within six (6) months of the date of execution

hereof, so that a viable cell culture of said Biological Materials no longer

exists, Rockefeller shall authorize the ATCC to provide the Company with a

quantity of Biological Materials sufficient to reestablish the Company’s viable

colony thereof.

 

        3.3          Within sixty (60) days of the

Effective Date, Rockefeller shall deliver to the Company tangible copies of all

existing Know-How which it did not previously provide to the Company pursuant

to the Prior Agreement.

 

4.     Payments

 

        4.1          In consideration of the rights and

licenses granted hereunder, the Company shall pay or cause to be paid to

Rockefeller amounts as follows:

 

(a)           {Not

disclosed by Cell Genesys}

 

(b)           {Not disclosed

by Cell Genesys}

 

(c)           {Not disclosed by Cell Genesys}

 

(d)           a royalty of [ * ] of Net Sales of

Licensed Products sold by the Company within the scope of a Valid Claim within

the Licensed Patent Rights in the country they are made or sold.

 

Notwithstanding the above, the royalty due Rockefeller

on Net Sales of Licensed Products, the manufacture, use or sale of which would

not infringe a Valid Claim in the country for which they are sold but which are

within the scope of a Pending Claim in such country, shall be fifty percent

(50%) of the royalty due under Section 4. l(d).

 

        4.2          In the event that a Licensed Product

is sold in combination as a single product with another product whose sale and

use are not covered by the Licensed Patent Rights in the country for which the

combination product is sold, Net Sales from such sales, for purposes of

calculating the amounts due under Section 4.1 above, shall be calculated by

multiplying the Net Sales of that combination by the fraction A/(A + B), where

A is the gross selling price of the Licensed Product, as the case may be, sold

separately, and B is the gross selling price of the other product sold

separately. In the event that no such separate sales are made by the Company,

Net Sales for royalty determination shall be as reasonably allocated by the

Company between such Licensed Product and such other product, based upon their

relative importance and proprietary protection.

 

        4.3          Licensed Products sold, leased or

otherwise distributed by the Company’s sublicensees shall be considered to be

sales, leases or disposals of Licensed Products by the Company for purposes of

royalty payments and reports under this Agreement. The obligation to pay

royalties pursuant to this Agreement is imposed only once with respect to the sale

of a particular Licensed Product regardless of the number of claims or patents

that cover such Licensed Product. The Company shall have no obligation to pay

royalties on Licensed Products used in research and development, in clinical

trials or other noncommercial purposes, or distributed as samples.

 

        4.4.         The Company’s obligation to pay

royalties hereunder shall continue on a country-by-country basis until (i) the

expiration of the last-to-expire issued patent within the Licensed Patent

Rights in such country, or (ii) [ * ] following the first commercial sale of a

Licensed Product in a country, if no patent covering such Licensed Product has

been issued in such country. Thereafter, the Company shall have a fully paid up

license under Licensed Patent Rights, Biological Materials and Know-How to

make, have made, use, sell, lease, import, have imported, offer for sale or

otherwise exploit the Licensed Product(s) for any use in that country.

 

        4.5          {Not disclosed by Cell Genesys}

 

        4.6          {Not disclosed by Cell Genesys}

 

        4.7          Unless this Agreement is terminated

earlier, within sixty (60) days following the first achievement by the Company

or a sublicensee of the following milestones with respect to the first Licensed

Product within the scope of a Valid Claim within the Licensed Patent Rights,

the Company shall pay to Rockefeller [ * ] milestone payments as follows:

 

 

	

  Event

  	

   

  	

  Payment

  	

   

  
	

  Enrollment of first

  patient in a Company-sponsored [ * ] clinical trial of a Licensed

  Product

  	

   

  	

  $

  	

  [ * ]

  	

   

  
	

  Enrollment of first

  patient in a Company-sponsored [ * ] clinical trial of a Licensed Product

  	

   

  	

  $

  	

  [ * ]

  	

   

  
	

  Approval of NDA in U.S. of a Licensed Product

  	

   

  	

  $

  	

  [ * ]

  	

   

  

 

        4.8          Upon commencement of commercial sales

of any Licensed Products which generate a royalty to Rockefeller pursuant to

this Agreement, the Company shall within ninety (90) days of the close of the

fiscal semi-annual period, provide semi-annual reports to Rockefeller showing

the total Net Sales of Licensed Products sold, leased or otherwise disposed of

during such period and the calculation of royalties thereon. Any royalty then

due and payable shall be included with such report.  All reports provided hereunder by the Company shall be the

Confidential Information of the Company, subject to Section 7 herein. The

Company’s records shall be open to inspection by an independent certified

public accountant designated by Rockefeller for three (3) years from the

submission of such reports and payments, subject to execution of a

confidentiality agreement reasonably acceptable to the Company, once per

calendar year at reasonable times, at Rockefeller’s expense, for the sole

purpose of verifying the accuracy of the reports and royalty payments made by

the Company. The accountant shall report to Rockefeller only whether there has

been an underpayment and, if so, the amount thereof.

 

5.     Times And

Currencies Of Payment

 

        5.1          Royalty payments shall be made in

United States dollars or if sales are made in the currency of other countries,

royalties shall be calculated in the currency of such other country and be

converted into United States dollars using the applicable exchange rate for

sale of U.S. dollars listed by the foreign exchange desk of the Bank of America

on the last day of the applicable reporting period.

 

        5.2          If at any time legal restrictions

prevent the prompt remittance of part or all royalties by the Company with

respect to any country where a Licensed Product is sold, the Company shall have

the right and option to make such payment by depositing the amount thereof in

local currency to an account in the name of Rockefeller in a bank or other

depository in such country.

 

6.     Sublicensees

 

        6.1          The Company and its Affiliates shall

have the right to grant and authorize sublicenses under the Licensed Technology

and Improvement Technology to commercial entities for research purposes and for

commercial purposes, including without limitation, to make, have made, import,

have imported, use, lease, offer for sale and sell Licensed Products in the

Territory.

 

        6.2          The Company shall have the sole

discretion to determine the financial and other terms on which any sublicenses

shall be granted under the Licensed Technology, subject to the provisions

herein. Any sublicense(s) granted by the Company under this Agreement shall be

subject and subordinate to the terms and conditions of this Agreement, except

the financial terms of the sublicense(s) may require greater payments than the

financial terms in this Agreement.

 

        6.3          Notwithstanding Section 2.1 above,

Rockefeller, on behalf of the Company, may continue to grant limited,

non-transferable, research sublicenses to academic institutions, governmental

and other not-for-profit entities using the form sublicense agreement attached

hereto as Exhibit B. Rockefeller shall not enter into or agree to enter into

any agreement with such an entity which deviates in any way from the form

agreement set forth in Exhibit B, without the prior written consent of the

Company. Rockefeller shall provide the Company with a copy of each such

research license entered by Rockefeller promptly following the execution of

such agreement.

 

        6.4          In the event of any termination of

this Agreement, any sublicenses granted under or this Agreement shall also

terminate unless such sublicensees provide Rockefeller written notice that they

will abide by the applicable terms of this Agreement.

 

        6.5          In no event shall a default or breach

of a sublicensee of a sublicense granted by the Company pursuant to this

Agreement constitute by a default or breach by the Company of this Agreement or

be deemed a valid basis for the termination of this Agreement.

 

7.     Confidential

Information

 

        7.1          Each Party and its Affiliates and

sublicensees shall treat as confidential all Confidential Information received

from the other Party hereto, shall not use such Confidential Information except

as expressly set forth herein or otherwise authorized in writing, shall

implement reasonable procedures to prohibit the disclosure, unauthorized

duplication, misuse or removal of such Confidential Information and shall not

disclose such Confidential Information to any third party except as may be

necessary and required in connection with the rights and obligations of such

party under this Agreement, and subject to confidentiality obligations at least

as protective as those set forth herein. Without limiting the foregoing, each

of the parties shall use at least the same procedures and degree of care which

it uses to prevent the disclosure of its own confidential information to

prevent the disclosure of Confidential Information of the other Party. As used

herein, the term “Confidential Information” shall mean any information

expressly designated as Confidential Information in this Agreement and

information disclosed by one Party to another pursuant to this Agreement which

is in written, graphic, machine readable or other tangible form and is marked

“Confidential” to indicate its confidential nature. Confidential Information

may also include oral information disclosed by one Party to another pursuant to

this Agreement, provided that such information is designated as confidential at

the time of disclosure and within thirty (30) days after its oral disclosure is

reduced to a written summary by the disclosing Party, which summary is marked

in a manner to indicate its confidential nature and delivered to the receiving

Party.

 

        7.2          Notwithstanding the above, neither

Party has any obligation of confidence under this Agreement with respect to any

information which:

 

(i)            may be demonstrated to have been

known to the receiving Party prior to the time of disclosure thereof by the

disclosing Party; or

 

(ii)           without breach of this Agreement, has

been published or is otherwise available to the public at any time whether

before or after the time of disclosure to such Party; or

 

(iii)         is at any time lawfully received by

such Party from a third party who has no obligation of confidence to a Party in

respect hereof.

 

        7.3          Each Party hereto may disclose

another’s Confidential Information to the extent such disclosure is reasonably

necessary in filing or prosecuting patent applications, prosecuting or

defending litigation, complying with applicable governmental regulations or

otherwise submitting information to tax or other government authorities, making

a permitted sublicense or other exercise of its rights hereunder or conducting

clinical trials, provided that if a Party is required to make any such

disclosure of another Party’s secret or Confidential Information, other than

pursuant to a confidentiality agreement, it will give reasonable advance notice

to the latter Party of such disclosure requirement and, will use its best

efforts to secure confidential treatment of such information prior to its

disclosure (whether through protective orders or otherwise).

 

8.     Representations

And Warranties

 

        8.1          Rockefeller represents and warrants

that: (i) it is a nonprofit corporation duly organized, validly existing and in

good standing under the laws of New York; (ii) the execution, delivery and

performance of this Agreement have been duly authorized by all necessary action

on the part of Rockefeller; (iii) it is the sole and exclusive owner of all

right, title and interest in the Licensed Patent Rights; (iv) the Licensed

Patent Rights are free and clear of any lien, security interest or restriction

on transfer or license; (v) Rockefeller has not previously granted, and will

not grant during the term of this Agreement, any right, license or interest in

and to the Licensed Patent Rights, Biological Materials and Know-How, or any

portion thereof, in conflict with the rights, exclusive license and interest

granted to the Company herein; (vi) it has complied fully with all requirements

of 35 U.S.C. § 201 et seq. and all implementing regulations with respect to

perfecting its interest in the Licensed Patent Rights; (vii) Exhibit A contains

a complete and accurate listing of all Licensed Patent Rights existing as of

the Effective Date; and (viii) there are no actions, suits, investigations,

claims or proceedings pending in any way relating to the Licensed Patent Rights,

Biological Materials or Know-How.

 

        8.2          The Company represents and warrants

that: (i) it is a corporation duly organized, validly existing and in good

standing under the laws of the State of Delaware; and (ii) the execution,

delivery and performance of this Agreement have been duly authorized by all

necessary corporate action on the part of the Company.

 

        8.3          ROCKEFELLER EXPRESSLY DISCLAIMS ANY

AND ALL IMPLIED OR EXPRESS WARRANTIES AND MAKES NO EXPRESS OR IMPLIED

WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF

BIOLOGICAL MATERIALS, LICENSED PROCESSES OR LICENSED PRODUCTS CONTEMPLATED BY

THIS AGREEMENT. FURTHER, ROCKFELLER HAS MADE NO FORMAL INVESTIGATION AND

THEREORE CAN MAKE NO REPRESENTATION THAT BIOLOGICAL MATERIALS SUPPLIED BY IT OR

THE METHODS USED IN MAKING OR USING SUCH MATERIALS ARE NOW OR WILL REMAIN FREE

FROM LIABILITY FOR PATENT INFRINGEMENT.

 

9.     {Not

disclosed by Cell Genesys}

 

        9.1          {Not disclosed by Cell Genesys}

 

        9.2          {Not disclosed by Cell Genesys}

 

10.  Publicity

 

The Company will not use either directly or by implication the name of

Rockefeller, or the name of any member of the faculty or staff thereof for any

commercial or promotional purposes without prior notification and written

agreement of Rockefeller. Except as expressly provided herein, the Parties

agree not to disclose the terms of this Agreement to any third party without

the prior written consent of the other Party to the fact and form of such

disclosure, except as required by securities or other applicable laws, to

prospective investors and to such party’s accountants, attorneys and other

professional advisors. Notwithstanding the above, the Company may disclose the

existence of this Agreement and issue a press release, reasonably acceptable to

Rockefeller, describing this Agreement and the rights granted the Company by

Rockefeller under this Agreement, and disclose to actual and potential

sublicensees the rights granted the Company by Rockefeller under this

Agreement.

 

11.  Patents

 

        11.1        Except as set forth in Section 11.4, the

Company shall have the sole right to control the preparation, filing,

prosecution and maintenance of the Licensed Patent Rights, and any interference

or opposition proceeding relating thereto, using patent counsel of its choice.

The Company shall consult with Rockefeller regarding the prosecution of any

such patent applications, by providing Rockefeller a reasonable opportunity to

review and comment on all proposed submissions to any patent office before

submittal, and provided further that the Company shall keep Rockefeller

reasonably informed as to the status of such patent applications by promptly

providing Rockefeller copies of all communications relating to such patent

applications that are received from any patent office. If the Company informs

Rockefeller in writing that the Company no longer wishes to conduct such

activities with regard to any such patent applications or patents in any

country, then Rockefeller will be free, at its discretion and expense to either

abandon the subject patent applications or to continue such activities, and the

Company shall have no further rights with respect to the applicable patent

applications or patents in such countries.

 

        11.2        During the term of the Agreement, the

Company shall be responsible for one hundred percent (100%) of the expenses

incurred in connection with the activities set forth in Section 11.1. above. {Not

disclosed by Cell Genesys} With respect to patent-related costs

incurred after the Effective Date, the Company shall reimburse Rockefeller

within thirty (30) days following invoice for such costs, in a form reasonably

acceptable to the Company.

 

        11.3        If either Party hereto becomes aware

that any Licensed Patent Rights are being or have been infringed by any third

party, such Party shall promptly notify the other Party hereto in writing

describing the facts relating thereto in reasonable detail. The Company shall

have the initial right, but not the obligation, to institute, prosecute and

control any action, suit or proceeding (an “Action”) with respect to such

infringement, including any declaratory judgment action, at its expense, using

counsel of its choice; provided, however, during the pendency of any such

Action, the Company shall be entitled to place any royalties otherwise due Rockefeller

hereunder in a separate account controlled by the Company. If the pertinent

Licensed Patent Rights are found invalid or unenforceable in such an Action, or

any appeal thereof, the Company may retain the amounts placed in such account

without further obligation to Rockefeller with regard thereto. If the Licensed

Patent Rights are not held invalid or unenforceable in such an Action, or any

appeal thereof, the Company shall promptly pay the amounts deposited in such

account to Rockefeller. Any amounts recovered from third parties in any such

Action shall be retained by the Company. In the event the Company fails to

initiate or defend any Action involving the Licensed Patent Rights within one

(1) year of receiving notice of any commercially significant infringement,

Rockefeller shall have the right, but not the obligation, to initiate and

control such an Action, and the Company shall cooperate reasonably with

Rockefeller, at Rockefeller’s request, in connection with any such Action. Any

amounts recovered in such Action shall be used first to reimburse the Company

and Rockefeller for the expenses incurred in connection with such Action, and

any remainder retained by Rockefeller.

 

        11.4        In the event the parties believe an

interference may be declared or an interference is declared between any patent

application or patent within the Licensed Patent Rights and any patent

application or patent owned or controlled by the Company relating to the

production of high titer retroviruses, the parties agree to amicably settle any

such prospective or actual interference in accordance with the procedure set

forth on Exhibit C. The Company shall have the exclusive right to initiate such

settlement procedure after consultation with Rockefeller. In the event of any

such prospective or actual interference and the settlement thereof, each Party

shall pay its own costs associated therewith and the parties shall equally

share the costs of any arbitration, including without limitation,

administration and arbitrator fees. It is understood and agreed that in the

event an interference is declared, neither Patty shall have an obligation to

participate in such a proceeding, but each hereby acknowledges that it

understands that a failure to participate may result in an adverse outcome

which could have a material adverse impact on such Party. It is further

understood and agreed that any patent applications and patents within the

Licensed Patent Rights which are involved in any interference shall remain

subject to the license granted the Company herein.

 

12.  Licensed Product

Liability

 

The Company agrees to indemnify, defend and hold

harmless Rockefeller and its trustees, officers, agents, faculty, employees,

and students (the “Indemnitees”), from any and all liability arising from injury

or damage to persons or property resulting directly or indirectly from the

Company’s acquisition, use, manufacture, sublicense or sale of any Licensed

Product covered by Licensed Patent Rights or Know-How licensed hereunder.

Notwithstanding the foregoing, the Company expressly retains any and all claims

it may have against Indemnitees arising from Indemnitees’ negligence or willful

misconduct. The Company’s obligation to indemnify the Indemnitees under this

Section 11 shall not apply unless the indemnified Party promptly notifies the

Company of any claim or liability subject to this Section 12 and cooperates

fully with the Company in the defense of any such claim or proceeding.  The Company further agrees to obtain, prior

to the first commercial sale of a Licensed Product, and maintain in force for

at least fifteen (15) years following the last sale of a Licensed Product,

product liability insurance coverage of at least one million ($1,000,000)

dollars or a lesser amount as appropriate to the risk as determined by

reference to reliable standards in the industry, such insurance to specifically

name Rockefeller as an additional insured.

 

13.  Notices

 

Any notice required to be given pursuant to this Agreement shall be in

writing and may be made by personal delivery or by registered or certified

mail, return receipt requested, by one Party to the other Party at the

addresses noted below:

 

In the case of the

Company, notice should be sent to:

 

Cell Genesys, Inc.

322 Lakeside Drive

Foster City,

California 94404

Attn: Senior Vice

President, Corporate Development

 

In the case of

Rockefeller, notice should be sent to:

 

The Rockefeller

University

1230 York Avenue

New York, New York

10021

Attn: Office of

the General Counsel

 

14.  Law To Govern

 

This Agreement shall be interpreted and governed in accordance with the

laws of the State of New York.

 

15.  Assignment

 

This Agreement may not be assigned by either Party without the prior

written consent of the other; provided, however, the Company may assign

this Agreement in connection with the transfer of all or substantially all of

its business relating to the subject matter of this Agreement whether by sale,

merger, operation of law or otherwise.

 

16.  Termination

 

        16.1        The Company shall have the right to

terminate this Agreement at any time with respect to any Licensed Patent Right

or any country upon ninety (90) days prior written notice to Rockefeller. Such

termination shall automatically terminate the license rights provided in

Section 2 with respect to such Licensed Patent Rights hereof in such country

but shall not relieve the Company of the obligation to pay royalties for any

period prior to the effective date of termination.

 

        16.2        Either Party may terminate this

Agreement in the event of a material breach by the other Party which is not

cured within a reasonable time, provided only that the offending Party is given

notice of the breach and not less than ninety (90) days in which to cure such

breach.

 

        16.3        Sections 2.4, 6.4 and 24.3 and Articles

7, 8, 10, 12, 14, 17 and 25 shall survive expiration or termination of this

Agreement for any reason.

 

17.  Resolution Of

Disputes

 

The Parties agree that in the event of it dispute

between them arising from, concerning, or in any way relating to this

Agreement, the Parties shall undertake good faith efforts to resolve the same

amicably between themselves.

 

18.  Force Majeure

 

The Parties shall not be liable in any manner for

failure or delay in fulfillment of all or part of this Agreement, directly or

indirectly caused by acts of God, governmental orders or restrictions, war,

war-like conditions, revolution, riot, looting, strike, lockout, fire,

earthquake, flood or other similar or dissimilar cause or circumstances beyond

the nonperforming Party’s control. The nonperforming Party shall promptly

notify the other Party of the cause or circumstance and shall recommence its

performance of its obligations as soon as practicable after the cause or

circumstance ceases.

 

19.  Binding Upon

Successors And Assigns

 

Subject to the limitations on assignment herein, this

Agreement shall be binding upon and inure to the benefit of successors in

interest or assigns of Rockefeller and the Company. Any such successor or

assignee of a Party’s interest shall expressly assume in writing the

performance of all the terms and conditions of this Agreement to be performed

by said Party.

 

20.  Independent

Contractors

 

The relationship between Rockefeller and the Company

is that of independent contractors. Rockefeller and the Company are not joint

venturers, partners, principal and agent, master and servant, employer or

employee, and have no other relationship other than independent contracting

parties. Rockefeller shall have no power to bind or obligate the Company in any

manner, other than as is expressly set forth in this Agreement. Likewise, the

Company shall have no power to bind or obligate Rockefeller in any manner,

other than as is expressly set forth in this Agreement.

 

21.  Severability

 

If any provision of this Agreement is ultimately held

to be invalid, illegal or unenforceable, the validity, legality and

enforceability of the remaining provisions shall not in any way be affected or

impaired thereby.

 

22.  No Waiver

 

Any delay in enforcing a Party’s rights under this

Agreement or any waiver as to a particular default or other matter shall not

constitute a waiver of such Party’s rights to the future enforcement of its

rights under this Agreement, excepting only as to an express written and signed

waiver as to a particular matter for a particular period of time.

 

23.  No Implied

Obligations

 

It is understood and agreed that nothing in this

Agreement shall be deemed to prevent the Company from commercializing

technology or products similar to or competitive with the Licensed Technology

or the Licensed Products. Nor shall anything in this Agreement impair the right

of the Company to independently acquire, license, develop or have others

develop for it technology performing similar or equivalent functions as the

Licensed Technology, or to develop, market or distribute products based on such

technology in addition to or in lieu of the Licensed Products.

 

24.  Compliance With

Laws. Regulations And Standards

 

        24.1        The Company recognizes that the use of

Biological Materials carries with it certain safety risks to both the

environment and the population that are inherent in such materials, and shall

exercise prudent scientific laboratory procedures in the use of said Biological

Materials.

 

        24.2        The inventors and Rockefeller recognize

and have advised that the Biological Materials may be used to create infectious

retroviruses with a broad host range, that the supplied materials may be used

to create retroviruses that can infect human cells in both vitro and in vivo,

that the Biological Materials and all materials derived thereof should be

handled and used with all due care in accordance with generally acceptable

scientific guidelines establishing appropriate precautions and approved by the

Institutional Biosafety Committee or similar authority at the Company.

 

        24.3        The Company shall bear all risk to the

Company and/or to any others resulting from use, directly or indirectly, to

which the Company puts the Biological Materials or any progeny or cells or cell

lines derived from it.

 

25.  No Consequential

Damages

 

IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR SPECIAL,

INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF ANY BREACH OF THIS

AGREEMENT.

 

26.  ENTIRE UNDERSTANDING

 

This Agreement with its Exhibits represents the entire

understanding between the Parties with respect to the subject matter hereof and

supersedes any other agreement, expressed or implied, by the Parties with

respect to the Licensed Patent Rights, Biological Materials, Know-How and

Improvement Technology, and supersedes and merges all prior negotiations, discussions

and agreements, including without limitation, the Prior Agreement between the

parties. This Agreement may not be amended or modified except in a written

document signed by authorized representatives of the Parties.

 

In Witness Whereof, the Parties have caused

this Agreement to be duly executed as of the day and year first above written.

 

	

   

  	

  Cell Genesys, Inc.

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ R. Scott Greer

  
	

   

  	

   

  	

   

  
	

   

  	

  Title:

  	

  Senior Vice President

  
	

   

  	

   

  	

  Corporate Development

  
	

   

  	

   

  	

   

  
	

   

  	

  Date:

  	

  February 2, 1996

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  The Rockefeller University

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ William H. Griesar

  
	

   

  	

   

  	

   

  
	

   

  	

  Title:

  	

  Vice President and

  General Counsel

  
	

   

  	

   

  	

   

  
	

   

  	

  Date:

  	

  January 31, 1996

  
				

 

EXHIBIT “A”

 

LICENSED PATENT RIGHTS

 

United States Serial No.

08/023,909

 

PCT Application No.

PCT/US94/01983

 

AMENDMENT TO EXCLUSIVE LICENSE AGREEMENT

 

This Amendment to Exclusive License Agreement (“Amendment”), effective

as of November 3, 1998, by and between Cell Genesys, Inc.,(“Company”), a

corporation organized and existing under the laws of the State of Delaware,

having an office at 342 Lakeside Drive, Foster City, California 94404, and The

Rockefeller University (“Rockefeller”), a nonprofit education corporation

organized and existing under the laws of the State of New York, having an

office at 1230 York Avenue, New York, New York 10021-6395 (Company and

Rockefeller collectively, the “Parties”).

 

Background

 

The Parties desire to amend that certain Exclusive License Agreement by

and between Company and Rockefeller effective as of January 31, 1996 (the

“Agreement”) as set forth herein below.

 

Now,

Therefore, the Parties agree as follows:

 

1.             Amendment.

This Amendment hereby amends the Agreement to incorporate the terms and

conditions set forth in this Amendment. The relationship of the Parties shall

continue to be governed by the terms and conditions of the Agreement, as

amended herein; and in the event that there is any conflict between the terms

and conditions of the Agreement and this Amendment, the terms and conditions of

this Amendment shall control. As used in this Amendment, all capitalized terms

shall have the meanings defined for such terms in this Amendment or, if not

defined in the Amendment, the meanings defined in the Agreement.

 

Modification To The Agreement.

 

Section 4.6 of the

Agreement is hereby amended to read in its entirety as follows:

 

“4.6        Commercial Sublicenses. It is

understood and agreed that Company shall have the right, at its sole

discretion, to grant Commercial Sublicenses to third parties {Not

disclosed by Cell Genesys}. 

As used herein, “Commercial Sublicense” shall mean Commercial Target

Sublicenses and any other sublicense right granted under the Licensed

Technology; provided, however, Commercial Sublicenses shall exclude rights

granted by Company to a third party pursuant to an agreement substantially in

the form of Exhibit D to this Agreement (i.e., research sublicenses).”

 

The Agreement is hereby

amended to add the following new Section 4.9:

 

“4.9        Commercial Target Sublicenses.

Subject to the terms and conditions set forth in this Section 4.9 below and

without limiting the provisions of Section 4.6 above or Article 6 below,

Company shall have the right to grant and authorize Commercial Target

Sublicenses to third parties (each such third party, a “Commercial Target

Sublicensee”) on terms and conditions as Company deems appropriate in its sole

discretion.

 

(a)           Milestone

and Maintenance Fees. In addition to amounts payable pursuant

to Section 4.3 above and in consideration of Company’s right to grant and

authorize Commercial Target Sublicenses pursuant to this Section 4.9 {Not

disclosed by Cell Genesys}. 

Payments due under this Section 4.9(a) shall be due and payable within

sixty (60) days after the calendar quarter in which the Milestone Fee or

Maintenance Fee, as applicable, is received by Company {Not disclosed by Cell Genesys}.

 

(b)           Terms. For purposes

of this Section 4.9 the following capitalized terms shall have the following

meanings. “Commercial Target Sublicense” shall mean a sublicense under the

Licensed Technology that includes the right to conduct Target Validation using

the Licensed Technology.  “Target

Validation” shall mean the process by which the function of nucleotide

sequences are identified, determined and/or confirmed; and/or the function of nucleotide

sequences are identified, determined and/or confirmed as being significant in a

disease or other biological pathway in which pharmacological or other

intervention is sought to affect the function of that pathway. {Not

disclosed by Cell Genesys}.

 

(c)           Survival.  Subject to Section 6.4 below, Commercial

Sublicenses, including Commercial Target Sublicenses, shall survive the

termination of this Agreement, provided that the Commercial Sublicensee or

Commercial Target Sublicensee, as the case may be, agrees to be bound by the

applicable terms and conditions of this Agreement.”

 

Entire Agreement. Together the Agreement

(including the Exhibits thereto) and this Amendment constitute the entire

agreement between the Parties in connection with the subject matter thereof and

supersede all prior and contemporaneous agreements, understandings,

negotiations and discussions, whether oral or written, of the Parties.

 

In Witness

Whereof, the Parties have executed this Amendment.

 

 

	

  Cell

  Genesys, Inc.

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  By:

  	

    /s/ Bruce A. Hironaka

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Title:

  	

  Vice President,

  Corp. Devel.

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Date:

  	

  November 16,

  1998

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  By:

  	

    /s/ William A. Griesar

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  Title:

  	

   

  	

  Vice President

  and General Counsel

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  Date:

  	

   

  	

  11/3/98

  
											

 

APPENDIX B

 

BOSC 23 CELL LINE

 

	

  CGI Docket Number

  	

   

  	

  Application, Patent

  Number or Publication Number

  	

   

  	

  Filing Data, Grant date, or

  Publication Date

  	

   

  	

  Title/Inventors

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  The Rockefeller University

  	

   

  	

  PCTWO94/19478 (US application corresponding to the

  PCT)

  	

   

  	

   

  	

   

  	

  Production of High Titer Helper-Free Retroviruses by

  Transient Transfection Pear et al.

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  The Rockefeller University

  	

   

  	

  US 08/693,160

  	

   

  	

  6/12/96

  	

   

  	

  Production of High Titer, Helper-Free Retroviruses

  by Transient Transfection Pear, et

  al.

  

 

KATÔ

 

	

  CGI Docket Number

  	

   

  	

  Application, Patent

  Number or Publication Number

  	

   

  	

  Filing Data, Grant

  date, or Publication Date

  	

   

  	

  Title/Inventors

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  CELL 13.0

  	

   

  	

  US 5,834,256 (Patent)

  	

   

  	

  November 10, 1998

  	

   

  	

  Method for

  Production of High Titer Virus & High Efficiency of Retroviral Mediated

  Transduction of Mammalian Cells Finer

  et al.

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  CELL 13.1

  	

   

  	

  US 5,686,279 (Patent)

  	

   

  	

  November 11, 1997

  	

   

  	

  Method for

  Production of High Titer Virus & High Efficiency of Retroviral Mediated

  Transduction of Mammalian Cells Finer

  et al.

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  CELL 13.1 PCT

  	

   

  	

  WO 94/29438

  	

   

  	

  December 22, 1994

  	

   

  	

  Method for

  Production of High Titer Virus & High Efficiency of Retroviral Mediated

  Transduction of Mammalian Cells Finer

  et al.

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  CELL 13.2

  	

   

  	

  US 5,858,740 (Patent)

  	

   

  	

  January 12, 1999

  	

   

  	

  Method of

  Production of High Titer Virus & High Efficiency of Retroviral Mediated

  Transduction of Mammalian Cells Finer

  et al.

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  CELL 13.3

  	

   

  	

  US 08/517,488

  	

   

  	

  August 21, 1995

  	

   

  	

  Method for

  Production of High Titer Virus & High Efficency of Retroviral Mediated

  Transduction of Mammalian Cells Finer

  et al.

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  CELL 13.3 PCT

  	

   

  	

  WO 97/07225

  	

   

  	

  February 21, 1997

  	

   

  	

  Method for

  Production of High Titer Virus & High Efficiency of Retroviral Mediated

  Transduction of Mammalian Cells Finer

  et al.

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  CELL 13.5

  (will be dropped if 13.3 is allowed)

  	

   

  	

  US 09/266,956

  	

   

  	

  March 11,

  1999

  	

   

  	

  Method for Production of High Titer Virus & High

  Efficiency of Retroviral Mediated Transduction of Mammalian Cells Finer et al.

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  US 08/914,893

  	

   

  	

  8/20/97

  	

   

  	

  Method of Production of High Titer Virus & High

  Efficiency of Retroviral Mediated Transduction of  Mammalian Cells. Finer,

  et al.

  
										

 

APPENDIX C

 

RIGEL

BIOLOGICAL MATERIALS

[ * ] Vectors:

 

 

[ * ]

 

APPENDIX D

 

NOLAN

AND NOLAN/ROTHENBERG PATENTS

 

U.S. Patent Application No. 08/589,109, entitled “Methods for Screening

for Transdominant Effector Peptides and RNA Molecules”  (the Nolan/Rothenberg Patent Application).

 

 

U.S. Patent Applications Nos. 08/789,333, 08/589,911 and 08/963,368,

entitled, “Methods for Screening for Transdominant Intracellular Effector

Peptides and RNA Molecules”  (the Nolan

Patent Application).

 

 

APPENDIX

E

 

 

LICENSE

AGREEMENT

 

BY AND

BETWEEN

 

THE

BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY

 

AND

 

RIGEL

PHARMACEUTICALS, INC.

 

 

Table of

Contents

 

	

  1

  	

  Definitions

  
	

  2.

  	

  Grant;

  Transfer Of Licensed Biological Materials

  
	

  3.

  	

  License

  Royalties

  
	

  4.

  	

  Patents;

  New Inventions

  
	

  5.

  	

  Warranties

  
	

  6.

  	

  Indemnity

  
	

  7.

  	

  STANFORD

  Names And Marks

  
	

  8.

  	

  Sublicense(S)

  
	

  9.

  	

  Term

  And Termination

  
	

  10.

  	

  Assignment

  
	

  11.

  	

  Arbitration

  
	

  12.

  	

  Notices

  
	

  13.

  	

  Waiver

  
	

  14.

  	

  Applicable Law

  
	

  15.

  	

  Disclaimer

  Of Agency

  
	

  16.

  	

  Severability

  
	

  17.

  	

  Entire

  Agreement

  
	

  18.

  	

  Counterparts

  

 

 

APPENDIX E

 

LICENSE

AGREEMENT

 

Effective as of June 1, 1999 (the “Effective Date”), The Board of Trustees of the Leland Stanford Junior

University, a body having corporate powers under the laws of the

State of California (“STANFORD”) and Rigel Pharmaceuticals, Inc.,

a Delaware corporation having a principle place of business at 240 East

Grand Avenue, South San Francisco, CA 94080 (“RIGEL”), agree as follows:

 

Recitals

 

A.            STANFORD

owns certain [ * ] cell lines and derivatives thereof and

biological components related thereto.

 

B.            RIGEL desires to

obtain a non-exclusive license to such materials for use in the Field, with the

right to grant one non-exclusive sublicense to Cell Genesys, Inc.

 

1.             Definitions.

 

1.1          “Cell

Genesys” means Cell Genesys, Inc., a Delaware corporation,

having a principal place of business at 342 Lakeside Drive, Foster City, CA

94404.

 

1.2          “Field”

means any and all fields of use, including, without limitation, any research or

commercial field of use.

 

1.3          “Licensed

Biological Materials” means the materials listed on Exhibit

A.

 

1.4          “Licensed

Know-How” means:

 

(a)           any

and all tangible or intangible know-how, trade secrets, inventions (whether or

not patentable), processes, data, and other information owned by STANFORD as of

the Effective Date that are necessary or useful for the use of the Licensed

Biological Materials; and

 

(b)           any

modifications or progeny of the information and materials in subsection (a)

above that STANFORD may elect to provide to RIGEL at STANFORD’s sole and

exclusive discretion.

 

1.5          “Patent”

shall mean all foreign and domestic patents (including, without limitation,

extensions, reexaminations, reissues, renewals and inventors certificates) and

patents issuing from patent applications (including substitutions,

provisionals, divisionals, continuations and continuations-in-part).

 

2.             Grant; Transfer Of Licensed Biological

Materials.

 

2.1          STANFORD

hereby grants, and RIGEL hereby accepts, a worldwide, non-exclusive license

(without the right to sublicense except to Cell Genesys in the field of human

and/or animal gene therapy as provided in Article 8) under STANFORD’s right,

title and interest in the Licensed Biological Materials to conduct research and

development and to use the Licensed Biological Materials to make, have made,

use, import, offer for sale and sell products in the Field.

 

2.2          STANFORD

hereby grants, and RIGEL hereby accepts, a worldwide, non-exclusive license

(without the right to sublicense except to Cell Genesys in the field of human

and/or animal gene therapy as provided in Article 8) under STANFORD’s right,

title and interest in the Licensed Know-How to use the Licensed Know-How in the

Field.

 

2.3          STANFORD

shall have the right to use the Licensed Know-How and the Licensed Biological

Materials for its own bona fide research, including sponsored research and

collaborations.  In addition, STANFORD

shall have the right to distribute the Licensed Biological Materials.

 

2.4          Promptly

after the Effective Date, STANFORD shall transfer to RIGEL such quantities of

the Licensed Biological Materials as RIGEL shall reasonably request.  Thereafter, STANFORD shall transfer to RIGEL

such additional quantities of Licensed Biological Materials as RIGEL shall

reasonably request in the event that RIGEL’s stock of the Licensed Biological

Materials is destroyed or contaminated.

 

3.             License Royalties.

 

3.1          In

partial consideration for the license granted by STANFORD to RIGEL under

Section 2.1, RIGEL agrees to pay to STANFORD the following:

 

(a)           An

initial, nonrefundable license issue royalty of [ * ], which amount shall be

paid within thirty (30) days after the Effective Date.

 

(b)           A

royalty payment equal to [ * ] on each of the first three (3)

anniversaries of the Effective Date.

 

After the third (3rd) anniversary of the Effective Date, the

sublicense shall be considered perpetual and fully paid-up.

 

3.2          If

RIGEL grants to Cell Genesys a sublicense under the Licensed Biological

Materials to use and sell products in the field of human and/or animal gene

therapy, RIGEL shall pay to STANFORD during the term of such sublicense a

sublicense fee as follows:

 

 

	

  Upon signing of the sublicense

  	

   

  	

  $

  	

  [ * ]

  	

   

  
	

  On each of the first

  three (3) anniversaries of the effective date of such sublicense

  	

   

  	

  $

  	

  [ * ]

  	

   

  
	

  On the 4th, 5th and 6th

  anniversaries of the effective date of such sublicense

  	

   

  	

  $

  	

  [

  * ]

  	

   

  

 

After the sixth (6th) anniversary of the effective date of

such sublicense, the sublicense shall be considered perpetual and fully

paid-up.

 

4.             Patents; New Inventions.

 

Subject to the terms and

conditions of this Agreement, any patentable inventions or discoveries

conceived or reduced to practice by the employees, agents or consultants of one

party during the course of the Agreement (“Sole Inventions”) shall be the

property of such party.  Any patentable

inventions or discoveries conceived or reduced to practice jointly by

employees, agents or consultants of STANFORD and RIGEL as determined in

accordance with United States rules of inventorship (“Joint Inventions”) during

the course of and pursuant to this Agreement shall be owned jointly by STANFORD

and RIGEL, each to own an undivided one-half (1/2) interest in such Joint

Invention.  Each party shall cooperate

with the other in completing any patent applications relating to Joint

Inventions, and in executing and delivering any instrument required to assign,

convey or transfer to such other party its undivided one-half (1/2) interest.

 

5.             Warranties.

 

5.1          STANFORD’s

Office of Technology Licensing represents and warrants that to the best of its

knowledge as of the Effective Date, STANFORD has not sought or obtained patent

protection of the Licensed Biological Materials or any use thereof in the

Field.

 

5.2          STANFORD’s

Office of Technology Licensing represents and warrants that as of the Effective

Date, it has no knowledge of claims by third parties that the use of the

Licensed Biological Materials infringes any patents, copyrights or other rights

of third parties.

 

5.3          STANFORD

represents and warrants that it has all right, power and authority necessary to

grant the licenses set forth in Article 2 to RIGEL.

 

5.4          RIGEL

agrees that nothing in this Agreement grants RIGEL any express or implied

license or right under or to:

 

(a)           U.S.

Patent 4,656,134, entitled “Amplification of Eucaryotic Genes” or any patent

application corresponding thereto; or

 

(b)           U.S.

Patent 5,070,012, entitled “Monitoring of Cells and Trans-Activating

Transcription Elements” or any patent application corresponding thereto; or

 

(c)           U.S.

Patent 5,804,387, entitled “FACS-Optimized Mutants of the Green Fluorescent

Protein (GFP) or any patent application corresponding thereto.

 

5.5          STANFORD

agrees that nothing in this Agreement grants STANFORD any express or implied

license or right under or to U.S. Patent Application Nos. 08/789,333,

08/589,911, or 08/963,368, entitled “Method for Screening for Transdominant

Intracellular Effector Peptides and RNA Molecules,” or any continuations,

divisionals or continuation-in-parts thereof or any patents which may issue

therefrom.

 

5.6          Except

as provided in Sections 5.1, 5.2 and 5.3 and as otherwise expressly set forth

in this Agreement, nothing in this Agreement will be construed as a warranty or

representation that anything made, used, sold, or otherwise disposed of under

any license granted in this Agreement is or will be free from infringement of

patents, copyrights, and trademarks of third parties; conferring rights to use

in advertising, publicity, or otherwise any trademark or the name of

“STANFORD”; or granting by implication, estoppel, or otherwise any licenses or

rights under patents of STANFORD.

 

5.7          EXCEPT

AS EXPRESSLY SET FORTH IN THE AGREEMENT, STANFORD MAKES NO REPRESENTATIONS AND

EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED.  THERE ARE NO EXPRESS OR IMPLIED WARRANTIES

OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE USE OF THE

LICENSED BIOLOGICAL MATERIALS OR LICENSED KNOW-HOW WILL NOT INFRINGE ANY

PATENT, COPYRIGHT, TRADEMARK, OR OTHER RIGHTS, OR ANY OTHER EXPRESS OR IMPLIED

WARRANTIES.

 

6.             Indemnity.

 

6.1          RIGEL

agrees to indemnify, hold harmless, and defend STANFORD, UCSF-Stanford Health

Care and Stanford Health Services and their respective trustees, officers,

employees, students, and agents against any and all claims by third parties for

death, illness, personal injury, property damage, and improper business

practices arising out of the manufacture, use, sale, or other disposition of

the Licensed Biological Materials or any products arising or derived from

Licensed Biological Materials, by RIGEL or RIGEL’s sublicensee(s) or customers.

 

6.2          STANFORD

shall not be liable for any indirect, special, consequential or other damages

whatsoever, whether grounded in tort (including negligence), strict liability,

contract or otherwise. STANFORD shall not have any responsibilities or

liabilities whatsoever with respect to products arising or derived from

Licensed Biological Materials by RIGEL.

 

6.3          RIGEL

shall at all times comply, through insurance or self-insurance, with all

statutory workers’ compensation and employers’ liability requirements covering

any and all employees with respect to activities performed under this

Agreement.

 

6.4          In

addition to the foregoing, RIGEL shall maintain Comprehensive General Liability

Insurance, including Products Liability Insurance, with reputable and

financially secure insurance carrier(s) to cover the activities of RIGEL and

its sublicensee(s) in the amounts and during the periods specified herein.  Such insurance shall provide minimum limits

of liability of One Million Dollars ($1,000,000) as of the first anniversary of

the date upon which RIGEL first leases a facility in which it will conduct

research and development activities, and of Five Million Dollars ($5,000,000)

as of the commencement of human clinical trials.  Such insurance shall include STANFORD, UCSF-Stanford Health Care

and Stanford Health Services, their trustees, directors, officers, employees,

students, and agents as additional insureds. Such insurance shall be written to

cover claims incurred, discovered, manifested or made during or after the

expiration of this Agreement.  At

STANFORD’s request, RIGEL shall furnish a Certificate of Insurance evidencing

primary coverage and requiring thirty (30) days prior written notice of

cancellation or material change to STANFORD. RIGEL shall advise STANFORD, in

writing, that it maintains excess liability coverage (following form) over

primary insurance for at least the minimum limits set forth above. All such

insurance of RIGEL shall be primary coverage; insurance of STANFORD,

UCSF-Stanford Health Care or Stanford Health Services shall be excess and

noncontributory.

 

7.             STANFORD

Names And Marks.

 

RIGEL agrees not to identify STANFORD in any

promotional advertising or other promotional materials to be disseminated to

the pubic or any portion thereof or to use the name of any STANFORD faculty

member, employee, or student or any trademark, service mark, trade name, or

symbol of STANFORD, UCSF-Stanford Health Care or Stanford Health Services, or

that is associated with any of them, without STANFORD’s prior written consent,

except as required by law.  STANFORD

shall not unreasonably withhold consent under this Section 7.

 

8.             Sublicense(S).

 

8.1          Subject

to the provisions of this Article 8, RIGEL may grant a sublicense to the

license rights granted to RIGEL by STANFORD in Sections 2.1 and 2.2 to Cell

Genesys solely in the field of human and/or animal gene therapy.

 

8.2          Any

sublicense granted by RIGEL to Cell Genesys under this Agreement shall be

subject and subordinate to terms and conditions of this Agreement, except:

 

(a)           Sublicense

terms and conditions shall reflect that any sublicensee(s) shall not grant a

sublicense to a third party; and

 

(b)           The

financial obligations of any sublicensee to RIGEL specified in the

sublicense(s) may be different from those obligations set forth in this

Agreement.

 

Any such sublicense(s) also shall expressly include the provisions of

Articles 5 and 6 for the benefit of STANFORD and shall survive any termination

of this Agreement.

8.3          RIGEL

agrees to provide STANFORD with a copy (with financial terms redacted) of any

sublicense granted to Cell Genesys pursuant to this Article 8 and written

notice of the effective date of any termination of such sublicense prior to the

expiration of the Term (as defined in Section 9.1).

 

9.             Term And Termination.

 

9.1          The

term of this Agreement shall commence upon the Effective Date and shall expire

upon the later of: (a) the expiration of the last to expire of any Patents

owned by STANFORD at any time which claim inventions in the Licensed Biological

Materials or the Licensed Know-How; or (b) twenty (20) years from the Effective

Date (the “Term”).  In addition, RIGEL

may terminate this Agreement prior to the expiration of the Term by giving

STANFORD notice in writing at least thirty (30) days in advance of the

effective termination date selected by RIGEL.

 

9.2          Either

party may terminate this Agreement prior to the expiration of the Term if the

other party is in material breach of any provision hereof and fails to remedy

any such default or breach within thirty (30) days after written notice thereof

to the breaching party.

 

9.3          Surviving

the expiration of the Term are:

 

(a)           Any

cause of action or claim of RIGEL or STANFORD, accrued or to accrue, because of

any breach or default by the other party prior to the expiration of the Term;

and

 

(b)           Articles

4, 5, 6, 7 and 11; and

 

(c)           Article

8 and Sections 2.1 and 2.2; and the licenses granted thereunder shall be deemed

perpetual and fully paid-up.

 

9.4          Surviving

any termination of this Agreement are:

 

(a)           Any

cause of action or claim of RIGEL or STANFORD, accrued or to accrue, because of

any breach or default by the other party prior to the termination of this Agreement;

and

 

(b)           Articles

4, 5, 6, 7, 8 and 11 and Section 3.2; and

 

(c)           Sections 2.1

and 2.2 if RIGEL has fulfilled all of its payment obligations to STANFORD under

Section 3.1 prior to such termination; and the licenses granted thereunder

shall be deemed perpetual and fully paid-up.

 

10.          Assignment.

 

This Agreement may not be assigned by either party without the express

written consent of the other party, except that RIGEL may assign the Agreement

in connection with a merger, consolidation or sale of all or substantially all

of RIGEL’s assets.

 

11.          ArbitrationError!

Bookmark not defined..

 

11.1        Any

controversy arising under or related to this Agreement, and any disputed claim

by either party against the other under this Agreement excluding any dispute

relating to patent validity or infringement arising under this Agreement, shall

be settled by arbitration in accordance with the Licensing Agreement

Arbitration Rules of the American Arbitration Association.

 

11.2        Upon

request by either party, arbitration will be by a third party arbitrator

mutually agreed upon in writing by RIGEL and STANFORD within thirty (30) days

of such arbitration request.  Judgment

upon the award rendered by the arbitrator shall be final and nonappealable and

may be entered in any court having jurisdiction thereof.

 

11.3        The

parties shall be entitled to discovery in like manner as if the arbitration

were a civil suit in the California Superior Court.

 

11.4        Any

arbitration shall be held at Stanford, California, unless the parties hereto

mutually agree in writing to another place.

 

12.          Notices.

 

All notices under this Agreement shall be deemed to

have been fully given when done in writing and deposited in the United States

mail registered or certified, and addressed as follows:

 

	

  To STANFORD:

  	

  Office of Technology Licensing

  
	

   

  	

  Stanford University

  
	

   

  	

  900 Welch Road, Suite 350

  
	

   

  	

  Palo Alto, CA 94304-1850

  
	

   

  	

  Attention: 

  Director

  
	

   

  	

   

  
	

  To RIGEL:

  	

  Rigel Pharmaceuticals, Inc.

  
	

   

  	

  240 East Grand Ave.

  
	

   

  	

  South San Francisco, CA 94080

  
	

   

  	

  Attention: 

  President

  

 

Either party may change its address upon written notice to the other

party.

 

13.          Waiver.

 

None of the terms of this Agreement can be waived except by the written

consent of the party waiving compliance.

14.          Applicable

Law.

 

This Agreement shall be governed by the laws of the State of California

applicable to agreements negotiated, executed and performed wholly within

California.  Any claim or controversy

arising out of or related to this Agreement or any breach hereof shall be

submitted to a court of applicable jurisdiction in the State of California, and

each party hereby consents to the jurisdiction and venue of such court.

 

15.          Disclaimer Of Agency.

 

Neither party is, or will be deemed to be, the legal representative or

agent of the other, nor shall either party have the right or authority to

assume, create, or incur any third party liability or obligation of any kind,

express or implied, against or in the name of or on behalf of another except as

expressly set forth in this Agreement.

 

16.          Severability.

 

If any provision or provisions of this Agreement shall be held to be

invalid, illegal or unenforceable, the validity, legality and enforceability of

the remaining provisions shall not be in any way affected or impaired thereby.

 

17.          Entire Agreement.

 

This Agreement, together with the Exhibit attached

hereto, embodies the entire understanding of the parties and shall supersede

all previous communications, representations or understandings, either oral or

written, between the parties relating to the subject matter hereof.  No amendment or modification hereof shall be

valid or binding upon the parties unless made in writing and signed by duly

authorized representatives of both parties.

 

18.          Counterparts.

 

This Agreement may be executed in counterparts, with

the same force and effect as if the parties had executed the same instrument.

 

In Witness Whereof, the parties

hereto have executed this Agreement in duplicate originals by their duly

authorized officers or representatives.

 

The Board of Trustees of the Rigel Pharmaceuticals,

Inc.

Leland Stanford Junior University

 

 

	

  By:

  	

  /s/ Katherine Ku

  	

   

  	

  By:

  	

    /s/ Donald W. Perryman

  
	

  Name:

  	

  Katherine Ku

  	

   

  	

  Name:

  	

  Donald W. Perryman

  
	

  Title:

  	

  Director, Technology Licensing

  	

   

  	

  Title:

  	

  VP, Business Development 

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  June 9,1999

  
											

 

Exhibit A

 

LICENSED BIOLOGICAL

MATERIALS

[ * ] Vectors:

 

 

[ * ]

 

APPENDIX F

 

	

  Application, Patent Number or

  Publication Number

  	

   

  	

  Filing Date, Grant Date, or

  Publication Date

  	

   

  	

  Title/Inventors

  
	

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  [ * ]

  
	

  [ * ]

  	

   

  	

  [ * ]

  	

   

  	

  [ * ]

  
	

  [ * ]

  	

   

  	

  [ * ]

  	

   

  	

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APPENDIX G

 

RESEARCH PLAN

 

[ * ]

 

 

(6 pages of text omitted

here)

 

 

APPENDIX H

 

LIST OF FTEs

 

[ * ]

[ * ]

[ * ]

 

APPENDIX I

 

THIRD PARTY PATENTS

 

[ * ]

 

[ * ] = CERTAIN CONFIDENTIAL

INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED

AND FILED SEPARATELY  WITH THE

SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE

ACT OF 1934, AS AMENDED.EX-10.1

INTERCREDITOR AGREEMENT

     
   THIS   INTERCREDITOR   AGREEMENT   (as amended,   supplemented   or  otherwise   modified  from  time  to  time,   this
“Agreement”),  dated  as of  August  15,  2001,  is  made  by and  among  LENNOX
INTERNATIONAL  INC.  (the  “Company”);  LENNOX  INDUSTRIES  INC.,  ARMSTRONG AIR
CONDITIONING  INC.,  EXCEL COMFORT  SYSTEMS INC.,  SERVICE EXPERTS INC. and each
other party that  becomes a party hereto as a “Material  Restricted  Subsidiary”
(as  hereinafter  defined)  after  the  date  hereof  (collectively  herein  the
“Guarantors”  and  the  Company  and  the  Guarantors,   herein  the  “Obligated
Parties”); each of the noteholders listed as a noteholder on the signature pages
hereto  (collectively,  together with the other holders from time to time of the
hereinafter   described   Notes   and  their   successors   and   assigns,   the
“Noteholders”);  THE CHASE MANHATTAN BANK, in its capacity as the administrative
agent under the  Multiyear  Credit  Agreement  (as  hereinafter  defined) and on
behalf of the lenders  party  thereto (in such  capacity,  and together with its
successors  and  assigns,  the  “Multiyear  Agent” and such  lenders,  and their
respective successors and assigns, the “Multiyear Lenders”); THE CHASE MANHATTAN
BANK,  in its  capacity  as the  administrative  agent  under the 364 Day Credit
Agreement  (as  hereinafter  defined) and on behalf of the lenders party thereto
(in such capacity,  and together with its  successors and assigns,  the “364 Day
Agent” and such lenders and their  respective  successors and assigns,  the “364
Day  Lenders”);  any other  lender  which  becomes a party to this  Agreement in
accordance  with  Section  7.2  or  Section  7.3 of  this  Agreement  (the  “New
Lenders”);  and THE CHASE  MANHATTAN  BANK, in its capacity as collateral  agent
hereunder (in such capacity,  and together with its successors and assigns,  the
"Collateral  Agent") for the  Noteholders,  the Multiyear  Agent,  the Multiyear
Lenders,  the  364 Day  Agent,  the 364 Day  Lenders  and the New  Lenders  (the
Noteholders, the Multiyear Lenders, the 364 Day Lenders, the New Lenders and any
of their respective successors and assigns, herein the “Lenders”).

RECITALS

     
   A.        
The Company has entered into the following note purchase agreements:

	 	     
   (i)        nine
separate Note Purchase Agreements dated as of December 1, 1993, between the
Company and each of The Prudential Insurance Company of America, Connecticut
General Life Insurance Company, Connecticut General Life Insurance Company, on
behalf of one or more separate accounts, United of Omaha Life Insurance Company,
Mutual of Omaha Insurance Company, Companion Life Insurance Company, United
World Life Insurance Company, First Colony Life Insurance Company, General
Electric Capital Assurance Company (as a successor) and GE Life and Annuity
Assurance Company (as a successor); 

	 	     
   (ii)        the Note Purchase Agreement
dated as of July 6,  1995
between the Company and Teachers Insurance and Annuity Association
            of America;

	 	     
   (iii)        eight
separate Note Purchase Agreements dated as of April 3, 1998, between the
Company and each of The Prudential Insurance Company of America, U.S. Private
Placement Fund, Teachers Insurance and Annuity Association of America,
Connecticut General Life Insurance Company, Connecticut General Life Insurance
Company, on behalf of one or more separate accounts, CIGNA Property and Casualty
Insurance Company, United of Omaha Life Insurance Company and Companion Life
Insurance Company; and 

	 	     
   (iv)        that certain  Master Shelf
Agreement  dated as of  October 15,  1999

1

	 	between the Company and The
Prudential Insurance Company of America;

(as all such note purchase
agreements have been and may hereafter be amended, supplemented and otherwise
modified from time to time, the “Note Agreements”), pursuant to
which (i) the Company has issued, and the Noteholders have purchased, certain
Notes of the Company in the aggregate original principal amount of $255,000,000
and (ii) in the case of the Master Shelf Agreement, the Company may issue
additional Notes (including any notes delivered in substitution or exchange
therefor, the “Notes”). 

     
   B.        
Under the terms of the Note Agreements, payment of the Notes and performance and
observance of all other obligations of the Company arising under or in
connection with the Note Agreements are and will be guaranteed by the Guarantors
(such present and future guaranties as amended, supplemented or otherwise
modified from time to time, collectively, the “Note
Guaranties”). 

        
 C.
        The Company, the Multiyear Agent, and certain lenders have entered into that
certain Revolving Credit Facility Agreement dated as of July 29, 1999 (as
amended, supplemented and otherwise modified from time to time, the
“Multiyear Credit Agreement”) and the Company, the 364 Day
Agent and certain lenders have entered into that certain 364 Day Revolving
Credit Facility Agreement dated as of January 22, 2000 (as amended, supplemented
and otherwise modified from time to time, the “364 Day Credit
Agreement”; the Multiyear Credit Agreement together with the 364 Day
Credit Agreement, herein the “Credit Agreements”). Under the
Credit Agreements, the Multiyear Agent and the 364 Day Agent are authorized to
enter into this Agreement on behalf of the Multiyear Lenders and the 364 Day
Lenders, respectively, and to bind them to the terms hereof. 

     
   D.
        Under the terms of the Credit Agreements, the repayment of credit extended under
the Credit Agreements and performance and observance of all other obligations of
the Company arising under or in connection with the Credit Agreements are and
will be guaranteed by the Guarantors (such present and future guaranties as
amended, supplemented or otherwise modified from time to time, collectively, the
“Bank Guaranties” and, together with the Note Guaranties, the
“Guaranties”). 

     
   E.
        As required by the Note Agreements and the Credit Agreements (collectively with
all Notes and other evidences of indebtedness issued pursuant to any of the
foregoing and any note purchase agreement, credit agreement, note, other
evidence of indebtedness or other similar documents of any New Lender that
hereafter becomes a party hereto, the “Credit Facilities”), the
Company will execute and deliver a Pledge Agreement (herein so called, as the
same may be amended, supplemented or otherwise modified from time to time) in
favor of the Collateral Agent in substantially the form of
Attachment D hereto (the Pledge Agreement, together with all
financing statements and other documents executed pursuant thereto, as the same
may be amended, supplemented or otherwise modified from time to time,
collectively, the “Security Documents”), providing security
interests in favor of the Collateral Agent for the benefit of the Lenders, the
Multiyear Agent, the 364 Day Agent and any administrative agent acting for the
benefit of a New Lender (collectively, with the Collateral Agent, herein the
“Creditors”) in the capital stock of the Material Restricted
Subsidiaries and the other property described therein in order to secure ratably
(i) the obligations under and in respect of the Notes and the Note
Agreements and (ii) the obligations under and in respect of the Credit
Agreements. 

     
   F.
        Under applicable law and, if applicable, the terms of the Credit Facilities and
the Guaranties, a Lender may be entitled to set off, appropriate and apply any
deposits and any other indebtedness at any time held or owing by such parties to
or for the credit or account of any Obligated Party against and on account of
liabilities of such Obligated Party (collectively, such rights are hereinafter
referred to as the “Set–Off Rights,” including any right
to receive a lien on amounts previously subject to the Set–Off Rights, and
to recover such amounts, after the commencement of any action under any 

2

bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of
debt, dissolution or liquidation or similar law, whether now or hereafter in
effect). 

        G.
        The Company and the Lenders have agreed that obligations of the Obligated
Parties under and in respect of the Credit Agreements and the Bank Guaranties
are to be secured and treated on a pari passu basis with the obligations
of the Obligated Parties under and in respect of the Note Agreements, the Notes
and the Note Guaranties. 

        H.
        The Credit Facilities require that this Agreement shall have been executed and
delivered in order to (i) set forth certain responsibilities and
obligations of the Collateral Agent, (ii) establish among the Lenders their
respective rights with respect to certain payments that may be received:
(a) by the Lenders from one or more of the Obligated Parties in respect of
the Credit Facilities or the Guaranties; (b) by the Collateral Agent in
respect of the Collateral; and (c) otherwise by any of the Lenders under,
in connection with or pursuant to their respective Credit Facilities, including,
without limitation, pursuant to any Set–Off Rights. 

        NOW,
THEREFORE, in consideration of the premises and the mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows: 

ARTICLE I.

Definitions

        Section
1.1.        Uniform Definitions; Cross-references.
The capitalized terms used
herein and defined in the Credit Facilities but not otherwise defined in this
Agreement are used herein with the meaning therein specified as of the date
hereof. Each term shall include the plural as well as the singular and
vice-versa. 

        
Section 1.2.        Additional Definitions.
  The following terms, as used herein, have the following meanings:

	 	       
   “364 Day Agent” shall have the meaning specified in the
preamble to this Agreement.

	 	       
   
“364 Day Credit Agreement” shall have the meaning specified in Recital C of this
Agreement.

	 	       
 
“   364 Day Lenders” shall have the meaning specified in the
preamble to this Agreement.

	 	       
 
“Acceleration” shall have the meaning specified in Section
2.1 of this Agreement.

	 	       
 
“Agreement” shall have the meaning specified in the preamble
to this Agreement.

	 	       
 
“Bank Guaranties” shall have the meaning specified in Recital
 D of this Agreement.

3

	 	       
 “Bankruptcy Event” shall have the meaning specified in Section 2.1
of this Agreement.

	 	      
  “Breakage
Costs” shall mean, at any time, amounts then payable by the Company
under Section 8.05 (b) of the Multiyear Credit Agreement, and the similar
provisions of the 364 Day Credit Agreement or any other Credit Facility upon the
declaration or occurrence of an event of default, a termination event or a
similar event or circumstance thereunder. 

	 	    
    “Business
Day” shall mean any day other than a Saturday, a Sunday or a day on
which commercial banks in New York City, New York, or Houston, Texas are
required or authorized to be closed. 

	 	    
    “
Collateral” has the meaning set forth in the Pledge Agreement.

	 	    
    “
Collateral Agent” shall have the meaning specified in the preamble to this
Agreement.

	 	    
    “
Company” shall have the meaning specified in the preamble to this Agreement.

	 	    
    “
Credit Agreements” shall have the meaning specified in Recital C of
this Agreement.

	 	    
    
“Credit Facilities” shall have the meaning specified in Recital
E of this Agreement.

	 	    
    
“Creditors” shall have the meaning specified in Recital E of
this Agreement.

	 	    
    
“Date of Closing” shall mean August 15, 2001.

	 	    
    
“Default”  shall mean any event or  condition  which upon  notice,  lapse of time or both would  constitute  an Event of
            Default.

	 	    
    
“Default Reference Date” shall have the meaning specified in
Section 2.1 of this Agreement.

	 	    
    
“Dollars” shall mean lawful currency of the United States
of America.

	 	    
    
“Event of  Default”  shall mean the  occurrence  of any "Event of Default" as such term is defined in each of the Credit
            Facilities.

	 	    
    
“Financing Documents” shall mean the Note Agreements,  the Notes, the Credit Agreements,  any notes executed pursuant to
            any Credit Agreement, the Guaranties,  the Security Documents, this Agreement and any similar documentation executed in favor of any
            New Lender.

	 	     
   “Funded
Obligations” shall mean, at any time of determination and with respect
to any Lender under any Credit Facility, the aggregate amount payable at such
time (whether or not then due) to such Lender under such Credit Facility in
respect of

4

	 	
principal, interest (determined in accordance with the applicable
provisions of such Credit Facility, but only to the extent accrued through the
applicable determination date), Breakage Costs and Premium, plus the aggregate
amount of such Lender’s participation or other interest in all letters of
credit outstanding at such time under such Credit Facility. 

	 	        
“GAAP” shall mean  generally  accepted  accounting  principles  as in effect from time to time in the United  States of
            America.

	 	        
“Guaranties” shall have the meaning specified in Recital D of this Agreement.

	 	        
“Guarantors” shall have the meaning specified in the preamble to this Agreement.

	 	        
“Lenders” shall have the meaning specified in the preamble to this Agreement.

	 	        
“Material  Restricted  Subsidiary” shall mean Lennox  Industries
Inc.,  Armstrong Air  Conditioning Inc.,  Excel Comfort
            Systems Inc.,  Service  Experts Inc.  and each other  Restricted  Subsidiary
(except  LPAC  Corp.) the book  value  (determined  in
            accordance  with GAAP) of whose total assets equals or exceeds ten percent
(10%) of the book value  (determined  in accordance  with
            GAAP) of the consolidated total assets of the Company and all Subsidiaries
as determined as of the last day of each fiscal quarter.

	 	       
 
“Multiyear Agent” shall have the meaning specified in the
preamble of this Agreement.

	 	        
“Multiyear Credit Agreement” shall have the meaning specified in
Recital C of this Agreement.

	 	        
“Multiyear Lenders” shall have the meaning specified in the
preamble of this Agreement.

	 	        
“New Lender” shall have the meaning specified in the preamble
to this Agreement.

	 	        
“New Material Subsidiary” shall have the meaning specified in Section 7.4
of this Agreement.

	 	        
“Note Agreements” shall have the meaning specified in Recital A of
 this Agreement.

	 	        
“Note Guaranties” shall have the meaning specified in Recital B of
this Agreement.

	 	    
    “Notes” shall have the meaning specified
in Recital A of this Agreement.

	 	    
    
“Notice of Event of Default” shall have the meaning specified in Section 3.1(b) of
this Agreement.

	 	        
“Obligated Parties” shall have the meaning specified in the preamble to this
Agreement.

5

	 	        
“Obligations”  shall mean at any time,  the  aggregate  of all
Funded  Obligations  and all other  obligations,  indebtedness  and
liabilities of the
Obligated Parties (or any one or more of them) to the Creditors (or any one or
more of them) arising pursuant to any of the Financing Documents (including
without limitation, this Agreement and the Security Documents), whether now
existing or hereafter arising, whether direct, indirect, related, unrelated,
fixed, contingent, liquidated, unliquidated, joint, several, or joint and
several, including, without limitation, the obligation of the Company to repay
the loans made thereunder, the reimbursement obligations arising in connection
with letters of credit issued under the terms of the Credit Facilities, all
indemnification obligations thereunder and all fees, costs, and expenses
(including attorneys’ fees and expenses) provided for in the Financing
Documents. 

	 	        
“Person”
shall mean an individual, partnership, corporation, limited liability company,
association, trust, unincorporated organization, or a government or agency or
political subdivision thereof. 

	 	        
“Pledge Agreement” shall have the meaning specified in Recital E
of this Agreement.

	 	        
“Premium”  shall mean, at any time with respect to any Credit  Facility,  the amount (whether  denominated as a make-whole  amount,
yield  maintenance  amount or  otherwise)  payable as a premium in excess of  principal  and  interest  due on the  prepayment  or early  acceleration,  as
determined pursuant to the terms thereof.

	 	        
“Proceeds”  shall mean any and all money or other  property  received upon the sale,  lease,  exchange,  casualty loss or any other
disposition of any Collateral.

	 	        
“Purchaser” shall have the meaning specified in Section 7.2 of
this Agreement.

	 	        
“Reallocable Payment” shall have the meaning specified in Section
2.2 of this Agreement.

	 	        
“Required  Lenders”  shall mean, at any time of  determination,  (a) Noteholders
and New Lenders who have provided fixed rate term
loan Credit  Facilities  holding at such time, in the aggregate,  more than 66-2/3%
of the principal  outstanding  under their respective Credit Facilities
plus (b) the  Multiyear  Lenders,  364 Day Lenders and any New Lenders party to a
revolving Credit Facility or to a floating rate term loan Credit Facility
holding at such time, in the aggregate,  more than 66-2/3% of the sum of (i) the
principal  outstanding under their respective Credit Facilities,  (ii) the
letters of credit outstanding thereunder and (iii) the unused commitments then
available to be drawn thereunder.

	 	        
“Restricted  Subsidiary”  shall mean any Subsidiary of the Company which is (a)
listed as a Restricted  Subsidiary in Schedule 3.05
to the Multiyear Credit
Agreement or (b) organized under the laws of, and conducts substantially
all of its business and maintains substantially all of its property and assets
within, the United States or any state thereof (including the District of
Columbia).

	 	        
“Security Documents” shall have the meaning specified in Recital E
of this Agreement.

6

	 	        
“Set-Off Rights” shall have the meaning specified in Recital F of this
Agreement.

	 	        
“Sharing Notice” shall have the meaning specified in Section 2.1 of this
Agreement.

	 	        
“Sharing  Percentage”  shall mean, as to any Lender and at any time of  determination,
the percentage  equivalent of a fraction of
which the numerator
is such Lender’s Funded Obligations and the denominator is the
aggregate of all Funded Obligations of all Lenders.

	 	        
“Subsidiary”  shall mean, as to any Person,  any  corporation,  association or other business entity in which such Person or one or
more of its  Subsidiaries or such Person and one or more of its Subsidiaries  owns sufficient  equity or voting interests to enable it or them (as a group)
ordinarily,  in the absence of  contingencies,  to elect a majority of the  directors (or Persons  performing  similar  functions) of such entity,  and any
partnership or joint venture if more than a 50% interest in the profits or capital  thereof is owned by such Person or one or more of its  Subsidiaries  or
such Person and one or more of its  Subsidiaries  (unless such  partnership can and does ordinarily take major business  actions without the prior approval
of such Person or one or more of its  Subsidiaries).  Unless the context otherwise  clearly  requires,  any reference to a "Subsidiary" is a reference to a
Subsidiary of the Company.

ARTICLE II.

Sharing Among Lenders

        Section
2.1.        Sharing Notice.  
Upon an Acceleration with respect to any Credit
Facility, the accelerating Lender shall immediately notify the Collateral Agent
thereof and of its estimation of the Default Reference Date applicable thereto,
and the Collateral Agent shall immediately give notice (a “Sharing
Notice”) to each of the Lenders informing them that the provisions of
this Article II are to be implemented effective as of the Default Reference Date
and requiring each Lender to provide it with all necessary information to enable
it to calculate such Lender’s Funded Obligations as of the Default
Reference Date and the amount of any other Obligations then outstanding. Any
Sharing Notice shall be effective as of the date it is sent by the Collateral
Agent and shall remain effective until the accelerating Lender and the Required
Lenders agree that such Sharing Notice is no longer in effect. After receiving
the information required to be provided pursuant to this Section 2.1, the
Collateral Agent shall calculate and promptly notify the Lenders as to the
Funded Obligations of each Lender and, based on such information, the Sharing
Percentage of each Lender, which notice shall demonstrate such calculations in
reasonable detail. If the Collateral Agent thereafter receives information which
demonstrates that the Collateral Agent’s prior calculations were erroneous,
the Collateral Agent shall recalculate each Lender’s Funded Obligations and
each Lender’s Sharing Percentage, and shall promptly notify all Lenders of
such recalculations. As used in this Section 2.1 and elsewhere in this
Agreement, the following terms shall have the following meanings: 

	 	   
       
“Default Reference Date” shall mean the earlier of:

7

	 	
        
(a)        if a Notice of Event of Default
is given by a Lender pursuant to  Section 3.1(b)  (or was required by Section 3.1(b)
            to be given) and an Acceleration  occurs for any reason thereafter
without the related Event of Default having been cured or waived,
            the later of:

	 	
        
(i)        the date of the  Event of  Default  that  resulted  in the  giving  of such  Notice  of Event of
                        Default; or

	 	        
(ii)        the date 180 days prior to the Acceleration; or

	 	
        
(b)      the date on which Acceleration occurs.

	 	   
     “Acceleration”
shall mean the earlier of (a) the acceleration of the maturity of any
amount outstanding under a Credit Facility and (b) a Bankruptcy Event, with
the term “Bankruptcy Event” meaning any of the following
events: (a) any Obligated Party (i) is generally not paying, or admits
in writing its inability to pay, its debts as they become due, (ii) files,
or consents by answer or otherwise to the filing against it of, a petition for
relief or reorganization or arrangement or any other petition in bankruptcy, for
liquidation or to take advantage of any bankruptcy, insolvency, reorganization,
moratorium or other similar law of any jurisdiction, (iii) makes an
assignment for the benefit of its creditors, (iv) consents to the
appointment of a custodian, receiver, trustee or other officer with similar
powers with respect to it or with respect to any substantial part of its
property, (v) is adjudicated as insolvent or to be liquidated, or
(vi) takes corporate action for the purpose of any of the foregoing; or
(b) a court or governmental authority of competent jurisdiction enters an
order appointing, without consent by an Obligated Party, a custodian, receiver,
trustee or other officer with similar powers with respect to it or with respect
to any substantial part of its property, or constituting an order for relief or
approving a petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the dissolution, winding-up or
liquidation of an Obligated Party, or any such petition shall be filed against
an Obligated Party and such petition shall not be dismissed within 60 days. 

         Section
2.2.     Receipt of
Reallocable Payments; Purchase of Participations. If any
Lender obtains or obtained any Reallocable Payment after the Default Reference
Date or if, after the Default Reference Date and the adjustment to the Sharing
Percentages under Section 2.4 hereof, such Lender received more than its
Sharing Percentage of a Reallocable Payment, such Lender shall promptly after
the receipt of a Reallocable Payment (or, if later, after receipt of the Sharing
Notice) purchase at par from the other Lenders such participations in the Funded
Obligations held by such other Lenders as shall be necessary to cause such
purchasing Lender to share such Reallocable Payment (net of any out-of-pocket
costs and expenses paid by such Lender in so obtaining the same) ratably based
on the Sharing Percentages then in effect. Such participations shall be
evidenced by this Agreement. Although they shall have no obligation to do so,
the Required Lenders may agree upon another arrangement for vesting in the
sharing Lender the appropriate portion of the rights and benefits under the
Credit Facilities of the Lenders with whom such Reallocable Payment is shared.
As used in this Section 2.2 and elsewhere in this Agreement, the term
“Reallocable Payment” shall mean any amount received by a
Lender in respect of any Credit Facility by virtue of any voluntary or
involuntary payment or prepayment made by or for the account of any Obligated
Party, by virtue of the application of any provision of any of the Financing
Documents (other than this Agreement), or by virtue of an exercise of any
Set–Off Rights or similar mechanism or in any other manner (except pursuant
to this Agreement); provided, however, that in no event shall any
of the following be deemed to be Reallocable Payments: 

8

	 	
     
   
(i)        Proceeds (which shall
be shared by the Lenders in accordance with Section 2.6);

	 	
     
   (ii)        
The proceeds of any property other than the Collateral in which a Lender shall
have been granted a Lien in accordance with the permissions of the Credit
Facilities; 

	 	   
     (iii)        
Any amount received (through the exercise of Set–Off Rights or otherwise)
by a Lender and applied to any obligation owed to such Lender by an Obligated
Party which arise directly from the deposit, collection and other cash
management or deposit services provided by such Lender to such Obligated Party; 

	 	
        (iv)        
Payments accompanied by clear instructions from the applicable Obligated Party
or other Person making the payment that such payments are to be applied to other
obligations; 

	 	
        
(v)        
Payments  distributed by a court of competent  jurisdiction or in a proceeding
commenced under any bankruptcy or similar
proceeding specifically for application to or on account of other obligations;

	 	  
      (vi)        
With respect to any revolving credit facility, any repayments of advances made
on a revolving basis after the Default Reference Date which are not in excess of
the aggregate advances made after the Default Reference Date (provided that the
amount of the repayments which are in excess of the aggregate advances made
after the Default Reference Date shall be “Reallocable Payments” and
shall be shared in accordance with this Section 2.2); and 

	 	   
     (vii)        
regularly scheduled payment of principal or interest required under any
Credit Facility (but excluding any such payment that is contingent upon the
presence or happening of a specified event or occurrence such as the sale of
assets, a change of control of the Company, a cash sweep or otherwise) received
prior to the Default Reference Date. 

Except as provided in the
foregoing exceptions, any payments made by any Obligated Party at any time after
the Default Reference Date to any Lender on any loans or other extensions of
credit made to any Obligated Party other than under the Credit Facilities shall
be deemed by the Lender receiving such payments to be payments under its
respective Credit Facility and therefore Reallocable Payments. As among any
Lender group, the provisions of this Section 2.2 shall supersede and
control in the event of any conflict between this Section and any similar
section contained in any Credit Facility. 

     
     Section 2.3.
      Preferences, etc.
If any Lender purchases a participation pursuant to Section 2.2 and

     
           
  (a)        
  the amount obtained by such Lender which gave rise to such  participation  or any part thereof is required to be repaid,
and is repaid, by such Lender to any Obligated Party or any other Person; or

     
             
(b)          
such purchase was made based upon an erroneous prior calculation of the Sharing  Percentages as calculated in accordance
with Section 2.1; or

     
           
  (c)        
  the Sharing  Percentages  on
which such purchase was based changed in accordance  with  Section 2.4  and the
purchasing Lender retains less than its Sharing Percentage of the applicable
Reallocated Payment;

9

then the purchase of the
participations under Section 2.2 shall be rescinded to the extent necessary
to provide funds for such recovery, correct the error or take into account the
changed Sharing Percentages and each selling Lender shall promptly (after its
receipt of notification from the purchasing Lender) repay to the purchasing
Lender the purchase price for such participation to such extent, together with
an amount equal to such selling Lender’s ratable share (according to the
proportion of (x) the amount of such selling Lender’s required
repayment to the purchasing Lender to (y) the total amount so recovered
from the purchasing Lender) of any interest or other amount paid or payable by
the purchasing Lender in respect of the total amount so recovered or required to
be returned. 

    
      
Section 2.4.     
Adjustments to Sharing Percentages.  If, at any time after the date of a
Sharing Notice:

     
           
  (a)        
  a Lender is required to repay to any Obligated  Party or any other
Person all or any portion of an amount received on or
prior to the date of such Sharing Notice with the result that such Lender's
Funded Obligations are increased, or

     
           
  
(b)        
  an amount  originally  included  in the  Funded  Obligations  of a Lender  under its  Credit  Facility  as a  contingent
obligation (such as a
letter of credit) ceases to be an obligation because of its expiry, reduction,
cancellation or otherwise, with the result that such Funded Obligation is
reduced,

then the Sharing
Percentages of the Lenders shall be adjusted on the first Business Day of the
next calendar month to reflect such increase or reduction, and each Lender shall
promptly (and in any event within five Business Days after its receipt of
notification from the Collateral Agent) purchase or rescind its participation
interest in the Funding Obligations in accordance with either Section 2.2 or 2.3
hereof, as applicable. 

    
      
Section 2.5.        
Collateral Proceeds

           
       
(a)          
Pro Rata  Treatment.  The  Collateral  Agent shall be the secured party under
the Security  Documents and shall hold the Collateral, all for the
benefit of the Creditors. The Lenders hereby agree that they will receive pro
rata treatment in connection with all payments, distributions, collections
or recoveries relating to the Collateral. Each payment or distribution by or
from or received in connection with the exercise of remedies after a Default or
an Event of Default in respect of the Collateral shall be shared and applied to
the Obligations in accordance with Section 2.6. 

           
       
(b)          
This  Agreement  Controlling.      The
provisions  contained  herein  concerning  the  Collateral  and  Proceeds  shall
be controlling, notwithstanding the terms of any agreement between any Creditor and any
Obligated Party under any other document or instrument between such parties,
whether or not bankruptcy, receivership or insolvency proceedings shall at any
time have been commenced. 

    
    Section
2.6.      Application of Proceeds. The Proceeds of any sale, enforcement or
other disposition of any of the Collateral or other distribution in respect of
the Collateral, in each case following a Default or an Event of Default, shall
be applied by the Collateral Agent in the following order: 

           
       
first, to the payment of all costs,  fees and expenses  incurred by the Collateral Agent in connection with the realization upon the
Collateral under the
Security Documents or this Agreement, including, without limitation, reasonable
costs and expenses incurred by the Collateral Agent in connection with the
defense of any claim, suit, action or proceeding against the Collateral Agent,
as provided below in Section 5.8; 

10

           
       
second,  to the payment of the Funded  Obligations of the Lenders,  which payment shall be shared by the Lenders  according to their
respective Sharing
Percentages until all the liquidated Funded Obligations have been satisfied in
full and all contingent reimbursement obligations in respect of letters of
credit issued under any Credit Facility have been fully cash collateralized;

           
       
third,  to the payment of the other  Obligations  owed to Creditors and
then due, which payment shall be shared by the Creditors pro rata
determined based on the outstanding amounts thereof;

           
       
fourth,  to the  payment to the Company or its  successors
 or  assigns,  or as a court of  competent  jurisdiction  may direct,  or
otherwise as required by law, if any surplus is then remaining from
such proceeds.

Portions of the proceeds of
the Collateral distributed to a Lender may thereafter be held as collateral for
the contingent reimbursement obligations in respect of letters of credit issued
under the Credit Facilities. In the event that any such letter of credit expires
undrawn and as a result the contingent reimbursement obligations relating
thereto terminate, the Creditor holding such Collateral agrees to return such
proceeds to the Collateral Agent for distribution in accordance with this
Section 2.6 to be distributed as Proceeds of Collateral hereunder. 

        Section
2.7.        Proceeds Received Directly
by a Lender.  If any Creditor receives any
Proceeds, other than from the Collateral Agent, such Person shall:
(a) notify the Collateral Agent in writing of the nature of such receipt,
the date of the receipt and the amount thereof, (b) deduct from the
Proceeds received any costs or expenses (including attorneys’ fees and
expenses) incurred in connection with the acquisition of such Proceeds,
(c) hold the remaining amount of such Proceeds in trust for the benefit of
the Collateral Agent until paid over to the Collateral Agent and (d) pay
the remaining amount of such Proceeds to the Collateral Agent promptly upon
receipt thereof. Upon receipt, the Collateral Agent shall promptly distribute
the Proceeds so received in accordance with Section 2.6. 

        Section
2.8.        Incorrect Distribution
  If any Creditor receives any Proceeds in an
amount in excess of the amount such Person is entitled to receive under the
terms hereof, such Person shall (a) hold such excess Proceeds in trust for
the benefit of the Collateral Agent until paid over to the Collateral Agent and
(b) shall promptly pay the excess amount of such Proceeds to the Collateral
Agent. The Collateral Agent shall promptly distribute the amount so received to
in accordance with the terms of Section 2.6. 

        Section
2.9.        Return of Proceeds.  
If at any time payment, in whole or in part, of
any Proceeds distributed hereunder is rescinded or must otherwise be restored or
returned by the Collateral Agent or by any Creditor as a preference, fraudulent
conveyance or otherwise under any bankruptcy, insolvency or similar law, then
each Person receiving any portion of such Proceeds agrees, upon demand, to
return the portion of such Proceeds it has received to the Person responsible
for restoring or returning such Proceeds. 

        Section
2.10.        Notice to Persons making
Distributions.  Each Creditor shall
promptly and appropriately instruct any Person (other than Collateral Agent)
making any distribution of Proceeds or Reallocable Payments to make such
distribution so as to give effect to this Agreement. 

        Section
2.11.        Perfection by Possession.
  Collateral Agent hereby appoints each
Lender, the Multiyear Agent and the 364 Day Agent to serve as its bailee to
perfect the Collateral Agent’s liens and security interest in any
Collateral, including any Proceeds, in the possession of any such Person. Any
such party possessing such Collateral agrees to so act as bailee for the
Collateral Agent in accordance with the terms and provisions hereof. 

11

        Section
2.12.        Non-Cash Proceeds.
  Notwithstanding anything contained herein to the
contrary, if the Collateral Agent, acting upon the instructions of the Required
Lenders, shall ever acquire any Collateral through foreclosure or by a
conveyance in lieu of foreclosure or by retaining any of the Collateral in
satisfaction of all or part of the Obligations or if any Proceeds or other
property received by the Collateral Agent or any Creditor to be distributed and
shared pursuant to this Article II are in a form other than immediately
available funds, the Person receiving such Collateral, Proceeds or other
property shall not be required to remit any share thereof under the terms hereof
and the Creditors shall only be entitled to their undivided interests therein as
determined hereby. The Creditors shall receive the applicable portions of any
immediately available funds consisting of Proceeds from such Collateral or
proceeds of such non-cash Proceeds or other property so acquired only if and
when paid in connection with the subsequent disposition thereof. While any
Collateral or other property to be shared pursuant to this Article II is held by
the Collateral Agent or a Creditor pursuant to this Section 2.12, such
Person shall hold such Collateral or other property for the benefit of the
Creditors in accordance with their respective undivided interest therein and all
matters relating to the management, operation, further disposition or any other
aspect of such Collateral or other property shall be resolved by the agreement
of the Required Lenders. 

ARTICLE III.

Cooperation Among Creditors

        
Section 3.1.        Cooperation.
  
Each Creditor agrees with each of the other Creditors that:

       
           
(a)     
     it will from time to time provide such  information to the Collateral Agent as may be necessary to enable the Collateral
Agent to make any
calculation as referred to in Section 2.1 or Section 2.4 of this
Agreement or otherwise required for any other purpose hereof; 

       
           
(b)     
     it will,  not later than 60 days after it has become aware of the  occurrence  of any Event of Default which it believes
will not be cured or
waived, give the Collateral Agent notice, and if such notice is oral, confirmed
in writing, of such Event of Default and stating that the same constitutes a
Notice of Event of Default (a “Notice of Event of Default”);
and 

       
        
   
(c)          
it will give the  Collateral  Agent and the other Lenders  immediate  written notice of any  acceleration  of any of its
Funded Obligations or
suspension of all or any portion of its commitments to extend credit under any
of the Credit Facilities. 

        Section
3.2.        
Parties Having Other Relationships.  
Each Creditor acknowledges and
accepts that now and in the future the other Creditors or their respective
affiliates may lend to the Company or any Subsidiary on a basis other than as
covered by this Agreement or may accept deposits from, act as trustee under
indentures of, act as servicing bank or any similar function under any credit
relationship with, and generally engage in any kind of business with Company or
any Subsidiary, all as if such Person were not a party to this Agreement. Except
as set forth herein, each Creditor acknowledges that the other Creditors and
their respective affiliates may exercise all contractual and legal rights and
remedies which may exist from time to time with respect to such other existing
and future relationships without any duty to account therefor to the other
Creditors except as necessary to establish compliance with the provisions of
this Agreement. 

12

        Section
3.3.        Modification to Financing
Documents.  Nothing herein shall restrict
the right of any Creditor to amend, waive, consent to the departure from or
otherwise modify any Financing Documents to which it is a party in accordance
with the terms thereof. 

ARTICLE IV.

Obligated Party Agreements

        
Section 4.1.        Consent.
  Each of the Obligated Parties consent to, and agrees with the terms of, this
Agreement.

        Section
4.2.        
Further Assurances.  At any time and from time to time, upon the
written request of the Collateral Agent, and at the expense of the Company, each
Obligated Party will promptly execute and deliver any and all such further
instruments and documentation and take such further action as the Collateral
Agent reasonably deems necessary or advisable in obtaining the full benefits of
this Agreement and the Security Documents and of the rights, remedies and powers
herein and therein conferred or reserved. 

        
Section 4.3.        
Obligations Unimpaired.  Except as expressly provided herein, nothing
contained in this Agreement shall impair, as between any Obligated Party and any
Creditor, the obligation of the Obligated Parties to pay or perform any
obligation or liability owed to such Creditor when the same shall become due and
payable in accordance with the terms of the applicable Credit Facility. 

        Section
4.4.        No Additional Rights for the
Company.  If any Creditor shall enforce
its rights and remedies in violation of the terms of this Agreement, each
Obligated Party agrees that it shall not use such violation as a defense to the
enforcement by such Lender of any of its rights under any Credit Facility or any
other Financing Documents to which it is a party nor assert such violation as a
counterclaim or basis for setoff or recoupment against such Creditor. Compliance
with this Section 4.4 will not constitute a violation of any other provisions of
this Agreement by an Obligated Party. 

          
Section 4.5.        Set–Off Rights.
  Each Obligated Party agrees that each Lender
purchasing a participation from another Lender pursuant to Section 2.2 hereof,
may, to the fullest extent permitted by law, exercise all its rights of payment
(including Set–Off Rights) with respect to such participation as fully as
if such Lender were the direct creditor of the applicable Obligated Party in the
amount of such participation. 

ARTICLE V.

Collateral Agent

        Section
5.1.        Appointment and Authority of Collateral
Agent.  In order to expedite
the enforcement of the rights and remedies set forth in this Agreement and the
Security Documents, The Chase Manhattan Bank is hereby appointed to act as
collateral agent for the Creditors hereunder and thereunder. The Collateral
Agent is hereby authorized and directed to take such action on behalf of the
Lenders under the terms and provisions of this Agreement and the Security
Documents and to exercise such rights and remedies hereunder and thereunder as
are specifically delegated to or required of the Collateral Agent under the
terms and provisions hereof and thereof. The Collateral Agent is hereby
expressly authorized as Collateral Agent on behalf of the Creditors, without
hereby limiting the foregoing, and subject to, and in accordance with, the terms
and conditions of this Agreement: 

13

       
           
(a)     
     to receive on behalf of each of the Creditors  any payment of monies paid to the  Collateral  Agent in  accordance  with
this Agreement and the
Security Documents, and to distribute to each Creditor its share of all payments
so received in accordance with the terms of this Agreement; 

       
           
(b)     
     to receive all documents and items to be
furnished under the Security Documents;

       
           
(c)     
     to maintain physical  possession of any of the Collateral as contemplated in any of the Security  Documents as agent and
bailee for the Creditors to perfect the liens and security interests granted pursuant
to the Security Documents therein;

       
           
(d)     
     to act on behalf of the Creditors in and under the
Security Documents;

       
           
(e)     
     to execute and deliver to the Company requests, demands, notices, approvals,  consents and other communications received
from the Creditors in connection with the Security Documents, subject to the terms
and conditions set forth herein and therein;

       
           
(f)     
     to the extent  permitted  by this  Agreement  and the  Security  Documents,  to exercise on behalf of each  Creditor all
remedies of the Creditors upon the occurrence and during the continuance of any
Default or Event of Default under any of the Security Documents;

       
           
(g)     
     to distribute to the  Creditors  information,  requests,  notices,  documents and other items  received from Company and
other Persons in respect of the Collateral and the Security Documents;

       
           
(h)     
     to accept, execute, and deliver the Security Documents
as the secured party for the benefit of the Creditors;

       
           
(i)     
     to take title to Collateral  for the benefit of the Creditors  pursuant to the exercise of any rights and remedies under
the Security Documents and to manage the Collateral so acquired pursuant to the
directions of the Required Lenders; and

       
           
(j)     
     to take such other actions,  other than as specified in Section 5.2  hereof, as may be requested by the Required Lenders
or as are reasonably
incident to any powers granted to the Collateral Agent hereunder and not in
conflict with applicable law or regulation or any Financing Document. 

     
   Section
5.2.        
Actions of Agent Requiring Consent, or Upon Request, of the Required
Lenders.  Notwithstanding anything contained herein or in the Security
Documents to the contrary, (a) the Collateral Agent shall not, without the
prior written consent of all the Lenders, release or substitute any Collateral
except as permitted by Section 5.12, (b) the Collateral Agent shall
not, without the prior written consent of the Required Lenders, institute
foreclosure proceedings with respect to all or any portion of the Collateral,
and (c) the Collateral Agent shall not enter into any other amendment,
modification or supplement of any of the Security Documents without the prior
written consent of the Required Lenders; provided, however, that upon the
Collateral Agent’s receipt of the prior written consent, or upon the
written instruction, of the Required Lenders, the Collateral Agent shall take
such action as to which consent has been granted or such instruction has been
given. 

     
   Section
5.3.        Non-Reliance on Collateral
Agent and Other Creditors.  Each Creditor
agrees that it has, independently and without reliance on the Collateral Agent
or any other Creditor, and based upon such documents and information as it has
deemed appropriate, made its own credit analysis of the

14

Obligated Parties and
the Collateral, and its independent decision to enter into this Agreement, and
that it will, independently and without reliance upon the Collateral Agent or
any other Creditor, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement. The Collateral Agent shall not
be required to keep the Creditors informed as to the performance or observance
by any Obligated Party with the terms of this Agreement, the Pledge Agreement or
any other Financing Document or to inspect the properties or books of any
Obligated Party. The Collateral Agent shall not have any duty, responsibility or
liability to provide any Creditor with any credit or other information
concerning the affairs, financial condition or business of any Obligated Party
which may come into the possession of Collateral Agent; provided,
however, the Collateral Agent shall send to the Lenders written notice of
any Event of Default of which it has been given notice and all payments and
repayments of amounts required hereunder to be paid to the Lenders received by
the Collateral Agent under or in connection with the Security Documents or this
Agreement. The Collateral Agent shall provide each Lender with a schedule of all
costs and expenses which the Collateral Agent has paid or proposes to pay from
the proceeds of such payments or repayments as permitted hereunder. 

     
   Section 5.4.        
Collateral Agent and Affiliates.  The Chase Manhattan Bank and any
successor Collateral Agent, in its capacity as a Lender and an agent under the
Credit Agreements, shall have the same rights and powers under the Financing
Documents and may exercise or refrain from exercising the same as though it were
not the Collateral Agent hereunder, and such Lender and its affiliates may lend
money to and generally engage in any kind of lending, investment, trust, hedging
or other business with or for any Lender, any Obligated Party, or any of their
respective affiliates, as if it were not acting as Collateral Agent hereunder. 

        Section
5.5.        Action by Collateral
Agent.  The obligations of the Collateral Agent
hereunder and under the Security Documents are only those expressly set forth
herein and therein. Notwithstanding anything contained herein or in any
Financing Document to the contrary, the Collateral Agent shall not be required
to take any action with respect to any Default or Event of Default, except as
expressly provided herein. 

     
   Section
5.6.        Consultation with
Experts.  The Collateral Agent may consult with
legal counsel, independent public accountants and any other experts selected by
it and shall not be liable for any action taken or omitted to be taken by it in
good faith in accordance with the advice of such counsel, accountants or
experts. Furthermore, the Collateral Agent (a) shall have no duties or
responsibilities except those set forth in this Agreement and the other Security
Documents and (b) shall not be required to initiate any litigation,
foreclosure or collection proceedings hereunder or under any Security Document
except to the extent requested by Required Lenders. 

     
   Section
5.7.        Liability of Collateral
 Agent.  The Collateral Agent shall be
entitled to rely on any communication or document believed by it to be genuine
and correct and to have been communicated or signed by the Person by whom it
purports to be communicated or signed and shall not be liable to any Creditor
for any of the consequences of such reliance. Neither the Collateral Agent nor
any director, officer, employee or agent of the Collateral Agent shall be liable
for any action taken or not taken by it or them under, or in connection with,
this Agreement or any of the Financing Documents in the absence of its or their
gross negligence or willful misconduct. As to any matters not expressly provided
for herein, the Collateral Agent shall act or refrain from acting in accordance
with written instructions from the Required Lenders or, in the absence of such
instructions, in accordance with its discretion, taking into account the
interests of all Lenders. The Collateral Agent shall not be obligated to follow
any such written directions to the extent that it shall determine that such
directions are in conflict with any provision hereof or of any applicable law or
regulation or any Financing Document or which exposes the 

15

Collateral Agent to personal liability. Neither the Collateral Agent nor any director, officer,
employee or agent of the Collateral Agent shall be responsible for or have any
duty to ascertain, inquire into or verify (a) any statement, warranty or
representation made in connection with any of the Financing Documents or any
payment thereunder; (b) the performance or observance of any of the
covenants or agreements of any Obligated Party or any Creditor under any of the
Financing Documents; (c) the validity, effectiveness or genuineness of the
Financing Documents or any other instrument or writing furnished in connection
therewith; or (d) the existence, genuineness or value of any of the
Collateral or the validity, effectiveness, perfection, priority or
enforceability of the security interests in or liens on any of the Collateral. 

       
   
Section 5.8.      Indemnification of Collateral Agent;
Defense of Claims

       
           
(a)          
EACH LENDER HEREBY AGREES TO INDEMNIFY THE COLLATERAL  AGENT AND EACH OF THE
COLLATERAL  AGENT'S  DIRECTORS,  OFFICERS,
AFFILIATES, REPRESENTATIVES
AND AGENTS (AS USED IN THIS SECTION 5.8 “COLLATERAL AGENT”
SHALL MEAN ALL OF THE FOREGOING) AGAINST ALL LOSS, COST, LIABILITY AND EXPENSE
(TO THE EXTENT NOT PAID BY AN OBLIGATED PARTY AND NOT ARISING OUT OF OR AS A
RESULT OF GROSS NEGLIGENCE OR WILLFUL MISCONDUCT ON THE PART OF THE COLLATERAL
AGENT BUT INCLUDING ALL LOSS, COST, LIABILITY AND EXPENSE ARISING OUT OF OR AS A
RESULT OF THE NEGLIGENCE ON THE PART OF THE COLLATERAL AGENT), INCLUDING
REASONABLE ATTORNEYS’ FEES, RESULTING FROM ANY ACTION TAKEN OR TO BE TAKEN
BY IT AS COLLATERAL AGENT ON BEHALF OF THE LENDERS WITHIN THE SCOPE OF ITS
AUTHORITY AS PROVIDED IN THIS AGREEMENT OR ANY OF THE SECURITY DOCUMENTS, TO THE
EXTENT OF SUCH LENDER’S PRO RATA SHARE (BASED UPON ITS SHARING
PERCENTAGE) OF ANY SUCH LOSS, COST, LIABILITY AND EXPENSE. 

       
           
(b)     
     The Collateral Agent shall notify each Lender as promptly as is reasonably  practicable of the written  assertion of, or
the commencement of, any
claim, suit, action or proceeding filed against the Collateral Agent arising out
of, or in connection with, the acceptance or administration of the duties
imposed upon the Collateral Agent hereunder or under any of the Financing
Documents or any action or omission taken or made within the scope of the rights
or powers conferred upon the Collateral Agent hereunder or under the Financing
Documents promptly after the Collateral Agent shall have received the written
assertion or have been served with the summons or other first legal process
giving information as to the nature and basis of the lawsuit. Each Lender shall
be entitled to participate in and assume, at its own expense, the defense of any
such claim, suit, action or proceeding, and such defense shall be conducted by
counsel chosen by such Lender and reasonably satisfactory to the Collateral
Agent, provided, however, that (i) if any Lender has not
assumed the defense of such claim, suit, action or proceeding, (ii) if the
attorneys handling the defense are not reasonably satisfactory to the Collateral
Agent, or (iii) if the defendants in any such action include both the
Collateral Agent and the Lenders and the Collateral Agent shall have been
advised by its counsel that there may be legal defenses available to it that are
different from or additional to those available to the Lenders, which in the
reasonable opinion of such counsel are sufficient to make it undesirable for the
same counsel to represent both the Lenders and the Collateral Agent, the
Collateral Agent shall have the right to employ its own counsel in all such
instances described in (i), (ii) or (iii) above, and shall be entitled to
recover from any proceeds received pursuant to Section 2.6 all reasonable
fees and expenses of such counsel. If more than one Lender gives notice of
assumption of defense, the matter shall be presented to all the Lenders and,
unless the Collateral Agent receives notice from the Required Lenders specifying
the Lender that is to assume the defense, the Collateral Agent shall proceed
itself with the defense. Except as provided above, the Collateral Agent’s
right to recover its reasonable counsel fees and expenses from proceeds received
pursuant to Section 2.6 shall cease upon any Lender’s assumption of
the defense of the claim, suit, action or proceeding. Each 

16

Lender and the
Collateral Agent is always entitled to defend itself at its own expense. Neither
the Lenders nor the Collateral Agent shall be bound by any settlement entered
into by the other parties without such party’s consent. 

     
     Section
5.9.      Resignation or Removal of Collateral Agent. Subject to the
appointment and acceptance of a successor Collateral Agent as provided below,
the Collateral Agent may resign at any time by giving notice thereof to each
Lender and may be removed, upon thirty days’ prior written notice of such
removal from the Required Lenders. Upon any such resignation or removal, a
successor Collateral Agent may be appointed by the Required Lenders. If no
successor Collateral Agent shall have been appointed as aforesaid and shall have
accepted such appointment within 30 days after the retiring Collateral
Agent’s giving of notice of resignation or having received notice of
removal, then the retiring Collateral Agent may, on behalf of the Lenders,
appoint a successor Collateral Agent which shall be a depository institution
with capital and surplus greater than $500,000,000 and which shall be qualified
to perform its duties hereunder and under the Security Documents. 

     
     Upon
the acceptance of any appointment as Collateral Agent hereunder by a successor
Collateral Agent, such successor Collateral Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
Collateral Agent, and the retiring Collateral Agent shall be discharged from its
duties and obligations under this Agreement or any Security Document, except to
the extent for acts or omissions prior to the resignation or removal. After any
retiring Collateral Agent’s resignation or removal hereunder as Collateral
Agent, (a) the provisions of Sections 5.7 and 5.8 shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken by
it while it was acting as Collateral Agent, (b) any Collateral held in
possession of the retiring Collateral Agent shall be delivered to the successor
Collateral Agent, and (c) the retiring Collateral Agent shall assign all of
its rights as secured party with respect to all of the Collateral to the
successor Collateral Agent for the benefit of the Creditors. 

     
     Section
5.10.      Appointment of Co-Agents. At any time or times, in order to comply
with any legal requirement in any jurisdiction, the Collateral Agent may appoint
a bank or trust company or one or more other Persons, either to act as co-agent
or co-agents, jointly with the Collateral Agent, or to act as separate agent or
agents on behalf of the Lenders with such power and authority as may be
necessary for the effectual operation of the provisions hereof and may be
specified in the instrument of appointment (which may, in the discretion of the
Collateral Agent, include provisions for the protection of such co-agent or
separate agent similar to the provisions of this Article V). 

     
     Section
5.11.      Compensation of Collateral Agent; Expenses. The Collateral Agent
agrees to serve hereunder without compensation except for the reimbursement of
its customary custodial fees charged for the safekeeping of the certificates
evidencing the stock pledged as collateral under the Pledge Agreement. Any
successor Collateral Agent appointed pursuant to Section 5.9 shall be
compensated by the Company on a basis which shall be approved by the Required
Lenders. The Lenders agree that such compensation paid to any successor
Collateral Agent and all reasonable out-of-pocket expenses (including, without
limitation, attorneys’ fees and expenses) incurred by the Collateral Agent
or such successor Collateral Agent on behalf of the Creditors incident to the
exercise or enforcement of any terms or provisions of the Security Documents
shall be indebtedness to the Collateral Agent or such successor Collateral
Agent, secured by the Collateral. Upon the request of the Collateral Agent or
such successor Collateral Agent, however, the Lenders will reimburse the
Collateral Agent or such successor Collateral Agent, to the extent not paid by
the Obligated Parties, for any such fees or expenses in accordance with each
Lender’s Sharing Percentage. 

17

     
     Section
5.12.      Release of Collateral. The Company may from time to time request
the Collateral Agent in writing, with copies thereof delivered simultaneously to
all Lenders, to release portions of the Collateral, if and to the extent such
Collateral is required to be released in connection with any sale of Collateral
that is permitted under the Credit Facilities. Promptly after the Collateral
Agent receives (a) such written request from the Company and
(b) written notice from the Required Lenders that the proposed disposition
is permitted under the terms of the Credit Facilities, then if no Default or
Event of Default exists the Collateral Agent shall release such Collateral. If
all the Obligations arising under the Credit Agreements have been paid and
satisfied in full and the commitments thereunder terminated, the Company may
request the Collateral Agent in writing, with copies thereof delivered
simultaneously to all Noteholders, to release all of the Collateral. Promptly
after the Collateral Agent receives (a) such written request from the
Company and (b) written notice from the Noteholders that the proposed
release is permitted (which notice the Noteholders agree to deliver if no
Default or Event of Default exists, no other creditors of the Company enjoy the
benefits of collateral or guaranties to secure the amounts owed by the Company
[other than purchase money lenders and holders of capital leases] and all other
conditions to the release of the Note Guaranties under the Note Agreements have
been satisfied), then if no Default or Event of Default exists the Collateral
Agent shall release all the Collateral. If the proposed sale or release of the
Collateral is not permitted by the Credit Facilities or hereby, the Collateral
Agent may only release the Collateral upon the written consent of all the
Lenders. 

     
     Section
5.13.      Emergency Actions. The Collateral Agent, is authorized, but not
obligated, to take any action reasonably required to perfect or continue the
perfection of the security interests in the Collateral for the benefit of the
Creditors and following the occurrence of an Event of Default and before the
Required Lenders have given the Collateral Agent directions, to take any action
(subject to the restrictions in Section 5.2) which the Collateral Agent, in
its sole discretion and good faith, believes to be reasonably required to
promote and protect the interests of the Lenders and to maximize both the value
of the Collateral and the present value of the recovery by the Lenders on the
Obligations; provided, however, that once such directions have
been received, the actions of the Collateral Agent shall be governed thereby and
the Collateral Agent shall not take any further action which would be contrary
thereto. The Collateral Agent shall give written notice of any such action to
the Lenders within one Business Day and shall cease any such action upon its
receipt of written instructions from the Required Lenders. 

     
     Section
5.14.      Interpleader; Declaratory Judgment. In the event any controversy
arises between or among the Lenders with respect to this Agreement, the Security
Documents or any rights of any Creditor hereunder or thereunder, the Collateral
Agent shall have the right to institute a bill of interpleader in any court of
competent jurisdiction with respect to any amounts held by the Collateral Agent
hereunder or to initiate proceedings in any court of competent jurisdiction for
a declaratory judgment to determine the rights of the parties. 

ARTICLE VI.

Enforcement of Remedies

     
     Section
6.1.      Waivers of Rights. Except as otherwise expressly set forth herein,
so long as the Obligations remain unpaid, the Creditors (other than the
Collateral Agent) hereby agree to refrain from exercising any and all rights
each may individually (i.e., other than through the Collateral Agent) now
or hereafter have applicable to the Collateral to exercise any right pursuant to
the Security Documents, the Uniform Commercial Code as in effect in any
applicable jurisdiction, or under similar provisions of the laws of any
jurisdiction or otherwise dispose of or retain any of the Collateral. The
Creditors (other than the Collateral Agent) hereby agree not to take any action
whatsoever to enforce any term or provision of 

18

the Security Documents or to
enforce any right with respect to the Collateral, in conflict with this
Agreement or the terms and provisions of the Security Documents. 

     
     Section
6.2.        
Permitted Action by the Lenders.  Any Creditor may (but in no event
shall be required to), without instruction from the Collateral Agent, take
action permitted by applicable law or in accordance with the terms of the
Security Documents to preserve its rights, security interests and liens in any
item of Collateral securing the payment and performance of the Obligations,
including but not limited to curing any default or alleged default under any
contract entered into by any Obligated Party, paying any tax, fee or expense on
behalf of any Obligated Party, exercising any offset or recoupment rights and
paying insurance premiums on behalf of any Obligated Party so long as such
action shall not impair the rights of the Collateral Agent or of any other
Creditor. 

     
     Section
6.3.        
Right to Instruct Collateral Agent.  Upon Acceleration under a Credit
Facility, the Required Lenders may instruct the Collateral Agent to liquidate
all or any portion of the Collateral, and to take any other action, in the
manner, and upon the terms and conditions, described in the Security Documents. 

     
     Section
6.4.      Permitted Exercise of other Rights.  Except as otherwise specifically
provided in this Article VI, each Creditor shall have all the rights and
remedies available to them under the Financing Documents to which they are a
party upon the occurrence of a Default or an Event of Default or at any other
time, and without limiting the generality of the foregoing, each Creditor shall
have the independent right, exercised in accordance with the applicable
Financing Documents and applicable law, to do any of the following: 

       
           
(a)     
     accelerate the Obligations  owing to such Creditor  pursuant to the Financing  Documents  (other than this Agreement and
the Security Documents) to which such Creditor is a party;

       
        
   
(b)          
institute suit against any Obligated  Party  (i) under the terms of the applicable  Financing  Documents  (including the
Guaranties but excluding
this Agreement and the Security Documents) for collection of the amounts owing
thereunder or (ii) seeking an injunction, restraining order or any other
similar remedy; 

       
           
(c)     
     seek the appointment of a receiver for any Obligated
Party (but not any of the Collateral); 

     
        
     
(d)          
file an  involuntary  petition under any  bankruptcy or insolvency  laws against any Obligated  Party or file a proof of
claim in any bankruptcy or insolvency proceeding;

 
       
           
(e)     
     exercise any Set-Off Right; or

       
           
(f)     
     take any other  enforcement  action with respect to any Default or Event of Default  pursuant to and in accordance  with
the Financing Documents (other than this Agreement and the Security Documents) to
which it is a party.

If any Creditor obtains any
payment of any Obligations owed as a result of the exercise of any right or
remedy permitted by this Section 6.4, such Creditor shall comply with its
obligations under Section 2.2 or Section 2.7 hereof (as applicable)
with respect thereto. 

19

ARTICLE VII.

Successors and Assigns; New Parties

    
      Section
7.1.      Assignees.  
No provision of this Agreement shall restrict in any
manner the assignment, participation or other transfer by any Creditor (other
than the Collateral Agent) of all or any part of its right, title or interest
under any Credit Facility; provided that, unless the transferee becomes a
party hereto for purposes hereof in accordance with Section 7.2, the
transferor shall remain responsible for performance of this Agreement with
respect to the interest transferred, all as more fully set forth herein, and the
Collateral Agent shall have no responsibilities to and need not acknowledge the
interests of such transferee. 

     
     Section 7.2.      
Assignees of the Creditors.  In connection with an assignment of all,
or of a proportionate part of all, of a Creditor’s right, title and
interest under any Credit Facility to any insurance company, bank or other
financial institution (a “Purchaser”), all in accordance with
the applicable provisions of such Credit Facility, such Purchaser shall become a
party hereunder only upon the receipt by the Collateral Agent of a Supplement to
Intercreditor Agreement substantially in the form of Attachment A
hereto properly completed, executed and delivered by such Purchaser. 

     
     Section
7.3.      Additional Lenders.  
Any bank, insurance company or other financial
institution that has extended credit to the Company after the Closing Date the
proceeds of which are used to repay any of the then outstanding Funded
Obligations may become a “Lender” hereunder (and their credit
agreement, note purchase agreement and/or related documents may become a
“Credit Facility” hereunder entitled to share in the Reallocable
Payments and the Collateral and any administrative agent appointed by such
Lender may become a “Creditor”) upon the receipt by the Collateral
Agent of a Supplement to Intercreditor Agreement substantially in the form of
Attachment B hereto properly completed, executed and delivered by
such new lender. Any other bank, insurance company or other financial
institution that has extended credit to the Company after the Closing Date may
become a “Lender” hereunder (and their credit agreement, note purchase
agreement and/or related documents may become a “Credit Facility”
hereunder entitled to share in the Reallocable Payments and the Collateral and
any administrative agent appointed by such Lender may become a
“Creditor”) with the written consent of the Required Lenders and upon
the receipt by the Collateral Agent of a Supplement to Intercreditor Agreement
substantially in the form of Attachment B hereto executed and
delivered by such new lender. 

     
     Section
7.4.      Addition of New Material Restricted Subsidiaries.
  Within forty–five (45) days after the end of each fiscal quarter, the Company is
required under certain of the Financing Documents to cause each Material
Restricted Subsidiary created or acquired during such fiscal quarter, and each
Restricted Subsidiary that, as a result of a change in assets, became a Material
Restricted Subsidiary during such fiscal quarter (any such Material Restricted
Subsidiary, herein a “New Material Subsidiary”), to execute and
deliver a joinder agreement joining it as a guarantor under the Guaranties.
Simultaneously with the execution and delivery of any such joinder agreement,
the Company shall cause the New Material Subsidiary to join into this Agreement
and become a “Guarantor” hereunder by the execution and delivery of a
Supplement to Intercreditor Agreement substantially in the form of
Attachment C hereto 

ARTICLE VIII.

Miscellaneous

     
     Section
8.1.      Indemnification. EACH OBLIGATED PARTY,
JOINTLY AND SEVERALLY,
INDEMNIFIES THE COLLATERAL AGENT AND ITS AFFILIATES AND THE DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS OF THE FOREGOING (EACH SUCH PERSON BEING CALLED AN
“INDEMNITEE”) AGAINST, AND TO HOLD EACH INDEMNITEE HARMLESS FROM, ANY
AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED EXPENSES, INCLUDING
REASONABLE COUNSEL FEES AND EXPENSES, INCURRED BY OR ASSERTED AGAINST ANY
INDEMNITEE ARISING OUT OF (I) THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR ANY SECURITY DOCUMENT, OR (II) ANY CLAIM,
LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING,
WHETHER OR NOT ANY INDEMNITEE IS A PARTY THERETO (INCLUDING, WITHOUT LIMITATION,
ANY LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED EXPENSES ARISING FROM THE
SOLE OR CONTRIBUTORY NEGLIGENCE OF THE INDEMNITEE); PROVIDED THAT SUCH INDEMNITY
SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES,
CLAIMS, DAMAGES, LIABILITIES OR RELATED EXPENSES (I) ARE DETERMINED TO HAVE
RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE OR
(II) RESULT FROM ANY LITIGATION BROUGHT BY SUCH INDEMNITEE AGAINST AN
OBLIGATED PARTY OR BY AN OBLIGATED PARTY AGAINST SUCH INDEMNITEE, IN WHICH THE
OBLIGATED PARTY IS THE PREVAILING PARTY. 

        Section
8.2.      Expenses. The Obligated Parties, jointly and severally, agree to pay
the Collateral Agent on demand (a) all costs and expenses incurred by the
Collateral Agent in connection with the preparation, negotiation, and execution
of this Agreement and any and all amendments, modifications, renewals,
extensions, and supplements thereof and thereto (whether or not the same become
effective), including, without limitation, the fees and expenses of legal
counsel for the Collateral Agent, (b) all costs and expenses incurred by
the Collateral Agent in connection with the enforcement of this Agreement or the
Security Documents, including, without limitation, the fees and expenses of
legal counsel for the Collateral Agent, and (c) all other costs and
expenses incurred by the Collateral Agent in connection with this Agreement or
the Security Documents, including, without limitation, all costs, expenses,
taxes, assessments, filing fees, and other charges levied by any governmental
authority or otherwise payable in respect of this Agreement or the Security
Documents and the Collateral Agent’s customary custodial fees charged for
the safekeeping of the certificates evidencing the stock pledged as collateral
under the Pledge Agreement. 

     
     Section
8.3.      No Partnership or Joint Venture. Nothing contained in this
Agreement, and no action taken by any Creditor pursuant hereto, is intended to
constitute or shall be deemed to constitute the Creditors as a partnership,
association, joint venture or other entity. 

     
     Section
8.4.      Notices. Unless otherwise specified herein, all notices, requests
and other communications to any party hereunder shall be in writing (including
overnight delivery service, facsimile copy or similar writing) and shall be
given to such party at its address or facsimile number specified pursuant to the
Credit Facilities to which it is a party or such other address or facsimile
number as such party may hereafter specify for the purpose by notice to the
Collateral Agent. All such notices and other communications shall, when mailed,
delivered by overnight delivery service or transmitted by facsimile, be
effective when deposited in the mails, delivered to the overnight delivery
service or transmitted by facsimile with receipt confirmed and with a copy sent
by mail or overnight delivery service, respectively. 

     
     Section
8.5.      Entire Agreement; Amendments and Waivers. THIS AGREEMENT AND THE
OTHER DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT 

21

AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO. Any
provision of this Agreement may be amended or waived if, and only if, such
amendment or waiver is in writing and signed by the Required Lenders (and, if
the rights or duties of the Collateral Agent are affected thereby, by the
Collateral Agent); provided that no amendment, waiver or other modification
shall without the consent of all the Lenders modify the terms of Section 5.12 or
this Section 8.5 or release any Collateral except as permitted by
Section 5.12. 

        Section
8.6.      Payments.  All payments hereunder shall be made
in Dollars in
immediately available funds. All payments to the Collateral Agent shall be made
to it at such office or account as it may specify for the purpose by notice to
the Lenders. All payments to any Creditor shall be made to it, to the extent
practicable, in accordance with the provisions of the Credit Facilities. 

        Section
8.7.      Counterparts; Effectiveness.  
This Agreement may be signed in any
number of counterparts, each of which shall be an original, and all of which
taken together shall constitute a single agreement, with the same effect as if
the signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective when the Collateral Agent shall have received
counterparts hereof executed by each of the parties listed on the signature
pages hereof. 

     
     Section
8.8.      Benefits.  This Agreement is
solely for the benefit of and shall be
binding upon the Obligated Parties, the Lenders, the Collateral Agent and the
other Creditors and their successors or assigns, and no other Person shall have
any right, benefit, priority or interest under or by reason of this Agreement.
No Obligated Party may assign their rights or obligations hereunder without the
consent of all the Lenders. 

     
     Section
8.9.      No Waiver; Cumulative Remedies.  
No failure on the part of any
Creditor to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power, or privilege under this Agreement or any Security
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power, or privilege under this Agreement or any Security
Document preclude any other or further exercise thereof or the exercise of any
other right, power, or privilege. The rights and remedies provided for in this
Agreement and the Security Documents are cumulative and not exclusive of any
rights and remedies provided by law. 

     
     Section
8.10.      Term.  This Agreement
shall terminate upon the occurrence of the
following events if no Default or Event of Default then exists: (i) the
irrevocable payment in full of the Obligations under the Credit Agreements
(provided, however, this Agreement shall be reinstated if any such
payment is required to be returned by any Creditor); (ii) no Lender shall
have any commitment to lend or otherwise extend credit under any Credit
Agreement; and (iii) the release of the liens on the Collateral in
accordance with Section 5.12 or otherwise. If an Event of Default has
occurred which has not been cured or waived, this Agreement shall terminate only
upon the occurrence of the following events: (i) the irrevocable payment in full
of the Obligations (provided, however, this Agreement shall be
reinstated if any such payment is required to be returned by any Creditor);
(ii) no Lender shall have any commitment to lend or otherwise extend credit
under any Credit Facility; and (iii) the release of the liens on the
Collateral or the total liquidation of the Collateral and the distribution of
all the proceeds in accordance herewith. Without prejudice to the survival of
any other obligations hereunder, the indemnification and reimbursement
obligations of the Obligated Parties under Sections 8.1 and 8.2 of this
Agreement and the obligations of the Lenders under Section 5.11 shall
survive the termination of this Agreement. 

22

     
     Section
8.11.      Governing Law.  THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. 

     
     Section
8.12.      Limitation of Liability.  
Neither the Collateral Agent nor any
affiliate, officer, director, employee, attorney, or agent thereof shall have
any liability with respect to, and each Obligated Party and each other Creditor
hereby waives, releases, and agrees not to sue any of them upon, any claim for
any special, indirect, incidental, consequential or punitive damages suffered or
incurred by any Obligated Party or any other Creditor in connection with,
arising out of, or in any way related to, this Agreement or any of the other
Financing Documents, or any of the transactions contemplated by this Agreement
or any of the other Financing Documents. 

     
     Section
8.13.      Severability.  Any provision
of this Agreement held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision held to be invalid or illegal. 

     
     
Section 8.14.      Headings.  The headings,
captions,  and  arrangements  used in this  Agreement are for  convenience  only and shall not
affect the interpretation of this Agreement.

     
     
Section
8.15.      Construction.  Each Obligated Party
and each Creditor acknowledge
that each of them has had the benefit of legal counsel of its own choice and has
been afforded an opportunity to review this Agreement with its legal counsel and
that this Agreement shall be construed as if jointly drafted by the parties
hereto. 

     
     
Section
8.16.      WAIVER OF JURY TRIAL.  EACH PARTY
HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT
IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. 

23

     
     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
duly executed by their  respective  officers  hereunto duly authorized as of the
date first above set forth.

			COMPANY:

        

			LENNOX INTERNATIONAL INC.

        By:_________________________________________________

               Richard A. Smith, Executive Vice President

               and Chief Financial Officer

			GUARANTORS
        

			LENNOX INDUSTRIES INC.

                        SERVICE EXPERTS INC.
ARMSTRONG AIR CONDITIONING INC.

                        EXCEL COMFORT SYSTEMS INC.

        By:________________________________________________________
        
       Name:__________________________________________________

                       
         Authorized officer for each Guarantor

			COLLATERAL AGENT:

        
			THE CHASE MANHATTAN BANK, in its capacities

                        as Collateral Agent for the Lenders and as administrative

                                                    agent for the Multiyear Lenders and the 364 Day

                                                    Lenders

        By:________________________________________________________
        
       Name:__________________________________________________
       
        Title:__________________________________________________

			NOTEHOLDERS:

        
			THE PRUDENTIAL INSURANCE COMPANY

                                                    OF AMERICA

        By:____________________________________________________
       Ric E. Abel,
        
       Vice President

24

			
			U.S. PRIVATE PLACEMENT FUND

        

        By:    Prudential Private Placement Investors, L.P.,
        
          Investment Advisor

			       
          By:    Prudential Private Placement Investors,
        
                
           its General Partner

                         
           By:____________________________________

                       
                  Ric E. Abel,

                       
                  Vice President

			TEACHERS INSURANCE AND ANNUITY
                                                    
ASSOCIATION OF AMERICA

        By:________________________________________________________
        
       Name:__________________________________________________
        
       
        Title:__________________________________________________

			CIG & CO.

        By:________________________________________________________
        
       Name:__________________________________________________
        
       
        Title:__________________________________________________

			UNITED OF OMAHA LIFE INSURANCE COMPANY

By:_________________________________________________
       Curtis R. Caldwell,
                                                    
       First Vice President

			MUTUAL OF OMAHA INSURANCE COMPANY

By:_________________________________________________
       Curtis R. Caldwell,
                                                    
       First Vice President

			COMPANION LIFE INSURANCE COMPANY

By:_________________________________________________
       Curtis R. Caldwell,
                                                    
       Authorized Signer

25

			
			UNITED WORLD LIFE INSURANCE COMPANY

By:_________________________________________________
       Curtis R. Caldwell,
                                                    
       Authorized Signer

			FIRST COLONY LIFE INSURANCE COMPANY

By:_________________________________________________
       Morian C. Mooers,
     
       Vice President and Investment Officer

			GENERAL ELECTRIC CAPITAL ASSURANCE COMPANY

By:_________________________________________________
       Morian C. Mooers,
     
       Investment Officer

			GE LIFE AND ANNUITY ASSURANCE COMPANY

By:_________________________________________________
       Morian C. Mooers,
   
       Investment Officer

26

EVIDENCE OF APPROVAL BY THE MULTIYEAR LENDERS AND 364 DAY LENDERS

     The Multiyear Agent is authorized to enter into this Agreement on behalf of the Multiyear  Lenders (binding the Multiyear Lenders hereto) under the terms of
the  Multiyear  Credit  Agreement  upon its approval by the  "Required  Lenders" thereunder  which means Lenders having 66-2/3% or more of the Total  Commitments
(as defined in the Multiyear Credit Agreement and such percentage  applicable to a Multiyear Lender herein such Lender's  "Multiyear Required  Percentage").  For
purposes of determining  the  effectiveness  of this  Agreement,  each Multiyear Lender's  Multiyear  Required  Percentage  is set forth on Schedule 1 hereto and
each  Multiyear  Lender  whose  signature  appears  below hereby  approves  this Agreement and agrees to be bound by the terms hereto.

     
The  364 Day  Agent is  authorized  to
enter into this Agreement on behalf of the 364 Day Lenders  (binding the 364 Day Lenders  hereto)  under  the  terms  of the 364 Day  Credit  Agreement  upon its
approval by the "Required Lenders" thereunder which means Lenders having 66-2/3% or more of the Total Commitments (as defined in the 364 Day Credit Agreement and
such  percentage  applicable  to a 364 Day  Lender  herein  such  Lender's  "364 Required  Percentage").  For purposes of determining the  effectiveness  of this
Agreement,  each  364 Day  Lender's  364  Required  Percentage  is set  forth on Schedule 2 hereto and each 364 Day Lender whose  signature  appears below hereby
approves this Agreement and agrees to be bound by the terms hereto.

     
Executed as of the date first written above.

			
			THE CHASE MANHATTAN BANK, as successor in

                        interest by merger to Chase Bank of Texas, National

                                    Association, individually as Lender

By:_________________________________________________

       Allen King

       Vice President

			WACHOVIA BANK, N.A., individually as a

                        Lender and as Syndication Agent

        By:________________________________________________________
        
       Name:__________________________________________________
        
       
        Title:__________________________________________________

			THE BANK OF NOVA SCOTIA,

                        individually as a Lender and as

                        documentation agent

        By:________________________________________________________
        
       Name:__________________________________________________
        
       
        Title:__________________________________________________

			THE NORTHERN TRUST COMPANY,

                        individually as a Lender and as a co-agent

        By:________________________________________________________
        
       Name:__________________________________________________
        
       
        Title:__________________________________________________

			UNITED WORLD LIFE INSURANCE COMPANY

By:_________________________________________________
       Curtis R. Caldwell,
                                                    
       Authorized Signer

			FIRST COLONY LIFE INSURANCE COMPANY

By:_________________________________________________
       Morian C. Mooers,
     
       Vice President and Investment Officer

			THE NORTHERN TRUST COMPANY,

                        individually as a Lender and as a co-agent

        By:________________________________________________________
        
       Name:__________________________________________________
        
       
        Title:__________________________________________________

			BANK ONE, TEXAS, N.A., as a Lender

        By:________________________________________________________
        
       Name:__________________________________________________
        
       
        Title:__________________________________________________

			BANK ONE, TEXAS, N.A., as a Lender

        By:________________________________________________________
        
       Name:__________________________________________________
        
       
        Title:__________________________________________________

			THE BANK OF TOKYO-MITSUBISHI, 

                        LTD., as a Lender

        By:________________________________________________________
        
       Name:__________________________________________________
        
       
        Title:__________________________________________________

			WELLS FARGO BANK (TEXAS), N.A.,

                        as a Lender

        By:________________________________________________________
        
       Name:__________________________________________________
        
       
        Title:__________________________________________________

			ROYAL BANK OF CANADA,

                        as a Lender

        By:________________________________________________________
        
       Name:__________________________________________________
        
       
        Title:__________________________________________________

28

			
			ABN AMRO BANK N.A., as a Lender

        By:________________________________________________________
        
       Name:__________________________________________________
        
       
        Title:__________________________________________________

        By:________________________________________________________
        
       Name:__________________________________________________
        
       
        Title:__________________________________________________

			THE BANK OF NEW YORK, as a Lender

        By:________________________________________________________
        
       Name:__________________________________________________
        
       
        Title:__________________________________________________

			COMPASS BANK, as a Lender

        By:________________________________________________________
        
       Name:__________________________________________________
        
       
        Title:__________________________________________________

			FIRST UNION NATIONAL BANK, as a Lender

        By:________________________________________________________
        
       Name:__________________________________________________
        
       
        Title:__________________________________________________

			FIRSTAR BANK N.A.(formerly Mercantile Bank

                National Association)

By:_________________________________________________

       Gregory L. Dryden, Vice President

			UBS AG, Stamford Branch

By:_________________________________________________

       Gregory L. Dryden, Vice President

29

Schedule 1

                                       to

                             Intercreditor Agreement

                     MULTIYEAR REQUIRED LENDER PERCENTAGES

	Lender	Required Lender
                
Percentage Held	
        Lenders Agreeing to Agreement

        (insert % from prior column if Lender
 signs this Agreement then total

         percentages in this column)
	The Chase Manhattan Bank	11.333%	
	Wachovia Bank, N.A.	11.333%	
	The Bank of Nova Scotia	11.333%	
	The Northern Trust Company	11.333%	
	Bank One, Texas N.A.	 8.333%	
	Bank of Texas, N.A.	 8.333%	
	The Bank of Tokyo - 
                
  Mitsubishi, Ltd.	 8.333%	
	Wells Fargo Bank (Texas), N.A.	 8.333%	
	Royal Bank of Canada	 6.333%	
	ABN Amro Bank N.V.	 5.000%	
	The Bank of New York	 5.000%	
	Compass Bank	 5.000%	

	TOTAL	  100%	

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                                   Schedule 2

                                       to

                             Intercreditor Agreement

                      364 Day REQUIRED LENDER PERCENTAGES

	Lender	Required Lender
                
Percentage Held	Lenders Agreeing to Agreement

        (insert % from prior column if Lender
 signs this Agreement then total

         percentages in this column)
	The Chase Manhattan Bank	13.5385%	
	Wachovia Bank, N.A.	12.9231%	
	The Bank of Nova Scotia	 9.2308%	
	ABN AMRO BANK, N.V.	 7.6923%	
	First Union National Bank	12.3077%	
	Firstar Bank N.A.	 9.2308%	
	Royal Bank of Canada	 9.8462%	
	The Bank of New York	 3.0769%	
	The Bank of Tokyo - 
                
  Mitsubishi, Ltd.	 3.0769%	
	The Northern Trust Company	 3.6923%	
	UBS AG, Stamford Branch	15.3846%	

	TOTAL	     100%	

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Attachment A

SUPPLEMENT TO INTERCREDITOR AGREEMENT

             (SUCCESSSOR CREDITORS)

[Date]

The Chase Manhattan Bank

2200 Ross Avenue, 3rd Floor

Dallas, TX 75201

Attention of Allen King

Telecopy No. 214/965-2044

with a copy to

The Chase Manhattan Bank

1 Chase Manhattan Plaza, 8th Floor

New York, New York 10081

Attention: Muniram Appanna

Telecopy No. 212/552-7490

	     
   Re:	
Intercreditor Agreement dated as of August 15, 2001,
among Lennox International Inc., certain of its subsidiaries, the noteholders, lenders and agents named
therein and THE CHASE MANHATTAN BANK, as the collateral agent for itself and the other Creditors
(the  “Intercreditor Agreement”); capitalized terms used herein and not otherwise
defined herein shall have the meaning provided in the Intercreditor Agreement.

Ladies and Gentlemen:

        
We acknowledge that we have received a copy of the Intercreditor Agreement and we refer to
Section 7.2 thereof.

        
Upon your receipt of this Supplement, we (a) shall
have all the rights and benefits of a "Lender" ["Creditor"] under the Intercreditor
Agreement as if we were an original signatory thereto, and (b) agree to be bound by the terms and conditions set forth in the Intercreditor  Agreement and
to be obligated thereunder as if we were an original signatory thereto.

        
We hereby advise you that we have succeeded
to [[________]% of] the interest of [applicable Lender] or [applicable
administrative agent] under the [Note Agreements][Credit Agreements] and have
assumed the obligations of [applicable Lender] thereunder.

        
We hereby advise you of the following
administrative details:

	 	

Address:       ________________________

	 	

Facsimile:      ________________________

	 	

Telephone:     ________________________

        
IN WITNESS WHEREOF, the undersigned has caused this Supplement to be duly executed by its proper
officer hereunto duly authorized.

[NEW PARTY:]

   
              
              
              
              
        By:______________________________________________

   
              
              
              
              
             
Name:_________________________________________

   
              
              
              
           
                
Title:__________________________________________

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Attachment B

SUPPLEMENT TO INTERCREDITOR AGREEMENT

             (NEW LENDER)

[Date]

The Chase Manhattan Bank

2200 Ross Avenue, 3rd Floor

Dallas, TX 75201

Attention of Allen King

Telecopy No. 214/965-2044

with a copy to

The Chase Manhattan Bank

1 Chase Manhattan Plaza, 8th Floor

New York, New York 10081

Attention: Muniram Appanna

Telecopy No. 212/552-7490

	         Re:	Intercreditor Agreement dated as of August 15, 2001, among Lennox International Inc., certain
of its subsidiaries, the noteholders, lenders and agents named therein and THE CHASE  MANHATTAN  BANK,
as the collateral agent for itself and the other Creditors (the  “Intercreditor Agreement”);
capitalized terms used herein and not otherwise defined herein shall have the meaning provided in the
Intercreditor Agreement.

Ladies and Gentlemen:

We acknowledge that we have
received a copy of the Intercreditor  Agreement and we refer to Section 7.3 thereof
and confirm that we are entitled to become a "Lender" under the terms of Section 7.3
of the Intercreditor Agreement.

Upon your receipt of this  Supplement,  we (a) shall have all the rights and benefits of a "Lender" under the  Intercreditor  Agreement as if we
were an original  signatory  thereto,  and (b) agree to be bound by the terms and  conditions set forth in the  Intercreditor  Agreement and to be obligated
thereunder as if we were an original signatory  thereto.  ___________________  is our  administrative  agent and shall have all the rights and benefits of a
"Creditor"  under the  Intercreditor  Agreement as if it were an original  signatory  thereto and by its execution below agrees to be bound by the terms and
conditions set forth in the Intercreditor Agreement and to be obligated thereunder as if it were an original
signatory thereto.

We hereby advise you that we have extended credit to the Company on the terms summarized on Schedule 1  hereto and that our Financing  Documents
are described on Schedule 2 hereto.

We hereby advise you of the following administrative details:

	 	
        Address:       ________________________

	 	
        Facsimile:      ________________________

	 	
        Telephone:    ________________________

IN WITNESS WHEREOF, the undersigned has
caused this Supplement to be duly executed by its proper officer hereunto duly authorized.

	[NEW ADMINISTRATIVE AGENT:]	[NEW LENDER:]
	By:___________________________________________	By:___________________________________________
	        Name:_____________________________________	        Name:_____________________________________
	        Title:______________________________________	        Title:______________________________________

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Attachment C

SUPPLEMENT
TO INTERCREDITOR AGREEMENT
(New Guarantor)

[Date]

                                                                                                                                                      [Date]
The Chase Manhattan Bank

2200 Ross Avenue, 3rd Floor

Dallas, TX 75201

Attention of Allen King

Telecopy No. 214/965-2044

with a copy to

The Chase Manhattan Bank

1 Chase Manhattan Plaza, 8th Floor

New York, New York 10081

Attention: Muniram Appanna

Telecopy No. 212/552-7490

		Re:	
Intercreditor Agreement dated as of August 15, 2001, among Lennox
International Inc, certain of its subsidiaries, the noteholders, lenders and
agents named therein and THE CHASE MANHATTAN BANK, as the collateral agent for
itself and the other Creditors (the “Intercreditor Agreement”);
capitalized terms used herein and not otherwise defined herein shall have the
meaning provided in the Intercreditor Agreement.

Ladies and Gentlemen:

        We
acknowledge that we have received a copy of the Intercreditor Agreement and we
refer to Section 7.4 thereof. 

        Upon
your receipt of this Supplement, we (a) shall have all the rights and
benefits of a “Guarantor” under the Intercreditor Agreement as if we
were an original signatory thereto, and (b) agree to be bound by the terms
and conditions set forth in the Intercreditor Agreement and to be obligated
thereunder as if we were an original signatory thereto. 

        IN
WITNESS WHEREOF, the undersigned has caused this Supplement to be duly executed
by its proper officer hereunto duly authorized. 

[NEW GUARANTOR:]

  
             
             
             
  By:_______________________________________

  
             
             
             
  Name:_____________________________________

  
             
             
             
    Title:______________________________________

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