Document:

Exhibit 4.8

 

AAR CORP.

To

U.S. BANK NATIONAL ASSOCIATION

as Trustee

INDENTURE

Dated as of [                    ], 20[   ]

Providing for Issuance of Subordinated Debt Securities

 

 

AAR CORP.

Reconciliation and Tie between Trust
Indenture Act of 1939, as amended, and

the Indenture, dated as of [                    ], 20[   ]

 

	
  Trust Indenture

  	
   

  	
  Indenture

  
	
  Act Section

  	
   

  	
   

  	
  Section(s)

  
	
   

  	
   

  	
   

  	
   

  
	
  §310

  	
  (a)(1)

  	
   

  	
  6.9

  
	
   

  	
  (a)(2)

  	
   

  	
  6.9, 6.14

  
	
   

  	
  (a)(3)

  	
   

  	
  Not Applicable

  
	
   

  	
  (a)(4)

  	
   

  	
  Not Applicable

  
	
   

  	
  (a)(5)

  	
   

  	
  6.9

  
	
   

  	
  (b)

  	
   

  	
  6.8, 6.10

  
	
   

  	
  (c)

  	
   

  	
  Not Applicable

  
	
  §311

  	
  (a)

  	
   

  	
  6.13

  
	
   

  	
  (b)

  	
   

  	
  6.13

  
	
   

  	
  (c)

  	
   

  	
  6.13

  
	
  §312

  	
  (a)

  	
   

  	
  7.1, 7.2(a)

  
	
   

  	
  (b)

  	
   

  	
  7.2(a)

  
	
   

  	
  (c)

  	
   

  	
  7.2(b)

  
	
  §313

  	
  (a)

  	
   

  	
  7.3(a)

  
	
   

  	
  (b)

  	
   

  	
  7.3(b)

  
	
   

  	
  (c)

  	
   

  	
  7.3(c)

  
	
   

  	
  (d)

  	
   

  	
  7.3(c)

  
	
  §314

  	
  (a)

  	
   

  	
  7.4

  
	
   

  	
  (a)(4)

  	
   

  	
  10.1, 10.9

  
	
   

  	
  (b)

  	
   

  	
  Not Applicable

  
	
   

  	
  (c)(1)

  	
   

  	
  1.2

  
	
   

  	
  (c)(2)

  	
   

  	
  1.2

  
	
   

  	
  (c)(3)

  	
   

  	
  Not Applicable

  
	
   

  	
  (d)

  	
   

  	
  Not Applicable

  
	
   

  	
  (e)

  	
   

  	
  1.2

  
	
   

  	
  (f)

  	
   

  	
  Not Applicable

  
	
  §315

  	
  (a)

  	
   

  	
  6.1

  
	
   

  	
  (b)

  	
   

  	
  6.2

  
	
   

  	
  (c)

  	
   

  	
  6.1

  
	
   

  	
  (d)

  	
   

  	
  6.1

  
	
   

  	
  (e)

  	
   

  	
  5.14

  
	
  §316

  	
  (a)(1)(A)

  	
   

  	
  5.2, 5.12

  
	
   

  	
  (a)(1)(B)

  	
   

  	
  5.13

  
	
   

  	
  (a)(2)

  	
   

  	
  Not Applicable

  
	
   

  	
  (b)

  	
   

  	
  5.8

  
	
   

  	
  (c)

  	
   

  	
  1.4

  
	
  §317

  	
  (a)(1)

  	
   

  	
  5.3

  
	
   

  	
  (a)(2)

  	
   

  	
  5.4

  
	
   

  	
  (b)

  	
   

  	
  10.3

  
	
  §318

  	
  (a)

  	
   

  	
  1.8

  
	
   

  	
  (c)

  	
   

  	
  1.8

  
					

 

NOTE:            This
Reconciliation and Tie shall not, for any purpose, be deemed to be a part of
the Indenture.

 

 

TABLE OF CONTENTS(1)

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE ONE

  	
  DEFINITIONS AND OTHER PROVISIONS
  OF GENERAL APPLICATION

  	
   

  	
  1

  
	
  Section 1.1

  	
  Definitions

  	
   

  	
  1

  
	
  Section 1.2

  	
  Compliance Certificates and Opinions

  	
   

  	
  7

  
	
  Section 1.3

  	
  Form of Documents Delivered to Trustee

  	
   

  	
  8

  
	
  Section 1.4

  	
  Acts of Holders; Record Dates

  	
   

  	
  8

  
	
  Section 1.5

  	
  Notices, Etc., to Trustee, Corporation

  	
   

  	
  10

  
	
  Section 1.6

  	
  Notice to Holders of Securities; Waiver

  	
   

  	
  11

  
	
  Section 1.7

  	
  Language of Notices, Etc.

  	
   

  	
  12

  
	
  Section 1.8

  	
  Conflict with Trust Indenture Act

  	
   

  	
  12

  
	
  Section 1.9

  	
  Effect of Headings and Table of Contents

  	
   

  	
  12

  
	
  Section 1.10

  	
  Successors and Assigns

  	
   

  	
  12

  
	
  Section 1.11

  	
  Separability Clause

  	
   

  	
  12

  
	
  Section 1.12

  	
  Benefits of Indenture

  	
   

  	
  12

  
	
  Section 1.13

  	
  Governing Law

  	
   

  	
  12

  
	
  Section 1.14

  	
  Legal Holidays

  	
   

  	
  12

  
	
  Section 1.15

  	
  No Adverse Interpretation of Other Agreements

  	
   

  	
  13

  
	
  Section 1.16

  	
  Execution in Counterparts

  	
   

  	
  13

  
	
  ARTICLE TWO

  	
  SECURITY FORMS

  	
   

  	
  13

  
	
  Section 2.1

  	
  Forms Generally

  	
   

  	
  13

  
	
  Section 2.2

  	
  Form of Trustee’s Certificate of Authentication

  	
   

  	
  13

  
	
  Section 2.3

  	
  Securities in Global Form

  	
   

  	
  14

  
	
  Section 2.4

  	
  Form of Legend for Global Securities

  	
   

  	
  14

  
	
  Section 2.5

  	
  Form of Legend for Bearer Securities

  	
   

  	
  14

  
	
  ARTICLE THREE

  	
  THE SECURITIES

  	
   

  	
  14

  
	
  Section 3.1

  	
  Amount Unlimited; Issuable in Series

  	
   

  	
  14

  
	
  Section 3.2

  	
  Denominations

  	
   

  	
  17

  
	
  Section 3.3

  	
  Execution, Authentication, Delivery and Dating

  	
   

  	
  17

  
	
  Section 3.4

  	
  Temporary Securities

  	
   

  	
  20

  
	
  Section 3.5

  	
  Registration, Registration of Transfer and Exchange

  	
   

  	
  21

  
	
  Section 3.6

  	
  Mutilated, Destroyed, Lost and Stolen Securities

  	
   

  	
  24

  
	
  Section 3.7

  	
  Payment of Interest; Interest Rights Preserved

  	
   

  	
  25

  

 

(1) Note:  This table of contents shall not, for any
purpose, be deemed to be a part of the Indenture.

 

i

 

TABLE OF
CONTENTS

(continued)

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.8

  	
  Persons Deemed Owners

  	
   

  	
  26

  
	
  Section 3.9

  	
  Cancellation

  	
   

  	
  27

  
	
  Section 3.10

  	
  Computation of Interest

  	
   

  	
  27

  
	
  Section 3.11

  	
  Form of Certification by a Person Entitled to
  Receive a Bearer Security

  	
   

  	
  27

  
	
  Section 3.12

  	
  CUSIP, ISIN and Common Code Numbers

  	
   

  	
  28

  
	
  ARTICLE FOUR

  	
  SATISFACTION AND DISCHARGE

  	
   

  	
  28

  
	
  Section 4.1

  	
  Satisfaction and Discharge of Indenture

  	
   

  	
  28

  
	
  Section 4.2

  	
  Application of Trust Money

  	
   

  	
  30

  
	
  ARTICLE FIVE

  	
  REMEDIES

  	
   

  	
  30

  
	
  Section 5.1

  	
  Events of Default

  	
   

  	
  30

  
	
  Section 5.2

  	
  Acceleration of Maturity; Rescission and Annulment

  	
   

  	
  31

  
	
  Section 5.3

  	
  Collection of Indebtedness and Suits for Enforcement
  by Trustee

  	
   

  	
  32

  
	
  Section 5.4

  	
  Trustee May File Proofs of Claim

  	
   

  	
  33

  
	
  Section 5.5

  	
  Trustee May Enforce Claims Without Possession
  of Securities or Coupons

  	
   

  	
  33

  
	
  Section 5.6

  	
  Application of Money Collected

  	
   

  	
  33

  
	
  Section 5.7

  	
  Limitation on Suits

  	
   

  	
  34

  
	
  Section 5.8

  	
  Unconditional Right of Holders to Receive Principal,
  Premium and Interest

  	
   

  	
  34

  
	
  Section 5.9

  	
  Restoration of Rights and Remedies

  	
   

  	
  35

  
	
  Section 5.10

  	
  Rights and Remedies Cumulative

  	
   

  	
  35

  
	
  Section 5.11

  	
  Delay or Omission Not Waiver

  	
   

  	
  35

  
	
  Section 5.12

  	
  Control by Holders of Securities

  	
   

  	
  35

  
	
  Section 5.13

  	
  Waiver of Past Defaults

  	
   

  	
  35

  
	
  Section 5.14

  	
  Undertaking for Costs

  	
   

  	
  36

  
	
  Section 5.15

  	
  Waiver of Stay or Extension Laws

  	
   

  	
  36

  
	
  ARTICLE SIX

  	
  THE TRUSTEE

  	
   

  	
  36

  
	
  Section 6.1

  	
  Certain Duties and Responsibilities

  	
   

  	
  36

  
	
  Section 6.2

  	
  Notice of Defaults

  	
   

  	
  38

  

 

ii

 

TABLE OF
CONTENTS

(continued)

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.3

  	
  Certain Rights of Trustee

  	
   

  	
  38

  
	
  Section 6.4

  	
  Not Responsible for Recitals or Issuance of
  Securities

  	
   

  	
  39

  
	
  Section 6.5

  	
  May Hold Securities

  	
   

  	
  39

  
	
  Section 6.6

  	
  Money Held in Trust

  	
   

  	
  39

  
	
  Section 6.7

  	
  Compensation and Reimbursement

  	
   

  	
  39

  
	
  Section 6.8

  	
  Disqualification; Conflicting Interests

  	
   

  	
  40

  
	
  Section 6.9

  	
  Corporate Trustee Required; Eligibility

  	
   

  	
  40

  
	
  Section 6.10

  	
  Resignation and Removal; Appointment of Successor

  	
   

  	
  41

  
	
  Section 6.11

  	
  Acceptance of Appointment by Successor

  	
   

  	
  42

  
	
  Section 6.12

  	
  Merger, Conversion, Consolidation or Succession to
  Business

  	
   

  	
  43

  
	
  Section 6.13

  	
  Preferential Collection of Claims Against
  Corporation

  	
   

  	
  43

  
	
  Section 6.14

  	
  Appointment of Authenticating Agent

  	
   

  	
  43

  
	
  ARTICLE SEVEN

  	
  HOLDERS’ LISTS AND REPORTS BY
  TRUSTEE AND CORPORATION

  	
   

  	
  45

  
	
  Section 7.1

  	
  Corporation to Furnish Trustee Names and Addresses
  of Holders

  	
   

  	
  45

  
	
  Section 7.2

  	
  Preservation of Information; Communications to
  Holders

  	
   

  	
  45

  
	
  Section 7.3

  	
  Reports by Trustee

  	
   

  	
  46

  
	
  Section 7.4

  	
  Reports by Corporation

  	
   

  	
  46

  
	
  ARTICLE EIGHT

  	
  CONSOLIDATION, MERGER,
  CONVEYANCE, TRANSFER OR LEASE

  	
   

  	
  47

  
	
  Section 8.1

  	
  Corporation May Consolidate, Etc., Only on
  Certain Terms

  	
   

  	
  47

  
	
  Section 8.2

  	
  Successor Corporation Substituted

  	
   

  	
  47

  
	
  ARTICLE NINE

  	
  SUPPLEMENTAL INDENTURES

  	
   

  	
  47

  
	
  Section 9.1

  	
  Supplemental Indentures without Consent of Holders

  	
   

  	
  47

  
	
  Section 9.2

  	
  Supplemental Indentures with Consent of Holders

  	
   

  	
  48

  
	
  Section 9.3

  	
  Execution of Supplemental Indentures

  	
   

  	
  50

  
	
  Section 9.4

  	
  Effect of Supplemental Indentures

  	
   

  	
  50

  
	
  Section 9.5

  	
  Conformity with Trust Indenture Act

  	
   

  	
  50

  
	
  Section 9.6

  	
  Reference in Securities to Supplemental Indentures

  	
   

  	
  50

  

 

iii

 

TABLE OF
CONTENTS

(continued)

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE TEN

  	
  COVENANTS

  	
   

  	
  50

  
	
  Section 10.1

  	
  Payment of Principal, Premium and Interest

  	
   

  	
  50

  
	
  Section 10.2

  	
  Maintenance of Office or Agency

  	
   

  	
  50

  
	
  Section 10.3

  	
  Money for Securities Payments to be Held in Trust

  	
   

  	
  51

  
	
  Section 10.4

  	
  Statement as to Compliance

  	
   

  	
  52

  
	
  Section 10.5

  	
  Waiver of Certain Covenants

  	
   

  	
  52

  
	
  Section 10.6

  	
  Additional Sums

  	
   

  	
  53

  
	
  Section 10.7

  	
  Original Issue Discount

  	
   

  	
  53

  
	
  ARTICLE ELEVEN

  	
  REDEMPTION OF SECURITIES

  	
   

  	
  54

  
	
  Section 11.1

  	
  Applicability of Article

  	
   

  	
  54

  
	
  Section 11.2

  	
  Election to Redeem; Notice to Trustee

  	
   

  	
  54

  
	
  Section 11.3

  	
  Selection by Trustee of Securities to be Redeemed

  	
   

  	
  54

  
	
  Section 11.4

  	
  Notice of Redemption

  	
   

  	
  55

  
	
  Section 11.5

  	
  Deposit of Redemption Price

  	
   

  	
  55

  
	
  Section 11.6

  	
  Securities Payable on Redemption Date

  	
   

  	
  55

  
	
  Section 11.7

  	
  Securities Redeemed in Part

  	
   

  	
  56

  
	
  ARTICLE TWELVE

  	
  SINKING FUNDS

  	
   

  	
  57

  
	
  Section 12.1

  	
  Applicability of Article

  	
   

  	
  57

  
	
  Section 12.2

  	
  Satisfaction of Sinking Fund Payments with
  Securities

  	
   

  	
  57

  
	
  Section 12.3

  	
  Redemption of Securities for Sinking Fund

  	
   

  	
  57

  
	
  ARTICLE THIRTEEN

  	
  MEETINGS OF HOLDERS OF
  SECURITIES

  	
   

  	
  58

  
	
  Section 13.1

  	
  Purposes for Which Meetings May be Called

  	
   

  	
  58

  
	
  Section 13.2

  	
  Call Notice and Place of Meeting

  	
   

  	
  58

  
	
  Section 13.3

  	
  Persons Entitled to Vote at Meetings

  	
   

  	
  58

  
	
  Section 13.4

  	
  Quorum; Action

  	
   

  	
  58

  
	
  Section 13.5

  	
  Determination of Voting Rights; Conduct and
  Adjournment of Meetings

  	
   

  	
  59

  
	
  Section 13.6

  	
  Counting Votes and Recording Action of Meetings

  	
   

  	
  60

  
	
  Section 13.7

  	
  Action Without Meeting

  	
   

  	
  60

  
	
  ARTICLE FOURTEEN

  	
  IMMUNITY OF INCORPORATORS,
  STOCKHOLDERS, OFFICERS, DIRECTORS AND EMPLOYEES

  	
   

  	
  60

  

 

iv

 

TABLE OF
CONTENTS

(continued)

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 14.1

  	
  Liability Solely Corporate

  	
   

  	
  60

  
	
  ARTICLE FIFTEEN

  	
  SUBORDINATION OF SECURITIES

  	
   

  	
  61

  
	
  Section 15.1

  	
  Subordination Terms

  	
   

  	
  61

  

 

v

 

INDENTURE,
dated as of [                     ], 20[   ],
between AAR CORP., a corporation duly organized and existing under the laws of
the State of Delaware (herein called the “Corporation”),
having its principal office at One AAR Place, 1100 N. Wood Dale Road, Wood
Dale, Illinois 60191, and U.S. Bank National Association, a national banking
association duly organized and existing under the laws of the United States,
having a corporate trust office at 60 Livingston Avenue, St. Paul, Minnesota
55107, as trustee hereunder (herein called the “Trustee”).

 

RECITALS OF THE CORPORATION

 

The
Corporation has duly authorized the execution and delivery of this Indenture to
provide for the issuance from time to time of the Corporation’s unsecured
debentures, notes or other evidences of indebtedness (herein collectively
called the “Securities,” and
individually called a “Security”),
which may or may not be convertible into or exchangeable for any securities of
any Person, to be issued in one or more series as provided in this Indenture.

 

All things
necessary to make this Indenture a valid agreement of the Corporation, in
accordance with its terms, have been done.

 

This Indenture
is subject to the provisions of the Trust Indenture Act of 1939, as amended,
and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder that are required to be part of this Indenture and, to
the extent so required, shall be governed by such provisions.

 

NOW,
THEREFORE, THIS INDENTURE WITNESSETH:

 

For and in
consideration of the premises and the purchase of the Securities by the Holders
thereof, it is mutually covenanted and agreed, for the equal and proportionate
benefit of all Holders of the Securities or of series thereof, as follows:

 

ARTICLE ONE

 

Definitions and Other Provisions of General
Application

 

Section 1.1  Definitions.  For all purposes of this Indenture, except as
otherwise expressly provided or unless the context otherwise requires:

 

(a)           the terms defined in this Article have
the meanings assigned to them in this Article and include the plural as well as
the singular;

 

(b)           all other terms used herein which are
defined in the Trust Indenture Act, either directly or by reference therein,
have the meanings assigned to them in the Trust Indenture Act;

 

(c)           all accounting terms not otherwise
defined herein have the meanings assigned to them in accordance with generally
accepted accounting principles in the United States of America, and, except as
otherwise herein expressly provided, the term “generally accepted accounting
principles” with respect to any computation required or permitted hereunder 

 

1

 

shall mean such accounting principles as are generally
accepted in the United States of America at the date of such computation;

 

(d)           the words “herein,” “hereof,” “hereto”
and “hereunder” and other words of similar import refer to this Indenture as a
whole and not to any particular Article, Section or other subdivision; and

 

(e)           the word “or” is always used inclusively
(for example, the phrase “A or B” means “A or B or both,” not “either A or B
but not both”).

 

Certain terms
used principally in certain Articles are defined in those Articles.

 

“Act,” when used with respect to any Holder
of a Security, has the meaning specified in Section 1.4.

 

“Affiliate” of any specified Person means
any other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person.  For the purposes of this definition, “control”
when used with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms “controlling”
and “controlled” have meanings correlative to the foregoing.

 

“Authenticating Agent” means any Person or
Persons authorized by the Trustee to act on behalf of the Trustee to
authenticate one or more series of Securities.

 

“Authorized Newspaper” means a newspaper, in
an official language of the country of publication or in the English language,
customarily published on each Business Day, whether or not published on
Saturdays, Sundays or holidays, and of general circulation in the place in
connection with which the term is used or in the financial community of such
place.  Where successive publications are
required to be made in Authorized Newspapers, the successive publications may
be made in the same or in different newspapers in the same city meeting the
foregoing requirements and in each case on any Business Day.

 

“Bankruptcy Law” means Title 11 of the
United States Code or any similar United States federal or state law for the
relief of debtors.

 

“Bearer Security” means any Security
established pursuant to Section 2.1 which is payable to bearer and shall
bear the legend specified in Section 2.5.

 

“Board of Directors” means the board of
directors of the Corporation or any committee thereof duly authorized to act on
behalf of the Board of Directors in respect of any matter.

 

“Board Resolution” means a copy of a
resolution, certified by the Secretary or an Assistant Secretary of the
Corporation to have been duly adopted by the Board of Directors and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.

 

2

 

“Business Day” means any day other than a
Saturday or Sunday or a day on which banks and trust companies located in the
municipality in which the Corporate Trust Office is located are authorized or
required by law, regulation or executive order to remain closed.

 

“Commission” means the Securities and
Exchange Commission, as from time to time constituted, created under the
Securities Exchange Act of 1934, as amended, or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.

 

“Common Stock” means, with respect to any
Person, any and all shares, interests, participations or other equivalents,
however designated, whether voting or non-voting, of that Person’s equity,
other than preferred stock of that Person, whether now outstanding or issued
after the date of this Indenture, including, without limitation, all series and
classes of common stock.

 

“Corporate Trust Office” means a corporate
trust office of the Trustee at which at any particular time this Indenture
shall be administered, which office on the date of execution of this Indenture
is located at 60 Livingston Avenue, St. Paul, Minnesota 55107, Attention:
Corporate Trust Services, except that with respect to the presentation of
Securities of a series for payment or for registration of transfer or exchange,
such term shall mean the office or agency of the Trustee designated for such
purpose from time to time.

 

“corporation” includes any corporation,
association, company, limited liability company, joint stock company or
statutory or business trust.

 

“Corporation” means the Person named as the “Corporation” in the first paragraph of this
instrument until a successor corporation shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter “Corporation” shall mean such successor
corporation.

 

“Defaulted Interest” has the meaning
specified in Section 3.7.

 

“Depositary” means, with respect to the
Securities of any series issuable or issued in whole or in part in the form of
one or more Global Securities, a clearing agency registered under the Securities
Exchange Act of 1934, as amended, specified for that purpose as contemplated by
Section 3.1, or any successor clearing agency registered under such Act as
contemplated by Section 3.5.

 

“Dollar” or “$” means a dollar or other equivalent unit in such coin or
currency of the United States of America as at the time shall be legal tender
for the payment of public and private debts.

 

“Event of Default” has the meaning specified
in Section 5.1.

 

“Global Security” means a Security bearing
the legend specified in Section 2.4 evidencing all or part of a series of
Securities, issued to the Depositary for such series or its nominee, and
registered in the name of such Depositary or nominee.

 

3

 

“Holder,” when used with respect to any
Security, means in the case of a Registered Security the Person in whose name
the Security is registered in the Security Register and in the case of a Bearer
Security the bearer thereof and, when used with respect to any coupon, means the
bearer thereof.

 

“Indenture” means this instrument as
originally executed or as it may from time to time be supplemented or amended
by one or more indentures supplemental hereto entered into pursuant to the
applicable provisions hereof.

 

“Interest,” when used with respect to an
Original Issue Discount Security, which by its terms bears interest only after
Maturity, means interest payable after Maturity.

 

“Interest Payment Date,” when used with
respect to any Security, means the Stated Maturity of an installment of
interest on such Security.

 

“Maturity,” when used with respect to any
Security, means the date on which the principal of such Security or an
installment of principal becomes due and payable as therein or herein provided,
whether at the Stated Maturity or by declaration of acceleration, call for
redemption or otherwise.

 

“Officer” means, with respect to any Person,
the Chairman of the Board, a Vice Chairman, the President, a Vice President,
the Treasurer, an Assistant Treasurer, the Controller, an Assistant Controller,
the Secretary or an Assistant Secretary, of such Person and, if no other Person
is designated in this Indenture, of the Corporation.

 

“Officers’ Certificate” means a certificate
signed by the Chairman of the Board, a Vice Chairman, the President or a Vice
President, and by the Treasurer, an Assistant Treasurer, the Controller, an
Assistant Controller, the Secretary or an Assistant Secretary, of the
Corporation, that complies with the requirements of Section 314(c) of the
Trust Indenture Act and is delivered to the Trustee.

 

“Opinion of Counsel” means a written opinion
of counsel, who may be counsel for the Corporation, and who shall be acceptable
to the Trustee, that complies with the requirements of Section 314(c) of
the Trust Indenture Act and Section 1.2 of this Indenture.

 

“Original Issue Discount Security” means any
Security, which provides for an amount less than the principal amount thereof
to be due and payable upon a declaration of acceleration of the Maturity
thereof pursuant to Section 5.2.

 

“Outstanding,” when used with respect to the
Securities of any series, means, as of the date of determination, all
Securities of such series theretofore authenticated and delivered under this
Indenture, except:

 

(a)           Securities of such series theretofore
canceled by the Trustee or delivered to the Trustee for cancellation;

 

(b)           Securities of such series for whose
payment or redemption money in the necessary amount has been theretofore
deposited with the Trustee or any Paying Agent 

 

4

 

(other than the Corporation) in trust or set aside and
segregated in trust by the Corporation (if the Corporation shall act as its own
Paying Agent) for the Holders of such Securities and any coupons thereto appertaining
and, if such Securities are to
be redeemed, notice of which redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made; and

 

(c)           Securities of such series which have
been paid pursuant to Section 3.6 or in exchange for or in lieu of which
other Securities have been authenticated and delivered pursuant to this
Indenture, other than any such Securities in respect of which there shall have
been presented to the Trustee proof satisfactory to it that such Securities are
held by a bona fide purchaser in whose hands such Securities are valid
obligations of the Corporation;

 

and provided further, that in determining
whether the Holders of the requisite principal amount of the Outstanding
Securities of any series or all series, as the case may be, have given any
request, demand, authorization, direction, notice, consent or waiver hereunder
or are present at a meeting of Holders of Securities of such series for quorum
purposes, Securities of such series owned by the Corporation or any other
obligor upon the Securities of such series or any Affiliate of the Corporation
or of such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver or upon any such determination as to the presence of a quorum, only
Securities of such series which the Trustee knows to be so owned shall be so disregarded.  Securities of such series so owned which have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee’s right so to act
with respect to such Securities and that the pledgee is not the Corporation or
any other obligor upon the Securities or any Affiliate of the Corporation or of
such other obligor.

 

“Paying Agent” means any Person authorized
by the Corporation to pay the principal of (and premium, if any) or interest on
any Securities on behalf of the Corporation.

 

“Person” means any individual, corporation,
limited liability company, partnership, joint venture, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivision thereof, or any other entity.

 

“Place of Payment,” when used with respect
to the Securities of any series, means the place or places where the principal
of (and premium, if any) and interest on the Securities of that series are
payable as specified as contemplated by Section 3.1.

 

“Predecessor Security” of any particular
Security means every previous Security evidencing all or a portion of the same
debt as that evidenced by such particular Security; and, for the purposes of
this definition, any Security authenticated and delivered under Section 3.6
in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security
shall be deemed to evidence the same debt as the mutilated, destroyed, lost or
stolen Security.

 

“Redemption Date,” when used with respect to
any Security to be redeemed, means the date fixed for such redemption by or
pursuant to this Indenture.

 

5

 

“Redemption Price,” when used with respect
to any Security to be redeemed, means the price at which it is to be redeemed
pursuant to this Indenture.

 

“Registered Security” means any Security
established pursuant to Section 2.1 that is registered in the Security
Register.

 

“Regular Record Date” for the interest
payable on any Interest Payment Date on the Registered Securities of any series
means the date specified for that purpose as contemplated by Section 3.1.

 

“Request” or “Order” means a written request or order signed in the name of
the Corporation, by its Chairman of the Board, a Vice Chairman, its President
or a Vice President, and by its Treasurer, an Assistant Treasurer, its
Controller, an Assistant Controller, its Secretary or an Assistant Secretary,
and delivered to the Trustee.

 

“Responsible Officer,” when used with
respect to the Trustee, means any Vice President, any assistant secretary, any
assistant treasurer, any cashier, any assistant cashier, any senior trust
officer, any trust officer or assistant trust officer, any assistant controller
or any other officer of the Trustee customarily performing corporate trust
functions on behalf of the Trustee and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of such officer’s knowledge of and familiarity with the particular subject.

 

“Section 10.6
Indemnitee” has the meaning specified in Section 10.6

 

“Securities”
and “Security” have the meanings
stated in the first recital of this Indenture and more particularly means any
Securities authenticated and delivered under this Indenture; provided, that if at any time there is
more than one Person acting as Trustee under this Indenture, the term “Securities,”
with respect to any such Person, shall mean Securities authenticated and
delivered under this Indenture, exclusive, however, of Securities of any series
as to which such Person is not Trustee.

 

“Security Register” and “Security Registrar” have the respective
meanings specified in Section 3.5.

 

“Senior Indebtedness” means indebtedness issued pursuant to a
senior indenture, as supplemented or amended by one or more indentures
supplemental thereto, payment of which shall be senior to the payment of the
Securities issued hereunder, pursuant to Article Fifteen hereof.

 

“Special Record Date” for the payment of any
Defaulted Interest on the Registered Securities of any series means a date
fixed by the Trustee pursuant to Section 3.7.

 

“Stated Maturity,” when used with respect to
any Security or any installment of principal thereof or interest thereon, means
the date specified in such Security or a coupon representing such installment
of interest as the fixed date on which the principal of such Security or such
installment of principal or interest is due and payable.

 

6

 

“Subsidiary” means a corporation more than
50% of the outstanding Voting Stock of which is owned, directly or indirectly,
by the Corporation or by one or more other Subsidiaries, or by the Corporation
and one or more other Subsidiaries.

 

“Trust Indenture Act” means the Trust Indenture
Act of 1939, as amended, and any reference herein to the Trust Indenture Act or
a particular provision thereof shall mean such Trust Indenture Act or
provision, as the case may be, as amended or replaced from time to time or as
supplemented from time to time by rules or regulations adopted by the
Commission under or in furtherance of the purposes of such Trust Indenture Act
or provision, as the case may be.

 

“Trustee” means the Person named as the “Trustee”
in the first paragraph of this instrument until a successor Trustee shall have
become such with respect to one or more series of Securities pursuant to the
applicable provisions of this Indenture, and thereafter the term “Trustee”
shall mean or include each Person who is then a Trustee hereunder and, if at
any time there is more than one such Person, the term “Trustee,” as used with
respect to the Securities of any series, shall mean the Trustee with respect to
Securities of that series.

 

“United States” means the United States of
America (including the states and the District of Columbia), its territories
and possessions and other areas subject to its jurisdiction.

 

“United States Alien” means any Person who,
for United States federal income tax purposes, is a foreign corporation, a
non-resident alien individual, a non-resident alien fiduciary of a foreign
estate or trust, or a foreign partnership one or more of the members of which
is, for United States federal income tax purposes, a foreign corporation, a
non-resident alien individual or a non-resident alien fiduciary of a foreign
estate or trust.

 

“Vice President,” when used with respect to
the Corporation or the Trustee, means any vice president, whether or not
designated by a number or a word or words added before or after the title “vice
president.”

 

“Voting Stock” means the class or classes of
stock which ordinarily have voting power for the election of directors, whether
at all times or only so long as no senior class of stock has such voting power
by reason of any contingency.

 

Section 1.2  Compliance Certificates and Opinions.  Upon any application or
request by the Corporation to the Trustee to take any action under any
provision of this Indenture, the Corporation shall furnish to the Trustee an
Officers’ Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that, in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional Officers’ Certificate or
Opinion of Counsel need be furnished under this Section 1.2.

 

Every Officers’
Certificate or Opinion of Counsel with respect to compliance with a condition
or covenant provided for in this Indenture shall include:

 

7

 

(a)           a statement that each individual
signing such certificate or opinion has read such covenant or condition and the
definitions herein relating thereto;

 

(b)           a brief statement as to the nature
and scope of the examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;

 

(c)           a statement that, in the opinion of
each such individual, such individual has made such examination or
investigation as is necessary to enable him or her to express an informed opinion
as to whether or not such covenant or condition has been complied with; and

 

(d)           a statement as to whether, in the
opinion of each such individual, such condition or covenant has been complied
with.

 

Section 1.3  Form of Documents Delivered to Trustee.  In any case where several matters are
required to be certified by, or covered by an opinion of, any specified Person,
it is not necessary that all such matters be certified by, or covered by the
opinion of, only one such Person, or that they be so certified or covered by
only one document, but one such Person may certify or give an opinion with
respect to some matters and one or more other such Persons as to other matters,
and any such Person may certify or give an opinion as to such matters in one or
several documents.

 

Any
certificate or opinion of an Officer of the Corporation may be based, insofar
as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such Officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such Officer’s certificate or opinion is
based are erroneous.  Any such
certificate or Opinion of Counsel may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an Officer or
Officers of the Corporation, stating that the information with respect to such
factual matters is in the possession of the Corporation, unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.

 

Where any
Person is required to make, give or execute two or more applications, requests,
consents, certificates, statements, opinions or other instruments under this
Indenture, they may, but need not, be consolidated and form one instrument.

 

Section 1.4  Acts of Holders; Record Dates.

 

(a)           Any request, demand, authorization,
direction, notice, consent, waiver or other action provided in or pursuant to
this Indenture to be made, given or taken by Holders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Holders in person or by an agent duly appointed in writing.  If Securities of a series are issuable as
Bearer Securities, any request, demand, authorization, direction, notice,
consent, waiver or other action provided in or pursuant to this Indenture to be
made, given or taken by Holders may, alternatively, be embodied in and
evidenced by the record of Holders of Securities voting in favor thereof,
either in person or by proxies duly appointed in writing, at any meeting of
Holders of Securities duly called and held in accordance with the provisions of
Article 

 

8

 

Thirteen, or a combination of such instrument or
instruments and any such record.  Except
as herein otherwise expressly provided, such action shall become effective when
such instrument or instruments or record or both are delivered to the Trustee
and, where it is hereby expressly required, to the Corporation or both.  Such instrument or instruments and any such
record (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the “Act”
of the Holders signing such instrument or instruments and so voting at any such
meeting.  Proof of execution of any such
instrument or of a writing appointing any such agent, or of the holding by any
Person of a Security, shall be sufficient for any purpose of this Indenture and
(subject to Section 6.1) conclusive in favor of the Trustee and the
Corporation if made in the manner provided in this Section.  The record of any meeting of Holders of
Securities shall be proved in the manner provided in Section 13.6.

 

Notwithstanding
the foregoing, with respect to any Global Security, nothing herein shall
prevent the Corporation, the Trustee, or any agent of the Corporation or the
Trustee, from giving effect to any request, demand, authorization, direction, notice,
consent, waiver or other action provided in this Indenture to be given or taken
by a Depositary or impair, as between a Depositary and such holders of
beneficial interests, the operation of customary practices governing the
exercise of the rights of the Depositary (or its nominee) as Holder of any
Security.

 

Without
limiting the generality of this Section 1.4, unless otherwise provided in
or pursuant to this Indenture, a Holder, including a Depositary that is a
Holder of a Global Security, may make, give or take, by a proxy or proxies duly
appointed in writing, any request, demand, authorization, direction, notice,
consent, waiver or other action provided in or pursuant to this Indenture to be
made, given or taken by Holders, and a Depositary that is a Holder of a Global
Security may give its proxy or proxies to the Depositary’s participants or the
beneficial owners of interests in any such Global Security, as the case may be,
through such Depositary’s standing instructions and customary practices.

 

Subject to the
next succeeding paragraph, the Corporation may, in the circumstances permitted
by the Trust Indenture Act, fix any day as the record date for the purpose of
determining the Holders of Securities of any series entitled to give or take
any request, demand, authorization, direction, notice, consent, waiver or other
action, or to vote on any action, authorized or permitted to be given or taken
by Holders of Securities of such series. 
If not set by the Corporation prior to the first solicitation of a
Holder of Securities of such series made by any Person in respect of any such
action, or in the case of any such vote, prior to such vote, the record date
for any such action or vote shall be the 30th day prior to such first
solicitation or vote, or, if later, the date of the most recent list of Holders
required to be provided pursuant to Section 7.1, as the case may be.  With regard to any record date for action to
be taken by the Holders of one or more series of Securities, only the Holders
of Securities of such series on such date (or their duly designated proxies)
shall be entitled to give or take, or vote on, the relevant action.

 

The Trustee
shall fix a record date for the purpose of determining the Persons who are
beneficial owners of interests in any permanent Global Security held by a
Depositary and who are entitled under the procedures of such Depositary to
make, give or take, by a proxy or proxies duly appointed in writing, any
request, demand, authorization, direction, notice, consent, waiver or other
action provided in or pursuant to this Indenture to be made, given or taken by 

 

9

 

Holders.  If such a record date
is fixed, the Holders on such record date or their duly appointed proxy or
proxies, and only such Persons, shall be entitled to make, give or take such
request, demand, authorization, direction, notice, consent, waiver or other
action, whether or not such Holders remain Holders after such record date.  No such request, demand, authorization,
direction, notice, consent, waiver or other action shall be valid or effective
if made, given or taken more than 90 days after such record date.

 

(b)           The fact and date of the execution by
any Person of any such instrument or writing may be proved in any manner that
the Trustee deems sufficient.

 

(c)           The principal amount and serial
numbers of Registered Securities held by any Person, and the date of holding
the same, shall be proved by the Security Register.

 

(d)           The principal amount and serial
numbers of Bearer Securities held by any Person executing any such instrument
or writing as a Holder of Securities, and the date of such Holder’s holding the
same, may be proved by the production of such Bearer Securities or by a
certificate executed, as depositary, by any trust company, bank, banker or
other depositary, wherever situated, if such certificate shall be deemed by the
Trustee to be satisfactory, showing that at the date therein mentioned such
Person had on deposit with such depositary, or exhibited to it, the Bearer
Securities therein described; or such facts may be proved by the certificate or
affidavit of the Person executing such instrument or writing as a Holder of
Securities, if such certificate or affidavit is deemed by the Trustee to be
satisfactory.  The Trustee and the
Corporation may assume that such ownership of any Bearer Security continues
until (1) another certificate or affidavit bearing a later date issued in
respect of the same Bearer Security is produced, or (2) such Bearer
Security is produced to the Trustee by some other Person, or (3) such
Bearer Security is surrendered in exchange for a Registered Security, or (4) such
Bearer Security is no longer Outstanding.

 

(e)           The fact and date of execution of any
such instrument or writing, the authority of the Person executing the same, the
principal amount and serial numbers of Bearer Securities held by the Person so
executing such instrument or writing and the date of holding the same may also
be proved in any other manner which the Trustee deems sufficient; and the
Trustee may in any instance require further proof with respect to any of the
matters referred to in this Section.

 

(f)            Any request, demand, authorization,
direction, notice, consent, election, waiver or other Act of  the Holder of any Security shall bind
every future Holder of the same Security and the Holder of every Security
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof in respect of anything done, omitted or suffered to be done by the
Trustee or the Corporation in reliance thereon, whether or not notation of such
action is made upon such Security.

 

Section 1.5  Notices, Etc., to Trustee, Corporation.  Any request, demand, authorization,
direction, notice, consent, election, waiver or other Act of Holders of a
series of Securities or other document provided or permitted by this Indenture
to be made upon, given or furnished to, or filed with,

 

10

 

(a)           the Trustee of such series by any
Holder of a Security of such series or by the Corporation shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing to or
with the Trustee of such series at its Corporate Trust Office, or

 

(b)           the Corporation by the Trustee of
such series or by any Holder of a Security of such series shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to the Corporation, addressed
to the attention of its Secretary, at One AAR Place, 1100 N. Wood Dale Road,
Wood Dale, Illinois 60191, or at any other address previously furnished in
writing to the Trustee of such series by the Corporation.

 

Section 1.6  Notice to Holders of Securities; Waiver.  Except as otherwise expressly provided
herein, where this Indenture provides for notice to Holders of Securities (of
any series) of any event,

 

(a)           such notice shall be sufficiently
given to Holders of Registered Securities of such series if in writing and
mailed, first-class postage prepaid, to each Holder of a Registered Security of
such series affected by such event, at such Holder’s address as it appears in
the Security Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such Notice; and

 

(b)           such notice shall be sufficiently
given to Holders of Bearer Securities of such series if published in an
Authorized Newspaper in the Borough of Manhattan, The City of New York and, if
the Securities of such series are then listed on The London Stock Exchange and
such stock exchange shall so require, in London and, if the Securities of such
series are then listed on the Luxembourg Stock Exchange and such stock exchange
shall so require, in Luxembourg and, if the Securities of such series are then
listed on any other stock exchange outside the United States and such stock
exchange shall so require, in any other required city outside the United States
or, if not practicable, in Europe, on a Business Day at least twice, the first
such publication to be not earlier than the earliest date and not later than
the latest date prescribed for the giving of such notice.

 

In case by
reason of the suspension of regular mail service or by reason of any other
cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder.  In any case where notice to Holders of
Registered Securities is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular Holder of a
Registered Security shall affect the sufficiency of such notice with respect to
other Holders of Registered Securities or the sufficiency of any notice by
publication to Holders of Bearer Securities given as provided above.

 

In case by
reason of the suspension of publication of any Authorized Newspaper or
Authorized Newspapers or by reason of any other cause it shall be impracticable
to publish any notice to Holders of Bearer Securities of any series as provided
above, then such notification to Holders of such Bearer Securities as shall be
given with the approval of the Trustee for such series shall constitute
sufficient notice to such Holders for every purpose hereunder.  Neither failure to give notice by publication
to Holders of Bearer Securities as provided above, nor any 

 

11

 

defect in any notice so published, shall affect the sufficiency of any
notice mailed to Holders of Registered Securities as provided above.

 

Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice.  Waivers of notice by Holders of Securities
shall be filed with the Trustee, but such filing shall not be a condition precedent
to the validity of any action taken in reliance upon such waiver.

 

Section 1.7  Language of Notices, Etc.  Any request, demand, authorization,
direction, notice, consent, election or waiver required or permitted under this
Indenture shall be in the English language, except that any published notice
may be in an official language of the country of publication.

 

Section 1.8  Conflict with Trust Indenture Act.  If any provision hereof limits, qualifies or
conflicts with any duties under any required provision of the Trust Indenture
Act deemed included herein by Section 318(c) thereof, such required
provision shall control.

 

Section 1.9  Effect of Headings and Table of Contents.  The Article and Section headings herein and
the Table of Contents are for convenience only and shall not affect the
construction hereof.

 

Section 1.10  Successors and Assigns.  All covenants and agreements in this
Indenture by the Corporation shall bind its successors and assigns, whether so
expressed or not.

 

Section 1.11  Separability Clause.  In case any provision in this Indenture or
the Securities or coupons shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

 

Section 1.12  Benefits of Indenture.  Nothing in this Indenture or the Securities
or coupons, express or implied, shall give to any Person, other than the
parties hereto, their successors hereunder and the Holders of Securities and
coupons (and, with respect to the provisions of Article Fifteen, the
holders of Senior Indebtedness), any benefit or any legal or equitable right,
remedy or claim under this Indenture.

 

Section 1.13  Governing Law.  This Indenture and the Securities and coupons
shall be governed by and construed in accordance with the internal law of the
State of New York.

 

Section 1.14  Legal Holidays.  In any case where any Interest Payment Date,
Redemption Date or Stated Maturity of any Security shall not be a Business Day
at any Place of Payment, then (notwithstanding any other provision of this
Indenture or of the Securities or coupons) payment of interest or principal
(and premium, if any) need not be made at such Place of Payment on such date,
but may be made on the next succeeding Business Day at such Place of Payment
with the same force and effect as if made on the Interest Payment Date or
Redemption Date, or at the Stated Maturity; provided,
that no interest shall accrue on the amount so payable for the period from and
after such Interest Payment Date, Redemption Date or Stated Maturity, as the
case may be.

 

12

 

Section 1.15  No Adverse Interpretation of Other
Agreements.  This
Indenture may not be used to interpret another indenture, loan or debt
agreement of the Corporation or any Affiliate thereof.  No such indenture, loan or debt agreement may
be used to interpret this Indenture.

 

Section 1.16  Execution in Counterparts.  This instrument may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.

 

ARTICLE TWO

Security Forms

 

Section 2.1  Forms Generally.  The Registered Securities, if any, of each
series and the Bearer Securities, if any, of each series and related coupons
and the Global Securities, if any, issued pursuant to this Indenture shall be
in such form as shall be established by or pursuant to a Board Resolution of
the Corporation or in one or more indentures supplemental hereto, in each case
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture, and may have such letters,
numbers or other marks of identification and such legends or endorsements
placed thereon as may be required to comply with the rules of any securities
exchange or as may, consistently herewith, be determined by the Officers
executing such Securities or coupons, as evidenced by their execution of the
Securities or coupons (but which do not affect the rights or duties of the
Trustee).  If the forms of Securities or
coupons of any series are established by or pursuant to a Board Resolution, a
copy of an appropriate record of such action shall be certified by the Secretary
or an Assistant Secretary of the Corporation and delivered to the Trustee at or
prior to the delivery of the Order of the Corporation contemplated by Section 3.3
for the authentication and delivery of such Securities or coupons.

 

The Trustee’s
certificates of authentication shall be in substantially the form set forth in
this Article or Article Six.

 

Unless
otherwise provided as contemplated by Section 3.1 with respect to any
series of Securities, the Securities of each series shall be issuable in global
and registered form without coupons.  If
so provided as contemplated by Section 3.1, the Securities of a series
also shall be issuable in bearer form, with or without interest coupons
attached.

 

The definitive
Securities and coupons, if any, shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner permitted by the rules
of any applicable securities exchange, all as determined by the Officers
executing such Securities, as evidenced by their execution of such Securities
or coupons.

 

Section 2.2  Form of Trustee’s Certificate of
Authentication. 
Subject to Section 6.14, the Trustee’s certificate of
authentication shall be in substantially the following form:

 

This is one of
the Securities of the series referred to in the within-mentioned Indenture.

 

13

 

	
   

  	
  U.S. Bank National Association, as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Authorized Officer

  

 

Section 2.3  Securities in Global Form.  If Securities of a series are issuable in
global form, any such Security may provide that it or any number of such
Securities shall represent the aggregate amount of all Outstanding Securities
of such series (or such lesser amount as is permitted by the terms thereof)
from time to time endorsed thereon and may also provide that the aggregate
amount of Outstanding Securities represented thereby may from time to time be
increased or reduced to reflect exchanges. 
Any endorsement of any Security in global form to reflect the amount, or
any increase or decrease in the amount, or changes in the rights of Holders, of
Outstanding Securities represented thereby shall be made in such manner and by
such Person or Persons as shall be specified therein or in the Order of the
Corporation to be delivered pursuant to Sections 3.3 or 3.4 with respect thereto.  Subject to the provisions of Section 3.3
and, if applicable, Section 3.4, the Trustee shall deliver and redeliver
any Security in permanent global form in the manner and upon instructions given
by the Person or Persons specified therein or in the applicable Order of the
Corporation.  If the Order of the
Corporation pursuant to Sections 3.3 or 3.4 has been, or simultaneously is,
delivered, any instructions by the Corporation with respect to a Security in
global form shall be in writing but need not be accompanied by or contained in
an Officers’ Certificate and need not be accompanied by an Opinion of Counsel.

 

Section 2.4  Form of Legend for Global Securities.  Any Global Security authenticated and
delivered hereunder shall bear a legend in substantially the following form, or
in such other form that is acceptable to the Depositary and the Trustee:

 

“Unless and
until it is exchanged in whole or in part for Securities in definitive
registered form, this Security may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary.”

 

Section 2.5  Form of Legend for Bearer Securities.  Any Bearer Security authenticated and
delivered hereunder shall bear a legend in substantially the following form:

 

“Any United
States person who holds this Security shall be subject to limitations under the
United States income tax laws, including the limitation provided in Sections 165(j)
and 1287(a) of the Internal Revenue Code of 1986, as amended.”

 

ARTICLE THREE

 

The Securities

 

Section 3.1  Amount Unlimited; Issuable in Series.  The aggregate principal amount of Securities
which may be authenticated and delivered under this Indenture is unlimited.

 

14

 

The Securities
may be issued in one or more series. 
There shall be established in or pursuant to a Board Resolution, and set
forth in an Officers’ Certificate, or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of any series,

 

(a)           the title of the Securities of the
series (which shall distinguish the Securities of the series from securities of
all other series issued by the Corporation);

 

(b)           any limit upon the aggregate
principal amount of the Securities of the series which may be authenticated and
delivered under this Indenture (except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in lieu of,
other Securities of the series pursuant to Section 3.4, 3.5, 3.6, 9.6 or
11.7);

 

(c)           the date or dates on which the
principal of the Securities of the series is payable;

 

(d)           the subordination terms of the
Securities of the series;

 

(e)           the right, if any, to extend the
Stated Maturity on which the Corporation shall pay any installment of principal
of or interest on the Securities of the series;

 

(f)            the rate or rates at which the
Securities of the series shall bear interest, if any, or any method by which
such rate or rates shall be determined, the basis upon which interest shall be
computed if other than that specified in Section 3.10, the date or dates
from which such interest shall accrue, the Interest Payment Dates on which such
interest shall be payable and the Regular Record Date for the interest payable
on Registered Securities on any Interest Payment Date;

 

(g)           the place or places where the
principal of (and premium, if any) and interest, if any, on Securities of the
series shall be payable;

 

(h)           whether Securities of the series may
be redeemed and, if so, the period or periods within which, the price or prices
at which and the terms and conditions upon which Securities of the series may
be redeemed, in whole or in part, at the option of the Corporation;

 

(i)            the obligation, if any, of
Corporation to redeem or purchase Securities of the series pursuant to any
sinking fund or analogous provisions or at the option of a Holder thereof and
the period or periods within which, the price or prices at which and the terms
and conditions upon which Securities of the series shall be redeemed or
purchased, in whole or in part, pursuant to such obligation;

 

(j)            the right, if any, of the
Corporation or a third party to redeem or purchase Securities of the series and
the period or periods within which, the price or prices at which and the terms
and conditions upon which Securities of the series shall be redeemed or
purchased, in whole or in part, pursuant to such right;

 

(k)           whether Bearer Securities of the
series are to be issuable;

 

15

 

(l)            if Bearer Securities of the series
are to be issuable, whether interest in respect of any portion of a temporary
Bearer Security in global form (representing all of the Outstanding Bearer
Securities of the series) payable in respect of an Interest Payment Date prior
to the exchange of such temporary Bearer Security for definitive Securities of
the series shall be paid to any clearing agency with respect to the portion of
such temporary Bearer Security held for its account and, in such event, the
terms and conditions (including any certification requirements) upon which any
such interest payment received by a clearing agency shall be credited to the
Persons entitled to interest payable on such Interest Payment Date;

 

(m)          the date as of which any Bearer
Securities of the series, any temporary Bearer Security in global form and any
Global Securities shall be dated if other than the date of original issuance of
the first Security of the series to be issued;

 

(n)            the denominations in which
Registered Securities of the series, if any, shall be issuable if other than
denominations of $1,000 and any integral multiple thereof, and the
denominations in which Bearer Securities of the series, if any, shall be
issuable if other than the denomination of $5,000;

 

(o)           the currency or currencies, including
composite currencies, in which payment of the principal of (and premium, if
any) and interest, if any, on the Securities of the series shall be payable (if
other than the currency of the United States of America);

 

(p)           if the amount of payments of
principal of (and premium, if any) or interest, if any, on the Securities of
the series may be determined with reference to an index, the manner in which
such amounts shall be determined;

 

(q)           if other than the principal amount
thereof, the portion of the principal amount of Securities of the series which
shall be payable upon declaration of acceleration of the Maturity thereof
pursuant to Section 5.2;

 

(r)            any additional Events of Default or
additional covenants of the Corporation pertaining to the Securities of the
series;

 

(s)           whether and under what circumstances
the Corporation shall pay additional amounts on the Securities of the series
held by a Person who is a United States Alien in respect of taxes or similar
charges withheld or deducted and, if so, whether the Corporation shall have the
option to redeem such Securities rather than pay such additional amounts;

 

(t)            whether any Securities of the series
are to be issuable in whole or in part in the form of one or more Global
Securities and, if so, (i) the Depositary with respect to such Global
Security or Securities and (ii) the circumstances under which beneficial
owners of interests in any such Global Security may exchange such interest for
Securities of the same series and of like tenor and of any authorized form and
denomination, and the circumstances under which any such exchange may occur, if
other than as set forth in Section 3.5;

 

(u)           if any Securities of the series are
to be issued in global form and are to be issuable in definitive form (whether
upon original issue or upon exchange of a temporary 

 

16

 

Security) only upon receipt of certain certificates or
other documents or satisfaction of other conditions, the form and terms of such
certificates, documents, or conditions;

 

(v)           the date or dates, if any, after
which the Holders may convert Securities of the series into shares of Common
Stock or preferred stock of the Corporation and the terms for that conversion;
and

 

(w)          any other terms of the Securities of
the series (which terms shall not be inconsistent with the terms of this
Indenture).

 

All Securities
of any one series and the coupons appertaining to Bearer Securities of such
series, if any, shall be substantially identical except, in the case of
Registered Securities, as to denomination and except as may otherwise be
provided in or pursuant to the Board Resolution and set forth in the Officers’
Certificate, or provided in the indenture supplemental hereto, establishing the
series.

 

If any of the
terms of the series are established by action taken pursuant to a Board Resolution,
a copy of an appropriate record of such action shall be certified by the
Secretary or an Assistant Secretary of the Corporation and delivered to the
Trustee at or prior to the delivery of the Officers’ Certificate setting forth
the terms of the series.  Such Board
Resolution may provide general terms or parameters for Securities of such
series and may provide that the specific terms of particular Securities of such
series, and the Persons authorized to determine such terms or parameters may be
determined in accordance with or pursuant to the Order of the Corporation
referred to in the third paragraph of Section 3.3.

 

Section 3.2  Denominations.  Unless otherwise provided as contemplated by Section 3.1
with respect to any series of Securities, the Registered Securities of each
series, if any, shall be issuable in denominations of $1,000 or any integral
multiple thereof, and the Bearer Securities of each series, if any, shall be
issuable in the denomination of $5,000.

 

Section 3.3  Execution, Authentication, Delivery and
Dating.  The
Securities shall be executed on behalf of the Corporation by its Chairman of
the Board, a Vice Chairman, its President or one of its Vice Presidents, under
its corporate seal reproduced thereon attested by its Secretary or one of its
Assistant Secretaries.  The signature of
any of these officers on the Securities may be manual or facsimile.  Coupons shall bear the facsimile signature of
the Treasurer or any Assistant Treasurer of the Corporation.

 

Securities and
coupons bearing the manual or facsimile signatures of individuals who were at
any time relevant to the authorization thereof the proper officers of the
Corporation shall bind the Corporation, notwithstanding that such individuals
or any of them have ceased to hold such offices prior to the authentication and
delivery of such Securities or did not hold such offices at the date of such
Securities.

 

At any time
and from time to time after the execution and delivery of this Indenture, the
Corporation may deliver Securities of any series executed on behalf of the
Corporation to the Trustee for authentication by the Trustee together with an
Order of the Corporation for the authentication and delivery of such
Securities, and the Trustee in accordance with such Order shall authenticate
and deliver such Securities; provided,
that in connection with 

 

17

 

its original issuance, a Bearer Security may be delivered only outside
the United States and only if the Trustee shall have received from the Person
entitled to receive such Bearer Security a certificate in the form required by Section 3.11;
and provided further, that, with
respect to Securities of a series constituting a medium-term note program, the
Trustee shall authenticate and deliver Securities of such series for original
issue from time to time in the aggregate principal amount established for such
series pursuant to such procedures acceptable to the Trustee and to such
recipients as may be specified from time to time by an Order of the
Corporation.  The maturity dates,
original issue dates, interest rates and any other terms of the Securities of a
subseries of any medium-term note program shall be determined by or pursuant to
such Order of the Corporation and such procedures.

 

In
authenticating Securities in accordance with an Order of the Corporation, and
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive, and (subject to
Sections 315(a) through 315(d) of the Trust Indenture Act) shall be fully
protected in relying upon:

 

(a)          the Board Resolution or indenture
supplemental hereto establishing the form of the Securities of the series
pursuant to Section 2.1 and the terms of the Securities of the series
pursuant to Section 3.1 (or, in the case of a Board Resolution, pursuant
to which such form and terms are established);

 

(b)          an Officers’ Certificate pursuant to
Sections 2.1 and 3.1 and complying with Section 1.2; and

 

(c)          an Opinion of Counsel complying with Section 1.2
stating,

 

(i)            that the forms of such Securities
and coupons, if any, have been established by or pursuant to a Board Resolution
or by an indenture supplemental hereto, as permitted by Section 2.1 and in
conformity with the provisions of this Indenture;

 

(ii)           that the terms of such Securities
have been established by or pursuant to a Board Resolution or by an indenture
supplemental hereto, as permitted by Sections 2.1 and 3.1 and in conformity
with the provisions of this Indenture;

 

(iii)          that such Securities, together with
the coupons, if any, appertaining thereto, when authenticated and delivered by
the Trustee and issued by the Corporation in the manner and subject to any
customary conditions specified in such Opinion of Counsel, shall constitute
valid and legally binding obligations of the Corporation entitled to the
benefits provided by the Indenture, enforceable in accordance with their
respective terms, except to the extent that the enforcement of such obligations
may be subject to bankruptcy laws or insolvency laws or other similar laws,
general principles of equity and such other qualifications as such counsel
shall conclude are customary or do not materially affect the rights of the
Holders of such Securities;

 

18

 

(iv)          that all laws and requirements in
respect of the execution and delivery of the Securities have been complied
with; and

 

(v)           such other matters as the Trustee may
reasonably request.

 

With respect
to Securities of a subseries of a medium-term note program, the Trustee may
conclusively rely on the documents and opinion delivered pursuant to Sections
2.1 and 3.1 and this Section 3.3, as applicable (unless revoked by
superseding comparable documents or opinions), with respect to the
establishment of the medium-term note program as to the authorization of the
Board of Directors of the Corporation of any Securities delivered hereunder,
the form thereof and the legality, validity, binding effect and enforceability
thereof.

 

Notwithstanding
the provisions of Section 3.1 and of the preceding two paragraphs, if not
all the Securities of any series are to be issued at one time, it shall not be
necessary to deliver the Officers’ Certificate otherwise required pursuant to Section 3.1
or the documents otherwise required pursuant to the preceding clauses (a), (b) or
(c) prior to or at the time of issuance of each Security, but such documents
shall be delivered prior to or at the time of issuance of the first Security of
such series and shall pertain to all of the Securities of such series.  After any such first delivery, any separate
Request by the Corporation that the Trustee authenticate Securities of such
series for original issue shall be deemed to be a certification by the Corporation
that all conditions precedent provided for in this Indenture relating to
authentication and delivery of such Securities continue to have been complied
with.

 

If such forms
or terms have been so established by or pursuant to a Board Resolution or by an
indenture supplemental hereto as permitted by Sections 2.1 and 3.1, the Trustee
shall have the right to decline to authenticate and deliver any Securities of
such series:

 

(x)            if the Trustee,
being advised by counsel, determines that such action may not lawfully be
taken;

 

(y)           if the Trustee in
good faith by its board of directors, executive committee or a committee of
directors or Responsible Officers of the Trustee in good faith determines that
such action would expose the Trustee to personal liability to Holders of any
Outstanding series of Securities; or

 

(z)            if the issue of
such Securities pursuant to this Indenture shall affect the Trustee’s own
rights, duties and immunities under the Securities and this Indenture or
otherwise in a manner which is not acceptable to the Trustee.

 

If the
Corporation shall establish pursuant to Section 3.1 that the Securities of
a series are to be issued in whole or in part in the form of one or more Global
Securities, then the Corporation shall execute and the Trustee shall, in
accordance with this Section and the Order of the Corporation with respect to
such series, authenticate and deliver one or more Global Securities in
permanent form that (A) shall represent and shall be denominated in an
amount equal to the aggregate principal amount of the Outstanding Securities of
such series to be represented by such Global Security or Securities, (B) shall
be registered, if in registered form, in the name of the Depositary for such
Global Security or Securities or the nominee of such 

 

19

 

Depositary, (C) shall be delivered by the Trustee to such
Depositary or pursuant to such Depositary’s instruction and (D) shall bear
a legend as required by Section 2.4.

 

Each
Registered Security shall be dated the date of its authentication.  Each Global Security, each Bearer Security
and any temporary Bearer Security in global form shall be dated as of the date
specified as contemplated by Section 3.1.

 

No Security or
related coupon shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder and is entitled to
the benefits of this Indenture.  Except
as permitted by Section 3.6 or 3.7, the Trustee shall not authenticate and
deliver any Bearer Security unless all appurtenant coupons for interest then
matured and paid or payment duly provided for have been detached and canceled.

 

Section 3.4  Temporary Securities.  Pending the preparation of definitive
Securities of any series, the Corporation may execute, and upon an Order of the
Corporation the Trustee shall authenticate and deliver, temporary Securities
which are printed, lithographed, typewritten, mimeographed or otherwise
produced, in any authorized denomination, substantially of the tenor of the
definitive Securities in lieu of which they are issued, in registered form or,
if authorized, in bearer form with one or more coupons or without coupons, and
with such appropriate insertions, omissions, substitutions and other variations
as the officers executing such Securities may determine, as evidenced by their
execution of such Securities (but which do not affect the rights or duties of
the Trustee).  In the case of Bearer
Securities of any series, such temporary Securities may be in global form,
representing all of the outstanding Bearer Securities of such series.

 

Except in the
case of temporary Securities in global form, which shall be exchanged in
accordance with the provisions thereof, if temporary Securities of any series
are issued, the Corporation shall cause definitive Securities of that series to
be prepared without unreasonable delay. 
After the preparation of definitive Securities of such series, the temporary
Securities of such series shall be exchangeable for definitive Securities of
such series upon surrender of the temporary Securities of such series at the
office or agency of the Corporation in a Place of Payment for that series,
without charge to the Holder.  Upon
surrender for cancellation of any one or more temporary Securities of any
series (accompanied by any unmatured coupons appertaining thereto), the
Corporation shall execute and the Trustee shall authenticate and deliver in
exchange therefor (at an office or agency of the Corporation in the case of
Bearer Securities) a like principal amount of definitive Securities of the same
series of authorized denominations and of like tenor; provided, that no definitive Bearer
Security shall be delivered in exchange for a temporary Registered Security;
and provided further, that no
definitive Bearer Security shall be delivered in exchange for a temporary
Bearer Security unless the Trustee shall have received from the Person entitled
to receive the definitive Bearer Security a certificate in the form required by
Section 3.11.  Until so exchanged,
the temporary Securities of any series, including temporary Securities in
global form, shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of such series.

 

20

 

Section 3.5  Registration, Registration of Transfer and
Exchange.  The
Corporation shall cause to be kept at one of its offices or agencies designated
pursuant to Section 10.2 a register (referred to as the “Security Register”) in which, subject to
such regulations as it may prescribe, the Corporation shall provide for the
registration of Registered Securities of each series and of transfers and
exchanges of Registered Securities of such series.  Said office or agency is hereby appointed the
security registrar (referred to as the “Security
Registrar”) for the purpose of registering Registered Securities of
each series and transfers and exchanges of Registered Securities of such series
as herein provided.

 

Upon surrender
for registration of transfer of any Registered Security of any series at the
office or agency in a Place of Payment maintained for such purpose for such
series, the Corporation shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Registered Securities of the same series, Stated Maturity and original
issue date, of any authorized denominations and of like tenor and aggregate
principal amount.

 

At the option
of the Holder, Registered Securities of any series (except a Global Security
representing all or a portion of such series) may be exchanged for Registered
Securities of the same series, Stated Maturity and original issue date, of any
authorized denominations and of like tenor and aggregate principal amount, upon
surrender of the Securities to be exchanged at any such office or agency.

 

At the option
of the Holder, Bearer Securities of any series may be exchanged for Registered
Securities of the same series, Stated Maturity and original issue date, of any
authorized denominations and of like tenor and aggregate principal amount, upon
surrender of the Bearer Securities to be exchanged at any such office or
agency, with all unmatured coupons and all matured coupons in default thereto
appertaining.  If the Holder of a Bearer
Security is unable to produce any such unmatured coupon or coupons or matured
coupon or coupons in default, such exchange may be effected if the Bearer
Securities are accompanied by payment in funds acceptable to the Corporation
and the Trustee in an amount equal to the face amount of such missing coupon or
coupons, or the surrender of such missing coupon or coupons may be waived by
the Corporation and the Trustee if there is furnished to them such security or
indemnity as they may require to save each of them and any Paying Agent
harmless.  If thereafter the Holder of
such Security surrenders to any Paying Agent any such missing coupon in respect
of which such a payment shall have been made, such Holder shall be entitled to
receive the amount of such payment; provided,
that except as otherwise provided in Section 10.2, interest represented by
coupons shall be payable only upon presentation and surrender of those coupons
at an office or agency located outside the United States.  Notwithstanding the foregoing, in case a
Bearer Security of any series is surrendered at any such office or agency in
exchange for a Registered Security of the same series after the close of
business at such office or agency on (1) any Regular Record Date and
before the opening of business at such office or agency on the relevant
Interest Payment Date, or (2) any Special Record Date and before the
opening of business at such office or agency on the related date for payment of
Defaulted Interest, such Bearer Security shall be surrendered without the
coupon relating to such Interest Payment Date or proposed date of payment, as
the case may be.

 

21

 

Whenever any
Securities are so surrendered for exchange, the Corporation shall execute, and
the Trustee shall authenticate and deliver, the Securities which the Holder
making the exchange is entitled to receive.

 

All Securities
issued upon any registration of transfer or exchange of Securities shall be the
valid obligations of the Corporation, evidencing the same debt, and entitled to
the same benefits under this Indenture, as the Securities surrendered upon such
registration of transfer or exchange.

 

Every
Registered Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Corporation or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Corporation and the Security Registrar, duly executed by
the Holder thereof or such Holder’s attorney duly authorized in writing.

 

No service
charge shall be made for any registration of transfer or exchange of
Securities, but the Corporation may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 3.4, 9.6 or 11.7 not involving any transfer.

 

The
Corporation shall not be required (a) to issue, to register the transfer
of or to exchange Securities of any series during a period of 15 Business Days
immediately preceding the date notice is given identifying the serial numbers
of the Securities of that series called for redemption, or (b) to issue,
to register the transfer of or to exchange any Registered Security so selected
for redemption in whole or in part, except the unredeemed portion of any
Security being redeemed in part, or (c) to exchange any Bearer Security so
selected for redemption except that such a Bearer Security may be exchanged for
a Registered Security of that series, provided,
that such Registered Security shall be immediately surrendered for redemption
with written instruction for payment consistent with the provisions of this
Indenture.

 

Notwithstanding
the foregoing, except as otherwise specified as contemplated by Section 3.1,
any Global Security shall be exchangeable pursuant to this Section 3.5 or
Sections 3.4, 3.6, 9.6 or 11.7 for Securities registered in the name of, and a
transfer of a Global Security of any series may be registered to, any Person
other than the Depositary for such Global Security or its nominee only if:

 

(i)                                     such
Depositary notifies the Corporation that it is unwilling or unable to continue
as Depositary for such Global Security, or such Depositary ceases to be a
clearing agency registered under the Securities Exchange Act of 1934, as
amended, and a successor Depositary is not appointed by the Corporation within
90 days;

 

(ii)                                  the
Corporation executes and delivers to the Trustee an Order of the Corporation
that such Global Security shall be so exchangeable and the transfer thereof so
registrable; or

 

22

 

(iii)                               there
shall have occurred and be continuing an Event of Default or an event which,
with the giving of notice or lapse of time, would constitute an Event of
Default with respect to the Securities of such series.

 

Upon the
occurrence in respect of any Global Security of any series of any one or more
of the conditions specified in clauses (i), (ii) or (iii) of the
preceding sentence or such other conditions as may be specified as contemplated
by Section 3.1 for such series, then without unnecessary delay, but in any
event not later than the earliest date on which such interests may be so
exchanged, the Corporation shall deliver to the Trustee definitive Securities
of that series in aggregate principal amount equal to the principal amount of
such Global Security, executed by the Corporation.

 

On or after
the earliest date on which such interests may be so exchanged, such Global
Securities shall be surrendered from time to time by the Depositary and in
accordance with instructions given to the Trustee and the Depositary (which
instructions shall be in writing but need not be contained in or accompanied by
an Officers’ Certificate or be accompanied by an Opinion of Counsel), as shall
be specified in the Order of the Corporation with respect thereto to the
Trustee, as the Corporation’s agent for such purpose, to be exchanged, in whole
or in part, for definitive Securities of the same series without service
charge.  The Trustee shall authenticate
and make available for delivery, in exchange for each portion of such
surrendered Global Security, a like aggregate principal amount of definitive
Securities of the same series of authorized denominations and of like tenor as
the portion of such Global Security to be exchanged which (unless the
Securities of the series are not issuable both as Bearer Securities and as
Registered Securities, in which case the definitive Securities exchanged for
the Global Security shall be issuable only in the form in which the Securities
of the series are issuable, as specified as contemplated by Section 3.1)
shall be in the form of Bearer Securities or Registered Securities, or any combination
thereof, as shall be specified by the beneficial owner thereof; provided, that no such exchanges may occur
during a period beginning at the opening of business 15 Business Days before
any selection of Securities of the series to be redeemed and ending on the
relevant Redemption Date; and provided
further, that (unless otherwise specified as contemplated by Section 3.1)
no Bearer Security delivered in exchange for a portion of a Global Security
shall be mailed or otherwise delivered to any location in the United States.

 

Promptly
following any such exchange in part, such Global Security shall be returned by
the Trustee to the Depositary in accordance with the instructions of the
Corporation referred to above.  If a
Registered Security is issued in exchange for any portion of a Global Security
after the close of business at the office or agency where such exchange occurs
on any Regular Record Date for such Security and before the opening of business
at such office or agency on the next Interest Payment Date, or any Special
Record Date for such Security and before the opening of business at such office
or agency on the related proposed date for payment of interest or Defaulted
Interest, as the case may be, interest shall not be payable on such Interest Payment
Date or proposed date for payment, as the case may be, in respect of such
Registered Security, but shall be payable on such Interest Payment Date or
proposed date for payment, as the case may be, only to the Person to whom
interest in respect of such portion of such Global Security is payable in
accordance with the provisions of this Indenture.

 

23

 

Section 3.6  Mutilated, Destroyed, Lost and Stolen
Securities.  If any
mutilated Security or a Security with a mutilated coupon appertaining to it is
surrendered to the Trustee, the Corporation shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Security of the same
series, Stated Maturity and original issue date, and of like tenor and
principal amount and bearing a number not contemporaneously outstanding, with
coupons corresponding to the coupons, if any, appertaining to the surrendered
Security.

 

If there shall
be delivered to the Corporation and the Trustee (1) evidence to their
satisfaction of the destruction, loss or theft of any Security or coupon and (2) such
security or indemnity as may be required by them to save each of them and any
agent of either of them harmless, then, in the absence of notice to the
Corporation or the Trustee that such Security or coupon has been acquired by a
bona fide purchaser, the Corporation shall execute and upon its Request the
Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or
stolen Security or in exchange for the Security to which a destroyed, lost or
stolen coupon appertains (with all appurtenant coupons not destroyed, lost or
stolen), a new Security of the same series, Stated Maturity and original issue
date, and of like tenor and principal amount and bearing a number not
contemporaneously outstanding, with coupons corresponding to the coupons, if
any, appertaining to such destroyed, lost or stolen Security or to the Security
to which such destroyed, lost or stolen coupon appertains.

 

In case any
such mutilated, destroyed, lost or stolen Security or coupon has become or is
about to become due and payable, the Corporation in its discretion may, instead
of issuing a new Security, pay such Security or coupon; provided, that payment of principal of
(and premium, if any) and any interest on Bearer Securities shall, except as
otherwise provided in Section 10.2, be payable only at an office or agency
located outside the United States; and provided
further, that with respect to any such coupons, interest represented
thereby (but not any additional amounts payable as provided in Section 10.6),
shall be payable only upon presentation and surrender of the coupons
appertaining thereto.

 

Upon the
issuance of any new Security under this Section, the Corporation may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Trustee) connected therewith.

 

Every new
Security of any series, with its coupons, if any, issued pursuant to this Section in
lieu of any mutilated, destroyed, lost or stolen Security, or in exchange for a
Security to which a destroyed, lost or stolen coupon appertains, shall
constitute an original additional contractual obligation of the Corporation,
whether or not the mutilated, destroyed, lost or stolen Security and its
coupons, if any, or the mutilated, destroyed, lost or stolen coupon shall be at
any time enforceable by anyone, and any such new Security and coupons, if any,
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Securities of that series and their
coupons, if any, duly issued hereunder.

 

The provisions
of this Section are exclusive and shall preclude (to the extent lawful)
all other rights and remedies with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities or coupons.

 

24

 

Section 3.7  Payment of Interest; Interest Rights Preserved.  Unless otherwise provided as contemplated by Section 3.1
with respect to any series of Securities, interest on any Registered Security
which is payable, and is punctually paid or duly provided for, on any Interest
Payment Date shall be paid to the Person in whose name that Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest. 
Interest, if any, on any Bearer Securities shall be paid to Holders of
coupons.  In case a Bearer Security of
any series is surrendered in exchange for a Registered Security of such series
after the close of business (at an office or agency in a Place of Payment for
such series) on any Regular Record Date and before the opening of business (at
such office or agency) on the next succeeding Interest Payment Date, such
Bearer Security shall be surrendered without the coupon relating to such
Interest Payment Date and interest shall not be payable on such Interest
Payment Date in respect of the Registered Security issued in exchange for such
Bearer Security, but shall be payable only to the Holder of such coupon when
due in accordance with the provisions of this Indenture.

 

Any interest
on a Registered Security of any series which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called “Defaulted Interest”) shall forthwith cease
to be payable to the Holder on the relevant Regular Record Date by virtue of
having been such Holder, and such Defaulted Interest may be paid by the
Corporation, at its election in each case, as provided in clause (a) or (b) below:

 

(a)                                  The
Corporation may elect to make payment of any Defaulted Interest to the Persons
in whose names the Registered Securities of such series (or their respective
Predecessor Securities) are registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest, which shall be fixed in
the following manner.  The Corporation
shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Registered Security of such series and the date of
the proposed payment, and at the same time the Corporation shall deposit with
the Trustee an amount of money equal to the aggregate amount proposed to be paid
in respect of such Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as provided in this clause.  Thereupon the Trustee shall fix a Special
Record Date for the payment of such Defaulted Interest, which shall be not more
than 15 days and not less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the Trustee of the
notice of the proposed payment.  The
Trustee shall promptly notify the Corporation of such Special Record Date and,
in the name and at the expense of the Corporation, shall cause notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first-class postage prepaid, to each Holder of
Registered Securities of such series at the address of such Holder as it
appears in the Security Register, not less than 10 days prior to such Special
Record Date.  The Trustee may, in its
discretion, in the name and at the expense of the Corporation, cause a similar
notice to be published at least once in an Authorized Newspaper in each Place
of Payment, but such publication shall not be a condition precedent to the
establishment of such Special Record Date. 
Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such Defaulted Interest
shall be paid to the Persons in whose names the Registered Securities of such
series (or their respective Predecessor Securities) are registered at the close
of business on such Special Record Date and shall no longer be payable pursuant
to the

 

25

 

following clause (b). 
In case a Bearer Security of any series is surrendered at the office or
agency in a Place of Payment for such series in exchange for a Registered
Security of such series after the close of business at such office or agency on
any Special Record Date and before the opening of business at such office or
agency on the related proposed date for payment of Defaulted Interest, such
Bearer Security shall be surrendered without the coupon relating to such
proposed date of payment and Defaulted Interest shall not be payable on such
proposed date of payment in respect of the Registered Security issued in
exchange for such Bearer Security, but shall be payable only to the Holder of
such coupon when due in accordance with the provisions of this Indenture.

 

(b)                                 The
Corporation may make payment of any Defaulted Interest on the Securities of any
series in any other lawful manner not inconsistent with the requirements of any
securities exchange on which such Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Corporation to the Trustee of the proposed payment pursuant to this clause,
such manner of payment shall be deemed practicable by the Trustee.

 

Subject to the
foregoing provisions of this Section, each Security delivered under this
Indenture upon registration of transfer of or in exchange for or in lieu of any
other Security shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.

 

Section 3.8  Persons Deemed Owners.  Prior to due presentment of a Registered
Security for registration of transfer, the Corporation, the Trustee and any
agent of the Corporation or the Trustee may deem and treat the Person in whose
name such Registered Security is registered as the absolute owner of such
Registered Security for the purpose of receiving payment of principal of (and
premium, if any) and (subject to Section 3.7) interest, if any, on such
Security and for all other purposes whatsoever, whether or not such Security is
overdue, and neither the Corporation, the Trustee nor any agent of the
Corporation or the Trustee shall be affected by any notice to the contrary.

 

The
Corporation, the Trustee and any agent of the Corporation or the Trustee may
treat the bearer of any Bearer Security and the bearer of any coupon as the
absolute owner of such Security or coupon for the purpose of receiving payment
thereof or on account thereof and for all other purposes whatsoever, whether or
not such Security or coupon is overdue, and neither the Corporation, the
Trustee nor any agent of the Corporation or the Trustee shall be affected by
notice to the contrary.

 

No holder of
any beneficial interest in any Global Security held on its behalf by a Depositary
(or its nominee) shall have any rights under this Indenture with respect to
such Global Security or any Security represented thereby, and such Depositary
may be treated by the Corporation, the Trustee, and any agent of the
Corporation or the Trustee as the owner of such Global Security or any Security
represented thereby for all purposes whatsoever.  None of the Corporation, the Trustee, any
Paying Agent or the Security Registrar shall have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests of a Global Security or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.

 

26

 

Section 3.9  Cancellation.  All Securities and coupons surrendered for
payment, redemption, registration of transfer or exchange or for credit against
any sinking fund payment shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee and shall be promptly canceled by the
Trustee.  The Corporation may at any time
deliver to the Trustee for cancellation any Securities previously authenticated
and delivered hereunder which the Corporation may have acquired in any manner
whatsoever, and all Securities so delivered shall be promptly canceled by the
Trustee.  No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section, except as expressly permitted by this Indenture.  All canceled Securities and coupons held by
the Trustee shall be destroyed and certification of their destruction delivered
to the Corporation, unless an Order of the Corporation shall direct that
canceled Securities be returned to the Corporation.

 

The repayment
of any principal amount of Securities pursuant to any option of the Holder to
require repayment of Securities before their Stated Maturity, for purposes of
this Section 3.9, shall not operate as a payment, redemption or
satisfaction of the indebtedness represented by such Securities unless and
until the Corporation, at its option, shall deliver or surrender the same to
the Trustee with an Order of the Corporation directing that such Securities be
canceled.

 

Section 3.10  Computation of Interest.  Except as otherwise specified as contemplated
by Section 3.1(d) for Securities of any series, interest on the
Securities of each series shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.

 

Section 3.11  Form of Certification by a Person
Entitled to Receive a Bearer Security.  Whenever any provision of this Indenture or
the form of Security contemplates that certification be given by a Person
entitled to receive a Bearer Security, such certification shall be provided
substantially in the form of the following certificate, with only such changes
as shall be approved by the Corporation and of which the Corporation shall have
given written notice to the Trustee:

 

[Form of
Certificate to Be Given By

Person
Entitled to Receive Bearer Security]

 

Certificate

 

[Name of
Security]

 

This is to
certify that the above-captioned Security is not being acquired by or on behalf
of a United States person, or for offer to resell or for resale to a United
States person, or, if a beneficial interest in the Security is being acquired
by a United States person, that such person is a financial institution or is
acquiring through a financial institution and that the Security is held by a
financial institution that has agreed in writing to comply with the requirements
of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code
of 1986, as amended, and the regulations thereunder and that such person or
financial institution is not purchasing for offer to resell or for resale
within the United States.  If this certificate
is being provided by a clearing organization, it is based on statements
provided to it by its member organizations. 
As used herein, “United States” means the United States of America
(including the States and the District of Columbia),

 

27

 

its territories and possessions and other areas subject to its
jurisdiction, and “United States person” means any citizen or resident of the
United States, any corporation, partnership or other entity created or organized
in or under the laws of the United States or any political subdivision thereof
and any estate or trust the income of which is subject to United States federal
income taxation regardless of its source. 
If the undersigned is a dealer, the undersigned agrees to obtain a
similar certificate from each person entitled to delivery of any of the
above-captioned Securities in bearer form purchased from it; provided, that if the undersigned has
actual knowledge that the information contained in such a certificate is false,
the undersigned shall not deliver a Security in temporary or definitive bearer
form to the person who signed such certificate notwithstanding the delivery of
such certificate to the undersigned.

 

We undertake
to advise you by telecopy if the above statement as to beneficial ownership is
not correct on the date of delivery of the above-captioned Securities in bearer
form as to all of such Securities.

 

We understand
that this certificate is required in connection with certain tax legislation in
the United States.  If administrative or
legal proceedings are commenced or threatened in connection with which this
certificate is or would be relevant, we irrevocably authorize you to produce
this certificate or a copy thereof to any interested party in such proceedings.

 

Dated:                     ,
20

 

Section 3.12  CUSIP, ISIN and Common Code Numbers.  The Corporation in issuing the Securities may
use “CUSIP,” “ISIN” or “Common Code” numbers (if then generally in use) and, if
so, the Trustee shall use “CUSIP” numbers, “ISIN” or “Common Code” in notices
of redemption as a convenience to Holders; provided,
however, that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be
affected by any defect in or omission of such numbers.

 

ARTICLE FOUR

 

Satisfaction and Discharge

 

Section 4.1  Satisfaction and Discharge of Indenture.  This Indenture shall upon a Request of the
Corporation cease to be of further effect (except as to any surviving rights of
registration of transfer or exchange or conversion of Securities herein
expressly provided for, and any right to receive additional amounts, as
provided in Section 10.6), and the Trustee, at the expense of the
Corporation, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when:

 

(a)                                  either

 

(i)                                     all
Securities theretofore authenticated and delivered and all coupons appertaining
thereto (other than (w) coupons appertaining to Bearer Securities
surrendered for exchange for Registered Securities and maturing after such exchange,

 

28

 

whose surrender is not required or has been waived as
provided in Section 3.5, (x) Securities and coupons which have been
destroyed, lost or stolen and which have been replaced or paid as provided in Section 3.6,
(y) coupons appertaining to Securities called for redemption and maturing
after the relevant Redemption Date, whose surrender has been waived as provided
in Section 11.6, and (z) Securities and coupons for whose payment
money has theretofore been deposited in trust or segregated and held in trust
by the Corporation and thereafter repaid to the Corporation or discharged from
such trust, as provided in Section 10.3) have been delivered to the
Trustee for cancellation; or

 

(ii)                                  all
such Securities not theretofore delivered to the Trustee for cancellation

 

(1)                                  have
become due and payable, or

 

(2)                                  shall
become due and payable at their Stated Maturity within one year, or

 

(3)                                  are
to be called for redemption within one year under arrangements satisfactory to
the Trustee for the giving of notice of redemption by the Trustee in the name,
and at the expense, of the Corporation,

 

and the Corporation, in the case of (ii)(1), (2) or
(3) above, has deposited or caused to be deposited with the Trustee as trust
funds in trust dedicated solely for such purpose an amount sufficient, without
reinvestment, to pay and discharge the entire indebtedness on such Securities
and coupons not theretofore delivered to the Trustee for cancellation, for
principal (and premium, if any) and interest, if any, to the date of such
deposit (in the case of Securities which have become due and payable) or to the
Stated Maturity or Redemption Date, as the case may be;

 

(b)                                 the
Corporation has paid or caused to be paid all other sums payable hereunder by
the Corporation; and

 

(c)                                  the
Corporation has delivered to the Trustee an Officers’ Certificate of the
Corporation and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of
this Indenture have been complied with.

 

In the event
there are Securities of two or more series hereunder, the Trustee shall be
required to execute an instrument acknowledging satisfaction and discharge of
this Indenture only if requested to do so with respect to Securities of all
series as to which it is Trustee and if the other conditions thereto are
met.  In the event there are two or more
Trustees hereunder, then the effectiveness of any such instrument shall be
conditioned upon receipt of such instruments from all Trustees hereunder.

 

Notwithstanding
the satisfaction and discharge of this Indenture, the obligations of the
Corporation to the Trustee under Section 6.7, the obligations of the
Trustee to any Authenticating Agent under Section 6.14 and, if money shall
have been deposited with the Trustee pursuant to subclause (ii) of clause (a) of
this Section, the obligations of the Trustee under Sections 3.5, 3.6, 4.2, 10.2
and 10.3 shall survive.

 

29

 

Section 4.2  Application of Trust Money.  Subject to the provision of the last
paragraph of Section 10.3, all money deposited with the Trustee pursuant
to Section 4.1 shall be held in trust and applied by it, in accordance
with the provisions of the Securities, the coupons and this Indenture, to the
payment, either directly or through any Paying Agent (including the Corporation
acting as its own Paying Agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal (and premium, if any) and interest for whose
payment such money has been deposited with the Trustee, but such money need not
be segregated from other funds, except to the extent required by law.

 

ARTICLE FIVE

Remedies

 

Section 5.1  Events of Default.  “Event of
Default,” wherever used herein with respect to Securities of any
series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body):

 

(a)                                  the
Corporation defaults in the payment of any interest (including any additional
amounts due under Section 10.6 as specified therein) upon any Security of
that series when it becomes due and payable and continuance of such default for
a period of 30 days; or

 

(b)                                 the
Corporation defaults in the payment of the principal (including any additional
amounts due under Section 10.6 as specified therein) of (or premium, if
any, on) any Security of that series at its Maturity; or

 

(c)                                  the
Corporation defaults in the deposit of any sinking fund payment when and as due
by the terms of a Security of that series; or

 

(d)                                 the
Corporation defaults in the performance or breach of any covenant or warranty
of the Corporation in this Indenture (other than a covenant or warranty a
default in whose performance or whose breach is elsewhere in this Section specifically
dealt with or which has expressly been included in or pursuant to this
Indenture solely for the benefit of one or more series of Securities other than
that series), and continuance of such default or breach for a period of 60 days
after there has been given, by registered or certified mail, to the Corporation
by the Trustee, or to the Corporation and the Trustee by the Holders of at
least 25% in principal amount of the Outstanding Securities of that series, a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a “Notice of Default” hereunder; or

 

(e)                                  the
entry by a court having jurisdiction in the premises of (i) a decree or
order for relief in respect of the Corporation in an involuntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or (ii) a decree or order adjudging
the Corporation bankrupt or insolvent, or approving as properly filed a
petition by one or more Persons other than the Corporation or any Affiliates
thereof seeking reorganization, arrangement, adjustment or composition of or in
respect of the Corporation under any applicable federal or state law, or
appointing a custodian, receiver, liquidator, assignee, 

 

30

 

trustee, sequestrator or other similar official for
the Corporation or for any substantial part of the property of the Corporation,
or ordering the liquidation or winding up of the affairs of the Corporation,
and the continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of 90 consecutive days; or

 

(f)                                    the
commencement by the Corporation of a case or proceeding under any applicable
federal or state bankruptcy, insolvency, reorganization or other similar law or
of any other case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by it to the entry of a decree or order for relief in respect of it
in a case or proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by it of a petition or
answer or consent seeking reorganization or relief under any applicable federal
or state law, or the consent by it to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or similar official in respect of it or any
substantial part of its property, or the making by it of an assignment for the
benefit of creditors, or its admission in writing of its inability to pay its
debts generally as they become due, or its taking of corporate action in
furtherance of any such action; or

 

(g)                                 any
other Event of Default provided with respect to Securities of that series.

 

Section 5.2  Acceleration of Maturity; Rescission and
Annulment.  If an
Event of Default with respect to Securities of any series at the time
Outstanding occurs and is continuing, then in every such case the Trustee or
the Holders of not less than 25% in principal amount of the Outstanding
Securities of that series may declare the principal amount (or, if the
Securities of that series are Original Issue Discount Securities, such portion
of the principal amount as may be specified in the terms of that series) of all
of the Securities of that series to be due and payable immediately, by a notice
in writing to the Corporation (and to the Trustee if given by Holders), and
upon any such declaration such principal amount (or specified amount) shall
become immediately due and payable.

 

At any time
after such a declaration of acceleration with respect to Securities of any
series has been made and before a judgment or decree for payment of the money
due has been obtained by the Trustee as hereinafter in this Article provided,
the Holders of a majority in principal amount of the Outstanding Securities of
that series, by written notice to the Corporation and the Trustee, may rescind
and annul such declaration and its consequences if:

 

(a)                                  the
Corporation has paid or deposited with the Trustee a sum sufficient to pay:

 

(i)                                     all
overdue interest on all Securities of that series;

 

(ii)                                  the
principal of (and premium, if any, on) any Securities of that series which have
become due otherwise than by such declaration of acceleration and interest
thereon at the rate or rates, if any, prescribed therefor in such Securities;

 

(iii)                               to
the extent that payment of such interest is lawful, interest upon overdue
interest at the rate or rates prescribed therefor in such Securities; and

 

31

 

(iv)                              all
sums paid or advanced by the Trustee hereunder and the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel,
and any other amounts due to the Trustee under Section 6.7;

 

and

 

(b)                                 all
Events of Default with respect to Securities of that series, other than the
non-payment of the principal of Securities of that series, which has become due
solely by such declaration of acceleration, have been cured or waived as
provided in Section 5.13.

 

No such
rescission and annulment shall affect any subsequent default or impair any
right consequent thereon.

 

Section 5.3  Collection of Indebtedness and Suits for Enforcement
by Trustee.  The
Corporation covenants that if:

 

(a)                                  default
is made in the payment of any interest on any Security when such interest
becomes due and payable and such default continues for a period of 30 days, or

 

(b)                                 default
is made in the payment of the principal of (or premium, if any, on) any
Security at the Maturity thereof and such default continues for a period of
three Business Days,

 

the
Corporation shall, upon demand of the Trustee, pay to it, for the benefit of
the Holders of such Securities and coupons, the whole amount then due and
payable on such Securities and coupons for principal (and premium, if any) and
interest, if any, with interest on any overdue principal (and premium, if any)
and on any overdue interest, to the extent that payment of such interest shall
be legally enforceable, at the rate or rates prescribed therefor in such
Securities, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due to the Trustee under Section 6.7.

 

If the
Corporation fails to pay such amounts forthwith upon such demand, the Trustee,
in its own name and as trustee of an express trust, may institute a judicial
proceeding for the collection of the sums so due and unpaid, may prosecute such
proceeding to judgment or final decree, and may enforce the same against the
Corporation or any other obligor upon such Securities and collect the moneys
adjudged or decreed to be payable in the manner provided by law out of the
property of the Corporation or any other obligor upon such Securities, wherever
situated.

 

If an Event of
Default with respect to Securities of any series occurs and is continuing, the
Trustee may in its discretion proceed to protect and enforce its rights and the
rights of the Holders of Securities of such series and any related coupons by
such appropriate judicial proceedings as the Trustee shall deem most effectual
to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture, or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy.

 

32

 

Section 5.4  Trustee May File Proofs of Claim.  In case of the pendency of any receivership,
insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceeding relative to the Corporation or any
other obligor upon the Securities or the property of the Corporation or of such
other obligor or their creditors, the Trustee (irrespective of whether the
principal of the Securities shall then be due and payable as therein expressed
or by declaration or otherwise and irrespective of whether the Trustee shall
have made any demand on the Corporation or any other obligor for the payment of
overdue principal or interest) shall be entitled and empowered, by intervention
in such proceeding or otherwise:

 

(a)                                  to
file and prove a  claim for the whole
amount of principal (and premium, if any) and interest owing and unpaid in
respect of the Securities and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee (including
any claim for the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, and any other amounts due to the
Trustee under Section 6.7) and of the Holders of Securities and coupons
allowed in such judicial proceeding; and

 

(b)                                 to
collect and receive any moneys or other property payable or deliverable on any
such claims and to distribute the same;

 

and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Holder of Securities and coupons to make such payments to the Trustee and, in
the event that the Trustee shall consent to the making of such payments
directly to the Holders of Securities and coupons, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 6.7.

 

Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to
or accept or adopt on behalf of any Holder of a Security or coupon any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or coupons or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder of a Security or coupon in any such
proceeding.

 

Section 5.5  Trustee May Enforce Claims Without
Possession of Securities or Coupons.  All rights of action and claims under this
Indenture or the Securities or coupons may be prosecuted and enforced by the
Trustee without the possession of any of the Securities or coupons or the
production thereof in any proceeding relating thereto, and any such proceeding
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the Holders
of the Securities and coupons in respect of which such judgment has been
recovered.

 

Section 5.6  Application of Money Collected.  Any money collected by the Trustee pursuant
to this Article shall be applied in the following order, at the date or
dates fixed by the Trustee and, in case of the distribution of such money on
account of principal (or premium, if any) or interest, if any, upon
presentation of the Securities or coupons, or both, as

 

33

 

the case may be, and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:

 

FIRST: 
To the payment of all amounts due the Trustee under Section 6.7;
and

 

SECOND: 
To the payment of all Senior Indebtedness of the Company if and to the
extent required by Article Fifteen; and

 

THIRD: 
To the payment of the amounts then due and unpaid for principal of (and
premium, if any) and interest, if any, on the Securities and coupons in respect
of which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the amounts due and
payable on such Securities and coupons for principal (and premium, if any) and
interest, respectively; and

 

FOURTH: 
To the Corporation.

 

Section 5.7  Limitation on Suits.  No Holder of any Security of any series or
any related coupons shall have any right to institute any proceeding, judicial
or otherwise with respect to this Indenture, or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless:

 

(a)                                  such
Holder has previously given written notice to the Trustee of a continuing Event
of Default with respect to the Securities of that series;

 

(b)                                 the
Holders of not less than a majority in principal amount of the Outstanding
Securities of that series shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;

 

(c)                                  such
Holder or Holders have offered to the Trustee reasonable indemnity against the
costs, expenses and liabilities to be incurred in compliance with such request;

 

(d)                                 the
Trustee for 60 days after its receipt of such notice, request and offer of
indemnity has failed to institute any such proceeding; and

 

(e)                                  no
direction inconsistent with such written request has been given to the Trustee
during such 60-day period by the Holders of a majority in principal amount of
the Outstanding Securities of that series;

 

it being understood and intended that no one or more of such Holders
shall have any right in any manner whatever by virtue of, or by availing of,
any provision of this Indenture to affect, disturb or prejudice the rights of
any other of such Holders or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this
Indenture except in the manner herein provided and for the equal and ratable
benefit of all of such Holders.

 

Section 5.8  Unconditional Right of Holders to Receive
Principal, Premium and Interest.  Notwithstanding any
other provision in this Indenture, the Holder of any Security or coupon shall
have the right, which is absolute and unconditional, to receive payment of the
principal of (and premium, if any) and (subject to Section 3.7) interest,
if any, on such Security

 

34

 

or payment of such coupon on the Stated Maturity or
Maturities expressed in such Security or coupon (or, in the case of redemption,
on the Redemption Date) and to institute suit for the enforcement of any such
payment, and such rights shall not be impaired without the consent of such
Holder.

 

Section 5.9  Restoration of Rights and Remedies.  If the Trustee or any Holder of a Security or
coupon has instituted any proceeding to enforce any right or remedy under this
Indenture and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Holder, then
and in every such case, subject to any determination in such proceeding, the
Corporation, the Trustee and the Holders of Securities and coupons shall be
restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall
continue as though no such proceeding had been instituted.

 

Section 5.10  Rights and Remedies Cumulative.  Except as otherwise provided with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities
or coupons in the last paragraph of Section 3.6, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders of Securities or
coupons is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. 
The assertion or employment of any right or remedy hereunder, or
otherwise shall, not prevent the concurrent assertion or employment of any
other appropriate right or remedy.

 

Section 5.11  Delay or Omission Not Waiver.  No delay or omission of the Trustee or of any
Holder of any Security or coupon to exercise any right or remedy accruing upon
any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein.  Every right and remedy given by this Article or
by law to the Trustee or to the Holders of Securities or coupons may be exercised
from time to time, and as often as may be deemed expedient, by the Trustee or
by the Holders of Securities or coupons, as the case may be.

 

Section 5.12  Control by Holders of Securities.  The Holders of a majority in principal amount
of the Outstanding Securities of any series shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee, with
respect to the Securities of such series; provided,
that:

 

(a)                                  such
direction shall not be in conflict with any rule of law or with this
Indenture, expose the Trustee to personal liability or be unduly prejudicial to
Holders not joined therein; and

 

(b)                                 the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.

 

Section 5.13  Waiver of Past Defaults.  The Holders of not less than a majority in
principal amount of the Outstanding Securities of any series may on behalf of
the Holders of all

 

35

 

the Securities of such series and any related coupons
waive any past default hereunder with respect to such series and its
consequences, except a default:

 

(a)                                  in
the payment of the principal of (or premium, if any) or interest, if any, on
any Security of such series; or

 

(b)                                 in
respect of a covenant or provision hereof which under Article Nine cannot
be modified or amended without the consent of the Holder of each Outstanding
Security of such series affected.

 

Upon any such
waiver, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other default
or impair any right consequent thereon.

 

Section 5.14  Undertaking for Costs.  All parties to this Indenture agree, and each
Holder of any Security or coupon by such Holder’s acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Indenture, or in any
suit against the Trustee for any action taken, suffered or omitted by it as
Trustee, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys’ fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this Section shall
not apply to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in
principal amount of the Outstanding Securities of any series, or to any suit
instituted by any Holder of any Security or coupon for the enforcement of the
payment of the principal of (or premium, if any) or interest, if any, on any
Security or the payment of any coupon on or after the Stated Maturity or Maturities
expressed in such Security (or, in the case of redemption, on or after the
Redemption Date).

 

Section 5.15  Waiver of Stay or Extension Laws.  The Corporation covenants (to the extent that
it may lawfully do so) that it shall not at any time insist upon, or plead, or
in any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force which may
affect the covenants or the performance of this Indenture; and the Corporation (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law and covenants that it shall not hinder, delay or
impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law had
been enacted.

 

ARTICLE SIX

 

The Trustee

 

Section 6.1 
Certain Duties and Responsibilities.

 

(a)                                  Except
during the continuance of an Event of Default with respect to Securities of any
series:

 

36

 

(i)                                     the
Trustee undertakes to perform, with respect to Securities of such series, such
duties and only such duties as are specifically set forth in this Indenture,
and no implied covenants or obligations shall be read into this Indenture
against the Trustee; and

 

(ii)                                  in
the absence of bad faith on its part, the Trustee may, with respect to
Securities of such series, conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of this
Indenture; but in the case of any such certificates or opinions which by any
provision hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether or not
they conform to the requirements of this Indenture.

 

(b)                                 In
case an Event of Default with respect to Securities of any series has occurred
and is continuing, the Trustee shall exercise, with respect to Securities of
such series, such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.

 

(c)                                  No
provision of this Indenture shall be construed to relieve the Trustee from
liability for its own negligent action, its own negligent failure to act, or
its own willful misconduct, except that:

 

(i)                                     this
subsection shall not be construed to limit the effect of subsection (a) of
this Section;

 

(ii)                                  the
Trustee shall not be liable for any error of judgment made in good faith by a
Responsible Officer, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts;

 

(iii)                               the
Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in good faith in accordance with the direction of the Holders of a
majority in principal amount of the Outstanding Securities of any series relating
to the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon the
Trustee, under this Indenture with respect to the Securities of such series;
and

 

(iv)                              no
provision of this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.

 

(d)                                 Whether
or not therein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection
to the Trustee shall be subject to the provisions of this Section.

 

37

 

Section 6.2  Notice of Defaults.  Within 90 days after the occurrence of any
default hereunder with respect to the Securities of any series, the Trustee
shall transmit, in the manner and to the extent provided in Section 313(c) of
the Trust Indenture Act, notice of all such defaults hereunder known to the
Trustee, unless such default shall have been cured or waived; provided, that except in the case of a
default in the payment of the principal of (or premium, if any) or interest, if
any, on any Security of such series or in the payment of any sinking fund
installment with respect to Securities of such series, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a committee of directors or Responsible Officers of
the Trustee in good faith determine that the withholding of such notice is in
the interest of the Holders of Securities of such series; and provided further, that in the case of any
default of the character specified in Section 5.1(d) with respect to
Securities of such series, no such notice to Holders shall be given until at
least 30 days after the occurrence thereof. 
For the purpose of this Section, the term “default” means any event
which is, or after notice or lapse of time or both would become, an Event of
Default with respect to Securities of such series.

 

Section 6.3  Certain Rights of Trustee.  Subject to Sections 315(a) through 315(d) of
the Trust Indenture Act:

 

(a)                                  the
Trustee may rely and shall be protected in acting or refraining from acting
upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, coupon,
other evidence of indebtedness or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or parties;

 

(b)                                 any
request or direction of the Corporation mentioned herein shall be sufficiently
evidenced by a Request or Order and any resolution of the Board of Directors of
the Corporation shall be sufficiently evidenced by a Board Resolution;

 

(c)                                  whenever
in the administration of this Indenture the Trustee shall deem it desirable
that a matter be proved or established prior to taking, suffering or omitting
any action hereunder, the Trustee (unless other evidence be herein specifically
prescribed) may, in the absence of bad faith on its part, rely upon an Officers’
Certificate;

 

(d)                                 the
Trustee may consult with counsel and the advice of such counsel or any Opinion
of Counsel shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon;

 

(e)                                  the
Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Indenture at the request or direction of any of the
Holders of Securities of any series pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction;

 

(f)                                    the
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, coupon,
other evidence of indebtedness

 

38

 

or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Corporation personally or by agent or attorney;

 

(g)                                 the
Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys and the Trustee
shall not be responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder; and

 

(h)                                 the
Trustee shall not be charged with knowledge of any Event of Default with
respect to the Securities of any series for which it is acting as Trustee
unless either (i) a Responsible Officer of the Trustee assigned to its
Corporate Trust Services unit (or any successor division or department of the
Trustee) shall have actual knowledge of the Event of Default or (ii) written
notice of such Event of Default shall have been given to the Trustee by the
Corporation, any other obligor on such Securities or by any Holder of such
Securities.

 

Section 6.4  Not Responsible for Recitals or Issuance of
Securities.  The
recitals contained herein and in the Securities (except the Trustee’s
certificates of authentication) and in any coupons shall be taken as the
statements of the Corporation, and the Trustee or any Authenticating Agent
assumes no responsibility for their correctness.  The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the Securities or coupons,
except that the Trustee represents that it is duly authorized to execute and
deliver this Indenture, authenticate the Securities and perform its obligations
hereunder and that the statements made by it in a Statement of Eligibility on Form T-1
supplied to the Corporation are true and accurate, subject to the
qualifications set forth therein.  The
Trustee or any Authenticating Agent shall not be accountable for the use or
application by the Corporation of Securities or the proceeds thereof.

 

Section 6.5  May Hold Securities.  The Trustee, any Authenticating Agent, any
Paying Agent, any Security Registrar or any other agent of the Corporation, in
its individual or any other capacity, may become the owner or pledgee of
Securities and coupons and, subject to Sections 310(b) and 311 of the
Trust Indenture Act, may otherwise deal with the Corporation or an Affiliate
thereof with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Security Registrar or such other agent.

 

Section 6.6  Money Held in Trust.  Money held by the Trustee in trust hereunder need
not be segregated from other funds except to the extent required by law.  The Trustee shall be under no liability for
interest on any money received by it hereunder except as otherwise agreed with
the Corporation.

 

Section 6.7  Compensation and Reimbursement. 
The Corporation agrees:

 

(a)                                  to
pay to the Trustee and each Authenticating Agent from time to time reasonable
compensation for all services rendered by it hereunder (which compensation
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust);

 

(b)                                 except
as otherwise expressly provided herein, to reimburse the Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or
made by

 

39

 

the Trustee in accordance
with any provision of this Indenture (including the reasonable compensation and
the expenses and disbursements of its agents and counsel and any Authenticating
Agent), except any such expense, disbursement or advance as may be attributable
to its negligence, willful misconduct or bad faith; and

 

(c)                                  to
indemnify, defend and hold harmless the Trustee and its directors, employees,
Affiliates and agents (“indemnitees”) for, and to hold them harmless against,
any loss, liability or expense (including the fees and expenses of counsel)
arising out of or incurred in connection with (i) the acceptance or
administration of the trust or trusts hereunder, except to the extent with
respect to any indemnitee that such loss, liability or expense was due to such
indemnitee’s negligence, willful misconduct or bad faith, and (ii) any
action taken, suffered or omitted upon the Order of the Corporation.

 

As security
for the performance of the obligations of the Corporation under this Section,
the Trustee shall have a lien prior to the Securities upon all property and
funds held or collected by the Trustee as such, except funds held in trust for
the payment of principal of, premium, if any, or interest, if any, on
particular Securities.  The obligations
of the Corporation under this Section shall survive the discharge of this
Indenture and the succession of the Trustee hereunder.

 

Section 6.8  Disqualification; Conflicting Interests.  If at any time the Trustee fails to comply
with the obligations imposed upon it by the provisions of Section 310(b) of
the Trust Indenture Act with respect to Securities of any series after written
request therefor by the Corporation or by any Holder of a Security of such
series who has been a bona fide Holder of a Security of such series for at
least six months then, (1) the Corporation, by or pursuant to a Board
Resolution, may remove the Trustee with respect to all Securities or the
Securities of such series, or (2) subject to Section 315(e) of
the Trust Indenture Act, any Holder who has been a bona fide Holder of a
Security of such series for at least six months may, on behalf of such Holder
and all others similarly situated, petition any court of competent jurisdiction
for the removal of the Trustee with respect to all Securities of such series
and the appointment of a successor Trustee or Trustees.  The Trustee shall comply with the terms of Section 310(b) of
the Trust Indenture Act.

 

Section 6.9  Corporate Trustee Required; Eligibility.  There shall at all times be a Trustee
hereunder that is a Person organized and doing business under the laws of the
United States of America, any state thereof or the District of Columbia,
authorized under such laws to exercise corporate trust powers, or any other
Person permitted by the Trust Indenture Act to act as trustee under an
indenture qualified under the Trust Indenture Act and that has a combined
capital and surplus (computed in accordance with Section 310(a)(2) of
the Trust Indenture Act) of at least $50,000,000, is subject to supervision or
examination by federal, state or District of Columbia authority and is not
otherwise ineligible under Section 310(a)(5) of the Trust Indenture
Act.  If such Person publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published.  If at any time the Trustee
ceases to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter
specified in this Article.

 

40

 

Section 6.10  Resignation and Removal; Appointment of
Successor.

 

(a)                                  No
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of Section 6.11.

 

(b)                                 The
Trustee may resign at any time with respect to the Securities of one or more
series by giving written notice thereof to the Corporation.  If the instrument of acceptance by a successor
Trustee required by Section 6.11 is not delivered to the Trustee within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Securities of such series.

 

(c)                                  The
Trustee may be removed at any time with respect to the Securities of any series
by Act of the Holders of a majority in principal amount of the Outstanding
Securities of such series delivered to the Trustee and the Corporation.

 

(d)                                 If
at any time:

 

(1)                                  the
Trustee fails to comply with Section 6.8 after written request therefor by
the Corporation or by any Holder of a Security who has been a bona fide Holder
of a Security for at least six months; or

 

(2)                                  the
Trustee ceases to be eligible under Section 6.9 and fails to resign after
written request therefor by the Corporation or by any such Holder; or

 

(3)                                  the
Trustee becomes incapable of acting or is adjudged a bankrupt or insolvent or a
receiver of the Trustee or of its property is appointed or any public officer
takes charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation;

 

then, in any
such case, (i) the Corporation by Board Resolution may remove the Trustee
with respect to all Securities, or (ii) subject to Section 315(e) of
the Trust Indenture Act, any Holder of a Security who has been a bona fide
Holder of a Security for at least six months may, on behalf of such Holder and
all other similarly situated Holders, petition any court of competent
jurisdiction for the removal of the Trustee with respect to all Securities and
the appointment of a successor Trustee or Trustees.

 

(e)                                  If
the Trustee resigns, is removed or becomes incapable of acting, or if a vacancy
occurs in the office of Trustee for any cause, with respect to the Securities
of one or more series, the Corporation, by a Board Resolution, shall promptly
appoint a successor Trustee or Trustees with respect to the Securities of that or
those series (it being understood that any such successor Trustee may be
appointed with respect to the Securities of one or more or all of such series
and that at any time there shall be only one Trustee with respect to the
Securities of any particular series) and shall comply with the applicable
requirements of Section 6.11.  If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee with respect to the Securities
of any series is appointed by Act of the Holders

 

41

 

of a majority in principal amount of the Outstanding
Securities of such series delivered to the Corporation and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with the applicable requirements
of Section 6.11, become the successor Trustee with respect to the
Securities of such series and to that extent supersede the successor Trustee
appointed by the Corporation.  If no
successor Trustee with respect to the Securities of any series is so appointed
by the Corporation or the Holders of Securities and accepts appointment in the
manner required by Section 6.11, any Holder of a Security who has been a
bona fide Holder of a Security of such series for at least six months may, on
behalf of such Holder and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee with respect
to the Securities of such series.

 

(f)                                    The
Corporation shall give notice of each resignation and each removal of the
Trustee with respect to the Securities of any series and each appointment of a
successor Trustee with respect to the Securities of any series by mailing
written notice of such event by first-class mail, postage prepaid, to all
Holders of Registered Securities, if any, of such series as their names and
addresses appear in the Security Register and, if Securities of such series are
issuable as Bearer Securities, by publishing notice of such event once in an
Authorized Newspaper in each Place of Payment located outside the United
States.  Each notice shall include the
name of the successor Trustee with respect to the Securities of such series and
the address of its Corporate Trust Office.

 

Section 6.11  Acceptance of Appointment by Successor.

 

(a)                                  In
case of the appointment hereunder of a successor Trustee with respect to all
Securities, every such successor Trustee so appointed shall execute,
acknowledge and deliver to the Corporation and to the retiring Trustee an
instrument accepting such appointment. 
Thereupon the resignation or removal of the retiring Trustee shall
become effective and such successor Trustee, without any further act, deed or
conveyance shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee; but, on the request of the Corporation or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all
the rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder; provided,
that such property and money shall continue to be subject to any lien in favor
of the retiring Trustee provided for in Section 6.7.

 

(b)                                 In
case of the appointment hereunder of a successor Trustee with respect to the
Securities of one or more (but not all) series, the Corporation, the retiring
Trustee and each successor Trustee with respect to the Securities of one or
more series shall execute and deliver an indenture supplemental hereto wherein
each successor Trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of
that or those series to which the appointment of such successor Trustee
relates, (2) if the retiring Trustee is not retiring with respect to all
Securities, shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or

 

42

 

those series as to which the retiring Trustee is not
retiring shall continue to be vested in the retiring Trustee, and (3) shall
add to or change any of the provisions of this Indenture as shall be necessary
to provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Trustees co-trustees of the same
trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee; and upon the execution and delivery of such
supplemental indenture the resignation or removal of the retiring Trustee shall
become effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series to which the appointment of such
successor Trustee relates; but, on request of the Corporation or any successor
Trustee, such retiring Trustee shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee
hereunder, subject nevertheless to its lien provided for in Section 6.7,
with respect to the Securities of that or those series to which the appointment
of such successor Trustee relates.

 

(c)                                  Upon
request of any such successor Trustee, the Corporation shall execute any and
all instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts referred to in paragraph (a) or
(b) of this Section, as the case may be.

 

(d)                                 No
successor Trustee shall accept its appointment unless at the time of such
acceptance such successor Trustee shall be qualified and eligible under this
Article.

 

Section 6.12  Merger, Conversion, Consolidation or
Succession to Business. 
Any Person into which the Trustee may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any Person
succeeding to all or substantially all the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, if such Person is
otherwise qualified and eligible under this Article, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto.  In case any Securities shall
have been authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating Trustee
may adopt such authentication and deliver the Securities so authenticated with
the same effect as if such successor Trustee had itself authenticated such
Securities.

 

Section 6.13  Preferential Collection of Claims Against
Corporation.  If
and when the Trustee is or becomes a creditor of the Corporation (or any other
obligor upon the Securities), the Trustee shall be subject to the provisions of
Section 311 and any other provision of the Trust Indenture Act regarding
the collection of claims against the Corporation (or any such other obligor),
as the case may be.

 

Section 6.14  Appointment of Authenticating Agent.  At any time when any of the Securities remain
Outstanding, the Trustee may appoint an Authenticating Agent or Agents with
respect to one or more series of Securities which shall be authorized to act on
behalf of the Trustee to authenticate Securities of such series issued upon
exchange, registration of transfer or

 

43

 

partial redemption thereof or pursuant to Section 3.6,
and Securities so authenticated shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. 
Wherever reference is made in this Indenture to the authentication and
delivery of Securities by the Trustee or the Trustee’s certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating
Agent.  Each Authenticating Agent shall
be acceptable to the Corporation and shall at all times be a corporation
organized and doing business under the laws of the United States of America,
any state thereof or the District of Columbia, authorized under such laws to
act as Authenticating Agent, having a combined capital and surplus (computed in
accordance with Section 310(a)(2) of the Trust Indenture Act) of not
less than $50,000,000 and subject to supervision or examination by federal,
state or District of Columbia authority. 
If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.  If at any time an Authenticating Agent ceases
to be eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section.

 

Any
corporation into which an Authenticating Agent may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which such Authenticating Agent shall be
a party, or any corporation succeeding to the corporate agency or corporate
trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, if such corporation is otherwise eligible under this
Section, without the execution or filing of any paper or any further act on the
part of the Trustee or the Authenticating Agent.

 

An
Authenticating Agent may resign at any time by giving written notice thereof to
the Trustee and to the Corporation.  The
Trustee may at any time terminate the agency of an Authenticating Agent by
giving written notice thereof to such Authenticating Agent and to the
Corporation.  Upon receiving such a
notice of resignation or upon such termination, or in case at any time such
Authenticating Agent ceases to be eligible in accordance with the provisions of
this Section, the Trustee may appoint a successor Authenticating Agent which shall
be acceptable to the Corporation and shall (1) mail written notice of such
appointment by first-class mail, postage prepaid, to all Holders of Registered
Securities, if any, of the series with respect to which such Authenticating
Agent shall serve, as their names and addresses appear in the Security
Register, and (2) if Securities of the series are issuable as Bearer
Securities, publish notice of such appointment at least once in an Authorized
Newspaper in the place where such successor Authenticating Agent has its
principal office if such office is located outside the United States.  Any successor Authenticating Agent upon
acceptance of its appointment hereunder shall become vested with all the
rights, powers and duties of its predecessor hereunder, with like effect as if
originally named as an Authenticating Agent. 
No successor Authenticating Agent shall be appointed unless eligible
under the provisions of this Section.

 

The provisions
of Sections 3.8, 6.4 and 6.5 shall be applicable to each Authenticating Agent.

 

44

 

If an
appointment with respect to one or more series is made pursuant to this
Section, the Securities of such series may have endorsed thereon, in addition
to the Trustee’s certificate of authentication, an alternate certificate of
authentication in the following form:

 

This is one of
the Securities of the series designated therein referred to in the
within-mentioned Indenture.

 

	
   

  	
  U.S. Bank National Association

  
	
   

  	
   

  	
  as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  As Authenticating
  Agent

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Authorized
  Signatory

  

 

ARTICLE SEVEN

 

Holders’ Lists and Reports by Trustee and Corporation

 

Section 7.1  Corporation to Furnish Trustee Names and
Addresses of Holders. 
In accordance with Section 312(a) of the Trust Indenture Act,
the Corporation shall furnish or cause to be furnished to the Trustee:

 

(a)                                  semi-annually,
not later than June 1 and December 1, in each year, a list, in such
form as the Trustee may reasonably require, containing all the information in
the possession or control of the Corporation, or any of its Paying Agents other
than the Trustee, as to the names and addresses of the Holders of Securities as
of the preceding May 15 or November 15, as the case may be, and

 

(b)                                 at
such other times as the Trustee may request in writing, within 30 days after
the receipt by the Corporation of any such request, a list of similar form and
content as of a date not more than 15 days prior to the time such list is
furnished;

 

provided, that no such list need be furnished
if the Trustee is the Security Registrar.

 

Section 7.2 
Preservation of Information; Communications to Holders.

 

(a)                                  The
Trustee shall comply with the obligations imposed upon it pursuant to Section 312
of the Trust Indenture Act.

 

(b)                                 Every
Holder of Securities or coupons, by receiving and holding the same, agrees with
the Corporation and the Trustee that neither the Corporation nor the Trustee
nor any agent of any of them shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the Holders
of Securities in accordance with Section 312 of the Trust Indenture Act,
regardless of the source from which such information

 

45

 

was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request made under Section 312
of the Trust Indenture Act.

 

Section 7.3 
Reports by Trustee.

 

(a)                                  Within
60 days after May 15 of each year commencing with the first May 15
following the first issuance of Securities pursuant to Section 3.1, if
required by Section 313(a) of the Trust Indenture Act, the Trustee
shall transmit, pursuant to Section 313(c) of the Trust Indenture
Act, a brief report dated as of such May 15 with respect to any of the
events specified in said Section 313(a) which may have occurred since
the later of the immediately preceding May 15 and the date of this
Indenture.

 

(b)                                 The
Trustee shall transmit the reports required by Section 313(b) of the
Trust Indenture Act at the times specified therein.

 

(c)                                  Reports
pursuant to this Section shall be transmitted in the manner and to the
Persons required by Sections 313(c) and 313(d) of the Trust Indenture
Act.

 

Section 7.4  Reports by Corporation.  The Corporation, pursuant to Section 314(a) of
the Trust Indenture Act, shall:

 

(a)                                  file
with the Trustee, within 15 days after the Corporation is required to file the
same with the Commission, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the foregoing
as the Commission may from time to time by rules and regulations
prescribe) which the Corporation may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934, as amended; or, if the Corporation is not required to
file information, documents or reports pursuant to either of said sections,
then it shall file with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Securities Exchange Act of 1934, as
amended, in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules and
regulations;

 

(b)                                 file
with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such additional
information, documents and reports with respect to compliance by the
Corporation with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations; and

 

(c)                                  transmit,
within 30 days after the filing thereof with the Trustee, to the Holders of
Securities, in the manner and to the extent provided in Section 313(c) of
the Trust Indenture Act, such summaries of any information, documents and
reports required to be filed by the Corporation pursuant to paragraphs (a) and
(b) of this Section as may be required by rules and regulations
prescribed from time to time by the Commission.

 

46

 

ARTICLE EIGHT

 

Consolidation, Merger, Conveyance, Transfer or Lease

 

Section 8.1  Corporation May Consolidate, Etc., Only
on Certain Terms. 
The Corporation shall not consolidate with or merge into any other
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, unless:

 

(a)                                  the
Person formed by any such consolidation or into which it is merged or the
Person which acquires by conveyance or transfer, or which leases, its
properties and assets substantially as an entirety shall be organized and
existing under the laws of the United States of America, any state thereof or
the District of Columbia and shall expressly assume the due and punctual
payment of the principal of (and premium, if any) and interest, if any, on all
the Securities and the performance of every covenant of this Indenture to be performed
or observed on the part of the Corporation;

 

(b)                                 immediately
after giving effect to such transaction, no Event of Default, and no event
which, after notice or lapse of time or both, would become an Event of Default,
shall have happened and be continuing; and

 

(c)                                  the
Corporation has delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that such consolidation, merger, conveyance,
transfer or lease complies with this Section 8.1 and that all conditions
precedent herein provided for relating to such transaction have been complied
with.

 

Section 8.2  Successor Corporation Substituted.  Upon any consolidation by the Corporation
with or merger by the Corporation into any other Person or any conveyance,
transfer or lease of the Corporation’s properties and assets substantially as
an entirety in accordance with Section 8.1, the successor formed by such
consolidation or into which it is merged or to which such conveyance, transfer
or lease is made shall succeed to, and be substituted for, and may exercise
every right and power of, the Corporation under this Indenture with the same
effect as if such successor had been named as the Corporation herein, and
thereafter, except in the case of a lease, the predecessor shall be relieved of
all obligations and covenants under this Indenture and the Securities.

 

ARTICLE NINE

 

Supplemental Indentures

 

Section 9.1  Supplemental Indentures without Consent of
Holders.  Without
the consent of any Holders of Securities or coupons, the Corporation, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any one or more of the following purposes
only:

 

(a)                                  to
evidence the succession of another corporation to the Corporation and the
assumption by any such successor of the covenants of the Corporation herein and
in the Securities and coupons; or

 

47

 

(b)                                 to
add to the covenants of the Corporation for the benefit of the Holders of all
or any series of Securities (and if such covenants are to be for the benefit of
less than all series of Securities, stating that such covenants are expressly
being included solely for the benefit of such series) or to surrender any right
or power herein conferred upon the Corporation; or

 

(c)                                  to
add any additional Events of Default; or

 

(d)                                 to
add to or change any of the provisions of this Indenture to provide that Bearer
Securities may be registrable as to principal, to change or eliminate any
restrictions on the payment of principal (or premium, if any) on Registered
Securities or of principal (or premium, if any) or any interest on Bearer
Securities, to permit Registered Securities to be exchanged for Bearer
Securities or to permit the issuance of Securities in uncertificated form; provided, that any such action shall not
adversely affect the interests of the Holders of Securities of any series or
any related coupons in any material respect; or

 

(e)                                  to
change or eliminate any of the provisions of this Indenture; provided, that any such change or
elimination shall become effective only when there is no Security Outstanding
of any series created prior to the execution of such supplemental indenture
which is entitled to the benefit of such provision; or

 

(f)                                    to
secure the Securities; or

 

(g)                                 to
establish the form or terms of Securities of any series and any related coupons
as permitted by Sections 2.1 and 3.1; or

 

(h)                                 to
evidence and provide for the acceptance of appointment hereunder by a successor
Trustee with respect to the Securities of one or more series, to contain such
provisions as shall be deemed necessary or desirable to confirm that all the
rights, powers, trusts and duties of the predecessor Trustee with respect to
the Securities of any series as to which the predecessor Trustee is not
retiring shall continue to be vested in the predecessor Trustee, and to add to
or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, pursuant to the requirements of Section 6.11(b); or

 

(i)                                     to
cure any ambiguity, to correct or supplement any provision herein which may be
defective or inconsistent with any other provision herein, or to make any other
provisions with respect to matters or questions arising under this Indenture; provided, that such change shall not be
inconsistent with the provisions of this Indenture and shall not adversely affect
the interests of the Holders of Securities of any series or any related coupons
in any material respect; or

 

(j)                                     to
conform this Indenture to any amendments to the Trust Indenture Act.

 

Section 9.2  Supplemental Indentures with Consent of
Holders.  With the
consent of the Holders of not less than a majority in principal amount of the
Outstanding Securities of each series affected by such supplemental indenture,
by Act of said Holders delivered to the Corporation and the Trustee, the
Corporation, when authorized by a Board Resolution, and the Trustee may enter
into an indenture or indentures supplemental hereto for the

 

48

 

purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Indenture or modifying in
any manner the rights of the Holders of Securities of such series and any
related coupons under this Indenture; provided,
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Security or coupon affected thereby:

 

(a)                                  change
the Stated Maturity of the principal of, or of any installment of principal of
or interest on, any Security, or reduce the principal amount thereof or the
rate of interest thereon or any premium payable upon the redemption thereof, or
change the method of calculating the rate of interest thereon, or change any
obligation of the Corporation to pay additional amounts pursuant to Section 10.6
(except as contemplated by Section 8.1(a) and permitted by Section 9.1(a)),
or reduce the amount of the principal of an Original Issue Discount Security
that would be due and payable upon a declaration of acceleration of the
Maturity thereof pursuant to Section 5.2, or change any Place of Payment
in the United States where, or the currency in which, any Security or any
premium or interest thereon is payable, or impair the right to institute suit
for the enforcement of any such payment on or after the Stated Maturity thereof
(or, in the case of redemption, on or after the Redemption Date);

 

(b)                                 reduce
the percentage in principal amount of the Outstanding Securities of any series,
the consent of whose Holders is required for any such supplemental indenture,
or the consent of whose Holders is required for any waiver (of compliance with
certain provisions of this Indenture or certain defaults hereunder and  their consequences) provided for in this
Indenture, or reduce the requirements of Section 13.4 for quorum or
voting;

 

(c)                                  change
any obligation of the Corporation to maintain an office or agency in each Place
of Payment, or any obligation of the Corporation to maintain an office or
agency outside the United States pursuant to Section 10.2;

 

(d)                                 modify
any of the provisions of this Section, Section 5.13 or Section 10.5,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent
of the Holder of each Outstanding Security affected thereby; provided, that this clause shall not be
deemed to require the consent of any Holder of a Security or coupon with
respect to changes in the references to “the Trustee” and concomitant changes
in this Section and Section 10.4, or the deletion of this proviso, in
accordance with the requirements of Sections 6.11(b) and 9.1(h).

 

A supplemental
indenture which changes or eliminates any covenant or other provision of this
Indenture which has expressly been included solely for the benefit of one or
more particular series of Securities, or which modifies the rights of the
Holders of Securities of such series with respect to such covenant or other
provision, shall be deemed not to affect the rights under this Indenture of the
Holders of Securities of any other series.

 

It shall not
be necessary for any Act of Holders of Securities under this Section to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.

 

49

 

The
Corporation shall have the right to set a record date for the solicitation of
any consents under this Article Nine, which record date shall be set in
accordance with Section 1.4.

 

Section 9.3  Execution of Supplemental Indentures.  In executing, or accepting the additional
trusts created by, any supplemental indenture permitted by this Article or
the modifications thereby of the trusts created by this Indenture, the Trustee
shall be entitled to receive, and (subject to Section 315 of the Trust
Indenture Act) shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental indenture is authorized or
permitted by this Indenture.  The Trustee
may, but shall not be obligated to, enter into any such supplemental indenture
which affects the Trustee’s own rights, duties, immunities or liabilities under
this Indenture or otherwise.

 

Section 9.4  Effect of Supplemental Indentures.  Upon the execution of any supplemental
indenture under this Article, this Indenture shall be modified in accordance
therewith, and such supplemental indenture shall form a part of this Indenture
for all purposes; and every Holder of Securities theretofore or thereafter
authenticated and delivered hereunder and of any coupons appertaining thereto
shall be bound thereby.

 

Section 9.5  Conformity with Trust Indenture Act.  Every supplemental indenture executed
pursuant to this Article shall conform to the requirements of the Trust
Indenture Act as then in effect.

 

Section 9.6  Reference in Securities to Supplemental
Indentures. 
Securities of any series authenticated and delivered after the execution
of any supplemental indenture pursuant to this Article may, and shall if
required by the Trustee, bear a notation in form approved by the Trustee as to
any matter provided for in such supplemental indenture.  If the Corporation shall so determine, new
Securities of any series so modified as to conform, in the opinion of the
Trustee and the Corporation, to any such supplemental indenture may be prepared
and executed by the Corporation and authenticated and delivered by the Trustee
in exchange for Outstanding Securities of such series.

 

ARTICLE TEN

 

Covenants

 

Section 10.1  Payment of Principal, Premium and
Interest.  The
Corporation covenants and agrees for the benefit of each series of Securities
that it shall duly and punctually pay the principal of (and premium, if any)
and interest (including any Additional Interest), if any, on the Securities of
that series in accordance with the terms of such Securities and this Indenture.

 

Section 10.2  Maintenance of Office or Agency.  The Corporation shall
maintain in each Place of Payment for any series of Securities an office or
agency where Securities of that series may be presented or surrendered for
payment, where Securities of that series may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Corporation
in respect of the Securities of that series and this Indenture may be
served.  The Corporation initially
appoints the Trustee, acting through its Corporate Trust Office, as its agent
for said purposes.  The Corporation shall
give prompt written notice to the Trustee of any change

 

50

 

in the location of any such office or agency.  If at any time the Corporation fails to
maintain such office or agency or fails to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee, and the Corporation hereby
appoints the Trustee as its agent to receive all such presentations,
surrenders, notices and demands.

 

The
Corporation may also from time to time designate one or more other offices or
agencies where the Securities may be presented or surrendered for any or all of
such purposes, and may from time to time rescind such designations; provided,  however,
that no such designation or rescission shall in any manner relieve the
Corporation of its obligation to maintain an office or agency in each Place of
Payment for Securities of any series for such purposes. The Corporation shall
give prompt written notice to the Trustee of any such designation and any
change in the location of any such office or agency.

 

Section 10.3  Money for Securities Payments to be Held in
Trust.  If the
Corporation at any time acts as its own Paying Agent with respect to any series
of Securities, it shall, on or before each due date of the principal of (and
premium, if any) or interest (including any Additional Interest) on any of the
Securities of such series, segregate and hold in trust for the benefit of the
Persons entitled thereto a sum sufficient to pay the principal (and premium, if
any) or interest (including any Additional Interest), if any, so becoming due
until such sums shall be paid to such Persons or otherwise disposed of as
herein provided, and shall promptly notify the Trustee of its failure so to
act.

 

Whenever the
Corporation shall have one or more Paying Agents, it shall, prior to 10:00 a.m.,
New York City time, on each due date of the principal of (or premium, if any)
or interest (including any Additional Interest), if any, on any Securities,
deposit with a Paying Agent a sum sufficient to pay the principal (and premium,
if any) or interest (including any Additional Interest), if any, so becoming
due, such sum to be held in trust for the benefit of the Persons entitled to
such principal (and premium, if any) or interest (including any Additional
Interest), if any, and if the Corporation fails to make such deposit (unless
such Paying Agent is the Trustee) the Corporation shall promptly notify the
Trustee of its failure so to act.

 

The
Corporation shall cause each Paying Agent other than the Trustee to execute and
deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent shall:

 

(a)                                  hold
all sums held by it for the payment of the principal of (and premium, if any)
or interest (including any Additional Interest), if any, on the Securities of a
series in trust for the benefit of the Persons entitled thereto until such sums
shall be paid to such Persons or otherwise disposed of as herein provided;

 

(b)                                 give
the Trustee notice of any default by the Corporation (or any other obligor upon
such Securities) in the making of any payment of principal (and premium, if
any) or interest (including any Additional Interest), if any,  in respect of any Security of any series;

 

51

 

(c)           at any time during the continuance of
any default with respect to a series of Securities, upon the written request of
the Trustee, forthwith pay to the Trustee all sums so held in trust by such
Paying Agent with respect to such series; and

 

(d)           comply with the provisions of the
Trust Indenture Act applicable to it as a Paying Agent.

 

The
Corporation may at any time, for the purpose of obtaining the satisfaction and
discharge of this Indenture or for any other purpose, pay, or by an Order of
the Corporation direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Corporation or such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were held by the
Corporation or such Paying Agent; and, upon such payment by any Paying Agent to
the Trustee, such paying Agent shall be released from all further liability
with respect to such money.

 

Any money
deposited with the Trustee or any Paying Agent, or then held by the Corporation
in trust for the payment of the principal of (and premium, if any) or interest
(including any Additional Interest), if any, on any Security and remaining
unclaimed for two years after such principal (and premium, if any) or interest
(including any Additional Interest), if any, has become due and payable shall
(unless otherwise required by mandatory provision of applicable escheat or
abandoned or unclaimed property law) be paid on Request of the Corporation, or
(if then held by the Corporation) shall (unless otherwise required by mandatory
provision of applicable escheat or abandoned or unclaimed property law) be
discharged from such trust; and the Holder of such Security shall thereafter,
as an unsecured general creditor, look only to the Corporation for payment
thereof, and all liability of the Trustee or such Paying Agent with respect to
such trust money, and all liability of the Corporation as trustee thereof,
shall thereupon cease; provided, however,
that the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Corporation cause to be published once, in
a newspaper published in the English language, customarily published on each
Business Day and of general circulation in the Borough of Manhattan, The City
of New York, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining shall be repaid
to the Corporation.

 

Section 10.4  Statement as to Compliance.  The Corporation shall
deliver to the Trustee, within 120 days after the end of each fiscal year of
the Corporation ending after the date hereof, an Officers’ Certificate covering
the preceding calendar year, stating whether or not to the best knowledge of
the signers thereof the Corporation is in default in the performance,
observance or fulfillment of or compliance with any of the terms, provisions,
covenants and conditions of this Indenture, and if the Corporation is in default,
specifying all such defaults and the nature and status thereof of which they
may have knowledge.  For the purpose of
this Section 10.4, compliance shall be determined without regard to any
grace period or requirement of notice provided pursuant to the terms of this
Indenture.

 

Section 10.5  Waiver of Certain Covenants.  The Corporation may omit in any particular
instance to comply with any covenant or condition provided pursuant to Section 3.1,
9.1(b) or 9.1(g) with respect to the Securities of any series, if
before or after the time for such

 

52

 

compliance the Holders of at least a majority in
aggregate principal amount of the Outstanding Securities of such series shall,
by Act of such Holders, either waive such compliance in such instance or
generally waive compliance with such covenant or condition, but no such waiver
shall extend to or affect such covenant or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the
obligations of the Corporation in respect of any such covenant or condition
shall remain in full force and effect.

 

Section 10.6  Additional Sums.  If the Securities of a series provide for the
payment of additional amounts, the Corporation shall pay to the Holder of any
Security of any series or any coupon appertaining hereto additional amounts
upon the terms and subject to the conditions provided therein.  Whenever in this Indenture there is
mentioned, in any contexts, the payment of the principal of (or premium, if
any) or interest, if any, on, or in respect of, any Security of any series or
any related coupon or the net proceeds received on the sale or exchange of any
Security of any series, such mention shall be deemed to include mention of the
payment of additional amounts provided for in the terms of such Securities and
this Section to the extent that, in such context, additional amounts are,
were or would be payable in respect thereof pursuant to the provisions of this
Section, and express mention of the payment of any additional amounts (if
applicable) in any provisions hereof shall not be construed as excluding
additional amounts in those provisions hereof where express mention is not
made.

 

If the
Securities of a series provide for the payment of additional amounts, at least
10 days prior to the first Interest Payment Date with respect to that series of
Securities (or if the Securities of that series shall not bear interest prior
to Maturity, the first day on which a payment of principal (and premium, if
any) is made), and at least 10 days prior to each date of payment of principal
(and premium, if any) or interest if there has been any change with respect to
the matters set forth in the above-mentioned Officers’ Certificate, the
Corporation shall furnish to the Trustee and the Corporation’s principal Paying
Agent or Paying Agents, if other than the Trustee, an Order instructing the
Trustee and such Paying Agent or Paying Agents whether such payment of
principal of (and premium, if any) or interest on the Securities of that series
shall be made to Holders of Securities of that series or the related coupons
who are United States Aliens without withholding for or on account of any tax,
assessment or other governmental charge described in the Securities of that
series.  If any such withholding shall be
required, then such Order shall specify by country the amount, if any, required
to be withheld on such payments to such Holders of Securities or coupons, and the
Corporation shall pay to the Trustee or such Paying Agent the additional
amounts, if any, required by the terms of such Securities and the first
paragraph of this Section.  The
Corporation shall indemnify, defend and hold harmless the Trustee and any Paying
Agent and any director, employee, Affiliate or agent of either (a “Section 10.6 Indemnitee”) against any
loss, liability or expense, including without limitation any penalties and the
fees and expenses of counsel, arising out of or in connection with actions
taken or omitted in reliance on any Order furnished pursuant to this Section,
except to the extent with respect to any Section 10.6 Indemnitee any loss,
liability or expense is due to the negligence, willful misconduct or bad faith
of such Section 10.6 Indemnitee.

 

Section 10.7  Original Issue Discount.  For each year during which any Original Issue
Discount Securities are Outstanding, the Corporation shall furnish to each
Paying Agent in a timely fashion such information as may be reasonably
requested by each Paying Agent in order that each Paying Agent may prepare the
information which it is required to report for such year

 

53

 

on Internal Revenue Service Forms 1096 and 1099
pursuant to Section 6049 of the Internal Revenue Code of 1986, as amended.
Such information shall include the amount of original issue discount includible
in income for each $1,000 of principal amount at Stated Maturity of outstanding
Securities during such year.

 

ARTICLE ELEVEN

 

Redemption of Securities

 

Section 11.1  Applicability of Article.  Securities of any series that are redeemable
before their Stated Maturity shall be redeemable in accordance with their terms
and (except as otherwise specified as contemplated by Section 3.1 for
Securities of any series) in accordance with this Article.

 

Section 11.2  Election to Redeem; Notice to Trustee.  The election of the Corporation to redeem any
Securities shall be evidenced by a Board Resolution.  In case of any redemption at the election of
the Corporation of all of the Securities of any series, the Corporation shall,
at least 60 days prior to the Redemption Date fixed by the Corporation (unless
a shorter notice shall be satisfactory to the Trustee), notify the Trustee in
writing of such Redemption Date.  In case
of any redemption at the election of the Corporation of less than all the
Securities of any series, the Corporation shall, at least 60 days prior to the
Redemption Date fixed by the Corporation (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee in writing of such Redemption
Date and of the principal amount of Securities of such series to be
redeemed.  In the case of any redemption
of Securities (1) prior to the expiration of any restriction on such
redemption provided in the terms of such Securities or elsewhere in this
Indenture, or (2) pursuant to an election of the Corporation which is
subject to a condition specified in the terms of such Securities, the
Corporation shall furnish the Trustee with an Officers’ Certificate evidencing
compliance with such restriction or condition.

 

Section 11.3  Selection by Trustee of Securities to be
Redeemed.  If less
than all the Securities of any series are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee from the Outstanding Securities of such series
(other than Securities of such series held by the Corporation), not previously
called for redemption, by such method as the Trustee shall deem fair and appropriate
and which may provide for the selection for redemption of portions (equal to
the minimum authorized denomination for Securities of that series or any
integral multiple thereof) of the principal amount of Securities of such series
of a denomination larger than the minimum authorized denomination for
Securities of that series.  Unless
otherwise provided in the Securities of a series, partial redemptions must be
in an amount not less than $1,000,000 principal amount of Securities.

 

The Trustee
shall promptly notify the Corporation in writing of the Securities selected for
redemption and, in the case of any Securities selected for partial redemption,
the principal amount thereof to be redeemed.

 

For all
purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Securities shall relate, in the case
of any Securities

 

54

 

redeemed or to be redeemed only in part, to the portion of the
principal amount of such Securities which has been or is to be redeemed.

 

Section 11.4  Notice of Redemption.  Notice of redemption shall be given in the
manner provided in Section 1.6 to the Holders of Securities to be redeemed
not less than 30 nor more than 60 days prior to the Redemption Date.

 

All notices of
redemption shall state:

 

(a)           the Redemption Date,

 

(b)           the Redemption Price,

 

(c)           if less than all the Outstanding
Securities of any series are to be redeemed, the identification (and, in the
case of partial redemption, the principal amounts) of the particular Securities
to be redeemed,

 

(d)           that on the Redemption Date the
Redemption Price shall become due and payable upon each such Security to be
redeemed and, if applicable, that interest thereon shall cease to accrue on and
after said date,

 

(e)           the place or places where such
Securities, together in the case of Bearer Securities with all coupons
appertaining thereto, if any, maturing after the Redemption Date, are to be
surrendered for payment of the Redemption Price, which shall be the office or
agency maintained by the Corporation in each Place of Payment pursuant to Section 10.2,
and

 

(f)            that the redemption is for a sinking
fund, if such is the case.

 

A notice of
redemption published as contemplated by Section 1.6 need not identify
particular Registered Securities to be redeemed.

 

Notice of
redemption of Securities to be redeemed at the election of the Corporation
shall be given by the Corporation or, at the Corporation’s request, by the
Trustee in the name and at the expense of the Corporation.

 

Section 11.5  Deposit of Redemption Price.  On or prior to any Redemption Date, the
Corporation shall deposit with the Trustee or with a Paying Agent (or, if the
Corporation is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 10.3) an amount of money sufficient to pay the
Redemption Price of, and (except if the Redemption Date is an Interest Payment
Date) accrued interest, if any, on, all the Securities which are to be redeemed
on that date.

 

Section 11.6  Securities Payable on Redemption Date.  Notice of redemption having been given as
aforesaid, and the conditions, if any, set forth in such notice having been
satisfied, the Securities so to be redeemed shall, on the Redemption Date,
become due and payable at the Redemption Price therein specified, and from and
after such date (unless the Corporation defaults in the payment of the
Redemption Price and accrued interest, if any,) such Securities shall cease to
bear interest and the coupons for such interest appertaining to any

 

55

 

Bearer Securities so to be redeemed, except to the
extent provided below, shall be void. 
Upon surrender of any such Security for redemption in accordance with
said notice, together with all coupons, if any, appertaining thereto maturing
after the Redemption Date, such Security shall be paid by the Corporation at
the Redemption Price, together with accrued interest, if any, to the Redemption
Date; provided, that installments
of interest on Bearer Securities whose Stated Maturity is on or prior to the
Redemption Date shall be payable only upon presentation and surrender of
coupons for such interest (at an office or agency located outside the United
States except as otherwise provided in Section 10.2); and provided further, that installments of
interest on Registered Securities whose Stated Maturity is on or prior to the
Redemption Date shall be payable to the Holders of such Securities, or one or
more Predecessor Securities, registered as such at the close of business on the
relevant Record Dates according to their terms and the provisions of Section 3.7.

 

If any Bearer
Security surrendered for redemption is not accompanied by all appurtenant
coupons maturing after the Redemption Date, such Security may be paid after
deducting from the Redemption Price an amount equal to the face amount of all
such missing coupons, or the surrender of such missing coupon or coupons may be
waived by the Corporation and the Trustee if there is furnished to them such
security or indemnity as they may require to save each of them and any Paying
Agent harmless.  If thereafter the Holder
of such Security surrenders to the Trustee or any Paying Agent any such missing
coupon in respect of which a deduction shall have been made from the Redemption
Price, such Holder shall be entitled to receive the amount so deducted; provided, that interest represented by
coupons shall be payable only upon presentation and surrender of those coupons
at an office or agency located outside of the United States except as otherwise
provided in Section 10.2.

 

If any
Security called for redemption is not so paid upon surrender thereof for
redemption, the principal (and premium, if any) shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the
Security.

 

Section 11.7  Securities Redeemed in Part.  Any Security which is to be redeemed only in
part shall be surrendered at a Place of Payment therefor (with, if the
Corporation or the Trustee so requires with respect to any Registered Security,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Corporation and the Trustee duly executed by, the Holder thereof or such
Holder’s attorney duly authorized in writing), and the Corporation shall
execute, and the Trustee shall authenticate and deliver to the Holder of such
Security without service charge, a new Security or Securities of the same
series, Stated Maturity and of any authorized denomination as requested by such
Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.

 

Except as
otherwise specified as contemplated by Section 3.1, if a Global Security
is so surrendered, the Corporation shall execute, and the Trustee shall
authenticate and deliver to the Depositary in global form, without service
charge, a new Global Security or Securities of the same series, Stated Maturity
and of any authorized denomination as requested by the Depositary, in an
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the Global Security so surrendered.

 

56

 

ARTICLE TWELVE

 

Sinking Funds

 

Section 12.1  Applicability of Article.  The provisions of this Article shall be
applicable to any sinking fund for the retirement of Securities of a series
except as otherwise specified as contemplated by Section 3.1 for
Securities of such series.

 

The minimum
amount of any sinking fund payment provided for by the terms of Securities of
any series is herein referred to as a “mandatory sinking fund payment,” and any
payment in excess of such minimum amount provided for by the terms of
Securities of any series is herein referred to as an “optional sinking fund
payment.”  If provided for by the terms
of Securities of any series, the cash amount of any sinking fund payment may be
subject to reduction as provided in Section 12.2.  Each sinking fund payment shall be applied to
the redemption of Securities of any series as provided for by the terms of
Securities of such series.

 

Section 12.2  Satisfaction of Sinking Fund Payments with
Securities.  The
Corporation (1) may deliver Outstanding Securities of a series (other than
any previously called for redemption), together in the case of any Bearer
Securities of such series with all unmatured coupons appertaining thereto, and (2) may
apply as a credit Securities of a series which have been redeemed either at the
election of the Corporation pursuant to the terms of such Securities or through
the application of permitted optional sinking fund payments pursuant to the
terms of such Securities, in each case in satisfaction of all or any part of
any sinking fund payment with respect to the Securities of such series required
to be made pursuant to the terms of such Securities as provided for by the
terms of such series; provided,
that such Securities have not been previously so credited.  Such Securities shall be received and
credited for such purpose by the Trustee at the Redemption Price specified in
such Securities for redemption through operation of the sinking fund and the
amount of such sinking fund payment shall be reduced accordingly.

 

Section 12.3  Redemption of Securities for Sinking Fund.  Not less than 60 days prior to each sinking
fund payment date for any series of Securities, the Corporation shall deliver
to the Trustee an Officers’ Certificate specifying the amount of the next
ensuing sinking fund payment for that series pursuant to the terms of that
series, the portion thereof, if any, which is to be satisfied by payment of
cash and the portion thereof, if any, which is to be satisfied by delivering
and crediting Securities of that series pursuant to Section 12.2 and
stating the basis for such credit and that such Securities have not previously
been so credited and shall also deliver to the Trustee any Securities to be so
delivered.  Not less than 30 days before
each such sinking fund payment date the Trustee shall select the Securities to
be redeemed upon such sinking fund payment date in the manner specified in Section 11.3
and cause notice of the redemption thereof to be given in the name of and at
the expense of the Corporation in the manner provided in Section 11.4.  Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 11.6 and 11.7.

 

57

 

ARTICLE THIRTEEN

 

Meetings of Holders of Securities

 

Section 13.1  Purposes for Which Meetings May be
Called.  If
Securities of a series are issuable as Bearer Securities, a meeting of Holders
of Securities of such series may be called at any time and from time to time
pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Securities of such
series.

 

Section 13.2 
Call Notice and Place of Meeting.

 

(a)           The Trustee may at any time call a meeting
of Holders of Securities of any series for any purpose specified in Section 13.1,
to be held at such time and at such place in the Borough of Manhattan, The City
of New York, or in London, as the Trustee shall determine.  Notice of every meeting of Holders of
Securities of any series, setting forth the time and the place of such meeting
and in general terms the action proposed to be taken at such meeting, shall be
given, in the manner provided in Section 1.6, not less than 21 nor more
than 180 days prior to the date fixed for the meeting.

 

(b)           In case at any time the Corporation,
pursuant to a Board Resolution, or the Holders of at least 10% in principal
amount of the Outstanding Securities of any series shall have requested the
Trustee to call a meeting of the Holders of Securities of such series for any
purpose specified in Section 13.1, by written request setting forth in
reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have made the first publication of the notice of such meeting
within 21 days after receipt of such request or shall not thereafter proceed to
cause the meeting to be held as provided herein, then the Corporation or the
Holders of Securities of such series in the amount above specified, as the case
may be, may determine the time and the place in the Borough of Manhattan, The
City of New York, or in London for such meeting and may call such meeting for
such purposes by giving notice thereof as provided in subsection (a) of
this Section.

 

Section 13.3  Persons Entitled to Vote at Meetings.  To be entitled to vote at any meeting of
Holders of Securities of any series, a Person shall be (1) a Holder of one
or more Outstanding Securities of such series, or (2) a Person appointed
by an instrument in writing as proxy for a Holder or Holders of one or more
Outstanding Securities of such series by such Holder or Holders.  The only Persons who shall be entitled to be
present or to speak at any meeting of Holders of Securities of any series shall
be the Persons entitled to vote at such meeting and their counsel, any
representatives of the Trustee and its counsel and any representatives of the
Corporation and its counsel.

 

Section 13.4  Quorum; Action.  The Persons entitled to vote a majority in
principal amount of the Outstanding Securities of a series shall constitute a
quorum for a meeting of Holders of Securities of such series.  In the absence of a quorum within 30 minutes
of the time appointed for any such meeting, the meeting shall, if convened at
the request of Holders of Securities of such series, be dissolved.  In any other case, the meeting may be
adjourned for a period of not less than 10 days as determined by the chairman
of the meeting prior to the

 

58

 

adjournment of such meeting.  In the absence of a quorum at any such
adjourned meeting, such adjourned meeting may be further adjourned for a period
of not less than 10 days as determined by the chairman of the meeting prior to
the adjournment of such adjourned meeting. 
Except as provided by Section 13.5(d), notice of the reconvening of
any adjourned meeting shall be given as provided in Section 13.2(a),
except that such notice need be given only once not less than five days prior
to the date on which the meeting is scheduled to be reconvened.  Notice of the reconvening of an adjourned
meeting shall state expressly the percentage, as provided above, of the
principal amount of the Outstanding Securities of such series which shall
constitute a quorum.

 

Except as
limited by the proviso to Section 9.2, any resolution presented to a
meeting or adjourned meeting duly reconvened at which a quorum is present as
aforesaid may be adopted only by the affirmative vote of the Holders of a
majority in principal amount of the Outstanding Securities of that series; provided, that, except as limited by the
proviso to Section 9.2, any resolution with respect to any request,
demand, authorization, direction, notice, consent, waiver or other action which
this Indenture expressly provides may be made, given or taken by the Holders of
a specified percentage, which is less than a majority, in principal amount of
the Outstanding Securities of a series may be adopted at a meeting or an
adjourned meeting duly reconvened and at which a quorum is present as aforesaid
by the affirmative vote of the Holders of such specified percentage in
principal amount of the Outstanding Securities of that series.

 

Any resolution
passed or decision taken at any meeting of Holders of Securities of any series
duly held in accordance with this Section shall be binding on all the
Holders of Securities of such series and the related coupons, whether or not
present or represented at the meeting.

 

Section 13.5 
Determination of Voting Rights; Conduct and Adjournment of Meetings.

 

(a)           Notwithstanding any other provisions
of this Indenture, the Trustee may make such reasonable regulations as it may
deem advisable for any meeting of Holders of Securities of such series in
regard to proof of the holding of Securities of such series and of the
appointment of proxies and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates
and other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall deem appropriate.  Except as otherwise permitted or required by
any such regulations, the holding of Securities shall be proved in the manner
specified in Section 1.4, and the appointment of any proxy shall be proved
in the manner specified in Section 1.4. 
Such regulations may provide that written instruments appointing
proxies, regular on their face, may be presumed valid and genuine without the
proof specified in Section 1.4 or other proof.

 

(b)           The Trustee shall, by an instrument
in writing, appoint a temporary chairman of the meeting, unless the meeting
shall have been called by the Corporation or by Holders of Securities as
provided in Section 13.2(b), in which case the Corporation or the Holders
of Securities of the series calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. 
A permanent chairman and a permanent secretary of the meeting

 

59

 

shall be elected by vote of the Persons entitled to
vote a majority in principal amount of the Outstanding Securities of such
series represented at the meeting.

 

(c)           At any meeting each Holder of a
Security of such series or proxy shall be entitled to one vote for each $1,000
principal amount of Securities of such series held or represented by such
Holder; provided, that no vote
shall be cast or counted at any meeting in respect of any Security challenged
as not Outstanding and ruled by the chairman of the meeting to be not
Outstanding.  The chairman of the meeting
shall have no right to vote, except as a Holder of a Security of such series or
proxy.

 

(d)           Any meeting of Holders of Securities
of any series duly called pursuant to Section 13.2 at which a quorum is
present may be adjourned from time to time by Persons entitled to vote a
majority in principal amount of the Outstanding Securities of such series
represented at the meeting; and the meeting may be held as so adjourned without
further notice.

 

Section 13.6  Counting Votes and Recording Action of
Meetings.  The vote
upon any resolution submitted to any meeting of Holders of Securities of any
series shall be by written ballots on which shall be subscribed the signatures
of the Holders of Securities of such series or of their representatives by
proxy and the principal amounts and serial numbers of the Outstanding
Securities of such series held or represented by them.  The permanent chairman of the meeting shall
appoint two inspectors of votes who shall count all votes cast at the meeting
for or against any resolution and who shall make and file with the secretary of
the meeting their verified written reports in triplicate of all votes cast at
the meeting.  A record, at least in
triplicate, of the proceedings of each meeting of Holders of Securities of any
series shall be prepared by the secretary of the meeting, and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 13.2 and, if
applicable, Section 13.4.  Each copy
shall be signed and verified by the affidavits of the permanent chairman and
secretary of the meeting, and one such copy shall be delivered to the
Corporation and another to the Trustee to be preserved by the Trustee, the
latter to have attached thereto the ballots voted at the meeting.  Any record so signed and verified shall be
conclusive evidence of the matters therein stated.

 

Section 13.7  Action Without Meeting.  In lieu of a vote of Holders at a meeting as
hereinbefore contemplated in this Article, any request, demand, authorization,
direction, notice, consent, waiver or other action may be made, given or taken
by Holders by written instruments as provided in Section 1.4.

 

ARTICLE FOURTEEN

 

Immunity of Incorporators, Stockholders, Officers,

Directors and Employees

 

Section 14.1  Liability Solely Corporate.  No recourse shall be had for the payment of
the principal of or premium, if any, or interest, if any, on any Securities, or
any part thereof, or for any claim based thereon or otherwise in respect
thereof, or of the indebtedness

 

60

 

represented thereby, or upon any obligation, covenant
or agreement under this Indenture, against any incorporator, stockholder,
officer, director or employee, as such, past, present or future of the
Corporation or of any predecessor or successor Corporation (either directly or
through the Corporation or a predecessor or successor Corporation), whether by
virtue of any constitutional provision, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise; it being expressly
agreed and understood that this Indenture and all the Securities are solely
corporate obligations, and that no personal liability whatsoever shall attach
to, or be incurred by, any incorporator, stockholder, officer, director or
employee, past, present or future, of the Corporation or of any predecessor or
successor Corporation, either directly or indirectly through the Corporation or
any predecessor or successor Corporation, because of the indebtedness hereby
authorized or under or by reason of any of the obligations, covenants or
agreements contained in this Indenture or in any of the Securities or to be
implied herefrom or therefrom, and that any such personal liability is hereby
expressly waived and released as a condition of, and as part of the
consideration for, the execution of this Indenture and the issuance of the
Securities.

 

ARTICLE FIFTEEN

 

Subordination of Securities

 

Section 15.1  Subordination Terms.  The payment by the Corporation of the
principal of (and premium, if any) and interest on any series of Securities
issued hereunder shall be subordinated to the extent set forth in an indenture
supplemental hereto relating to such Securities.

 

 

61

 

IN
WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed and attested, all as of the day and year first
above written.

 

	
   

  	
   

  	
  AAR CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
  Attest:

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  U.S. BANK NATIONAL ASSOCIATION,
  as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
  Attest:

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
							

 

62EXHIBIT 10.15

 

Execution
Version

 

 

CONFIDENTIAL
PROVISIONS REDACTED

 

COLLABORATION
AGREEMENT

 

THIS COLLABORATION AGREEMENT
(the “Agreement”) is entered into as of September 12,
2005 (the “Effective Date”) by and between
Protein Design Labs, Inc., a Delaware corporation having its offices at
34801 Campus Drive, Fremont, California 94555 (“PDL”),
and Biogen Idec MA Inc., a Massachusetts corporation having offices at 14
Cambridge Center, Cambridge, Massachusetts 02142 (“Biogen Idec”).
PDL and Biogen Idec may each be referred to in this Agreement individually as a
“Party” and collectively as the “Parties.”

 

RECITALS

 

WHEREAS, PDL
possesses worldwide rights to develop, manufacture, market, and sell certain
proprietary antibodies directed at certain antigens (such antigens defined
below as “Collaboration Targets”) and;

 

WHEREAS, PDL has
research and development programs for such antibodies as well and for certain
compounds relating to the Collaboration Targets; and

 

WHEREAS, Biogen Idec
and PDL wish to collaborate in the research, development, manufacturing and
commercialization of products for the Collaboration Targets, including such
antibodies and compounds, under the terms and conditions set forth below.

 

NOW THEREFORE, in
consideration of the foregoing premises and the mutual covenants contained
herein, the Parties, intending to be legally bound, agree as follows:

 

ARTICLE 1

DEFINITIONS

 

The following capitalized terms, whether used in the
singular or the plural, shall have the following meanings as used in this
Agreement unless otherwise specifically indicated:

 

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

 

 

	
   

  	
  1.1

  	
  “5

  	
  1” means [****].

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.2

  	
  “5

  	
  1 Target Field” means the diagnosis, treatment or
  prevention of human diseases.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.3

  	
  “5

  	
  1 Target Future Product” means [****].

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.4

  	
  “5

  	
  1 Target Product” means [****].

  

 

1.5                               “Affiliate”
means any corporation or other business entity controlled by, controlling,
or under common control with another entity, with “control” meaning: (a) direct
or indirect beneficial ownership of at least fifty percent (50%) of the voting
stock of, or at least fifty percent (50%) interest in the income of, such
corporation or other business entity, or (b) the possession, directly or
indirectly, of the power to direct the management or policies of a legal
entity, whether through the ownership of voting securities or by contract
relating to voting rights or corporate governance. For purposes of clarity,
Affiliates of Biogen Idec shall include Biogen Dompé SRL and Biogen Dompé AG.

 

1.6                               “Annual
Workplan/Budget” means, as to a Collaboration Product the detailed schedule of
Development activities and budgets prepared pursuant to Section 3.3.

 

1.7                               “Antibody”
means a molecule comprising or containing: (a) one or more immunoglobulin
variable domains; (b) fragments, variants, modifications or derivatives of
molecules described in the foregoing clause (a); and (c) the nucleic acid
consisting of a sequence of nucleotides encoding (or complementary to a nucleic
acid encoding) an antibody. Antibody shall include any antibody monospecific
and bispecific antibodies; less than full-length antibody forms such as Fv, Fab,
and F(ab’)2; and  any antibody
or fragment that is conjugated or fused to any other composition, including for
example, a toxin, radionuclide, small molecule, polypeptide or polypeptide
fragment. The term Antibody includes any human, humanized, primatized, chimeric
or other antibody.

 

1.8                               “Antibody
Product” means any pharmaceutical product having an Antibody as an active
ingredient.

 

1.9                               “Approved
Budget” means the then-current JSC approved aggregate annual budget for the
current calendar year for the Development and/or Commercialization of all
Collaboration Products.

 

1.10                        “Asthma Field” means the treatment and/or prevention of
asthma or other respiratory diseases.

 

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

 

2

 

1.11                        “Biogen
Idec Indemnitees” shall have the meaning set forth in Section 15.1.

 

1.12                        “Biogen
Idec Inventions” means all Inventions that (a) relate to or are useful
with any Antibody Product or Non-Antibody Product that are directed against or
incorporate a Collaboration Target, (b) are made during the Term by one or
more employees of Biogen Idec or its Affiliates or persons contractually
required to assign or license patent rights covering such inventions to Biogen
Idec or its Affiliates, in the course of performing Biogen Idec’s obligations,
or exercising Biogen Idec’s rights, under this Agreement, and (c) are not Joint
Inventions.

 

1.13                        “Biogen
Idec Know-How” means all Know-How that is (a) Controlled by Biogen
Idec or its Affiliates at any time during the Term; (b) used by or on
behalf of Biogen Idec or its Affiliates in the development or commercialization
of a Collaboration Product and (c) reasonably necessary or useful for PDL
to (i) perform its obligations under this Agreement or (ii) develop
or commercialize a Collaboration Product or Royalty Product in the Field;
provided that Biogen Idec Know-How shall not include methods of manufacturing,
production and test methods, procedures and batch records, manufacturing and
testing summary data, process and assay validation information, designing,
developing or preparing Antibodies including methods of humanizing Antibodies,
methods of reducing the immunogenicity of Antibodies, methods of modifying
effector function, and methods of increasing the affinity or half-lives of
Antibodies, unless necessary for PDL to perform its Development  or Commercialization obligations hereunder.

 

1.14                        “Biogen
Idec Patent Rights” means Patent Rights that claim  Technology Controlled by Biogen Idec or its
Affiliates at any time during the Term and that relate in whole or in part to
the Collaboration Targets or the manufacture, use or sale of Products. Biogen
Idec Patent Rights shall not include Joint Patents but shall include Biogen
Idec Target Patent Rights. As of the Effective Date, to Biogen Idec’s
knowledge, there are no Biogen Idec Patent Rights.

 

1.15                        “Biogen
Idec Target Patent Rights” means Patent Rights that claim  Technology Controlled by Biogen Idec or its
Affiliates at any time during the Term and that relate in substantial part to
the Collaboration Targets or in substantial part to the manufacture, use or
sale of Products.

 

1.16                        “Biogen
Idec Technology” means Biogen Idec Patent Rights and Biogen Idec Know-How.

 

1.17                        “Calendar
Quarter” means the respective periods of three consecutive calendar months
ending on March 31, June 30, September 30 or December 31,
for so long as this Agreement is in effect.

 

1.18                        “Change of
Control” means with respect to a Party: (i) the sale of all or
substantially all of such Party’s assets or business relating to this
Agreement; (ii) a merger, reorganization or consolidation involving such
Party in which the voting

 

3

 

securities of such Party
outstanding immediately prior thereto cease to represent at least fifty percent
(50%) of the combined voting power of the surviving entity immediately after
such merger, reorganization or consolidation; or (iii) a person or entity,
or group of persons or entities, acting in concert acquire more than fifty
percent (50%) of the voting equity securities or management control of such
Party.

 

1.19                        “Clinical
Supplies” shall mean supplies of Collaboration Product or Royalty Products,
as the case may be, in suitable form, whether Manufactured by PDL or by Biogen
Idec, as specified under this Agreement or under any Manufacturing agreement
between the Parties, Manufactured in compliance with GMP, if required given the
intended use, and ready to be used for the conduct of pre-clinical and/or human
clinical trials of such Product in the Field by the Parties pursuant to the
Development Plan and Annual Workplan/Budget.

 

1.20                        “Collaboration”
means the Parties’ program of collaborative Development, and
Commercialization of Products contemplated by this Agreement.

 

1.21                        “Collaboration
Committee” or “Committee”
means any of the JSC, JDCs, JCCs, JPC or JFC, or any other committee formed with
the approval of such other committees.

 

1.22                        “Collaboration
Invention” means a Joint Invention, Biogen Idec Invention or PDL Invention.

 

1.23                        “Collaboration
Product” means a Product being jointly Developed and Commercialized by the
Parties under this Agreement pursuant to a Development Plan or a
Commercialization Plan. For the avoidance of doubt, a Collaboration Product
shall not be a Royalty Product.

 

1.24                        “Collaboration  Product Profit”
means the profits or losses resulting from the Commercialization of Collaboration
Products in the Profit Sharing Territory and shall be equal to [****].

 

1.25                        “Collaboration
Target” means [****].

 

1.26                        “Combination
Product” shall have the meaning set forth in Exhibit C.

 

1.27                        “Combination
Product Amount” shall have the meaning set forth in Exhibit C.

 

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

 

4

 

1.28                        “Commercial
Supplies” shall mean supplies of Collaboration Product or Royalty Product,
as the case may be, in suitable final packaged form, as specified under a
Commercial Supply Agreement, Manufactured in compliance with GMP, and ready to
be offered for commercial sale for use in the Field in the Territory by Biogen
Idec and/or PDL, and/or their Affiliates, or permitted licensees or
sublicensees.

 

1.29                        “Commercial
Supply Agreement” shall have the meaning set forth in Section 8.3(a).

 

1.30                        “Commercialization”
means all activities undertaken relating to the manufacture, marketing,
distribution, offer for sale and sale of a Product in the Field, including
pre-marketing, advertising, education, planning, marketing, promotion,
distribution, market and product support, post-Regulatory Approval product
support and related medical affairs.

 

1.31                        “Commercialization
Plan” shall have the meaning set forth in Section 6.1(a).

 

1.32                        “Confidential
Information” means all Know-How, information (whether in written, oral,
electronic, visual, tangible, or other form) and materials, including
biological and other tangible materials, that are disclosed by one Party to the
other Party prior to the Effective Date or during the Term and are either
identified as confidential at the time of disclosure or should reasonably be
believed to be of the type of information that would be considered confidential
under the circumstances.

 

1.33                        “Controlled”
means, with respect to a Party and its Affiliates, and any intellectual
property right, that the Party owns or has a license to such intellectual
property right and has the ability to grant to the other Party a license or
sublicense to such intellectual property right without violating the terms of
any agreement or other arrangements with any Third Party existing at the time
such Party would be first required hereunder to grant the other Party such
license or sublicense.

 

1.34                        “Controlling
Party” shall have the meaning set forth in Section 12.5(b)(vi).

 

1.35                        “Co-Promoting
Party” shall have the meaning set forth in Section 7.1(c).

 

1.36                        “Co-Promotion Option” shall have the meaning set forth in Section 7.1(a).

 

1.37                        “Co-Promote
Product” shall have the meaning set forth in Section 7.4.

 

1.38                        “Cost of
Clinical Supplies” shall have the meaning set forth in Exhibit C.

 

1.39                        “Cost of
Goods Manufactured for Sale” or “COGM” shall
have the meaning set forth in Exhibit C.

 

1.40                        “Cost of
Sales” shall have the meaning set forth in Exhibit C.

 

5

 

1.41                        “Daclizumab
Product” means [****].

 

1.42                        “Detail”
or “Detailing” means a face-to-face presentation by a Party’s sales
representative, to one or several medical professional(s) having prescribing
authority in the applicable territory in the Field, as well as to other
mutually agreed individuals or entities that have significant impact or
influence on prescribing decisions in the applicable territory in the Field,
where the principal objective of such presentation is to emphasize the features
and function of such Collaboration Product in the Field in a balanced manner. A
Detail does not include a reminder or sample drop.

 

1.43                        “Development”
means all research and pre-Regulatory Approval development and regulatory
activities in the Field regarding a Product. This includes (i) research,
preclinical testing, toxicology, formulation, manufacturing-related technology
development, and clinical studies of Products; and (ii) preparation,
submission, review, and development of data or information for the purpose of
submission to a governmental authority to obtain Regulatory Approval of
Products, and outside counsel regulatory legal services related thereto. Development
shall include development and regulatory activities for additional Indications
for a Product after Regulatory Approval of such Product but shall not include
Post-Approval Clinical Trials or Phase 4 Trials with respect to an approved
Indication.

 

1.44                        “Development
Expenses” shall have the meaning set forth in Exhibit C.

 

1.45                        “Development
Plan” shall have the meaning set forth in Section 3.3(a).

 

1.46                        “Development
Program” means any of the following: (a) the program of Development
contemplated by this Agreement for [****], (b) the program of Development
contemplated by this Agreement for [****], and (c) the program of
Development contemplated by this Agreement for [****], in each case as such
programs may be revised or amended from time to time.

 

1.47                        “Diligent
Efforts” means reasonable and good faith efforts by a Party to accomplish
such objective as that Party would normally use to accomplish a similar
objective under similar circumstances, it being understood and agreed that,
with respect to the Development or Commercialization of a Collaboration Product
or Royalty Product, as the case may be, such efforts shall be similar to those
efforts and resources commonly used by a Party for a similar pharmaceutical
product owned by it or to which it has rights, which product is at a similar
stage in its development or product life and is of similar market potential in
the applicable market taking into account efficacy, safety, approved labeling,
the competitiveness of all products in the applicable market, the

 

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

 

6

 

patent and other
proprietary position of the product, the likelihood of regulatory approval
given the regulatory structure involved, the profitability of the product
including the royalties payable to licensors of patent or other intellectual
property rights, alternative products and other relevant factors. Diligent
Efforts shall be determined on a market-by-market and Indication-by-Indication
basis for a particular Product, and it is anticipated that the level of effort
shall be different for different markets, and shall change over time,
reflecting changes in the status of the Product and the market(s) involved.

 

1.48                        “Drug
Approval Application” means a Biologics License Application or an
equivalent application for Regulatory Approval required before commercial sale
or use of a pharmaceutical product in a field in a regulatory jurisdiction.

 

1.49                        “EU
Territory” means all countries that are officially recognized as member
states of the European Union. There are twenty-five (25) such member states as
of the Effective Date, namely:  Austria,
Belgium, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany,
Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the
Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, and United
Kingdom.

 

1.50                        “Executive”
means the Chief Executive Officer of a Party or such other executive
officer designated by such person. If the Chief Executive Officer position for
either Party is vacant or does not exist, then the person having the most
nearly equivalent position at such Party (or such individual’s designee) shall
be deemed to be the Executive of such Party.

 

1.51                        “Existing Product” means any one or more of the Daclizumab
Product, the Fontolizumab Product or the Volociximab Product.

 

1.52                        “Field”
means: [****].

 

1.53                        “First
Commercial Sale” means, for each Collaboration Product or Royalty Product,
as the case may be, in each country, the first sale for end use or consumption
to a Third Party of such Product in the country by a Party, its Affiliate, or
its sublicensee, after the granting of Regulatory Approval in the relevant
Field for the Collaboration Product or Royalty Product, as the case may be, by
the relevant governing authorities. First Commercial Sale excludes any sale or
other distribution for use in a clinical trial or other Development activity.

 

1.54                        “Fontolizumab
Product” means [****].

 

1.55                        “FTE Rate”
shall have the meaning set forth in Exhibit C.

 

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

 

7

 

1.56                        “Future Product” means [****].

 

1.57                        “GMP”
means current Good Manufacturing Practices, as defined under the rules and
regulations of the United States Food and Drug Administration, as the same may
be amended from time to time.

 

1.58                        “Gross
Sales” shall have the meaning set forth in Exhibit C.

 

1.59                        “IFN-”
means [****].

 

1.60                        “IFN- Target Field” means the diagnosis,
treatment or prevention of human diseases.

 

1.61                        “IFN- Target Future Product” means [****].

 

1.62                        “IFN- Target Product” means [****].

 

1.63                        “[****]
Product” means the [****].

 

1.64                        “IL-2R” means
(a) the protein commonly known as the IL-2 receptor alpha subunit “p55” “TAC
antigen”, “CD25 antigen “T-Cell Growth factor receptor”,  “TCGFR” and (b) fragments of the
foregoing.

 

1.65                        “IL-2R Target
Field” means the diagnosis, treatment or prevention of human diseases, but [****].

 

1.66                        “IL-2R
Target Future Product” means [****].

 

1.67                        “IL-2R
Target Product” means [****].

 

1.68                        “Independent
Indication” means, with respect to a particular Collaboration Product, any
Indication for which a Party has exercised its opt-out right pursuant to Section 4.1
and shall include all Opt Out Indications, provided that such Party has not
exercised its opt-in right for such Indication pursuant to Section 4.4
(after which such Indication shall cease to be an Independent Indication).

 

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

 

8

 

1.69                        “Independent
Product” means a former Collaboration Product for which a Party terminated
its participation in such Product pursuant to Section 4.1, and as to which
no Indication is (i) being developed under the Collaboration, or (ii) is
the subject of a proposal made in writing to the JSC under Section 3.10(a) as
to which the JSC has not made a decision.

 

1.70                        “Indication”
means an illness or sickness; or any interruption, cessation or disorder of
a particular bodily function, system or organ; in any case regardless of the
severity, frequency or route of any treatment.

 

1.71                        “Initial
Development Program Budget” means the budget attached hereto as part of the
initial draft Development Plan attached as Exhibit 3.3.

 

1.72                        “Invention”
means any process, method, composition of matter, article of manufacture,
discovery or finding that is conceived and/or reduced to practice (whether or
not patentable).

 

1.73                        “Joint
Commercialization Committee” or “JCC” shall have the meaning set forth in Section 2.4(a).

 

1.74                        “Joint
Development Committee” or “JDC” shall have the meaning set forth in Section 2.3(a).

 

1.75                        “Joint
Finance Committee” or “JFC” shall have the meaning set forth in Section 2.5(a).

 

1.76                        “Joint
Inventions” means all Inventions that are jointly made during the Term by
at least one (1) PDL employee or person contractually required to assign
or license patent rights covering such inventions to PDL and at least one (1) Biogen
Idec employee or person contractually required to assign or license patent
rights covering such inventions to Biogen Idec.

 

1.77                        “Joint
Patent Committee” or “JPC” shall have the meaning set forth in Section 2.6(a).

 

1.78                        “Joint
Patent Rights” means all Patent Rights that claim or cover Joint Inventions.

 

1.79                        “Joint
Steering Committee” or “JSC” shall have the meaning set forth in Section 2.2(a).

 

1.80                        “Know-How”
means Inventions, discoveries, trade secrets, information, experience, data,
formulas, procedures, technology and results (whether or not patentable), which
at the time of use constitute Confidential Information, including discoveries,
formulae, materials including biological materials, practices, methods,
knowledge, know-how, processes, experience and test data (including physical,
chemical, biological, toxicological, pharmacological, clinical, and veterinary
data), dosage regimens, control assays, product specifications, analytical and
quality control

 

9

 

data, marketing, pricing,
distribution cost and sales data or descriptions.

 

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

 

1.82                        “Manufacturing”
means any activities related to the manufacturing of a Collaboration Product or
Royalty Product, as the case may be, or any ingredient thereof, including
manufacturing process development, technology transfer, and scale-up,
establishment of manufacturing capacity, evaluation, qualification and
validation of manufacturing processes and facilities, manufacturing active
ingredients or supplies of such Product for Development, manufacturing such
Product for commercial sale, packaging, in-process and finished product
testing, release of product or any component or ingredient thereof, and quality
assurance activities related to manufacturing, ongoing stability tests and
regulatory activities related to any of the foregoing.

 

1.83                        “Manufacturing
Party” shall have the meaning set forth in Section 8.1.

 

1.84                        “Milestone
Indication” means  any Indication
as to which a separate Drug Approval Application is required for approval in a
jurisdiction. By way of example, (i) for ophthalmology Indications,
macular degeneration and diabetic retinopathy are two separate Milestone
Indications, (ii) with respect to autoimmune disease indications, Crohn’s
disease and ulcerative colitis are two separate Milestone Indications and (iii) with
respect to cancer Indications, “Milestone Indication” means a cancer of a
particular organ or any metastatic progression thereof, including as distinct
Milestone Indications, breast cancer, prostate cancer, colon cancer, rectal
cancer, ovarian cancer, uterine cancer, gastric cancer, bladder cancer, brain
cancer, bile duct cancer, pancreatic cancer, kidney cancer, stomach cancer,
head-and-neck cancer, esophageal cancer, liver cancer, and lung cancer.

 

1.85                        “MS” means
multiple sclerosis.

 

1.86                        “Net Sales”
shall have the meaning set forth in Exhibit C.

 

1.87                        “Non-Antibody
Product” means any pharmaceutical product having as an active ingredient
any synthetic molecule or biologic molecule other than an Antibody, including a
compound that has a molecular weight that is less than or equal to 1000
daltons, fusion protein (other than an Antibody), antisense molecule, siRNA,
nucleic acid, peptide, polypeptide (other than an Antibody) or fragment
thereof.

 

1.88                        “Non-Developing
Party” shall have the meaning set forth in Section 4.1(a).

 

1.89                        “North
American Territory” means the United States (including its possessions and
territories) and Canada.

 

1.90                        “Ongoing
Development Expense” shall have the meaning set forth in Exhibit C.

 

10

 

1.91                        “Operating
Expenses” shall have the meaning set forth in Exhibit C.

 

1.92                        “Opt Out
Indications” shall have the meaning set forth in Section 4.1(b)(iii).

 

1.93                        “Other
Out-of-Pocket Costs” shall have the meaning set forth in Exhibit C.

 

1.94                        “Patent
Expenses” means the sum of all out-of-pocket expenses reasonably incurred
by a Party to prepare, file, prosecute and maintain PDL Target Patent Rights,
Biogen Idec Target Patent Rights and Joint Patent Rights, including the costs
of interferences/oppositions proceedings with respect to such Patent Rights,
provided in each case such expenses have been incurred in accordance with
Sections 12.4 and 12.5 and subject to Section 12.7 (b)(vii) below. In
addition, Patent Expenses shall include the costs of freedom to operate
searches and analyses with respect to Collaboration Products, to the extent
such searches or analyses have been authorized by the JPC and approved by the
JSC.

 

1.95                        “Patent Rights” means (a) all patents and patent
applications in any country or supranational jurisdiction, and (b) any
substitutions, divisions, continuations, continuations-in-part, reissues,
renewals, registrations, confirmations, re-examinations, extensions,
supplementary protection certificates and the like, and any provisional
applications, of any such patents or patent applications.

 

1.96                        “PDL
Inventions” means all Inventions that (a) relate to or are useful with
any Antibody Product or Non-Antibody Product that are directed against or
incorporate a  Collaboration Target, (b) are
made during the Term by one or more employees of PDL or its Affiliates or
persons contractually required to assign or license patent rights covering such
inventions to PDL or its Affiliates, in the course of performing PDL’s
obligations, or exercising PDL’s rights, under this Agreement, and (c) are
not Joint Inventions.

 

1.97                        “PDL
Know-How” means all Know-How that is (a) Controlled by PDL or its
Affiliates at any time during the Term and (b) reasonably necessary or
useful for Biogen Idec to (i) perform its obligations under this
Agreement; or (ii) develop or commercialize a Collaboration Product or a
Royalty Product in the Field; provided that PDL Know-How shall not include methods
of manufacturing, production and test methods, procedures and batch records,
manufacturing and testing summary data, process and assay validation
information, designing, developing or preparing Antibodies including methods of
humanizing Antibodies, methods of reducing the immunogenicity of Antibodies,
methods of modifying effector function, and methods of increasing the affinity
or half-lives of Antibodies unless necessary for Biogen Idec to perform its
Development or Commercialization obligations or to exercise its rights
hereunder.

 

1.98                        “PDL
Patent Rights” means Patent Rights that claim  Technology Controlled by PDL or its
Affiliates at any time during the Term and that relate in whole or in part to
the Collaboration Targets or the manufacture, use or sale of Products. PDL

 

11

 

Patent Rights shall not
include Joint Patents but shall include the Queen Patents and PDL Target Patent
Rights. As of the Effective Date, to PDL’s knowledge, all PDL Patent Rights are
listed on Exhibit A hereto.

 

1.99                        “PDL
Target Patent Rights” means Patent Rights that claim Technology Controlled
by PDL or its Affiliates at any time during the Term and that relate in
substantial part to the Collaboration Targets or the manufacture, use or sale
of Products. PDL Target Patent rights shall not include the Queen Patents.

 

1.100                 “PDL Technology”
means PDL Patent Rights and PDL Know-How.

 

1.101                 “Phase 1 Trial” means,
as to a specific pharmaceutical product, a well conducted and lawful study in
humans of the safety of such product, which is prospectively designed to
generate sufficient data (if successful) to commence a Phase 2 Trial (or
foreign equivalent) of such product, as further defined in Federal Regulation
21 C.F.R. 312.21(a), as amended from time to time, or the corresponding
regulation in jurisdictions other than the United States. A Phase 1 Trial shall
be deemed initiated upon the enrollment of the first patient.

 

1.102                 “Phase 2 Trial” means,
as to a specific pharmaceutical product, a well conducted and lawful study,
conducted anywhere in the world in diseased humans, of the feasibility, safety,
dose ranging and efficacy of such product, that is prospectively designed to
generate sufficient data (if successful) to commence a Phase 3 Trial (or
foreign equivalent) of such product, as further defined in 21 C.F.R. 312.21(b),
as amended from time to time, or the corresponding regulation in jurisdictions
other than the United States. For the avoidance of doubt, a Phase 2 Trial
requires enrollment of patients with the applicable disease or condition and is
aimed to provide a measure of efficacy in addition to short-term tolerability. A
Phase 2 Trial shall be deemed initiated upon the enrollment of the first
patient.

 

1.103                 “Phase 3 Trial” means,
as to a specific pharmaceutical product, a well conducted and lawful study in
humans performed to gain evidence of the efficacy of such product in a target
population, and to obtain expanded evidence of safety for such product that is
needed to evaluate the overall benefit-risk relationship of such product and
provide an adequate basis for physician labeling, as described in 21 C.F.R.
312.21(c), as amended from time to time, or the corresponding regulation in
jurisdictions other than the United States. A Phase 3 Trial shall be deemed
initiated upon the enrollment of the first patient.

 

1.104                 “Phase 4 Trial” means
any clinical trial in an Indication to be conducted after a Regulatory Approval
which was mandated by the applicable Regulatory Authority as a condition of
such Regulatory Approval.

 

1.105                 “Physician Group”
means a category of physicians and other medical professionals to whom one
or more Products is being Promoted, or will be Promoted if then-current
Development activities are successful. For purposes of this definition,
all  oncologists (without regard to
whether they treat a particular type or stage of cancer)

 

12

 

shall be a single
Physician Group.

 

1.106                 “Post-Approval
Clinical Trial” shall have the meaning set forth in Exhibit C.

 

1.107                 “Product”
means [****].

 

1.108                 “Profit Sharing
Territory” means, with respect to a particular Product, those countries or
territories outside the Royalty Territory, if any, for such Product.

 

1.109                 “Promotion” or “Promote”
means the marketing and advertising of a Collaboration Product in the
relevant Field in the applicable territory in accordance with the relevant
Commercialization Plan, including medical education, information and
communication, market development and medical liaison activities, but not
including Detailing.

 

1.110                 “Queen Patents” means
those issued patents and patent applications Controlled by PDL that claim
priority under 35 USC §120 to U.S. Patent Application Serial No. [****].

 

1.111                 “Recipient” shall
have the meaning set forth in Section 14.2.

 

1.112                 “Regulatory
Approval” means, with respect to a particular regulatory jurisdiction, all
approvals (including pricing and reimbursement approvals), product and/or
establishment licenses, registrations or authorizations of any regional,
federal, state or local regulatory agency, department, bureau or other
governmental entity, necessary for the commercial sale of Products in such
regulatory jurisdiction.

 

1.113                 “Regulatory
Filings” means all applications, filings, dossiers and the like submitted
to a regulatory authority for the purpose of obtaining Regulatory Approval from
that regulatory authority. Regulatory Filings shall include all Drug Approval
Applications.

 

1.114                 “[****]” means
the [****] except to the extent such rights are later included within the scope
of this Agreement pursuant to Section 3.8.

 

1.115                 “Responsible
Commercialization Party” means the Party having the responsibilities set
forth in Article 6 for the execution and implementation of the
JSC-approved Commercialization Plan for the Commercialization of a particular
Collaboration Product, but excluding regulatory activities specifically
assigned to the Responsible Regulatory Party hereunder.

 

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1.116                 “Responsible
Development Party” means the Party having the responsibilities set forth in
Article 3 for the execution and implementation of the JSC-approved
Development Plan for the Development of a particular Collaboration Product, but
excluding any regulatory or Manufacturing activities.

 

1.117                 “Responsible
Regulatory Party” means the Party having the responsibilities set forth in Article 5
for the execution and implementation of the regulatory activities set forth in
the JSC-approved Development Plan for a particular Collaboration Product.

 

1.118                 “[****]” means
[****].

 

1.119                 “[****]
Agreements” means (a) [****], and (b) [****].

 

1.120                 “ROW Territory” means
all parts of the Territory not included in the North American Territory or EU
Territory.

 

1.121                 “Royalty Product”
means (a) an Independent Product; (b) a Collaboration Product with
respect solely to any Independent Indication; or (c) with respect solely
to the ROW Territory, a Collaboration Product, an Independent Product or
Independent Indication.

 

1.122                 “Royalty
Territory” means, with respect to a particular Product, those countries or
territories in which such Product is a Royalty Product.

 

1.123                 “Sales Costs” shall
have the meaning set forth in Exhibit C.

 

1.124                 “Sales Returns &
Allowances” shall have the meaning set forth in Exhibit C.

 

1.125                 “Strategic Plan”
means, on a Collaboration Product-by-Collaboration Product basis, a written
document establishing, for such Collaboration Product, a specific multi-year
global strategic plan and budget.

 

1.126                 “Sublicensing
Revenues” means [****] approved pursuant to Section 3.7(c) [****].

 

1.127                 “Technology”
means any technical and other information, discoveries, inventions,
modifications, improvements, data, results, designs, formulae, ideas, analyses,
methods, techniques, assays, research plans, procedures, tests, processes
(including manufacturing processes, specifications and techniques), laboratory
records,

 

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14

 

chemical,
pharmacological, toxicological, clinical, analytical and quality control data,
reports, summaries, and information contained in submissions to, and
information from, regulatory authorities (in each case whether patentable or
not).

 

1.128                 “Term” shall
have the meaning set forth in Section 16.1.

 

1.129                 “Territory”
means all the countries of the world, and their territories and possessions.

 

1.130                 “Third Party” means
any person or entity other than a Party or its Affiliates.

 

1.131                 “Third Party
License” means (a) any of the license agreements set forth on Exhibit B
and (b) any license agreement entered into by a Party with a Third Party
after the Effective Date that the Parties (or the JSC, to the extent
authorized) agree in writing is necessary for the Development, Manufacture or
Commercialization of one or more Products in the applicable territory under
this Agreement.

 

1.132                 “Third Party
License Fees” shall mean license fees, royalties and other amounts incurred
by a Party under a Third Party License or in-license after the Effective Date.

 

1.133                 “Transplant Field”
means all indications that involve the suppression of rejection of
transplanted organs, bone marrow or other tissue, including, solid organ
transplantation (including tolerance induction and xenotransplantation), bone
marrow transplantation, graft versus host disease and cell transplantation.

 

1.134                 “Valid Claim”
means a claim in any (a) [****]; or (b) [****].

 

1.135                 “Volociximab
Product” means [****].

 

Any reference in this Agreement to an Article,
Section, subsection, paragraph, clause, Schedule or Exhibit shall be
deemed to be a reference to an Article, Section, subsection, paragraph, clause,
Schedule or Exhibit, of or to, as the case may be, this Agreement, unless
otherwise indicated. Unless the context of this Agreement otherwise requires, (a) words
of any gender include each other gender, (b) words such as “herein”, “hereof”,
and “hereunder” refer to this Agreement as a whole and not merely to the
particular provision in which such words appear, (c) words using the
singular shall include the plural, and vice versa, and (d) the words “include,”
“includes” and “including” shall be deemed to be followed by the phrase “but not
limited to”, “without limitation”, “inter alia” or words of similar import.

 

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15

 

ARTICLE 2

GOVERNANCE OF THE COLLABORATION

 

2.1                               Scope
of the Agreement. Pursuant and subject to the terms of this Agreement,
within the Field and the Territory, the Parties agree to engage in Development activities
with the goal of obtaining Regulatory Approval for Collaboration Products, as
soon as reasonably practicable. Each Party agrees, during the Term, to Develop
Collaboration Products only under the terms of this Agreement except as
contemplated under the terms of the [****] Agreements. The Parties’ intent is
to Develop Collaboration Products as expeditiously as reasonably practicable
with the resources and responsibilities allocated between the Parties on the
basis of each Party’s respective capabilities and availability of adequate
capacities. Unless otherwise specified in this Agreement, the guiding
principles to be followed by the Parties are attached hereto as Exhibit 2.1.

 

2.2                               Joint
Steering Committee.

 

(a)                                  Formation
and Purpose. As of the Effective Date, the Parties shall create a Joint
Steering Committee (the “JSC”) to
oversee the overall strategy of the Development and Commercialization of
Collaboration Products and carry out the functions described in this Section 2.2.
The purposes of the JSC shall be to provide overall strategic decision-making
and oversight of the Development and Commercialization of Collaboration
Products, including the development of a Strategic Plan, a [****] high-level
budget forecast and Approved Budget (consistent with the Development Plans to
be prepared pursuant to Section 3.3), oversight of the activities of the
Collaboration Committees, review of recommendations from the Collaboration
Committees regarding strategic and aggregate budget issues, allocation of
financial and other resources among collaboration projects, and resolution of
any matters not resolved by any other Collaboration Committee. The JSC shall
operate by the procedures set forth in this Section 2.2 and in Section 2.7.
The members of the JSC appointed by a party shall collectively exercise one
vote as to any matter upon which a vote is taken

 

(b)                                  Membership
of the JSC. Each Party shall designate representatives who are employees of
such Party or an Affiliate of such Party (not to exceed [****] for each Party)
with appropriate expertise to serve as members of the JSC. Each representative
may serve on more than one Committee as appropriate in view of the individual’s
expertise and may be substituted by another person with notice

 

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16

 

to the other Party. Each
party may replace any or all of its representatives at any time upon prior
written notice to the other Party.

 

(c)                                  Specific
Responsibilities of the JSC. In addition to its general responsibilities
set forth in Section 2.2(a), the JSC shall, in particular:

 

(i)                                    prepare
and approve a Strategic Plan for the Collaboration and all Collaboration
Products, a [****] high-level budget forecast and an Approved Budget for the
Collaboration, and within such Approved Budget, make high-level budget
allocations among particular Development Programs. Such Strategic Plan will
guide the management of the Collaboration, and strategic decision-making
regarding Collaboration Products. The Strategic Plan shall be in a form to be
determined by the JSC (it being understood that the Parties will endeavor to
approve such Strategic Plan, [****] high-level budget forecast, and Approved
Budget within [****] following the Effective Date);

 

(ii)                                review
and approve the Development Plan and Commercialization Plan for each
Collaboration Product, and the Annual Workplans/Budget including any amendments
and revisions thereto, submitted to it by the JDC and JCC, respectively, as
soon as reasonably practicable after receipt thereof, but in no event later
than the dates specified in Section 3.3(c);

 

(iii)                            review
and approve decisions to terminate Collaborative efforts on Collaboration
Products, including with respect to specific Indications;

 

(iv)                               review
and approve decisions to proceed with the Development of any Future Products as
part of a Development Plan therefor;

 

(v)                                   establish
subcommittees pursuant to Section 2.7(c), oversee the activities of all
subcommittees so established, and address disputes or disagreements arising in
all such subcommittees;

 

(vi)                               attempt
to resolve disputes or disagreements arising in any other Collaboration
Committee or pursuant to Section 5.2(a);

 

(vii)                           review
and approve any changes in the Responsible Regulatory Party, the Responsible
Development Party, the Responsible Commercialization Party or the Manufacturing
Party, when and as necessary;

 

(viii)                       [****];
and

 

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

 

17

 

(ix)                              perform
such other functions as the Parties may agree in writing or as otherwise
assigned by this Agreement.

 

(d)                                  Meetings
of the JSC. The JSC shall meet at least twice every calendar  year, on such dates and at such times as agreed to by PDL
and Biogen Idec, with all scheduled in-person meetings to alternate between
Fremont, California and a Biogen Idec site to be designated by Biogen Idec
prior to such meeting, or at other locations as determined by the JSC. In
addition, either Party may convene a special meeting of the JSC by no less than
ten (10) business days’ prior written notice. Meetings may be held by
audio or video conference with the consent of each Party, provided that at
least one (1) meeting per calendar year shall be held in person.
Additional representatives or consultants may from time to time, by mutual
consent of the Parties, be invited to attend JSC meetings, subject to such
representative’s or consultant’s written agreement to comply with the
requirements of this Agreement. Each Party shall be responsible for its own
expenses for participating in the JSC. Meetings of the JSC shall be effective
only if at least three (3) representatives of each Party are present or
participating.

 

2.3                               Joint
Development Committees.

 

(a)                                  Formation
and Purpose. Within thirty (30) days after the Effective Date, the Parties
shall create a Joint Development Committee (the “JDC”)
for each Development Program to oversee the Development of the Existing
Products in such program. In addition, within thirty (30) days after a decision
by the JSC to Develop a Future Product, the JSC shall decide whether to create
a JDC to oversee the Development of such Future Product hereunder or include
such Development within the scope of an existing JDC. The purposes of each JDC
shall be to (i) review and recommend to the JSC Development Plans and
Annual Workplan/Budgets prepared by the Responsible Development Party for its
particular Collaboration Products and (ii) monitor and facilitate, as
necessary, the implementation of the Development Plans by the Parties. Each JDC
shall operate by the procedures set forth in this Section 2.3 and in Section 2.7.

 

(b)                                  Membership
of the JDC. Each Party shall designate representatives who are employees of
such Party or an Affiliate of such Party (not to exceed six (6) for each
Party) with appropriate expertise to serve as members of each JDC. Each Party
shall include representatives from the functions for which it is the
Responsible Party. Each representative may serve on more than one Committee as
appropriate in view of the individual’s expertise and may be substituted by
another person with notice to the other Party. Each party may replace any or
all of its representatives at any time upon prior written notice to the other
Party.

 

(c)                                  Specific
Responsibilities of the JDC. In addition to its general responsibilities
set forth in Section 2.3(a), the JDC shall, in particular:

 

(i)                                    consult
with the Responsible Development Party on its preparation of a Development Plan
and the Annual Workplans/Budget for each

 

18

 

Collaboration Product,
including with respect to budgets, clinical trial strategy, Regulatory Approval
requirements and clinical supply requirements;

 

(ii)                                review
and recommend to the JSC for approval each Development Plan as soon as
reasonably practicable after receipt thereof, but in no event later than the
dates specified in Section 3.3(c);

 

(iii)                            review
and recommend to the JSC for approval the Annual Workplan/Budget proposed by
the Responsible Development Party as soon as reasonably practicable after
receipt thereof, but in no event later than the dates specified in Section 3.3(c);

 

(iv)                               review
changes to the Development Plan proposed by the Responsible Development Party
and recommend to the JSC for approval as soon as reasonably practicable after
receipt thereof, but in no event later than the dates specified in Section 3.3(c);

 

(v)                                   establish
subcommittees pursuant to Section 2.7(c), oversee the activities of all
subcommittees so established, and address disputes or disagreements arising in
all such subcommittees;

 

(vi)                               present
disputes not resolvable by the JDC to the JSC for resolution; and

 

(vii)                           perform
such other functions as the Parties may agree in writing or as otherwise
assigned by this Agreement.

 

(d)                                  Meetings
of the JDC. The JDC shall meet as frequently as members of the JDC
determine is required (but in no event, less frequently than once every month
during the first six (6) months following the Effective Date and once
every Calendar Quarter thereafter), on such dates and at such times as agreed
to by PDL and Biogen Idec, with all scheduled in-person meetings to alternate
between a PDL site and a Biogen Idec site as designated by the respective Party
prior to such meeting prior to such meeting, or at other locations as
determined by the JDC. Meetings may be held by audio or video conference with
the consent of each Party, provided that at least two (2) meetings per
calendar year shall be held in person. Additional consultant’s or
representatives may from time to time, by mutual consent of the Parties, be
invited to attend JDC meetings, subject to such consultant’s or representative’s
written agreement to comply with the requirements of this Agreement. Each Party
shall be responsible for its own expenses for participating in each JDC. Meetings
of the JDC shall be effective only if more than one-half of the representatives
of each Party are present or participating.

 

2.4                               Joint
Commercialization Committees.

 

(a)                                  Formation
and Purpose. The Parties shall form a Joint Commercialization Committee
(the “JCC”) for such Collaboration Product to
oversee the Commercialization thereof not later than the date that is six (6) months
prior to the

 

19

 

anticipated commencement
of the first Phase 3 Trial with respect to a Collaboration Product or such
earlier date as the JSC may determine. The purpose of each JCC shall be to (i) review
and recommend to the JSC Commercialization Plans prepared by the Responsible
Commercialization Party for its particular Collaboration Products and (ii) monitor
and facilitate, as necessary, the implementation of such Commercialization
Plans by the Parties. Each JCC shall operate by the procedures set forth in
this Section 2.4 and in Section 2.7.

 

(b)                                  Membership
of the JCC. Each Party shall designate representatives who are employees of
such Party or an Affiliate of such Party (not to exceed three (3) for each
Party) with appropriate expertise to serve as members of each JCC. Each Party
may replace any or all of its representatives at any time upon prior written
notice to the other Party. Each representative may serve on more than one
Committee as appropriate in view of the individual’s expertise and may be
substituted by another person with notice to the other Party.

 

(c)                                  Specific
Responsibilities of the JCC. In addition to its general responsibilities
set forth in Section 2.4(a), the JCC shall, in particular:

 

(i)                                    promptly
following the formation of each JCC, develop and recommend to the JSC a
Strategic Plan for the Commercialization of the applicable Collaboration
Product prior to the submission by the Responsible Commercialization Party of a
Commercialization Plan for such Product;

 

(ii)                                consult
with the Responsible Commercialization Party on its preparation of a
Commercialization Plan for each Collaboration Product, including budgets to be
included therein;

 

(iii)                            review
and recommend to the JSC for approval each annual Commercialization Plan as
soon as reasonably practicable after receipt thereof, but in no event later
than the dates specified in Section 3.3(c);

 

(iv)                               review
changes to the Commercialization Plan proposed by the Responsible
Commercialization Party and recommend to the JSC for approval as soon as
reasonably practicable after receipt thereof, but in no event later than the
dates specified in Section 3.3(c);

 

(v)                                   review
initial Collaboration Product launch concepts for such Collaboration Product
Promotional material prior to the creation and use thereof;

 

(vi)                               serve
as a forum for discussion of issues presented by a Party with respect to the
Commercialization of Collaboration Products;

 

(vii)                           establish
subcommittees pursuant to Section 2.7(c), oversee the activities of all
subcommittees so established, and address disputes or disagreements arising in
all such subcommittees;

 

(viii)                       present
disputes not resolvable by the JCC to the JSC for

 

20

 

resolution; and

 

(ix)                              perform
such other functions as the Parties may agree in writing or as otherwise
assigned by this Agreement.

 

(d)                                  Meetings
of the JCC. The JCC shall meet as frequently as members of the JCC
determine is required (but in no event, less frequently than once every
Calendar Quarter), on such dates and at such times as agreed to by PDL and
Biogen Idec, with all scheduled in-person meetings to alternate between a PDL
site and a Biogen Idec site as designated by the respective Party prior to such
meeting, or at other locations as determined by the JCC. Meetings may be held
by audio or video conference with the consent of each Party, provided that at
least two (2) meetings per calendar year shall be held in person.
Additional representatives or consultants may from time to time, by mutual
consent of the Parties, be invited to attend JCC meetings, subject to such
representative’s or consultant’s written agreement to comply with the
requirements of this Agreement. Each Party shall be responsible for its own
expenses for participating in each JCC. Meetings of each JCC shall be effective
only if more than one-half of the representatives of each Party are present or
participating.

 

2.5                               Joint
Finance Committee.

 

(a)                                  Formation
and Purpose. Within thirty (30) days after the Effective Date, the Parties
shall create a single Joint Finance Committee (the “JFC”)
for the Collaboration. The JFC shall operate under the direction of the JSC to
provide services to and consult with the JDC and the JCC in order to address
the financial, budgetary and accounting issues that arise in connection with
the Development Plans and updates thereto as described in Exhibit C, as
well as Commercialization Plans and updates thereto. Additionally, the JFC will
lead the economic analysis to help drive decisions on future Collaboration
investments, and lead the reporting and reconciliation processes outlined in Exhibit C.
The JFC shall operate by the procedures set forth in this Section 2.5 and
in Section 2.7.

 

(b)                                  Membership
of the JFC. Each Party shall designate two (2) employees of such Party
or an Affiliate of such Party. Each Party may replace any or all of its
representatives at any time upon prior written notice to the other Party. Such
representatives will include individuals with expertise and responsibilities in
the areas of accounting, cost allocation, budgeting and financial reporting. Each
representative may serve on more than one Committee as appropriate in view of
the individual’s expertise.

 

(c)                                  Meetings
of the JFC. The JFC shall meet as frequently as members of the JSC
determine is required (but in no event, less frequently than twice every
calendar year), on such dates and at such times as agreed to by PDL and Biogen
Idec, with all scheduled in-person meetings to alternate between a PDL site and
a Biogen Idec site as designated by the respective Party prior to such meeting,
or at other locations as determined by the JFC. All meetings shall be held in
person or by audio or videoconference. Additional representatives or
consultants may from time to time, by mutual consent of the Parties, be invited
to attend JFC meetings, subject to such

 

21

 

representative’s or
consultant’s written agreement to comply with the requirements of this
Agreement. Each Party shall be responsible for its own expenses for
participating in the JFC. Meetings of the JFC shall be effective only if all
representatives of each Party are present or participating.

 

2.6                               Joint
Patent Committee.

 

(a)                                  Formation
and Purpose. Within thirty (30) days after the Effective Date, the Parties
shall create a single Joint Patent Committee (the “JPC”)
for the Collaboration. The purposes of the JPC shall be to prepare, file and
prosecute the PDL Patent Rights, the Biogen Idec Patent Rights and the Joint
Patent Rights, as described in and subject to the terms of Article 12. The
JPC shall operate by the procedures set forth in this Section 2.6 and in Section 2.7.

 

(b)                                  Membership
of the JPC. Each Party shall designate an employee of such Party or an
Affiliate of such Party with appropriate expertise to serve as members of the
JPC. Each Party may replace any or all of its representatives at any time upon
prior written notice to the other Party. Each representative may serve on more
than one Committee as appropriate in view of the individual’s expertise.

 

(c)                                  Specific
Responsibilities of the JPC. In addition to its general responsibilities
set forth in Section 2.6(a), the JPC shall, in particular be responsible
for:

 

(i)                                    Managing
continued prosecution of the PDL Patent Rights, the Biogen Idec Patent Rights
and the Joint Patent Rights as described and in accordance with the terms of Article 12;

 

(ii)                                Reviewing
invention disclosures and publications in accordance with the terms of Article 12
and Section 14.3;

 

(iii)                            Reviewing
and managing licensing, enforcement activities and conflicts involving
intellectual property rights to the extent provided in Article 12;

 

(iv)                               Providing
advice, periodic updates and reports to the JSC regarding intellectual property
matters;

 

(v)                                   Using
reasonable efforts to provide a freedom to operate analysis relating to
Collaboration Products prior to the Phase 2 Trial completion;

 

(vi)                               Using
good faith efforts to keep the Parties informed as to material developments
with respect to the prosecution of, and any adversarial proceedings involving
intellectual property rights, to the extent a Party’s representative on the JPC
concludes that such prosecution or proceeding directly affects a Collaboration
Product; and

 

(vii)                           Performing
such other functions as the Parties may agree in writing or as otherwise assigned
by this Agreement.

 

22

 

(d)                                  Meetings
of the JPC. The JPC shall communicate on such dates and at such times as
agreed upon by its members but in no event, less frequently than once every
other Calendar Quarter. Meetings may be held by audio or video conference with
the consent of each Party, provided that at least two (2) meetings per
calendar year shall be held in person with all scheduled in-person meetings to
alternate between a PDL site and a Biogen Idec site as designated by the
respective Party prior to such meeting, or at other locations as determined by
the JPC. Each Party may permit visitors to attend meetings of the JPC. Each
Party shall be responsible for its own expenses for participating in the JPC. Meetings
of the JPC shall be effective only if the representative of each Party is
present or participating.

 

(e)                                  Decisions;
Actions Without Meetings. Subject to Article 12 below, any approval,
determination or other action of the JPC shall require unanimous agreement of
both members of the JPC. In the event that a decision can not be reached by the
JPC, then the matter shall be referred to the respective senior management of
the in-house legal department of each Party. In the event such senior management
is unable to resolve the matter, then the matter will be resolved pursuant to Section 2.8
(b) and (c) and Article 17. Unless otherwise agreed by the
Parties, decisions of the JPC shall be determined in a manner designed to
ensure a reasonable scope of protection for the PDL Patent Rights, the Biogen
Idec Patent Rights and the Joint Patent Rights, to obtain broad patent
protection for Collaboration Products and to strengthen the Parties’ ability to
broadly protect and enforce such Patent Rights against infringers within the
scope of Collaboration Products.

 

2.7                               General
Committee Procedures.

 

(a)                                  Chairperson.
Each Collaboration Committee will be led by a representative of one of the
Parties (the “Chairperson”), appointed as
follows:  [****] shall select from its
representatives a Chairperson for each of the Committees for the period
commencing on the Effective Date and ending on [****] and [****] shall select
from its representatives a Chairperson for each of the Committees for the
period commencing on [****] and ending on [****]. Thereafter, selection of the
Chairperson for each of the Committees will [****].

 

(b)                                  Responsibilities.
The Chairperson shall have only those responsibilities set forth in this Section 2.7(b).
The Chairperson of each Collaboration Committee shall be responsible for
calling meetings, preparing and circulating an agenda in advance of each
meeting of such Collaboration Committee, provided, that a Chairperson shall
call a meeting of the applicable Collaboration Committee promptly upon the
written request of either Party to convene such a meeting. In addition, each

 

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

 

23

 

Chairperson shall bear
the responsibility for preparing written draft minutes of that Collaboration
Committee’s meetings in reasonable detail and for distributing such draft
minutes to all members of that Collaboration Committee for comment and review
within [****] after the relevant meeting. The members of the Collaboration
Committee shall have [****] to provide comments. Each Chairperson shall
incorporate timely received comments and distribute revised minutes to all
members of that Collaboration Committee for their final review and approval
within [****] after the relevant meeting.

 

(c)                                  Subcommittees.
From time to time, each Committee may establish and delegate duties to
other committees or sub-committees on an “as-needed” basis to oversee
particular projects or activities. Each such subcommittee shall be constituted
and shall operate as the JSC, JDC, JCC, JFC or JPC, as the case may be,
determines; provided, that each Party shall have the right to equal
representation on any such subcommittee. Subcommittees may be established on an
ad hoc basis for purposes of a specific project for the life of a Collaboration
Product, or on such other basis as the applicable Committee may determine. Each
subcommittee and its activities shall be subject to the oversight, review and
approval of, and shall report to, the Committee that established such
subcommittee. In no event shall the authority of the subcommittee exceed that
specified for the relevant Committee in this Article 2.

 

(d)                                  Limitations
of Committee Powers. Each Committee shall have only such powers as are
specifically delegated to it hereunder and shall not be a substitute for the
rights of the Parties. Without limiting the generality of the foregoing, no
Committee shall have any power to amend this Agreement. Any amendment to the
terms and conditions of this Agreement shall be implemented pursuant to Section 18.3
below.

 

(e)                                  Authority.
The Parties agree that, in voting on matters as described in this Article 2,
it shall be conclusively presumed that each voting member of the JSC or other
Committee has the authority and approval of such member’s respective senior
management in casting his or her vote.

 

2.8                               Committee
Decision-Making.

 

(a)                                  Consensus;
Good Faith; Action Without Meeting. Subject to the terms of this Section 2.8,
each Committee will take action by [****], assuming a quorum for such Committee
is present. Consistent with Exhibit 2.1, the members of each Committee
shall act in good faith to cooperate with one another to reach agreement with
respect to issues to be decided by the Committee. Action that may be taken at a
meeting of a Committee also may be taken without a meeting if a written

 

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

 

24

 

consent setting forth the
action so taken is signed by all of the Committee representatives of each
Party.

 

(b)                                  Failure
to Reach Consensus by a Collaboration Committee. If a Collaboration
Committee is unable to reach [****] within [****] of its initial consideration
of any matter over which such Committee has authority and responsibility, then
the Committee shall escalate the matter to the JSC for decision; provided, that
such Committee may escalate the matter to the JSC prior to the expiration of
such [****] with the consent of both Parties.

 

(c)                                  [****]:

 

(i)                                    With
respect to any [****] shall [****] with respect to all matters, except as
described below in clause (ii) and (iv) and provided that [****];

 

(ii)                                Each
Party shall possess final decision-making authority with respect to
Manufacturing processes during the time that such Party is the Manufacturing
Party under this Agreement, but for avoidance of doubt in each case, such
authority does not include the ability to terminate Manufacturing of a Product
in contravention of the terms of any Clinical Supply arrangement or a
Commercial Supply Agreement or to unilaterally alter the terms of any Clinical
Supply arrangement or Commercial Supply Agreement including quantities or
forecasts.

 

(iii)                            [****].

 

(iv)                               [****].

 

2.9                               Compliance
with [****] Agreements. PDL shall have no obligation to act in any way that
would breach its obligations under the [****] Agreements.

 

2.10                        [****].

 

ARTICLE 3

DEVELOPMENT OF COLLABORATION PRODUCTS

 

3.1                               Overview.
The Collaboration between the Parties is divided into three Development
Programs, one for each Collaboration Target. This Article 3 describes the
rights and obligations of the Parties with respect to the Development of
Collaboration Products within the various Development Programs, including both
Existing Products and Future Products.

 

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

 

25

 

3.2                               Responsible
Development Party. Subject to the roles of the various Collaboration
Committees described in Article 2, the allocation of primary
responsibility for the creation of Development Plans and the implementation of
Development activities of Collaboration Products described in such Development
Plans shall be given to the Responsible Development Party. The allocation of
such responsibilities shall be as follows: 

 

	
   

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  North
  American Territory

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  EU
  Territory and ROW Territory

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  

 

3.3                               Development
Plan.

 

(a)                                  Scope.
All  Development of Collaboration Products
shall be conducted pursuant to a Collaboration Product specific, multi-year,
global development plan and budget (in each case, a “Development
Plan”), which shall set forth all anticipated Development activities
and timelines, allocate responsibility for carrying out such activities between
PDL and Biogen Idec and include an associated [***] development budget with
respect to each such Collaboration Product, plus a forecast of the total,
multi-year costs of any clinical trials included within such plan. Primary
responsibility for developing and implementing each such Development Plan shall
reside with the Responsible Development Party for its respective Collaboration
Product. The non-Responsible Development Party will have the right to consent
to any Development activities assigned to such Party under the terms of a
Development Plan. The initial draft Development Plans, including the Initial
Development Program Budget, for the Existing Products are attached hereto as Exhibit 3.3.
The Parties intend that the draft Development Plans attached in Exhibit 3.3
will serve as the Development Plans until first Development Plans are prepared
and approved pursuant to Section 3.3(b).

 

(b)                                  Development
Plan and First Annual Workplan/Budget. The Responsible Development Party
shall in consultation with the relevant JDC pursuant to Section 2.3(c)(i) prepare
a Development Plan for each Existing Product as soon as practicable following
the Effective Date, and each such Development Plan, when

 

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

 

26

 

approved, shall supersede
the applicable draft Development Plan attached as Exhibit 3.3. The
Responsible Development Party will also prepare a draft of an Annual
Workplan/Budget for [****] after consultation with the relevant JDC, specifying
in detail the Development activities to be performed during the year,
designation of which Party is responsible for each task, staffing levels (which
levels shall be reasonably necessary for the attainment of the Development
goals, as applicable), any approved use of Third Party contractors required to
carry out such activities, a budget setting forth the estimated expenditures
required to carry out such activities and a timeline for completion of such
activities. Such draft will be prepared as soon as practicable following the
Effective Date.

 

(c)                                  Yearly
Updates and Subsequent Annual Workplan/Budget. The Responsible Development
Party shall, on an annual basis, update the Development Plan to reflect any
changes necessary given the progress and the results of the Development work as
of such date or any change in strategy, timelines, or long range plans going
forward. In addition, prior to the start of each year, the Responsible
Development Party shall prepare an Annual Workplan/Budget which shall specify
in detail the Development activities to be performed during such year,
designation of which Party is responsible for each task, staffing levels (which
levels shall be reasonably necessary for the attainment of the Development
goals, as applicable), any approved use of Third Party contractors required to
carry out such activities, a budget setting forth the estimated expenditures
required to carry out such activities, a timeline for completion of such
activities and annual production requirements, as specified in Section 8.2.
Each update to the Development Plan and adoption of each Annual
Work-plan/Budget under this paragraph and any modifications and updates under paragraph
(d) below shall automatically be deemed to constitute an amendment to the
Development Plans upon JSC approval and ratification of the meeting minutes
related thereto, and shall not constitute an obligation of either Party until
such approval and ratification. The schedule for yearly updates to the
Development Plan and the drafting and approval of each Annual Workplan/Budget
commencing with the calendar year [****], shall occur no later than the dates
set forth below:

 

	
  EVENT

  	
   

  	
  TIMING

  
	
  [****]

  	
   

  	
  [****]

  
	
  [****]

  	
   

  	
  [****]

  
	
  [****]

  	
   

  	
  [****]

  
	
  [****]

  	
   

  	
  [****]

  

 

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

 

27

 

(d)                                  Interim
and Annual Workplan/Budget Modifications and Updates. The Responsible
Development Party shall review each Annual Workplan/Budget on a [****] during
the course of each year to review actual activities and expenditures compared
to plan and to determine if any changes are necessary given the progress and
the results of the Development work as of such date. Other interim
modifications to each Annual Workplan/Budget during the course of the year may
also be adopted by the Responsible Development Party, as necessary, but shall
be subject to the approval of the JSC if material. All changes to any Annual
Work-plan/Budget shall be subject to review and approval of the JSC where such
modifications exceed the authority delegated to the Responsible Development
Party by the JSC or under this Agreement.

 

3.4                               Standards
of Conduct; Diligence.

 

(a)                                  Each
Party shall perform the Development activities for which it is responsible
under the Development Plan in good scientific manner and in compliance with
applicable laws, rules and regulations. Each Party will keep the other
Party fully informed regarding the progress and results of such Party’s
Development activities with respect to the Collaboration Products through the
Collaboration Committee meetings.

 

(b)                                  Each
Party shall use Diligent Efforts to execute and carry out the activities
assigned to it in the Development Plan within each Annual Workplan/Budget; [****].

 

(c)                                  The
Parties shall cooperate in good faith to establish appropriate and consistent
medical information support relating to Collaboration Products.

 

3.5                               Shared
Development Expenses.

 

(a)                                  Payment
of Development Expenses. Subject to a Party’s right to opt out as set forth
in Article 4, all Development Expenses or Other Out of Pocket Costs shall
be shared between Biogen Idec and PDL as provided below and in accordance with Exhibit C,
so that Biogen Idec bears fifty percent (50%) of such costs and PDL bears fifty
percent (50%) of such costs, provided that such costs were part of an Annual
Workplan/Budget, or were incurred pursuant to the draft Development Plans
attached as Exhibit 3.3 prior to approval of a Development Plan under Section 3.3(b),
or were otherwise approved by the JSC. There shall be a Reconciliation
Statement, prepared by the Responsible Development Party as set forth in Section A.2.2
of Exhibit C, of such costs which are to be shared and which are incurred
during a reporting period by each Party, in accordance with Section A.2.2
of Exhibit C, with a payment by one Party to the other, pursuant to Section A.5
of Exhibit C, to the extent necessary so that each Party bears its
appropriate percentage of such shared Development Costs. [****].  

 

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

 

28

 

(b)                                  Development
Cost Accounts. Subject to the limitations set forth in Section 3.6,
each Party shall charge all Development Expenses or Other Out-of –Pocket Costs
so incurred by it or its Affiliates on its books and records to enable the
tracking of expenses incurred in connection with each Development Plan and each
Annual Workplan/Budget (each, a “Development Cost Project
Account”). Within [****] after the end of each Calendar Quarter,
each Party shall submit to the other Party a written summary of all expenses
charged to its Development Cost Project Account during such Calendar Quarter,
which summary shall be accompanied by reasonable supporting documentation for
such expenses. Each Party shall provide the other Party with interim [****]
reports of [****] estimates of current Calendar Quarter charges within [****]
after the end of [****] in a Calendar Quarter (other than the [****], for which
only a quarterly report will be due).

 

3.6                               Excluded
Development Expenses. Notwithstanding the terms of Section 3.5, [****]
will bear any [****], incurred by the Parties primarily in connection with the
Development of any and all Royalty Products for approval and sale in the ROW
Territory.

 

3.7                               Third
Parties.

 

(a)                                  Contractors.
Any Third Party retained by a Party to perform Development activities must
be approved in advance in writing by the other Party, unless such Third Party
is specifically named in a Development Plan. Each Party shall remain liable for
the performance of its obligations hereunder which it delegates to such Third
Parties. Any Third Parties performing Development activities hereunder shall be
subject to confidentiality and non-use obligations at least as stringent as
those set forth in Article 14 and must comply with the terms of Article 12.

 

(b)                                  Intellectual
Property. The Parties intend not to knowingly introduce to any
Collaboration Product any Technology that is not Controlled by a Party, except
with the prior approval of the JPC and the JSC. If the JSC in consultation with
the JPC determines that a license to certain Third Party technology is
reasonably necessary to advance the successful Development of a Collaboration
Product, then the JSC shall [****]. Upon approval of the terms of such Third
Party license, the [****] may execute such Third Party license and any payments
that become due pursuant to a Third Party License agreement executed pursuant
to this Section 3.7(b) will, during the course of Development of the
applicable Collaboration Products, be treated as [****].

 

(c)                                  Sublicensing.
The JSC may elect to license the further Development or Commercialization
of a Collaboration Product to a Third Party in one or more Indications and/or
territories. In such event, the JSC shall designate a Party to negotiate the
terms on which such a Third Party license would be granted and to serve

 

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29

 

as the primary point of
contact with the applicable Third Party sublicensee following the execution of
the license agreement, provided that the JSC may condition approval of such
sublicense upon submission of the final agreement with the Third Party to the
JSC for final approval. The parties acknowledge that any grant of rights to a
distributor shall not constitute a license of Development or Commercialization
rights hereunder.

 

3.8                               [****].
If, after the Effective Date,  [****]. If the
Parties fail to agree on the payment and other terms under which such [****]
would be included within this Agreement prior to the termination of the
Negotiation Period, then such [****] shall not be included within the scope of
this Agreement and [****] shall have no further obligation to [****] in respect
of such rights except as set forth in this Section 3.8. If the Parties
were unable to execute an agreement prior to the termination or expiration of
the Negotiation Period, [****] will not, for a period of [****] from the
termination or expiration of the Negotiation Period, enter into a license or
other agreement with a Third Party providing for the development or
commercialization of such [****] on terms which are in the aggregate less
favorable to [****] than the last bona fide offer made in writing by [****] to [****]
without first offering to [****] for a period of [****] the right to include
the [****] within the scope of this Agreement upon such alternative terms.

 

3.9                               Development
of Products in the ROW Territory.

 

(a)                                  Responsibility.
Biogen Idec shall be solely responsible, at its sole cost and expense and at
its sole discretion, for the Development of any Royalty Product in the ROW
Territory. Biogen Idec shall use Diligent Efforts in proceeding with the
development and registration of Royalty Products in Japan.

 

(b)                                  Updates.
Biogen Idec will inform PDL of the status of Biogen Idec’s Development and
Commercialization of Royalty Products in the ROW Territory through [****]
progress reports submitted in writing to PDL. In addition, upon reasonable
notice to Biogen Idec, it will provide PDL with copies of any information or
data reasonably requested by PDL and reasonably necessary for the development
or commercialization of Royalty Products. Through the JSC, Biogen Idec shall
advise and consult with PDL with respect to any significant issues or questions
raised by any regulatory authorities in the ROW Territory with respect to a
Royalty Product that Biogen Idec believes would have an adverse impact on the
corresponding Collaboration  Product in
the Profit Sharing Territory.

 

(c)                                  Regulatory
Cross-Referencing. Biogen Idec will allow the Responsible Regulatory Party
in a Territory to cross-reference, in furtherance of JSC-approved activities
under this Agreement, Biogen Idec regulatory filings and clinical data

 

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30

 

with respect to any
Royalty Product developed or commercialized by Biogen Idec in the ROW Territory
and will grant PDL reasonable access during normal business hours to such
regulatory filings and clinical data.

 

3.10                        Consideration
of Future Products and Additional Indications or New Formulations of
Collaboration Products; Scope and Exclusivity

 

(a)                                  Future
Products Brought to Joint Steering Committee

 

(i)                                    From
time to time during the Term, the JSC shall consider proposals that the Parties
jointly Develop and Commercialize any (A) new Product as a Future Product
in accordance with the terms of this Agreement; (B) additional Indication
for an existing Collaboration Product; or (C) new formulation of an
existing Collaboration Product.

 

(ii)                                Either
Party may initiate the foregoing proposal at any time during the Term. In
addition, the Parties must initiate a proposal with respect to a Product under
the circumstances discussed below. A Party initiating a proposal under this Section 3.10
shall be deemed a “Proposing Party.”

 

(1)                                 A
Party must bring a proposal to the JSC that the Parties Collaborate on [****]
at the following times:

 

(a)                                  With
respect to a [****], prior to negotiation of such license; or

 

(b)                                  With
respect to all other Products that are [****], after the Proposing Party has
performed Development on such Product, [****];

 

(2)                                 PDL
must [****] at the following times:

 

(a)                                  With
respect to a [****]; or

 

(b)                                  With
respect to all other Products that are [****], after PDL has performed
Development on such Product, [****];

 

(b)                                  Consequences
of JSC Consideration of Future Products and Additional Indications or New Formulations
of Collaboration Products

 

(i)                                    Full
Approval. If the JSC approves the addition of a new Product as a Future
Product or an additional Indication for an existing Collaboration Product or a
new formulation of an existing Collaboration Product, then such Product

 

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31

 

shall be a Collaboration
Product and the JSC shall appoint a Responsible Development Party that shall
create a new Development Plan for such Collaboration Product or update the
applicable Development Plan to include the Development activities to be
performed by the Parties in the case of an additional Indication for or new
formulation of an existing Collaboration Product. The JSC will take into
consideration a Party’s current abilities, expertise and infrastructure when
appointing new Responsible Development Parties and will make such appointments
accordingly. The Responsible Development Party for each such Collaboration
Product shall implement such Development activities as contemplated by this Article 3.
Any such Development Plan or update shall be prepared and approved in
accordance with the provisions of Articles 2 and 3.

 

(ii)                                Partial
Approval. If, after a proposal is made under Section 3.10(a), the JSC
does not approve the addition of a new Product as a Future Product or an
additional Indication for an existing Collaboration Product or a new
formulation of an existing Collaboration Product, but determines that such
Product or additional Indication or formulation should be subject to further
evaluation then such Product or additional Indication or formulation shall be subject
to this Section 3.10(b)(ii). At the request of the Proposing Party, the
JSC shall develop a proposed work plan, which shall include specific goals
(such as a clinical trial, with primary endpoints) for such Product or
additional Indication or formulation and the Proposing Party shall provide all
information reasonably requested by the JSC that would be material to making a
determination as to whether such proposed work plan should be approved and to
the appropriateness of the proposed goals. If the JSC agrees that if the
specific goals set forth in work plan are met, the Indication, formulation or
new Product would become a Collaboration Product, then the following shall
apply:

 

(1)                                 The
Proposing Party shall have the right to undertake the work specified in the
work plan at its own expense;

 

(2)                                 If
the Proposing Party carries out the work plan and meets all of the JSC-approved
specific goals, then

 

(a)                                  the
other Party shall reimburse the Proposing Party an amount equal to [****] of
the Development Expenses related to such trial that such Party would have
otherwise been responsible for if the JSC had approved such trial as part of
the Development Plan,  and

 

(b)                                  the
formulation, Indication or new Product shall be developed jointly by the
Parties and the JSC shall take the actions described in Section 3.10(b) in
respect of such new Collaboration Product or additional Indication or new
formulation of an existing Collaboration Product.

 

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(3)                                 If
the JSC-approved specific goals are not met, the Proposing Party shall be
solely responsible for all related costs without the right of reimbursement
from the other Party and neither Party will be allowed to continue development
except in the following circumstances:

 

(a)                                  If
[****] is the Proposing Party, it may [****];

 

(b)                                  If
[****] is the Proposing Party [****] it may [****].

 

For purposes of clarity,
the Parties agree that if the JSC is unable to agree on the specific goals for
the foregoing work plan or is unable to agree that if the work plan meets its
goals the Parties would jointly Develop the new product as a Future Product or
an additional clinical indication for an existing Collaboration Product or a
new formulation of an existing Collaboration Product, such disagreement shall
not be subject to dispute resolution hereunder and shall be considered final.

 

(iii)                            No
Approval. If, after a proposal is made under Section 3.10(a), the JSC
does not approve the addition of a new Product as a Future Product or an
additional Indication for an existing Collaboration Product or a new
formulation of an existing Collaboration Product, and does not determine that
such Product or additional Indication or formulation should be subject to
further evaluation, [****] except in the following circumstances, and provided
that the Proposing Party did not block the approval of any such proposal:

 

(1)                                 If
[****] is the Proposing Party, it may [****];

 

(2)                                 If
[****] is the Proposing Party [****], it may [****].

 

Any such Product which is permitted to be pursued
outside the Collaboration shall not be subject to the terms, obligations,
rights and responsibilities in this Agreement.

 

(c)                                  Lapse
of Obligations [****]. The obligations to propose [****] under this Section 3.10
shall lapse as to any [****].

 

3.11                        Transfer
of Materials. During the Term, the Parties anticipate that each Party will
transfer certain of its proprietary tangible research materials to the other
Party. Each Party agrees during the Term that it will use such materials of the
other Party only for the purposes set forth in this Agreement, and will not
transfer such materials to any Third Party, except in compliance with Section 14.1
and Section 14.2 of this Agreement. Each Party shall have the right to use
proprietary tangible research materials provided

 

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33

 

to it by the other Party
during the Term and in furtherance of the purposes set forth in this Agreement,
solely for the purposes hereunder. Such proprietary materials received from the
other Party which are directly related to Collaboration Products may be
transferred to Third Parties only with consent of the JDC and JPC, subject to the
form of material transfer agreements or collaboration agreements, as
applicable, covering such materials, such form agreements to be drafted and
agreed upon by the JPC.

 

ARTICLE 4

OPT OUT RIGHTS; ROYALTY  PRODUCTS

 

4.1                               Opt
Out Rights for Collaboration Products or Indications

 

(a)                                  Opt
Out Right. Each Party will have the option to terminate its participation
in the Development and Commercialization of one or more Collaboration Products
as set forth in this Section 4.1 (the Party exercising such right referred
to as the “Non-Developing Party”). A
Non-Developing Party may terminate its participation with respect to: (i) [****];
(ii) [****]; (iii) [****]; or (iv) [****], everywhere in the
world; provided, however, that (A) [****] and (B) [****].

 

(b)                                  Limitations.
The rights of each party to terminate its participation pursuant to this Section 4.1
shall be subject to the following limitations:

 

(i)                                    [****]
may not exercise its opt out rights described in this Section 4.1 with
respect to [****].

 

(ii)                                [****]
can opt out of Development or Commercialization except at one of the points
shown at Exhibit 4.1(b)(ii) with respect to the Existing Products and
at such other points as determined by the Parties with respect to other
Collaboration Products or as provided in Section 4.1(b)(iv). The Parties
agree that they will include such opt out points in the Development Plans for
other Collaboration Products at the time of preparation thereof.

 

(iii)                            If
a Party elects to opt out of an Indication for a Collaboration Product, it
shall automatically be deemed to have opted out of all other Indications for
which that Collaboration Product would be marketed to the same Physician Group
(collectively the “Opt Out Indications”)
and if a Party opts out of an oncology Indication it shall be deemed to have
opted out of all oncology Indications.

 

(iv)                               If
a Party elects to opt out of Commercialization, the election shall not be
effective until [****] after written notice of such election (or such earlier
date

 

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34

 

as specified in writing
by the Independent Development Party (as defined in Section 4.1(d) below))
and may not be made until [****] following the [****]. A party may not opt out
of Commercialization of a Collaboration Product if the opt out would result in
a higher profit to the Party electing to opt-out, based on a comparison of the
royalty payments and Collaboration Product Profit payments that such Party
would have received in the four full calendar quarters prior to the election.

 

(v)                                   Neither
Party can elect to opt out of Development or Commercialization with respect to
a Product if such Party has received notice pursuant to Section 16.2 that
it is in material breach of this Agreement with respect to such Product and it
has not cured such breach or resolved in its favor any dispute regarding
whether there was a breach or whether such breach was cured.

 

(c)                                  Timing.
Subject to the limitations in Section 4.1(b) a Party may exercise its
opt out right with respect to Development of a particular Collaboration Product
or an Opt Out Indication(s) of a particular Collaboration Product at the
decision points described in Section 4.1(b). The Non-Developing Party
shall provide written notice to the other Party of its decision to exercise
such right (the “Opt Out Notice”) during the time
period described in each opt out point.

 

(d)                                  Effects
of Exercise. Effective upon timely delivery of an Opt Out Notice, (i) the
Party that is not the Non-Developing Party will be deemed the “Independent Development Party” with respect to the
applicable Independent Product or Independent Indication, (ii) the
Non-Developing Party will be deemed the “Non-Developing Party”
with respect to the applicable Independent Product or Independent Indication
and responsibility shall be as set forth in Section 4.3, (iii) if
such exercise was made with respect to [****], such Collaboration Product will
become an Independent Product in [****], and (iv) if such exercise was
made with respect to [****]. In any event, the further Development of such [****]
by the Independent Development Party will be subject to the terms set forth in
Sections 4.2 and 4.3. For purposes of the following Section 4.2, [****] is
not [****] with respect to the [****].

 

4.2                               Development
of Independent Products and Independent Indications.

 

(a)                                  Generally.
For each Independent Product and Independent Indication, the Independent
Development Party will have the right, at its own option and expense, to plan
and conduct the Development of and to Commercialize such Independent Product or
Independent Indication, as the case may be, in accordance with the terms of
Sections 4.2, 4.3 and 4.5.

 

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(b)                                  Transition
of Development Activities. Upon a Party giving the Opt Out Notice with
respect to a Collaboration Product or one or more Indications of a
Collaboration Product, the applicable Development Plan or Commercialization
Plan, as the case may be, for such Collaboration Product or Indication, as the
case may be, shall automatically be amended to provide that the Parties shall
carry out and share the costs with respect to only those particular Development
or Commercialization activities under the applicable Development Plan or
Commercialization Plan, respectively, that have commenced on or before the date
of such Opt Out Notice. By way of example, an activity for purposes of this Section would
include a clinical trial that has commenced. Notwithstanding the foregoing, the
Non-Developing Party shall transfer responsibility for such ongoing activities
to the Independent Development Party as of the date of such Opt Out Notice or
as soon as reasonably practicable after such date.

 

4.3                               Rights
and Obligations Upon Opt-Out.

 

(a)                                  Prior
to the Opt-In Trigger. Prior to the date of the Opt-In Trigger,  the Independent Development Party shall be obligated to
Develop the Independent Indication, at its sole cost (subject to Section 4.2(b)),
and shall use Diligent Efforts in such development. The Independent Development
Party shall keep the JSC reasonably informed regarding matters that would
adversely affect Development or Commercialization of the Collaboration Product
in other Indications then being Developed or Commercialized by the Parties
jointly.

 

(b)                                  Following
the  Opt-In Trigger and As to Independent Products.
The Independent Development Party will assume unilateral control over the
Development and Commercialization of (i) an Independent Product after opt
out has occurred as to such Product, and (ii) as to an Independent
Indication from and after the date of the Opt-in Trigger if such option is not
exercised by the other Party, except that:

 

(1)                                 The
Independent Development Party shall give the JSC annual updates regarding the
status and results of any development and commercialization activities
conducted regarding an Independent Indication.

 

(2)                                 If
PDL is the Independent Development Party, then PDL shall use Diligent Efforts
to Develop and Commercialize  such
Independent Product or Independent Indication.

 

(3)                                 If
Biogen Idec is the Independent Development Party, then Biogen Idec shall use
Diligent Efforts to Develop and Commercialize such Independent Product or
Independent Indication.

 

(4)                                 If
[****] is the Independent Development Party and [****] PDL, at its option, may [****].

 

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(c)                                  Manufacturing.
If the Non-Developing Party as to a Product is responsible for Manufacturing
the applicable Collaboration Product pursuant to Article 8, then such
Non-Developing Party will continue to supply the Independent Development Party
with clinical and/or commercial supply of the applicable Collaboration Product
until such time as the Parties have effected a technology transfer of the
applicable Manufacturing process, at the Independent Development Party’s
request, and the Independent Development Party has validated such process in
its or its CMO’s designated facility and has all necessary regulatory approvals
to Manufacture and such Manufacture has commenced. The Non-Developing Party
shall use commercially reasonable efforts to effect a technology transfer of
the applicable Manufacturing process to the Independent Development Party or
its designated CMO as soon as practicable, but in no event more than [****]
after the Opt Out Notice is delivered The Non-Developing Party shall supply
such Product to the Independent Development Party during the [****] at a cost
of [****]  Between [****] and [****], the
Non-Developing Party shall supply such Product to the Independent Development
Party at a cost of [****]. Between [****] and [****], the Non-Developing Party
shall supply such Product to the Independent Development Party at a cost of [****].

 

(d)                                  Remaining
Program Obligations. The portion of the applicable Development Program with
respect to which the Non-Developing Party has not exercised its option to opt
out will continue unaffected by such opt out.

 

(e)                                  Data
Transfer. Commencing at the time of delivery of the Opt Out Notice, the
Non-Developing Party promptly shall provide, at the sole cost of the Non-Developing
Party, the Independent Development Party with copies of all data and
information, and samples of all tangible items, comprising Know-how and other
Technology of the Non-Developing Party relating to such Independent Product or
Independent Indication, as the case may be.

 

(f)                                    Assignment
of Regulatory Filings. The Non-Developing Party promptly shall, as
applicable, assign or make available by cross-reference to the Independent
Development Party, at the Non-Developing Party’s sole cost, all registrations
for such Independent Product (at the time of exercising its opt out rights) or
Independent Indication (an assignment shall only occur after the expiration of
the Non-Developing Party’s  right to opt
in; a cross reference right shall be available from the time of exercise of the
Non-Developing Party’s opt out rights until the expiration of such party’s opt
in rights or longer, as appropriate), as the case may be, and shall notify the
appropriate Regulatory Authorities and take any other action reasonably
necessary to effect such transfer of ownership or access to regulatory filings;
provided, however, that a Non-Developing Party shall not have any obligation to
assign to the Independent

 

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Development Party the
Drug Master File for any Independent Product if and for so long as the Non-Developing
Party is engaged in the Manufacture of such Independent Product on behalf of
the Independent Development Party or with respect to Indications or territories
for which such Non-Developing Party has retained rights.

 

(g)                                 Obligations
with Respect to Third Party Contracts. Each Party shall include provisions
in its contracts with Third Parties entered into after [****] and specifically
related to Development or Commercialization of a Collaboration Product or an
Indication of a Collaboration Product that would permit (i) [****] or (ii) [****].
Except as otherwise set forth in this Article 4, the Non-Developing Party
shall use Diligent Efforts to effect assignment (and full release of the
Non-Developing Party) or the granting of a sublicense or equivalent right of
access (and partial release of the Non-Developing Party) to the Independent
Development Party, whether through novation or sublicensing of such contracts
or otherwise, of any and all rights under any contract between the
Non-Developing Party and any Third Party that are necessary for Independent
Development Party to continue with Development or Commercialization of such
Collaboration Product or Indication, as the case may be, and the Independent
Development Party shall reasonably cooperate in connection therewith. If such
assignment, novation or sublicense is not permissible, the Parties shall
discuss in good faith potential alternatives that would enable the Independent
Development Party to exercise the rights and obligations of the Non-Developing
Party under such contracts with respect to such Independent Product while
minimizing the continuing obligations of the Non-Developing Party.

 

(h)                                 Technical
Assistance. During the period commencing with delivery of an Opt Out Notice
and ending [****] following the effective date of such Opt Out Notice, the
Non-Developing Party shall provide reasonable technical assistance as requested
by the Independent Development Party to effectuate an orderly transition of the
Development and Commercialization of such Independent Product or Independent
Indication, as the case may be, to the Independent Development Party. Such
assistance shall be at the expense of the Non-Developing Party until the
effective date of the Opt Out Notice and thereafter shall be at the expense of
the Independent Development Party.

 

(i)                                    Termination
of License Rights. Unless and until the Non-Developing Party decides to
Opt-in pursuant to the Opt In Trigger described herein, it shall have no
further rights under the licenses provided to it under Article 11 with
respect to such Independent Product or Independent Indication.

 

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(j)                                    Transfer of Trademarks. If the
Non-Developing Party owns the Product Trademarks (as defined in Section 12.13(a))
relating to the Independent Product (or Independent Indication, if there are
Product Trademarks that relate specifically to such Indication), ownership of
such Product Trademarks shall be transferred to the Independent Development
Party in the Territories as to which the opt out occurs.

 

4.4                               Rights
to Opt In to Independent Indication During Development.

 

(a)                                  General.
Subject to the terms of this Section 4.4, a Non-Developing Party will have
the option to opt-in to the independent development of an Independent
Indication on a one-time basis, exercisable by providing a notice in writing to
the Independent Development Party within (i) the [****] (the “Opt In Trigger”)  [****]
or (ii) the [****]. Within [****] of receipt of such written notice, the
Independent Development Party shall provide to the Non-Developing Party a
package of data and other information concerning the Independent Indication
reasonably necessary to permit the Non-Developing Party to make an informed
decision on its desire to opt in to Development and Commercialization in the
manner set forth in this Agreement (the “Data Package”).
Following receipt of the Data Package, the Non-Developing Party shall have [****]
within which to elect to opt-in. Any such election shall become effective upon
receipt by the Independent Development Party of a final written determination
by the Non-Developing Party stating its decision to opt-in. Failure to deliver
timely notice of an intent to opt-in shall be conclusively deemed to be a
waiver of such rights.

 

(b)                                  Limitations.
A Non-Developing Party shall not have the right to opt in to the Commercialization
of a Collaboration Product in the event that it delivers an Opt Out Notice for
such Product at any time following final regulatory approval for the marketing
of such Collaboration Product anywhere in the Territory.

 

(c)                                  Expense
Reimbursement. Upon exercise of an opt in right as described in this Section 4.4,
the Non-Developing Party shall reimburse the Independent Development Party for [****]
of that portion of the Development Expenses that would have been incurred by
the Non-Developing Party, had such Party not opted out, during the period in
which such Party had opted out.

 

(d)                                  Effects
of Opt In. Upon exercise of an opt in right and payment of all amounts due
under subsection (c) above, the Independent Indication shall cease
being an Independent Indication and will automatically return to the scope of
the Collaboration. Thereafter, the Parties shall continue Development and
Commercialization of such Indication jointly as described in this Agreement;
provided, that for the [****] following the exercise of an opt in right, the
Party that had been the

 

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Independent Development
Party shall be the Responsible Development Party, notwithstanding the
provisions of Section 3.2 and the Parties shall agree on the allocation of
responsibilities thereafter.

 

4.5                               Royalty
Products.

 

(a)                                  Effective
upon the exercise of a Party’s opt-out right with respect to a Collaboration
Product, either on a Product or Indication basis, the applicable Product will
be a Royalty Product. The Independent Development Party will pay the Opt-Out
Party the royalty payments described in Section 9.5 for such Royalty
Product.

 

(b)                                  With
respect to Collaboration Products developed by [****], [****] is the
Independent Development Party and [****] is the Non-Developing Party, such
Products are Royalty Products with respect to the [****] and the [****] is
within the Royalty Territory for such Products. [****] will pay to [****] the
royalty payments described in Section 9.5 for all such Royalty Products
Commercialized in the [****].

 

ARTICLE 5

REGULATORY

 

5.1                               Responsible
Regulatory Party. Subject to the roles of the various Committees described
in Article 2, the allocation of Responsible Regulatory Party for
Collaboration Products under this Agreement is as follows:

 

(a)                                  [****]
will be the Responsible Regulatory Party in the [****] and the [****] for all
Collaboration Products; and

 

(b)                                  [****]
will be the Responsible Regulatory Party in the [****] for all Collaboration
Products during the Development of such Collaboration Product. At the time of
receipt of first Regulatory Approval for the [****].

 

5.2                               Regulatory
Filings for Collaboration Products.

 

(a)                                  The
Responsible Regulatory Party identified in Section 5.1 above shall
primarily be responsible for preparing and filing all Regulatory Filings and
seeking all Regulatory Approvals in the relevant territory, including preparing
all reports necessary as part of a Drug Approval Application. All Regulatory
Filings for all Collaboration Products shall be filed in the name of the
Responsible Regulatory Party for a particular Territory. The Parties anticipate
that Regulatory Filings for the EU and North America Territories will be based
on a common set of technical documents. Such

 

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common set of technical
documents shall be prepared by the Responsible Development Party (or
collectively by both of the Responsible Development Parties where there are two
for a Collaboration Product). The Responsible Regulatory Party and the
Responsible Commercialization Party (to the extent they are different Parties)
shall jointly prepare all Regulatory Filings. All reasonable comments of the
Responsible Commercialization Party for an applicable Collaboration Product
shall be incorporated into such Regulatory Filing for any Collaboration Product.
The Responsible Regulatory Party shall, at all times, consult with the
Responsible Commercialization Party on all communications and other dealings
with the regulatory agencies relating to such Collaboration Product in the
applicable territory. However, the Manufacturing Party shall be solely
responsible for all communications and other dealings with the regulatory
agencies throughout the world pertaining to the Manufacture of such
Collaboration Products. The Responsible Regulatory Party and the Responsible
Commercialization Party shall jointly develop and implement procedures for
drafting and review of Regulatory Filings for the relevant Collaboration
Products in the applicable territory, which procedures shall provide for
sufficient time for the Responsible Commercialization Party to provide comments
to such Regulatory Filings. If the Parties are unable to resolve any disputes
related to such Regulatory Filings content or strategy, such disputes shall be
resolved as set forth in Article 2 hereof. In addition to the right to
cross-reference set forth in Section 3.9(c), the other Party shall have
the right of cross-reference to all such Regulatory Filings or Regulatory
Approvals obtained hereunder for purposes of Collaboration Products.

 

(b)                                  The
Responsible Regulatory Party shall promptly provide the other Party with a copy
(which may be wholly or partly in electronic form) of all Regulatory Filings
with respect to such Collaboration Products that it makes hereunder. The
Responsible Regulatory Party will provide the other Party with reasonable
advance notice of any meeting with any regulatory agency relating to
Development, Commercialization and/or any Drug Approval Application in the
relevant territory, and the other Party shall have the right to observe and, if
the Parties mutually agree in advance or if such Party is the Responsible
Commercialization Party, participate in any such meeting. The Responsible
Regulatory Party also shall promptly furnish the other Party with copies of all
material correspondence or minutes of material meetings with any regulatory
agency relating to Development, Regulatory Filings and/or a Drug Approval
Application in the relevant territory. As between the Parties, the Responsible
Regulatory Party shall be the initial legal and beneficial owner of all
Regulatory Filings and related approvals in the relevant territory for such
Collaboration Product. The Responsible Regulatory Party shall assign all
Regulatory Filings in the North American Territory to the Responsible
Commercialization Party promptly following filing of the NDA (or its foreign
equivalent). No such assignment shall take place in the ROW Territory.

 

(c)                                  The
Manufacturing Party shall provide the Responsible Commercialization Party (if a
different Party) with reasonable advance notice of any scheduled regulatory
inspection of the Manufacturing Party’s Manufacturing facilities for a Product.
The Manufacturing Party shall control all interactions with regulatory

 

41

 

authorities with respect
to such inspection. The  other Party if
applicable, shall have the right to be present, but not participate, during
such inspection.

 

5.3                               Safety
Data. [****] will ensure that [****] has complete access to any and all
safety data regarding the [****] or any [****] thereof. [****] will ensure that
[****] have complete access to any and all safety data regarding the [****] or
any [****]. If and to the extent that a single global safety database is
required for the [****],  [****] will be
the recognized holder of the global safety database for such Product, which
will be searched to provide answers to safety queries, for signal evaluation,
for the preparation of analyses of similar events and for the preparation of
periodic safety update reports.

 

5.4                               Adverse
Event Reporting. Each Party shall notify the other of all information
coming into its possession concerning any and all side effects, injury,
toxicity, pregnancy or sensitivity event associated with commercial or clinical
uses, studies, investigations or tests with any of the Collaboration Products
or Royalty Products, throughout the world, whether or not determined to be
attributable to such Products (“Adverse Event Reports”). 
The Parties shall each identify a person to coordinate the exchange of Adverse
Event Reports (“Report Coordinators”) so as to
enable timely reporting of such Adverse Event Reports to appropriate
governmental and regulatory authorities consistent with all laws, rules and
regulations. Within a reasonable time after  the Effective
Date, the Parties shall agree in writing on formal procedures for such exchange
in a separate pharmacovigilance agreement. Provided that [****] is under a
similar obligation under the [****] Agreements, the Parties agree to engage in
good faith negotiations regarding a three-party pharmacovigilance agreement. The
Parties acknowledge and agree that such procedures, as well as the Parties’
exchange of Adverse Event Reports in general, must not be in contravention with
the [****] Agreements relating to safety issues involving the [****] that is a
Collaboration Product, or a Royalty Product.

 

5.5                               Copies
of Responses. Within a reasonable time frame prior to submission of
responses to any regulatory authority on product safety issues regarding a
Collaboration Product, a copy of a near final draft response will be provided
to the other Party for review.  Final copies of responses submitted to any
regulatory authority will be provided to the other Party within [****] of
document finalization. [****] acknowledges that such responses may need to be
coordinated under the [****] Agreements with respect to the [****] and agrees
to use commercially reasonable efforts to facilitate such coordination.

 

5.6                               Regulatory
Actions. The Party responsible for interacting with regulators on a
specific safety issue regarding a Collaboration Product or Royalty Product shall
communicate material action requested by regulators to the other Party without
delay.

 

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42

 

Such actions may include,
for example, change in label, Dear Doctor letter, trial on hold for clinical
safety reasons and the like.

 

5.7                               Other
Safety Issues. Either Party may request that specific safety issues be
discussed, and the parties will establish a Safety Committee (the “SC”) consisting of an equal number of representatives from
each Party, for such purpose. The role of the SC shall be to advise each Party
concerning the collection and evaluation of safety data, and to respond to any
significant safety issues raised, or requests made, by regulatory authorities.

 

ARTICLE 6

COMMERCIALIZATION

 

6.1                               Overview.
Subject to the roles of the various Committees described in Article 2,
the allocation of primary responsibility for the creation of Commercialization
Plans and the implementation of Commercialization activities of Collaboration
Products described in such Commercialization Plans shall be given to the
Responsible Commercialization Party. The allocation of such responsibilities
with respect to the Existing Products shall be as follows: 

 

	
   

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  North
  American Territory

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  EU
  Territory

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  ROW
  Territory

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  

 

(a)                                  Commercialization
Plans. All Commercialization of Collaboration Products shall be conducted
pursuant to a Collaboration Product specific, multi-year, global
commercialization plan and budget (in each case, a “Commercialization
Plan”), which shall set forth the anticipated activities (including
market studies, launch plans, Detailing and Promotion) and timelines, and shall
allocate responsibility for carrying out such activities between PDL and Biogen
Idec. Each Commercialization Plan shall include the plan for: (i) Detailing
and Promotion activities for the applicable Collaboration Product in the
applicable Indication for the next [****] (as to the initial Commercialization
Plan, the [****] following launch) and timelines for performing such activities,
(ii) target audience, (iii) anticipated expenses other than
personnel,

 

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43

 

(iv) assumptions
regarding product profile, (v) sales force size, and (vi) Promotional
efforts. Any Commercialization Plan, together with any updates thereto, shall
be prepared and approved as follows:

 

(i)                                    The
Responsible Commercialization Party with strategic guidance from the JSC shall
prepare the initial Commercialization Plan for a Collaboration Product and
submit such plan to the JCC for recommendation for approval and, following such
recommendation, to the JSC for its review and approval; provided that the JCC
must recommend and the JSC must approve the Commercialization Plan if it is
consistent with the then-current Strategic Plan and Approved Budget for that
year. The Parties agree and acknowledge that any such Commercialization Plan
will reasonably allocate between the Parties the performance of any
Post-Approval Clinical Trials for Collaboration Products in the North American
Territory, giving equal consideration to each Party’s abilities when making such
allocation.

 

(ii)                                The
Responsible Commercialization Party will, from time to time, prepare and submit
an update to each Commercialization Plan for its territory for a Collaboration
Product as necessary to reflect changes in the progress, strategy, or costs of
Commercialization of such Collaboration Product, but in no event more
frequently than quarterly.

 

(iii)                            the
Responsible Commercialization Party for a Collaboration Product will prepare
and submit an update to the applicable Commercialization Plan for its territory
on an annual basis thereafter until the Parties cease Commercializing the
applicable Collaboration Product.

 

(iv)                               the
Responsible Commercialization Party will lead the implementation of the
Commercialization Plan in accordance with the allocation of responsibilities
set forth therein.

 

Once approved by the JSC,
a Commercialization Plan shall become effective and supersede any previous
Commercialization Plan, if any, as of the date of such approval. Unless the
Parties otherwise agree, in the event that a Commercialization Plan is
inconsistent with or contradicts the terms of this Agreement, the terms of this
Agreement shall prevail.

 

(b)                                  Commercialization
Plans for Additional Collaboration Products. Promptly following the JSC’s
request for a Commercialization Plan for a particular Collaboration Product,
the Responsible Commercialization Party shall create an initial
Commercialization Plan for such Collaboration Product. Such Commercialization
Plan shall be approved as described in this Section 6.1.

 

6.2                               Commercialization
Reports. The Responsible Commercialization Party will keep the JCC fully
informed regarding the progress and results of its Commercialization activities
under this Agreement.

 

44

 

6.3                               Standards
of Conduct.

 

(a)                                  Each
Party shall perform, or shall ensure that its Affiliates and permitted
sublicensees and Third Party contractors perform, all Commercialization
activities assigned to it in a good scientific and ethical business manner and
in compliance with applicable laws, rules and regulations.

 

(b)                                  The
Parties shall use Diligent Efforts in Commercializing Collaboration Products.

 

(c)                                  Each
Party shall use Diligent Efforts to execute and carry out the activities
assigned to it in the Commercialization Plan within the associated annual
budget; provided that if a Party exceeds the associated annual budget by
greater than [****] without the prior approval of the JSC, any amount in excess
of such number shall not be considered expenses reimbursable hereunder and such
Party shall be solely responsible for payment of such excess.

 

6.4                               Sales
Force Training. The Responsible Commercialization Party shall develop and
conduct training programs for its sales representatives and for the other Party’s
sales representatives in the event such Party has exercised its Co-Promotion
Option hereunder, specifically relating to the Collaboration Products to be
Commercialized by such Party. Each Party agrees to utilize such training
programs on an ongoing basis to assure a consistent, focused promotional
strategy.

 

6.5                               Branding.
Each Product Commercialized under this Agreement shall be Commercialized
under and in connection with the trademarks and trade dress selected in
accordance with Section 12.13. To the extent that a Party is granted
rights under this Agreement to Commercialize a Product, it shall Commercialize
such Product solely under and in connection with the trademarks and trade dress
selected and approved pursuant to the terms of Section 12.13 (except for a
Party’s use of its house marks, which do not require such approval).

 

6.6                               Pricing.
[****].

 

6.7                               Booking
of Sales.

 

(a)                                  [****]
will be solely responsible for the invoicing and booking of sales of [****]
that are Collaboration Products in the [****] and the supply and distribution
of product in respect to such sales. [****] shall also be responsible for
handling inventory, receivables, managing relationships with the trade,
returns, reimbursements, and charge-backs, trade-customer complaints and
inquiries regarding [****] that are Collaboration Products in the [****].

 

(b)                                  The
JSC will jointly determine which Party will book sales in

 

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45

 

accordance with U.S.
GAAP, including handling inventory, receivables, managing relationships with
the trade, returns, reimbursements, and charge-backs, trade-customer complaints
and inquiries with respect to all other Collaboration Products.

 

(c)                                  For
clarity, each Party’s expenses in connection with the activities described in
this Section 6.7 will be included as Marketing Costs or Distribution
Costs, as appropriate.

 

6.8                               Special
Provisions Relating to Sales Tracking for [****].

 

(a)                                  The
Parties recognize that [****] marketed by [****] or its licensees for
indications in the [****] may nonetheless be sold in the [****], and [****]
marketed by [****] and [****] for indications in the [****] may nonetheless be
sold in the [****]  (collectively, “Cross-Field Sales”). In order to detect and limit these
Cross-Field Sales of such Collaboration Products, the Parties agree as follows:

 

(i)                                    If,
at any time following the receipt of Regulatory Approval in the [****] for an [****]
that is a Collaboration Product or Royalty Product (Collectively, “Collaborative Field Products”), a Party believes that either
(i) sales of such Collaborative Field Products are occurring or will occur
for uses both inside and outside the [****], or (ii) that sales by [****]
of a [****] licensed to it in the [****] by [****] (a “Non-Collaborative
Field Product”) are occurring in any Indication in which a
Collaboration Product or Royalty Product is marketed, then such Party may
provide notice to the other Party of its desire to track sales of the
Collaborative Field Products and the Non-Collaborative Field Products for the
relevant Indications in the relevant territory.

 

(ii)                                Upon
receipt of notice under Section 6.8(a)(i) [****] and [****] shall
meet and agree upon a method of tracking sales of each such product (“Sales Tracking Methodology”) for use in the relevant
Indications including (A) the acquisition of one or more prescription data
products or services (including, by way of example, IMS Xponent or DDD data) or
other relevant pharmaceutical sales tracking research services (including, for
example, use of random sampling, use of data regarding distribution channels as
a proxy for indication-specific sales and development of mathematical models
for approximating indication-specific sales) generally recognized in the
pharmaceutical industry as having a high degree of accuracy and reliability in
the tracking of sales of pharmaceutical products that have a similar nature as
and are prescribed by similar physicians as the relevant [****] in the [****]
and, if applicable, outside the [****] (the “Data Services”),
and (B) the methodology for applying any such resulting data and
information provided by such Data Services to determine the extent to which
sales of the relevant [****] are Cross-Field Sales in the relevant territory. At
the request of either Party, any meeting held under this Section 6.8(a) shall
include licensees of [****] to whom [****] has granted rights in the [****],
provided such licensee

 

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46

 

agrees to be bound to
confidentiality provisions similar to those contained in this Agreement.

 

(b)                                  If
[****] (as applicable) are unable to agree on a Sales Tracking Methodology
pursuant to Section 6.8(a), then the following default methodologies shall
apply:

 

(i)                                    With
respect to each of the U.S., United Kingdom, France, Germany, Italy, or Spain
(each a “Major Regulatory Jurisdiction”) in
which a Collaborative Field Product and a Non-Collaborative Field Product have
received Regulatory Approval and in which Data Services are available at a
reasonable cost (evaluated in light of the anticipated accuracy of such data
and anticipated magnitude of Cross-Field Sales in such country), sales in the
Field in such country and sales outside the Field in such country shall be
calculated for each Collaborative Field Product and each Non-Collaborative
Field Product based on the sales levels reported by the Data Services for such
country. For clarity, the sum of sales of a product in the Field and sales of
such product outside the Field (both as calculated for such country in
accordance with the preceding sentence) shall always be equal to the total
sales for such product in the relevant country.

 

(ii)                                With
respect to each country in which a Collaborative Field Product and a
Non-Collaborative Field Product have received Regulatory Approval and to which Section 6.8(b)(i) is
inapplicable, the percentage of sales of each Collaborative Field Product
attributable to use outside the Field and the percentage of sales of each
Non-Collaborative Field Product attributable to use in the Field shall be
calculated from total sales of such products based on the assumption that the
ratio of Cross-Field Sales to total sales in such country is equal to the ratio
of Cross-Field Sales to total sales calculated across all Major Regulatory
Jurisdictions in which Cross-Field Sales are evaluated pursuant to Section 6.8(b)(i).
If there are no Major Regulatory Jurisdictions in which Cross-Field Sales are
evaluated pursuant to Section 6.8(b)(i), then no Sales Tracking
Methodology shall apply unless and until the Parties agree on a Sales Tracking
Methodology pursuant to Section 6.8(a).

 

(c)                                  All
costs associated with the acquisition and application of such Data Services and
Sales Tracking Methodology shall be shared equally by the Parties and any
licensee of PDL participating in the negotiations contemplated by Section 6.8(a).
All such costs that are attributable to PDL and Biogen Idec shall be included
in the Operating Expenses for the applicable [****]. In addition, the Parties
shall also meet and confer with respect to: (A) how to account for
prescriptions to patients with multiple afflictions, both within and outside
the [****]; (B) the right for each Party to audit, on a periodic basis,
the application of the Data Services and Sales Tracking

 

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47

 

Methodology; and (C) a
mechanism for addressing prescriptions that are tracked back to sole source
purchasing agreements.

 

(d)                                  If
in the course of applying the foregoing Sales Tracking Methodology of the
Collaborative Field Product and Non-Collaborative Field Product pursuant to
this Section 6.8, or in the course of performing an audit of such
application by the other Party, a Party determines that Cross-Field Sales are
occurring at more than [****] or such [****] as may be agreed under the [****]
Agreements [****] (with written notice of such amount to be provided to [****]),
the Parties shall confer, together with the [****], regarding an appropriate
method either to curtail such Cross-Field Sales and to compensate any affected
Party (or affected [****]) for the economic effects thereof. [****] will ensure
that [****] is reimbursed for any such Cross-Field Sales as if such Cross-Field
Sales were included in Collaboration Product Profit. The Parties shall also negotiate
with each other and with such licensee in good faith (provided that such
licensee is bound by a substantially similar obligation) to reach an agreement
implementing a Sales Tracking Methodology that is as accurate as reasonably
possible given the then-available information and the costs associated
therewith.

 

(e)                                  In
the event of any unresolved issues, dispute or disagreement under this Section 6.8
the Parties will submit such dispute, issue or disagreement for resolution
pursuant to Article 17.

 

6.9                               Other
Cross Field Sales. If either Party is marketing a Product for an
Independent Indication and cross field sales may be occurring with the same
Product that is a Collaboration Product, the Parties shall meet and negotiate
in good faith provisions similar to or designed to have the same economic
effect as Section 6.8.

 

6.10                        Product
Recalls. Decisions with respect to recalls, withdrawals or other corrective
actions (“Recall”) with respect to any
Collaboration Product related to manufacturing or product quality issues shall
be handled in accordance with the Commercial Supply Agreement. Decisions with
respect to any other Recall  related to
any Collaboration Product in the Profit Sharing Territory or Royalty Product in
its applicable territory shall be made only upon mutual agreement of the
Parties; provided, however, that nothing herein shall prohibit either Party
from initiating or conducting any Recall (i) mandated by a regulatory
authority or applicable law, (ii) which in its reasonable judgment is, or
such Party reasonably believes will result in, a Class I or Class II
recall (under U.S. Food and Drug Administration regulations or its equivalent
outside of the U.S.) or (iii) if a Party is the Independent Development
Party in its sole discretion. The Parties shall cooperate with respect to any
actions taken or public statements made in connection with any such Recall.
Except as otherwise provided in this Section 6.10, the Parties will share
all costs of a Recall with respect to any Collaboration Product in the Profit
Sharing Territory as a Shared Promotion Expense.

 

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48

 

An Independent
Development Party shall bear all costs of a Recall with respect to any Royalty
Product in the Royalty Territory. Notwithstanding the foregoing, a Party shall
bear any and all costs of a recall, market withdrawal or other corrective
action with respect to a Collaboration Product in the Territory, including the
COGM for the Collaboration Product in question, to the extent the Recall is
attributable to the fault of such Party and results from (a) a grossly
negligent or reckless act or omission or intentional misconduct of such Party
(or its Affiliate, agent or sublicensee), (b) the failure of the
Manufacturing Party to perform its responsibilities and Manufacture the
Collaboration Product in compliance with specifications or with applicable
laws, including applicable Good Manufacturing Practices, or (c) a breach
of any laws or the terms of this Agreement.

 

6.11                        [****]. [****]
hereby covenants that it shall not, nor shall it cause any Affiliate or
sublicensee to, [****] that are Collaboration Products or Independent Products
for any use outside the [****]. Except as permitted pursuant to Section 3.8,
[****] hereby covenants that it shall only [****] in the [****] pursuant to the
[****] Agreements.

 

ARTICLE 7

CO-PROMOTION OF COLLABORATION PRODUCTS

 

7.1                               Option
to Co-Promote.

 

(a)                                  Subject
to this Section 7.1, PDL and Biogen Idec shall each have the right, to the
extent it is not the Responsible Commercialization Party (the “Co-Promotion Option”) to elect at specified times to
Commercialize a particular Indication of a Collaboration Product in either or
both of the North American Territory or the EU Territory jointly with the
Responsible Commercialization Party for such Collaboration Product.

 

(b)                                  [****]
may exercise its Co-Promotion Option in respect of a particular Territory only
if it has and only with respect [****] shall reasonably be expected to be in
place at the time of Co-Promotion. [****] may exercise its Co-Promotion Option
in respect of a particular Territory only with respect [****] which shall
reasonably be expected to be in place at the time of Co-Promotion.

 

(c)                                  A
Party may exercise its Co-Promotion Option with respect to a particular
Indication of a Collaboration Product in a particular territory by providing
written notice of such exercise to the Responsible Commercialization Party and
the JCC. Such exercise must be provided for a particular territory no later
than the date

 

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49

 

[****] prior to the
anticipated filing date for Regulatory Approval in such territory for such
Indication for the Collaboration Product and will be effective [****] following
receipt of such notice by the Responsible Commercialization Party. Thereafter,
the Party exercising the Co-Promotion Option shall be deemed a co-promoting
Party (the “Co-Promoting Party”) of such
Indication for such Collaboration Product in such territory.

 

(d)                                  If
a Co-Promotion Option is exercised, then responsibility for Detailing will be
shared on a basis to be determined by the JCC taking into account the resources
and capabilities of each Party as well as each Party’s prior efforts under
Co-Promotion Options previously exercised and the nature of the market and
Indication for which the Co-Promotion Option has been exercised. The Parties
agree and acknowledge that, in allocating such Detailing activities between the
Parties, the JCC shall apply the following principle in the event that both
Parties have resources and capabilities in respect of a specific sales force
(or neither Party has such resources and capabilities):  the JCC shall give first consideration to
using [****] and first consideration to using [****].

 

7.2                               Co-Promotion
Period. The “Co-Promotion Period” will commence
upon the Co-Promoting Party’s exercise of the Co-Promotion Option and will
expire upon the earlier of: (a) termination of the Parties’
Commercialization of the applicable Collaboration Product for the applicable
Indication in the relevant portion of the Profit Sharing Territory, and (b) [****]  following the date that the Co-Promoting Party provides
written notice to the Responsible Commercialization Party terminating the
Co-Promoting Party’s Co-Promotion activities hereunder (or such lesser period
of time as the Responsible Commercialization Party is able to satisfactorily
fill the sales force commitments previously filled by the Co-Promoting Party) .

 

7.3                               Co-Promotion
in Commercialization Plan. The Parties’ co-promotion activities for any
Collaboration Product in the relevant territory shall be governed by the
Commercialization Plan for such Collaboration Product prepared by the  Responsible Commercialization Party. Each
Commercialization Plan for a Co-Promote Product shall set forth the allocation
between the Parties of the co-promotion activities for the Collaboration
Product in the applicable territory determined pursuant to Section 7.1(d),
the sales and marketing strategy determined by the JSC and the means by which
to maximize the overall gross profit from sales of such Collaboration Product.

 

7.4                               Scope.
The Co-Promotion by the Co-Promoting Party of any Collaboration Products under
this Agreement shall be subject to the terms and conditions set forth in this Article 7.
For purposes of this Article 7, a Collaboration Product subject to
co-promotion under this Agreement shall be referred to as a “Co-Promote Product.”

 

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7.5                               Advertising
and Promotional Materials.

 

(a)                                  The
Responsible Commercialization Party shall be responsible for designing and
supplying all advertising and promotional materials for each Co-Promote Product.
The Responsible Commercialization Party shall provide samples of such
advertising and promotional materials to the JCC for its information.

 

(b)                                  Each
Party agrees that:

 

(i)                                    it
will instruct its sales representatives to use only promotional materials,
Co-Promote Product samples, and literature approved for use under this Section 7.5
for the Promotion of the Co-Promote Product; and

 

(ii)                                all
written, electronic and visual communications provided by a Party to its sales
representatives regarding the positioning, selling messages or product strategy
of the applicable Co-Promote Product will be subject to prior review and
approval by the Responsible Commercialization Party; provided, that a
communication, once approved, need not be re-submitted for approval again prior
to its re-use unless the Co-Promote Product labeling applicable to such
communication has been changed since such prior approval date.

 

7.6                               Training.

 

(a)                                  The
Responsible Commercialization Party will develop and implement training
programs for the Co-Promoting Party’s sales representatives as to matters
relating specifically to the Co-Promote Product in a manner as set forth in the
applicable Commercialization Plan. Training shall be carried out at a time that
is mutually acceptable to the Parties, and that is prior to but reasonably near
the commencement of the co-promoting Party’s co-promotion of the Co-Promote
Product. All costs associated with such product-specific training shall be
shared equally by the Parties, except that the Co-Promoting Party shall pay all
travel costs for its sales representatives to attend such training.

 

(b)                                  The
Responsible Commercialization Party shall provide continuing education
regarding each Co-Promote Product for sales representatives of the Co-Promoting
Party on substantially the same schedule as it provides continuing
education for its own sales representatives for such Co-Promote Product.

 

7.7                               Sales
and Distribution of Co-Promote Product.

 

(a)                                  For
each Co-Promote Product, other than [****], the Responsible Commercialization
Party shall be solely responsible for handling all returns, recalls,

 

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51

 

order processing,
invoicing and collection, distribution, and inventory and receivables. With
respect to [****], [****] shall solely be responsible for such activities.  The Co-Promoting Party may not accept orders for Co-Promote
Product or make sales for its own account or for the Responsible
Commercialization Party’s account. If the Co-Promoting Party receives any order
for a Co-Promote Product, it shall refer such orders to the Responsible
Commercialization Party for acceptance or rejection.

 

(b)                                  The
Responsible Commercialization Party shall have the right and responsibility for
establishing and modifying the terms and conditions with respect to the sale of
the Co-Promote Product, other than [****], including any terms and conditions
relating to or affecting the price at which the Co-Promote Product will be
sold, discounts available to managed care providers, any discount attributable
to payments on receivables, distribution of the Co-Promote Product, and
credits, price adjustments, or other discounts and allowances to be granted or
refused. With respect to [****], [****] shall solely be responsible for such
activities.

 

ARTICLE 8

 

MANUFACTURE AND SUPPLY

 

8.1                               Overview.
The Party primarily responsible for the Manufacturing Clinical Supplies or
Commercial Supplies of Collaboration Products (the “Manufacturing
Party”) will be determined by the JSC (except for the Existing
Products, with respect to which such responsibility is allocated by the table
below) and shall be subject to the terms of this Article 8 and any
Clinical Supply arrangement or Commercial Supply Agreement entered into by the
Parties after the Effective Date. Unless determined otherwise by the JSC, the
Manufacturing Party for the Existing Products will be as follows:

 

	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  

 

8.2                               Clinical
Manufacturing.

 

(a)                                  Clinical
Supply. Each Manufacturing Party shall Manufacture a clinical supply of
bulk or finished Collaboration Products pursuant to a plan and on terms set by
the Manufacturing Party, as approved by the JSC (a “Supply Plan”).
Notwithstanding the aforementioned, [****] shall ensure a supply of [****]
necessary to complete dosing in the [****] as of the Effective Date, provided
that such supply shall be not less than [****].

 

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52

 

(b)                                  Supply
Plan. The Supply Plan shall be in accordance with the supply schedule dictated
by the applicable Development Plan for each Collaboration Product and shall set
forth, among other things, the quantities of and specifications for such
Collaboration Products to be supplied by the Manufacturing Party for
Development purposes and an approximate delivery schedule therefor.

 

(c)                                  Cost
of Clinical Supply. The Manufacturing Party will notify the JDC of the COGM
for such Collaboration Products under the applicable Development Program for quantities
of Collaboration Products supplied for clinical use.

 

8.3                               Commercial
Manufacturing.

 

(a)                                  Commercial
Supply Agreement. No later than [****] prior to the anticipated First
Commercial Sale of a Collaboration Product as specified in the Commercialization
Plan for such Collaboration Product, PDL and Biogen Idec shall negotiate in
good faith one or more definitive supply agreements (each, a “Commercial Supply Agreement”). Each such agreement will set
forth the specific terms and conditions governing the supply of bulk and/or
finished Collaboration Products by the Parties for commercial use. Any
Commercial Supply Agreement shall include terms substantially similar to those
set forth in Exhibit 8.3 as well as additional reasonable and customary
terms relating to commercial supply.

 

(b)                                  Cost
of Commercial Supply. Each  Commercial
Supply Agreement will provide for a transfer price from the Manufacturing Party
to the Collaboration based on the total quantity of finished Collaboration
Product ordered per calendar year (including material for Collaboration Product
samples) calculated as follows:  Transfer
Price = [****].

 

8.4                               Exclusivity.
Each Responsible Commercialization Party, its Affiliates and sublicensees,
shall purchase all of their respective requirements for the supply of
Collaboration Products from the Manufacturing Party, unless otherwise agreed in
writing by the Parties. The Manufacturing Party may not supply Collaboration
Product for use in any field to any party other than the Responsible
Commercialization Party, its Affiliates and sublicensees, except that [****]
may provide material manufactured by [****] to [****] to support [****].

 

8.5                               Good
Manufacturing Practice. Each Collaboration Product, regardless of the form
or formulation delivered by the Manufacturing Party, shall be Manufactured by
the Manufacturing Party in accordance with GMP and the specifications for such
Collaboration Product.

 

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ARTICLE 9

FINANCIAL TERMS

 

9.1                               Licensing
Fee. As partial payment for the rights and licenses granted by PDL pursuant
to this Agreement, Biogen Idec shall pay to PDL, within five (5) days
following the Effective Date, the following non-refundable and non-creditable
license fees with respect to each Collaboration Product, as follows:

 

(a)                                  With
respect to the [****], total license fees of twenty-five million dollars
($25,000,000); and

 

(b)                                  With
respect to the [****], total license fees of fifteen million dollars
($15,000,000).

 

9.2                               Milestone
Payments. Biogen Idec shall make the following non-creditable and
non-refundable milestone payments to PDL within [****] after the achievement by
Biogen Idec of each of the following milestones (or, in the event that any such
milestone is achieved by PDL, after PDL shall have given Biogen Idec sufficient
written documentation evidencing the achievement of such milestone). For the
avoidance of doubt, the milestone payments to be paid under this Section 9.2
shall be paid even following the delivery of an Opt Out Notice by PDL under Article 4
provided that Biogen Idec continues Development of the product. However, such
milestone payments shall not be paid following the delivery of an Opt Out
Notice by Biogen Idec under Article 4.

 

(a)                                  Milestone
Payments for [****] and [****] that are Collaboration Products or [****]. The
following milestone payments shall be paid by Biogen Idec to PDL upon the [****]
of each of the designated milestone events for any [****] that are
Collaboration Products or [****] for which [****]:

 

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54

 

	
  Milestone Event

  	
   

  	
  Milestone Payment

  [****]

  	
   

  	
  Milestone Payment

  [****]

  	
   

  	
  Milestone Payment

  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  n/a

  	
   

  	
  n/a

  	
   

  
	
  [****]

  	
   

  	
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  [****]

  	
   

  	
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  [****]

  	
   

  	
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  [****]

  	
   

  	
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  [****]

  	
   

  	
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  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  

 

*  [****],
Biogen Idec shall pay an additional [****] to PDL.

 

For the avoidance of doubt, the foregoing milestone
payments will only be made a maximum of [****] per milestone event, regardless
of the number of Collaboration Products, applicable Independent Products or
Indications Developed.

 

(b)                                  Milestone
Payments for [****] that are Collaboration Products or Independent Products. The
following milestone payments shall be paid by Biogen Idec to PDL upon the [****]
occurrence of each of the designated milestone events: (i) for an [****]
that is an Antibody Product and a Collaboration Product or Independent Product,
and (ii) for an [****] that is a Non-Antibody Product and a Collaboration
Product or Independent Product. For clarity, each milestone below will be
payable a maximum of [****], [****] for a Product in category (i) and [****]
for a Product in category (ii), irrespective of the number of such [****] that
may trigger the milestone events.

 

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  Milestone Event

  	
   

  	
  Milestone Payment

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
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  [****]

  	
   

  	
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  [****]

  	
   

  	
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  [****]

  	
   

  	
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  [****]

  	
   

  	
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  [****]

  	
   

  	
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  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  

 

9.3                               R&D
Funding. Biogen Idec shall make a [****] non-creditable, non-refundable
R&D funding payment to PDL within [****] after approval by the JSC of a [****]
to the JSC following the Effective Date.

 

9.4                               Profit
Sharing. PDL and Biogen Idec shall share equally in the Collaboration
Product Profit for each Collaboration Product as set forth Exhibit C. The
Parties shall share Collaboration Product Profit hereunder with respect to each
Collaboration Product in the Profit Sharing Territory until each such
Collaboration Product is permanently withdrawn from and is no longer being sold
anywhere in the Profit Sharing Territory or otherwise ceases to be a
Collaboration Product.

 

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56

 

9.5                               Royalties.

 

(a)                                  Royalties.

 

(i)                                    For
the term specified below, the Independent Development Party shall pay to the
Non-Developing Party incremental royalties on Net Sales of the relevant Royalty
Product in the Royalty Territory, at a royalty rate as determined in accordance
with the schedules set forth in Exhibit D, as applicable. The term of the
Independent Development Party’s obligation to pay a royalty under this Section 9.5(a)(i) for
a particular Royalty Product (collectively, the “Royalty Term”)
shall expire on a country-by-country and Royalty Product-by-Royalty Product
basis, upon the later of:

 

(1)                                 In
the event that Biogen Idec is the Independent Development Party for [****] that is an Antibody Product, (i) [****],
and (ii) [****];

 

(2)                                 In
the event that Biogen Idec is the Independent Development Party for any
Products other than an [****] that is
an Antibody Product (i) [****], and (ii) [****]; or

 

(3)                                 In
the event that PDL is the Independent Development Party, (i) [****], and (ii) [****].

 

(ii)                                For
purposes of calculating Net Sales under this Section 9.5, the Independent
Development Party may make the additional deductions described herein.

 

(1)                                 In
the event that pursuant to a Third Party License, the Independent Development
Party must pay such Third Party royalties on sales of the Royalty Product in a
particular country in the Royalty Territory, then the Independent Development
Party may deduct [****] of such royalties paid to such Third Party from Net
Sales of the applicable Royalty Product in such country.

 

(2)                                 Following
the expiration in a particular country in the Royalty Territory of the last to
expire Valid Claim of a relevant Patent Right claiming the Manufacture, use or
sale of a particular Royalty Product, the royalty rates set forth in Exhibit D
with respect to such Royalty Product will be decreased [****] until expiration
of the Royalty Term.

 

(3)                                 If,
during the Royalty Term, a Third Party receives regulatory approval for and
commences commercial sale of a Generic Product in a country of the Royalty
Territory, then the Independent Development Party shall have the right to
reduce any royalties due under Section 9.5(a)(i) on account of the
sale of such

 

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57

 

Royalty Products for such
Indication by [****] during such time as such Third Party continues sales of
such Generic Product in such country. As used in this Section, “Generic Product” means a Third Party product (a) [****];
and (b) [****]. Notwithstanding the foregoing, Generic Products do not
include Royalty Products sold by either Party’s sublicensees or distributors
pursuant to this Agreement. For the avoidance of doubt, the reduction in
royalties pursuant to Section 9.5(a)(ii)(3) for generic competition
or Section 9.5(a)(ii)(2) for patent expiration, shall not, in the
aggregate, [****].

 

(b)                                  Special
Provision Relating to ROW Territory. With respect to any definitive
sublicense agreement under which Biogen Idec grants a Third Party a license to
develop or commercialize one or more Royalty Products in the ROW Territory
which is entered into prior to the [****], Biogen Idec will pay to PDL [****]
of any Sublicensing Revenues received by Biogen Idec in connection with such
sublicense agreement(s). As used in this Section 9.5(b) ONLY, “Sublicensing Revenues” means any [****], but excluding: (1) [****];
and (2) [****].

 

(c)                                  Reporting
and Payment.

 

(i)                                    Until
the expiration of the Independent Development Party’s royalty obligations under
Section 9.5, the Independent Development Party agrees, within [****] after
the end of each Calendar Quarter, to make payments and written reports to the
Non-Developing Party based upon Net Sales of the Royalty Products (substituting
“Royalty Products” for “Collaboration Products” in the Net Sales definition) in
the relevant Field in the Royalty Territory by the Independent Development
Party, its Affiliates or sublicensees during such Calendar Quarter and provide
written reports to the Non-Developing Party detailing for the period in
question Net Sales by Product, royalty rate and royalty due.

 

(ii)                                The
information contained in each report under Section 9.5(c)(i) shall be
considered Confidential Information of the Independent Development Party. Concurrent
with the delivery of each quarterly report, the Independent Development Party
shall make the payment due the Non-Developing Party hereunder for the Calendar
Quarter covered by such report.

 

(iii)                            It
is understood that only one royalty payment under Section 9.5 shall be
payable on a given unit of Royalty Product disposed of under this Agreement. In
the case of transfers or sales of any Royalty Product between the Independent
Development Party and an Affiliate or sublicensee of the Independent
Development Party, such royalty shall be payable with respect to the sale of
such Royalty Product to (i) an independent Third Party not an Affiliate of
the seller or (ii) if the end user is an Affiliate of the seller, then
such end user.

 

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58

 

9.6                               Provisions
Regarding [****]. After the Effective Date, PDL will use Diligent Efforts
to renegotiate the terms of that certain License Agreement between [****] to
extend the diligence deadline for [****] (as defined in the [****]) to  [****]. If, as a result of such renegotiations, the royalty rate
payable by PDL on sales of licensed antibody products [****] (and provided the
calculation of such royalty remains subject to the same offset provisions as
included in the form of the [****] as of the Effective Date, then PDL may not
charge as Third Party License Fees hereunder any royalty amount paid under the [****]
in [****].

 

ARTICLE 10

PAYMENT TERMS

 

10.1                        Accounting.

 

(a)                                  Product
Sales Records. Each Party (a “Selling Party”)
agrees to keep complete and accurate records for a period of at least [****]
after the relevant payment is owed pursuant to this Agreement, setting forth
the sales and other disposition of Collaboration Products or Royalty Products
sold or otherwise disposed of pursuant to this Agreement in sufficient detail
to enable compensation payable to either Party hereunder to be determined. The
Selling Party further agrees to permit its books and records to be examined by
an independent accounting firm selected by the other Party to verify reports
provided for in Section 9.5. Unless the other Party obtains the prior
written consent of the Selling Party, such accounting firms must be selected
from among the four largest U.S. accounting firms. Such audit shall not be
performed more frequently that [****] nor more frequently than
once with respect to records covering any specific period of time. Such
examination is to be made at the expense of auditing Party, except in the event
that the results of the audit reveal a discrepancy in favor of the Selling
Party of [****] or more over the period being audited, in which
case reasonable audit fees for such examination shall be paid by the Selling
Party.

 

(b)                                  Expense
Records. Each Party (an “Expense Incurring Party”)
agrees to keep full, clear and accurate records for a period of at least [****]
after the relevant report is made pursuant to Section 9.5(c) setting
forth its incurred Development Expenses, Operating Expenses, Ongoing
Development Expenses, Other Out-of-Pocket Costs in sufficient detail to enable
compensation payable to the other Party (an “Expense
Reimbursing Party”) hereunder to be determined. Each Expense
Incurring Party further agrees to permit its books and records to be examined
by an independent accounting firm selected by the Expense Reimbursing Party to
verify reports made

 

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59

 

pursuant to Section 9.5(c).
Unless the Expense Reimbursing Party obtains the prior written consent of the
Expense Incurring Party, such accounting firms must be selected from among the
four largest U.S. accounting firms. Such audit shall not be performed more
frequently that [****]. Such examination is to be made at the expense of the
Expense Reimbursing Party, except in the event that the results of the audit
reveal a discrepancy in favor of the Expense Incurring Party of [****] or more
over the period being audited, in which case reasonable audit fees for such
examination shall be paid by the Expense Incurring Party.

 

10.2                        Methods of
Payments. All payments due to either PDL or Biogen Idec under this
Agreement shall be paid in Dollars by wire transfer to a bank in the U.S.
designated in writing by the Party to which the payment is due. Payments due on
Collaboration Products or Royalty Products distributed in countries or
jurisdictions outside of the U.S. shall be made in U.S. Dollars after being
converted at the rate of exchange for such country’s or jurisdiction’s currency
in U.S. Dollars as listed in the Wall Street Journal, Eastern Edition on the
last business day of the Calendar Quarter in which such sales were made.

 

10.3                        Taxes. If
provision is made in law or regulation of any country for withholding of taxes
of any type, levies or other charges with respect to the any amounts payable
hereunder to a Party, the other Party (a “Withholding Party”)
shall promptly pay such tax, levy or charge for and on behalf of the Party to
the proper governmental authority, and shall promptly furnish the Party with
receipt of such payment. The Withholding Party shall have the right to deduct
any such tax, levy or charge actually paid from payment due the Party or be
promptly reimbursed by the Party if no further payments are due the Party. Each
Withholding Party agrees to assist the other Party in claiming exemption from
such deductions or withholdings under double taxation or similar agreement or
treaty from time to time in force and in minimizing the amount required to be
so withheld or deducted.

 

ARTICLE 11

LICENSES

 

11.1                        Licenses
to Biogen Idec.

 

(a)                                  Subject
to the terms and conditions of this Agreement, PDL and its Affiliates hereby
grant to Biogen Idec:

 

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60

 

(i)                                    a
worldwide license, under the PDL Technology and Joint Inventions, to conduct
Development of the Collaboration Products in the applicable Field in accordance
with the Development Plans (which shall not include any Independent Indications
for such Products);

 

(ii)                                a
license, under the PDL Technology and Joint Inventions, to use, import, offer
for sale and sell Collaboration Products in the applicable Field and in the
North American Territory and EU Territory (i.e., the Profit Sharing Territory)
in accordance with the Commercialization Plans (which shall not include any
Independent Indications for such Products);

 

(iii)                            a
worldwide license, under the PDL Technology and Joint Inventions, to make and
have made Collaboration Products for which Biogen Idec is the Manufacturing
Party, provided that such manufacture is solely for use in the applicable
Field;

 

(iv)                               a
worldwide license, under the PDL Technology and Joint Inventions, to develop,
make, have made, use, have used, import, offer for sale and sell, in the
applicable Field, Independent Products for which Biogen Idec is the Independent
Development Party;

 

(v)                                   a
worldwide license, under the PDL Technology and Joint Inventions, to develop,
use, have used, import, offer for sale and sell, in the applicable Field and in
the Independent Indications, those Royalty Products for which Biogen Idec is
the Independent Development Party with respect to such Indications; and

 

(vi)                               a
license, under the PDL Technology and Joint Inventions, to use, have used,
import, offer for sale and sell, in the applicable Field and in the ROW
Territory (i.e., the Royalty Territory), Royalty Products.

 

(b)                                  The
licenses set forth in Sections 11.1(a)(i), (ii) and (iii) shall be
exclusive in the Field (except as to PDL) for all PDL Know-How, for all PDL
Patent Rights other than the Queen Patents, and with respect to PDL’s interest
in the Joint Inventions. The licenses set forth in Section 11.1(a)(iv)-(vi) shall
be exclusive (even as to PDL) for all PDL Know-How, for all PDL Patent Rights
other than the Queen Patents, and with respect to PDL’s interest in the Joint
Inventions. Subject to all of the restrictions of Section 11.1(a) and
this Section 11.1(b), all licenses set forth in Section 11.1(a) are
non-exclusive with respect to the Queen Patents.

 

(c)                                  The
licenses set forth in Section 11.1(a) may only be sublicensed to
Biogen Idec Affiliates and permitted Third Parties.

 

11.2                        Licenses
to PDL.

 

(a)                                  Subject
to the terms and conditions of this Agreement, Biogen Idec and its Affiliates
hereby grant to PDL:

 

(i)                                    a
worldwide license, under the Biogen Idec Technology and

 

61

 

Joint Inventions, to
conduct Development of the Collaboration Products in the applicable Field in
accordance with the Development Plans (which shall not include any Independent
Indications for such Products);

 

(ii)                                a
license, under the Biogen Idec Technology and Joint Inventions, to use, import,
offer for sale and sell Collaboration Products in the applicable Field and in
the North American Territory and EU Territory 
in accordance with the Commercialization Plans (which shall not include
any Independent Indications for such Products);

 

(iii)                            a
worldwide license, under the Biogen Idec Technology and Joint Inventions, to
make and have made Collaboration Products for which PDL is the Manufacturing
Party, provided that such manufacture is solely for use in the applicable
Field;

 

(iv)                               a
worldwide license, under the Biogen Idec Technology and Joint Inventions, to
develop, make, have made, use, have used, import, offer for sale and sell, in
the applicable Field, Independent Products for which PDL is the Independent
Development Party;

 

(v)                                   a
worldwide license, under the Biogen Idec Technology and Joint Inventions, to
develop, use, have used, import, offer for sale and sell, in the applicable
Field and in the Independent Indications, those Collaboration Products for
which PDL is the Independent Development Party with respect to such Indications;
and

 

(vi)                               a
license, under the Biogen Idec Technology and Joint Inventions, to use, have
used, import, offer for sale and sell, in the applicable Field and in the ROW
Territory  Royalty Products, if the right
to Develop and Commercialize any Royalty Product in the ROW Territory revert to
PDL.

 

(b)                                  The
licenses set forth in Sections 11.2(a)(i), (ii) and (iii) shall be
exclusive in the Field (except as to Biogen Idec) for all Biogen Idec
Technology and with respect to Biogen Idec’s interest in the Joint Inventions. The
licenses set forth in Section 11.2(a)(iv)-(vi) shall be exclusive
(even as to Biogen Idec) for all Biogen Idec Technology and with respect to
Biogen Idec’s interest in the Joint Inventions.

 

(c)                                  The
licenses set forth in Section 11.2(b) may only be sublicensed to PDL
Affiliates and permitted Third Parties.

 

11.3                        No Implied
Licenses. Except as expressly provided in this Agreement, neither Party
grants to the other Party any right or license in any intellectual property
right, whether by implication, estoppel or otherwise. No implied licenses are
granted under this Agreement. Each Party hereby covenants and agrees not to use
or

 

62

 

sublicense any of its
rights under the licenses set forth in this Article 11 except as expressly
permitted in this Agreement. In particular, for the avoidance of doubt, PDL has
no right to, and is not hereby granting any license to, [****].

 

11.4                        Affiliates.
The licenses granted pursuant to this Article 11 include the right of
each licensee to use its Affiliates in exercising such rights and carrying out
its obligations under this Agreement; provided that in the event any such
Affiliate ceases to meet the definition of an Affiliate (whether due to the
transfer or sale of all or substantially all of the assets or stock of such
Affiliate or otherwise) then such right with respect to such Affiliate shall
terminate

 

11.5                        Third
Party Licenses.

 

(a)                                  Certain
license rights granted by one Party to the other Party under this Article 11
may include a sublicense of Patent Rights and/or Know-How of Third Parties
under Third Party Licenses. Notwithstanding anything to the contrary in this
Agreement, the licenses granted under the provisions of this Article 11 (i) are
subject to the applicable terms and conditions of such Third Party Licenses,
and (ii) the Party receiving a sublicense under such Third Party License
shall, in exercising such sublicense rights, comply with the applicable
provisions of such Third Party Licenses. The Parties agree and acknowledge that
the licenses granted to Biogen Idec under this Article 11 shall be subject
to the following Third Party License provisions (as such Third Party Licenses
and specific provisions may be amended from time to time upon notice to and consent
of the JPC) and such provisions shall supersede anything to the contrary
contained in this Agreement:  (i) [****];
(ii) [****]; (iii) [****]; (iv)  [****]; (v) [****];  (vi) [****]; (vii) [****]; (viii) [****];
and (ix) [****]. The Parties agree and acknowledge that the provisions of [****]
are incorporated by reference herein solely for the benefit of [****]. The
Parties agree and acknowledge that a copy of Paragraphs [****] is attached
hereto as Exhibit 11.5 and shall be binding on Biogen Idec as if it were a
party to the [****].

 

(b)                                  PDL
represents and warrants to Biogen Idec that, as of the Effective Date, (i) [****];
(ii) [****]; (iii) [****]. [****].

 

(c)                                  With
respect to each Third Party License to which a Party is a party, such Party (i) shall
use Diligent Efforts to maintain such Third Party License in full force and
effect, including without limitation seeking amendments or modifications of
such agreements if necessary or useful as agreed by the Parties to continue
Development or Commercialization of a Product, (ii) shall not amend,
modify or permit to be amended or modified such Third Party License to reduce
or impair the right sublicensed hereunder or to increase the obligations or
burdens on the other Party hereunder without the other Party’s consent, not to
be unreasonably withheld, except as

 

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63

 

to the [****] as
specifically provided herein, (iii) shall provide the other Party with a
copy of each notice received by such Party under such Third Party License
Agreement material to the rights granted to the other Party under this
Agreement and derivative of rights granted under such Third Party License
Agreement, and (iv) shall use Diligent Efforts to cause such Third Party
License, as to rights licensed hereunder, to convert to a direct license to the
other Party hereunder upon the termination of such Third Party License
(provided that the other Party agrees to be bound by the terms and conditions
of such Third Party License) and subject to the terms of such Third Party
Licenses, including the following provisions (as such Third Party Licenses and
specific provisions may be amended from time to time upon notice to and consent
of the JPC):  (a)  [****]; (b) [****];
(c) [****]; (d) [****]; and (e) [****].

 

ARTICLE 12

INTELLECTUAL PROPERTY OWNERSHIP AND PATENT RIGHTS

 

12.1                        Ownership
of Intellectual Property.

 

(a)                                  Generally.
[****].

 

(b)                                  Joint
Ownership. All Joint Inventions will be owned jointly by PDL and Biogen
Idec.

 

(c)                                  Inventorship
Procedure. The JPC shall, within a reasonable time after the Effective
Date, establish and oversee a mutually agreeable procedure for (i) identifying
Collaboration Inventions, and (ii) determining inventorship of Inventions
made by a Party in connection with the Collaboration, provided that such
determination shall be made in accordance with the applicable patent laws
relating to inventorship in the country where each patent application is to be
filed in instances where U.S. law regarding determinations of inventorship may
be at variance with the laws of the said country. All such determinations shall
be documented to ensure that any divisional or continuation patent application
reflect appropriate inventorship and that inventions and patent rights are
assigned to the appropriate assignee.

 

12.2                        Disclosure
of Patentable Inventions. Each Party shall provide to the other Party any
invention disclosure submitted in the normal course of its business which
discloses a Collaboration Invention within [****] after the Party determines
that an Invention has been made.

 

12.3                        Patent Due
Diligence. Each Party agrees to use good faith efforts to bring to the
attention of the JPC in a timely manner any Third Party Patent Right it

 

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64

 

discovers, or has
discovered, and which the disclosing Party reasonably believes relates to, the
Development or Commercialization of a Collaboration Product.

 

12.4                        Prosecution
of Patents

 

(a)                                  PDL
Patent Rights

 

(i)                                    PDL
Target Patent Rights. Decisions regarding the preparation, filing,
prosecution and maintenance of PDL Target Patent Rights shall be made by the
JPC. PDL shall be responsible, using in-house counsel or outside patent counsel
selected by PDL and reasonably acceptable to Biogen Idec to implement the
decisions of the JPC regarding the preparation, filing, prosecution and
maintenance of such PDL Target Patent Rights. PDL shall provide the JPC with a
copy of each patent application within such PDL Target Patent Rights as filed,
together with its filing date and serial number. PDL shall keep the JPC advised
of the status of all communications, actual and prospective filings or
submissions regarding the PDL Target Patent Rights, and shall give the JPC an
opportunity to review and comment on any such communications, filings and
submissions proposed to be sent to any patent office. PDL shall consult with,
and obtain the approval of, the JPC before deciding that it is no longer
interested in maintaining or prosecuting the PDL Target Patent Rights
contemplated by Section 12.10, provided, however, that if the JPC cannot
reach agreement as to whether or not to maintain or prosecute such PDL Target
Patent Rights, then PDL shall continue to maintain and prosecute such PDL
Target Patent Rights. [****].

 

(ii)                                Queen
Patents.             Decisions regarding the
preparation, filing, prosecution and maintenance of the Queen Patents shall be
made solely by PDL. Notwithstanding the foregoing, [****]. PDL shall
provide the JPC with a copy of each patent application within the Queen Patents
that contains claims
that specifically relate to a Collaboration Target or Collaboration Product,
as filed, together with its filing date and serial number. PDL shall keep the
JPC advised of the status of all communications, actual and prospective filings
or submissions regarding the [****] and shall give the JPC an opportunity to
review and comment on any such communications, filings and submissions proposed
to be sent to any patent office. Subject to Section 12.12, PDL shall
consult with, and obtain the approval of, the JPC before deciding that [****] or Collaboration Product,
provided, however, that if the JPC cannot reach agreement as to whether or not [****].

 

(iii)                            Other
PDL Patent Rights. Decisions regarding the preparation, filing, prosecution
and maintenance of the PDL Patent Rights, to the extent not addressed in Section 12.4(a)(i) or
Section 12.4(a)(ii), shall be made solely by PDL.

 

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(b)                                  Biogen
Idec Patent Rights.

 

(i)                                    Biogen
Idec Target Patent Rights. Decisions regarding the preparation, filing,
prosecution and maintenance of Biogen Idec Target Patent Rights shall be made
by the JPC. Biogen Idec shall be responsible, using in-house counsel or outside
patent counsel  selected by Biogen Idec
and reasonably acceptable to PDL, to implement the decisions of the JPC
regarding the preparation, filing, prosecution and maintenance of such Biogen
Idec Target Patent Rights. Biogen Idec shall provide the JPC with a copy of
each patent application within such Biogen Idec Target Patent Rights as filed,
together with its filing date and serial number. Biogen Idec shall keep the JPC
advised of the status of all communications, actual and prospective filings or
submissions regarding the Biogen Idec Target Patent Rights, and shall give the
JPC an opportunity to review and comment on any such communications, filings
and submissions proposed to be sent to any patent office. [****].

 

(ii)                                Other
Biogen Idec Patent Rights. Decisions regarding the preparation, filing,
prosecution and maintenance of Biogen Idec Patent Rights that are not Biogen
Idec Target Patent Rights shall be made solely by Biogen Idec.

 

(c)                                  Prosecution
of Joint Inventions.

 

(i)                                    Decisions
regarding the preparation, filing and prosecution and maintenance of Joint
Patents shall be made by the JPC. Upon the identification of a Joint Invention,
the JPC shall (1) promptly discuss such Joint Invention, (2) promptly
discuss the desirability of filing a United States patent application covering
such Joint Invention, as well as foreign counterparts, and (3) designate
the Party (the “Implementing Party”) to be responsible for the preparation,
filing, prosecution and maintenance of such Joint Patent Rights. The
Implementing Party shall be responsible, using in-house or outside counsel
reasonably selected by the JPC to implement the decisions of the JPC regarding
the preparation, filing, prosecution and maintenance of such Joint Patent
Rights.   The Implementing Party
shall provide the JPC an opportunity to review and comment upon the text of the
applications relating to such Joint Patent Rights before filing. The
Implementing Party shall provide the JPC with a copy of each patent application
within such Joint Patent Rights as filed, together with notice of its filing
dates and serial number. The Implementing Party shall keep the JPC advised of
the status of all communications, actual and prospective filings or submissions
regarding such Joint Patent Rights, shall provide the JPC an opportunity to
review and comment on such communications, filings and submissions proposed to
be sent to any patent office. The Implementing Party shall also notify the JPC
of the grant of any such Joint Patent Rights. The Implementing Party shall not
cease the prosecution and/or

 

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66

 

maintenance, or modify
the claims, of any such Joint Patent Rights in any country or elect not to file
a patent application within such Joint Patent Rights, unless approved by the
JPC (which approval shall not be unreasonably withheld).

 

(d)                                  Patent
Term Extensions. PDL shall be responsible to implement the decisions of the
JPC regarding patent term extensions, including supplementary protection
certificates and any other extensions that are now or become available in the
future, wherever applicable to PDL Target Patent Rights or Queen Patents that
contain claims that
specifically relate to a Collaboration Target or a Collaboration Product,
in each case to the extent claiming a Collaboration Product. Biogen Idec shall
be responsible to implement the decisions of the JPC regarding patent term
extensions, including supplementary protection certificates and any other
extensions that are now or become available in the future, wherever applicable
to such Biogen Idec Target Patent Rights to the extent claiming a Collaboration
Product. The Implementing Party shall be responsible to implement the decisions
of the JPC regarding patent term extensions, including, without limitation,
supplementary protection certificates and any other extensions that are now or
become available in the future, wherever applicable to Joint Patent Rights to
the extent claiming such Royalty Product. Each Party shall reasonably
cooperate, as requested by the other Party, to implement such decisions of the
JPC. In each instance of patent term extension contemplated by this section,
the Parties agree to take all actions necessary to comply with the then-current
laws and regulations relating to patent term extensions.

 

12.5                        Patent
Interferences/Oppositions

 

(a)                                  Interferences/Oppositions Between the Parties.
If an interference is declared by the U.S. Patent and Trademark
Office, or its foreign equivalent, or an opposition exists between one or more
PDL Target Patent Rights, Biogen Idec Target Patent Rights or Joint Patent
Rights and such declared interference or opposition involves any claims
specifically directed to a Collaboration Product, then the Parties shall in
good faith establish a mutually agreeable process to resolve such interference
or oppositions in a reasonable manner in conformance with all applicable legal
standards, but which prejudices neither Party nor diminishes the value of such
PDL Target Patent Rights, Biogen Idec Target Patent Rights, or Joint Patent
Rights at issue.

 

(b)                                  Oppositions/Interferences
With Third Parties.

 

(i)                                    PDL
Target Patent Rights. Other than as set forth in Section 12.5(a), all
decisions relating to interferences or oppositions lodged against PDL Target
Patent Rights, including whether to initiate such interferences, appropriate
settlement strategy, along with other strategic decisions relating to the PDL
Target Patent Rights, shall be made by PDL, subject to the advice and counsel
of the JPC. Subject to the provisions of this subsection (i), PDL shall
control the conduct of any such interference or opposition. Biogen Idec shall
reasonably cooperate, as requested by PDL, with respect to such opposition or
interference. PDL shall keep the JPC informed of the progress of any opposition
or interference action or proceeding relating to the PDL Target Patent Rights.
PDL shall keep the JPC advised of all communications, actual and prospective
filings or submissions regarding such PDL 

 

67

 

Target Patent Rights, and
shall provide the JPC an opportunity to review and comment on any such
communications, filing and submissions. Notwithstanding the foregoing, [****].

 

(ii)                                Queen
Patents.             All decisions
relating to interferences or oppositions lodged against the Queen Patents,
including whether to initiate such interferences, appropriate settlement
strategy, along with other strategic decisions relating to the Queen Patents,
shall be made solely by PDL. Notwithstanding [****]. Subject to the provisions
of this subsection (ii), PDL shall control the conduct of any such
interference or opposition. Biogen Idec shall reasonably cooperate, as
requested by PDL, with respect to such opposition or interference. PDL shall
keep the JPC informed of the progress of any opposition or interference action
or proceeding relating to such Queen Patents that contain claims that specifically
relate to a Collaboration Target or a Collaboration Product. PDL shall keep the
JPC advised of all communications, actual and prospective filings or
submissions regarding such claims in such Queen Patents, and shall provide the
JPC an opportunity to review and comment on any such communications, filing and
submissions. Notwithstanding the foregoing, [****].

 

(iii)                            Other
PDL Patent Rights. Decisions relating to interferences or oppositions
lodged against Queen Patents or PDL Patent Rights, including whether to
initiate such interferences, appropriate settlement strategy, and other
strategic decisions relating to the Queen Patents or PDL Patent Rights, to the
extent not addressed in Section 12.5(b)(i) or Section 12.5(b)(ii),
shall be made by PDL.

 

(iv)                               Biogen
Idec Target Patent Rights. Other than as set forth in Section 12.5(a),
all decisions relating to interferences or oppositions lodged against Biogen
Idec Target Patent Rights, including whether to initiate such interferences,
appropriate settlement strategy, along with other strategic decisions relating
to the Biogen Idec Target Patent Rights, shall be made by Biogen Idec, subject
to the advice and counsel of the JPC. Subject to the provisions of this subsection (i),
Biogen Idec shall control the conduct of any such interference or opposition. PDL
shall reasonably cooperate, as requested by Biogen Idec, with respect to such
opposition or interference. Biogen Idec shall keep the JPC informed of the
progress of any opposition or interference action or proceeding relating to the
Biogen Idec Target Patent Rights. Biogen Idec shall keep the JPC advised of all
communications, actual and prospective filings or submissions regarding such
Biogen Idec Target  Patent Rights,
and shall provide the JPC an opportunity to review and comment on any such
communications, filings and submissions. Notwithstanding the foregoing, [****].

 

(v)                                   Other
Biogen Idec Patent Rights. Other than as set forth in Section 12.5(a) and
Section 12.5(b)(iv), all decisions relating to interferences or

 

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68

 

oppositions lodged
against Biogen Idec Patent Rights that are not Biogen Idec Target Patent
Rights, including, without limitation, whether to initiate such interferences,
appropriate settlement strategy, along with other strategic decisions relating
to such Biogen Idec Patent Rights, shall be made by Biogen Idec.

 

(vi)                               Joint
Patent Rights and Third Party Patent Rights. Other than as set forth in Section 12.5(a),
all decisions relating to interferences or oppositions lodged against Joint
Patent Rights, including, without limitation, whether to initiate such
interferences, whether to file oppositions against Third Party Patent Rights
relevant to a Collaboration Product, appropriate settlement strategy, along
with other strategic decisions relating thereto, with respect to the Joint
Patent Rights and Third Party Patent Rights shall be made by the JPC. Upon the
identification of a potential opposition or interference directly involving the
Joint Patent Rights or to the extent such opposition or interference is
specifically directed to a Collaboration Product or Third Party Patent Rights
(each, an “Adversarial Prosecution Action”), the JPC shall (i) promptly
discuss such Adversarial Prosecution Action, including the strategy for
conducting such Adversarial Prosecution Action, and (ii) designate the a
Party (the “Controlling Party”) to be responsible for controlling such
Adversarial Prosecution Action, and determine a reasonable allocation between
the Parties of the cost of such Adversarial Prosecution Action. The Controlling
Party shall be responsible, using outside counsel reasonably selected by the
Controlling Party, to implement the decisions of the JPC regarding such
Adversarial Prosecution Action. The Party that is not the Controlling Party
shall reasonably cooperate, as requested by the Controlling Party, in such
Adversarial Prosecution Action. The Controlling Party shall keep the JPC
informed of the progress of any such Adversarial Prosecution Action. The
Controlling Party shall keep the JPC advised of all communications, actual and
prospective filings or submissions regarding such Adversarial Prosecution
Action, and shall provide the JPC an opportunity to review and comment on any
such communications, filings and submissions. The Controlling Party shall not
settle or consent to an adverse judgment in any such Adversarial Prosecution
Action with respect to the Joint Patent Rights or Third Party Patent Rights,
unless approved by the JPC (which approval shall not be unreasonably withheld).

 

12.6                        Initial
Filings if Made Outside of the United States.  The Parties agree to
use reasonable efforts to ensure that any Patent Right within the PDL Target
Patent Rights, Biogen Idec Target Patent Rights or Joint Patent Rights that is
filed outside of the United States prior to a United States filing will be in a
form sufficient to establish the date of original filing as a priority date for
the purposes of a subsequent United States filing.

 

12.7                        Enforcement of Patent Rights.

 

(a)                                  Notification.
If either Party learns of any substantial and continuing infringement of PDL
Target Patent Rights, Biogen Idec Target Patent Rights or Joint Patent Rights
by a Third Party making, using, offering for sale, selling or importing a
product in or outside of the applicable Field, such Party shall promptly notify
the other Party and shall provide such other Party with available evidence of
such infringement.

 

69

 

(b)                                  Enforcement
of Patent Rights.

 

(i)                                    PDL
Target Patent Rights. Subject to the further provisions of this subsection (b),
decisions regarding the enforcement of PDL Target Patent Rights in an action
against an infringement by a Third Party of claims licensed to Biogen Idec
under Section 11.1, including the defense of a declaratory judgment action
with respect to such potential infringement (each, an “Enforcement
Action”) shall be made by PDL. PDL shall have the first right to
implement at its sole expense any Enforcement Actions relating to the PDL
Target Patent Rights. Biogen Idec shall reasonably cooperate, as requested by
PDL, with respect to such Enforcement Action. PDL shall keep the JPC informed
of the progress of any action or proceeding to enforce the PDL Target Patent
Rights. PDL shall keep the JPC advised of all communications, actual and prospective
filings or submissions regarding such PDL Target Patent Rights, and shall
provide the JPC an opportunity to review and comment on any such
communications, filing and submissions. PDL shall not settle or consent to an
adverse judgment in any action or proceeding to enforce such PDL Target Patent
Rights that admits the invalidity or unenforceability of such PDL Target Patent
Rights unless approved by the Joint Steering Committee (which approval shall
not be unreasonably withheld). If PDL fails to institute such a suit or take
such action within [****] after a request by Biogen Idec to do so, then Biogen
Idec shall have the right at its sole discretion to bring and control such
Enforcement Action in the name of either or both Parties, subject to Section 12.10.
Such prosecution or defense shall be at Biogen Idec’s sole expense unless PDL
opts, at its discretion, to reimburse Biogen Idec for a portion ([****]) of all
costs or expenses incurred by Biogen Idec with respect to such prosecution or
defense.

 

(ii)                                Queen
Patents.             Decisions regarding
Enforcement Actions with respect to Queen Patents shall be made solely by PDL. [****]
shall be carried out in accordance with subsection (i) above and Section 12.10.
For clarity, an Enforcement Action that involves [****] and carried out in
accordance subsection (i), Section 12.9, and Section 12.12.

 

(iii)                            Additional
PDL Patent Right Enforcement. Decisions regarding Enforcement Actions as
well as actions for infringement outside the applicable Field and declaratory
judgment suits regarding potential infringement outside the applicable Field,
with respect to PDL Patent Rights and Queen Patents, to the extent and so long
as such Enforcement Actions are not addressed in 12.7(b)(i) or (b)(ii),
shall be made by PDL. PDL shall have the right, using outside counsel selected
by PDL, to bring and control such Enforcement Actions at its sole expense. Biogen
Idec shall reasonably cooperate, as requested by PDL, with respect to such
Enforcement Action. PDL shall keep the Joint Patent Committee informed of the
progress of any such Enforcement Action with respect to the PDL Patent Rights
that are not PDL Target 

 

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Patent Rights or Queen Patents. Notwithstanding the terms of Section 12.7(b)(vii),
[****].

 

(iv)                               Biogen
Idec Target Patent Rights. Subject to the further provisions of this subsection (b),
decisions regarding the enforcement of Biogen Idec Target Patent Rights in an
action against an infringement by a Third Party, including the defense of a
declaratory judgment action with respect to such potential infringement shall
be made by Biogen Idec. Biogen Idec shall have the first right to implement at
its sole expense any Enforcement Actions relating to the Biogen Idec Target
Patent Rights. PDL shall reasonably cooperate, as requested by Biogen Idec,
with respect to such Enforcement Action. Biogen Idec shall keep the JPC
informed of the progress of any action or proceeding to enforce the Biogen Idec
Target Patent Rights. Biogen Idec shall keep the JPC advised of all
communications, actual and prospective filings or submissions regarding such
Biogen Idec Target Patent Rights, and shall provide the JPC an opportunity to
review and comment on any such communications, filing and submissions. Biogen
Idec shall not settle or consent to an adverse judgment in any action or proceeding
to enforce such Biogen Idec Target Patent Rights that admits the invalidity or
unenforceability of such Biogen Idec Target Patent Rights unless approved by
the Joint Steering Committee (which approval shall not be unreasonably
withheld). If Biogen Idec fails to institute such a suit or take such action
within [****] after a request by PDL to do so, then PDL shall have the right at
its sole discretion to bring and control such Enforcement Action in the name of
either or both Parties, except to the extent that such prosecution or defense
would conflict with rights granted by Biogen Idec to a Third Party. Such
prosecution or defense shall be at PDL’s sole expense unless Biogen Idec opts,
at its discretion, to reimburse PDL for a portion ([****]) of all costs or
expenses incurred by Biogen Idec with respect to such prosecution or defense.

 

(v)                                   Additional
Biogen Idec Patent Right Enforcement. Decisions regarding Enforcement
Actions with respect to Biogen Idec Patent Rights that are not Biogen Idec
Target Patent Rights shall be made by Biogen Idec. Biogen Idec shall have the
right, using outside counsel selected by Biogen Idec, to bring and control such
Enforcement Actions at its sole expense. PDL shall reasonably cooperate, as
requested by Biogen Idec, with respect to such Enforcement Action. Biogen Idec
shall keep the Joint Patent Committee informed of the progress of any such
Enforcement Action with respect to the Biogen Idec Patent Rights that are not
Biogen Idec Target Patent Rights. Notwithstanding the terms of Section 12.7(b)(vii),
Biogen Idec shall retain all Recoveries received from a Third Party in
connection with such Enforcement Action.

 

(vi)                               Joint
Patent Rights. Decisions regarding Enforcement Actions with respect to the
Joint Patent Rights shall be made by the JPC, upon

 

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consultation with the
Joint Steering Committee. Upon the identification of an infringement of Joint
Patent Rights with respect to a Collaboration Product, the JPC shall (i) promptly
discuss such infringement, (ii) promptly discuss the strategy for enforcing
such Joint Patent Rights, and (iii) designate the Controlling Party to be
responsible for controlling an Enforcement Action with respect to such Joint
Patent Rights, and determine a reasonable allocation between the Parties of the
costs of such Enforcement Action. The Controlling Party shall be responsible,
using outside counsel mutually acceptable to both Parties, to implement the
decisions of the JPC regarding such Enforcement Action. The non-Controlling
Party shall reasonably cooperate, as requested by the Controlling Party, in
such Enforcement Action. The Controlling Party shall keep the Joint Steering
Committee and the JPC informed of the progress of any action or proceeding to
enforce the Joint Patent Rights. The Controlling Party shall keep the JPC
advised of all communications, actual and prospective filings or submissions
regarding such Joint Patent Rights, and shall provide the JPC an opportunity to
review and comment on any such communications, filing and submissions. The
Controlling Party shall not settle or consent to an adverse judgment in any
such Enforcement Action with respect to the Joint Patent Rights, unless
approved by the Joint Steering Committee (which approval shall not be
unreasonably withheld).

 

(vii)                           Allocation
of Recoveries. All cash amounts (plus the fair market value of all non-cash
consideration) received by a Party or its Affiliates from a Third Party in
connection with the final judgment, award or (to the extent a sublicense to
such Third Party would require the consent of the other Party under this
Agreement) settlement of such Enforcement Action (“Recoveries”) shall
first be applied to reimbursement of the unreimbursed legal fees and expenses
of the Parties in connection with such Enforcement Action, and then the
remainder shall be divided equally between the Parties, except that [****], [****],
such remainder shall be shared [****] to the [****], and [****] to the [****]; provided
that the [****] shall receive such share only to the extent the
Recoveries were obtained with respect to Patents of such Party (e.g., [****]).

 

(viii)                       Representation
by Counsel. Each Party shall always have the right to be represented by
counsel of its own selection and its own expense in any suit or other action
instituted by the other Party pursuant to this Section 12.7 for
infringement in a Field. The amounts borne by such Party pursuant to this Section 12.7(b)(viii) shall
not count towards the determination of the allocation between the Parties of
any remaining recovery pursuant to Section 12.7(b)(vii).

 

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12.8                        Defense of Infringement
Actions.

 

(a)                                  If
PDL and/or Biogen Idec are defendant(s) named in a patent infringement suit
filed by a Third Party concerning the development, manufacture, production,
use, importation, offer for sale, or sale of Collaboration Products in the Field
(a “Defensive Action”) decisions regarding such Defensive Actions shall be made
by the JPC, upon consultation with the Joint Steering Committee. Upon the
identification of a Defensive Action with respect to a Collaboration Product,
the JPC shall (i) promptly discuss such Defensive Action, (ii) promptly
discuss the strategy for defending such suit, and (iii) designate the
Controlling Party to be responsible for controlling said Defensive Action, and
determine a reasonable allocation between the Parties of the costs of such
Defensive Action. The Controlling Party shall be responsible, using outside
counsel mutually acceptable to both Parties, to implement the decisions of the
JPC regarding such Defensive Action. The non-Controlling Party shall reasonably
cooperate, as requested by the Controlling Party, in such Defensive Action. The
Controlling Party shall keep the Joint Steering Committee and the JPC informed
of the progress of any action or proceeding in the Defensive Action. The
Controlling Party shall keep the JPC advised of all communications, actual and
prospective filings or submissions regarding such Defensive Action, and shall
provide the JPC an opportunity to review and comment on any such
communications, filing and submissions. The Controlling Party shall not settle
or consent to an adverse judgment in any such Defensive Action, unless approved
by the Joint Steering Committee (which approval shall not be unreasonably
withheld).

 

(b)                                  During
the term of this Agreement, each Party shall bring to the attention of the
other Party all information regarding potential infringement of Third Party
intellectual property rights via the development, manufacture, production, use,
importation, offer for sale, or sale of Collaboration Products in a Field
throughout the world. The Parties shall discuss such information and decide how
to handle such matter.

 

12.9                        Third
Party Intellectual Property.

 

(a)                                  In
the event that PDL or Biogen Idec (the “Acquiring Party”) proposes to
apply to a Collaboration Product Technology that the Acquiring Party obtained
from a Third Party that is not included automatically within the definition of
Biogen Idec Technology or PDL Technology prior to the Effective Date (and hence
included in the licenses granted by the Acquiring Party pursuant to Article 11)
or otherwise acquired by the Acquiring Party, the Acquiring Party shall
disclose the same to the Joint Steering Committee, including any royalty or
other payment obligations determined in accordance with United States GAAP that
would apply to the Collaboration Product as a result of the Development or
Commercialization of such

 

73

 

Collaboration Products
hereunder. The Joint Steering Committee shall determine, [****] whether or not
the Joint Steering Committee agrees that the intellectual property so acquired
should be applied to the Collaboration Products, and if the Joint Steering
Committee so determines, the agreement under which the Acquiring Party acquires
such intellectual property shall be a Third Party License for purposes of this
Agreement. To the extent the agreement is not so included within the Third
Party Licenses hereunder, the subject matter of such agreement shall not be
within the definition of PDL Technology or Biogen Idec Technology hereunder
(and therefore the licenses granted by the Acquiring Party pursuant to Article 11
shall not include such subject matter).

 

(b)                                  Manufacturing
Technology.

 

(i)                                    PDL-Lead
Manufacturer. Notwithstanding the foregoing, with respect to Collaboration
Products or Royalty Products for which PDL is the Manufacturing Party under Article 8
above, PDL shall have the right to decide which Third Party Technology will be
used in such Manufacturing, and any agreement pursuant to which PDL acquired or
acquires such technology shall be deemed a Third Party License.

 

(ii)                                Biogen
Idec-Lead Manufacturer. Notwithstanding the foregoing, with respect to
Collaboration Products or Royalty Products for which Biogen Idec is the
Manufacturing Party under Article 8 above, Biogen Idec shall have the
right to decide which Third Party Technology will be used in such
Manufacturing, and any agreement pursuant to which Biogen Idec acquired or
acquires such technology shall be deemed a Third Party License.

 

(c)                                  Third
Party Licenses. Notwithstanding the provisions of this Article 12, the
rights and obligations of the Parties under this Article 12, with respect
to Patents licensed pursuant to a Third Party License, shall be subject to the
rights of the applicable Third Party licensor/licensee pursuant to such Third
Party License and the applicable Parties’ obligations to such Third Party
pursuant to such Third Party License. Without limiting the foregoing, the
Parties agree and acknowledge that the provisions set forth in this Article 12
shall be subject to the following Third Party License provisions (as such Third
Party Licenses and specific provisions may be amended from time to time upon
notice to and consent of the other Party, if required, pursuant to Section 11.5(c)(ii))
and such provisions shall supersede anything to the contrary contained in this
Agreement:  (i) [****]; (ii) [****];
(iii) Article 5 of the UCSD License Agreement;  (iv) [****]; (v) [****]; (vi) [****];
(vii) [****]; (viii) [****]; and (ix) [****]. The Parties further
agree and acknowledge that PDL does not have any rights to prosecute or enforce
the Patent

 

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Rights licensed to it
pursuant to the following Third Party Licenses and therefore no portion of Article 12
shall be interpreted as granting Biogen Idec or the JPC or JSC rights to file,
prosecute (including interferences and oppositions), maintain, enforce or
defend such Patents or receive information or provide input with respect to
such Patent Rights:  [****]; [****]; [****]; [****];
and [****].

 

12.10                 Rights pursuant
to the [****] Agreements.

 

(a)                                  The
Parties acknowledge that, pursuant to the [****] Agreements, [****] has certain
rights to file, prosecute (including interferences and oppositions), maintain,
enforce and defend certain PDL Patent Rights that are licensed by or to PDL
pursuant to the [****] Agreements. Notwithstanding anything to the contrary,
Biogen Idec’s, JPC’s and JSC’s rights pursuant to this Article 12 with
respect to such PDL Patent Rights are subject to such [****] rights to file,
prosecute, maintain, enforce and defend the certain PDL Patent Rights that are
licensed by or to PDL pursuant to [****] Agreement. For clarity, PDL shall not
be required pursuant to this Article 12 to provide Biogen Idec or the JPC
or JSC with any patent filing, prosecution (including interferences and
oppositions), maintenance, enforcement or defense associated-rights that
conflict with [****] rights under the [****] Agreements or that would
constitute a breach of PDL’s obligations to [****] under the [****] Agreements,
provided however, no additional rights shall accrue to Biogen Idec unless and
until Biogen Idec obtains a license pursuant to Section 3.8. The Parties
acknowledge that certain of Biogen Idec’s, JPC’s and JSC’s rights under this Article 12
that relate to PDL Patent Rights that are licensed by or to PDL pursuant to the
[****] Agreements. The Parties further acknowledge that such rights of Biogen
Idec, JPC or JSC derive solely from those rights retained by PDL under the [****]
Agreements.

 

(b)                                  PDL
hereby agrees and acknowledges that, notwithstanding any other provisions of
this Agreement, Biogen Idec will not be obligated to pay any royalties due to [****]
pursuant to the [****] Agreements for sales of Collaboration or Royalty
Products, except as expressly stated in this Agreement.

 

12.11                 Patent Marking.
Each Party agrees to comply with the patent marking statutes in each country in
which Collaboration Products or Royalty Products are sold by such Party, its
Affiliates and/or sublicensees. Notwithstanding the foregoing, prior to the
launch of each Product, the JPC will formulate a marking strategy for such
Product in cooperation with qualified outside counsel and in cooperation with
the guidelines of the appropriate governmental agencies regulating the
Manufacture or sale of Products, including determining the appropriate patent
marking, if any, to be used with such Product.

 

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12.12                 Limited Rights to
Humanization Technology Claims in Queen Patents. Nothing in this Article 12
shall be interpreted as granting Biogen Idec, the JPC or the JSC any rights
with respect to the filing, prosecution (including interferences and oppositions),
maintenance, enforcement or defense of primarily those claims in the Queen
Patents that are directed toward the humanization of antibodies or humanized
antibodies in general (as opposed to particular humanized antibodies or
humanized antibodies directed at a particular target). For example and without
limiting the foregoing, PDL shall not have any obligation to: (a) keep
Biogen Idec or the JPC advised of the status of communications, actual and
prospective filings or submissions primarily regarding such claims; (b) consult
with Biogen Idec or the JPC on matters that primarily relate to such claims; (c) give
Biogen Idec or the JPC access to or an opportunity to review and comment on any
portion of patent office or patent litigation communications, filings or
proposed submissions that pertain primarily to such claims; or (d) obtain
JSC approval of a settlement or consent to an adverse judgment with respect to
any admission of invalidity or unenforceability primarily of such claims.

 

12.13                 Trademark
Selection and Ownership.

 

(a)                                  Ownership
of Trademarks. The Responsible Commercialization Party for the North
American Territory, as the “Responsible Trademark Party,” shall own, throughout
the world, all trademarks and trade dress, and all registrations therefor, selected
under Section 12.13(b) and used or intended to be used on or in
connection with a Product under this Agreement (the “Product Trademarks”). Accordingly,
with respect to the Existing Products, [****] shall be the Responsible
Trademark Party for [****], and [****] shall be the Responsible Trademark Party
for [****] and [****]. All goodwill attributable to a Product Trademark
generated by the Commercialization of a Product under this Agreement bearing a
Product Trademark shall inure to the benefit of the Responsible Trademark
Party.

 

(b)                                  Selection
and Procurement of Trademarks. The Responsible Trademark Party for a
Product to be Commercialized under this Agreement shall select, subject to
approval by the Joint Commercialization Committee, a minimum of [****]
trademarks in each of the North American Territory and EU Territory and
appropriate corresponding trade dress for such Product (whether as a
Collaboration Product or Royalty Product). Any determination regarding the
selection of such trademarks and trade dress shall take into account the
objectives of the Parties, both within and outside the Collaboration, when
making any determinations and exercising any rights it may have with respect to
selecting the trademark and trade dress for a Product. All uses of trademarks
and trade dress to identify and/or in connection with the Commercialization of
a Product under this Agreement shall comply with all applicable laws
(including,

 

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without limitation, those
laws and regulations particularly applying to the proper use and designation of
trademarks in the applicable countries).

 

(c)                                  Prosecution
and Enforcement; Expenses. The Responsible Trademark Party shall be
responsible for procurement and maintenance of trademark registrations for the
Product Trademarks throughout the Territory, except that the Responsible
Trademark Party may cease trademark registration procurement activities for any
Product Trademark in any country in the Royalty Territory provided it first
offers the other Party the opportunity to assume such activities at its own
expense. All expenses incurred by the Responsible Trademark Party with respect
to the preparation, filing, prosecution, maintenance and enforcement of the
Product Trademarks for the Profit Sharing Territory shall be included in Other
Out-of-Pocket Costs and solely for the Royalty Territory shall be borne at the
Independent Development  Party’s sole
expense.

 

(d)                                  Use
of the Product Trademarks. To effectuate the purposes of this Agreement,
the Responsible Trademark Party shall grant to the other Party, a non-exclusive,
non-royalty bearing license (with the right to grant sublicenses) pursuant to a
separate agreement, to use each Product Trademark solely in connection with the
Commercialization of Products under this Agreement. The Party that is not the
Responsible Trademark Party, its Affiliates and its sublicensees will comply
with the Responsible Trademark Party’s then-current trademark and trade dress
guidelines for trademarks and trade dress and shall have the right to monitor
the quality of the Products on which a Product Trademark appears or which
incorporates a Product Trademark in the form of trade dress in accordance with
reasonable procedures to be agreed by the Parties. The Party that is not the
Responsible Trademark Party, its Affiliates and sublicensees shall use the
Product Trademarks only in connection with the Commercialization of Products
under this Agreement in the Territory in accordance with the licenses to be
granted herein. The Responsible Trademark Party, or the Party commercializing
an Independent Product or Royalty Product as the case may be, shall provide all
materials (including without limitation advertising or promotional materials)
that incorporate the Product Trademarks or a Party’s house marks to the
Responsible Trademark Party for prior review and approval, not to be
unreasonably withheld.

 

(e)                                  House
Marks. In the event that the Parties mutually agree to permit a Party to
use the house marks of the other Party in connection with the Commercialization
and/or Co-Promotion of Products under this Agreement, the Parties will
establish mutually acceptable terms for the usage of such house marks.

 

(f)                                    Acknowledgement
of Ownership Rights. Each Party acknowledges the sole ownership by the
other Party and validity of all trademarks, trade dress, logos and slogans
owned by the other Party and used or intended to be used on or in connection
with the Commercialization of a Product under this Agreement. Each Party agrees
that it will not at any time during or after the Term assert or claim any interest
in or do anything which may adversely affect the validity or enforceability of
any trademark, trade dress, logo or slogan owned by the other Party and used or
intended to be used on or in connection with Commercialization of a Product
under this Agreement. Neither Party will register, seek to register or cause to
be registered any

 

77

 

trademarks, trade dress,
logos or slogans owned by the other Party and used or intended to be used on or
in connection with the Commercialization of a Product under this Agreement or
any variation thereof, under any law providing for registration of trademarks,
service marks, trade names, fictitious names or similar laws, as an Internet
domain name, or in the name of a corporation, partnership, limited liability
company or other entity, without the other Party’s prior written consent.

 

(g)                                 Use
of Trademark Designations. The TM designation may be used in conjunction
with each Product Trademark within the Territory. Once registrations issue, the
® designation may be used in connection with the Product Trademarks. An
appropriate statutory notice of trademark ownership shall be affixed to or
imprinted on any material wherever a Party’s house marks or Product Trademarks
are used. The Responsible Trademark Party’s ownership of the Product Trademarks
shall be identified on all materials on which they appear. The exact language
for identification of ownership shall be in accordance with branding and
implementation guidelines to be agreed on by the Parties.

 

(h)                                 Infringement
of Product Trademarks.

 

(i)                                    Procedure.
In the event that either Party becomes aware of (i) actual
infringement of a Product Trademark  in the
Territory; (ii) a mark or name confusingly similar to a Product Trademark
in the Territory; or (iii) any unfair trade practices, trade dress
imitation, passing off, or like offenses, in the Territory that relate to the
Product Trademarks, such Party shall promptly so notify the other Party in
writing. The Responsible Trademark Party shall have the right, but not the
obligation, at its sole cost and expense, to initiate, prosecute, and control
an infringement action or file any other appropriate action or claim related to
such infringement of the Product Trademark against any Third Party. If the
Responsible Trademark Party fails to bring any such infringement action within
a period of [****] after delivery of the notice set forth above, then the other
Party shall have the right, but not the obligation, at its sole cost and
expense, to initiate, prosecute, and control an infringement action or file any
other appropriate action or claim related to such infringement of the Product
Trademark against any Third Party. In either event, the Party not bringing any
such action (i) shall have the right (at its own expense) to participate
in such action and to be represented by counsel of its own choice, and (ii) agrees,
at the request and expense of the Party bringing such action, to be joined as a
Party to the suit and to provide reasonable assistance in any such action. The
Party controlling such action shall take all reasonable and appropriate steps
to protect, defend, and maintain the Product Trademarks for use by the Parties
and shall have the right to control settlement of such action; provided,
however, that no settlement shall be entered into without the written consent
of the other Party, not to be unreasonably withheld.

 

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(ii)                                Costs.
The costs associated with such defense for the Profit Sharing Territory
shall be included in [****] as set forth in Exhibit C and the costs
associated solely with the Royalty Territory shall be borne by the Independent
Development Party. Any damages or monetary award recovered shall be allocated
as follows:  All cash amounts (plus the
fair market value of all non-cash consideration) received by a Party or its
Affiliates from a Third Party in connection with the final judgment, award or
settlement of such action (“Recoveries”) shall first be applied to
reimbursement of the unreimbursed legal fees and expenses of the Parties in
connection with such action, and then the remainder shall be [****].

 

12.14                 Third Party
Trademark Claims Based on Use of the Trademarks.

 

If a
claim is brought by a Third Party that a Party’s use of the Product Trademarks
infringes such Third Party’s trademarks, the Party against which (or against
whose Affiliate, as the case may be) the action is brought will give prompt
written notice to the other Party of such claim. The Responsible Trademark
Party shall defend any such claim and any resulting suit brought in the Territory
with respect to the use of the Product Trademark, provided the costs associated
with such defense for the Profit Share Territory shall be included in [****] as
set forth in Exhibit C and the costs associated solely with the Royalty
Territory shall be borne by the [****]. Any damages or monetary award recovered
shall be allocated as follows:  All cash
amounts (plus the fair market value of all non-cash consideration) received by
a Party or its Affiliates from a Third Party in connection with the final
judgment, award or settlement of such defense (“Recoveries”) shall first
be applied to reimbursement of the unreimbursed legal fees and expenses of the
Parties in connection with such defense, and then the remainder shall be [****],
except that [****]. The Responsible Trademark Party shall not settle any claim
or suit in a manner that would adversely affect the other Party without
obtaining the other Party’s prior written consent, which shall not be
unreasonably withheld.

 

ARTICLE 13

REPRESENTATIONS AND WARRANTIES

 

13.1                        Mutual
Representations and Warranties. Each Party hereby represents and warrants
to the other Party as of August 2, 2005:

 

(a)                                  Such
Party is a corporation or entity duly organized and validly existing under the
laws of the state or other jurisdiction of its incorporation or formation;

 

(b)                                  The
execution, delivery and performance of this Agreement by such Party has been
duly authorized by all requisite corporate action;

 

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(c)                                  Such
Party has the power and authority to execute and deliver this Agreement and to
perform its obligations hereunder, and such performance does not conflict with
or constitute a breach of any agreement of such Party with a Third Party;

 

(d)                                  Subject
to Section 11.5(b)(iii) such Party has the right to grant the rights
and licenses described in Article 11; and

 

(e)                                  Such
Party has and shall maintain the resources and capability to perform its
obligations hereunder either alone or together with one or more of its
Affiliates whose performance it can cause to be made available to perform
obligations hereunder.

 

13.2                        Representations
by PDL. PDL hereby represents and warrants to Biogen Idec as of August 2,
2005:

 

(a)                                  Prior
to August 2, 2005, it has provided a complete copy of the [****]
Agreements and of all Third Party Licenses in effect as of the Effective Date;

 

(b)                                  [****];

 

(c)                                  it
has not previously assigned, transferred, conveyed or otherwise encumbered its
right, title and interest in PDL Technology in the Field;

 

(d)                                  [****];

 

(e)                                  [****];

 

(f)                                    [****];

 

(g)                                 [****];

 

(h)                                 [****];
and

 

(i)                                    [****].

 

As used and except as otherwise set forth
herein, “PDL’s knowledge” means the actual knowledge, after reasonable inquiry,
as of the Effective Date, of any executive officer of PDL with operational
responsibility for the subject matter of the applicable representation or
warranty.

 

Without limiting the foregoing, the Parties
agree and acknowledge that the representations made by PDL in this Section 13.2
shall not be deemed to be representations made by or on behalf of [****].

 

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13.3                        Disclaimer.
EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN SECTION 13.1 AND 13.2, EACH
PARTY MAKES NO OTHER REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, AND
EACH PARTY EXPRESSLY DISCLAIMS ANY AND ALL OTHER REPRESENTATIONS AND WARRANTIES
OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF DESIGN, MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, ARISING FROM A COURSE OR DEALING, USAGE OR
TRADE PRACTICES, OR ANY WARRANTY AS TO THE VALIDITY OR ANY PATENTS OR THE
NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF ANY THIRD PARTIES, IN
ALL CASES WITH RESPECT THERETO.

 

13.4                        Limitation
of Liability. NEITHER PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER
PARTY ANY SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN
CONNECTION WITH THIS AGREEMENT, EACH PARTY’S PERFORMANCE OR LACK OF PERFORMANCE
HEREUNDER, OR ANY LICENSE GRANTED HEREUNDER, HOWEVER CAUSED, ON ANY THEORY OF
LIABILITY AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES. THE FOREGOING LIMITATION SHALL NOT LIMIT EITHER PARTY’S
OBLIGATION TO THE OTHER PARTY UNDER ARTICLES 14 AND 15.

 

13.5                        Essential
Basis. The Parties acknowledge and agree that the disclaimers, exclusions
and limitations of liability set forth in this Article 13 form an
essential basis of this Agreement, and that, absent any of such disclaimers,
exclusions or limitations of liability, the terms of this Agreement, including
the economic terms, would be substantially different.

 

ARTICLE 14

CONFIDENTIALITY

 

14.1                        Generally.
During and for five (5) years after the Term of this Agreement, each
Party (i) shall maintain in confidence all Confidential Information of the
other Party; (ii) shall not use such Confidential Information for any
purpose except as permitted by this Agreement; and (iii) shall not
disclose such Confidential Information to anyone other than those of its
Affiliates, sublicensees, prospective sublicensees, employees, consultants,
agents or subcontractors who are bound by written obligations of nondisclosure
and non-use no less stringent than those set forth in this Article 14 and
to whom such disclosure is necessary in connection with such Party’s activities
as contemplated in this Agreement. Each Party shall ensure that such Party’s
Affiliates, sublicensees, prospective sublicensees, employees, consultants,
agents and subcontractors comply with these obligations. Each Party shall
notify the other promptly on discovery of any unauthorized use or disclosure of
the other’s trade secrets or proprietary information.

 

14.2                        Exceptions.
The obligations of confidentiality, non-disclosure, and non-use set forth in Section 14.1
shall not apply to the extent the receiving Party (the

 

81

 

“Recipient”)
can demonstrate that the disclosed information (i) was in the public
domain at the time of disclosure to the Recipient by the other Party, or
thereafter entered the public domain, in each case other than as a result of
actions of the Recipient, its Affiliates, employees, licensees, agents or
subcontractors, in breach of this Agreement; (ii) was rightfully known by
the Recipient or its Affiliates (as shown by its written records) prior to the
date of disclosure to the Recipient by the other Party; or (iii) was
received by the Recipient or its Affiliates on an unrestricted basis from a
Third Party rightfully in possession of such information and not under a duty
of confidentiality to the other Party. Notwithstanding any other provision of
this Agreement, Recipient’s disclosure of Confidential Information shall not be
prohibited if such disclosure:  (a) is
in response to a valid order of a court or other governmental body, provided
that Recipient provides the other Party with prior written notice of such
disclosure in order to permit the other Party to seek a protective order or
other confidential treatment of such Confidential Information; or (b) is
otherwise required by applicable law or regulation, or rules of a
nationally recognized securities exchange.

 

14.3                        Publications.

 

(a)                                  Prior
to public disclosure or submission for publication of a proposed academic,
scientific or other publication or presentation that contains or references the
results of any scientific or clinical activity relating to any Development
Program or Collaboration Product, or any Patents or Know-How related thereto,
the Party disclosing or submitting such proposed publication (“Submitting Party”) shall send the other party (“Responding Party”) by expedited delivery a copy of the
proposed publication to be submitted and shall allow the Responding Party a
reasonable time period (but no less than forty-five (45) days from the date of
confirmed receipt) in which to determine whether the proposed publication
contains subject matter for which patent protection should be sought (prior to
publication of such proposed publication) for the purpose of protecting an
invention and/or whether the proposed publication contains the Confidential
Information of the Responding Party. Following the expiration of the forty-five
(45) day review period, the Submitting Party shall be free to submit such proposed
publication for publication and publish or otherwise disclose to the public
such scientific or clinical results, subject to the procedures set forth in Section 14.3(b).

 

(b)                                  If
the Responding Party believes that the subject matter of the proposed publication
contains Confidential Information or a patentable invention of the Responding
Party, then prior to the expiration of the applicable time period for review,
the Responding Party shall notify the Submitting Party in writing of its
determination that such proposed publication contains such information or
subject matter for which patent protection should be sought. On receipt of such
written notice from the Responding Party, the Submitting Party shall delay
public disclosure of such information or submission of the proposed publication
for an additional period of ninety (90) days to permit preparation and filing
of a patent application on the disclosed subject matter. The Submitting Party
shall thereafter be free to publish or disclose such information, except that
the Submitting Party may not disclose any Confidential Information of the
Responding Party in violation of Sections 14.1 and 14.2 hereof.

 

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14.4                        Publicity.
The Parties agree that the public announcement of the execution of this
Agreement shall be substantially in the form of a mutually agreed press release.
Any other publication, news release or other public announcement relating to
this Agreement or to the performance hereunder, shall first be reviewed and
approved by both Parties unless such publication, news release or other public
announcement contains information previously approved by the other Party for
release hereunder; provided, however, that any disclosure which is required by
law, or by the rules of a nationally recognized securities exchange, as
advised by the disclosing Party’s counsel may be made without the prior consent
of the other Party, although the other Party shall be given prompt notice of
any such legally required disclosure and to the extent practicable shall
provide the other Party an opportunity to comment on the proposed disclosure.

 

ARTICLE 15

INDEMNIFICATION

 

15.1                        Indemnification
by PDL.

 

(a)                                  PDL
agrees to indemnify, hold harmless and defend Biogen Idec and its Affiliates,
directors, officers, employees and agents (the “Biogen Idec
Indemnitees”) from and against any and all Third Party suits,
claims, actions, demands, liabilities, expenses and/or losses (including
attorneys’ fees, court costs, witness fees, damages, judgments, fines and
amounts paid in settlement) (“Losses”) [****],
but [****].

 

(b)                                  PDL
agrees to indemnify, hold harmless and defend the Biogen Idec Indemnitees from
and against any and all Losses [****] (i) [****], or (ii) [****],
except [****].

 

15.2                        Indemnification
by Biogen Idec.

 

(a)                                  Biogen
Idec shall indemnify, hold harmless and defend PDL and its Affiliates
directors, officers, employees and agents (the “PDL
Indemnitees”) from and against any and all Losses, [****], but [****],
but not [****]. [****].

 

(b)                                  Biogen
Idec agrees to indemnify, hold harmless and defend the PDL Indemnitees from and
against any and all Losses [****], except [****].

 

15.3                        Procedure.
In the event of a claim by a Third Party against a Party entitled to
indemnification under this Agreement (“Indemnified Party”),
the Indemnified

 

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Party shall promptly
notify the other Party (“Indemnifying Party”)
in writing of the claim and the Indemnifying Party shall undertake and solely
manage and control, at its sole expense, the defense of the claim and its
settlement. The Indemnified Party shall cooperate with the Indemnifying Party,
including, as requested by the Indemnifying Party entering into a joint defense
agreement. The Indemnified Party may, at its option and expense, be represented
in any such action or proceeding by counsel of its choice. The Indemnifying
Party shall not be liable for any litigation costs or expenses incurred by the
Indemnified Party without the Indemnifying Party’s written consent. The
Indemnifying Party shall not settle any such claim unless such settlement fully
and unconditionally releases the Indemnified Party from all liability relating
thereto, unless the Indemnified Party otherwise agrees in writing.

 

15.4                        Insurance.
Each Party, at its own expense, shall maintain product liability insurance in
an amount consistent with industry standards for a company of similar standing
during the Term. Each Party shall provide [****] prior written notice of any
cancellation of its insurance program. Each Party shall provide the other Party
with a certificate of insurance evidencing product liability coverage.

 

ARTICLE 16

TERM AND TERMINATION; EFFECTS OF TERMINATION

 

16.1                        Term. The
term of this Agreement shall begin on the Effective Date and, unless earlier
terminated in accordance with the terms of this Article 16, will expire on
the date on which neither Party has nor will have any additional payment
obligations to the other Party under this Agreement (the “Term”).

 

16.2                        Termination
for Breach.

 

(a)                                  Breach.
If a Party materially breaches its obligations under this Agreement with
respect to a Collaboration Product or Royalty Product, which breach is not
cured within [****] after written notice thereof from the non-breaching Party
(or if such breach is not capable of cure within such period, which breach the breaching
Party is not making diligent good faith efforts to cure), then upon further
express written notice from the non-breaching Party, the breaching Party
automatically (and without further action on its part) shall be deemed to have [****]
(a “Breaching Party”); provided however that the breaching Party shall be
entitled to receive no more than [****] of the royalties due to a
Non-Developing Party hereunder. This preceding sentence shall not, however,
limit in any manner the non-breaching Party’s other remedies for breach. The
Parties acknowledge and agree that failure to exercise any right or option with
respect

 

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to any Collaboration
Product or to take any action expressly within the discretion of a Party shall
not be deemed to be material breach hereunder.

 

(b)                                  Breaching
Party Obligations. A Breaching Party shall, with respect to the
Collaboration Product or Royalty Product as to which it is the Breaching Party (i) notwithstanding
the provisions of this Agreement to the contrary, the Breaching Party shall be [****],
(ii) in addition to the obligations specified in [****] the Breaching  Party shall [****], and (iii) the
Breaching Party shall [****].

 

16.3                        Bankruptcy.
All rights and licenses granted under this Agreement by one Party to the other
Party are, and shall otherwise be deemed to be, for purposes of Section 365(n)
of the United States Bankruptcy Code (the “Bankruptcy Code”),
licenses of rights to “intellectual property” as defined under Section 101(35A)
of the Bankruptcy Code. The Parties agree that a Party shall retain and may
fully exercise all of its rights and elections under the Bankruptcy Code in the
event of a bankruptcy by the other Party. The Parties further agree that in the
event of the commencement of a bankruptcy proceeding by or against one Party
under the Bankruptcy Code, the other Party shall be entitled to complete access
to any such intellectual property pertaining to the rights granted in the
licenses hereunder of the Party by or against whom a bankruptcy proceeding has
been commenced and all embodiments of such intellectual property.

 

16.4                        Change of
Control.

 

(a)                                  In
the event a Party undergoes a Change of Control (the “Acquired Party”), the
other Party (the “Non-Acquired Party”) shall have the right, at any time within
[****] following the closing of such Change of Control, and at its sole
discretion, to elect none, some or all of the following. This Agreement shall
otherwise remain in full force and effect.

 

(i)                                    The
provisions of this Agreement permitting the Acquired Party to vote in any
Committee decision [****].

 

(ii)                                The
Non-Acquired Party shall have the option [****].

 

(iii)                            The
Non-Acquired Party shall have [****].

 

(iv)                               Upon
[****] prior written notice, the Non-Acquired Party may [****]; and

 

(v)                                   The
Non-Acquired Party shall have the [****] to (A) [****] and (B) [****].
The purposes of such procedures shall be to strictly limit such disclosures to

 

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only those personnel
having a need-to-know Sensitive Information in order for the Acquired Party to
perform its remaining obligations under this Agreement and to prohibit the use
of Sensitive Information for competitive reasons against the Non-Acquired Party
and its Affiliates, including without limitation, the use of Sensitive
Information for the development or commercialization of competing products.

 

(b)                                  An
Acquired Party shall have the one-time right, at any time within [****]
following the election by the Non Acquired Party to exercise any of the rights
specified in Section 16.4(a)  to [****]. Upon written notice of the
Acquired Party’s intent to [****], the Acquired Party shall:

 

(i)                                    Continue
to participate in the equal funding of the Development and Commercialization of
each Collaboration Product in the Profit Sharing Territory until the next
applicable opt-out point specified in Exhibit 4.1(b)(iii) for such
Collaboration Product.

 

(ii)                                Promptly
comply with the provisions of Sections 4.3(c), 4.3(e), 4.3(f),  4.3(g) and 4.3 (h) with respect to
each Collaboration Product as if it were a Non-Developing Party thereunder.

 

(iii)                            Following
the termination of the Acquired Party’s funding obligation as set forth in Section 16.4(b)(i) above,
the Acquired Party shall thereafter be eligible to receive from the
Non-Acquired Party, for the term specified below, incremental royalties on Net
Sales of the relevant Collaboration Product at a royalty rate which is equal to
the sum of (A) [****] (B) [****], as applicable. The term of the
Non-Acquired Party’s obligation to pay a royalty under this Section 16.4(b) shall
expire on a country-by-country and Collaboration Product-by-Collaboration
Product basis, at the dates specified in Section 9.5. Each Collaboration
Product shall thereafter be deemed to be an Independent Product and all the
applicable provisions of the Agreement shall remain in full force and effect.

 

16.5                        In any
event, expiration or termination of this Agreement shall not relieve the
Parties of any liability which accrued hereunder prior to the effective date of
such expiration or termination nor preclude either Party from pursuing all
rights and remedies it may have hereunder or at law or in equity with respect
to any breach of this Agreement, nor prejudice either Party’s right to obtain
performance of any obligation.

 

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ARTICLE 17

DISPUTE RESOLUTION; GOVERNING LAW

 

17.1                        Disputes.
Unless otherwise set forth in this Agreement, in the event of any dispute
arising under this Agreement between the Parties, the Parties shall refer such
dispute to the respective Executives, and such Executives shall attempt in good
faith to resolve such dispute.

 

17.2                        Arbitration.
Subject to the provisions of Section 2.8(c), if the Parties are unable
resolve a given dispute pursuant to Section 17.1 within [****] of
referring such dispute to the Executives, either Party may have the given
dispute settled by binding arbitration in the manner described below:

 

(a)                                  Arbitration
Request. If a Party intends to begin an arbitration to resolve a dispute
arising under this Agreement, such Party shall provide written notice (the “Arbitration Request”) to the other Party of such intention
and the issues for resolution. From the date of the Arbitration Request and
until such time as the dispute has become finally settled, the running of the
time periods as to which Party must cure a breach of this Agreement becomes
suspended as to the subject matter of the dispute.

 

(b)                                  Additional
Issues. Within [****] after the receipt of the Arbitration Request, the
other Party may, by written notice, add additional issues for resolution.

 

(c)                                  No
Arbitration of Patent Issues. Unless otherwise agreed by the Parties,
disputes relating to patents shall not be subject to arbitration, and shall be
submitted to a court of competent jurisdiction.

 

(d)                                  Arbitration
Procedure. Except as expressly provided herein, the sole mechanism for
resolution of any claim, dispute or controversy arising out of or in connection
with or relating to this Agreement or the breach or alleged breach thereof
shall be arbitration by the American Arbitration Association (“AAA”) in Los Angeles, California, or in such other venue as
the Parties agree, under the commercial rules then in effect for the AAA
except as provided herein. All proceedings shall be held in English and a
transcribed record prepared in English. The Parties shall choose, by mutual
agreement, one arbitrator within [****] of receipt of notice of the intent to
arbitrate. If no arbitrator is appointed within the times herein provided or
any extension of time that is mutually agreed on, the AAA shall make such
appointment within [****] of such failure. The award rendered by the arbitrator
shall not include costs of arbitration, attorneys’ fees or costs for expert and
other witnesses. Within [****] of initiation of arbitration, the Parties shall
reach agreement upon and thereafter follow procedures assuring that the
arbitration will be concluded and the award rendered within no more than [****]
from

 

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

 

87

 

selection of the
arbitrator. Failing such agreement, the AAA will design and the Parties will
follow procedures that meet such a time schedule. The arbitrator (i) shall
not have any power or authority to add to, alter, amend or modify the terms of
this Agreement but shall specify rules sufficient to allow reasonable
discovery by the Parties; (ii) shall establish and enforce appropriate rules to
ensure that the proceedings, including the decision, be kept confidential and
that all Confidential Information of the Parties be kept confidential and be
used for no purpose other than the arbitration; (iii) shall have the power
to enforce specifically this Agreement and the terms and conditions hereof in
addition to any other remedies at law or in equity; and (iv) shall issue
all decisions in writing. Nothing in this Agreement shall be deemed as
preventing either Party from seeking injunctive relief (or any other
provisional remedy) from any court having jurisdiction over the Parties and the
subject matter of the dispute as necessary to protect either Party’s name,
proprietary information, trade secrets, know-how or any other proprietary right.
If the issues in dispute involve scientific or technical matters, any
arbitrator chosen hereunder shall have educational training and/or experience
sufficient to demonstrate a reasonable level of knowledge in the field of
biotechnology. Judgment on the award rendered by the arbitrator may be entered
in any court having jurisdiction thereof.

 

17.3                        Choice of
Law. The validity, performance, construction, and effect of this Agreement
shall be governed by the laws of the [****], U.S.A., without regard to
conflicts of law principles that would provide for application of the law of a
jurisdiction outside California and excluding the United Nations Convention on
Contracts for the International Sales of Goods.

 

ARTICLE 18

MISCELLANEOUS

 

18.1                        Assignment.
Each Party, without the consent of the other Party, may assign this
Agreement and its rights and obligations hereunder (i) [****], or (ii) [****].
Any permitted assignee shall assume all assigned obligations of its assignor
under this Agreement. The assigning Party shall promptly notify the other Party
of any such Change of Control and any such assignment and shall use all
reasonable efforts to provide such notification at least [****] before the
completion of the Change of Control and before the assignment. Except as
specifically provided in this Section 18 or in Section 3.7, this
Agreement may not be assigned or otherwise transferred, nor may any right or
obligation hereunder be assigned or transferred, by either Party without the
consent of the other Party. Any attempted assignment not in accordance with
this Section shall be void.

 

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

 

88

 

18.2                        Force
Majeure. If either Party shall be delayed, interrupted in or prevented from
the performance of any obligation hereunder by reason of force majeure
including an act of God, fire, flood, earthquake, war (declared or undeclared),
public disaster, act of terrorism, strike or labor differences, governmental
enactment, rule or regulation, or any other cause beyond such Party’s
control, such Party shall not be liable to the other therefor; and the time for
performance of such obligation shall be extended for a period equal to the
duration of the force majeure which occasioned the delay, interruption or
prevention. The Party invoking such force majeure rights of this Section 18.2
must notify the other Party by courier or overnight dispatch (e.g., Federal
Express) within a period of fifteen (15) days of both the first and last day of
the force majeure unless the force majeure renders such notification impossible
in which case notification will be made as soon as possible. If the delay
resulting from the force majeure exceeds six (6) months, both Parties
shall consult together to find an appropriate solution.

 

18.3                        Entire
Agreement; Amendment. This Agreement constitutes the entire agreement
between the Parties with respect to the subject matter herein and, effective on
the Effective Date, supersedes all previous agreements between the Parties with
respect to the subject matter herein, whether written or oral, including the
existing confidentiality agreement between PDL and Biogen Idec. This Agreement
shall not be changed or modified orally, but only by an instrument in writing
signed by both Parties.

 

18.4                        Severability.
If any provision of this Agreement is declared invalid by a court of last
resort or by any court or other governmental body from the decision of which an
appeal is not taken within the time provided by law, then and in such event,
this Agreement will be deemed to have been terminated only as to the portion
thereof that relates to the provision invalidated by that decision and only in
the relevant jurisdiction, but this Agreement, in all other respects and all
other jurisdictions, will remain in force; provided, however, that if the
provision so invalidated is essential to the Agreement as a whole, then the
Parties shall negotiate in good faith to amend the terms hereof as nearly as
practical to carry out the original intent of the Parties, and, failing such
amendment, either Party may submit the matter for resolution pursuant to Article 16.

 

18.5                        Notices. Any
notice or report required or permitted to be given under this Agreement shall
be in writing and shall be mailed by nationally recognized overnight courier,
or faxed and confirmed by mailing, as follows and shall be effective one (1) day
after such mailing:

 

	
  If to PDL:

  	
  Protein Design Labs, Inc.

  
	
   

  	
  34801 Campus Drive

  
	
   

  	
  Fremont, California U.S.A. 94555

  
	
   

  	
  Attention: Chief Executive Officer

  
	
   

  	
  Facsimile:

  
	
   

  	
   

  
	
  and

  	
  Protein Design Labs, Inc.

  
	
   

  	
  34801 Campus Drive

  

 

89

 

	
   

  	
  Fremont, California U.S.A. 94555

  
	
   

  	
  Attention: General Counsel

  
	
   

  	
  Facsimile:

  
	
   

  	
   

  
	
  If to Biogen Idec:

  	
  Biogen Idec Inc.

  
	
   

  	
  14 Cambridge Center

  
	
   

  	
  Cambridge, Massachusetts U.S.A 02142

  
	
   

  	
  Attention: Chief Executive Officer

  
	
   

  	
  Facsimile:

  
	
   

  	
   

  
	
  and

  	
  Biogen Idec Inc.

  
	
   

  	
  14 Cambridge Center

  
	
   

  	
  Cambridge, Massachusetts U.S.A 02142

  
	
   

  	
  Attention: General Counsel

  
	
   

  	
  Facsimile:

  

 

18.6                        Further
Assurances. The Parties agree to reasonably cooperate with each other in
connection with any actions required to be taken as part of their respective
obligations under this Agreement, and shall (a) furnish to each other such
further information; (b) execute and deliver to each other such other documents;
and (c) do such other acts and things (including working collaboratively
to correct any clerical, typographical, or other similar errors in this
Agreement), all as the other Party may reasonably request for the purpose of
carrying out the intent of this Agreement.

 

18.7                        Agency. Neither
Party is, nor will be deemed to be an employee, agent or representative of the
other Party for any purpose. Each Party is an independent contractor, not an
employee or partner of the other Party. Neither Party shall have the authority
to speak for, represent or obligate the other Party in any way without prior
written authority from the other Party.

 

18.8                        No Waiver.
Any omission or delay by either Party at any time to enforce any right or
remedy reserved to it, or to require performance of any of the terms, covenants
or provisions hereof, by the other Party, shall not constitute a waiver of such
Party’s rights to the future enforcement of its rights under this Agreement. Any
waiver by a Party of a particular breach or default by the other Party shall
not operate or be construed as a waiver of any subsequent breach or default by
the other Party.

 

18.9                        No Strict
Construction. Each Party has had the opportunity to consult with counsel in
connection with the review, drafting and negotiation of this Agreement. Accordingly,
the rule of construction that any ambiguity in this Agreement shall be
construed against the drafting Party shall not apply.

 

18.10                 Headings. The
captions used herein are inserted for convenience of reference only and shall
not be construed to create obligations, benefits, or limitations.

 

90

 

18.11                 Cumulative
Remedies. No remedy referred to in this Agreement is intended to be
exclusive, but each shall be cumulative and in addition to any other remedy
referred to in this Agreement or otherwise available under law.

 

18.12                 Counterparts. This
Agreement may be executed in counterparts, all of which taken together shall be
regarded as one and the same instrument.

 

 

[Signature Page to Follow]

 

91

 

IN WITNESS WHEREOF,
the Parties have executed this Collaboration Agreement through their duly
authorized representatives to be effective as of the Effective Date.

 

 

	
  PROTEIN DESIGN LABS, INC.

  	
  BIOGEN IDEC MA INC.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Mark McDade

  	
   

  	
  By:

  	
  /s/ James Mullen

  	
   

  
	
   

  
	
  Title:

  	
   President and CEO

  	
   

  	
  Title:

  	
      President

  	
   

  
	
   

  
	
  Date:

  	
  September 12, 2005

  	
   

  	
  Date

  	
    September 12, 2005

  	
   

  
										

 

 

EXHIBIT A

PDL PATENT RIGHTS

 

I.                                         Queen
Patents

 

[****]

 

II.                                     [****]
Patent Rights

 

[****]

 

III.                                 [****]
Patent Rights

 

[****]

 

IV.                                 [****]
Patent Rights

 

[****]

 

 

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

 

 

EXHIBIT B

 

THIRD
PARTY LICENSES

 

[****]

 

 

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

 

 

EXHIBIT C

 

FINANCIAL
PLANNING, ACCOUNTING AND REPORTING PROCEDURES

FOR COLLABORATION AGREEMENT

 

This Exhibit C
to the Collaboration Agreement (the “Agreement”)
dated as of the Effective Date, between Protein Design Labs, Inc. (“PDL”) and Biogen Idec MA, Inc. (“Biogen Idec”)
covers financial planning, accounting policies and procedures to be followed in
determining Development Expenses, Ongoing Development Expenses, Other
Out-of-Pocket Costs and Reimbursable Commercial Costs pursuant to the
Agreement.

 

For such
purpose, this Exhibit C sets forth the principles for reporting
actual results and budgeted plans in the Territory, the frequency of reporting,
the use of a single “Functional Currency”
(as defined in A.3) and the methods of determining payments to the Parties, auditing
of accounts and other matters.

 

This Exhibit C
also provides agreed upon definitions of financial terms applicable to the
Parties for purposes of the Agreement. All capitalized terms used herein
without definition shall have the meanings ascribed thereto in the Agreement
and, where applicable, the further definitions contained herein. References in
this Exhibit C to a “Party” or “Parties” shall be construed to mean Biogen Idec or PDL, as
the case may be, and in every case shall be deemed to include a Party’s
Affiliates or sublicensees under the Agreement.

 

The contents
of this Exhibit C are hereby incorporated into the Agreement and
are governed by the terms and conditions of the Agreement, including the
confidentiality provisions set forth therein. Notwithstanding anything in the
Agreement to the contrary, no cost, expense, amount or sum allocable or
chargeable to the Parties’ activities under the Agreement shall be
allocated or charged more than once. Unless otherwise specifically authorized
by the Parties or the Agreement, all costs, expenses, amounts or sums to be
charged or allocated by one Party to the other Party under the Agreement shall
not be so chargeable or allocable unless they are both directly related to the
Agreement and the activities to be performed under the Agreement and are
reasonable and customary with respect to the global biopharmaceutical industry
considering the respective size and activities of the two Parties as
collaborators under the Agreement.

 

A.                                    Definitions,
Reporting and Reconciliation

 

A.1.                          Definitions

 

A.1.1                   “Combination
Product” shall mean a product containing both the Collaboration Product and
one or more other active ingredients in addition to the Collaboration Product
where the other active ingredients have independent prophylactic or therapeutic
effect when used alone to treat the disease or indication for which the
Combination Product is labeled, whether the Collaboration Product and the other
active

 

 

ingredients are together in a physical mixture or
packaged and priced together as a single product.

 

A.1.2                   “Combination
Product Amount” shall mean the following: in the event a Collaboration
Product is sold in the form of a Combination Product, and provided that the
JSC  has approved the sale and marketing
of such a Combination Product in a Commercialization Plan , Net Sales for such
Combination Product for purposes of this Agreement will be determined by [****].
If, on a country-by-country basis, the other active component or components in
the combination are not sold separately in such country, Net Sales shall be
calculated by [****]. If, on a country-by-country basis, the Collaboration
Product component of the Combination Product is not sold separately in such
country, but the other active component or components are sold separately, Net
Sales shall be calculated by [****]. If, on a country-by-country basis, neither
the Collaboration Product nor the other active component or components of the
Combination Product is sold separately in such country, [****].

 

A.1.3  “Cost of
Clinical Supplies”  shall mean a
Party’s costs to produce [****], to the extent that such costs would ordinarily
be included [****] for a similar product, including without limitation labor
and material cost, allocable depreciation and amortization, product quality
assurance/control costs, allocable facilities costs (e.g., sewer, water,
property taxes), Third Party Royalties, insurance, and other costs borne by the
party for transport, customs and duty clearance and storage of Clinical
Supplies of Collaboration Product. [****].

 

A.1.4                   “Cost of Goods
Manufactured for Sale” or “COGM” shall mean a Party’s costs to produce [****]
and/or [****] to the extent that such costs would ordinarily be included [****]
for a similar product, including without limitation labor and material cost,
allocable depreciation and amortization, product quality assurance/control
costs, allocable facilities costs (e.g., sewer, water, property taxes), Third
Party Royalties, insurance, and other costs borne by the party for transport,
customs and duty clearance and storage of Commercial Supplies of Collaboration
Product. [****].

 

A.1.5                   “Cost of Sales”
shall mean a Collaboration Product’s Cost of Goods Manufactured for Sale [****],
Third Party Royalties (i.e., any allocable intellectual property acquisition
and licensing costs not included in COGM) and transport, customs and duty
clearance on sales if borne by the seller.

 

A.1.6                   “Development Expenses”  shall mean the
costs and expenses associated with Development activities actually for each
Collaboration Product incurred by Biogen Idec or PDL or their Affiliates from August 2,
2005, provided that the provisions of Section 3.5(a)(ii) are complied
with, and otherwise, from the Effective Date through the later of (a) [****],
or (b) [****]. The costs and expenses associated with

 

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

 

 

Development
activities shall include those costs required to obtain, maintain and/or expand
the authorization and/or ability to manufacture, formulate, fill, ship and/or
sell Collaboration Product in commercial quantities to Third Parties in the
Territory, including the costs of the Parties associated with the transfer of,
and implementation of manufacturing technology necessary to qualify a
manufacturing facility. Development Expenses shall also include, but are not
limited to, costs of research or Development, including costs of studies on the
toxicological, pharmacological, metabolical or clinical aspects of a
Collaboration Product conducted internally or by individual investigators or
consultants and necessary for the purpose of obtaining, maintaining and/or
expanding marketing approval of a Collaboration Product, process development,
process improvement and scale-up costs, validation costs, including
qualification lots, the manufacture of Clinical Supplies of Collaboration
Product, and costs for preparing, submitting, reviewing or developing data or
information for the purpose of submission to a governmental authority to
obtain, maintain and/or expand manufacturing and/or marketing approval of a
Collaboration Product and costs of marketing studies related to Collaboration
Product. Development Expenses shall include the previously incurred cost of any
inventory of Collaboration Products held by PDL at the Effective Date, provided
that the date at which the cost of any such inventory shall be deemed to be
incurred by PDL as a Development Expense shall be the date such product is
shipped for use in Clinical Trials for a Collaboration Product. Development
Expenses shall also include expenses for data management, statistical designs
and studies, document preparation, and other administration expenses associated
with the clinical testing program. In determining Development Expenses
chargeable under this Agreement, each Party will use its respective project
accounting systems, and will review its respective project accounting systems
and methodologies with the other Party. The Parties shall agree upon and
consistently apply methodologies for calculating and allocating Development
Expenses based on their respective internal accounting systems. The Parties
hereby agree that efforts of the employees of a Party or its Affiliates in
performing its activities hereunder shall be charged as Development Expenses at
the applicable FTE Rate. Notwithstanding anything in this Section to the
contrary, only those Development Expenses that are contemplated by the Development
Plan and an Annual Workplan/Budget or were otherwise approved by the JSC shall
be chargeable by a Party as Development Expenses with any cost overruns treated
in the manner set forth in Section A.2.2 of this Exhibit C. All
payments made by a Party to a Third Party in connection with the performance of
its activities under the Development Plan and an Annual Workplan/Budget shall
be charged as Development Expenses at such Party’s actual out-of-pocket cost. The
Cost of Clinical Supplies of Collaboration Product shall be charged as a
Development Expense. Except to the extent included in Cost of Clinical Supplies
of Collaboration Product, expenses incurred by each Party for equipment,
materials and supplies utilized in performing its activities under the
Development Plan and an Annual Workplan/Budget shall not be separately charged
as Development Expenses, except for those expenses incurred by a Party, with
the prior written consent of the JSC as set forth in the Development Plan and
Annual Workplan/Budget, in the purchase or making of equipment, materials or
supplies (other than common laboratory supplies, e.g.,
pipettes, test tubes, petri dishes, reagents, and the like) that are to be used
exclusively in connection with the performance of such

 

 

Party’s
activities under a Development Plan and an Annual Workplan/Budget (e.g., laboratory animals, placebo supplies, etc.), which
expenses shall be charged as Development Expenses at such Party’s actual
out-of-pocket expense incurred in purchasing or making such equipment,
materials or supplies. Special purchases of capital equipment not related to
Manufacturing that are used solely for purposes of the Collaboration shall be
approved in advance by the JSC.

 

A.1.7                   “Distribution Costs”  shall mean the
FTE costs and other costs specifically identifiable or allocable to the
distribution of Collaboration Product by a Party and described in an Annual
Commercialization Plan/Budget including warehousing, transportation, order
entry, billing, shipping, credit and collection and other such activities as
approved by the JSC. For purposes of this definition, FTE costs shall be
charged at the applicable FTE Rate.

 

A.1.8                   “FTE Rate” shall
mean as defined in Section A.6 of this Exhibit C.

 

A.1.9                   “Gross Sales” shall mean the gross amount invoiced by a Party
or its Affiliates or sublicensees for sales of a Collaboration Product to Third
Parties in the Territory, including sales to distributors. For clarity, Gross
Sales will include a Party’s revenue from distributors, and not revenue of the
distributors themselves. A sale or transfer of a Collaboration Product by a
Party to one of its Affiliates shall not be considered a sale to a Third Party
for the purpose of this provision but the resale of such Collaboration Product
by such Affiliate to a Third Party shall be a sale for such purposes. In the
event the Collaboration Product is sold in the form of a Combination Product,
Gross Sales will be the Combination Product Amount. Each Party shall
communicate to the other Party any mandatory discounts to Gross Sales levied by
any Third Party.

 

A.1.10            “Marketing Costs”
shall mean the FTE costs and other direct costs of marketing, promotion and
advertising, including, without limitation, costs for preparing and reproducing
detailing aids, Collaboration Product promotional Materials and other
promotional materials,  costs of professional education,  product related public relations, relationships with
opinion leaders and professional societies, market research (before and after
product approval), healthcare economics studies, Post-Approval Clinical Trials,
and other similar activities directly related to the Collaboration Products, in
each case as approved by the JSC as part of the Commercialization Plan and an
Annual Commercialization Plan/Budget. Such costs may also include actual
out-of-pocket costs for outside services and expenses (e.g., consultants,
agency fees, meeting costs, etc.). “Marketing Costs” shall also include
activities related to obtaining reimbursement from payers, costs of sales and
marketing data, and costs not previously included as Sales Costs. For purposes
of this definition, FTE costs shall be charged at the applicable FTE Rate, as
set forth in Section A.1.16 of this Exhibit C.

 

A.1.11  “Net Sales” shall
mean Gross Sales of a Collaboration Product less applicable Sales Returns and
Allowances.

 

A.1.12  “Ongoing Development Expense” shall mean FTE costs and

 

 

other costs
and expenses borne by either Party or its Affiliates with respect to Phase IV
Clinical Trials approved by the JSC and other expenses approved by the JSC
associated with market positioning of a Collaboration Product to the extent not
otherwise included within Development Expenses or Marketing Costs or Sales
Costs under any other written agreement between the Parties or their Affiliates
relating to Collaboration Product. For purposes of this definition, FTE costs
shall be charged at the applicable FTE Rate.

 

A.1.13  “Operating Expenses” shall mean Cost of Sales,  Marketing Costs,  Sales Costs, Ongoing Development Expenses,  Other Out-of-Pocket Costs and Distribution
Costs

 

A.1.14  “Other Out-of-Pocket Costs” shall mean other operating
expenses paid by the Parties or their Affiliates to Third Parties which are not
part of Development Expenses, but are considered and approved by the JSC as
expenses for purposes of the cost sharing arrangements under the Agreement. Other
Out-of-Pocket Costs shall be limited to the following:

 

•                       Third Party
License Fees (other than those related to the manufacture of Collaboration
Product to the extent covered under any other written agreement between the
Parties or their Affiliates related to Collaboration Product)

 

•                       Patent
Costs and trademark costs (as limited by Article 12 of the Agreement)

 

•                       product
liability insurance to the extent the Parties obtain a joint policy

 

•                       costs
pursuant to joint ownership of intellectual property as outlined in Article 12
of this Agreement

 

•                       costs
incurred in the defense of infringement suits pursuant to Section 12.8 of
the Agreement

 

•                       other
expenses approved by the JSC

 

A.1.15  “Post-Approval Clinical Trial” shall mean any clinical trial
in an indication, other than a Phase 3 Clinical Trial or Phase 4 Clinical
Trial, to be conducted after a Regulatory Approval for such indication.

 

A.1.16            “Sales Costs” shall
mean FTE costs and other direct costs approved by the JCC as part of the
Commercialization Plan and an Annual Commercialization Plan/Budget and
specifically identifiable to sales of Collaboration Products in the Territory. Sales
Costs shall include costs associated with Sales Representatives and training of
the Sales Representatives, sales meetings, details, sales call reporting, work
on managed care accounts, costs related to customer service and other sales and
customer service-related expenses. Sales Costs will not include start-up costs
associated with either Party’s sales force, including recruiting, relocation

 

 

and other similar costs. The annual FTE cost shall be determined based
on the actual FTE cost from the prior budget year for the respective Sales,
Marketing, Customer Service, Managed Markets, Decision Support and Medical
Affairs functions of each Party, with one collaboration FTE rate established
each year for all sales and marketing functions.

 

A.1.17  “Sales Returns & Allowances” shall
mean the sum of (a) and (b), where: (a) [****]; and (b) [****].

 

It is the
intention of the Parties that the interpretation of these definitions in this Exhibit C
will be in accordance with U.S. GAAP consistently applied in accordance with
Biogen Idec then current practices. A Party will promptly make the appropriate
adjustments to the financial information it supplies under the Agreement to
reflect changes to the provisions, including reasonable detail underlying the
adjustment, in reporting results of operation.

 

A.2.1. Reporting.
Each Party shall report to the other Party forecasts, budgets and actual
results of operations related to the following:

 

•                       [****]

•                       [****]

•                       [****]

•                       [****]

•                       [****]

•                       [****]

•                       [****]

•                       [****]

•                       [****]

•                       [****]

•                       [****]

•                       [****]

•                       [****]

 

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

 

 

Reporting by
each Party will be performed as follows:

 

	
  Reporting Event

  	
   

  	
  Frequency

  	
   

  	
  Timing of Submission

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  

 

The financial
representatives from the Parties will review financial information [****] and
meet as appropriate but shall in any event meet in person at least quarterly to
review and approve the following:

 

•                       [****]

•                       [****]

•                       [****]

•                       [****]

•                       [****]

 

Costs included
in Cost of Clinical Supplies are not subject to JSC approval as long as they
are consistent with the definitions and within the JSC approved budget.

 

A.2.2  Reconciliation Statements.
Within [****] following the end of a Calendar Quarter, each Party shall submit
to the other Party its report of actual results as outlined above (including a
summary of charges and credits allocated to its Development Expense Project
Account). Expenses charged by either Party as Ongoing Development Expenses,
Other Out-of-Pocket Costs and Development Expenses shall not exceed [****] of
the amount included for the total expenditure in the then current Development
Plan or Annual Workplan/Budget, as the case may be, unless the JFC recommends,
and the JSC approves such excess expense. If actual costs of any expense line
item in implementing an Annual Work Plan/Budget or the Development Plan is
expected to vary by more than [****], then the Party incurring the variance(s)
has

 

 

the obligation
to inform the other Party of such variance(s) in a timely manner and to discuss
with such Party the causes of the variance(s). Any such discussion as to the
cause of the variances shall occur at the JFC. If the actual costs of
implementing an Annual Work Plan/Budget or the Development Plan are expected to
vary by more than [****] from the amounts budgeted for expenditure during the
calendar year, the Responsible Development Party will promptly revise, as applicable,
the Annual Workplan/Budget or Development Plan and submit it in writing, with
an explanation of the variance and the reasons therefore, for approval to the
JSC. If the JSC does not approve the variance, the amount by which the actual
costs exceed [****] of the budgeted costs shall be borne by the Party that
incurred the costs.

 

The financial
representatives from each Party on the JFC shall be responsible for, within [****]
days following the end of a Calendar Quarter, preparing a statement (“Reconciliation Statement”) in a format agreed to by the
Parties showing each Party’s results, the calculations of Ongoing Development
Expenses, Other Out-of-Pocket Costs, Cost of Clinical Supplies, COGM and
Development Expenses sharing under Section 3.6 of the Agreement and any
cash settlement required. The Reconciliation Statement and reports of actual
results compared to budget will be sent to the JFC, within [****] following the
end of a Calendar Quarter for approval. After approval by the JFC, the JFC will
forward the Reconciliation Statement to the JSC for its information or approval
in the case of a dispute. The Reconciliation Statement shall be provided to the
JSC [****] prior to the date upon which the JSC shall meet to approve the
Reconciliation Statement, if approval is being sought. Reconciliation
Statements shall be made by PDL or Biogen Idec in the manner set forth in Section A.5
of this Exhibit C.

 

A.3  Foreign Exchange. The
“Functional Currency” for accounting for
Ongoing Development Expenses, Other Out-of-Pocket Costs and Development
Expenses will be U.S. dollars. Except as the Parties otherwise mutually agree,
for billing and reporting, the statement of operations will be translated into
U.S. dollars using the [****] listed in The Wall Street Journal
for the [****]. If, due to restrictions or prohibitions imposed by national or
international authority, payments cannot be made as provided in this Section,
the Parties shall consult with each other with a view towards finding a prompt
and acceptable solution, and the paying Party will transfer funds as the other
Party may lawfully direct at no additional out-of-pocket expense to the paying
Party.

 

A.4  Audits and Interim Reviews.
Either Party shall have the right to request that a nationally recognized, independent
accounting firm to be mutually agreed upon by the Parties and that is not
either Party’s independent accounting firm perform an audit or
interim review of the other Party’s books and records as they relate to

 

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

 

 

activities
under this Agreement in order to express an opinion regarding such Party’s
accounting for revenues, costs and expenses under this Agreement. Such audits
or review will be conducted at the expense of the requesting Party. Either
Party shall have the right to request that a nationally recognized, independent
accounting firm to be mutually agreed upon by the Parties and that is not
either Party’s independent accounting firm perform an audit of the other Party’s
books of accounts for the sole purpose of verifying compliance with the
Agreement and the Transaction Agreements. Upon [****] prior written notice from
a Party (the “Auditing Party”), the other Party
(the “Audited Party”) shall permit the
mutually agreed upon independent accounting firm to examine the relevant books
and records of the Audited Party and its Affiliates as may be reasonably
necessary to verify the reports and information submitted by the Audited Party
and the accuracy of any Reconciliation Statement. An examination by a Party
under this Section shall occur not more than [****] and shall be limited
to the pertinent books and records for any calendar year ending not more than [****]
before the date of the request. The accounting firm shall be provided access to
such books and records at the Audited Party’s facility(ies) and/or the
facilities of its Affiliates or sublicensees where such books and records are
normally kept and such examination shall be conducted during the Audited Party’s
normal business hours. The Audited Party may require the accounting firm to
sign a standard non-disclosure agreement with terms that are not inconsistent
with the terms of the Agreement before providing the accounting firm access to
the Audited Party’s facilities or records. Upon completion of the audit, the
accounting firm shall provide both Biogen Idec and PDL a written report
disclosing whether the reports submitted by the Audited Party are correct or
incorrect and the specific details and supporting analysis for any
discrepancies. No other information shall be provided to the Auditing Party. If
the accounting firm determines that, based on errors in the reports so
submitted, any report prepared in accordance with the Agreement is incorrect,
the Parties shall promptly revise the report and the associated Reconciliation
Statement and any additional amount owed by one Party to the other shall be
paid within [****] after receipt of the accountant’s report, along with
interest at the lesser of (i) the [****] or (ii) the highest rate
permitted by applicable law from the date that such additional amount should
have first been paid; provided, however, that no such interest shall be payable if the
errors leading to the Reconciliation Statement being incorrect were in the
reports provided by the Party to receive such additional amount. Additionally,
if the accountant determines that the reports submitted by the Audited Party
overstate the Audited Party’s share by more than [****], the Audited Party
shall reimburse the Auditing Party for the expenses incurred by the Auditing
Party in conducting the audit. Notwithstanding anything to the contrary herein,
the Parties shall coordinate with their Affiliates such that not more than [****]
audit of a Party and its Affiliates as a whole, shall be performed in any given
calendar year with respect to the

 

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

 

 

development,
manufacturing, commercialization or other use of the Collaboration Product
under any written agreement between the Parties and/or their Affiliates
relating to the Collaboration Product. In the event of any sublicense or
transfer of rights with respect to Collaboration Products by a Party under this
Agreement, the sublicensor or transferor shall provide for audit rights by the
other Party to this Agreement in accordance with this Section A.4 of this Exhibit C.

 

A.5 
Payments Between the Parties. Based upon the
Reconciliation Statement, as approved by the JFC or the JSC, as applicable,
there shall be a cash settlement between the Parties no later than [****]
after the end of each Calendar Quarter. In the event any payment is made after
the date specified in the preceding sentence and provided that such payment is
not otherwise subject to good faith dispute, the paying Party shall increase
the amount otherwise due and payable by adding interest at the lesser of (i) [****]
or (ii) the highest rate permitted by applicable law from the date that
such additional amount should have first been paid. Except where the actual
expenses for the Daclizumab development exceeds the annualized budget/plan by
more than [****], and such variances were approved by the JSC, then the Parties
shall get a payment deferral of [****] for cash settlement of the amount in
excess of [****] of the annualized budget/plan. If a Party elects to defer
payments during this time, interest will accrue [****] and through settlement.

 

Any other amount owed by one Party to the
other Party under this Agreement, except for amounts pursuant to Reconciliation
Statements, that is not paid within the applicable time period set forth herein
shall bear simple interest [****], as reported in the Wall Street Journal,
Eastern Edition, on the due date (or, if the due date is not a business day, on
the last business day prior to such due date).

 

A.6                             FTE
Methodology

 

A.6.1                   Accounting for
Development Expenses. All Development Expenses, Ongoing Development
Expenses and Other Out-of-Pocket Costs will be based on the appropriate costs
definition stated in the Agreement or Section A.1 of this Exhibit C.

 

Each Party shall report Development Expenses
and Ongoing Development Expenses based on its project cost system (which shall
in any event track FTEs by functional area and by month) or using such other
system as such Party applies with respect to its internal programs and which
system has been reviewed with the JFC. In general, these project cost systems
shall report actual and/or allocable time spent on specific projects, apply the
FTE Rates, determined in the manner specified below, capture actual and/or
allocable costs of specific projects and allocate other expenses to

 

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

 

 

projects. For
Other Out-of-Pocket Costs the Parties will allocate costs based on spending in
the relevant departments or applying such other allocation methodology as such
Party uses with respect to all other products taken as a whole, and which shall
be approved by the JSC.

 

A.6.2                   Research and
Development FTE Rate. For the [****], the FTE rate will be set at [****]
per year. FTE Rates will increase annually to reflect the change over the
preceding [****] for which data is then available in the [****], All Items (as
published by the [****]).  FTE Rates
shall be set in a manner, which fairly reflects the direct costs of each Party
for the direct functional groups specified below:

 

Direct
Functional Groups.       Research &
Development shall include the following: Research, Project Management,
Preclinical, Product Development/QA, Medical Research/Medical
Operations/Clinical, Biometry (biostatistics and data management), Medical
Writing,  Regulatory Affairs/Drug Safety,
Manufacturing (not including production of Clinical Supplies and commercial
supplies, which will be stated in the Clinical Supply Plan for Clinical
Supplies and in the Commercial Supply Agreement for Commercial Supplies).

 

Total budgeted
expenses incorporated in the FTE Rate shall include and be limited to: [****].

 

A.7                             Principles
of Reporting

 

The results of operations of the Collaboration will be presented in the
following format (on a per Collaboration Product basis), with the categories as
defined in Section A.1 below:

 

A.7.1                   Income
Statement

 

Gross Sales

Less: Sales Returns
and Allowances

= Net Sales

Less: Cost of
Sales

= Gross
Profits

Less:
Marketing Costs

Less: Sales
Costs

Less: Ongoing
Development Expenses

Less: Other
Out-of-Pocket Costs

= Contribution

Less:
Distribution Costs

=
Collaboration Product Profit (Loss)

 

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

 

 

Separately
reported will also be:

 

Other Development Costs

 

Development Expenses

 

Cost of Clinical Supplies

 

Ongoing Development Expense

 

It is the intention of the Parties that the
interpretation of these definitions will be in accordance with U.S. GAAP
consistently applied consistent with a Party’s report in its financial statements
filed in accordance with the Securities Exchange Act of 1934, as amended.

 

A.7.2                   Subcomponent
Reporting

 

For reporting purposes only, expenses will be
identified for the budget, forecast, and quarterly actual amounts within this Section A.7.
by the following detail sub-components within the aggregate Income Statement
expense components specified under Section A.7.1.

 

•                  Cost
of Sales – cost of goods manufactured for sale, third party royalties, freight &
other

•                  Marketing
– marketing promotion, market research, marketing headcount

•                  Sales
– sales headcount, sales promotion & sales operations

•                  Development
– by indication label-enabling activities & trials, by indication post
marketing activities & trials, cost of goods manufactured for clinical
supply, medical education.

 

A.8                             Budget
and Long Range Plan

 

Responsibility for the Budget and Long Range Plan with regard to
Collaboration Products, prior to the First New Product FDA Approval, will be as
specified in Articles 2 and 3 of the Agreement

 

Budgets will be prepared annually for the following full calendar year
containing monthly details/numbers.

 

Budgets will be supplemented with high level business plans and costs
for clinical trials, registration applications, and plans for product
introduction, sales efforts and promotion.

 

 

EXHIBIT D
:  OPT OUT ROYALTIES AND ROW ROYALTIES

 

I. OPT-OUT ROYALTIES FOR
COLLABORATION PRODUCTS

 

	
   

  	
   

  	
  Existing Products

  	
   

  	
  Existing Products

  	
   

  	
  Future Products

  	
   

  
	
   

  	
   

  	
  Payable to Biogen

  Idec

  	
   

  	
  Payable to PDL

  	
   

  	
  Payable to Biogen

  Idec/ PDL

  	
   

  
	
  Preclinical

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  Phase I

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  Phase II

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  Phase III

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  After
  Approval

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  

 

*Royalties in %

 

II. ROW ROYALTIES OWED FOR ROYALTY
PRODUCTS

 

	
   

  	
   

  	
  ROW Royalty

  payable to PDL

  	
   

  	
  Royalty on

  Termination**

  payable to

  Biogen Idec

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  

 

	
  *Royalties
  in %

  

 

**Note:  The royalty in table
applies provided that diligent efforts were underway in the territory, and that
such termination was Phase III or later in the US and EU territories. In the
event that this is not the case, Phase II royalties should apply for Biogen
Idec in the ROW territory:

 

[****]

[****]

[****]

 

 

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

 

 

Exhibit 1.41

 

Daclizumab PRODUCT

 

[****]

 

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

 

 

EXHIBIT 1.54

 

Fontolizumab PRODUCT

 

[****]

 

 

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

 

 

EXHIBIT 1.135

 

Volociximab
PRODUCT

 

[****]

 

 

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

 

 

Exhibit 2.1

 

Joint Operating Principles

 

The following Principles are intended as guidelines for the operation
of the Committees and Collaboration, but the specific terms of the Agreement
shall be controlling in the case of any conflict between a provision of the
Agreement and these guidelines.

 

 Guiding Principles

 

•                  Engage in
development activities with the goal of obtaining regulatory approval for each
collaborative product as soon as reasonably practicable in major market
countries where it makes commercial sense to do so given the economic profile
and the safety and efficacy profile of such collaborative product

•                  Utilize the
then-prevailing infrastructure, expertise and experience of each party with
respect to specific development activities for collaborative products in
specific indications

•                  Create reasonable
flexibility to allow each party to build infrastructure for development and
commercialization activities if it reasonably elects, provided that the cost
associated with building such infrastructure are not charged to the
reimbursable activities under this agreement

•                  Avoid
unnecessary duplication of resources

•                  Maximize
information flow between parties

•                  Allow each party
to have input into the content and scope of Registrations for collaborative
products and, through their Joint Steering Committee representatives, the right
to approve substantive portions of any registrations

•                  Allow each party
to participate in substantive interactions with Regulatory Authorities related
to collaborative products

 

1.                                      Development:  Joint Development Plan

 

Each joint development plan shall be in the form agreed upon by the
Joint Strategy Committee, but shall address, at a minimum, the following:

•                  Goals for the
development of the collaborative products

•                  Critical
decision points criterion

•                  Scope of
research and clinical work, including regulatory strategy

•                  Timeline for
performing research and clinical work

•                  Anticipated
indications, including the desired product profile and formulation

•                  Competitive
market issues

•                  High level cost
and other financial estimates

•                  Manufacturing,
product supply and cell-line development activities

•                  General
commercialization framework

 

 

•                  Operational
responsibilities for each party

•                  Key technical
and commercial assumptions

 

2.                                      Development:  Annual Work Plan

 

•                  A reasonable
detailed description of the development activities to be performed during the
next full calendar year or to the next key decision point 

•                  The estimated
budget for such activities for at least the next full calendar year 

•                  A designation of
which party is responsible for each task 

•                  Estimated
staffing levels 

•                  Any expected use
of Third Party contractors required to carry out the applicable development
activities and the party that shall manage such third party contractor 

•                  Estimated
timelines for completion of such activities 

•                  Estimated
product requirements for each activity

 

 

Exhibit 3.3

 

Initial Development Plans And Initial
Development Program Budget For Existing Products

 

Neither Party shall be obligated to incur costs for any activities,
except for those set forth herein, unless and until (a) such
study/activity is approved by the JSC, or (b) is included in a Development
Plan approved by the JSC pursuant to Section 3.3(b) of the Agreement.

 

All costs submitted for reimbursement by the Parties must be demonstrably
related to the activities specified in this draft Development Plan.

 

I. Development Plan for Daclizumab in [****]

 

2.1                               A.
Daclizumab in [****]:  Clinical Program
Rationale and Strategy 

 

[****].

 

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

 

 

B. Daclizumab in [****]:  Clinical Development Studies 

 

	
  Study

  	
   

  	
  N

  [Active;

  Placebo]

  (Inv.

  Centers)

  	
   

  	
  Purpose

  	
   

  	
  First

  Patient

  Dosed

  	
   

  	
  Last

  Patient

  Visit

  	
   

  	
  Status

  	
   

  	
  Projected

  Cost ****

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [****]

  	
   

  

 

Notes:* – Pivotal studies; ** TBD – to be determined; *** dac –
Daclizumab; **** [****].

 

C. Daclizumab
in [****]:  Timetable of Development
Milestones 

 

	
  Milestone

  	
   

  	
  Date

  	
   

  	
  Comments

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  

 

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

 

 

II. Development Plan for Volociximab in [****]

 

A. Volociximab in [****]:  Clinical Program Rationale and Strategy 

 

[****]

 

B.
Volociximab in [****]:  Clinical
Development Studies

 

	
  Study

  	
   

  	
  Est. # Pts

  (# of

  Centers)

  	
   

  	
  Purpose of

  study

  	
   

  	
  Est. Start

  Date

  	
   

  	
  Est. Last

  Patient visit

  	
   

  	
  Status

  	
   

  	
  Projected

  Cost*

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  

 

* [****].

 

C. Volociximab in [****]:  Major Project Milestones 

 

	
  Milestone

  	
   

  	
  Date

  	
   

  	
  Comments

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  

 

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

 

 

III. Development Plan for Volociximab in [****]

 

A. Volociximab in [****]:  Clinical Development Rationale and Strategy

 

[****]

 

B.
Volociximab in [****]:  Clinical
Development Studies

 

	
  Study

  	
   

  	
  Est. # Pts (#

  of Centers)

  	
   

  	
  Purpose of

  study

  	
   

  	
  Est. Start

  Date

  	
   

  	
  Est. Last

  Patient

  visit

  (safety)

  	
   

  	
  Status

  	
   

  	
  Projected

  Cost*

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  

 

* [****].

 

C. Volociximab in [****]:  Major Project Milestones 

 

	
  Milestone

  	
   

  	
  Date

  	
   

  	
  Comments

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  

 

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

 

 

IV. Development Plan for Fontolizumab in [****]

 

A. Fontolizumab in [****]:  Clinical Development Rationale and Strategy

 

[****]

 

B.
Fontolizumab in [****]:  Clinical
Development Studies

 

	
  Study

  	
   

  	
  Est. # Pts

  (# of

  Centers)

  	
   

  	
  Purpose of

  study

  	
   

  	
  Est. Start

  Date

  	
   

  	
  Est. Last

  Patient

  visit

  	
   

  	
  Status

  	
   

  	
  Projected

  Cost*

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  

 

* [****].

 

C. Fontolizumab in [****]:  Major Project Milestones 

 

	
  Milestone

  	
   

  	
  Date

  	
   

  	
  Comments

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
   

  	
   

  

 

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

 

 

V. Initial
Program Budget for Existing Products

 

2005 FTE and External Cost  ($ in thousands)

 

	
  Function

  	
   

  	
  Type

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  Program

  Totals

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
   

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
   

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
   

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
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  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
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  [****]

  	
   

  	
  [****]

  	
   

  
	
   

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
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  [****]

  	
   

  
	
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  [****]

  	
   

  	
  [****]

  	
   

  	
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  [****]

  	
   

  
	
   

  	
   

  	
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  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
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  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
   

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
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  [****]

  	
   

  	
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  [****]

  	
   

  	
  [****]

  	
   

  
	
   

  	
   

  	
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  [****]

  	
   

  	
   

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
   

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [****]

  	
   

  	
   

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
   

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  
	
  [****]

  	
   

  	
   

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  	
  [****]

  	
   

  

 

* An additional [****]
in [****] expense will be incurred if the [****] trial enrolls on plan.

 

 

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

 

 

EXHIBIT 4.1(b)(ii)

OPT OUT POINTS FOR EXISTING
COLLABORATION PRODUCTS

 

2.1                               Daclizumab

 

•                  [****]

•                  [****]

•                  [****]

•                  [****]

•                  [****]

•                  [****]

•                  [****]

•                  [****]

 

2.2                               Fontolizumab

 

•                  [****]

•                  [****]

•                  [****]

•                  [****]

•                  [****]

•                  [****]

•                  [****]

•                  [****]

•                  [****]

 

 

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

 

 

2.3                               Volociximab

 

•                  [****]

•                  [****]

•                  [****]

•                  [****]

•                  [****]

•                  [****]

•                  [****]

 

 

Opt out points for New Collaboration Products or Indications shall be
decided by the JSC.

 

 

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

 

 

Exhibit 8.3

 

A Commercial Supply Agreement between the Parties for
Collaboration Products or Royalty Products shall contain, in addition to
customary manufacturing terms and conditions, the following obligations:

 

a.               The Responsible Commercialization Party
shall purchase [****] of its, its Affiliates and its sublicensees’ commercial
requirements of Collaboration Product from the Manufacturing Party.

 

b.              The Parties will agree to reasonable
forecasting mechanisms in the Commercial Supply Agreement. The Manufacturing
Party will provide the other Party with notice not less than [****] in advance
of any anticipated change in annual production that would impact such party’s
ability to meet forecasted demand.

 

c.               Collaboration Product shall be Manufactured
in accordance with all requirements of applicable laws and regulations and all
GMP, as prescribed from time to time by the FDA and other applicable worldwide
regulatory authorities, using the product specifications, manufacturing methods
and formulae as agreed upon by the Parties.

 

d.              If either Party believes that any
Regulatory Approval, GMP, or other applicable law, or any other notice from a
regulatory authority, shall require a change to the particular product specifications,
the Parties shall consult prior to the implementation of such change in order
to mutually determine whether such change is, in fact, required by such
Regulatory Approval, GMP, other applicable law or notice. Any such change in
product specifications will be effected upon mutual agreement of the Parties.

 

e.               In the event either Party is unable to obtain
Regulatory Approval for a Collaboration Product and such lack of approval is
related to the CMC Section, then the other Party shall have the right to
become, and assume all of the responsibilities of, the Manufacturing Party for
such product.

 

 

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

 

 

f.                 The non-Manufacturing Party shall have the
right to conduct (upon reasonable notice during reasonable business hours)
reasonable quality assurance audits with respect to all facilities, operations
and laboratories (and any records related thereto) of the Manufacturing Party
or, if applicable, the Third Party contract manufacturer used by such Party,
where applicable Manufacturing activities are conducted, as is reasonably
necessary to verify the compliance with GMP and other regulatory requirements.
The results of any such audit shall be provided to the other Party.

 

g.              The Manufacturing Party may
not utilize a Third Party contract manufacturer without the consent of the
non-Manufacturing Party.

 

h.              The Manufacturing Party shall
be responsible for release of product from its and its Third Party CMO’s
facilities. The non Manufacturing Party shall have access to, and the right to
review, all release documentation for any evidence of product nonconformance.

 

i.                  If the Manufacturing Party
desires to use a Third Party to perform any part of the Manufacture and supply
or if the Manufacturing Party plans to undertake capacity expansion,
significant facility improvements, or the purchase of capital equipment for the
Manufacture of Collaboration Product, the JSC shall first consider whether the
other Party has the ability, capability, and desire to perform such Manufacture
and supply and, if so, the Parties shall amend the Commercial Manufacturing
Agreement to cover the part of the Manufacture and supply to be performed by
such other Party.

 

j.                  In the event that the non Manufacturing
Party consents to use of a Third Party contract manufacturer, the Manufacturing
Party shall enter into a supply agreement and quality agreement and shall
ensure that the non Manufacturing Party shall either be a party to such
agreements (in addition to the Responsible Manufacturing Party), or a third
party beneficiary of such agreements. To the extent the non Manufacturing Party
is not a party to such agreements, it shall be a permitted assignee or
sublicensee under such agreement.

 

k.               The non Manufacturing Party shall have the
right to review and comment upon the Third Party supply agreement and quality
agreement.

 

l.                  If the Manufacturing Party utilizes a Third
Party contract manufacturer, such supply agreement shall require the Third
Party supplier to transfer sufficient information (including information
contained in the CMC section of any applicable Regulatory Filings, the
results of any stability studies performed on Product and copies of any direct
communications between the Third Party supplier and regulatory authorities in
relation to Product) to

 

 

Biogen Idec or PDL (as appropriate), in each case as is required to
implement the then-most current versions of such Manufacturing process, upon
termination of such agreement or otherwise upon request.

 

m.            If the Manufacturing Party is unwilling or unable to meet [****]
of the Responsible Commercialization Party’s requirements for Collaboration
Product on the timelines set forth in the Commercialization Plan for such
Collaboration Product or if the Collaboration Product Manufactured consistently
does not meet the requisite Product specifications and other quality
requirements set forth herein, then the Manufacturing Party shall, at the election of the other
party, conduct a transfer of the necessary Manufacturing
Technology to the non Manufacturing Party so as to enable it to Manufacture or
have Manufactured such Product by a Third Party contract manufacturer of its
choice. The non Manufacturing Party, upon such transfer, shall become the
Manufacturing Party for purposes of the Collaboration Product.

 

n.              The Parties shall enter into a Technology
Transfer Agreement containing the FTE Plans and costs related to CMC/filing
activities for the Collaboration Products. In addition, the Parties shall enter
into a Quality Agreement related to the Manufacture of the Collaboration
Products. Such Quality Agreement shall specify the designated Qualified Person
for release of finished Collaboration Products.

 

 

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

 

 

Exhibit 11.5

 

Required Attachment of Certain Provisions of the [****]

 

[****]

 

 

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

 

 

FIRST AMENDMENT TO

COLLABORATION AGREEMENT

 

THIS FIRST AMENDMENT TO COLLABORATION AGREEMENT
(the “Amendment”) amends the Collaboration
Agreement entered into as of September 12, 2005 (the “Agreement”)
by and between PDL BioPharma, Inc. (formerly Protein Design Labs, Inc.),
a Delaware corporation (“PDL”), and
Biogen Idec MA Inc., a Massachusetts corporation (“Biogen Idec”).

 

RECITALS

 

WHEREAS, the Parties desire to amend the
Agreement to delete Section 16.4 of the Agreement regarding consequences
of a Change of Control (as defined in the Agreement), to permit the Agreement,
as amended, to be assigned by either Party upon a Change of Control as provided
in Section 18.1 of the Agreement without the consequences that would have
occurred under Section 16.4.

 

NOW THEREFORE, in consideration of the
foregoing premises and the mutual covenants contained herein, the Parties,
intending to be legally bound, agree as follows:

 

1.  Capitalized Terms.  The capitalized
terms used herein shall have the same definitions as provided in the Agreement.

 

2.  Deletion of Section 16.4; No other
Amendment.  Section 16.4
of the Agreement is hereby deleted in its entirety and Section 16.5 is
renumbered as Section 16.4.  Except
as provided in Section 2, the Agreement shall continue in effect.

 

 

This Amendment may be executed in
counterparts, all of which taken together shall be regarded as one and the same
instrument.

 

IN WITNESS WHEREOF, the Parties have executed
this First Amendment to Collaboration Agreement through their duly authorized
representatives to be effective as of November 1, 2007.

 

	
  PDL BIOPHARMA, INC.

  	
  BIOGEN IDEC MA INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ L. Patrick Gage

  	
   

  	
  By:

  	
  /s/ James Mullen

  
	
  Title:   CEO – Interim

  	
  Title:   CEO

  
	
  Date:   October 30,
  2007

  	
  Date:  
  October 31, 2007

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00150-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00150-of-00352.parquet"}]]