Document:

PDLI-2014.6.30 10Q EX 10.4

Exhibit 10.4
Pursuant to 17 CFR 240.24b-2, confidential information has been omitted in places marked "* * *" and has been filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Application filed with the Commission.

FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”), dated as of June 19, 2014, is entered into by and among WELLSTAT DIAGNOSTICS, LLC, a limited liability company (the “Borrower”), PDL BIOPHARMA, INC., a Delaware corporation (the “Lender”), and PDL BIOPHARMA, INC., a Delaware corporation (the “Agent”).
W I T N E S S E T H
WHEREAS, the Borrower, the Lender and the Agent have entered into that certain Amended and Restated Credit Agreement, dated as of August 15, 2013 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”);
WHEREAS, the Borrower acknowledges and admits herein that certain Events of Default have occurred under (i) Section 8.1.3 of the Credit Agreement as a result of Borrower becoming generally unable to pay its debts as they become due, and (ii) Section 8.1.4(a) of the Credit Agreement for Borrower’s failure to provide written notice to the Agent and the Lender of any event which could reasonably be expected to have a Material Adverse Effect (collectively, the “Existing Events of Default”); 
WHEREAS, as a condition to (i) the effectiveness of the Letter Agreement (as defined below) between the Agent and the Second Lien Agent and (ii) the Agent’s agreement to forbear in its exercise of certain remedies solely in respect of the Existing Events of Default and to the limited extent set forth in the Letter Agreement, the Borrower has requested that the Lender and the Agent agree, and subject to the terms and conditions set forth herein, and the Lender and the Agent do hereby agree, to the amendments and other modifications to the Credit Agreement as set forth herein.  
NOW, THEREFORE, in consideration of the agreements hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
1.1    Definitions.  Unless otherwise defined herein or the context otherwise requires, terms used in this Amendment, including its preamble and recitals, have the meanings provided in the Credit Agreement, as amended by this Amendment.

ARTICLE II.     
AMENDMENTS
2.1    Amendments.  Upon satisfaction of the conditions set forth in Article III hereof, the Credit Agreement is hereby amended as follows:
(a)    Section 1.1 of the Credit Agreement is hereby amended by adding the following definitions in alphabetical order:
“* * * Sale” has the meaning set forth in the Letter Agreement.
“First Amendment” means the First Amendment to Amended and Restated Credit Agreement, dated as of June 19, 2014, by and among the Borrower, the Lender and the Agent.  
“First Amendment Effective Date” has the meaning specified in Article III of the First Amendment.  
(b)    Section 1.1 of the Credit Agreement is hereby amended by amending and restating the following definitions in their entirety:
“Debt” of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all indebtedness evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person as lessee under Capital Leases which have been or should be recorded as liabilities on a balance sheet of such Person in accordance with GAAP, (d) all obligations of such Person to pay the deferred purchase price of property or services (excluding trade accounts payable in the ordinary course of business that have been outstanding for less than 60 calendar days), (e) all indebtedness secured by a Lien on the property of such Person, whether or not such indebtedness shall have been assumed by such Person (with the amount thereof being measured as the fair market value of such property), (f) all obligations, contingent or otherwise, with respect to letters of credit (whether or not drawn), banker’s acceptances and surety bonds issued for the account of such Person, (g) all Hedging Obligations of such Person, (h) all Contingent Obligations of such Person, (i) all non-compete payment obligations and earn-out, purchase price adjustment and similar obligations, (j) all obligations of such Person in respect of Disqualified Capital Stock issued by such Person, (k) all indebtedness of the types listed in (a) through (j) and (l) of any partnership of which such Person is a general partner and (l) all obligations of such Person under any synthetic lease transaction, where such obligations are considered borrowed money indebtedness for tax purposes but the transaction is classified as an operating lease in accordance with GAAP.
“Intercreditor Agreement” means that certain Intercreditor Agreement dated as of August 15, 2013 between the Agent and the Second Lien Agent, as amended, amended and restated, supplemented or otherwise modified from time to time, as permitted by, and in accordance with, the terms thereof, and which for the avoidance of doubt shall include the agreements set forth in the Letter Agreement.    

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“Letter Agreement” means the letter agreement dated as of June 17, 2014 by and between the Agent and the Second Lien Agent a true and correct copy of which is attached hereto as Exhibit “A”.

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(c)    Section 6.9 of the Credit Agreement is hereby amended and restated in its entirety as follows:
“6.9.    Chief Restructuring Officer and Investment Banking Advisor.  
(a)    Chief Restructuring Officer.  
(i)    The Borrower shall appoint and continuously employ a Chief Restructuring Officer (the “CRO”) acceptable to Agent in its sole discretion.  The CRO shall be duly appointed and given sole authority with respect to the disbursement of all funds of the Borrower, including the Borrower’s operating cash flow, cash contributions set forth in Section 4.1.9 and advances made by Agent or Lender to Borrower.  The CRO shall have sole authority to transfer any cash or sums in any of the Borrower’s accounts, and shall be authorized by the Borrower to openly and honestly communicate all material information about the Borrower’s assets, liabilities, compliance with obligations under the Loan Documents and operational and financial performance to the Agent and its representatives.      
(ii)    The Borrower agrees to cause the CRO to participate in weekly telephone calls or meetings with the Agent (during reasonable business hours but otherwise at the sole discretion of Agent) to discuss the Borrower’s financial condition, including, without limitation, budgets, projections, monthly forecasts, accounts payable and communications with creditors, and such measures as are being taken to ensure that Borrowers expenses and budget are consistent with the Allowed Budget.  
(b)    Investment Banking Advisor.  Not later than July 15, 2014, Borrower shall engage an investment banker to market for sale substantially all of the Borrower’s assets and/or seek to obtain debt or equity financing sufficient to continue Borrower’s operations and pay all Obligations (the “Investment Banker”).  Borrower shall cause the Investment Banker retained by the Borrower to participate in weekly telephone calls or meetings to discuss, among other things, potential acquisitions of the Borrower by acquirors or other Persons, investments in the Borrower by new investors and/or sales or other dispositions of any assets of the Loan Parties and shall require the Investment Banker to provide to Agent every letter of intent, offer or expression of interest received by the Investment Banker not later than two business days after receipt thereof.”
(d)    Section 6 is hereby amended by adding the following Section 6.12 at the end thereof:
“6.12.  Additional Capital Contribution.  On or prior to the earlier of (i) the date of consummation of the * * * Sale and (ii) sixty (60) days following the First Amendment Effective Date, the Holders shall make a capital contribution to the Borrower in an amount 

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not less than the greater of $3,000,000 and 100% of the proceeds of the * * * Sale released by the Second Lien Agent from the Second Lien pursuant to the Letter Agreement.”
(e)    Section 7.4(b) is hereby amended by (i) deleting “and” immediately preceding clause (vii) thereof, (ii) deleting the “.” at the end of such paragraph (b) and (iii) inserting the following at the end thereof:
“, (viii) notwithstanding any other provision of any of the Loan Documents, including without limitation any guarantee or security agreement, which might otherwise restrict such Dispositions,  any sale transaction with respect to * * * yielding net cash proceeds to the Borrower or the Holders in an aggregate amount not less than $* * *, and (ix) the * * * Sale.”  
(f)    Section 7 is hereby amended by adding the following Section 7.17 at the end thereof:
“7.17.  Expenses.  On or prior to the earlier of (i) the date of consummation of the * * * Sale and (ii) sixty (60) days following the First Amendment Effective Date, and each month thereafter, the Borrower shall present to the Agent a budget showing that operating expenses (including wages, rent, insurance and utilities, but excluding accounts payable existing as of such date)  of the Borrower, as set forth in consolidated statements of income or operations delivered to the Agent and the Lender pursuant to Section 6.1.3, do not exceed $* * * per month (the “Allowed Budget”).  From such date, Borrower shall ensure that its total operating expenses are maintained within the Allowed Budget, and no exceptions shall be made without the written consent of the Agent.  In the event that Borrower receives further cash contributions in excess of that provided for in Section 6.12, Lender agrees to discuss with Borrower whether such cash contributions provide a commercially reasonable basis to revise the Allowed Budget.” 
ARTICLE III.     
CONDITIONS TO EFFECTIVENESS
This Amendment shall be and become effective on the date (the “First Amendment Effective Date”) all of the conditions set forth in this ARTICLE III shall have been satisfied (or waived by the Agent and the Lender in accordance with Section 10.1 of the Credit Agreement):
3.1    Counterparts.  The Agent shall have received counterparts of this Amendment, which shall be collectively executed by each of the Borrower, the Lender and the Agent.
3.2    Letter Agreement.  The Agent shall have received evidence that the Letter Agreement has been executed and delivered in form and substance satisfactory to the Agent in the sole discretion of the Agent.  
3.3    Second Lien Loan Documents.  The Agent shall have received evidence that (i) the amendments to the Second Lien Loan Documents have been executed and delivered in form and substance satisfactory to the Agent in the sole discretion of the Agent and (ii) the Borrower has received an aggregate principal amount of not less than $2,470,090.00 from borrowings pursuant to the Second Lien Credit Agreement.

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3.4    Fees and Expenses.  The Agent shall have received reimbursement of any costs and expenses (including fees and expenses of counsel to the Agent and the Lender) incurred by it or the Lender relating to this Amendment and the transactions contemplated hereby.
3.5    Representations and Warranties.  Other than with respect to the Existing Events of Default, the representations and warranties contained in the Loan Documents are true and correct in all material respects (without duplication of any materiality qualifier contained therein) on and as of the date hereof as if made on the date hereof.
3.6    Event of Default. Other than the Existing Events of Default, no Event of Default shall have occurred and be continuing under the Credit Agreement and no Event of Default shall result from execution and delivery of the Amendment and the consummation of the transactions contemplated herein.
ARTICLE IV.     
REPRESENTATIONS AND WARRANTIES
4.1    Representations and Warranties.  In order to induce the Agent and the Lender to enter into this Amendment, the Borrower hereby represents and warrants to the Agent and the Lender that as of the date hereof and after giving effect to this Amendment:
(a)    The Borrower is a limited liability company validly existing and in good standing under the laws of the State of Delaware.  The Borrower is duly authorized to execute and deliver this Amendment and the performance by the Borrower of the Credit Agreement, as amended hereby, has been duly authorized by all necessary action, and the Borrower has all requisite power, authority and legal right to execute, deliver and perform this Amendment and the Credit Agreement, as amended hereby.  
(b)    The execution, delivery and performance by the Borrower of this Amendment do not and will not (a) require any consent or approval of any Governmental Authority (other than (i) any consent or approval which has been obtained and is in full force and effect and (ii) recordings and filings in connection with the Liens granted to the Agent under the Collateral Documents), (b) conflict with (i) any provision of Applicable Law, (ii) the charter, by-laws, limited liability company agreement, partnership agreement or other organizational documents of any Loan Party or (iii) any agreement, indenture, instrument or other document, or any judgment, order or decree, which is binding upon any Loan Party or any of their respective properties or (c) require, or result in, the creation or imposition of any Lien on any asset of the Borrower or any other Loan Party (other than Liens in favor of the Agent created pursuant to the Collateral Documents).
(c)    Each of this Amendment and the Credit Agreement, as amended hereby, is the legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, subject to bankruptcy, insolvency and similar laws affecting the enforceability of creditors’ rights generally and to general principles of equity.
ARTICLE V.     
MISCELLANEOUS

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5.1    Loan Document.  This Amendment is a Loan Document executed pursuant to the Credit Agreement and shall (unless otherwise expressly indicated therein) be construed, administered and applied in accordance with the terms and provisions of the Credit Agreement.

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5.2    Effect of Amendment.  Except as expressly set forth herein, this Amendment shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect, the rights and remedies of the parties to the Credit Agreement and shall not alter, modify, amend or in any way affect any of the terms or conditions contained therein, all of which are ratified and affirmed in all respects and shall continue in full force and effect.  Nothing herein shall be deemed to entitle the Company to any future consent, to, or waiver, amendment, modification or other change of, any of the terms or conditions contained in the Credit Agreement in similar or different circumstances.  Except as expressly stated herein, the Agent and the Lender reserve all rights, privileges and remedies under the Loan Documents.  All references in the Credit Agreement and the other Loan Documents to the Credit Agreement shall be deemed to be references to the Credit Agreement as modified hereby.  
5.3    Reaffirmation.  The Borrower hereby reaffirms its obligations under each Loan Document to which it is a party.  The Borrower hereby further ratifies and reaffirms the validity and enforceability of all of the liens and security interests heretofore granted, pursuant to and in connection with the Security Agreement or any other Loan Document, to the Agent, as collateral security for the obligations under the Loan Documents in accordance with their respective terms, and acknowledges that all of such Liens and security interests, and all Collateral heretofore pledged as security for such obligations, continue to be and remain collateral for such obligations from and after the date hereof.
5.4    Counterparts. This Amendment may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement.  Delivery of an executed signature page of this Amendment by facsimile transmission or electronic transmission shall be as effective as delivery of a manually executed counterpart hereof.
5.5    Construction; Captions. Each party hereto hereby acknowledges that all parties hereto participated equally in the negotiation and drafting of this Amendment and that, accordingly, no court construing this Amendment shall construe it more stringently against one party than against the other.  The captions and headings of this Amendment are for convenience of reference only and shall not affect the interpretation of this Amendment.
5.6    Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns (as permitted under the Credit Agreement).
5.7    GOVERNING LAW.  THIS AMENDMENT, THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO, AND ANY CLAIMS OR DISPUTES RELATING THERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (EXCLUDING THE CHOICE OF LAW RULES THEREOF). 
5.8    Severability.  The illegality or unenforceability of any provision of this Amendment or any instrument or agreement required hereunder shall not in any way affect or impair the legality 

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or enforceability of the remaining provisions of this Amendment or any instrument or agreement required hereunder.  
5.9    Release of Claims.  In consideration of the Lender’s and the Agent’s agreements contained in this Amendment, the Borrower hereby releases and discharges the Lender and the Agent and their affiliates, subsidiaries, successors, assigns, directors, officers, employees, agents, consultants and attorneys (each, a “Released Person”) of and from any and all other claims, suits, actions, investigations, proceedings or demands, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law of any kind or character, known or unknown, which Borrower ever had or now has against the Agent, any Lender or any other Released Person which relates, directly or indirectly, to any acts or omissions of the Agent, any Lender or any other Released Person relating to the Credit Agreement or any other Loan Document on or prior to the date hereof.
5.10    Forbearance Period.  Subject to the terms and conditions set forth herein and in the Letter Agreement, solely with respect to the Existing Events of Default, the Agent agrees that it shall refrain from exercising the remedies under the Loan Documents or Applicable Law to the extent and for the period provided under the Letter Agreement, so long as Borrower does not Default under any of the provisions of this Amendment or the Letter Agreement.  
5.11    Affirmation.  Subject only to the limitations set forth in the Letter Agreement, the Agent shall have the right to enforce its liens on the assets of all parties then liable to Agent, including without limitation the assets of Borrower and the equity in Borrower.  Borrower acknowledges and agrees that in order to preserve the value of the assets of Borrower and the value of the equity in Borrower, Agent has the right to enforce its lien on the License Agreement or on the equity in Borrower, in a manner that is intended to comply with the provisions of the ROFR Provisions, and to avoid termination of the License Agreement pursuant to Section 5.3 of the License Agreement.  Therefore, Borrower acknowledges and agrees that any steps taken by Agent to comply with such provisions in connection with the enforcement of Agent’s lien on the License Agreement and/or the equity of the Borrower, including without limitation contacting the Licensor, are commercially reasonable and Borrower and Holders agree to cooperate fully and completely with any such actions, in either case in connection with a disposition of the Collateral pursuant to the UCC, (along with any back up or explanatory material or analysis related thereto reasonably requested by the Agent).  Borrower and Holders agree that it is appropriate for Agent to take the steps set forth in Exhibit “B” hereto, as part of a commercially reasonable sale and that while Agent reserves its right to proceed without taking any or all such steps, Borrower and Holders stipulate and agree that it would be commercially reasonable for the Agent to take each of such steps and if Agent elects to so proceed Borrower and Holders will cooperate with such efforts, provide Agent with all information needed to so proceed and grant on the date hereof to Agent the Power of Attorney attached hereto as Exhibit “C” to take such actions.
5.12    Existing Events of Default.  The Loan Parties hereby acknowledge that certain Events of Default have occurred under (i) Section 8.1.3 of the Credit Agreement as a result of Borrower becoming insolvent and generally failing to pay its debts as they become due and this Agreement constitutes a written admission that Borrower is unable to pay its debts as they become due, and 

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(ii) Section 8.1.4(a) of the Credit Agreement for Borrower’s failure to provide written notice to the Agent and the Lender of any event which could reasonably be expected to have a Material Adverse Effect. 
[Signature page follows]

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Each of the parties hereto has caused a counterpart of this Amendment to be duly executed and delivered as of the date first above written.

BORROWER:

WELLSTAT DIAGNOSTICS, LLC

By: /s/ Nadine Wohlstadter______________
Name: Nadine Wohlstadter
Title:

Loan Parties 
WELLSTAT BIOCATYLYSIS, LLC

By: /s/ Nadine Wohlstadter______________
Name: Nadine Wohlstadter 
Title:

WELLSTAT BIOLOGICS CORPORATION

By: /s/ Nadine Wohlstadter______________
Name: Nadine Wohlstadter
Title: 

WELLSTAT IMMUNOTHERAPEUTICS, LLC

By: /s/ Nadine Wohlstadter______________
Name: Nadine Wohlstadter
Title:

WELLSTAT MANAGEMENT COMPANY, LLC

By: /s/ Nadine Wohlstadter______________
Name: Nadine Wohlstadter
Title:

First Amendment to Amended and Restated Credit Agreement

HYPERION CATALYSIS INTERNATIONAL, a California corporation

By: /s/ Nadine Wohlstadter______________
Name: Nadine Wohlstadter
Title:

WELLSTAT AVT INVESTMENT LLC

By: /s/ Nadine Wohlstadter______________
Name: Nadine Wohlstadter
Title:

WELLSTAT THERAPEUTICS CORPROTAION

By: /s/ Nadine Wohlstadter______________
Name: Nadine Wohlstadter
Title:

WELLSTAT VACINES, LLC

By: /s/ Nadine Wohlstadter______________
Name: Nadine Wohlstadter
Title:

HEBRON FARMS, INC.

By: /s/ Nadine Wohlstadter______________
Name: Nadine Wohlstadter
Title:

SJW PROPERTIES, INC.

By: /s/ Nadine Wohlstadter______________
Name: Nadine Wohlstadter
Title:

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HVF, INC.

By: /s/ Nadine Wohlstadter______________
Name: Nadine Wohlstadter
Title:

NHW, LLC

By: /s/ Nadine Wohlstadter______________
Name: Nadine Wohlstadter
Title:

DUCK FARM, INC.

By: /s/ Nadine Wohlstadter______________
Name: Nadine Wohlstadter
Title:

WELLSTAT OPTHALMICS CORPORATION

By: /s/ Nadine Wohlstadter______________
Name: Nadine Wohlstadter
Title:

WELLSTAT THERAPEUTICS EU LIMITED

By: /s/ Nadine Wohlstadter______________
Name: Nadine Wohlstadter
Title:

HYPERION CATALYSIS EU LIMITED

By: /s/ Nadine Wohlstadter______________
Name: Nadine Wohlstadter
Title:

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/s/ Nadine Wohlstadter_________________
NADINE WOHLSTADTER

/s/ Samuel J. Wohlstadter_______________
SAMUEL J. WOHLSTADTER

LENDER:

PDL BIOPHARMA, INC.

By: /s/ Christopher L. Stone_____________
Name: Christopher L. Stone
Title:  Vice President, General Counsel and Secretary

AGENT:

PDL BIOPHARMA, INC.

By: /s/ Christopher L. Stone_____________
Name: Christopher L. Stone
Title:  Vice President, General Counsel and Secretary

14PDLI-2014.6.30 10Q EX 10.5

Exhibit 10.5

AMENDMENT NO. 1 TO CREDIT AGREEMENT, dated as of February 5, 2014 (this “Amendment”), among PDL BIOPHARMA, INC., a Delaware corporation (the “Borrower”), the Lenders party hereto and ROYAL BANK OF CANADA, as administrative agent (in such capacity, the “Administrative Agent”) for the Lenders (such capitalized term and, unless otherwise specified, all other capitalized terms not otherwise defined herein shall have the meanings set forth in the Credit Agreement referred to below).  
WHEREAS, the Borrower, the Lenders party thereto and the Administrative Agent and the other parties named therein, are party to that certain Credit Agreement, dated as of October 28, 2013 (as amended, amended and restated, supplemented or otherwise modified to (but not including) the date hereof, the “Credit Agreement”) pursuant to which the Lenders have made certain extensions of credit available to and on behalf of the Borrower; and
WHEREAS, the Borrower and the Required Lenders party hereto have agreed to amend the Credit Agreement, but only on the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:
Section 1.Credit Agreement Amendments.  
Section 1.1.    The Credit Agreement is, effective as of the Amendment No. 1 Effective Date (as defined below), hereby amended to delete the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the double-underlined text (indicated textually in the same manner as the following example: double-underlined text) as set forth in the pages of the Credit Agreement attached as Exhibit A hereto, except that any Schedule or Exhibit to the Credit Agreement not amended pursuant to the terms of this Amendment or otherwise included as part of said Exhibit A shall remain in effect without any amendment or other modification thereto.  
Section 2.    Representations and Warranties.  The Borrower represents and warrants to the Administrative Agent and the Lenders as of the Amendment No. 1 Effective Date that this Amendment (a) is within the Borrower’s corporate or other organizational power and authority; (b) has been duly authorized by all necessary corporate or other organizational action and (c) does not and will not (i) violate the terms of any of the Borrower’s Organizational Documents, (ii) result in the creation or imposition of any Lien on any asset of the Borrower or any of its Subsidiaries, except Liens created under the Loan Documents, (iii) violate any Requirements of Law applicable to the Borrower or any of its Subsidiaries or (iv) violate or result in a default under any loan agreement, indenture or other material agreement or instrument binding upon the Borrower or any of its Subsidiaries or their respective assets, or give rise to a right thereunder to require any payment, repurchase or redemption to be made by the Borrower or any of its Subsidiaries, or give rise to a right of, or result in, termination, cancellation or acceleration of any obligation thereunder.  The Borrower further represents and warrants that (a) the representations and warranties of the Borrower set forth in the Loan Documents are true and correct in all material respects (or if qualified by “materiality”, “Material Adverse Effect” or similar language, in all respects) on and as of Amendment No. 1 Effective Date with the same effect as though such representations and warranties had been made on and as of the Amendment No. 1 Effective Date and (b) at the time of and immediately after giving effect to this Amendment, no Default or Event of Default has occurred and is continuing.  This Amendment has been duly executed and delivered by the Borrower and constitutes a legal, valid and binding obligation of the Borrower, enforceable against it in accordance with its terms.  This Amendment

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does not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect and except filings necessary to perfect Liens created under the Loan Documents.  
Section 3.    Conditions to Effectiveness of Amendment.  This Amendment shall become effective on the date (the “Amendment No. 1 Effective Date”) on which each of the following conditions are satisfied or waived by each applicable party:
(A)    The Administrative Agent shall have received executed signature pages to this Amendment from the Required Lenders and the Borrower;
(B)    The representations and warranties of the Borrower set forth in the Loan Documents are true and correct in all material respects (or if qualified by “materiality”, “Material Adverse Effect” or similar language, in all respects) on and as of Amendment No. 1 Effective Date with the same effect as though such representations and warranties had been made on and as of the Amendment No. 1 Effective Date;
(C)    At the time of and immediately after giving effect to this Amendment, no Default or Event of Default has occurred and is continuing; and
(D)    The Borrower shall have paid or caused to be paid all reasonable and documented out-of-pocket costs and expenses incurred by the Administrative Agent and its Affiliates (without duplication) including the reasonable fees, charges and disbursements of legal counsel to the Administrative Agent incurred in connection with this Amendment. 
Section 4.    Counterparts.  This Amendment may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which when so executed and delivered shall be deemed to be an original, but all of which when taken together shall constitute a single instrument.  Delivery of an executed counterpart of a signature page of this Amendment by facsimile or other electronic transmission (i.e. a “PDF” or “TIF”) shall be effective as delivery of a manually executed counterpart hereof.
Section 5.    Applicable Law.  THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
Section 6.    Headings.  The headings of this Amendment are for purposes of reference only and shall not limit or otherwise affect the meaning hereof.
Section 7.    Effect of Amendment.  Except as expressly set forth herein, this Amendment shall not by implication or otherwise limit, impair, constitute a waiver of or otherwise affect the rights and remedies of the Lenders under the Credit Agreement or any other Loan Document, and shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any other provision of either such agreement or any other Loan Document, and the Borrower acknowledges and agrees that each of the Loan Documents to which it is a party or otherwise bound shall continue in full force and effect and that all of its obligations thereunder shall be valid and enforceable and shall not be impaired or limited by the execution or effectiveness of this Amendment.  Each and every term, condition, obligation, covenant and agreement contained in the Credit Agreement or any other Loan Document is hereby ratified and reaffirmed in all respects and shall continue in full force and effect.  The Borrower ratifies and reaffirms its obligations under the Loan Documents to which it is party and the Liens granted by it pursuant to the Security Documents, which continue to secure the Secured Obligations.  From and after the Amendment No. 1 Effective Date, all references to the Credit

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Agreement in any Loan Document shall, unless expressly provided otherwise, refer to the Credit Agreement as amended by this Amendment.  In entering into this Amendment, each Lender has undertaken its own analysis and has not relied on any other Lender in making its decision to enter into this Amendment.  This Amendment constitutes a Loan Document.  The Borrower agrees to pay all reasonable and documented out-of-pocket costs and expenses of the Administrative Agent in connection with the preparation, execution, delivery and administration of this Amendment and the other instruments and documents to be delivered hereunder (including, without limitation, the reasonable fees and expenses of counsel for the Administrative Agent) in accordance with the terms of Section 9.03(a) of the Credit Agreement.
[SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.

PDL BIOPHARMA, INC.
		
	By:
	 /s/ Peter S. Garcia     
Name: Peter S. Garcia 
Title: VP and CFO

[Signature Page to Amendment No.1 to Credit Agreement]

ROYAL BANK OF CANADA,                                                    as a Lender

By:     /s/ Mustafa Topiwalla     
    Name: Mustafa Topiwalla 
    Title: Authorized Signatory

[Signature Page to Amendment No.1 to Credit Agreement]

WELLS FARGO BANK, NATIONAL ASSOCIATION,  as a Lender

By:     /s/ Catherine Hill     
    Name: Catherine Hill 
    Title: Assistant Vice President

[Signature Page to Amendment No.1 to Credit Agreement]

Acknowledged and Accepted:
ROYAL BANK OF CANADA,                     as Administrative Agent 

By:     /s/ Rodica Dutka     
    Name: Rodica Dutka  
    Title: Manager, Agency

[Signature Page to Amendment No.1 to Credit Agreement]

Exhibit A
Credit Agreement Amendments

plus the costs of additions thereto), but without any other adjustment for increases or decreases in value of, or write-ups, write-downs or write-offs with respect to, such Investment after the date of such Investment. For purposes of Section 6.04, if an Investment involves the acquisition of more than one Person, the amount of such Investment shall be allocated among the acquired Persons in accordance with GAAP; provided that pending the final determination of the amounts to be so allocated in accordance with GAAP, such allocation shall be as reasonably determined by a Financial Officer.
“IP Collateral” has the meaning specified in the Collateral Agreement.
“IRS” means the United States Internal Revenue Service.
“Junior Financing” means, collectively, the Existing Notes, any unsecured, junior secured or subordinated Material Indebtedness incurred under Section 6.01(vii), and any Permitted Refinancing thereof.
“Lead Arranger” means RBC Capital Markets and Wells Fargo Securities, LLC, in their respective capacities as Joint Lead Arrangers and Co-Bookrunners.
“Lenders” means the Persons listed on Schedule 2.01 and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption, in each case, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.
“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset.
“Liquidity” means, on any date, the sum of all cash and other Cash Equivalents of the Loan Parties that are not subject to a Lien (except for Liens permitted under the Collateral Agreement, under Section 6.02(xiv)(A) and under clauses (a) and (f) of the definition of “Permitted Encumbrances”).
“Loan Document Obligations” has the meaning assigned to such term in the Collateral Agreement.
“Loan Documents” means (i) this Agreement, (ii) the Guarantee Agreement, (iii) the Collateral Agreement, (iv) the other Security Documents, (v) solely for purposes of Article VII, the Fee Letter and (vi) each document or instrument executed in connection with this Agreement and designated by the Borrower and the Administrative Agent as a “Loan Document”.
“Loan Parties” means the Borrower and the Subsidiary Loan Parties.
“Loans” has the meaning specified in Section 2.01.
“Material Adverse Effect” means any event, circumstance or condition that has had, or could reasonably be expected to have, a materially adverse effect on (a) the business, property, assets, financial condition, or results of operations of the Borrower and its Subsidiaries, taken as a whole, (b) the ability of the Borrower and the other Loan Parties, taken as a whole, to perform their payment obligations under the Loan Documents, (c) the rights and remedies of the Administrative Agent and the Lenders under the Loan Documents or (d) a material adverse effect on the Collateral or the Liens

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terms of the applicable Third Party Loan document or documents governing the applicable
Permitted Royalty Acquisition; and
(l) the settlement or early termination of any Permitted Bond Hedge Transaction and the settlement or early termination of any Permitted Warrant Transaction; provided that the sole consideration paid in connection with such settlement or early termination is common stock of the Borrower and cash in lieu of fractional shares (other than, in the case of an early termination of such Permitted Warrant Transaction, pursuant to customary exceptions (substantially similar to or no more onerous on the Borrower and its Subsidiaries than such exceptions in the warrants with respect to the Existing Notes) to the right of an issuer to settle the relevant close-out amount, cancellation amount or other similar payment obligation in shares);
provided that (a) any Disposition of any property pursuant to this Section 6.05 (except pursuant to Section 6.05(b), (h) and (k) and except for Dispositions by a Loan Party to another Loan Party), shall be for no less than the fair market value of such property at the time of such Disposition and (b) notwithstanding anything in this Section 6.05 to the contrary, the Borrower shall not take any action to Dispose of the Core Assets to any Person other than a Loan Party.
        
Section 6.06  Restricted Payments; Certain Payments of Indebtedness.
(a) The Borrower will not, nor will it permit any of its Subsidiaries to, declare or make, directly or indirectly, any Restricted Payment, except:
(i) each Subsidiary may make Restricted Payments to the Borrower or any other Subsidiary; provided that if such Subsidiary is a Loan Party, then it can only make a Restricted Payment pursuant to this Section 6.06(a)(i) to another Loan Party;
(ii) the Borrower and each of its Subsidiaries may declare and make dividend payments or other distributions payable solely in the Qualified Equity Interests of such Person; provided that in the case of any such Restricted Payment by a Subsidiary that is not a Wholly Owned Subsidiary of the Borrower, such Restricted Payment is made to the Borrower, any Subsidiary and to each other owner of Equity Interests of such Subsidiary based on their relative ownership interests of the relevant class of Equity Interests;
(iii) the Borrower and each of its Subsidiaries may (A) repurchase for fair value Equity Interests held by former directors, officers, employees and consultants; (B) pay withholding or similar Taxes payable by present or former directors, officers, employees or consultants in respect of their Equity Interests and (C) repurchase Equity Interests deemed to occur upon a cashless exercise of options or warrants;
(iv) Eacheach of the Subsidiaries of the Borrower may make Restricted Payments in cash to the Borrower:
(1) the proceeds of which will be used to pay the Tax liability to the relevant jurisdiction in respect of consolidated, combined, unitary or affiliated returns attributable to the income of the Borrower and/or any Subsidiary; provided that Restricted Payments made pursuant to this

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equity) from any issuance of Equity Interests (other than Disqualified Equity Interests) of the Borrower, so long as such Restricted Payment is made within 90 days of the receipt of such net cash proceeds and, with respect to any such Restricted Payments, no Event of Default shall have occurred and be continuing or would result therefrom;
(vi) to the extent constituting Restricted Payments, the Borrower and its Subsidiaries may enter into transactions expressly permitted by Sections 6.03 and 6.04;
(vii) the Borrower or any of its Subsidiaries may (1) pay cash in lieu of fractional shares in connection with any dividend, split or combination thereof or any Permitted Acquisition and (2) (a) solely to the extent permitted under Section 6.06(b), honor any conversion request by a holder of convertible Indebtedness (including any payment of cash in connection withupon such conversion pursuant to the terms of such convertible Indebtedness in an amount not to exceed the sum of (x) the principal amount of such convertible Indebtedness plus (y) any payments received by the Borrower or any of its Subsidiaries pursuant to the exercise, settlement or termination of any related Permitted Bond Hedge Transaction or Permitted Warrant Transaction) and make cash payments in lieu of fractional shares in connection with any such conversion and (b) make payments in connection with a Permitted Bond Hedge Transaction and the settlement of any related Permitted Warrant Transaction (x) by delivery of shares of the Borrower’s common stock upon net share settlement thereof or (y) by set-off against the related Permitted Bond Hedge Transaction and payment of an early termination amount thereof in common stock upon any early termination thereof;
(viii) the Borrower or any of its Subsidiaries may make Restricted Payments in order to effectuate payments that at such time are permitted to be made pursuant to Section 6.07(iii), (v), (vi) and (vii);
(ix) the Borrower may declare and pay dividends and distributions within 60 days after the record date therefor, if at the record date, no Event of Default under Section 7.01(a), (b), (h) or (i) shall exist at the time of, or would result from, the making of such payment;
(x) the Borrower may redeem in whole or in part of any of its Equity Interests for another class of its Equity Interests or with proceeds from substantially concurrent equity contributions or issuances of new Equity Interests; provided that such new Equity Interests contain terms and provisions at least as advantageous to the Lenders in all respects material to their interests as those contained in the Equity Interests redeemed thereby; and
(xi) the Borrower may repurchase shares of its common stock in the open market or in private transactions or pay cash dividends on its common stock; provided that on the date of such repurchase or payment (i) no Default has occurred and is continuing or would result therefrom, (ii) the Total Leverage Ratio shall not be greater than 0.25 less than the Total Leverage Ratio in effect on the Effective Date, and (iii) the Administrative Agent shall have received a certificate of a Responsible Officer, in form and substance reasonably satisfactory to the Administrative Agent,

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certifying and attaching calculations demonstrating compliance with the requirements of clause (ii) above.
(b) The Borrower will not, nor will it permit any other Subsidiary to, make or pay, directly or indirectly, any payment or other distribution (whether in cash, securities or other property) of or in respect of principal of or interest on any Junior Financing, or any payment or other distribution (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Junior Financing, or any other payment (including any payment under any Swap Agreement) that has a substantially similar effect to any of the foregoing, except:
(i) payment of regularly scheduled or required interest and principal payments as, in the form of payment and when due in respect of any Indebtedness to the extent such payments in respect of any Junior Financing are permitted by the subordination provisions thereof;
(ii) refinancings, refundings, renewals, modifications or exchanges of Indebtedness to the extent permitted by Section 6.01;
(iii) the conversion or exchange of any Junior Financing to, or for, Equity Interests (other than Disqualified Equity Interests) of the Borrower;
(iv) any conversion of convertible notes, and any payment in respect of a Permitted Bond Hedge Transaction and Permitted Warrant Transaction, into or comprised of common stock of the Borrower and, to the extent otherwise permitted byunder clause (a)(vii)(2v) of this Section 6.06(b), into cash; and
(v) the Borrower may make (A) any payment of cash upon the conversion of any of its convertible Indebtedness pursuant to the terms of such convertible Indebtedness and may make cash payments in lieu of fractional shares in connection with any such conversion and (B) cash or common stock conversion payments, or cash or common stock payments in connection with any exchange offer, to holders of the Existing Notes or any other Junior Financing comprised of convertible debt, and pay the present value of accrued interest on the Existing Notesthereon, in cash at the time of any such conversion thereof, in an aggregate amount not to exceed $25,000,000, so long as, in each of clauses (A) and (B), (x) noDefault under Section 7.01(a) or 7.01(b) or Event of Default shall have occurred and be continuingis continuing or shall occur as a result of any such payment, (y) the Borrower shall be in compliance, on a Pro Forma Basis, with the Financial Performance Covenants, and (z) after giving pro forma effect to each such payment, there shall be at least $15,000,000 of Liquidity.
Section 6.07 Transactions with Affiliates. The Borrower will not, nor will it permit any of its Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (i) transactions between or among the Borrower or any of its Subsidiaries (or an entity that becomes a Subsidiary of the Borrower as a result of the transaction); (ii) on terms substantially as favorable to the Borrower or such Subsidiary as would be obtainable by such Person at the time in a comparable arm’s-length transaction with a Person other than an Affiliate; (iii) the payment of fees and expenses related to the Transactions; (iv) issuances of Equity Interests (and
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(f) the Borrower or any of its Subsidiaries shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness, when and as the same shall become due and payable (after giving effect to any applicable grace period);
(g) any eventthe Borrower or any of its Subsidiaries shall fail to observe or perform any term, covenant or condition occurscontained in any Material Indebtedness that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with all applicable grace periods having expired) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity, provided that this paragraph (g) shall not apply to (i) secured Indebtedness that becomes due as a result of the sale, transfer or other disposition (including as a result of a casualty or condemnation event) of the property or assets securing such Indebtedness (to the extent such sale, transfer or other disposition is not prohibited under this Agreement), or (ii) termination events or similar events occurring under any Swap Agreement that constitutes Material Indebtedness (it being understood that paragraph (f) of this Section will apply to any failure to make any payment required as a result of any such termination or similar event);
(h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, court protection, reorganization or other relief in respect the Borrower, any direct or indirect parent of the Borrower, or any Material Subsidiary of the Borrower or its debts, or of a material part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, examiner, sequestrator, conservator or similar official for the Borrower and its Material Subsidiaries or for a material part of its assets, and, in any such case, such proceeding or petition shall continue undismissed or unstayed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered;
(i) the Borrower or any of its Material Subsidiaries shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, court protection, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in paragraph (h) of this Section, (iii) apply for or consent to the appointment of a receiver, trustee, examiner, custodian, sequestrator, conservator or similar official for the Borrower and its Material Subsidiaries or any of them, or for a material part of their respective assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding or (v) make a general assignment for the benefit of creditors;
(j) one or more enforceable judgments for the payment of money in an aggregate amount in excess of $25,000,000 (to the extent not covered by insurance as to which the insurer has been notified of such judgment or order and has not denied coverage) shall be rendered against the Borrower or any of its Subsidiaries or any direct or indirect parent company of the Borrower or any combination thereof and the same shall remain undischarged for a period of 60 consecutive days during which execution shall not be effectively stayed, or any judgment creditor shall legally attach or levy upon assets of such
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