Sample Business Contracts

Software License Agreement - Protein Design Labs Inc., Molecular Applications Group and Michael Levitt

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Between Protein Design Labs, Inc. and Molecular Applications Group

This Software License Agreement ("Agreement") is entered into by and
among Protein Design Labs, Inc., a Delaware corporation having a place of
business at 2375 Garcia Avenue, Mountain View, California 94043 ("PDL"), and
Molecular Applications Group, a California corporation having a place of
business at 880 Lathrop, Stanford, California 94305 ("MAG") and Michael
Levitt, a natural person having a residence at 880 Lathrop, Stanford,
California 94305 ("Levitt").  The effective date of this Agreement shall be
September 1, 1990 ("Effective Date").

A.      MAG's president and sole shareholder, Levitt, is the developer of
certain software described in Parts 1 ("Antibody Model") and II ("Other
Software") of Exhibit A ("Product Description").

B.      MAG is the exclusive licensee of, and has the right to sublicense,
such software and is considering, but undertakes no obligation with respect
to, the future development, acquisition or licensing of additional programs
related to the modeling of proteins.

C.      PDL desires to reproduce and use such software for its internal
business purposes and to use one copy of a source code listing of certain of
such software for the particular purposes described below.

D.      PDL desires to obtain certain licenses with respect to the
foregoing, subject to certain permitted academic uses of such software, all as
more fully set forth below.


In consideration of the mutual covenants and other valuable
consideration set forth herein, the parties agree as follows:

1.      Definitions.
For purposes of this Agreement, the following terms shall have the
respective meanings indicated below.

1.1     Academic Use.  "Academic Use" shall mean use of the
Software, governed by a binding, signed agreement substantially as
protective of PDL's rights as the form attached hereto as Exhibit B
("Academic License Agreement"), by Levitt's students and professional
colleagues under Levitt's supervision ("Academic Users") for academic,
non-commercial purposes or in the course of Levitt's consulting work for
companies other than commercial companies.

1.2     License Term.  "License Term" shall mean the term, as set
forth in Paragraph 7 ("Term and Termination") below, of the licenses
granted in this Agreement to the Other Software and, as set forth in
Paragraph 4.1 ("Updates") below, to certain enhancements, error
corrections, modifications and other programs.

1.3     Software.  "Software" shall mean protein modeling software
programs consisting of (a) certain existing programs, i.e., the Antibody
Model and the Other Software and (b) other programs that MAG derives
from such existing software or develops, acquires or obtains the right
to sublicense during the term of this Agreement which are either:
        (i)     Changed or modified versions of the Software that
        correct defects contained in the Software on the Effective Date
        ("Corrected Software") or
        (ii)    Changed, modified or enhanced versions of the Software
        (other than Corrected Software) and new software programs that are
        applicable to the humanization of antibodies.

No software program, whether or not derived from the Software, that includes
less than twenty-five percent (25%) of the source code of the Software in
existence as of the Effective Date and that is not applicable to modeling the
humanization of antibodies shall be considered to be Software for purposes of
this Agreement.

2.      License.

2.1     License Grant.  MAG hereby grants to PDL a worldwide license
to reproduce and use the Software within PDL (e.g., use by PDL's
employees and consultants is within the scope of this license but PDL
has no right to sublicense).  The foregoing license shall be for a
perpetual term as to the Antibody Model and for the License Term as to
the Other Software.

2.2     Exclusivity.

(a)     MAG covenants that it will not, during the License
Term, grant any further license permitting any party other than
PDL to use or sublicense the Software; provided, however, that
        (i) MAG may grant a non-exclusive license permitting the internal
        use of the Other Software (e.g., without the right to sublicense),
        but not the Antibody Model, by E.I. duPont de Nemours & Co. and/or
        Amgen Inc. (including any subsidiary or affiliate thereof) and
        (ii) the foregoing restriction on MAG's rights shall end one (1)
        year following the Effective Date.
(b)     PDL's license shall include an exclusive license (even
as to MAG and its licensors) to use the Antibody Model to
        (i) design antibodies, (ii) design proteins linked to antibodies,
        or (iii) design and develop methods of joining antibodies and
        proteins (the "Exclusive Purposes").
(c)     MAG and Levitt covenant that, MAG and Levitt will take
reasonable steps to assure that no third party makes use of the
Antibody Model other than an Academic Use by an Academic User. 
PDL agrees that, so long as MAG and Levitt are in compliance with
the foregoing covenant, neither MAG nor Levitt shall have any
liability to PDL as a result of third party uses of the Antibody
Model not authorized by MAG or Levitt.
(d)     The restrictions on use and/or licensing of the
Software set forth in this Paragraph 2.2 ("Exclusivity") shall in
no way limit the right of MAG or Levitt to authorize Academic Use
of the Software.

3.      Delivery, Acceptance and Warranty.

3.1     Delivery and Acceptance.  PDL acknowledges that MAG has
previously delivered, or concurrently with the Effective Date will
deliver, a master copy of the Antibody Model and Other Software.  PDL
acknowledges that it has either inspected or waived its right to
inspect, and hereby accepts, the Antibody Model and Other Software.

3.2     Warranty.  MAG warrants that (i) it is the sole and
exclusive licensee of the Software and all intellectual property rights
therein, (ii) it has the full right and power to grant to PDL the rights
herein granted, (iii) the Software and its use by PDL within the scope
of the licenses herein granted will not infringe any patent, copyright
or trade secret and, to the best of MAG's knowledge, any other
intellectual property right arising under United States law and
(iv) neither it nor its licensors have previously granted any license
permitting any party other than PDL to use or sublicense the Software. 
If in the future MAG becomes aware of a significant possibility that the
Software or its use by PDL within the scope of the licenses granted
herein might infringe any intellectual property right arising under
United States law, MAG shall promptly so inform PDL.


4.      Updates and Use of PDL Computers.

4.1     Updates.  If, during the term of this Agreement, MAG shall
develop, license or acquire any Corrected Software or New or Enhanced
Software, MAG shall promptly provide PDL with a copy thereof. MAG also
agrees to assist PDL, at no additional charge, in creating Corrected
Software and New or Enhanced Software as
 reasonably requested by PDL during the term of this Agreement.  All
Corrected Software and New or Enhanced Software shall be deemed, in
accordance with the terms and conditions of this Agreement and without
payment of additional consideration, to be included in the (i) Antibody
Model if directly applicable to the modeling of antibodies and
(ii) Other Software if not directly applicable to the modeling of anti-
bodies; provided, however, that PDL's license to all New or Enhanced
Software shall expire at the end of the License Term for the Other

4.2     Use of PDL Computers.  During the term of this Agreement,
PDL shall allow Levitt to continue to use time an PDL's Silicon Graphics
machines without charge, to the extent appropriate for additional
software development and to the extent that such use does not interfere
with PDL's ongoing activities.

5.      License Fee.  PDL agrees to pay MAG a license fee of [   ] within five
(5) business days following the Effective Date and a license fee of [   ]
dollars on fourth and each subsequent quarterly anniversary of the Effective
Date during the License Term for the Other Software; provided, however, that
the quarterly fee shall be reduced to [   ] following termination of this
Agreement pursuant to Paragraph 7.2 ("Termination Without Cause") below.  PDL
and MAG agree that [   ] shall be allocable to the Antibody Model and [   ]
shall be applicable to each of ENCAD and MolMan (as defined in Exhibit A
("Product Description")).

6.      Source Code.

6.1     Return of Source Code.  PDL specifically acknowledges that,
except as set forth in this Paragraph 6 ("Source Code"), no rights are
granted to it hereunder to the human readable source code versions of
the Software.  PDL agrees not to disassemble, decompile, reverse
engineer or otherwise reduce the object code versions of the Software to
a human-perceivable form.  Within thirty (30) days of the Effective
Date, PDL shall return to MAG all source code versions of the Software
(other than as set forth in the following sentence) and shall certify to
MAG in writing that it retains no such source code versions.  Within
thirty (30) days of the Effective Date, MAG shall provide PDL with one
(1) printed listing of the current Fortran source code of the Antibody
Model, which PDL may consult, internally, for the sole purpose of
diagnosing apparent conflicts between the documentation and behavior of
the Antibody Model, and which PDL shall not otherwise reproduce or
convert into in any other form by any electronic or other means
(including, but not limited to, computer or information storage and
retrieval systems) without the prior written consent of MAG; provided,
however, that MAG hereby consents to PDL's reproduction of up to five
(5) additional printed, non-electronic copies of the printed listing
solely for PDL's internal use and subject to its confidentiality and
non-disclosure requirements hereunder.

6.2     Potential Function Numbers.  MAG shall, during the License
Term for the Other Software, provide PDL with the mathematical
expression of potential energy functions (numerical values and relevant
equations) that are developed, acquired or licensed by MAG or included
in the Software, and all updates to these functions, in a timely manner.

6.3     Escrow Agreement.  PDL and MAG shall at all times during the
License Term maintain in force an escrow agreement in substantially the
form set forth in Exhibit C ("Escrow Agreement") with an independent
third party escrow agent.  PDL and MAG shall promptly enter into such
agreement with the escrow agent named in the Escrow Agreement and any
successor escrow agent appointed pursuant to the Escrow Agreement.  PDL
shall pay the fees and expenses of such escrow agent as required by the
Escrow Agreement.

6.4     Escrow License.  MAG hereby grants PDL a worldwide,
irrevocable, license, effective upon the rightful release (in accordance
with the Escrow Agreement) to PDL of Source Code (as defined in the
Escrow Agreement), to utilize such Source Code solely within PDL to
(i) maintain and correct the Source Code for the Other Software and
(ii) maintain, correct, enhance, modify and prepare derivative works
based upon the Source Code for the Antibody Model, and to derive object
code therefrom for use and reproduction by PDL subject to the licenses
granted herein (which, in such event and for such purpose, shall be
perpetual).  The foregoing license to utilize Source Code shall be
exclusive as to the Source Code of the Antibody Model and non-exclusive
as to the Source Code of the Other Software.

7.      Term and Termination.

7.1     Term and License Term.  The term of this Agreement and the
License Term shall commence on the Effective Date and shall continue
until terminated in accordance with the provisions of this Paragraph 7
("Term and Termination").

7.2     Termination Without Cause.  PDL may terminate the term of
this Agreement and the License Term, without cause, effective upon one
(1) year written notice to MAG.  MAG may terminate the term of this
Agreement, without cause, effective immediately upon written notice to
PDL and the License Term shall continue for five (5) years following
such notice.

7.3     Termination For Cause.  In the event of any breach of any
term or provision under this Agreement by either party hereto, the non-
breaching party may send a written notice explaining the nature of the
breach to the breaching party, which notice shall be delivered in
accordance with the terms of this Agreement.  If any breach is not cured
within thirty (30) days after the MAG of the notice of breach, the non-
breaching party may terminate this Agreement upon written notice.

7.4     Obligations Upon Termination or Expiration.  Upon the
effective date of termination of the License Term, PDL shall deliver to
MAG or destroy all Software, Master Copies and related materials in its
possession furnished hereunder by MAG, together with all copies thereof,
and shall warrant in writing within thirty (30) days of termination that
the Software, Master Copies, related materials and all copies thereof
have been returned to MAG-or erased or destroyed.

8.      Protection of Proprietary Rights.

8.1     Proprietary Rights.  PDL will take all reasonable measures
to protect the proprietary rights of MAG and its licensors in the
Software and any source code versions thereof, including all measures
PDL employs to protects its own valuable trade secret information. 
Except as stated herein, this Agreement does not grant PDL any rights to
patents, copyrights, trade secrets, tradenames, trademarks (whether
registered or unregistered) or any other rights, franchises or licenses
in respect of the Software.

8.2     Non-Disclosure.
(a)     Obligations.  PDL expressly undertakes to retain in
confidence all confidential information, designated as such in
accordance with the terms of subparagraph (b) below, transmitted
to it hereunder by MAG, and agrees to make no use of such
confidential information except under the terms of this Agreement. 
During the term of this Agreement, PDL shall be exposed to certain
information concerning MAG's Software and proposed new Software
which are the confidential and proprietary information of MAG and
not generally known to the public.  PDL agrees that during and
after the term of this Agreement, it will not use or disclose to
any third party any confidential information without the prior
written consent of MAG. MAG hereby consents to the disclosure of
its confidential information to certain employees of PDL who agree
to keep MAG's confidential information in confidence, in order to
allow PDL to perform under this Agreement and to obtain the
benefits hereof. MAG further agrees that PDL shall be permitted to
demonstrate the object code version of the Software to third
parties in connection with PDL's business discussions with such
third parties.  This subparagraph (a) shall not apply to
information after such information is made public by MAG.
(b)     Designation of Confidential Information.  MAG
confidential information shall consist of (i) all information in
written form that is marked "Confidential" or similarly marked by
MAG before being furnished to PDL and (ii) the source code of the
Software.  AU oral disclosures of confidential information shall
be identified as such prior to disclosure and summarized, in
writing, by MAG and said summary shall be given to PDL within
thirty (30) days of the subject oral disclosure.
(c)     Exception.  PDL shall not be liable for disclosure or
use of any data or information which (i) was in the public domain
at the time it was disclosed or falls within the public domain,
except through the fault of PDL; (ii) was known to PDL at the time
of disclosure, which knowledge PDL shall have the burden of
establishing by clear and convincing evidence; (iii) was disclosed
after written approval of MAG; (iv) becomes known to PDL from a
source other than MAG without breach of this Agreement by PDL;
(iv) is disclosed pursuant to the order of a court or other
governmental authority having jurisdiction over PDL (provided,
however, that PDL shall promptly notify MAG and cooperate with MAG
in limiting disclosure to the extent legally permissible and/or
seeking an appropriate protective order from such authority); or
(v) was independently developed by PDL without the benefit of
confidential information received from MAG, which independent
development the receiving party shall have the burden of
establishing by clear and convincing evidence.

8.3     Proprietary Legends.  PDL will retain in and on all copies
of the Software all copyright notices and proprietary data legends
contained therein or thereon at the time of delivery to PDL or as
otherwise reasonably requested by MAG and will affix all such legends to
any copies of the Software made by PDL.

8.4     Continuing Covenant.  Each party covenants that, during and
in the course of its performance hereunder, it will not communicate to
the other party any confidential or proprietary information which, to
the best of the communicating party's knowledge is communicated in
violation of the communicating party's obligations to the owner thereof.


10.     Miscellaneous.

10.1    Notices.  Any notice or reports required or permitted to be
given under this Agreement shall be given in writing and shall be
delivered by personal delivery, telegram, telex, telecopier, facsimile
transmission or by certified or registered mail, postage prepaid, return
receipt requested, and shall be deemed given upon personal delivery,
five (5) days after deposit in the mail or upon acknowledgment of
receipt of electronic transmission.  Notices shall be sent to the
signatory of this Agreement at the address set forth at the beginning of
this Agreement or such other address as either party may specify in

10.2    Survival of Obligations.  PDL agrees that its obligations
under Paragraph 8 ("Protection of Proprietary Rights") shall survive any
expiration or termination of this Agreement.

10.3    Severability.  The provisions of this Agreement are
severable and if any one or more such provisions shall be determined to
be invalid, illegal or unenforceable, in whole or in part, the validity,
legality and enforceability of any of the remaining provisions or
portions thereof shall not in any way be affected or impaired thereby
and shall nevertheless be binding between the parties hereto.  Any such
invalid, illegal or unenforceable provision or portion thereof shall be
changed and interpreted so as to best accomplish the objectives of such
provision or portion thereof within the limits of applicable law or
applicable court decisions.

10.4    Governing Law.  This Agreement shall be construed in
accordance with and all disputes hereunder shall be governed by the laws
of the State of California as applied to transactions taking place
wholly within California between California residents.

10.5    Attorneys' Fees.  In any action to interpret or enforce this
Agreement, the prevailing party shall be awarded all court costs and
reasonable attorneys' fees incurred.

10.6    Assignment.  Neither party shall directly or indirectly
sell, transfer, assign, convey, pledge, encumber or otherwise dispose of
this Agreement without the prior written consent of the other party. 
Notwithstanding the foregoing, either party may, without the prior
consent of the other party, assign or transfer this Agreement as part of
a corporate reorganization, consolidation, merger or sale of
substantially an assets provided said entity assumes all of such party's
obligations hereunder.

10.7    Relationship of the Parties.  Nothing contained in this
Agreement shall be construed as creating any agency, partnership, or
other form of joint enterprise between the parties.  The relationship
between the parties shall at all times be that of independent
contractors.  Neither party shall have authority to contract for or bind
the other in any manner whatsoever.  This Agreement confers no rights
upon either party except those expressly granted herein.

10.8    Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

10.9    Entire Agreement.  This Agreement is the complete, entire,
final and exclusive statement of the terms and conditions of the
agreement between the parties.  This Agreement supersedes, and the terms
of this Agreement govern, (i) any prior or collateral agreements between
the parties with respect to the subject matter hereof (including that
certain letter agreement between PDL and Levitt dated as of June 28,
1988) and (ii) that certain Letter of Intent between PDL and Levitt
dated as of May 30, 1990.  The parties acknowledge and agree that
Levitt, in his capacity as a natural person, serves as a consultant to
PDL pursuant to that certain Consulting Agreement dated as of October 1,
1987 and amended as of January 1, 1990 ("Consulting Agreement") and
agree that this Agreement shall not apply to, and the Consulting
Agreement shall govern, all matters arising between PDL and Levitt in
connection with Levitt's services as a consultant to PDL This Agreement
may not be modified except in a writing executed by duly authorized
representatives of the parties.

10.10   Levitt as Limited Party.  Levitt shall use his best efforts
to insure that if he develops any software programs during the term of
this Agreement ("Programs") which, had such Programs been developed by
MAG, would constitute Software hereunder, that such Programs are
licensed or assigned either to (i) PDL on terms providing PDL with
rights substantially equivalent to its rights to Software hereunder or
(ii) MAG so that MAG obtains the right to sublicense such Programs to
PDL as Software.  PDL, Levitt and MAG agree that Levitt (in his capacity
as a natural person) is a direct party to this Agreement solely to
undertake the obligations and be subject to the provisions set forth in
Paragraph 10 ("Miscellaneous") and subparagraph (c) of Paragraph 2.2
("Exclusivity") and shall have no other obligations or liability under
this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the Effective Date.

MAG:  Molecular Applications Group

By: /s/ Michael Levitt 
      Michael Levitt, President

PDL:  Protein Design Labs, Inc.

By: /s/ Lawrence Jay Korn      
      Laurence Jay Korn, President

      /s/ Michael Levitt       
Michael Levitt

                                   EXHIBIT A

                              Product Description

Part I:  Antibody Model

The Antibody Model (ABMOD) is a computer software program that builds a
model of an antibody Fv domain from the three-dimensional structure of other Fv

Part II:  Other Software

ENCAD (Energy Calculation and Dynamics) program, a program which
calculates the potential energy of any system of organic molecules, especially
protein macromolecules, for energy minimization and molecular dynamics

MolMan (Molecular Manager) program, a program which allows molecular
structure to be displayed and modeled on the Silicon Graphics Iris series
workstations, with emphasis on space-filling representations, real-time
frequency filtering of trajectories and mouse-driven interface.


                                EXHIBIT B

                            Academic License

In return for the rights granted below, you agree as follows:

Scope.  Molecular Applications Group ("MAG") grants to you the
nonexclusive right to use the accompanying software and documentation
("Product") for academic, noncommercial purposes and to make such software
resident on a single computer.  This License does not grant you any
intellectual property rights or other rights in the Product other than as
expressly listed herein.  Without limitation, you may not (i) use the Product
in a network, (ii) rent or lease the Product or (iii) license or convey to any
third party any rights related to the commercial exploitation of humanized
antibodies designed or developed with the Product.

Proprietary Rights and Obligations.  The Product, including its
structure, sequence and organization, is the valuable property of MAG and its
Licensors.  You may not make, have made, or permit to be made, any copies of
the Product or any portion thereof, except that you may make one copy of the
Product solely for backup purposes which shall contain the same proprietary
notices which appear on or in the Product. MAG and its licensors retain title
and ownership of the Product recorded on the original media and all subsequent
copies of the Product, regardless of the form or media in or on which the
original and other copies may exist.  You may not modify, adapt, translate,
reverse engineer, decompile, disassemble or create derivative works based on
the Product.

No Assignment.  You may not assign or transfer your rights under this
License to any third party.

Term.  This License shall terminate immediately if you breach any
provision hereof and, otherwise, in the year [   ].  Upon termination, you
will destroy the Product and all copies or modifications in any form.

Export.  The Product may include commodities and technical data of
United States origin whose export or re-export is restricted by U.S. law.  You
agree not to export or reexport the Product, or any portion thereof in any
form without all required U.S. and foreign licenses.  Your obligations
pursuant to this paragraph shall survive and continue after any termination or
expiration of this License.

NO WARRANTY.  The Product is provided  "as is" without warranty of any
kind, either express or implied, including but not limited to the warranties
of non-infringement of  third party rights, merchantability or fitness for a
particular purpose.  MAG does not warrant that the Product will meet your
requirements or will operate uninterruptedly or without error.  The entire
risk as to the quality and performance of the Product is with you.  Should the
Product prove defective, you assume the entire cost of repair and correction. 
Some states do not allow the exclusion of implied warranties, limits on the
duration of implied warranties, or exclusion or limitation of incidental or
consequential damages, so the limitations or exclusions contained herein may
not apply to you.  This License gives you specific legal rights and you may
also have other rights which vary from state to state.

Limit of Liability.  In no event will MAG be liable to you for any
consequential or incidental damages, including lost profits or lost savings,
or for any claim by another party, even if an MAG representative has been
advised of the possibility of such damages or claim.

Third Party Beneficiary.  You acknowledge that certain commercial rights
with respect to the Product have been licensed to Protein Design Labs, Inc., a
Delaware corporation located at 2375 Garcia Avenue, Mountain View, California
who is an intended third party beneficiary of, and entitled to enforce, this

Entire Agreement.  You have read and understand this License.  It is the
complete and exclusive statement of the agreement between MAG and you and
supersedes any prior agreement, oral or written, and any other communications
between MAG and you relating to the subject matter hereof.  Your obligations
hereunder shall inure to the benefit of MAG's licensors whose rights are
licensed hereby.  No variation of the terms of this License or any different
terms will be enforceable against MAG unless MAG gives its express signed
written consent including an express waiver of the terms hereof.  This License
is governed by the laws of the State of California, without regard to
California's law regarding conflicts of law.

IN WITNESS WHEREOF, the undersigned student or professional colleague of
Dr. Michael Levitt has signed his or her name below.


Printed Name


                                 EXHIBIT C

                              ESCROW AGREEMENT

THIS AGREEMENT ("Escrow Agreement") is executed as of this 12th day of
December, 1990 by and among Protein Design Labs, Inc. ("Licensee"), a Delaware
corporation having a place of business at 2375 Garcia Avenue, Mountain View,
California 94043, and Molecular Applications Group, a California business at
880 Lathrop, Stanford, California 94305 ("Licensor") and Townsend & Townsend,
a California partnership having a place of business at 379 Lytton Avenue, Palo
Alto, California 94303 ("Escrow Agent").

A.      Licensor and Licensee have entered into a Software License
Agreement (the "Agreement") dated as of September 1, 1990 pursuant to which
Licensor has granted to Licensee certain rights with respect to object code
versions of certain of Licensor's computer software programs ("Software").
B.      Maintenance and support of such programs are critical to Licensee
in the conduct of its business;
C.      The Agreement requires Licensor and Licensee to enter into an
Escrow Agreement with Escrow Agent in the form hereof.
D.      The purpose of this Agreement is to provide for Licensor's
periodic deposit of certain source code for Software with Escrow Agent and,
under certain circumstances specified below, to permit Licensee to obtain the
escrowed Source Code from the Escrow Agent solely for the purposes set forth
E.      Escrow Agent is a law firm which serves as Licensee's patent
counsel.  Escrow Agent does not generally serve in the capacity of an escrow
agent but is MAG to do so, on the terms set forth herein, as an accommodation
to Licensee.

NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein, and for other good and valuable consideration, receipt of
which is hereby acknowledged, the parties agree as follows:

(a)     The term "Source Code" as used in this Escrow Agreement
means the human and/or machine readable versions (on disk or magnetic tape
media) as applicable of the materials utilized or generated by Licensor
internally in the course of creating Software and all associated internal
documentation including computer source instructions for Software, a list of
the names of the modules included, instructions for building object code
versions of Software from Source Code, command files used in constructing such
object code, object code files as built by Licensor from Source Code, any
other ancillary files and listings created in the course of building such
object code files and any additional tools and subroutines required to build
Software that are not generally commercially available.
(b)     Licensor agrees to deposit with Escrow Agent, (i) January
15, 1991 (the foregoing, and all other capitalized terms used and not defined
herein, being ascribed the meanings set forth in the Agreement) the Source
Code thereof and (ii) semi-annually, or as otherwise reasonably requested by
Licensee, the then current Source Code of the Software and updates and
corrections thereto delivered or required to be delivered under the Agreement. 
Such deposit shall consist of a sealed package certified by Licensee to
contain a complete set of such Source Code as defined in Paragraph l(a) above.
(c)     The term "Deposit" as used in this Escrow Agreement means
the Source Code deposited with Escrow Agent by Licensor pursuant to this
Escrow Agreement.

2.      REVISIONS AND MAINTENANCE.  Escrow Agent shall acknowledge receipt
of all Deposits by sending written acknowledgment thereof to both Licensor and

(a)     Escrow Agent shall act as custodian of the Deposit until the
escrow is terminated pursuant to Paragraph 11 ("Termination") of this Escrow
Agreement.  Escrow Agent shall maintain the Deposit in the same manner as it
would maintain a confidential client file in accordance with Escrow Agent's
usual business practices.
(b)     The Deposit shall remain the exclusive property of the
Licensor, subject only to the licenses provided in this Escrow Agreement.
(c)     Escrow Agent shall not divulge, disclose or otherwise make
available the Deposit to any parties other than those persons duly authorized
in writing by a competent officer of Licensor, except as provided in this
Escrow Agreement.
(d)     Escrow Agent shall not permit any person access to the
Deposit except as may be necessary for Escrow Agent's authorized
representatives to perform under this Escrow Agreement.
(e)     Access to the Deposit shall not be granted without
compliance with any security and identification procedures instituted by
Escrow Agent.
(f)     Escrow Agent shall have no obligation or responsibility to
verify or determine that the Deposit does, in fact, consist of those items
which Licensor is obligated to deliver, under any agreement, and Escrow Agent
shall bear no responsibility whatsoever to determine the existence, relevance,
completeness, currency, or accuracy of the Deposit.
(g)     Escrow Agent's sole responsibility shall be to accept, store
and deliver the Deposit, in accordance with the terms and conditions of this
Escrow Agreement.
(h)     If any of the Deposit shall be attached, garnished or levied
upon pursuant to an order of court, or the delivery thereof shall be stayed or
enjoined by an order of court, or any other order, judgment or decree shall be
made or entered by any court affecting the Deposit or any part thereof, Escrow
Agent is hereby expressly authorized in its sole discretion to obey and comply
with all orders, judgments or decrees so entered or issued by any court,
without the necessity of inquiring whether such court had jurisdiction, and in
case Escrow Agent obeys or complied with any such order, judgment or decree,
Escrow Agent shall not be liable to any Licensee of Record, Licensor or any
third party by reason of such compliance, notwithstanding that such order,
judgment or decree may subsequently be reversed, modified or vacated.

(a)     Upon the occurrence of any Event of Default (as defined in
Paragraph 7 ("Events of Default")), Licensee may deliver to Escrow Agent a
written notice of such Event of Default (a "Notice").  Escrow Agent shall,
within five (5) business days of receipt thereof, send a copy of such Notice
to Licensor.  Unless Licensor shall have provided Contrary Instructions (as
defined below) to Escrow Agent within twenty (20) business days after Escrow
Agent has sent a copy of such Notice to Licensor, the Deposit shall be
delivered to Licensee by Escrow Agent within the next five (5) business days
following the end of such twenty (20) day period.
(b)     "Contrary Instructions" for the purposes of this Escrow
Agreement means a notarized affidavit executed by an official of Licensor
stating that the Event or Events of Default specified in Licensee's Notice
have not occurred, or have been timely cured.
(c)     Upon timely receipt of such Contrary Instructions, Escrow
Agent shall not release the Deposit, but (except pursuant to subparagraph (c)
of Paragraph 11 ("Termination") below) shall continue to store the Deposit
until otherwise directed by Licensee and Licensor jointly, or until resolution
of the dispute pursuant to Paragraph 5 ("Dispute Resolution") of this Escrow
Agreement, or by a court of competent jurisdiction.
(d)     Notwithstanding any Deposit release hereunder, the
obligations of Licensor to continue making Deposits and the obligations of
Escrow Agent to receive and maintain such Deposits shall continue throughout
the term of this Escrow Agreement.

5.      DISPUTE RESOLUTION.  Licensor and Licensee agree that if Contrary
Instructions are timely given by Licensor pursuant to Paragraph 4 ("Release of
Deposit") hereof, then Licensor and Licensee shall submit their dispute
regarding Licensee's Notice to arbitration by a single arbitrator appointed by
the American Arbitration Association ("Association") in accordance with the
Association's commercial arbitration rules then in effect (as expressly
modified by this paragraph).  The arbitration shall take place in the County
of Santa Clara, State of California.  The decision of the arbitrator shall be
final and binding upon the parties and enforceable in any court of competent
jurisdiction, and a copy of such decision shall be delivered immediately to
Licensor, Licensee and Escrow Agent.  The parties shall use their best efforts
to commence the arbitration proceeding within twenty (20) business days
following delivery of the Contrary Instructions.  The sole question to be
determined by the arbitration panel shall be whether or not there existed an
Event of Default at the time Licensee delivered the Notice under Paragraph 4
("Release of Deposit"), and, if so, whether such Event of Default was timely
cured.  If the arbitration panel finds that there has been an Event of Default
not timely cured, Escrow Agent shall promptly deliver the Deposit to Licensee. 
Depositions may be taken and discovery obtained in any such arbitration
proceedings as provided in Sections 1283.05 and 1283.1 of the Code of Civil
Procedure of the State of California.  All fees and charges by the American
Arbitration Association and the reasonable attorneys' fees and costs incurred
by the prevailing party in the arbitration shall be paid by the non-prevailing
party.  Judgment upon the award rendered by the arbitrator may be entered into
any court having jurisdiction thereof.  Notwithstanding the foregoing, either
party shall have the right to obtain a preliminary judgment on any equitable
claim in any court of competent jurisdiction, where such judgment is necessary
to preserve property or proprietary rights under this Escrow Agreement.  Such
judgment shall remain effective as long as the terms of the judgment so
provide or until specifically superseded by the action of the arbitration
panel as provided above.

6.      BANKRUPTCY.  Licensor and Licensee acknowledge that this Escrow
Agreement is an "agreement supplementary to" the Agreement as provided in
Section 365(n) of Title 11, United States Code (the "Bankruptcy Code"). 
Licensor acknowledges that if Licensor as a debtor in possession or a trustee
in bankruptcy in a case under the Bankruptcy Code rejects the Agreement or
this Escrow Agreement, Licensee may elect to retain its rights under the
Agreement and this Escrow Agreement as provided in Section 365(n) of the
Bankruptcy Code.  Upon written request of the Licensee to Licensor or the
Bankruptcy Trustee, Licensor or such Bankruptcy Trustee shall not interfere
with the rights of licensee as provided in the Agreement and this Escrow
Agreement, including the right to obtain the Deposit from Escrow Agent.

7.      EVENTS OF DEFAULT.  The occurrence of any of the following shall
constitute an "Event of Default" for purposes of this Escrow Agreement.
(a)     Licensor applies for or consents to the appointment of a
trustee, receiver or other custodian or makes a general assignment for the
benefit of its creditors,
(b)     Any bankruptcy, reorganization, debt arrangement, or other
case or proceeding under any bankruptcy or insolvency law, or any dissolution
or liquidation proceedings are commenced by or against Licensor and, as to
such case or proceeding not commenced by Licensor, is acquiesced in or remains
undismissed for sixty (60) days.
(c)     Licensor fails to cure a material breach of its obligations
under Paragraphs 4.1 ("Updates") or 6.2 ("Potential Function Numbers") of the
Agreement within thirty (30) days of written notice thereof from Licensee.
(d)     The death or disability of Michael Levitt, the president and
sole shareholder of Licensor, prevents Licensor's continued compliance with
its obligations pursuant to the paragraphs of the Agreement referred to in
clause (c) above.

8.      INDEMNIFICATION.  Licensor and Licensee jointly and severally
agree to defend and indemnify Escrow Agent and to hold Escrow Agent harmless
from and against any and all claims, actions and suits, whether groundless or
otherwise, and from and against any and all liabilities, losses, damages,
costs, charges, penalties, counsel fees, and any other expense of any other
nature, including, without limitation, settlement costs incurred by Escrow
Agent on account of any act or omission of Escrow Agent, in respect of or with
regard to this Escrow Agreement, except insofar as such liabilities arise by
reason of Escrow Agent's willful misconduct.

(a)     Licensee's license described in Paragraph 6.4 ("Escrow
License") of the Agreement shall be effective upon the rightful release (in
accordance herewith) to Licensee of Source Code.
(b)     Licensee acknowledges and agrees that use of the Source Code
is furnished to Licensee on a confidential and secret basis for the sole and
exclusive use of Licensee, and not for sale, sublicense or disclosure to third
parties.  In the event that Licensee obtains the Source Code pursuant to the
terms hereof, Licensee agrees to treat the Source Code as Licensee
confidential information governed by Paragraph 8.2 ("NonDisclosure") of the

10.     RECORDS.  Escrow Agent agrees to keep complete written records of
the activities undertaken and materials prepared and delivered to Escrow Agent
pursuant to this Escrow Agreement.  Licensor and Licensee shall be entitled at
reasonable times during normal business hours and upon reasonable notice to
Escrow Agent during the term of this Escrow Agreement to inspect the records
of Escrow Agent with respect to the Source Code.  Licensor shall be entitled
upon reasonable notice to Escrow Agent and during normal business hours to
inspect the facilities of Escrow Agent with respect to the physical status and
condition of the Source Code.

(a)     This Escrow Agreement shall continue indefinitely until
terminated as set forth below or by operation of law.  Upon such termination,
except for termination as a result of rejection of the Agreement in a
bankruptcy case of Licensor, Escrow Agent shall return the Deposit to Licensor
after the payment of all costs, fees and expenses due Escrow Agent.
(b)     Licensee may unilaterally terminate this Escrow Agreement
upon sixty (60) days written notice to Escrow Agent.
(c)     Escrow Agent reserves the right to resign as Escrow Agent
either upon sixty (60) days prior written notice to Licensor and Licensee or
(ii) upon ten (10) days prior written notice to Licensor and Licensee in the
event that (x) Escrow Agent has received Contrary Instructions from Licensor
and (y) Escrow Agent has turned the Deposit over to National Safe Depository
(located at 3585 Stevens Creek Boulevard, San Jose, California 95117) or such
other successor escrow agent as is acceptable to Licensor and Licensee.  No
entity shall be qualified to be a successor escrow agent unless such entity is
willing and able, not later than the transfer of the Deposit to such successor
escrow agent, to enter into a written escrow agreement with Licensor and
Licensee containing provisions substantially equivalent to those hereof;
provided, however, that such successor agreement may, in lieu of subparagraph
(a) of Paragraph 13 ("Fees") hereof, provide for Licensor and Licensee to
jointly bear such successor escrow agent's usual and reasonable fees for
escrow services.  When Escrow Agent has transferred the Deposit to such
successor escrow agent, Escrow Agent shall have no further obligations
hereunder but shall remain entitled to receive payment of any unpaid fees and
costs pursuant to Paragraph 13 ("Fees") of this Escrow Agreement.
(d)     In the event that the applicable notice period in
Paragraph 11(c) elapses without Escrow Agent having received payment from
either Licensor or Licensee of the remaining fees due, Escrow Agent shall then
have the option, without further notice to either party, to terminate the
Escrow Agreement and to destroy the Deposit.

12.     GOOD FAITH RELIANCE.  Escrow Agent may rely and act upon any
instruction, instrument, or signature believed in good faith to be genuine,
and may assume that any person purporting to give any writing, notice,
respect, advice, or instruction in connection with or relating to this Escrow
Agreement has been duly authorized to do so.

13.     FEES.
(a)     Escrow Agent agrees to perform its normal services hereunder
without fee; provided, however, that if Escrow Agent is required to perform
any additional or extraordinary services as a result of being Escrow Agent,
including intervention in any litigation or proceeding, Licensor and Licensee
shall be jointly and severally obligated to pay Escrow Agent reasonable
compensation for such services and to reimburse Escrow Agent for such costs
incurred, including reasonable attorney's fees.
(b)     Escrow Agent shall be entitled to receive payment of all
costs, fees and expenses due it, prior to release of the Deposit.

14.     ENTIRE AGREEMENT.  This Escrow Agreement and the Agreement,
including the Exhibits hereto, constitutes the entire agreement among the
parties regarding the subject matter hereof, and shall supersede all previous
and contemporaneous communications, representations, understandings and
agreement, either oral or written between the parties.

15.     NOTICE.  All notices required or permitted by this Escrow
Agreement shall be sufficiently served by mailing the same by certified or
registered mail, return receipt requested, to the parties at their respective
addresses, as follows:
(a)     Escrow Agent:

Townsend & Townsend
Attention:  George M. Schwab, Esq., Managing
379 Lytton Avenue
Palo Alto, California 94303

(b)     Licensor:
        Molecular Applications Group
        c/o Michael Levitt, President
        880 Lathrop
        Stanford, California 94305

(c)     Licensee:
        Protein Design Labs, Inc.
        2375 Garcia Avenue
        Mountain View, California 94043
Attention: President

16.     COUNTERPARTS.  This Escrow Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, and all of which
taken together shall constitute one and the same instrument.

17.     GOVERNING LAW.  This Escrow Agreement shall be governed by and
construed according to the internal laws of the State of California without
application of the principles of choice of law or conflict of laws.

18.     SEVERABILITY.  In the event any of the provisions of this Escrow
Agreement shall be held by a court of competent jurisdiction to be contrary to
any state or federal law, the remaining provisions of this Escrow Agreement
will remain in full force and effect.

19.     HEADINGS.  The section headings in this Escrow Agreement do not
form a part of it, but are for convenience only and shall not limit or affect
the meaning of the provisions.

IN WITNESS WHEREOF, the parties have executed this Escrow Agreement on
the date first above written.


Molecular Applications Group

      Michael Levitt, President


Protein Design Labs, Inc.

By: /s/ Laurence Jay Korn
      Laurence Jay Korn, President


Townsend & Townsend

      George M. Schwab, Esq.
       Managing Partner