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Development and License Agreement - Protein Design Labs Inc. and SmithKline Beecham Corp.

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DEVELOPMENT AND LICENSE AGREEMENT

between

SMITHKLINE BEECHAM CORPORATION

and

PROTEIN DESIGN LABS, INC.







DEVELOPMENT AND LICENSE AGREEMENT

        THIS DEVELOPMENT AND LICENSE AGREEMENT (hereinafter "AGREEMENT"), is
made as of the 28th day of September 1999, between Protein Design Labs, Inc.,
a company organized under the laws of the state of Delaware and having its
principal place of business at 34801 Campus Drive, Fremont, California 94555
U.S.A. (hereinafter "PDL") and SmithKline Beecham Corporation, a corporation
organized and existing under the laws of the Commonwealth of Pennsylvania, and
having its principal office at One Franklin Plaza, Philadelphia, Pennsylvania
19101 U.S.A. (hereinafter "SB").

WITNESSETH THAT:
        WHEREAS, SB is the owner of all right, title and interest in, or
otherwise controls, certain SB PATENTS, identified in Appendix A hereto, and
know-how relating to an antibody that binds to IL-4, known as SB 240683;
        WHEREAS, PDL desires to obtain certain worldwide licenses from SB under
the aforesaid PATENTS and know-how in order to undertake certain development
and marketing efforts related to SB 240683, and SB is willing to grant to PDL
such licenses; and
        WHEREAS, PDL and SB are contemporaneously entering into a Patent Rights
Agreement (the "Rights Agreement") that grants SB rights to obtain certain
nonexclusive license rights under patents and patent applications owned or
controlled by PDL and a Patent License Agreement for an antibody directed
against the IL-5 antigen (the "IL-5 License Agreement").
        NOW, THEREFORE, in consideration of the covenants and obligations
expressed herein, and intending to be legally bound, the parties agree as
follows:

1.      DEFINITIONS
                Except as expressly provided herein, capitalized terms in this
AGREEMENT (including appendices hereto) shall have the following meanings:
        1.01    "ADMINISTRATION COSTS" shall mean those non-direct costs
associated with supporting the commercialization of PRODUCT incurred after the
commercial launch of the PRODUCT.  "SB ADMINISTRATION COSTS" shall equal
[CONFIDENTIAL TREATMENT REQUESTED] of SB NET SALES on an annual basis.  If PDL
co-promotes or otherwise markets or sells PRODUCT as set forth in Article 6,
"PDL ADMINISTRATION COSTS" shall mean those non-direct costs incurred by PDL
after the commercial launch of PRODUCT associated with supporting the
commercialization of PRODUCT and shall be in an amount (expressed as a
percentage of NET SALES) as agreed upon by the parties pursuant to Article 6;
provided however, that in no event shall the amount exceed [CONFIDENTIAL
TREATMENT REQUESTED]of NET SALES.
        1.02    "AFFILIATE(S)" shall mean any corporation, firm, partnership or
other entity, whether de jure or de facto, which directly or indirectly owns,
is owned by or is under common ownership with a party to this AGREEMENT to the
extent of at least fifty percent (50%) of the equity (or such lesser
percentage which is the maximum allowed to be owned by a foreign corporation
in a particular jurisdiction) having the power to vote on or direct the
affairs of the entity and any person, firm, partnership, corporation or other
entity actually controlled by, controlling or under common control with a
party to this AGREEMENT; provided however any such person, corporation, firm,
partnership or other entity shall be deemed an AFFILIATE only for so long as
it meets the requirements of this definition.
        1.03    "AGGREGATE PROJECTED DETAILS" shall mean the aggregate number of
DETAILS projected to be performed by SB sales representatives and, if
applicable, PDL sales representatives in the U.S.A., as determined in
accordance with Paragraph 7.03((b).
        1.04    "COST OF GOODS" as applied to the cost of manufacturing PRODUCT
for DEVELOPMENT and commercial purposes shall mean one or more of the
following:
                [CONFIDENTIAL TREATMENT REQUESTED]
For purposes of calculating PRE-TAX PROFITS, COST OF GOODS shall mean the COST
OF GOODS for the PRODUCT sold and reported in NET SALES during the relevant
reporting period.
        1.05  "DETAIL(S)" shall mean a face-to-face meeting, in an individual or
group practice setting, between a health care professional with prescribing
authority and a professional representative of the applicable party during
which a Major Presentation of PRODUCT is made to such health care
professional.  When used as a verb, "DETAIL" shall mean to engage in a DETAIL.
The term "Major Presentation" as used in this Paragraph 1.05 shall mean a full
PRODUCT presentation during which key PRODUCT attributes are verbally
presented; provided that there shall be no more than [CONFIDENTIAL TREATMENT
REQUESTED]Major Presentations in any DETAIL.
        1.06    "DEVELOPMENT" shall mean:
                (a) all activities related to the development of PRODUCT through
to NDA APPROVAL, including all requisite preclinical and clinical trials
required to confirm the profile of PRODUCT, such as, but not limited to,
trials required to confirm the clinical efficacy, tolerability and dosing
regimen of PRODUCT; and all activities associated with seeking NDA APPROVALS
of PRODUCT; provided that all such activities are undertaken in accordance
with the then-existing DEVELOPMENT PLAN; and
                (b) all activities related to:
(i) PRODUCT manufacture and PRODUCT improvement activities,
such as formulation or reformulation, whether occurring before or after NDA
APPROVAL including, without limitation, the activities set forth on Appendix
E;
(ii) the development of manufacturing processes for PRODUCT,
including without limitation, process development and optimization,
manufacturing scale-up, validation, qualification, and certification;
(iii) the establishment, improvement or expansion of
manufacturing plants and other facilities or equipment used solely for the
manufacture of PRODUCT or, if used for other applications in addition to the
manufacture of PRODUCT, solely to the extent used for the manufacture of
PRODUCT and in any event amortized in accordance with the accounting for such
expenditures in accordance with the then standard practices of the party
incurring the expenditure for such activities; and
(iv) any capital investment solely for PRODUCT associated with
(i), (ii), and (iii) above, provided that all such activities are approved in
advance by the JDC and undertaken in accordance with the then existing
DEVELOPMENT PLAN and in any event amortized in accordance with the accounting
for capital expenditures in accordance with the then standard practices of the
party incurring the expenditure for such activities.
1.07    "DEVELOPMENT COSTS" shall mean the following costs to the extent
incurred by a party after the EFFECTIVE DATE: (i) all costs incurred in
accordance with the then-current DEVELOPMENT PLAN, and (ii) all costs incurred
in excess of the budget in the then-current DEVELOPMENT PLAN provided that any
such excess costs have been approved in advance by each of the co-chairpersons
of the JDC or by the JDC, as appropriate.  DEVELOPMENT COSTS shall consist of
the following:
[CONFIDENTIAL TREATMENT REQUESTED]
The term "FTE" shall mean a full-time equivalent employee (other than
clerical, administrative assistant or secretarial employees) of a party for
whom a reasonable reimbursement allowance shall be determined by the JDC.  The
initial reimbursement rates for each party's FTE are set forth in the
DEVELOPMENT PLAN.  Such reimbursement allowance shall be prorated according to
the amount of time spent by the employee on activities for which reimbursement
is to be paid under this AGREEMENT.  By way of example, (i) if an employee is
a full-time employee and spends one hundred percent (100%) of his or her time
on activities for which reimbursement is to be paid under this AGREEMENT, such
employee shall count as one (1) FTE, and (ii) if an employee is a full-time
employee and spends forty percent (40%) of his or her time on activities for
which reimbursement is to be paid under this AGREEMENT, such employee shall
count as four-tenths (0.4) of an FTE.
        1.08    "DEVELOPMENT PLAN" shall mean the detailed plan for the
DEVELOPMENT of PRODUCT, which DEVELOPMENT PLAN shall include, without
limitation, the activities described in Paragraph 1.06 and a reasonably
detailed budget for the projected expenses to be incurred for the items
described in Paragraph 1.07.  The DEVELOPMENT PLAN, as of the EFFECTIVE DATE,
is summarized and attached to this AGREEMENT as Appendix D and is fully
incorporated into this AGREEMENT.  Such initial DEVELOPMENT PLAN may be
amended from time to time as provided in Article 3.
    1.09    "EFFECTIVE DATE" shall mean the date as of which this AGREEMENT is
effective and shall be the date of this AGREEMENT first written above.
     1.10    "FDA" shall mean, depending on context, the United States Food and
Drug Administration, or the corresponding REGULATORY AUTHORITY in the relevant
country of the TERRITORY, or any successor entities thereto.
        1.11    "IL-4" shall mean the human cytokine known as Interleukin 4.
        1.12    "INTEREST CHARGE ON WORKING CAPITAL" shall mean the quarterly
interest, calculated at the PRIME RATE, on the average Working Capital in the
TERRITORY from the beginning to the end of the relevant calendar quarter. For
purposes of this Paragraph 1.12, "Working Capital" shall mean the sum of
PRODUCT inventories held for sale in the TERRITORY and outstanding THIRD PARTY
trade receivables due from the NET SALES of PRODUCT in the TERRITORY, minus
outstanding THIRD PARTY trade credits due from the acquisition of PRODUCT from
a THIRD PARTY or materials for manufacture of PRODUCT from THIRD PARTIES in
the TERRITORY.
     1.13    "JDC" shall mean the joint development committee consisting of PDL
and SB representatives and other appropriate personnel assembled in accordance
with Paragraph 3.03.
        1.14    "JMC" shall mean the joint marketing committee consisting of PDL
and SB representatives and other appropriate personnel assembled in accordance
with Paragraph 7.01.
     1.15    "NDA" shall mean, depending on context, a New Drug Application or
Biologics License Application filed by or on behalf of SB or PDL with the FDA
requesting approval for commercialization of PRODUCT in the U.S.A. for an
indication, or the corresponding equivalent application in a given country or
regulatory jurisdiction of the TERRITORY.
        1.16    "NDA APPROVAL" shall mean, depending on context, the FDA's
approval of an NDA filed by or on behalf of SB or PDL for marketing PRODUCT
for an indication in any country or regulatory jurisdiction in the TERRITORY
and the approval of all authorizations by governmental authorities which are
required for the marketing, promotion, pricing and sale of PRODUCT in a given
country or regulatory jurisdiction of the TERRITORY, including all
manufacturing, pricing and reimbursement approvals.
     1.17    "OUT OF POCKET COSTS" shall mean any out-of-pocket payment made by
a party to a THIRD PARTY in accordance with the terms and conditions of this
AGREEMENT, but only to the extent such payment relates to costs which are
incurred by a party after the EFFECTIVE DATE.
     1.18    "PATENT COSTS" shall mean the OUT OF POCKET COSTS incurred by a
party in connection with the filing, prosecution and maintenance of SB PATENTS
or PDL PATENTS, as well as the OUT OF POCKET COSTS of any patent interference,
reexamination, reissue, opposition and revocation proceedings in connection
with such SB PATENTS or PDL PATENTS, as the case may be. [CONFIDENTIAL
TREATMENT REQUESTED]
        1.19    "PDL" shall mean Protein Design Labs, Inc., a company organized
under Delaware law and as of the EFFECTIVE DATE having its principal place of
business at 34801 Campus Drive, Fremont, California, 94555 U.S.A.
        1.20    "PDL KNOW-HOW" shall mean all present and future technical
information and know-how which relates to PRODUCT and shall include, without
limitation, all biological, chemical, pharmacological, toxicological,
clinical, assay, and control data and any other information relating to
PRODUCT and useful for the DEVELOPMENT and commercialization of PRODUCT.
Notwithstanding the above, it is understood that the term PDL KNOW-HOW shall
not include any information or know-how related to the manufacture (e.g., cell
culture, fermentation) or purification of any monoclonal antibody including,
without limitation, PRODUCT, except to the extent such information or know-how
shall be reasonably required with respect to a claim of product liability
related to PRODUCT.
        1.21    "PDL NET SALES" shall mean the gross receipts from sales of
PRODUCT in each country in the TERRITORY by PDL, its AFFILIATES and
sublicensees ("the Selling Party") to THIRD PARTIES less

[CONFIDENTIAL TREATMENT REQUESTED]
Sales between PDL, its AFFILIATES and its or their sublicensees shall be
excluded from the computation of PDL NET SALES and no payments will be payable
on such sales except where such AFFILIATES or sublicensees are end users, but
PDL NET SALES shall include the subsequent final sales to THIRD PARTIES by
such AFFILIATES or sublicensees. [CONFIDENTIAL TREATMENT REQUESTED] If a
Selling Party receives non-cash consideration for any PRODUCT sold or
otherwise transferred to a THIRD PARTY, the fair market value of such non-cash
consideration on the date of such transfer as known to PDL, or as reasonably
estimated by PDL if unknown, shall be included in the definition of Net Sales.
        1.22    "PDL PATENTS" shall mean either:
                 (a) Unless and until PDL's rights are terminated pursuant to
Paragraph 3.06 or Article 12, all U.S.A. and other patents and patent
applications (including any and all continuations, continuations-in-part,
divisions, patents of addition, reissues, renewals or extensions thereof and
all SPCs (as defined below)) during the term of this AGREEMENT which are or
become owned by PDL, or to which PDL otherwise has, now or in the future, the
right to grant licenses, which generically or specifically claim PRODUCT, a
process for manufacturing PRODUCT, an intermediate used in such process or a
use of PRODUCT.  Also included within the definition of PDL PATENTS under this
Paragraph 1.22(a) are any patents or patent applications which generically or
specifically claim any improvements on PRODUCT or intermediates or
manufacturing processes required or useful for production of PRODUCT which are
developed by PDL, or which PDL otherwise has the right to grant licenses, now
or in the future, during the term of this AGREEMENT.  The current list of PDL
PATENTS is set forth in Appendix A attached hereto.
            (b)  If PDL's rights to PRODUCT are terminated under Paragraph 3.06
or Article 12, all U.S.A. and other patents and patent applications (including
any and all continuations, continuations-in-part, divisions, patents of
addition, reissues, renewals or extensions thereof and all SPCs) which are or,
at any time during the term of this AGREEMENT through the effective date of
termination of PDL's rights under Paragraph 3.06 or Article 12 become owned by
PDL, or to which PDL otherwise has, now or at any time during the term of this
AGREEMENT through the effective date of termination of PDL's rights under
Paragraph 3.06 or Article 12, the right to grant licenses, which generically
or specifically claim PRODUCT, a process for manufacturing PRODUCT, an
intermediate used in such process or a use of PRODUCT.  Also included within
the definition of PDL PATENTS under this Paragraph 1.22 are any patents or
patent applications which generically or specifically claim any improvements
on PRODUCT or intermediates or manufacturing processes required or useful for
production of PRODUCT which are developed by PDL during the term of this
AGREEMENT through the effective date of termination of PDL's rights under
Paragraph 3.06 or Article 12.
        1.23    "PHASE II REVIEW POINT" shall mean the date of notification from
PDL that it has delivered to SB all of the clinical safety and efficacy data
due [CONFIDENTIAL TREATMENT REQUESTED].
        1.24    "PHASE II REVIEW POINT PAYMENT" shall mean the payment indicated
in Paragraph 3.04(a).
        1.25    "PRE-LAUNCH COMMERCIAL EXPENSES" shall mean the sum of the
following expenses: [CONFIDENTIAL TREATMENT REQUESTED].
        1.26    " PRE-TAX PROFITS" shall mean the following calculation:
[CONFIDENTIAL TREATMENT REQUESTED].
      1.27    "PRIME RATE" shall mean the U.S.A. prime rate quoted by Citibank,
N.A. for the applicable period.
        1.28    "PRODUCT" shall mean a pharmaceutical product comprising
[CONFIDENTIAL TREATMENT REQUESTED].
        1.29    "PROMOTION EXPENSES" shall mean all direct and/or allocated
selling, promotional, marketing and medical expenses for PRODUCT in the
TERRITORY incurred by SB or PDL after the PHASE II REVIEW POINT PAYMENT which
are directly related to:
                [CONFIDENTIAL TREATMENT REQUESTED]
provided that the scope of the term PROMOTION EXPENSES as it applies to
expenses incurred by PDL shall be limited to those which are incurred for the
promotion of PRODUCT in the U.S.A. in accordance with the procedures set forth
in Article 7.
     1.30    "REGULATORY AUTHORITY(IES)" shall mean, depending on context, the
FDA in the U.S.A. and/or the corresponding authorities in a given country or
regulatory jurisdiction of the TERRITORY with responsibility for granting
regulatory approval and pricing/reimbursement approval where appropriate for
the manufacture, marketing, import, sale or use of PRODUCT in such country or
regulatory jurisdiction.
        1.31    [CONFIDENTIAL TREATMENT REQUESTED]
    1.32    "SB 240683" shall mean that humanized antibody which binds to the
human cytokine Interleukin 4 (IL-4) designated by SB as of the EFFECTIVE DATE
as SB 240683.
        1.33    "SB" shall mean SmithKline Beecham Corporation, a corporation
organized and existing under the laws of the Commonwealth of Pennsylvania, and
as of the EFFECTIVE DATE having its principal office at One Franklin Plaza,
Philadelphia, Pennsylvania 19101 U.S.A.
        1.34    "SB KNOW-HOW" shall mean all present and future technical
information and know-how which relates to PRODUCT and shall include, without
limitation, all biological, chemical, pharmacological, toxicological,
clinical, assay, and control data and any other information relating to
PRODUCT and useful for the DEVELOPMENT and commercialization of PRODUCT.
Notwithstanding the above, it is understood that the term SB KNOW-HOW shall
not include any information or know-how related to the manufacture (e.g., cell
culture, fermentation) or purification of any monoclonal antibody including,
without limitation, PRODUCT, except to the extent such information or know-how
shall be reasonably required with respect to a claim of product liability
related to PRODUCT.
     1.35    "SB NET SALES" shall mean the gross receipts from sales of PRODUCT
in the TERRITORY by SB, its AFFILIATES and sublicensees ("the Selling Party")
to THIRD PARTIES less [CONFIDENTIAL TREATMENT REQUESTED]Sales between SB, its
AFFILIATES and its or their sublicensees shall be excluded from the
computation of SB NET SALES and no payments will be payable on such sales
except where such AFFILIATES or sublicensees are end users, but SB NET SALES
shall include the subsequent final sales to THIRD PARTIES by such AFFILIATES
or sublicensees. [CONFIDENTIAL TREATMENT REQUESTED]  If a Selling Party
receives non-cash consideration for any PRODUCT sold or otherwise transferred
to a THIRD PARTY, the fair market value of such non-cash consideration on the
date of such transfer as known to SB, or as reasonably estimated by SB if
unknown, shall be included in the definition of Net Sales.
        1.36    "SB PATENTS" shall mean either:
        (a) Unless and until SB's rights are terminated pursuant to Paragraph
3.06 or Article 12, all U.S.A. and other patents and patent applications
(including any and all continuations, continuations-in-part, divisions,
patents of addition, reissues, renewals or extensions thereof and all SPCs)
during the term of this AGREEMENT which are or become owned by SB, or to which
SB otherwise has, now or in the future, the right to grant licenses, which
generically or specifically claim PRODUCT, a process for manufacturing
PRODUCT, an intermediate used in such process or a use of PRODUCT. Also
included within the definition of SB PATENTS under this Paragraph 1.36(a) are
any patents or patent applications which generically or specifically claim any
improvements on PRODUCT or intermediates or manufacturing processes required
or useful for production of PRODUCT which are developed by SB, or which SB
otherwise has the right to grant licenses, now or in the future, during the
term of this AGREEMENT.  The current list of SB PATENTS is set forth in
Appendix A attached hereto.
        (b)  If SB's rights to PRODUCT are terminated under Paragraph 3.06 or
Article 12, all U.S.A. and other patents and patent applications (including
any and all continuations, continuations-in-part, divisions, patents of
addition, reissues, renewals or extensions thereof and all SPCs ) which are
or, at any time during the term of this AGREEMENT through the effective date
of termination of SB's rights under Paragraph 3.06 or Article 12 become owned
by SB, or to which SB otherwise has, now or at any time during the term of
this AGREEMENT through the effective date of termination of SB's rights under
Paragraph 3.06 or Article 12, the right to grant licenses, which generically
or specifically claim PRODUCT, a process for manufacturing PRODUCT, an
intermediate used in such process or a use of PRODUCT.  Also included within
the definition of SB PATENTS under this Paragraph 1.36(b) are any patents or
patent applications which generically or specifically claim any improvements
on PRODUCT or intermediates or manufacturing processes required or useful for
production of PRODUCT which are developed by SB during the term of this
AGREEMENT through the effective date of termination of SB's rights under
Articles 3 or Article 12.
     1.37    "SPC(s)" shall mean a right based upon a patent to exclude others
from making, using or selling PRODUCT, such as a Supplementary Protection
Certificate.
        1.38    "TERRITORY" shall mean all of the countries of the world.
        1.39    "THIRD PARTY(IES)" shall mean any party other than SB, PDL and
their respective AFFILIATES.
        1.40    "THIRD PARTY ROYALTIES" shall mean one hundred percent (100%) of
those payments set forth in Paragraph 5.06.
      1.41    "TRADEMARK COSTS" shall mean the OUT OF POCKET COSTS incurred by
SB after the EFFECTIVE DATE, including without limitation, the fees and
expenses paid to outside legal counsel and experts, related to creation,
search, trademark marketing research, prosecution, registration and
maintenance of trademarks which may be employed by SB specifically in
conjunction with the commercialization of PRODUCT in the TERRITORY and which
are directly related to PRODUCT ("Trademark").  TRADEMARK COSTS shall also
include the OUT OF POCKET COSTS incurred by SB, including without limitation,
the fees and expenses paid to outside legal counsel and experts and other
THIRD PARTIES which were incurred in bringing, maintaining and prosecuting any
action related to any actual, alleged or threatened infringement of any
Trademark or of any unfair trade practices, trade dress imitation, passing off
of counterfeit goods, or like offenses, or defending any such claims brought
by a THIRD PARTY against a Trademark used on a PRODUCT.  TRADEMARK COSTS shall
in no event include costs or expenses related to a "house name" or trade name
which is not used exclusively in connection with PRODUCT.
        1.42    "U.S.A." shall mean the United States of America and all of its
territories, trusteeships and possessions including, without limitation, the
Commonwealth of Puerto Rico.
        1.43    "VALID CLAIM" shall mean [CONFIDENTIAL TREATMENT REQUESTED] 2.
        LICENSE GRANTS
        2.01    SB Grant.
                (a)     Subject to the terms and conditions of this
AGREEMENT, SB hereby grants to PDL, under SB PATENTS and SB KNOW-HOW, a co-
exclusive license to make, have made, use, sell, import, and offer for sale
PRODUCT in the TERRITORY in accordance with the terms and conditions of this
AGREEMENT, with the right to sublicense as set forth in Paragraph 2.03 below.
                (b)     Subject to the terms and conditions of this
AGREEMENT, SB shall not grant to any THIRD PARTY, under SB PATENTS and SB
KNOW-HOW, any license to make, have made, use, sell, import, and offer for
sale PRODUCT in the TERRITORY, except as set forth in  Paragraph 2.03 below.
                (c)     In the event SB's rights to PRODUCT are
terminated in accordance with Paragraph 3.06 or Article 12, the license
granted in Paragraph 2.01(a) shall terminate and the license from SB to PDL,
under SB PATENTS and SB KNOW-HOW, shall become as of the effective date of
such termination a royalty-bearing, exclusive license to make, have made, use,
sell, import, and offer for sale PRODUCT in the TERRITORY in accordance with
the terms and conditions of this AGREEMENT, with the right to sublicense as
set forth in Paragraph 2.03 below.
        2.02    PDL Grant.
                (a)     Subject to the terms and conditions of this
AGREEMENT, PDL hereby grants to SB, under PDL PATENTS and PDL KNOW-HOW, a co-
exclusive license to make, have made, use, sell, import and offer for sale
PRODUCT in the TERRITORY in accordance with the terms and conditions of this
AGREEMENT, with the right to sublicense as set forth in Paragraph 2.03 below.
                (b)     Subject to the terms and conditions of this
AGREEMENT, PDL shall not grant to any THIRD PARTY, under PDL PATENTS and PDL
KNOW-HOW, any license to make, have made, use, sell, import and offer for sale
PRODUCT in the TERRITORY, except as set forth in Paragraph 2.03 below.
                (c)     In the event PDL's rights to PRODUCT are
terminated in accordance with Paragraph 3.06 or Article 12, the license
granted in Paragraph 2.02(a) shall terminate and  the license from PDL to SB,
under PDL PATENTS and PDL KNOW-HOW, shall become as of the effective date of
such termination a royalty-bearing, exclusive license to make, have made, use,
sell, import, and offer for sale PRODUCT in the TERRITORY in accordance with
the terms and conditions of this AGREEMENT, with the right to sublicense as
set forth in Paragraph 2.03 below.
        2.03    Sublicensing.
             (a)  Prior to the PHASE II REVIEW POINT, neither party shall have
the right to license its rights to PRODUCT, including both its own rights and
those rights it receives from the other party under this AGREEMENT, to a THIRD
PARTY without the approval of the other party.
             (b)  Subject to Paragraph 7.03(f), in the event SB makes the PHASE
II REVIEW POINT PAYMENT and neither party's rights to PRODUCT have been
terminated hereunder, neither party shall have the right to license its rights
to PRODUCT, including both its own rights and those rights it receives from
the other party under this AGREEMENT, to a THIRD PARTY without the approval of
the other party, such approval not to be unreasonably withheld.
                (c)  In the event SB's rights to PRODUCT are terminated in
accordance with Paragraph 3.06 or Article 12, PDL shall have the right to
license its rights to PRODUCT, including both its own rights and those rights
it receives from SB under this AGREEMENT, to a THIRD PARTY; provided, however,
that PDL's right to grant sublicenses pursuant to this Paragraph 2.03(c) shall
be subject to [CONFIDENTIAL TREATMENT REQUESTED].
                (d)  In the event PDL's rights to PRODUCT are terminated in
accordance with Paragraph 3.06 or Article 12, SB shall have the right to
license its rights to PRODUCT, including both its own rights and those rights
it receives from PDL under this AGREEMENT, to a THIRD PARTY.
        2.04    Each license and right granted pursuant to this AGREEMENT is
subject to all of the terms and conditions of this AGREEMENT in addition to
such terms and conditions as may be explicitly referenced in the provision
granting such license or right.
      2.05    Subject to Paragraphs 2.03, 5.03, 5.04 and 5.05, each party shall
have the right to grant sublicenses of its rights under this Article 2 with
respect to PRODUCT, provided that  each party shall grant such sublicenses
only in connection with the assignment or license by that party to such
sublicensee of the right to use, make, have made, sell or otherwise transfer
the PRODUCT in such country.  Notwithstanding the assignment or grant of a
sublicense by a party hereunder, the sublicensing party shall remain obligated
to pay all royalties due to the other party with respect to the sale of
PRODUCT by its assignee or sublicensee.  In addition, the grant of any
sublicenses under this AGREEMENT shall be on terms and conditions which are
subject to and subordinate to the terms of this AGREEMENT and the sublicensing
party shall remain fully responsible to the other party for the performance of
any and all such terms by its sublicensees.  Promptly following execution of
any sublicense hereunder, the sublicensing party shall notify the other party
of the identity of the sublicensee and the scope of the sublicense and provide
a copy of the sublicense agreement, which copy may be redacted to protect
confidential technical or financial information.
3.      DEVELOPMENT
        3.01    DEVELOPMENT Responsibility.
         (a)  Through PHASE II REVIEW POINT Decision.  After the EFFECTIVE
DATE and up through the PHASE II REVIEW POINT, PDL shall be responsible for
undertaking the DEVELOPMENT of PRODUCT in accordance with the DEVELOPMENT
PLAN, except as set forth in Paragraph 4.01.  PDL and SB (to the extent
applicable) shall use commercially reasonable efforts and diligence to
complete the activities set forth in the DEVELOPMENT PLAN in accordance with
the time frames set forth therein.  The parties expressly acknowledge that PDL
shall be solely responsible for the DEVELOPMENT COSTS through the PHASE II
REVIEW POINT pursuant to Paragraph 3.04, except as expressly provided herein
and in Paragraph 4.01; provided that each party shall be responsible for their
own PATENT COSTS incurred prior to the PHASE II REVIEW POINT.  The DEVELOPMENT
PLAN will be revised or amended as determined by the JDC but in any event at
least annually to reflect new data or information, including without
limitation information or data from clinical trials with PRODUCT and
[CONFIDENTIAL TREATMENT REQUESTED].  If, during the term of the AGREEMENT up
through the PHASE II REVIEW POINT, SB requests that additional DEVELOPMENT
activities which are not included in the DEVELOPMENT PLAN be carried out by
PDL (or by SB, in the case of DEVELOPMENT activities related to Paragraph
1.06(b)), and the JDC determines that such work is:
                (i) not critical to the timely registration of PRODUCT, then
PDL (or by SB, in the case of DEVELOPMENT activities related to Paragraph
1.06(b)) shall undertake such work at SB's expense, subject to SB's approval
that such activities should be performed and that the associated expense is
acceptable, or
              (ii) critical to the timely registration of PRODUCT, then
the DEVELOPMENT PLAN shall be amended and PDL (or SB, in the case of
DEVELOPMENT activities related to Paragraph 1.06(b)) shall undertake such work
at PDL's expense.
                (b)  After PHASE II REVIEW POINT Payment.  If SB has made the
PHASE II REVIEW POINT PAYMENT, the JDC shall allocate the various activities
to be performed under the DEVELOPMENT PLAN between the parties in accordance
with the terms and conditions of this AGREEMENT.  The DEVELOPMENT COSTS
incurred by either party subsequent to the PHASE II REVIEW POINT shall be
allocated between the parties as provided in Paragraph 3.04(a)(iii).  If SB
does not make the PHASE II REVIEW POINT PAYMENT, then the provisions of
Paragraph 3.04(b) shall be applicable, and all DEVELOPMENT COSTS for the
continuation of the DEVELOPMENT shall be borne solely by PDL.
   3.02    Development Coordinators.  Promptly after the EFFECTIVE DATE, each
party shall designate a Development Coordinator who will be responsible for
scheduling meetings and identifying appropriate contact individuals at SB and
PDL involved in the DEVELOPMENT of PRODUCT, promoting the progress of the
DEVELOPMENT PLAN, facilitating the exchange of data and information, preparing
and distributing minutes of the meetings of the JDC and other meetings
substantially focused on the DEVELOPMENT of PRODUCT and coordinating the
respective DEVELOPMENT efforts of the parties from time to time during the
term of this AGREEMENT.  Each party shall bear its own expenses, including
travel, accommodations, and living expenses, incurred in connection with their
respective efforts described in this Paragraph 3.02.  The role of each party's
Development Coordinator shall be subject to the direction of the respective
party's representatives on the JDC. The role of the Development Coordinators
shall terminate in the event that either party loses their rights to PRODUCT
in accordance with this AGREEMENT.
        3.03    JDC.
                (a)  Appointment. Within thirty (30) days after the EFFECTIVE
DATE, the parties will establish a JDC composed of three (3) representatives
from each party with appropriate background, experience and qualifications to
oversee the progress of DEVELOPMENT.  The initial PDL representatives shall be
[CONFIDENTIAL TREATMENT REQUESTED].  Either party may change its
representatives on the JDC at any time by written notice to the other party.
                (b)  Responsibilities. The JDC shall be responsible for:
(i) overseeing the implementation of and monitoring of the
DEVELOPMENT PLAN, including a coordination of the timelines, goals and
implementation of manufacturing and clinical efforts for DEVELOPMENT;
 (ii) coordinating the timely commitment of identified
resources to implement the DEVELOPMENT PLAN, including the timely manufacture
and release of PRODUCT supplies for use in clinical trials contemplated under
the DEVELOPMENT PLAN and timely preparation and filing of associated
regulatory filings;
(iii) regularly reviewing and providing written updates on
the progress of the DEVELOPMENT efforts under the DEVELOPMENT PLAN to
appropriate management of PDL and SB;
(iv) subject to Paragraph 3.03(d), attempting to settle any
issues or disputes that may arise between the functional departments of the
parties related to the DEVELOPMENT of PRODUCT;
                 (v) overseeing the activities carried out by the Development
Coordinators (as defined in Paragraph 3.02);
                 (vi) carrying out any other responsibilities not outlined in
this Paragraph which are specified for the JDC in this AGREEMENT; and
(vii) following the date on which SB has made the PHASE II
REVIEW POINT PAYMENT, in addition to the responsibilities outlined above, the
JDC shall have the following additional responsibilities:
        (A) preparing a comprehensive budget and related
annual budgets to be mutually agreed upon in advance of the relevant period
for which they apply for all subsequent DEVELOPMENT efforts, such
comprehensive budget to then become part of the DEVELOPMENT PLAN, provided it
is understood that an updated DEVELOPMENT PLAN will be drafted and presented
to the JDC at such times as the JDC deems appropriate, but no less frequently
than annually, and the JDC will review each update thereto and will amend such
plan as required to achieve approval by the JDC no later than thirty (30) days
after submission of the drafts prepared by the parties pursuant this
Paragraph;
        (B) administration of the annual budget, provided that
the JDC's authority is limited to such DEVELOPMENT PLAN and budget except as
otherwise provided in Paragraph 3.03(b)(vii)(C) below; and
        (C) except as expressly contemplated in a mutually
agreed upon budget and/or the DEVELOPMENT PLAN, each party agrees that
decisions of the JDC regarding the commitment of expenditures of amounts in
excess of [CONFIDENTIAL TREATMENT REQUESTED] of an approved annual budget, or
additional internal resources of a party beyond those specified in the
DEVELOPMENT PLAN, shall be subject to prior approval pursuant to that party's
then-current internal review and approval processes.
              (c)  Meetings, Reporting and Decisions.  The JDC will meet at
least once per calendar quarter at mutually agreed upon times and locations
using mutually agreed upon meeting formats, including videoconferencing and
teleconferencing, unless otherwise mutually agreed by the parties.  After the
EFFECTIVE DATE, it is envisioned that meetings of the JDC will be held at
facilities alternately selected by PDL and by SB.  Each party shall promptly
report to the JDC on all material issues relating to DEVELOPMENT of PRODUCT
including, but not limited to the status of formulation efforts, the status of
patient enrollment in the ongoing clinical trials, the status of clinical
supplies, target dates for data analysis and report preparation, and target
dates for the PHASE II REVIEW POINT and IND and NDA filings.  Each party shall
cause its representatives to attend the meetings of the JDC provided, however,
that meetings of the JDC shall be effective for decision-making if at least
one representative of each party is present or participating.  If a
representative of a party is unable to attend a meeting, such party may
designate an alternate to attend such meeting in place of the missing
representative.  In addition, each party may, at its discretion, invite non-
voting employees, consultants or advisors whose presence is considered of
importance or value to the DEVELOPMENT to attend and participate in the
meetings of the JDC, provided that any such consultant or advisor shall have
undertaken confidentiality obligations to PDL or SB, as the case may be, at
least comparable to the confidentiality provisions undertaken by the parties
under this AGREEMENT, with respect to the subject matter of any such meeting.
Minutes shall be kept of all JDC meetings, shall be promptly reviewed by both
parties within twenty (20) business days of delivery, and shall be deemed
approved when mutually accepted by the parties as evidenced in writing or if
one party has not responded to the draft and/or comments delivered by the
other party by the later of  the 20-day period or five (5) business days after
receipt of comments from the other party, if any.  The parties shall use good
faith efforts to finalize the minutes within five (5) business days after
receipt of comments, if any.  Decisions of the JDC shall be by unanimous vote,
with each party having one (1) vote.
          (d)  Deadlock - In the event of a deadlock by the JDC, in lieu of
invoking the dispute resolution process set forth in Article 17, the deadlock
shall be resolved as follows:
[CONFIDENTIAL TREATMENT REQUESTED]
           (e)  Expenses - Each party shall bear its own expenses, including
travel, accommodations, and living expense, incurred in connection with their
respective efforts described in Paragraph 3.03, except as otherwise provided
in Paragraph 3.03(d)(ii).
        3.04    PHASE II REVIEW POINT Decision.  Promptly after the PHASE II
REVIEW POINT, but, in any event, no later than sixty (60) days thereafter,
based, in part, on a review of the final, quality-assured data tables (in a
form to be mutually agreed upon) for all pre-specified safety and efficacy
data on PRODUCT described in the approved protocols from the studies outlined
in the DEVELOPMENT PLAN, SB, at its sole discretion, shall have the option to
elect to participate in the further DEVELOPMENT and commercialization of
PRODUCT in all countries in the TERRITORY in accordance with the terms and
conditions of this AGREEMENT by providing written notice to PDL.
             (a)  SB Exercises Right.  In the event SB makes such election,
the following provisions shall apply:
                (i)  In consideration for the licenses under PDL PATENTS and
PDL KNOW-HOW granted to SB under this AGREEMENT, SB shall pay to PDL a non-
refundable, non-creditable payment of [CONFIDENTIAL TREATMENT REQUESTED]within
fifteen (15) days after SB notifies PDL of its election.
              (ii)  The JDC shall promptly meet to decide which party can
most effectively and expeditiously complete the remaining DEVELOPMENT of
PRODUCT, which party shall be named on each regulatory filing in the
TERRITORY, and how to appropriately amend the DEVELOPMENT PLAN to reflect such
decisions; and
                      (iii)  The DEVELOPMENT COSTS and PRE-LAUNCH COMMERCIAL
EXPENSES incurred by either party subsequent to the PHASE II REVIEW POINT
shall be shared by the parties, with SB bearing [CONFIDENTIAL TREATMENT
REQUESTED]and PDL bearing [CONFIDENTIAL TREATMENT REQUESTED].  Accounting and
sharing of these costs shall be as provided in Article 11.
              (b)  SB Does Not Exercise Right.  In the event that SB elects
not to or fails to make the PHASE II REVIEW POINT PAYMENT,  the JDC and
Development Coordinators shall be terminated and the provisions of Paragraph
5.03 shall apply effective as of the date of expiration or termination of SB's
rights.  Thereafter, subject to SB's rights and obligations pursuant to
Article 4, SB shall have no further rights or obligations with respect to the
DEVELOPMENT or commercialization of the PRODUCT.  PDL shall thereafter use
commercially reasonable efforts and diligence, consistent with the effort that
is used by PDL in the development, testing, manufacture, registration,
marketing and sale of pharmaceutical products at a similar stage of
development, having a comparable level of market potential, and being subject
to a comparable regulatory review, to develop and commercialize the PRODUCT in
the TERRITORY and shall provide bi-annual updates to SB on the progress of the
DEVELOPMENT of PRODUCT.  All such bi-annual updates shall be considered the
confidential information of PDL and subject to the provisions of Paragraph
8.03.
        3.05    Information Exchange.  In order to facilitate DEVELOPMENT and
PDL's accomplishment of the responsibilities outlined in Paragraphs 3.01,
3.02, and 3.03, SB shall supply PDL, promptly after the EFFECTIVE DATE, with
the information and access to information set forth in Appendix E as well as
all relevant clinical, preclinical and other relevant data related to PRODUCT
in its possession. [CONFIDENTIAL TREATMENT REQUESTED]
        3.06    Termination of DEVELOPMENT.
                (a)  Termination of PDL DEVELOPMENT.
                        (i)  PDL Funding Difficulties.  In the event that PDL
becomes aware that it will have significant problems providing the funding it
requires in order to carry out its DEVELOPMENT obligations under this
AGREEMENT (including by reason of a decision by PDL not to provide such
funding), it shall promptly notify SB, in writing.  In this event, SB shall
have the option, at its sole discretion, within thirty (30) days of receipt of
such notice from PDL, to solely assume DEVELOPMENT responsibility.  If SB
elects to assume this responsibility, it shall so notify PDL in writing, in
which case the JDC and the Development Coordinators shall terminate and SB
shall be solely responsible for the continued DEVELOPMENT and
commercialization of PRODUCT, all rights to PRODUCT granted to PDL shall
terminate and revert to SB, PDL's license under SB PATENTS and SB KNOW-HOW
shall terminate, and PDL shall transfer all clinical, preclinical and other
relevant information and data related to PRODUCT in its possession to SB
(including the assignment of any filings with REGULATORY AUTHORITIES held by
PDL) at no cost to SB, and SB shall immediately have an exclusive license to
make, have made, import, use, sell and offer to sell PRODUCT in the TERRITORY
under all relevant PDL PATENTS and PDL KNOW-HOW.  In such case,  SB shall use
commercially reasonable efforts and diligence, consistent with the effort that
is used by SB in the development, testing, manufacture, registration,
marketing and sale of pharmaceutical products at a similar stage of
development, having a comparable level of market potential, and being subject
to a comparable regulatory review, to develop and commercialize PRODUCT in the
TERRITORY and any subsequent SB NET SALES of PRODUCT shall be subject to the
royalty obligations as set forth in Paragraph 5.05.  If SB elects not to
assume this responsibility, [CONFIDENTIAL TREATMENT REQUESTED].
                (ii)  PDL Failure to meet Material DEVELOPMENT Obligations.
In the event that either (A) the PHASE II REVIEW POINT is delayed more than
[CONFIDENTIAL TREATMENT REQUESTED] beyond the date set forth in the
DEVELOPMENT PLAN, and such delay is not agreed upon by both parties or is not
due to circumstances which are beyond PDL's reasonable control, or (B) PDL
fails to meet a material DEVELOPMENT obligation set forth in the DEVELOPMENT
PLAN due to action or failure to act in circumstances within PDL's reasonable
control and such failure is not corrected within thirty (30) days after
receipt of written notification from SB of such failure or PDL has not
provided a written plan setting forth its corrective efforts within such time
period, which plan shall be subject to the reasonable approval of SB, then SB
shall have the option, at its sole discretion, to solely assume DEVELOPMENT
responsibility.  If SB elects to assume this responsibility, it shall so
notify PDL, in writing within thirty (30) days of either (1) the projected
date of the PHASE II REVIEW POINT in the case of failure pursuant to Paragraph
3.06(a)(ii)(A)or (2) PDL's failure to correct within the 30-day corrective
period or SB's rejection of a corrective plan submitted by PDL in the case of
failure pursuant to Paragraph 3.06(a)(ii)(B).  If SB does not provide written
notice to PDL within such time limit, then SB shall irrevocably lose its
option to assume DEVELOPMENT responsibility hereunder with respect to that
particular delay or that particular failure to perform a material DEVELOPMENT
obligation.  If SB provides timely written notice to PDL of its election to
assume this responsibility, the JDC and the Development Coordinators shall
terminate and SB shall be solely responsible for the continued DEVELOPMENT and
commercialization of PRODUCT, all rights to PRODUCT granted to PDL shall
terminate and revert to SB, PDL's license under SB PATENTS and SB KNOW-HOW
shall terminate, and PDL shall transfer all clinical, preclinical and other
relevant information and data related to PRODUCT in its possession to SB
(including the assignment of any filings with REGULATORY AUTHORITIES held by
PDL) at no cost to SB, and SB shall immediately have an exclusive license to
make, have made, import, use and sell PRODUCT in the TERRITORY under all
relevant PDL PATENTS and PDL KNOW-HOW.  In such case, SB shall use
commercially reasonable efforts and diligence, consistent with the effort that
is used by SB in the development, testing, manufacture, registration,
marketing and sale of pharmaceutical products at a similar stage of
development, having a comparable level of market potential, and being subject
to a comparable regulatory review, to develop and commercialize PRODUCT in the
TERRITORY and any subsequent SB NET SALES of PRODUCT shall be subject to the
royalty obligations set forth in Paragraph 5.05.  If SB elects not to assume
this responsibility, it shall so notify PDL in writing, in which case this
AGREEMENT shall, at SB's option, [CONFIDENTIAL TREATMENT REQUESTED].
                (b)  Termination of SB DEVELOPMENT.
               (i)  SB Funding Difficulties.  In the event that SB becomes
aware that it will have significant problems providing the funding it requires
in order to carry out its DEVELOPMENT obligations under this AGREEMENT
(including by reason of a decision by SB not to provide such funding), it
shall promptly notify PDL, in writing.  In this event, PDL shall have the
option, at its sole discretion, within thirty (30) days of receipt of such
notice from SB, to solely assume DEVELOPMENT responsibility.  If PDL elects to
assume this responsibility, it shall so notify SB, in writing, in which case
the JDC and the Development Coordinators shall terminate and PDL shall have
sole responsibility for the DEVELOPMENT and commercialization of PRODUCT, all
rights to PRODUCT granted to SB shall terminate and revert to PDL, SB's
license under PDL PATENTS and PDL KNOW-HOW shall terminate, and SB shall
transfer all clinical, preclinical and other relevant information and data
related to PRODUCT in its possession to PDL (including the assignment of any
filings with REGULATORY AUTHORITIES held by SB) at no cost to PDL, and PDL
shall immediately have an exclusive license to make, have made, import, use,
sell and offer to sell PRODUCT in the TERRITORY under all relevant SB PATENTS
and SB KNOW-HOW.  In such case, PDL shall use commercially reasonable efforts
and diligence, consistent with the effort that is used by PDL in the
development, testing, manufacture, registration, marketing and sale of
pharmaceutical products at a similar stage of development, having a comparable
level of market potential, and being subject to a comparable regulatory
review, to develop and commercialize PRODUCT in the TERRITORY and any
subsequent PDL NET SALES of PRODUCT shall be subject to the royalty obligation
set forth in Paragraph 5.04. If PDL elects not to assume this responsibility,
[CONFIDENTIAL TREATMENT REQUESTED].
                (ii)  SB Failure to meet Material DEVELOPMENT Obligations.
In the event that SB fails to meet any material DEVELOPMENT obligation set
forth in the DEVELOPMENT PLAN due to action or failure to act in circumstances
within SB's reasonable control and such failure is not corrected within thirty
(30) days after receipt of written notification from PDL of such failure or,
if not corrected within such 30-day period and SB has not provided a written
plan setting forth its corrective efforts, which plan shall be subject to the
reasonable approval of PDL, then PDL shall have the option, at its sole
discretion, to solely assume DEVELOPMENT responsibility.  If PDL elects to
assume this responsibility, it shall so notify SB in writing within thirty
(30) days after SB's failure to correct within the 30-day corrective period or
PDL's rejection of a corrective plan submitted by SB, as the case may be.  If
PDL does not provide written notice to SB within such time limit, then PDL
shall irrevocably lose its option to assume DEVELOPMENT responsibility
hereunder with respect to that particular failure to perform a material
DEVELOPMENT obligation.  If PDL provides timely written notice to SB of its
election to assume this responsibility, the JDC and the Development
Coordinators shall terminate and PDL shall be solely responsible for the
continued DEVELOPMENT and commercialization of PRODUCT, all rights to PRODUCT
granted to SB shall terminate and revert to PDL, SB's license under PDL
PATENTS and PDL KNOW-HOW shall terminate, and SB shall transfer all clinical,
preclinical and other relevant information and data related to PRODUCT in its
possession to PDL (including the assignment of any filings with REGULATORY
AUTHORITIES held by SB) at no cost to PDL, and PDL shall immediately have an
exclusive license to make, have made, use and sell PRODUCT in the TERRITORY
under all relevant SB PATENTS and SB KNOW-HOW.  In such case, PDL shall use
commercially reasonable efforts and diligence, consistent with the effort that
is used by PDL in the development, testing, manufacture, registration,
marketing and sale of pharmaceutical products at a similar stage of
development, having a comparable level of market potential, and being subject
to a comparable regulatory review, to develop and commercialize PRODUCT in the
TERRITORY and any subsequent PDL NET SALES of PRODUCT shall be subject to the
royalty obligation set forth in Paragraph 5.04.  If PDL elects not to assume
this responsibility, it shall so notify SB in writing, in which case this
AGREEMENT shall, at PDL's option, either [CONFIDENTIAL TREATMENT REQUESTED].


4.      MANUFACTURE AND SUPPLY
     4.01    Pre-PHASE II REVIEW POINT.  Prior to the PHASE II REVIEW POINT, SB
will use commercially reasonable efforts to manufacture all clinical and
preclinical supplies of PRODUCT required for DEVELOPMENT in accordance with
the DEVELOPMENT PLAN and conduct certain additional activities and provide
materials, data and information as set forth in Appendix E.  PDL shall have
certain audit, data and information rights with respect to the efforts of SB
hereunder as provided in Appendix E.  PDL will pay to SB one hundred percent
(100%) of the COST OF GOODS incurred by SB for such clinical supplies from the
EFFECTIVE DATE through to the PHASE II REVIEW POINT and the costs incurred by
SB in performing the activities conducted in accordance with Appendix E.  SB
will provide reasonable detail of the activities performed and services
provided together with an invoice on a quarterly basis and PDL shall pay SB
for all such costs within thirty (30) days after receiving each of SB's
invoices therefor.  In any event, PDL's responsibility for the total COST OF
GOODS through the PHASE II REVIEW POINT plus the costs incurred by SB under
Appendix E shall not exceed [CONFIDENTIAL TREATMENT REQUESTED]unless (a) the
DEVELOPMENT PLAN is amended to increase the amount of PRODUCT required or
increase the activities required under Appendix E in order to complete the
DEVELOPMENT PLAN through to the PHASE II REVIEW POINT or (b) as otherwise
agreed by the JDC.
4.02    Post-PHASE II REVIEW POINT.  If SB has made the PHASE II REVIEW
POINT PAYMENT all COST OF GOODS for further DEVELOPMENT and commercial
manufacture, if applicable, incurred by either party after the date of such
payment will be shared by the parties, with [CONFIDENTIAL TREATMENT
REQUESTED].  If SB elects not to make the PHASE II REVIEW POINT PAYMENT, all
COSTS OF GOODS incurred by PDL after the PHASE II REVIEW POINT, whether
manufactured by SB, PDL or a THIRD PARTY, shall be at PDL's sole
responsibility and expense.  Reconciliation of amounts incurred hereunder
shall be as provided in Paragraph 11.02.
        4.03    Commercial Manufacturing Rights.
     (a)     SB makes PHASE II REVIEW POINT PAYMENT.  In the event SB makes the
PHASE II REVIEW POINT PAYMENT, SB shall have the first right to be the primary
and secondary manufacturer of commercial supplies of PRODUCT (including, for
the avoidance of doubt, supplies of PRODUCT for Phase III clinical trials),
[CONFIDENTIAL TREATMENT REQUESTED].  The term "primary manufacture" shall mean
the preparation of bulk biological substance.  The term "secondary
manufacture" shall mean the preparation of lyophile vials, labeling, finishing
and packaging.  If SB is not selected by the parties as the primary and
secondary manufacturer of PRODUCT, PDL shall have the second right to become
the primary and secondary manufacturer, [CONFIDENTIAL TREATMENT REQUESTED].
        (b)     SB Does Not Make PHASE II REVIEW POINT PAYMENT.  In the event SB
does not make the PHASE II REVIEW POINT PAYMENT, SB shall have the first right
to be the primary and secondary manufacturer of commercial supplies of PRODUCT
(including, for the avoidance of doubt, supplies of PRODUCT for Phase III
clinical trials), [CONFIDENTIAL TREATMENT REQUESTED].  The terms "primary
manufacture" and "secondary manufacture" shall have the meanings set forth in
Paragraph 4.03(a) above.  If SB is not selected by the PDL as the primary and
secondary manufacturer of PRODUCT, PDL shall select the manufacturer of
PRODUCT, which may be PDL itself.
        (c)     Transitional Manufacturing Services. [CONFIDENTIAL TREATMENT
REQUESTED]
        (d)     SB Involvement in CMC and DMF Questions If SB Does Not
Manufacture. [CONFIDENTIAL TREATMENT REQUESTED]
5.      PAYMENTS AND ROYALTIES
    5.01    Payments.  In consideration for the licenses under PDL PATENTS and
PDL KNOW-HOW granted to SB under this AGREEMENT, SB will make the following
payments to PDL within thirty (30) days of the first occurrence of the
following milestones:

                                (a)   [CONFIDENTIAL TREATMENT REQUESTED]

                                (b)     [CONFIDENTIAL TREATMENT REQUESTED],

provided that:
            (i) each such payment shall be made only one time regardless of
how many times any PRODUCT achieves each of the indicated milestones, and no
payment shall be owed for a milestone which is not reached;
           (ii) each such payment by SB shall be non-refundable and non-
creditable;
          (iii) in the event that PDL's rights to PRODUCT are terminated
under Paragraph 3.06 or Article 12, no payments shall be due under this
Paragraph 5.01 for milestones achieved after the notice date of termination;
and
          (iv) in the event that PDL has an overdue negative balance with
respect to any undisputed amount invoiced by SB under Paragraph 4.01, SB shall
have the right to offset any payments due under this Paragraph 5.01 against
the total of such amounts outstanding as part of the quarterly reconciliation
for the period in which the milestone is payable.
As used in this Paragraph 5.01, the term [CONFIDENTIAL TREATMENT REQUESTED]
means [CONFIDENTIAL TREATMENT REQUESTED];
[CONFIDENTIAL TREATMENT REQUESTED].
        5.02    SB Makes PHASE II REVIEW POINT PAYMENT: Profit-Sharing
Scenario.  In the event SB makes the PHASE II REVIEW POINT PAYMENT, and
neither party's rights under this AGREEMENT have been terminated, the
following provisions shall apply:
                [CONFIDENTIAL TREATMENT REQUESTED]
        5.03    SB Does Not Make PHASE II REVIEW POINT PAYMENT: Royalties.  In
the event SB does not make the PHASE II REVIEW POINT PAYMENT, in consideration
of the licenses granted by SB to PDL hereunder, as the sole compensation to
SB, PDL shall pay SB a royalty of:
                        [CONFIDENTIAL TREATMENT REQUESTED]
        5.04    SB Rights Terminated.
                In the event SB's rights to PRODUCT are terminated in accordance
with Paragraph 3.06 or Article 12 of this AGREEMENT, in consideration for the
license rights granted by SB to PDL hereunder, as the sole compensation to SB,
PDL shall pay to SB royalties as follows:
               (i) in those countries in the TERRITORY in which PDL NET SALES
are covered by a VALID CLAIM of an SB PATENT:
                                [CONFIDENTIAL TREATMENT REQUESTED]
        5.05    PDL Rights Terminated.  In the event of termination of PDL's
rights to PRODUCT as provided under Paragraph 3.06 or Article 12, SB will
provide, as the sole compensation to PDL, the following royalties to PDL, such
royalties to be based upon the phase of development that PRODUCT reached at
time of termination of PDL's rights:

        5.06            THIRD PARTY Payments.
                (a)  Pre-PHASE II REVIEW POINT.  Subject to Paragraph 5.06(b),
during the term of this AGREEMENT through the PHASE II REVIEW POINT, if
neither party's rights to PRODUCT have terminated hereunder, the parties shall
mutually determine in good faith if it is necessary to (i) seek a license from
a THIRD PARTY and if so, whether one or both parties should approach such
THIRD PARTY with respect to obtaining such a license, or (ii) otherwise
exercise an existing THIRD PARTY license between SB or PDL, on the one hand,
and a THIRD PARTY, on the other hand, as of the EFFECTIVE DATE, and, in each
case, make royalty or other fee payments to any THIRD PARTY in order to avoid
infringement with respect to the making, use, import or sale of PRODUCT
anywhere in the TERRITORY; provided that if the parties cannot agree on the
need for any such license or the commercial provisions relating to such
license or the need to exercise an existing THIRD PARTY license, the parties
shall endeavor to find a mutually acceptable resolution of this matter.  If
the parties cannot determine such a mutually acceptable resolution, the
parties shall submit the matter to a mutually acceptable THIRD PARTY expert
for a final and binding resolution, the cost of such expert to be equally
shared by the parties.  Prior to the PHASE II REVIEW POINT, all payments made
to THIRD PARTIES [CONFIDENTIAL TREATMENT REQUESTED]in accordance with
Paragraphs 5.06(a) and 5.06(b) throughout the TERRITORY will be the
responsibility of PDL; provided, however, that SB shall reimburse or credit
[CONFIDENTIAL TREATMENT REQUESTED] of all such payments when and if SB makes
the PHASE II REVIEW POINT PAYMENT.
                (b) [CONFIDENTIAL TREATMENT REQUESTED]
        (c) Post-PHASE II REVIEW POINT.  If SB makes the PHASE II REVIEW POINT
PAYMENT, then all of the payments to THIRD PARTIES outlined in Paragraphs
5.06(a) and 5.06(b) throughout the TERRITORY subsequent to the PHASE II REVIEW
POINT will be considered a THIRD PARTY ROYALTY.  If SB does not make the PHASE
II REVIEW POINT PAYMENT, then all of the payments to THIRD PARTIES outlined in
Paragraphs 5.06(a) and 5.06(b) throughout the TERRITORY subsequent to the
PHASE II REVIEW POINT will be borne solely by PDL.

6.      PDL CO-PROMOTION OPTION
If, at the time of filing of an NDA in the U.S.A. by PDL or SB, SB has made
the PHASE II REVIEW POINT PAYMENT and PDL is current in its payment of its
share of DEVELOPMENT COSTS in accordance with this AGREEMENT, and the rights
of both parties with respect to PRODUCT remain in effect, PDL shall have the
option to co-promote PRODUCT with SB (using the same Trademark) in the U.S.A.
in accordance with the terms and conditions of this AGREEMENT.  SB shall
provide to PDL a copy of its sales and marketing plan for PRODUCT as soon as
practicable following the completion of the last pivotal Phase III clinical
study set forth in the DEVELOPMENT PLAN.  PDL shall have sixty (60) days from
the later of (a) the filing of the first NDA for PRODUCT in the U.S.A. or (b)
delivery to PDL of a written sales and marketing plan for PRODUCT in the
U.S.A. prepared by SB in accordance with SB's then current internal sales and
marketing plans for other similar products in the U.S.A., to notify SB in
writing of its exercise of the co-promotion option under this Article 6.
Following receipt of such written notification from PDL, SB shall grant to PDL
a license to co-promote PRODUCT in the U.S.A. in accordance with both the
terms and conditions contained in this AGREEMENT as well as the terms and
conditions set forth in a separate written co-promotion agreement to be
entered into in accordance with Article 7.  If PDL does not send any written
notification to SB within the specified time limit set forth in this Article
6, then PDL shall irrevocably lose its rights to co-promote PRODUCT with SB in
the U.S.A.

7.      MARKETING AND CO-PROMOTION
        7.01    Joint Marketing Committee.
            (a)  Appointment. Within thirty (30) days after the filing of the
NDA for a PRODUCT in the [CONFIDENTIAL TREATMENT REQUESTED], the parties will
establish a Joint Marketing Committee ("JMC") composed of three (3)
representatives from SB and two (2) representatives from PDL, each with
appropriate background, experience and qualifications to productively discuss
the commercialization of PRODUCT in the TERRITORY.  Each party shall appoint
its own representatives and may change its representatives on the JMC at any
time by written notice to the other party.
                (b)  Purpose and Responsibilities.
                   (i)  PDL Does Not Co-Promote. For any year in which PDL is
not co-promoting PRODUCT in accordance with this Article 7, the primary
purpose of the JMC shall be to provide a forum in which the parties can share
and discuss information concerning the commercialization of PRODUCT in the
TERRITORY, including the strategic direction of the commercialization.  During
these periods, the JMC shall meet on a semi-annual basis.  The parties shall
discuss the annual marketing plan and budget for the TERRITORY, as prepared by
SB in accordance with Paragraph 7.02, and SB's performance against such plan
and budget.  During this period, SB shall have final decision making
responsibility with respect to the commercialization of PRODUCT in the
TERRITORY; provided that SB shall seriously consider, in good faith, all
reasonable suggestions of PDL.
                      (ii)  PDL Co-Promotes.  For any year in which PDL is co-
promoting PRODUCT in the U.S.A. in accordance with this Article 7, in addition
to the purposes and responsibilities set forth in Paragraph 7.01(b)(i) above,
the JMC shall also oversee, monitor and coordinate the activities of the
parties in marketing, selling and distributing PRODUCT in the U.S.A.;
provided, however, it is understood and agreed that, except as set forth in
Paragraph 7.03 below, SB shall have final decision-making responsibility with
respect to the commercialization of PRODUCT in the U.S.A and the rest of the
TERRITORY.  During these periods, the JMC shall meet on a quarterly basis.
                (c)  Meetings, Reporting and Decisions.  The JMC will meet at
least as often as set forth in Paragraph 7.01(b)(i) and (b)(ii) above at
mutually agreed upon times and locations using mutually agreed upon meeting
formats, including videoconferencing and teleconferencing, unless otherwise
mutually agreed by the parties.  It is envisioned that meetings of the JMC
will be held at facilities alternately selected by PDL and by SB.  Each party
shall promptly report to the JMC on all material issues relating to
commercialization of PRODUCT in the TERRITORY.  Each party shall cause its
representatives to attend the meetings of the JMC; provided, however, that
meetings of the JMC shall be effective for decision-making if at least one (1)
representative of each party is present or participating.  If a representative
of a party is unable to attend a meeting, such party may designate an
alternate to attend such meeting in place of the missing representative.  In
addition, each party may, at its discretion, invite employees, consultants or
advisors whose presence is considered of importance or value to the
commercialization of PRODUCT in the TERRITORY to attend and participate in the
meetings of the JMC, provided that any such consultant or advisor shall have
undertaken confidentiality obligations to PDL or SB, as the case may be, at
least comparable to the confidentiality provisions undertaken by the parties
under this AGREEMENT, with respect to the subject matter of any such meeting.
Minutes shall be kept of all JMC meetings..  At the first JMC meeting,
additional administrative details, including the review periods for minutes
from meetings, shall be determined.
         (d)  Expenses - Each party shall bear its own expenses, including
travel, accommodations, and living expense, incurred in connection with their
respective efforts described in this Paragraph 7.01 and such costs and
expenses shall not be included in PROMOTION EXPENSES.
                7.02    Annual Sales and Marketing Plan and Budget.  SB shall
prepare and deliver to PDL an annual sales and marketing plan for PRODUCT for
the TERRITORY in accordance with SB's standard internal procedures.  Such plan
and budget shall be reviewed and approved by SB management.  In addition, SB
shall provide PDL with a draft of SB's annual sales and marketing plan for
PRODUCT for the TERRITORY at least thirty (30) days prior to its approval by
SB management in order to give PDL the opportunity to review and comment.  PDL
shall have twenty (20) calendar days after receipt of the draft plan to
provide comments and/or suggestions to SB.  SB shall consider in good faith
all comments and suggestions received from PDL, but SB shall have the final
decision making responsibility with respect to such plan. The plan will detail
the proposed sales and marketing efforts, including, without limitation, the
AGGREGATE PROJECTED DETAILS in the U.S.A., to be undertaken with respect to
PRODUCT in the year, as well as marketing/promotional budget, any local Phase
IV medical support studies, selling investment required for PRODUCT, in each
country in the TERRITORY during such year, and estimated total PROMOTION
EXPENSES related thereto.  For the avoidance of doubt, it is understood and
agreed that, for so long as SB retains its rights to market and sell PRODUCT
under this AGREEMENT, SB shall be responsible for the booking of sales
throughout the TERRITORY.
        7.03    PDL Co-promotes.  In the event PDL elects the co-promotion
option in accordance with Article 6 above, the parties shall use reasonable
good faith efforts to negotiate and enter into a separate co-promotion
agreement (the "Co-Promotion Agreement") within ninety (90) days of PDL's
election to co-promote in accordance with Article 6.  The parties agree that
the following principles, as well as the relevant provisions of Paragraphs
7.01 and 7.02, shall, unless otherwise mutually agreed by the parties, apply
to any co-promotion activities and shall be included in the Co-Promotion
Agreement:                          (a) Target Audiences.  SB shall
determine the target audiences for PRODUCT in the U.S.A.
                (b) Projection of AGGREGATE PROJECTED DETAILS.  As part of SB's
annual sales and marketing planning process described in Paragraph 7.02, SB
shall reasonably determine the aggregate number of DETAILS to be performed for
PRODUCT in the U.S.A. ("AGGREGATE PROJECTED DETAILS") to all target audiences.
PDL shall have the opportunity to validate the reasonableness of the AGGREGATE
PROJECTED DETAILS determined by SB against the practices engaged by other
large pharmaceutical companies based upon widely available sales/market
research data.
                (c)  PDL Proposal.  On an annual basis, within sixty (60) days
after receipt by PDL of SB's annual sales and marketing plan for PRODUCT for
the year, PDL shall submit to SB a proposal (the "PDL Proposal") specifying
(i) the sales and marketing activities proposed to be performed by PDL as part
of its co-promotion activities in the U.S.A., which activities may include
without limitation, DETAILING PRODUCT, or, in lieu thereof, engaging in other
marketing, sales and distribution efforts such as conducting symposia,
educational sessions and other activities to promote PRODUCT, and conducting
post-regulatory approval clinical trials for PRODUCT, provided however, that
any non-DETAIL sales and marketing activities proposed by PDL must be
supplemental to the activities set forth in the Annual Sales and Marketing
Plan provided by SB, (ii) PDL's estimated PROMOTION EXPENSES related to such
activities and (iii) PDL's proposed profit split adjustment for such
activities; provided, however, that in no event shall the profit split
adjustment for the U.S.A. be more than [CONFIDENTIAL TREATMENT REQUESTED] of
PRE-TAX PROFITS derived from the U.S.A.
                (d)     SB Determination.  SB shall review and consider PDL's
proposal in good faith and determine, within thirty (30) days of receipt of
the PDL Proposal, the co-promotion activities to be performed by PDL, the
allowable PROMOTION EXPENSES related thereto, and the profit split adjustment
to be paid to PDL for such activities (the "SB Determination").  In making
such a determination, the following shall apply:
         (i)  DETAILS.  SB shall accept any PDL Proposal that specifies
that PDL will perform [CONFIDENTIAL TREATMENT REQUESTED] of the AGGREGATE
PROJECTED DETAILS in the U.S.A.  The profit-split adjustment for PRE-TAX
PROFITS derived from the U.S.A. for the performance of DETAILS is set forth on
Exhibit B.
                        (ii) [CONFIDENTIAL TREATMENT REQUESTED]
         (e)  PDL Guaranteed DETAILS.  To the extent PDL agrees to provide
DETAILS during a given year, PDL shall be required to perform a guaranteed
number of DETAILS ("PDL'S Guaranteed DETAILS"); such number shall be
determined by SB in accordance with Paragraph 7.03(b) above. During any co-
promotion year, if PDL shall fail to perform at least [CONFIDENTIAL TREATMENT
REQUESTED] of PDL's Guaranteed DETAILS and SB has performed its share of the
AGGREGATE PROJECTED DETAILS, PDL's right to co-promote PRODUCT under this
AGREEMENT shall irrevocably be terminated.
          (f)  No Sublicense Rights. In no event, shall PDL be permitted to
sublicense its right to co-promote PRODUCT with SB in the U.S.A. to any THIRD
PARTY without SB's prior written consent.
         (g)  In any event, any co-promotion arrangement shall provide for
(a) the marketing of PRODUCT under one brand name selected by SB, and (b) the
booking of all sales by SB.

8.      EXCHANGE OF INFORMATION AND CONFIDENTIALITY
        8.01    Transfer of Information.  Promptly after the EFFECTIVE DATE and
during the term of the AGREEMENT, SB shall disclose and supply to PDL all SB
KNOW-HOW.  Promptly after receipt of the PHASE II REVIEW POINT PAYMENT and
thereafter through the term of the AGREEMENT, PDL shall disclose and supply to
SB all PDL KNOW-HOW.  Notwithstanding the foregoing, the obligation of a party
to provide any further SB KNOW-HOW or PDL KNOW-HOW which may become known to
them during the term of the AGREEMENT, as the case may be, shall continue so
long as the other party has a continuing right to PRODUCT beyond the right to
receive royalties under this AGREEMENT.
     8.02    Adverse Experience Reporting.  The responsibilities of the parties
for the reporting of adverse experiences related to PRODUCT to regulatory
authorities throughout the TERRITORY shall be performed in accordance with the
Pharmacovigilance Agreement attached to this AGREEMENT as Appendix C.
        8.03    Confidentiality.
                (a)     The Confidentiality Agreement between the
parties dated December 22, 1998, as amended ("Confidentiality Agreement"),
shall terminate as of the EFFECTIVE DATE.
                (b)     During the term of this AGREEMENT and for
five (5) years thereafter, irrespective of any termination earlier than the
expiration of the term of this AGREEMENT, PDL and SB shall not use or reveal
or disclose to THIRD PARTIES any confidential information either:
(i) disclosed under the Confidentiality Agreement, or
(ii) received from the other party or otherwise developed by either
party in the performance of activities in furtherance of this
AGREEMENT
without first obtaining the written consent of the disclosing party, except as
may be otherwise provided herein, or as may be required for purposes of
investigating, developing, manufacturing or marketing PRODUCT or for securing
essential or desirable authorizations, privileges or rights from governmental
agencies, or as required to be disclosed to a governmental agency or as
necessary to file or prosecute patent applications concerning PRODUCT or to
carry out any litigation concerning PRODUCT.  This confidentiality obligation
shall not apply to such information which is or becomes a matter of public
knowledge, or is already in the possession of the receiving party, or is
disclosed to the receiving party by a THIRD PARTY having the right to do so,
or is subsequently and independently developed by employees of the receiving
party or AFFILIATES thereof who had no knowledge of the confidential
information disclosed.  The parties shall take reasonable measures to assure
that no unauthorized use or disclosure is made by others to whom access to
such information is granted.
                (c)     Nothing herein shall be construed as
preventing either party from disclosing any information received from the
other party to:
             (i)  an AFFILIATE, sublicensee or distributor of the receiving
party, provided such AFFILIATE, sublicensee or distributor has undertaken a
similar obligation of confidentiality with respect to the confidential
information; or
                   (ii)  the FDA in connection with the approval to conduct
clinical studies, manufacture, market or sell PRODUCT.
                (d)     All confidential information disclosed by one
party to the other shall remain the intellectual property of the disclosing
party.  In the event that a court or other legal or administrative tribunal,
directly or through an appointed master, trustee or receiver, assumes partial
or complete control over the assets of a party to this AGREEMENT based on the
insolvency or bankruptcy of such party, the bankrupt or insolvent party shall
promptly notify the court or other tribunal (i) that confidential information
received from the other party under this AGREEMENT remains the property of the
other party and (ii) of the confidentiality obligations under this AGREEMENT.
In addition, the bankrupt or insolvent party shall, to the extent permitted by
law, take all steps necessary or desirable to maintain the confidentiality of
the other party's confidential information and to ensure that the court, other
tribunal or appointee maintains such information in confidence in accordance
with the terms of this AGREEMENT.
      8.04    Public Announcements.  It is contemplated that one or both of the
parties will issue a press release announcing this AGREEMENT, the Rights
Agreement and the IL-5 License Agreement, the form and content of which shall
be mutually agreed upon.  No other public announcement or other disclosure to
THIRD PARTIES concerning the terms, financial or otherwise, of this AGREEMENT
shall be made, either directly or indirectly, by any party to this AGREEMENT,
except as may be legally required or as may be required for recording
purposes, without first obtaining the approval of the other party, which
approval shall not be unreasonably withheld, and agreement upon the nature and
text of such announcement or disclosure.  The party desiring to make any such
public announcement or other disclosure (whether such disclosure is legally
required or otherwise) shall inform the other party of the proposed
announcement or disclosure in reasonably sufficient time prior to public
release, and shall provide the other party with a written copy thereof, in
order to allow such other party to comment upon such announcement or
disclosure.  The party reviewing the release shall use good faith efforts to
promptly review and provide comments upon the proposed public release, which
comments shall be provided as soon as practicable but in any event within
seven (7) days of delivery of the initial draft of the proposed release.  Each
party agrees that it shall cooperate fully with the other with respect to all
disclosures regarding this AGREEMENT to the Securities Exchange Commission,
the U.K. Stock Exchange and any other governmental or regulatory agencies,
including requests for confidential treatment of proprietary information of
either party included in any such disclosure.
     8.05    Publications.  Neither SB nor PDL shall submit for written or oral
publication any manuscript, abstract or the like which includes data or other
information generated under this AGREEMENT and/or provided by the other party
under this AGREEMENT without first obtaining the prior written consent of the
other party in accordance with the procedure set forth in this Paragraph 8.05,
which consent shall not be unreasonably withheld.  Any proposed publication
which includes data or other information generated under this AGREEMENT and/or
provided by the other party under this AGREEMENT shall be subject to the prior
review and approval of the other party.  The party proposing publication
("Publishing Party") shall provide a draft or summary of the proposed
publication for review by the other party ("Reviewing Party") not less than
thirty (30) calendar days prior to the proposed date of submission for
publication.  The Reviewing Party shall review and provide comments upon the
proposed publication, which comments shall be provided as soon as practicable
but in any event within twenty (20) calendar days of delivery of the initial
draft of the proposed publication.  The Reviewing Party shall have the right
to require that any confidential information of the Reviewing Party be removed
from the proposed publication or presentation, or that any information to be
used as the basis of a proposed patent application be removed from the
proposed publication or presentation until the proposed patent application is
prepared and filed by either the Reviewing or Publishing Party.  In any event,
the contribution of each party (as determined in accordance with then current
practices for scientific or clinical publications) shall be noted in all
publications or presentations by acknowledgment or co-authorship, whichever is
appropriate.
     8.06    Statutory and Regulatory Requirements.  Nothing in this AGREEMENT
shall be construed as preventing or in any way inhibiting either party from
complying with statutory and regulatory requirements governing the
development, manufacture, use, importation, marketing, sale or other
distribution of PRODUCT in any manner which it reasonably deems appropriate,
including, for example, by disclosing to regulatory authorities confidential
or other information received from the other party or THIRD PARTIES.

9.      PATENT PROSECUTION AND LITIGATION
        9.01    Ownership of Intellectual Property.  Each party shall have
and retain sole and exclusive title to all inventions, discoveries, and know-
how which are made (as determined in accordance with the patent laws of the
U.S.A.) solely by its employees or agents in the course of or as a result of
activities performed in furtherance of the AGREEMENT.  Each party shall own a
fifty percent (50%) undivided interest in all joint inventions, discoveries,
and know-how made (as determined in accordance with the patent laws of the
U.S.A.) by employees or agents of both parties as a result of activities
performed in furtherance of the AGREEMENT.  Subject to the terms of this
AGREEMENT, each party shall own, and may fully exploit, all of its rights and
interests in such joint inventions, discoveries, and know-how, without any
encumbrances to each other.  Subject to the terms of this AGREEMENT, each
party shall promptly notify the other upon the determination to file, and in
any event prior to filing, a patent application with respect to any invention
or discovery referred to in this Paragraph 9.01, except that, notwithstanding
the above, neither party shall have the obligation to disclose to the other
party any invention made by its employees and agents related to the
manufacture (e.g., cell culture, fermentation) or purification of monoclonal
antibodies.
        9.02    Prosecution and Maintenance.
        (a) SB PATENTS.  SB shall have the first right, using in-house or
outside legal counsel selected at SB's sole discretion, to prepare, file,
prosecute, maintain and extend, at its expense, all SB PATENTS, as well as any
other patent applications which arise under Paragraph 9.01 which are owned in
whole or in part by SB, provided that PDL shall have the right to assume
responsibility, at PDL's expense, for preparing, filing, prosecuting,
maintaining and extending any such SB PATENT, or any part thereof, to which SB
intends to abandon or otherwise cause or allow to be forfeited to the extent
such is related to PRODUCT.
        (b) PDL PATENTS.  PDL shall have the first right, using in-house or
outside legal counsel selected at PDL's sole discretion, to prepare, file,
prosecute, maintain and extend, at its expense, all PDL PATENTS, as well as
any other patent applications which are owned solely by PDL and arise under
Paragraph 9.01, provided that SB shall have the right to assume
responsibility, at SB's expense, for preparing, filing, prosecuting,
maintaining and extending any such patent or patent application, or any part
thereof, which PDL intends to abandon or otherwise cause or allow to be
forfeited to the extent such is related to PRODUCT.
        9.03    Reasonable Assistance.  Notwithstanding the provisions of
Paragraph 9.02, each party shall, at its own expense, provide reasonable
assistance to the other party to facilitate filing, prosecution and issuance
of all patent applications covering inventions related to PRODUCT which are
referred to in Paragraph 9.01, or which are necessary for fulfillment of the
obligations set out in this AGREEMENT, and shall execute all documents deemed
necessary or desirable therefor.
        9.04    Infringement of PDL PATENTs.
         (a)  Notice.  In the event that PDL or SB becomes aware of actual or
threatened infringement of a PDL PATENT anywhere in the TERRITORY, wherein
such infringement relates to an antibody that binds to the IL-4 antigen, that
party shall promptly notify the other party in writing.  The notice shall
describe in reasonable detail the facts and circumstances forming the basis
for the determination that there is actual or threatened infringement.  In the
event the notice specifies threatened, but not actual infringement, the
parties agree to discuss in good faith the proper course of action; provided,
that PDL shall have the final decision making authority with respect to such
course of action.  [CONFIDENTIAL TREATMENT REQUESTED]   (b)  PDL First
Right to Litigate For Actual Infringement.  PDL shall have the first right but
not the obligation to bring an infringement action or file any other
appropriate action or claim directly related to actual infringement of the PDL
PATENTS related to an antibody that binds to the IL-4 antigen against any
THIRD PARTY (an "Action") and to use SB's name in connection therewith and to
include SB's name as a party thereto.  If PDL elects to bring an Action in
accordance with this Paragraph 9.04(b), PDL shall have sole control over any
Action, including the right to select counsel for such Action; provided
however that PDL shall solicit, and seriously consider in good faith SB's
input with respect to all material aspects of such Action, including without
limitation, the development of the litigation strategy and the execution
thereof. In furtherance and not in limitation of the foregoing, PDL shall keep
SB promptly and fully informed of the status of any such Action, and SB shall
have the right to review and comment upon PDL's activities related thereto. SB
shall consult with PDL concerning such Action at no cost to PDL.  To the
extent PDL elects its first right to bring an Action in any country of the
TERRITORY, PDL shall use commercially reasonable efforts, in each such
country, to diligently pursue such Action and obtain results that are
consistent with the respective objectives of the parties under this Agreement.
All cost and expenses related to any such Action shall be paid by PDL;
provided however that, in the event SB makes the PHASE II REVIEW POINT
PAYMENT, all such OUT OF POCKET COSTS, whether incurred prior to or after the
PHASE II REVIEW POINT, shall be considered PATENT COSTS for the determination
of PRE-LAUNCH COMMERCIAL EXPENSES and PRE-TAX PROFITS.
        (c)  SB's Right to Litigate for Actual Infringement.  At any time prior
to the PHASE II REVIEW POINT or at any time after SB makes the PHASE II REVIEW
POINT PAYMENT, SB shall have the following rights to file an Action with
respect to actual infringement of PDL PATENTs related to an antibody that
binds to the IL-4 Antigen.  [CONFIDENTIAL TREATMENT REQUESTED] SB shall have
sole control over any Action, including the right to select counsel for such
Action; provided however that SB shall solicit, and seriously consider in good
faith PDL's input with respect to all material aspects of such Action,
including without limitation, the development of the litigation strategy and
the execution thereof.  In furtherance but not in limitation of the foregoing,
SB shall keep PDL promptly and fully informed of the status of any such
Action, and PDL shall have the right to review and comment upon SB's
activities related thereto.  All cost and expenses related to any such Action
shall be paid by SB; provided however that, in the event SB makes the PHASE II
REVIEW POINT PAYMENT, all such OUT OF POCKET COSTS, whether incurred prior to
or after the PHASE II REVIEW POINT PAYMENT, shall be considered PATENT COSTS
for the determination of PRE-LAUNCH COMMERCIAL EXPENSES and PRE-TAX PROFITS.
PDL and its counsel shall consult with SB concerning such Action at no cost to
SB.  To the extent SB elects to bring an Action in accordance with this
Paragraph 9.04(c), SB shall use commercially reasonable efforts to diligently
pursue such Action and to obtain results that are consistent with the
respective objectives of the parties under this Agreement.  In the event SB
commences an Action prior to the PHASE II REVIEW POINT and later elects not to
make the PHASE II REVIEW POINT PAYMENT, the parties shall meet and negotiate
in good faith to determine an equitable and fair way to proceed or discontinue
with any such Action.
                (d)     Litigation and Settlement Costs.   In the event SB does
not make the PHASE II REVIEW POINT PAYMENT and PDL has paid for all costs and
expenses related to an  Action, PDL shall retain the entire recovery made with
respect to any such Action.  In the event SB makes the PHASE II REVIEW POINT
PAYMENT, any recovery made by either party with respect to any such Action
shall be considered a positive PATENT COST for the calculation of PRE-LAUNCH
COMMERCIAL EXPENSES and PRE-TAX PROFITS.
                (e)     Cooperation and Settlement.  The parties shall keep one
another informed of the status of and of their respective activities regarding
any Action, including without limitation any discussion concerning the
settlement thereof.  No settlement or consent judgment or other voluntary
final disposition of any suit defended or action brought by one party pursuant
to this Paragraph 9.04 may be entered into without the consent of the non-
settling party if such settlement would require the non-settling party to be
subject to an injunction, to make a monetary payment or would adversely affect
the non-settling party's rights under this AGREEMENT, including the PDL's
rights in PDL PATENTS and the licenses granted to SB hereunder.
        9.05    Infringement of SB PATENTs.
            (a)  Notice.  In the event that PDL or SB becomes aware of actual
or threatened infringement of a SB PATENT anywhere in the TERRITORY, wherein
such infringement relates to an antibody that binds to the IL-4 antigen, that
party shall promptly notify the other party in writing.  The notice shall
describe in reasonable detail the facts and circumstances forming the basis
for the determination that there is actual or threatened infringement.  In the
event the notice specifies threatened, but not actual infringement, the
parties agree to discuss in good faith the proper course of action; provided
that, unless SB has elected not to make the PHASE II REVIEW POINT PAYMENT, SB
shall have the final decision making authority with respect to such course of
action.  [CONFIDENTIAL TREATMENT REQUESTED]             (b)
SB's First Right to Litigate For Actual Infringement. SB shall have the first
right but not the obligation to bring an infringement action or file any other
appropriate action or claim directly related to actual infringement of the SB
PATENTS related to an antibody that binds to the IL-4 antigen against any
THIRD PARTY (an "Action") and to use PDL's name in connection therewith and to
include PDL's name as a party thereto.  If SB elects to bring an Action in
accordance with this Paragraph 9.05(b), SB shall have sole control over the
Action, including without limitation, the right to select counsel for such
Action; provided however that SB shall solicit, and seriously consider in good
faith, PDL's input with respect to all material aspects of such Action,
including without limitation the development of the litigation strategy and
the execution thereof.  In furtherance and not in limitation of the foregoing,
SB shall keep PDL promptly and fully informed of the status of any such
Action, and PDL shall have the right to review and comment upon SB's
activities related thereto. PDL shall consult with SB concerning such Action
at no cost to SB.  To the extent SB elects its first right to bring an Action
in any country of the TERRITORY, SB shall use commercially reasonable efforts,
in each such country, to diligently pursue such Action and to obtain results
that are consistent with the respective objectives of the parties under this
AGREEMENT.  All costs and expenses related to any such Action shall be paid by
SB; provided however that, in the event SB makes the PHASE II REVIEW POINT
PAYMENT, all such OUT OF POCKET COSTS, whether incurred prior to or after the
PHASE II REVIEW POINT PAYMENT, shall be considered PATENT COSTS for the
calculation of PRE-LAUNCH COMMERCIAL EXPENSES and PRE-TAX PROFITS.
            (c)  PDL's Right to Litigate for Actual Infringement.  If SB does
not commence a particular Action [CONFIDENTIAL TREATMENT REQUESTED] PDL shall
have sole control over any Action, including the right to select counsel for
such Action; provided however that PDL shall solicit, and seriously consider
in good faith SB's input with respect to all material aspects of such Action,
including without limitation, the development of the litigation strategy and
the execution thereof.  In furtherance but not in limitation of the foregoing,
PDL shall keep SB promptly and fully informed of the status of any such
Action, and SB shall have the right to review and comment upon PDL's
activities related thereto.  All costs and expenses related to any such Action
shall be paid by PDL; provided however that, in the event SB makes the PHASE
II REVIEW POINT PAYMENT, all such OUT OF POCKET COSTS, whether incurred prior
to or after the PHASE II REVIEW POINT, shall be considered PATENT COSTS for
the calculation of PRE-LAUNCH COMMERCIAL EXPENSES and PRE-TAX PROFITS.  SB and
its counsel shall consult with PDL concerning such Action at no cost to PDL.
To the extent PDL elects to bring an Action in accordance with this Paragraph
9.05(c), PDL shall use commercially reasonable efforts to obtain results that
are consistent with the respective objectives of the parties under this
Agreement.
                (d) Litigation and Settlement Costs.   In the event SB does not
make the PHASE II REVIEW POINT PAYMENT and PDL has paid for all costs and
expenses related to an  Action, PDL shall retain the entire recovery made with
respect to any such Action.  In the event SB makes the PHASE II REVIEW POINT
PAYMENT, any recovery made by either party with respect to any such Action
shall be deemed a positive PATENT COST for the calculation of PRE-TAX PROFITS.
                (e)     Cooperation and Settlement.  The parties shall keep one
another informed of the status of and of their respective activities regarding
any Action, including without limitation any discussion concerning the
settlement thereof.  No settlement or consent judgment or other voluntary
final disposition of any suit defended or Action brought by one party pursuant
to this Paragraph 9.05 may be entered into without the consent of the non-
settling party if such settlement would require the non-settling party to be
subject to an injunction, to make a monetary payment or would adversely affect
the non-settling party's rights under this AGREEMENT, including the SB's
rights in SB PATENTS and the  licenses granted to PDL hereunder.
        9.06    Infringement of THIRD PARTY Intellectual Property Rights.
                (a)  Notice.  In the event of the institution of any suit by a
THIRD PARTY against PDL or SB or their respective sublicensees or AFFILIATES
for patent infringement involving the manufacture, use, sale, distribution or
marketing of PRODUCT anywhere in the TERRITORY, the party sued shall promptly
notify the other party in writing.
                (b) Rights to Defend.  In the event SB has made the PHASE II
REVIEW POINT PAYMENT, SB shall have the right but not the obligation to defend
such suit and to use PDL's  name in connection therewith; provided however
that if SB does not defend such suit in a timely manner, PDL shall have the
right but not the obligation to defend such suit and to use SB's name in
connection therewith.  If SB elects not to make the PHASE II REVIEW POINT
PAYMENT, PDL shall have the sole right but not the obligation to defend such
suit at its own expense.  If SB has made the PHASE II REVIEW POINT PAYMENT,
all costs and expenses incurred by either party with respect to such suit,
whether incurred before or after the date of the PHASE II REVIEW POINT, shall
be considered PATENT COSTS for the calculation of PRE-LAUNCH COMMERCIAL
EXPENSES and PRETAX PROFITS.
                (c)     Cooperation and Settlement.  The parties shall keep one
another informed of the status of and of their respective activities regarding
any Action, including without limitation any discussion concerning the
settlement thereof.  No settlement or consent judgment or other voluntary
final disposition of any suit defended or action brought by one party pursuant
to this Paragraph may be entered into without the consent of the non-settling
party if such settlement would require the non-settling party to be subject to
an injunction, to make a monetary payment or would adversely affect the non-
settling party's rights under this Agreement
        9.07    Extensions of PDL AND SB PATENTS.
                (a)  In the event that SB has made the PHASE II REVIEW POINT
PAYMENT and SB's and PDL's rights have not been otherwise terminated, each
party shall have the  obligation to seek extensions of the terms of their
respective PDL PATENTS and SB PATENTS and to seek and obtain SPCs directly
related to the PRODUCT.
                (b)  In the event SB does not make the PHASE II REVIEW POINT
PAYMENT or SB's rights to PRODUCT (other than to receive royalties) have
otherwise been terminated,  PDL shall have the right but not the obligation to
seek extensions of the terms of SB PATENTS and to seek and obtain SPCs
directly related to the PRODUCT. At PDL's request, SB shall provide reasonable
assistance therefor to PDL, at PDL's expense for all OUT OF POCKET COSTS
incurred by SB. At PDL's request, SB shall authorize PDL to act as SB's agent
for the purpose of making any application for any extensions of the term of SB
PATENTS or for obtaining SPCs in such countries.
                (c) In the event PDL's rights to PRODUCT (other than to receive
royalties) are terminated, SB shall have the right but not the obligation to
seek extensions of the terms of PDL PATENTS and to seek and obtain SPCs
directly related to the PRODUCT.  At SB's request, PDL shall provide
reasonable assistance therefor to SB, at SB's expense for all OUT OF POCKET
COSTS incurred by PDL.  At SB's request, PDL shall authorize SB to act as
PDL's agent for the purpose of making any application for any extensions of
the term of PDL PATENTS or for obtaining SPCs in such countries.

10.     TRADEMARKS AND NON-PROPRIETARY NAMES
  10.01   Pre-PHASE II REVIEW POINT.  Prior to the PHASE II REVIEW POINT, SB
shall be responsible, at its expense, for the trademark development process,
which may include  the selection, registration, and maintenance of all
Trademarks for proposed use  in connection with PRODUCT throughout the
TERRITORY.  SB shall also be responsible for the development of a non-
proprietary name for the PRODUCT, at its expense, which may include obtaining
a USAN and INN.  SB shall keep PDL reasonably informed with respect to any
such activites.
        10.02   SB Makes PHASE II REVIEW POINT PAYMENT.
                (a)  Trademarks. In the event SB makes the PHASE II REVIEW POINT
PAYMENT and SB's rights have not been otherwise terminated, SB shall be
responsible for the selection, registration and maintenance of all Trademarks
which it uses in connection with PRODUCT throughout the TERRITORY and SB shall
own and control such Trademarks.  In the event that SB makes the PHASE II
REVIEW POINT PAYMENT but SB's rights to PRODUCT are terminated prior to the
completion of the first Phase III clinical trial, SB shall exclusively assign
to PDL all right, title and interest to all Trademarks used by SB in
connection with PRODUCT throughout the TERRITORY (or the relevant countries
within the TERRITORY); provided that PDL shall pay for all TRADEMARK COSTS
associated with the Trademarks to be assigned and all OUT OF POCKET COSTS
associated with the assignment thereof.  To the extent such assignment is
prohibited by the law of a country where a Trademark has been selected,
registered or maintained by SB, the parties shall take all necessary steps to
ensure that all rights in such Trademark is promptly transferred to PDL, and
SB shall cooperate with and reasonably assist PDL in protecting such
Trademark. Subsequently, PDL, at its expense, shall be responsible for the
selection, registration and maintenance of all Trademarks employed in
connection with PRODUCT throughout the TERRITORY (or the relevant countries in
the TERRITORY) and PDL shall own and control such Trademarks.  Except as
expressly provided herein, nothing in this AGREEMENT shall be construed as a
grant of rights, by license or otherwise, by SB to PDL to use such Trademarks
for any purpose, except as may be agreed upon to enable PDL to co-promote
PRODUCT in accordance with Article 6.
                (b)  Non-proprietary Names. If SB has made the PHASE II REVIEW
POINT PAYMENT and SB's rights have not been otherwise terminated, SB shall be
responsible for the selection and registration of non-proprietary names for
PRODUCT in the TERRITORY, including obtaining a USAN and INN.  In the event
that SB makes the PHASE II REVIEW POINT PAYMENT but SB's rights to PRODUCT are
terminated prior to the completion of the first Phase III clinical trial, PDL,
at its expense, shall be responsible for the selection and registration of
non-proprietary names for PRODUCT in the TERRITORY (or the relevant countries
of the TERRITORY), and, if necessary and appropriate, SB will cooperate with
and reasonably assist PDL in obtaining these non-proprietary names.
        10.03    SB Does Not Make PHASE II REVIEW POINT Payment.  If SB has not
made the PHASE II REVIEW POINT PAYMENT, or in the event that SB otherwise
loses or terminates its rights to PRODUCT under this AGREEMENT after the
completion of the first Phase III clinical study of PRODUCT in the TERRITORY
or in a given country of the TERRITORY, the following will apply:
                (a) Trademarks. If SB and PDL have not used a trademark in
connection with PRODUCT, PDL shall have no right to request an assignment
hereunder.  If SB or PDL has used a trademark designated by SB with respect to
the PRODUCT, then at PDL's request, that Trademark shall be assigned to PDL in
the TERRITORY if SB terminates or otherwise loses its rights to the PRODUCT in
the whole TERRITORY, or, in the event that SB terminates or otherwise loses
its rights to the PRODUCT in only certain specified countries, then SB shall
assign that Trademark in such specified countries.  To the extent such
assignment is prohibited by the law of a country where a Trademark has been
selected, registered or maintained by SB, the parties shall take all necessary
steps to ensure that all rights in such Trademark is promptly transferred to
PDL, and SB shall cooperate with and reasonably assist PDL in protecting such
Trademark.  PDL shall reimburse SB for all TRADEMARK COSTS associated with the
assigned Trademark and all OUT OF POCKET COSTS related to the assignment
thereof  within thirty (30) days after receipt of SB's invoice therefor.
Subsequently, PDL, at its expense, shall be responsible for the selection,
registration and maintenance of all Trademarks employed in connection with
PRODUCT throughout the TERRITORY (or the relevant countries in the TERRITORY)
and PDL shall own and control such trademarks.
                (b) Non-proprietary Names. PDL, at its expense, shall be
responsible for the selection and registration of non-proprietary names for
PRODUCT in the TERRITORY (or the relevant countries of the TERRITORY), and, if
necessary and appropriate, SB will cooperate with and reasonably assist PDL in
obtaining these non-proprietary names.
        10.04   Infringement of Trademarks. In the event that PDL or SB becomes
aware of actual or threatened infringement of a Trademark selected for a
PRODUCT anywhere in the TERRITORY, that party shall promptly notify the other
party in writing.  The notice shall describe in reasonable detail the facts
and circumstances forming the basis for the determination that there is actual
or threatened infringement.  The party responsible for the prosecution and
maintenance of Trademarks in accordance with this Article 10 shall have sole
control over any infringement action related to the Trademarks, including
without limitation, the right to select counsel; provided however that the
party controlling such action shall solicit, and seriously consider in good
faith, the other party's input with respect to all material aspects of such
action, including without limitation the development of the litigation
strategy and the execution thereof.
        10.05   Defense of Trademarks. In the event of the institution of any
opposition or cancellation action or suit by a THIRD PARTY against PDL or SB
or their respective sublicensees or AFFILIATES for trademark infringement
involving publication of the Trademark for opposition or cancellation, or the
manufacture, use, sale, distribution or marketing of PRODUCT anywhere in the
TERRITORY, the party sued shall promptly notify the other party in writing.
The party responsible for the prosecution and maintenance of Trademarks in
accordance with this Article 10 shall have sole control over the defense of
any such action, including without limitation, the right to select counsel;
provided however that the party controlling such action shall solicit, and
seriously consider in good faith, the other party's input with respect to all
material aspects of such action, including without limitation the development
of the litigation strategy and the execution thereof.

11.     STATEMENTS AND REMITTANCES
        11.01   Records and Audits.
                (a)  Records and Audits at SB.  SB shall keep and require its
AFFILIATES and sublicensees to keep complete and accurate records, including
details of the calculation, of all DEVELOPMENT COSTS, COSTS OF GOODS (for both
DEVELOPMENT and  commercialization), SB NET SALES, THIRD PARTY ROYALTIES,
PATENT COSTS, TRADEMARKS COSTS, INTEREST CHARGE ON WORKING CAPITAL, PROMOTION
EXPENSES, PRE-TAX PROFITS and royalties and any other amounts due to PDL (if
applicable).  PDL shall have the right, at PDL's expense, through a certified
public accountant or like person reasonably acceptable to SB, to examine such
records during regular business hours during the life of this AGREEMENT and
[CONFIDENTIAL TREATMENT REQUESTED] after its termination; provided, however,
that such examination shall not take place more often than once a calendar
year and shall not cover such records for more [CONFIDENTIAL TREATMENT
REQUESTED] years and provided further that such accountant shall report to PDL
only as to the accuracy of the reports from SB and amounts owed by or to PDL
hereunder.
                (b)  Records and Audits at PDL. PDL shall keep and require its
AFFILIATES and sublicensees to keep complete and accurate records of all
DEVELOPMENT COSTS, COST OF GOODS (for commercial manufacture, if applicable),
PDL NET SALES, THIRD PARTY ROYALTIES, PATENT COSTS, INTEREST CHARGE ON WORKING
CAPITAL, PROMOTION EXPENSES and the royalty and any other amounts due to SB
hereunder (if applicable).  SB shall have the right, at SB's expense, through
a certified public accountant or like person reasonably acceptable to PDL, to
examine such records during regular business hours during the life of this
AGREEMENT and for [CONFIDENTIAL TREATMENT REQUESTED] after its termination;
provided, however, that such examination shall not take place more often than
once a calendar year and shall not cover such records for more than the
[CONFIDENTIAL TREATMENT REQUESTED] years and provided further that such
accountant shall report to SB only as to the accuracy of the reports provided
by PDL to SB and amounts owed by or to SB hereunder.
        11.02   Quarter-Year Accounting.
                (a)  Prior to First Commercial Launch.  If SB has made the PHASE
II REVIEW POINT PAYMENT and neither SB's nor PDL's rights under this AGREEMENT
have otherwise been terminated, then (i) within thirty (30) days after the end
of each calendar quarter until such time as Paragraph 11.02(b) applies, PDL
shall provide SB with a statement setting forth in reasonable detail the
DEVELOPMENT COSTS, COST OF GOODS for DEVELOPMENT (if applicable) and PRE-
LAUNCH COMMERCIAL EXPENSES incurred by PDL during the preceding calendar
quarter, and (ii) SB shall use commercially reasonable efforts to provide as
soon as practicable consistent with the timing of SB's internal financial
reporting practices, a statement setting forth in reasonable detail its
estimated DEVELOPMENT COSTS, COST OF GOODS for DEVELOPMENT (if applicable) and
PRE-LAUNCH COMMERCIAL EXPENSES incurred by SB during the preceding calendar
quarter.  In any event, within sixty (60) days after each such calendar
quarter, SB shall deliver to PDL a true accounting for the applicable quarter
of:  all DEVELOPMENT COSTS, COST OF GOODS for DEVELOPMENT and PRE-LAUNCH
COMMERCIAL EXPENSES incurred by PDL and SB, and a reconciliation of any
amounts owed by one party to the other.  Any amount payable by a party shall
be paid within ten (10) days following receipt of such reconciliation
delivered by SB hereunder.
                (b)  After Commercial Launch.
                (i) PDL Sells. Within sixty (60) days after the end of each
calendar quarter during which there are PDL NET SALES, PDL shall deliver to SB
a true accounting of all  PRODUCT sold by PDL and its AFFILIATES during such
quarter and reports delivered by its sublicensees during such quarter,
including a reasonably detailed calculation of PDL NET SALES.  PDL shall pay
all royalties due SB under Paragraph 5.05 with the report for the applicable
quarter.  Such accounting shall show PDL NET SALES on a country-by-country
basis.
               (ii)  SB Sells.  Within thirty (30) days after the end of each
calendar quarter during which there are SB NET SALES, (A) PDL shall deliver to
SB a true accounting of all DEVELOPMENT COSTS, COST OF GOODS (if applicable),
THIRD PARTY ROYALTIES, PATENT COSTS and PROMOTION EXPENSES incurred by PDL
during the applicable quarter, and (B) SB shall use commercially reasonable
efforts to provide as soon as practicable consistent with the timing of SB's
internal financial reporting practices, a statement setting forth in
reasonable detail its estimated DEVELOPMENT COSTS, COST OF GOODS for
DEVELOPMENT (if applicable) and PRE-LAUNCH COMMERCIAL EXPENSES incurred by SB
during the preceding calendar quarter.  In any event, w ithin sixty (60) days
after the end of each calendar quarter during which there are SB NET SALES, SB
shall deliver to PDL a true accounting of all DEVELOPMENT COSTS, PRE-TAX
PROFITS, whether positive or negative, and royalty calculations, where
applicable, showing on a country-by-country basis SB NET SALES, COST OF GOODS,
DEVELOPMENT COSTS, THIRD PARTY ROYALTIES, TRADEMARK COSTS, PATENT COSTS,
INTEREST CHARGE ON WORKING CAPITAL, and PROMOTION EXPENSES incurred by both
parties, and SB shall, at the same time, pay, as a single payment, the
relevant share of PRE-TAX PROFITS, if any, due to PDL in accordance with
Paragraph 5.02, or, if applicable, all royalties, if any, due under Article 5.
and any amounts due to PDL for DEVELOPMENT COSTS in accordance with Paragraph
3.04(a)(iii).  To the extent PRE-TAX PROFITS are negative for any given
quarter, such negative amount shall be carried forward and applied to reduce
PRE-TAX PROFITS in succeeding quarters.  To the extent PDL owes SB for
DEVELOPMENT COSTS in accordance with Paragraph 3.04(a)(iii), SB shall deduct
such amounts from any payments due to PDL hereunder or, if no such payment is
due, PDL shall pay such amounts to SB within thirty (30) days.   It is
understood and agreed that pre-commercial launch PROMOTION EXPENSES incurred
by either party are not included in PRE-LAUNCH COMMERCIAL EXPENSES and shall
be applied to the calculation of PRE-TAX PROFITS until fully reimbursed as
provided in Paragraph 5.02(e).
   11.03   Withholding. Any taxes, levies or other duties paid or required to
be withheld by one party on account of payments made to the other party under
this AGREEMENT shall be identified and deducted from the payments otherwise
due.  The paying party shall secure and send to the other party proof of any
such taxes, levies or other duties withheld and paid by the paying party or
its sublicensees for the benefit of the other party.
        11.04   Payments.  All royalties and other payments due under this
AGREEMENT shall be payable in U.S. dollars and shall be paid by bank wire
transfer or by automated clearinghouse (electronic funds transfer) in
immediately available funds to such bank account designated in writing by SB
and PDL from time to time.  Interest shall accrue on delinquent payments from
the date such payments are due at the [CONFIDENTIAL TREATMENT REQUESTED].  If
governmental regulations prevent remittances from a foreign country with
respect to sales made in that country, the obligation of the paying party to
pay royalties or other payments on sales in that country shall be suspended
until such remittances are possible.  The other party shall have the right,
upon giving written notice to the paying party, to receive payment in that
country in local currency.
        11.05   Currency Exchange.  Monetary conversions from the currency of a
foreign country in which PRODUCT is sold, into U.S. dollars shall be
calculated as follows:
             (a) if by SB, at the actual average rates of exchange for the year
to date as used by SB in producing its quarterly and annual accounts, as
confirmed by SB's auditors, or
             (b) if by PDL, at the average of the daily exchange rates for such
currency quoted by Citibank, N.A., for each of the last five (5) banking days
of each calendar quarter.
        11.06   No Double Counting of Costs.  For the purpose of determining any
cost or expense which is shared by the parties or otherwise invoiced by one
party to another under this AGREEMENT, any cost or expense allocated by either
party to a particular cost category shall be consistent with the terms of this
AGREEMENT and shall not also be allocated to another category.  In the event a
cost or expense might arguably fall into more than one category, the party
shall determine in good faith which category such cost or expense most
appropriately falls into.

12.     TERM AND TERMINATION
        12.01  Termination Rights.
                (a)  Termination by SB.  SB may terminate its rights to
DEVELOPMENT and commercialization of PRODUCT [CONFIDENTIAL TREATMENT
REQUESTED] SB, using the same standards SB would use in assessing whether or
not to continue development or commercialization of a product of its own
making, that the patent, medical/scientific, technical, regulatory or
commercial profile of PRODUCT does not justify continued SB involvement in the
development or commercialization of PRODUCT in such [CONFIDENTIAL TREATMENT
REQUESTED].  In such event, the provisions of Paragraph 12.01(c) and Paragraph
5.03 or 5.04, as the case may be, shall apply.
                (b) Termination by PDL.  PDL may terminate its rights to
DEVELOPMENT and commercialization of PRODUCT [CONFIDENTIAL TREATMENT
REQUESTED] PDL, using the same standards PDL would use in assessing whether or
not to continue development or commercialization of a product of its own
making, that the patent, medical/scientific, technical, regulatory or
commercial profile of PRODUCT does not justify continued PDL involvement in
the development or commercialization of PRODUCT in such [CONFIDENTIAL
TREATMENT REQUESTED].  In such event, the provisions of Paragraph 12.01(c) and
Paragraph 5.05 shall apply.
                (c) Effect of Termination.  In the event that a party
("Terminating Party") elects to terminate its DEVELOPMENT and/or
commercialization of PRODUCT in any [CONFIDENTIAL TREATMENT REQUESTED]  at any
time under this AGREEMENT in accordance with Paragraph 12.01, then all rights
to PRODUCT granted to the Terminating Party in the [CONFIDENTIAL TREATMENT
REQUESTED] shall terminate and revert to the other party ("Surviving Party"),
the JDC, the Development Coordinators and/or the JMC shall terminate with
respect to such [CONFIDENTIAL TREATMENT REQUESTED] and the Surviving Party
shall have sole responsibility for DEVELOPMENT and commercialization in the
[CONFIDENTIAL TREATMENT REQUESTED], the licenses to the Terminating Party
under SB PATENTS and SB KNOW-HOW or PDL PATENTS and PDL KNOW-HOW, as the case
may be, shall terminate in the [CONFIDENTIAL TREATMENT REQUESTED], and the
Terminating Party shall promptly transfer all clinical, preclinical and other
relevant data and information related to PRODUCT in the [CONFIDENTIAL
TREATMENT REQUESTED] in its possession (including the assignment of any
filings with REGULATORY AUTHORITIES held by the Terminating Party) to the
Surviving Party at no cost to the Surviving Party, and the Surviving Party
shall immediately have an exclusive license to make, have made, import, use
and sell PRODUCT in the [CONFIDENTIAL TREATMENT REQUESTED] under all relevant
SB PATENTS, SB KNOW-HOW or PDL PATENTS and PDL KNOW-HOW, as the case may be.
In either case, the Surviving Party shall be fully responsible for the costs
and expenses of further DEVELOPMENT and commercialization in the [CONFIDENTIAL
TREATMENT REQUESTED] and use commercially reasonable efforts and diligence,
consistent with the effort that is used by the Surviving Party in the
development, testing, manufacture, registration, marketing and sale of
pharmaceutical products at a similar stage of development, having a comparable
level of market potential, and being subject to a comparable regulatory
review, to develop and commercialize PRODUCT in the [CONFIDENTIAL TREATMENT
REQUESTED] and any subsequent sales of PRODUCT by the Surviving Party in the
[CONFIDENTIAL TREATMENT REQUESTED] shall be subject to the royalty obligation
set forth in Paragraphs 5.03 or 5.04 (if SB elects to terminate) or 5.05 (if
PDL elects to terminate), as the case may be.
        12.02   Royalty Obligations.
                (a) PDL Royalty Obligations.  PDL's royalty obligations under
Paragraph 5.03(a) or 5.04(i), as applicable, in each country of the TERRITORY
shall expire on a country-by-country basis upon the [CONFIDENTIAL TREATMENT
REQUESTED].  PDL's royalty obligations under Paragraph 5.03(b) or 5.04(ii), as
applicable, in each country of the TERRITORY shall expire upon [CONFIDENTIAL
TREATMENT REQUESTED]  of the date of first marketing of PRODUCT in such
country by or on behalf of PDL.
                (b) SB Royalty Obligations.  SB's royalty obligations under
Paragraph 5.05(a) in each country of the world shall expire on a country-by-
country basis upon the [CONFIDENTIAL TREATMENT REQUESTED].  SB's royalty
obligations under Paragraphs 5.04(b) in each country of the TERRITORY shall
expire upon the [CONFIDENTIAL TREATMENT REQUESTED] date of first marketing in
such country by or on behalf of SB.
             (c) Profit-Sharing Scenario.  SB's obligation to make the payments
to PDL under Paragraph 5.02 shall expire on a country-by-country basis upon
the date that [CONFIDENTIAL TREATMENT REQUESTED].
     12.03   Term of Agreement in its Entirety.  Unless otherwise terminated in
accordance with the terms of this AGREEMENT, this AGREEMENT shall expire, on a
country-by-country basis upon the later of the expiration of SB's obligation
to make payments to PDL under Paragraph 5.02 or the expiration of all royalty
obligations owed by one party to the other party in such country of the
TERRITORY as set forth in this AGREEMENT.  Expiration of this AGREEMENT in a
particular country under this provision shall not preclude either party from
continuing to market or have marketed PRODUCT and to use SB KNOW-HOW and PDL
KNOW-HOW, as the case may be, in such country without further payments to the
other party.
        12.04   Termination Due to Default.
                (a)  If either party fails or neglects to perform covenants or
provisions of this AGREEMENT (other than pursuant to Paragraph 3.06) and if
such default is (a) for failure to pay undisputed amounts due hereunder and
such default is not cured within ten (10) business days, or (b) for any
default other than non-payment and such default is not corrected within sixty
(60) days after receiving written notice from the other party with respect to
such default, such other party shall have the right to terminate rights to
PRODUCT of the defaulting party under this AGREEMENT by giving written notice
to the party in default provided the notice of termination is given within six
(6) months of the default and prior to correction of the default.
                (b) In the event that a party's ("Terminating Party") rights to
the DEVELOPMENT and/or commercialization of PRODUCT in the TERRITORY are
terminated at any time under this AGREEMENT in accordance with Paragraph
12.04, then all rights to PRODUCT granted to the Terminating Party in the
TERRITORY shall terminate and revert to the other party ("Surviving Party"),
the JDC, the Development Coordinators and/or the JMC shall terminate and the
Surviving Party shall have sole responsibility for DEVELOPMENT and
commercialization in the TERRITORY, the licenses to the Terminating Party
under SB PATENTS and SB KNOW-HOW or PDL PATENTS and PDL KNOW-HOW, as the case
may be, shall terminate in the TERRITORY, and the Terminating Party shall
promptly transfer all clinical, preclinical and other relevant data and
information related to PRODUCT in the TERRITORY in its possession (including
the assignment of any filings with  REGULATORY AUTHORITIES held by the
Terminating Party) to the Surviving Party at no cost to the Surviving Party,
and the Surviving Party shall immediately have an exclusive license to make,
have made, import, use and sell PRODUCT in the TERRITORY under all relevant SB
PATENTS, SB KNOW-HOW or PDL PATENTS and PDL KNOW-HOW, as the case may be.  In
either case, the Surviving Party shall use commercially reasonable efforts and
diligence, consistent with the effort that is used by the Surviving Party in
the development, testing, manufacture, registration, marketing and sale of
pharmaceutical products at a similar stage of development, having a comparable
level of market potential, and being subject to a comparable regulatory
review, to develop and commercialize PRODUCT in the TERRITORY and any
subsequent sales of PRODUCT by the Surviving Party in the [CONFIDENTIAL
TREATMENT REQUESTED] shall be subject to the royalty obligation set forth in
Paragraphs 5.03 or 5.04 (if SB elects to terminate) or 5.05 (if PDL elects to
terminate), as the case may be.
        12.05   Termination Due to Bankruptcy.
                (a)  Either party may terminate this AGREEMENT if, at any time,
the other party shall file in any court or agency pursuant to any statute or
regulation of any state or country, a petition in bankruptcy or insolvency or
for reorganization or for an arrangement or for the appointment of a receiver
or trustee of the party or of its assets, or if the other party proposes a
written agreement of composition or extension of its debts, or if the other
party shall be served with an involuntary petition against it, filed in any
insolvency proceeding, and such petition shall not be dismissed within sixty
(60) days after the filing thereof, or if the other party shall propose or be
a party to any dissolution or liquidation, or if the other party shall make an
assignment for the benefit of creditors.
             (b)  Notwithstanding the bankruptcy of either party hereunder, or
the impairment of performance by that party of its obligations under this
AGREEMENT as a result of bankruptcy or insolvency of a party, the non-bankrupt
party shall be entitled to retain the licenses granted herein, subject to the
bankrupt party's rights to terminate this AGREEMENT for reasons other than
bankruptcy or insolvency as expressly provided in this AGREEMENT.
             (c)  All rights and distribution rights granted under or pursuant
to this AGREEMENT by one party to the other under this Agreement are, and
shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S.
Bankruptcy Code, licenses of rights to "intellectual property" as defined
under Section 101(35A) of the U.S. Bankruptcy Code.  The parties agree that
the licensee of such rights under this AGREEMENT shall retain and may fully
exercise all of its rights and elections under the U.S. Bankruptcy Code,
subject to performance by the licensee of its preexisting obligations under
this AGREEMENT.  The parties further agree that, in the event of the
commencement of a bankruptcy proceeding by or against the licensor under the
U.S. Bankruptcy Code, the licensee shall be entitled to a complete duplicate
of (or complete access to, as appropriate) any such intellectual property and
all embodiments of such intellectual property, and same, if not already in its
possession, shall be promptly delivered to the licensee (i) upon any such
commencement of a bankruptcy proceeding upon written request therefor by the
licensee, unless the licensor elects to continue to perform all of its
obligations under this AGREEMENT, or (ii) if not delivered under (i) above,
upon the rejection of this AGREEMENT by or on behalf of the licensor upon
written request therefor by the licensee, provided, however, that upon the
licensor's (or its successor's) written notification to the licensee that it
is again willing and able to perform all of its obligations under this
AGREEMENT, the licensee shall promptly return all such tangible materials to
the licensor, but only to the extent that the licensee does not require
continued access to such materials to enable the licensee to perform its
obligations under this AGREEMENT.

13.     RIGHTS AND DUTIES UPON TERMINATION
     13.01   Payments.  Upon termination of this AGREEMENT, PDL shall have the
right to retain any sums already paid by SB hereunder, and SB shall pay all
sums accrued hereunder which are then due, and SB shall have the right to
retain any sums already paid by PDL hereunder, and PDL shall pay all sums
accrued hereunder which are then due.
        13.02   Product Inventory.  Upon termination of this AGREEMENT following
NDA APPROVAL of PRODUCT anywhere in the TERRITORY but earlier than its
expiration in accordance with Paragraph 12.03, either party holding inventory
of PRODUCT shall notify the other of the amount of PRODUCT such party, its
AFFILIATES, sublicensees and distributors then have on hand, the sale of which
would, but for the termination, be subject to payment in accordance with
Paragraph 5.02, 5.03, 5.04 or 5.05, as the case may be, and each party and its
AFFILIATES, sublicensees and distributors shall thereupon be permitted to sell
that amount of PRODUCT, provided that the selling party shall pay the payment
thereon at the time herein provided for and provided further that the other
party shall have the first option to purchase such PRODUCT at a reasonable
cost to be negotiated by the parties.  If the parties fail to enter into an
agreement for purchase of such PRODUCT, the party holding the inventory of
PRODUCT will be free to sell such PRODUCT to THIRD PARTIES for a period not to
exceed ninety (90) days from the termination of negotiations for the purchase
of such PRODUCT; provided, however, that the party selling the inventory of
PRODUCT may only offer such PRODUCT on terms no more favorable to the THIRD
PARTY than those offered to the other party.
        13.03   Survival.  Subject to Paragraph 13.01, termination of this
AGREEMENT shall terminate all outstanding obligations and liabilities between
the parties arising from this AGREEMENT except those described in Paragraphs
8.03, 8.04, 9.01, 11.01, 14.03, 14.04, and 14.05 and Articles 12, 13, 16, 17
and 20, as well as any other provision, such as Paragraph 8.03 which, by its
terms, is stated to survive the termination or expiration of this AGREEMENT.
In addition, any other provision required to interpret and enforce the
parties' respective rights and obligations under this AGREEMENT shall also
survive, but only to the extent that such survival is required for the full
observation and performance of this AGREEMENT by the parties hereto.
        13.04   Remedies.  Termination of the AGREEMENT in accordance with the
provisions hereof shall not limit remedies which may be otherwise available in
law or equity.

14.     WARRANTIES, REPRESENTATIONS, INDEMNIFICATIONS
        AND INSURANCE
      14.01   Warranty by SB.  SB represents and warrants that, to the best of
its belief and knowledge, it owns the entire right and title to the extent of
its ownership interest in SB PATENTS, and that it has given to PDL all
information requested by PDL prior to the EFFECTIVE DATE, relating to SB
PATENTS, SB KNOW-HOW or PRODUCT, in SB's possession to the extent directly
related to PRODUCT.  Nothing in this AGREEMENT shall be construed as a
warranty that SB PATENTS are valid or enforceable or that their exercise does
not infringe any patent rights of THIRD PARTIES.  A holding of invalidity or
unenforceability of any SB PATENT, from which no further appeal is or can be
taken, shall not affect any obligation already accrued hereunder, but shall
only eliminate royalties otherwise due under such patent from the date such
holding becomes final in accordance with this AGREEMENT.
     14.02   Warranty by PDL.  PDL represents and warrants that, to the best of
its belief and knowledge, it owns the entire right and title to the extent of
its ownership interest in PDL PATENTS, and that is has given to SB all
information requested by SB prior to the EFFECTIVE DATE, relating to PDL
PATENTS, PDL KNOW-HOW or PRODUCT, in PDL's possession to the extent directly
related to PRODUCT.  Nothing in this AGREEMENT shall be construed as a
warranty that PDL PATENTS are valid or enforceable or that their exercise does
not infringe any patent rights of THIRD PARTIES.  A holding of invalidity or
unenforceability of any PDL PATENT, from which no further appeal is or can be
taken, shall not affect any obligation already accrued hereunder, but shall
only eliminate royalties otherwise due under such patent from the date such
holding becomes final in accordance with this AGREEMENT.
     14.03   Indemnification by SB.  SB hereby agrees to save, defend and hold
PDL, its AFFILIATES and their respective officers, directors, stockholders,
representatives, agents, employees, successors and assigns harmless from and
against any and all suits, claims, actions, demands, liabilities, expenses
and/or losses, including reasonable legal expense and attorneys' fees, brought
by a THIRD PARTY or that arise in connection with any claim brought by a THIRD
PARTY with respect to PRODUCT related to (a) death or other physical injury to
any person to the extent caused by the use or administration of PRODUCT
provided or sold by SB and its AFFILIATES hereunder; or which injury is due to
the negligence or willful misconduct of SB, (b) property damage to the extent
such damage is due to the negligence or willful misconduct of SB or (c) breach
of any representation or warranty of SB under this AGREEMENT provided that SB
shall not be required to provide indemnification hereunder to the extent that
any losses, claims, damages or liability result from (i) the negligence or
willful misconduct of PDL or breach by PDL of any provision of this AGREEMENT,
or (ii) PDL's manufacture (including its manufacture through THIRD PARTY
suppliers) of PRODUCT, or (iii) PDL's failure to perform its obligations with
respect to the marketing of PRODUCT in accordance with Article 7.
        14.04   Indemnification by PDL.  PDL hereby agrees to save, defend and
hold SB, its AFFILIATES and their respective officers, directors,
shareholders, representatives, agents, employees, successors and assigns
harmless from and against any and all suits, claims, actions, demands,
liabilities, expenses and/or losses, including reasonable legal expense and
attorneys' fees, brought by a THIRD PARTY or that arise in connection with any
claim brought by a THIRD PARTY with respect to PRODUCT related to (a) death or
other physical injury to any person to the extent caused by the use or
administration of PRODUCT provided or sold by PDL and its AFFILIATES
hereunder; or which injury is due to the negligence or willful misconduct of
PDL, (b) property damage to the extent such damage is due to the negligence or
willful misconduct of PDL or (c) breach of any representation or warranty of
PDL under this AGREEMENT provided that PDL shall not be required to provide
indemnification hereunder to the extent that any losses, claims, damages or
liability result from (i) the negligence or willful misconduct of SB or breach
by SB of any provision of this AGREEMENT, or (ii) SB's manufacture (including
its manufacture through THIRD PARTY suppliers) of PRODUCT, or (iii) SB's
failure to perform its obligations with respect to the marketing of PRODUCT in
accordance with Article 7.
14.05   Indemnification Procedure.
(a)  PDL Seeks Indemnification from SB.  In the event PDL is
seeking indemnification from SB under Paragraph 14.03, SB shall have no such
obligation unless PDL:
(i)  gives SB prompt notice of any claim or lawsuit or other
action for which it seeks to be indemnified under this AGREEMENT;
(ii)  cooperates fully with SB and its agents in defense of
any such claim, complaint, lawsuit or other cause of action; and
(iii)  SB is granted full authority and control over the
defense, including settlement or other disposition thereof, against such claim
or lawsuit or other action, provided that PDL shall have the right to retain
counsel of its choice to participate in the defense of any such claim or
lawsuit at PDL's own expense, provided that such counsel shall not interfere
with SB's full authority and control.
(b)  SB Seeks Indemnification from PDL.  In the event SB is
seeking indemnification under Paragraph 14.04, PDL shall have no such
obligation unless SB:
(i)  gives PDL prompt notice of any claim or lawsuit or
other action for which it seeks to be indemnified under this AGREEMENT;
(ii)  cooperates fully with PDL and its agents in defense of
any such claim, complaint, lawsuit or other cause of action; and
(iii)  PDL is granted full authority and control over the
defense, including settlement or other disposition thereof, against such claim
or lawsuit or other action, provided that SB shall have the right to retain
counsel of its choice to participate in the defense of any such claim or
lawsuit at SB's own expense, provided that such counsel shall not interfere
with PDL's full authority and control.
14.06   Insurance.  During the term of the AGREEMENT, and for a period of
five (5) years after the expiration or termination of this AGREEMENT or the
earlier termination thereof, each party shall maintain, respectively, at its
sole cost and expense insurance coverage from insurance companies having a
rating of at least "A-VIII" as published in the most recent edition of A.M.
Best's Insurance Reports, product liability and general liability coverage, in
amounts, respectively, which are reasonable and customary in the U.S.
pharmaceutical industry for companies of comparable size and activities at the
respective place of business of each party, or, solely in the case of SB, self
insure with the substantially the same protections.  Such product liability
insurance shall insure against all liability, including personal injury,
physical injury, or property damage arising out of the manufacture, sale,
distribution, or marketing of PRODUCT in the countries of the world in which
the party is permitted to undertake such activities in accordance with this
AGREEMENT.  Each party shall provide written proof of the existence of such
insurance to the other party upon request.  Notwithstanding the foregoing, (a)
during the conduct of Phase I and II clinical trials, each party shall always
maintain product liability insurance (or, in the case of SB, self-insure) with
a minimum of [CONFIDENTIAL TREATMENT REQUESTED] per occurrence (or claim) and
annual aggregate limit of liability of [CONFIDENTIAL TREATMENT REQUESTED],
(b) during the conduct of Phase III clinical trials, each party shall maintain
product liability insurance (or, in the case of SB, self-insure) with a
minimum of [CONFIDENTIAL TREATMENT REQUESTED]per occurence (or claim) and
annual aggregate limit of liability of [CONFIDENTIAL TREATMENT REQUESTED]and
(c) and after first commercial sale each party shall always maintain product
liability insurance (or, in the case of SB, self-insure) with a minimum of
[CONFIDENTIAL TREATMENT REQUESTED] per occurrence (or claim) and annual
aggregate limit of liability.

15.     FORCE MAJEURE
        If the performance of any part of this AGREEMENT by either party, or of
any obligation under this AGREEMENT, is prevented, restricted, interfered with
or delayed by reason of any cause beyond the reasonable control of the party
liable to perform, unless conclusive evidence to the contrary is provided, the
party so affected shall, upon giving written notice to the other party, be
excused from such performance to the extent of such prevention, restriction,
interference or delay, provided that the affected party shall use its
reasonable best efforts to avoid or remove such causes of non-performance and
shall continue performance with the utmost dispatch whenever such causes are
removed.  When such circumstances arise, the parties shall discuss what, if
any, modification of the terms of this AGREEMENT may be required in order to
arrive at an equitable solution.

16.     GOVERNING LAW
        This AGREEMENT shall be deemed to have been made in New York and its
form, execution, validity, construction and effect shall be determined in
accordance with the laws thereof.

17.     DISPUTE RESOLUTION
Except as otherwise described in Paragraphs 3.03(d), 5.06(a) and 7.03(d)(iii),
any dispute, controversy or claim arising out of or relating to this AGREEMENT
(hereinafter collectively referred to as "Dispute") shall be attempted to be
settled by the parties, in good faith, by submitting each such Dispute to
appropriate senior management representatives of each party in an effort to
effect a mutually acceptable resolution thereof within thirty (30) days.
Within fifteen (15) days after submission of the Dispute to such senior
representatives, each party shall submit a brief, written summary of the
Dispute and their respective position with respect to the Dispute to such
senior representatives.  In the event no mutually acceptable resolution is
achieved, then each party shall be entitled to seek relief for such Dispute by
using any appropriate judicial mechanism which may be available in the courts.

18.     SEPARABILITY
       18.01   In the event any portion of this AGREEMENT shall be held illegal,
void or ineffective, the remaining portions hereof shall remain in full force
and effect.
        18.02   If any of the terms or provisions of this AGREEMENT are in
conflict with any applicable statute or rule of law, then such terms or
provisions shall be deemed inoperative to the extent that they may conflict
therewith and shall be deemed to be modified to conform with such statute or
rule of law.
        18.03   In the event that the terms and conditions of this AGREEMENT are
materially altered as a result of Paragraph 18.01 or 18.02, the parties will
in good faith renegotiate the terms and conditions of this AGREEMENT to carry
out the original intent of the parties.

19.     ENTIRE  AGREEMENT
        This AGREEMENT (including Appendices hereto), entered into as of the
date written above, constitutes the entire agreement between the parties
relating to the subject matter hereof and supersedes all previous writings and
understandings.  No terms or provisions of this AGREEMENT shall be varied or
modified by any prior or subsequent statement, conduct or act of either of the
parties, except that the parties may amend this AGREEMENT by written
instruments specifically referring to and executed in the same manner as this
AGREEMENT.

20.     NOTICES
        20.01   Notices required or permitted under this AGREEMENT shall be in
writing in the English Language and sent by overnight express mail (e.g.,
FedEx), or by facsimile confirmed by overnight express mail (e.g., FedEx), and
shall be deemed to have been properly served to the addressee upon receipt of
such written communication, to the following addresses of the parties or to
such address or addresses as may be specified from time to time in a written
notice:
                PDL
                Protein Design Labs, Inc.
                34801 Campus Drive
                Fremont, California  94555  U.S.A.
                                Attention:  General Counsel
Fax: (510) 574-1473

                SB
                SmithKline Beecham Corporation
                One Franklin Plaza (Mail Code FP1930)
                P.O. Box 7929
                Philadelphia, Pennsylvania 19101
                U.S.A.
                Attention: Senior Vice President, Business Development
Fax: (215) 751-4253

                        copy to:

                        SmithKline Beecham Corporation
                        One Franklin Plaza (Mail Code FP2360)
                        P.O. Box 7929
                        Philadelphia, Pennsylvania 19101, U.S.A.
                        Attention:  Corporate Law-U.S.
Fax: (215) 751-3935

        20.02   Any notice required or permitted to be given concerning this
AGREEMENT shall be effective upon receipt by the party to whom it is
addressed.

21.     ASSIGNMENT
      This AGREEMENT and the licenses herein granted shall be binding upon and
inure to the benefit of the successors in interest of the respective parties.
Neither this AGREEMENT nor any interest hereunder shall be assignable by
either party without the written consent of the other provided, however, that
either party may assign this AGREEMENT or any part of its rights and
obligations hereunder to any AFFILIATE of such party or to any corporation
with which that party may merge or consolidate, or to which it may transfer
all or substantially all of its assets to which this AGREEMENT relates,
without obtaining the consent of the other party, provided that the party
effecting such assignment shall notify the other promptly following such
assignment.

22.     RECORDING
        SB and PDL, as appropriate, shall have the right, at any time, to
record, register, or otherwise notify this AGREEMENT in appropriate
governmental or regulatory offices anywhere in the TERRITORY, and PDL and SB,
as appropriate, shall provide reasonable assistance to the other in effecting
such recording, registering or notifying.

23.     INDEPENDENT CONTRACTORS
        The parties are independent contractors under this AGREEMENT and no
other relationship is intended, including, without limitation, partnership,
joint venture or agency relationship.  Neither party shall act in a manner
which expresses or implies a relationship other than of independent
contractor, nor bind the other party, except as otherwise expressly provided
in this AGREEMENT.  Nothing in this AGREEMENT shall be deemed to infer any
direct relationship between PDL and any AFFILIATE of SB.


24.     EXECUTION IN COUNTERPARTS
        This AGREEMENT may be executed in any number of counterparts, each of
which shall be deemed an original but all of which together shall constitute
one and the same instrument.
      IN WITNESS WHEREOF, the parties, through their authorized officers, have
executed this AGREEMENT as of the date first written above.


SMITHKLINE BEECHAM CORPORATION

BY:

TITLE:


PROTEIN DESIGN LABS, INC.

BY:

TITLE:


DEVELOPMENT AND LICENSE AGREEMENT
SMITHKLINE BEECHAM CORPORATION-PROTEIN DESIGN LABS, INC.
APPENDIX A

The following are patents and patent applications (also known as the "Queen et
al. patents") issued and filed in certain countries in the world and licensed
as part of the PDL PATENTS under the Agreement (As of August 25, 1999)

1.  The following issued U.S. patents and U.S. patent applications:

No. 5,585,089, "Humanized Immunoglobulins," issued December 17, 1996.

No. 5,693,761, "Polynucleotides Encoding Improved Humanized
Immunoglobulins," issued December 2, 1997.

No. 5,693,762, "Humanized Immunoglobulins," issued December 2, 1997.

[CONFIDENTIAL TREATMENT REQUESTED]


2.  The following patents and patent applications outside the U.S.:

Patent No.

Country
Title*
Issued
647383
Australia
"Novel Immunoglobulins, Their Production
and Use"
Issued
671949
Australia
"
Issued
AT E133452
Austria
"
Issued
0451216
Belgium
"
Issued
61095
Bulgaria
"
Issued
970016

Brazil
"
Issued
0451 216B1
European
"
Issued
0682040 B1
European

Issued
FR0451216
France
"
Issued
DE
68925536
Germany
"
Issued
DD 296 964
East Germany
"
Issued
GB 0451216
Great Britain
"
Issued
1001050

Greece
"
Issued
211174

Hungary
"
Issued
IT O451216
Italy
"
Issued
2828340
Japan
"
Issued
LU O451216
Luxembourg
"
Issued
92.2146
Monaco
"
Issued
NL 0451216
Netherlands
"
Issued
231984
New Zealand
"
Issued
132068
Pakistan
"
Issued
29729
Philippines
"
Issued
92758
Portugal
"
Issued
4895847.13
Russia
"
Issued
2126046
Russia
"
Issued
SG O451216
Singapore
"
Issued
89/9956
South Africa
"
Issued
178385
South Korea
"
Issued
2081974 T3
Spain
"
Issued
SE O451216
Sweden
"
Issued
CHO 451216
Switzerland
"
Issued
50034
Taiwan
"
Issued
13349
Uruguay
"
Issued
48700
Yugoslavia
"







Country
Title*
Pending
Argentina
"Novel Immunoglobulins, Their
Production and Use"
Pending
Canada
"
Pending
Chile
"
Pending
China
"
Pending
Croatia
"
Pending
Czech Republic
"
Pending
Ecuador
"
Pending
Europe
"
Pending
Hong Kong
"
Pending
Ireland
"
Pending
Israel
"
Pending
Japan
"
Pending
South Korea

Pending
Romania
"
Pending
Slovak Republic
"
Pending
Venezuela
"
Pending
Denmark
"
Pending
Finland
"
Pending
Norway
"









*Exact titles may differ in different countries.

SB PATENTS

[CONFIDENTIAL TREATMENT REQUESTED]

DEVELOPMENT AND LICENSE AGREEMENT
SMITHKLINE BEECHAM CORPORATION-PROTEIN DESIGN LABS, INC.
APPENDIX B
CO-PROMOTION TERMS: PROFIT SPLIT FOR DETAILING
[CONFIDENTIAL TREATMENT REQUESTED]

DEVELOPMENTAND LICENSE AGREEMENT
SMITHKLINE BEECHAM CORPORATION-PROTEIN DESIGN LABS, INC.
APPENDIX C
PHARMACOVIGILANCE AGREEMENT
Procedure for Exchange of Adverse Event data between
SB Worldwide Clinical Safety and PDL for PRODUCT (e.g., SB 240683)
1.0  Background:
This Pharmacovigilance procedure shall be effective for the term of the
AGREEMENT.  In the event SB makes the PHASE II REVIEW POINT PAYMENT, the
parties will review this Appendix C to assess whether amendments are required.

2.0  Definitions:

A.  Serious Adverse Event.  A serious adverse event includes any
experience/event that results in any of the following outcomes:
  death
  life-threatening (at immediate risk of death from the event as it
occurs)
  requires inpatient hospitalization or prolongation of existing
hospitalization
  a persistent or significant disability/incapacity
  a congenital anomaly/birth defect
  is an important medical event that may not result in any of the above
outcomes, but based upon appropriate medical judgment, may jeopardize
the patient or subject and may require medical or surgical intervention
to prevent one of the outcomes listed in the definition.

B.  Unexpected adverse drug experience.  An unexpected adverse drug
experience is any adverse drug experience that is not listed in the current
labeling for the Product. "Unexpected" refers to an adverse drug experience
that has not been previously observed (i.e. is not included in the
investigator brochure) rather than an experience that is not anticipated
based on the pharmacological properties of the pharmaceutical product.

3.0  Policy Statements:

A. Each Party will follow its existing procedures for intake, review and
reporting of adverse events.
B. Each Party will maintain the original source documents in accordance
with current regulatory requirements.
C. PDL and SB will exchange safety information as appropriate.
D. SB and PDL Central Safety Departments(or equivalents) will review this
Appendix periodically and revise same as necessary.
E. PDL will maintain the central international adverse event database of
adverse event reports associated with PRODUCT.

4.0  Processing Adverse Events Associated With PRODUCT:

A. PDL Responsibilities:

1. PDL will acknowledge all reports submitted by SB under 4.B.1 below.

2. PDL will generate and submit all serious and unexpected adverse event
(SAE) reports associated with PRODUCT to the FDA within 7 or 15 calendar
days of the initial report of information by PDL in accordance with
local regulations.  PDL will cross reference SB's IND on all such
reports and will provide SB Worldwide Clinical Safety (SB WWCS)
Department with a copy of any report at the time of submission  to the
FDA as well as a copy of the final report.

3. Prior to initiating the first clinical trial with PRODUCT, PDL will
provide SB with a copy of PDL's standard operating procedure "SOP"
related to safety reporting, including a technical description of the
information to be captured in the safety database.  SB will review this
SOP to ensure that regulatory reporting requirements will be met and,
and to ensure that the data captured is of sufficient detail to allow
the data to be integrated after the PHASE II REVIEW POINT PAYMENT, if
the parties decide that safety reporting shall be managed by SB in
accordance with Paragraph 3.04(a)(ii) of the AGREEMENT.

PDL will generate and submit a line listing of all SAEs to SB WWCS.
Such line-listing will be produced on a quarterly basis and will
indicate the patient number, SAE(s) reported for each patient, and
causality assigned by the clinical investigator for each SAE.

4. PDL will generate and submit all necessary documents associated with the
IND Annual Report to the FDA in accordance with regulations and will
cross reference SB's IND in doing so.  PDL will simultaneously submit a
copy of each IND Annual Report to SB WWCS.

5. PDL will generate and submit any necessary Investigator Letters
regarding serious and unexpected adverse reactions to the FDA in
accordance with regulations and will cross reference SB's IND in doing
so.  PDL will simultaneously submit a copy of each Investigator Letter
to SB WWCS.

B. SB Responsibilities:

1. Within 30 days following execution of this AGREEMENT, SB WWCS will
submit via CIOMS I forms all SAEs associated with PRODUCT entered into
SB's Safety Database as of the EFFECTIVE DATE.

2. In the event that SB is inadvertently contacted by a clinical
investigator to report a PRODUCT-related SAE, SB will attempt to (i)
forward the clinical investigator to PDL for follow-up and (ii) if this
is not immediately possible, record the SAE and send to PDL by facsimile
within 24 hours of receipt by SB WWCS.

3. SB will no longer enter any SAE reports associated with PRODUCT on its
Safety Database, as these reports will be maintained in PDL's Safety
Database as described in 4.A.3 above.

5.0  Pharmacovigilance Contacts In Each Party:
A.  For SB:                                                     Contact
Address and Numbers
Primary:        [CONFIDENTIAL TREATMENT REQUESTED]


B.  For PDL:                                                            Contact
Address and Numbers
[CONFIDENTIAL TREATMENT REQUESTED]

copy to:
[CONFIDENTIAL TREATMENT REQUESTED]

DEVELOPMENT AND LICENSE AGREEMENT
SMITHKLINE BEECHAM CORPORATION-PROTEIN DESIGN LABS, INC.
APPENDIX D
DEVELOPMENT PLAN
[CONFIDENTIAL TREATMENT
REQUESTED]



DEVELOPMENT AND LICENSE AGREEMENT
SMITHKLINE BEECHAM CORPORATION-PROTEIN DESIGN LABS, INC.
APPENDIX E
THE MANUFACTURING PLAN
[CONFIDENTIAL TREATMENT REQUESTED]



CONFIDENTIAL TREATMENT REQUESTED WITH RESPECT TO
DESIGNATED PORTIONS OF THIS DOCUMENT

DEVELOPMENT AND LICENSE AGREEMENT

CONFIDENTIAL TREATMENT REQUESTED WITH RESPECT TO
DESIGNATED PORTIONS OF THIS DOCUMENT

DEVELOPMENT AND LICENSE AGREEMENT               Page 70