Exhibit 10.1

 

Certain identified information, marked by [***], has been excluded from the
exhibit because it is both (i) not material and (ii) would likely cause
competitive harm to the Company, if publicly disclosed. 

EXECUTION VERSION

CONFIDENTIAL

 

 

COLLABORATION AND LICENSE AGREEMENT

This collaboration and license agreement ("Agreement") is made and entered into
effective as of January 12, 2020 (the "Execution Date"), by and between

MorphoSys AG, a German stock corporation having a place of business at
Semmelweisstrasse 7, 82152 Planegg, Germany ("MorphoSys AG"), and MorphoSys US
Inc., a Delaware corporation, wholly-owned by MorphoSys AG, having its place of
business at 470 Atlantic Avenue, 14th floor. Boston,  MA 02210, USA ("MorphoSys
Inc."), (both MorphoSys AG and MorphoSys Inc., subject to Section 18.7,
"MorphoSys")

and

Incyte Corporation, a Delaware corporation with its principal place of business
at 1801 Augustine Cut-Off, Wilmington, Delaware 19803, USA ("COMPANY").

MorphoSys and COMPANY each may be referred to herein individually as a "Party,"
or collectively as the "Parties."

RECITALS

A.         MorphoSys has in-licensed from Xencor and further developed a
humanized monoclonal antibody specifically binding to the target CD19 called
MOR208 or tafasitamab (as further defined herein).  MorphoSys controls certain
patents and other intellectual property pertaining to MOR208 and methods and
uses relating thereto, including its use for the treatment of B cell
malignancies and has been performing clinical and manufacturing development of
MOR208;

B.         MorphoSys and COMPANY desire to establish a global collaboration for
the further development and worldwide commercialization of MOR208; and

C.         Under such global collaboration COMPANY will have the exclusive
commercialization rights outside of the US, and MorphoSys and COMPANY will have
co-commercialization rights in the US.

D.         In the internal relationship between MorphoSys AG and MorphoSys Inc.,
both companies have arranged by way of an inter-company agreement their
interactions inter alia with regard to this Agreement. Pursuant to this
inter-company agreement, either MorphoSys AG and MorphoSys Inc. will perform the
obligations and assert rights under this Agreement.

In consideration of the foregoing premises, the mutual promises and covenants
set forth in this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, MorphoSys and COMPANY
hereby agree as follows:

 

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CONFIDENTIAL

 

 

1.          DEFINITIONS

When used in this Agreement, capitalized terms shall have the meanings as
defined below and throughout the Agreement. Unless the context indicates
otherwise, the singular shall include the plural and the plural shall include
the singular.

1.1       "ADCC" means antibody-dependent cell-mediated cytotoxicity, which is
an immune response, in which an Antibody coats a target-bearing cell and engages
Fc receptors on immune effector cells and thereby activates the immune effector
cells to lyse the target-bearing cells.  For clarity, this is not restricted to
effects mediated by natural killer cells, but includes e.g., other effector
cells as well.

1.2       "Affiliate" means with respect to a Party, any entity that, directly
or indirectly, through one or more intermediaries, controls, is controlled by or
is under common control with such Party.  For this purpose, "control" means the
ownership of fifty percent (50%) or more of the voting securities entitled to
elect the directors or management of the entity, or the actual power to elect or
direct the management or policies of the entity, whether by law, contract or
otherwise.

1.3       "ALL" means acute lymphoblastic leukemia (including any line of
treatment, including first line, second line and third line, and including
relapsed/refractory forms). For clarity, any of the above forms or lines of
therapy to treat acute lymphoblastic leukemia can achieve the milestone events
as set out in Section 8.2.

1.4       "Antibody" means whether in nucleic acid or protein form, individually
and collectively, any antibody, whether naturally occurring, artificially
produced, raised in an artificial system, designed de novo, or created through
modification of another antibody or otherwise; any fragment or fusion of any of
the foregoing; and any chemically modified versions of the foregoing antibodies
(including versions that are conjugated with another chemical entity, such as a
drug or toxin; pegylated versions (regardless of whether containing amino acid
substitutions in order to achieve pegylation or otherwise modified versions to
enable half-life extension or other desirable properties), including versions
that are chemically or genetically fused to another molecular entity, such as
multispecific antibodies, and cytokine fusions; and other chemically or
biologically modified versions).

1.5       "Approval" means, for the purpose of Section 8.2 only, with respect to
any Regulatory Approval, a final or a conditional approval or an approval under
exceptional circumstances of a MAA.

1.6       “Autoimmune Indication” means the treatment or prophylaxis of any
autoimmune disease or condition (i.e. any disease or condition that is caused by
dis-or de-regulation of the immune system leading to tissue injury by a reaction
to an endogenous antigen but that is not primarily a malignant neoplasia).

1.7       [***]

1.8       [***]

1.9       [***]

1.10     "BLA" means a Biologic License Application (as defined in the US
Federal Food, Drug and Cosmetics Act and the regulations promulgated thereunder
(21 C.F.R. §§ 600-680) in the

2

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US, submitted to the FDA that must be approved prior to importing, marketing and
selling a biological product.

1.11     "Breaching Party" has the meaning described in Section 17.2(a).

1.12     "Broader Anti-CD19 Patents" means the Xencor Background Patents listed
in EXHIBIT 3A.

1.13     "Business Day" means any day other than (i) Saturday or Sunday or (ii)
any other day on which banks in Munich, Germany, Geneva, Switzerland or New
York, New York in the US, are permitted or required to be closed.

1.14     “Buy-In Party” has the meaning described in Section 7.6(b).

1.15     "Candidate-Specific Patents" means the Xencor Background Patents listed
in EXHIBIT 3B.

1.16     "CDC" means complement-dependent cytotoxicity.

1.17     "CDR" means a complementarity determining region of an antibody.

1.18     "CD19" means CD19 (Cluster of Differentiation 19) protein, which
includes human and other species homologues.

1.19     "CFR" means the Code of Federal Regulations (i.e. the codification of
the general and permanent rules published in the Federal Register) published by
the Federal Government of the United States of America.

1.20     "Change of Control" means with respect to a Party: (i) the sale of all
or substantially all of such Party’s assets or business relating to this
Agreement; (ii) a merger, reorganization or consolidation involving such Party
in which the voting securities of such Party outstanding immediately prior
thereto cease to represent at least fifty percent (50%) of the combined voting
power of the surviving entity as a consequence of such merger, reorganization or
consolidation; or (iii) a person or entity, or group of persons or entities,
acting in concert (other than financial investment groups that do not have as a
primary business the development and/or commercialization of pharmaceutical
products or companion diagnostics) acquire more than fifty percent (50%) of the
voting equity securities or management control of such Party.

1.21     "Clearance" means with respect to this Agreement, the expiration or
termination of all applicable waiting periods and requests for information (and
any extensions thereof) under the HSR Act and any other antitrust laws and
regulations applicable to this Agreement.

1.22     "CLL" means Chronic Lymphocytic Leukaemia (including any line of
treatment, including first line, second line and third line, and including
relapsed/refractory forms). For clarity, any of the above forms or lines of
therapy to treat Chronic Lymphocytic Leukaemia can achieve the milestone events
as set out in Section 8.2.

1.23     "Co-Commercialization" means the joint performance of the
Commercialization activities and Medical Affairs Activities by the Parties with
respect to the Licensed Antibody(ies) or Product(s) in the Co-Commercialization
Territory, as further detailed in Section 5.3.

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1.24     "Co-Commercialization Budget" means the annual budget for the
Co-Commercialization, agreed upon by the Parties through the JCC and approved by
the JSC, which budget may be amended and/or supplemented from time to time by
consensual agreement of the JCC and approval by the JSC and shall cover at least
the upcoming [***] months at all times. An initial outline of the
Co-Commercialization Budget is attached hereto as EXHIBIT 15.

1.25     "Co-Commercialization Costs" means [***] incurred by the Parties in
support of Co-Commercialization of Product(s) in the Co-Commercialization
Territory in accordance with the Co-Commercialization Budget [***].

1.26     "Co-Commercialization Plan" means the plan for the Co-Commercialization
activities, agreed upon by the Parties through the JCC and approved by the JSC,
which plan may be amended and/or supplemented from time to time by consensual
agreement of the JCC and approval by the JSC and shall cover at least the
upcoming [***] months at all times. An initial outline of the
Co-Commercialization Plan is attached hereto as EXHIBIT 14.

1.27     "Co-Commercialization Territory" means the US.

1.28     "Combination Product" means (i) any Product which contains one or more
active ingredients in addition to any of the Licensed Antibody and (ii) any
product package which includes one or more additional tools or products (which
are not Products) in addition to a Product. For clarity, a bi-specific or
multi-specific Antibody shall not be regarded as a Combination Product in the
absence of any additional clinically active component other than the bi-specific
Licensed Antibody or multi-specific Licensed Antibody, respectively. For further
clarity, the Parties acknowledge that a Product comprising any Licensed Antibody
that is conjugated or otherwise bound to a toxin or any other clinically active
component shall not be regarded as a Combination Product in the absence of any
clinically active component other than the Licensed Antibody or the clinically
active component to which the Licensed Antibody is conjugated.

1.29     "Commercial FTE Rate" means, with respect to FTE costs,[***] US Dollars
(USD [***]) per year for Co-Commercialization-related FTEs. [***].

1.30     "Commercial Manufacturing Costs" means the costs and expenses incurred
[***].

1.31     "Commercialize" or "Commercialization" means all activities directed to
the Pre-Launch, launch, market access, patient support, booking sales, named
patients programs, compassionate use programs, marketing, promotion,
advertising, Detailing, selling and Distribution of a Product in a country or
region, including planning, forecasting, market research, market insight,
importing, exporting, and post-marketing safety surveillance and reporting and
Pricing Activities, including US Government Price Calculations and Reporting
obligations.  For clarity, "Commercialization" shall not include any activities
covering Manufacturing or Development or Regulatory Activities.

1.32     "Commercialization Costs" means the costs and expenses incurred by a
Party [***]the Commercialization of the Product [***].

1.33     "Commercially Reasonable Efforts" means [***].

1.34     "COMPANY Annual Development Report" means, for each calendar year, the
written report that describes COMPANY’s past and planned Development activities
for Licensed

4

CONFIDENTIAL

 

 

Antibody or Product in the Field for that year, and covers other subject matter
as called for in Section 3.14(a).

1.35     COMPANY Commercialization Plan" means the plan for the
Commercialization activities conducted by the COMPANY in the COMPANY Territory
and discussed by the Parties through the JCC and JSC, which plan shall cover at
least the upcoming [***] months at all times and be in line with the overall
strategic Product positioning, branding, core messaging, and overall medical
congress strategy and global medical education strategy with respect to the
global Commercialization in the Territory.

1.36     "COMPANY Discretionary Manufacturing Activities" means those
activities, which are related to the transfer, developing and implementing of
the Manufacturing process for the Manufacturing of Products from [***] to a
COMPANY manufacturing site or a Third Party manufacturing site, as initiated by
COMPANY, including activities like technology transfer, development of test
methods, stability testing, formulation development, process development,
quality assurance activities, quality control activities, qualification and
validation activities, analytic process development, manufacturing process
validation, scale-up, and all other activities, including CMC-related activities
and including activities to obtain Regulatory Approval.

1.37     "COMPANY Discretionary Manufacturing Activity Costs" means the costs
and expenses incurred by a Party [***] COMPANY Discretionary Manufacturing
Activities. [***]

1.38     "COMPANY Foreground Patents" means any Patent claiming a COMPANY
Invention.

1.39     "COMPANY Funded Development Activities" means (i) Development
activities of COMPANY or its Affiliates (or Sublicensee(s) or subcontractor(s))
in the Field that are NOT directly attributable to, or reasonably allocable to
the performance of a Global Trial or a MorphoSys Trial, including any Trial that
is solely designed or required to obtain and maintain Regulatory Approval in a
certain jurisdiction of the COMPANY Territory, (ii) COMPANY Discretionary
Manufacturing Activities, (iii) activities related to changes in the
Manufacturing process and the Regulatory Materials that are requested solely by
a Regulatory Authority within the COMPANY Territory, and (iv) Independent
Trials-related activities performed by or on behalf of COMPANY or its Affiliates
(or Sublicensee(s) or subcontractor(s)) in the Field.

1.40     "COMPANY Invention" means an Invention that is conceived solely by
employees of COMPANY or Sublicensee or any of their respective Affiliates, or by
employees of a Third Party under an obligation of assignment to COMPANY or an
Affiliate or Sublicensee of COMPANY.

1.41     "COMPANY Know-How" means all Know-How that COMPANY or its Affiliate
Controls during the Term that relates to any Product, Licensed Antibody or a
method of Developing, Manufacturing, using (including methods of administration
and dosing regimens) or testing of (or in the case of testing, of or for the
presence of) any of the foregoing (or any article necessary or useful to
practice or use (including those present during the practice or use of) any such
Product, Licensed Antibody or method.

1.42     "COMPANY Territory" means the whole world except the
Co-Commercialization Territory.

1.43     "COMPANY Trial" means [***].

5

CONFIDENTIAL

 

 

1.44     "Competing Product" means any (i) [***].

1.45     "Confidential Information" has the meaning set forth in Section 16.1.

1.46     "Controlled" or "Control" means, with respect to any Know-How, Patent,
Invention or other intellectual property right, possession (by means of
ownership or license) by a Party, directly or through an Affiliate (other than
pursuant to this Agreement), where the Party has the right to grant a license or
sublicense as provided for in this Agreement. Any Patent, Know-How or other
intellectual property right that is licensed or acquired by a Party following
the Execution Date and that would otherwise be considered to be under the
Control of a Party shall not be deemed to be under the Control of such Party if
the application of such definition in the context of any licenses or sublicenses
granted to the other Party under this Agreement would require the granting Party
to make any additional payments or royalties to a Third Party in connection with
such license or sublicense grants, unless the other Party agrees to pay the
additional payments or royalties to the Third Party.

1.47     "Cover" means, with respect to a particular item and a particular
Patent, that such Patent claims (as opposed to merely disclosing) directly or
indirectly: (a) the composition of such item, any of its ingredients or
formulations or any product containing or that is made using such item (by
virtue of such product containing or being made using such item); (b) a method
of making or using any of the foregoing things referred to in (a); and/or (c) an
item used or present in the manufacture of any of the foregoing things referred
to in (a) (for example, with respect to a biologic, any vector, plasmid or cell
line used to manufacture such product or item or any ingredient in either of
them), in each case of (a), (b) and (c) that provides market exclusivity for the
Product.

1.48     “Cure Period” has the meaning set forth in Section 17.2(a).

1.49     “Data Protection Laws” means all data protection and privacy
legislation in force from time to time including but not limited to the EU
General Data Protection Regulation 2016/679, as nationally implemented and
supplemented in the countries of the European Region, the Health Insurance
Portability and Accountability Act of 1996, and any other federal, state or
national legislation relating to Personal Data and privacy, which is applicable
to a Party relating to the processing of Personal Data.

1.50     "Data Room" means the virtual data room designated [***] hosted by
[***] under [***] which was prepared by MorphoSys and was available to COMPANY
from, [***] in its latest version of that later date.

1.51     "Designated JDC Officers" has the meaning set forth in Section 9.5(e).

1.52     "Detail" or "Detailing" means an interactive face-to-face visit by a
Sales Representative with a Healthcare Professional or healthcare provider
having prescribing authority and who is within the target audience, during which
approved uses, safety, effectiveness, contraindications, side effects, warnings,
or other relevant characteristics of a pharmaceutical or biological product are
discussed in an effort to increase prescribing preferences of a pharmaceutical
or biological product for its approved uses. Details shall not include: (a)
activities conducted by medical support staff; or (b) e-details, activities
conducted at conventions or similar gatherings, or activities performed by
market development specialists, managed care account directors, and other
personnel not performing face-to-face sales calls or not specifically trained
with respect to a pharmaceutical or biological product.

6

CONFIDENTIAL

 

 

1.53     "Detailing Costs" means [***]

1.54     "Develop" or "Development" means all activities covering research,
non-clinical, preclinical and Trials (including Trial recruitment and Trial site
engagement), toxicology testing, companion diagnostics development, statistical
analysis and reporting, all the aforementioned regarding the Licensed Antibody
and/or the Product in any country or jurisdiction in the world in the Field and
being necessary or reasonably useful or requested or required by a Regulatory
Authority or as a condition or in support of obtaining or maintaining any or all
Regulatory Approvals for the Licensed Antibody and/or Product in any country or
jurisdiction in the world in the Field. For clarity, "Develop" and "Development"
shall include Post-Marketing Authorization Trials that are required by or
committed to Regulatory Authorities but shall not include any activities
covering Commercialization or Manufacture or other Regulatory Activities.

1.55     "Development Activities" means activities by or on behalf of the
Parties or their Affiliates (or their Sublicensee(s) or subcontractor(s)) with
respect to the Development of the Licensed Antibody or Product in the Field,
which are (i) Joint Development Activities or (ii) Sole Funded Development
Activities.

1.56     "Development Costs" means [***] Development Costs shall exclude
Commercialization Costs, Medical Affairs Activities Costs and Regulatory Costs.
[***]

1.57     "Development Data" means all non-clinical, clinical, technical,
biochemical, safety, and scientific data and information and other results,
including relevant laboratory notebook information, screening data, Regulatory
Data and synthesis schemes, including descriptions in any form, data and other
information, including GMP and GDP-related quality information, generated by or
resulting from or in connection with the conduct of Joint Development Activities
("Joint Development Data") or in connection with the conduct of any Sole Funded
Development Activity ("Sole Funded Development Data").

1.58     "Development FTE Rate" means, with respect to FTE costs, [***] US
Dollars (USD [***]) per year for Development, Manufacture, and Regulatory
Activities-related FTEs. [***]

1.59     "Development Plan" means the plan for the Development of the Product in
the Field in the Territory agreed upon by the Parties through the JDC and
approved by the JSC, which plan may be amended and/or supplemented from time to
time by consensual agreement of the JDC and approval by the JSC and shall cover
at least the upcoming [***] months at all times.  An initial outline of the
Development Plan is provided in EXHIBIT 6 ("Development Plan Outline").

1.60     "Disclosing Party" has the meaning set forth in Section 16.1.

1.61     "Disclosure Schedule" has the meaning set forth in Section 13.2.

1.62     "Dispute" has the meaning set forth in Section18.3(a).

1.63     "Distribution" means all activities with respect to the Product
covering the (a) handling, storage and transportation to fulfil orders; and (b)
interactions with wholesalers, specialty pharmacies, distributors and group
purchasing organizations.

1.64     "Distribute" shall have the correlative meaning.

7

CONFIDENTIAL

 

 

1.65     "Distributor" means, for the purposes of the [***] definition and Net
Sales definition, any Third Party that is not granted a sublicense hereunder,
but that (a) has been granted the right to Distribute or resell any quantities
of Product, which quantities are provided by a Party or its Affiliates or its
Sublicensee(s); (b) pays the Party or its Affiliate or its Sublicensee(s) a
transfer price and assumes responsibility to resell in its name; and (c) does
not pay the Party or its Affiliate or its Sublicensee(s) a royalty calculated as
a percentage of sales or net sales, and (d) does not pay the Party or its
Affiliate or its Sublicensee(s) any other consideration in connection with
Licensed Antibody or Product.

1.66     "DLBCL" means Diffuse Large B Cell Lymphoma (including any line of
treatment, including first line, second line and third line, and including
relapsed/refractory "R/R" forms). For clarity, any of the above forms or lines
of therapy to treat Diffuse Large B Cell Lymphoma can achieve the milestone
events as set out in Section 8.2.

1.67     "Drug Product" means the Product in its final dosage form filled in its
designated primary containers (e.g. vials) but not labelled and not packed in
the final secondary packaging.

1.68     "Early Access Program" means a program that gives patients access to
the Product in a certain country or territory prior to Marketing Authorization
grant, or where applicable, prior to Pricing Approval, of the Product in such
country or territory and outside the framework of a Trial.

1.69     "Effective Date" shall mean the first (1st) Business Day following the
date on which Clearance occurs.

1.70     "EMA" means the European Medicines Agency or any successor agency
thereto in the EU.

1.71     "European Major Market" means [***].

1.72     "European Region"  means [***].

1.73     "European Union" or "EU" means [***].

1.74     "Execution Date" shall mean the date set forth in the Introductory
Clause of this Agreement.

1.75     "Existing Product Marks" means the Product Marks owned by MorphoSys and
existing at the Execution Date, which are listed in EXHIBIT 12.

1.76     "External Costs" means [***] external expenses (including [***]) [***]
excluding [***] paid by a Party or its Affiliates to Third Parties for [***] To
the extent such services are not attributable solely to Product, then only the
respective pro rata amount, which shall be agreed between the Parties in good
faith, for Product shall be regarded as External Cost.

1.77     "FDA" means the United States Food and Drug Administration or any
successor agency thereto in the US.

1.78     "Field" means all human and non-human diagnostic, prophylactic,
therapeutic and palliative uses.

8

CONFIDENTIAL

 

 

1.79     "Filing" means, with respect to any Regulatory Approval, the submission
to the respective Regulatory Authority of all necessary Regulatory Materials to
apply for such Regulatory Approval.

1.80     "Finished Drug Product" means the Drug Product finally labelled and
packaged for end-user use, as required for a Trial or for Commercialization, as
applicable.

1.81     "First Commercial Sale" means, with respect to any Product and country,
the first sale of such Product in a country by COMPANY or its Affiliates or
Sublicensees to any Third Party (other than a Sublicensee).

1.82     “First Position Detail” means a Detail in which the applicable
pharmaceutical product is Detailed before any other product and the predominant
portion of time is devoted to the Detailing of such pharmaceutical product.

1.83     "FL" means follicular lymphoma (including any line of treatment,
including first line, second line and third line, and including
relapsed/refractory forms). For clarity, any of the above forms or lines of
therapy to treat Follicular Lymphoma can achieve the milestone events as set out
in Section 8.2.

1.84     "FTE" means the equivalent of one (1) full-time person working over a
twelve (12) month period [***].

1.85     "GAAP" means Generally Accepted Accounting Principles and can comprise
International Financial Reporting Standards (IFRS) or US-GAAP, consistently
applied.

1.86     "GCP" means all applicable Good Clinical Practice standards for the
design, conduct, performance, monitoring, auditing, recording, analyses and
reporting of clinical trials, including, as applicable, (i) as set forth in
European Commission Directive 2001/20/EC relating to the implementation of good
clinical practice in the conduct of clinical trials on medicinal products for
human use, and brought into Law by European Commission Directive 2005/28/EC
laying down the principles and detailed guidelines for good clinical practice
for investigational medicinal products, (ii) regulation 536/2014 of the European
Parliament and of the council of 16 April 2014 on clinical trials on medicinal
products for human use, (iii) the International Conference on Harmonisation of
Technical Requirements for Registration of Pharmaceuticals for Human Use
Harmonised Tripartite Guideline for Good Clinical Practice (CPMP/ICH/135/95) and
any further addenda thereto and any other guidelines for good clinical practice
for trials on medicinal products in the EU, (iv) the Declaration of Helsinki
(2004) as last amended at the 64th World Medical Association in October 2013 and
any further amendments or clarifications thereto, (v) US Code of Federal
Regulations Title 21, Parts 50 (Protection of Human Subjects), 56 (Institutional
Review Boards) and 312 (Investigational New Drug Application), as may be amended
from time to time, and (vi) the equivalent Laws in any relevant country, each as
may be amended and applicable from time to time and in each case that provide
for, among other things, assurance that the clinical data and reported results
are credible and accurate and protect the rights, integrity, and confidentiality
of trial subjects.

1.87     “Germany Co-Detailing Agreement” has the meaning set forth in Section
2.4(d).

1.88     "Global Branding" has the meaning set forth in Section 5.6(a)(i)(1).

1.89     "Global Brand Strategy" has the meaning set forth in Section
5.6(a)(i)(2).

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1.90     "Global Product Mark" has the meaning set forth in Section 5.6(a)(iii)
and includes the Existing Product Marks.

1.91     "Global Trial" would mean a (i) Trial, other than a MorphoSys Trial,
that is required to obtain and/or maintain Regulatory Approvals in at least the
Co-Commercialization Territory and possibly also other country(ies) within the
COMPANY Territory, or (ii) an investigator initiated Trial, which is conducted
in at least the Co-Commercialization Territory and possibly also other
country(ies) within the COMPANY Territory or (iii) an Early Access Program based
on a MorphoSys Trial or a Trial under (i) above, which is conducted in at least
the Co-Commercialization Territory and possibly also other country(ies) within
the COMPANY Territory. If any activity under each of (i), (ii) and (iii) above
is a Non-NDA Study, such activity to be subject to approval under Section
9.2(e).

1.92     "GLP" means all applicable Good Laboratory Practice standards,
including, as applicable, (i) as set forth in European Commission Directive
2004/10/EC relating to the application of the principles of good laboratory
practices, as may be amended from time to time, as well as the OECD Series on
Principles of Good Laboratory Practice, (ii) the then-current good laboratory
practice standards promulgated or endorsed by the FDA as defined in 21 C.F.R.
Part 58, and (iii) the equivalent Laws in any relevant country, each as may be
amended and applicable from time to time.

1.93     "GMP" means all applicable Good Manufacturing Practices including, as
applicable, (i) the applicable part of quality assurance to ensure that products
are consistently produced and controlled in accordance with the quality
standards appropriate for their intended use, as defined in European Commission
Directive 2003/94/EC laying down the principles and guidelines of good
manufacturing practice, (ii) the principles detailed in the US Current Good
Manufacturing Practices, 21 C.F.R. Sections 210, 211, 601 and 610, (iii) the
Rules Governing Medicinal Products in the European Community, Volume IV Good
Manufacturing Practice for Medicinal Products, (iv) the principles detailed in
the ICH Q7A guidelines, and (v) the equivalent Laws in any relevant country,
each as may be amended and applicable from time to time.

1.94     "Governmental Authority" means any multinational, supra-national,
federal, state, local, municipal or other governmental authority of any nature
(including any Regulatory Authority and any governmental association, division,
prefecture, subdivision, department, agency, bureau, branch, office, commission,
committee, council, court or other tribunal, such as statutory health insurance
funds and their associations), in each case having jurisdiction over the
applicable subject matter.

1.95     “Government Official”  means (a) any officer, employee of a government
or any department, agency or instrument of a government; (b) any person acting
in an official capacity for or on behalf of a government or any department,
agency, or instrument of a government, including, for example, a Healthcare
Professional employed by a public hospital or healthcare system; (c) any officer
or employee of a company or business owned in whole or part by a government; (d)
any officer or employee of a public international organization such as the World
Bank or United Nations; (e) any political party, officer or employee of a
political party ,or any person acting in an official capacity on behalf of a
political party; and/or (f) any candidate or relative of any candidate for
political office.

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1.96     “Healthcare Professional”  means any member of the medical, pharmacy or
nursing professions or any other person who in the course of his or her
professional activities may prescribe, purchase, supply or administer a
medicinal product.

1.97     "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules promulgated thereunder.

1.98     "HSR Filing Date" has the meaning defined in Section 18.21(a).

1.99     "IND" means an Investigational New Drug Application (as defined in the
US Federal Food, Drug and Cosmetics Act and the regulations promulgated
thereunder (21 C.F.R. §312) in the US, a clinical trial application in Europe,
or a comparable application or filing in any other jurisdiction (i.e., a filing
with a Regulatory Authority or Ethics Committee that must be made prior to
commencing clinical testing in humans).

1.100   "Independent Trial" means a Trial, which has not been agreed by the
Parties to be a Global Trial as Joint Development Activity in accordance with
Section 3.5. For clarity, an Independent Trial may be conducted in countries in
either or both the Co-Commercialization Territory and the COMPANY Territory,
provided that (i) such Independent Trial has been reviewed and discussed in the
JDC, (ii) any Non-NDA Study is subject to approval under Section 9.2(e), and
(iii) such Independent Trial has been included into the Development Plan.

1.101   “Indication” means, with respect to a Product, a separate and distinct
disease or medical condition that such Product is intended to treat, cure,
mitigate, control, prevent, diagnose, monitor or ameliorate, as set forth in the
Market Authorization Application or label for such Product, as applicable, for
which such Product has received Regulatory Approval from the applicable
Regulatory Authority. For clarity, DLBCL, FL, MCL, MZL, ALL and CLL shall be
separate Indications. For the purpose of Section 8.2 only, the use of a Product
to treat an expanded set of patients or a sub-population of patients for a
disease or medical condition, when such Product has already received Regulatory
Approval in a different patient population or sub-population of patients with
respect to such disease or medical condition or line of therapy, shall not
constitute a separate Indication with respect to such Product, except as
specifically outlined [***].

1.102   “Initial Know-How Transfer” has the meaning set forth in Section 3.1.

1.103   "Invention" means any invention, discovery, improvement, technology or
other Know-How (in each case, whether patentable or not) that is not existing as
of the Execution Date and is invented or generated under this Agreement during
the Term.

1.104   "JCC" has the meaning set forth in Section 9.7(a).

1.105   "JDC" has the meaning set forth in Section 9.5(a).

1.106   "JMC" has the meaning set forth in Section 9.6(a).

1.107   "Joint Development Activities" means (i) any Global Trial(s) or
MorphoSys Trial(s), including Development Activities directly attributable to,
or reasonably allocable to the performance of a Global Trial or a MorphoSys
Trial, (ii) establishment and maintenance of the global safety database (or
safety databases, as applicable) and, until obtaining of first Regulatory
Approval for Product in Territory, pharmacovigilance activities for the Product,
and (iii) Manufacturing Development Activities; in each case undertaken by or on
behalf of a Party

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or its Affiliates (or their Sublicensee(s) or subcontractors) with respect to
the Licensed Antibody or Product in the Field and, for activities carried out
after the Execution Date, consistent with the applicable Development Plan. For
the avoidance of doubt, Manufacturing (other than commercial supply),
distribution and clinical supply of Product, as well as any combination or
comparator products, for Development Activities directly attributable to, or
reasonably allocable to the performance of a Global Trial or a MorphoSys Trial
shall be regarded as Joint Development Activities.

1.108   "Joint Development Budget" shall mean the annual budget for all Joint
Development Costs in the applicable Development Plan as agreed through the JDC
and approved by the JSC, which budget may be amended and/or supplemented from
time to time by consensual agreement of the JDC and approval by the JSC and
shall cover at least the upcoming [***] months at all times.  An initial outline
of the Joint Development Budget is provided in EXHIBIT 7.

1.109   "Joint Development Costs" means the Development Costs incurred by a
Party or its Affiliates directly attributable to, or reasonably allocable to
Joint Development Activities, provided that such costs and expenses are
consistent with the applicable Development Plan (including the Joint Development
Budget contained therein). "Joint Development Costs" shall [***]. For clarity,
Joint Development Costs shall exclude Medical Affairs Activities Costs,
Regulatory Costs and Commercialization Costs.  For the avoidance of doubt, to
the extent costs are partly directly attributable to the Joint Development
Activities and partly attributable to other activities of COMPANY or MorphoSys
(in particular Sole Funded Development Activities), such costs shall constitute
"Joint Development Costs" on a pro rata basis, which calculation shall be agreed
between the Parties in good faith.

1.110   "Joint Foreground Patents” means all Patents claiming Joint Inventions.

1.111   "Joint Invention" means an Invention that is conceived jointly by
employees of, or persons under an obligation of assignment to, MorphoSys and
COMPANY.

1.112   "JSC" or "Joint Steering Committee" shall have the meaning set forth in
Section 9.2(a).

1.113   "Know-How" means (i) all information, techniques, data, inventions,
practices, methods, processes, knowledge, know-how, skill, experience, technical
data, test results (including pharmacological, toxicological, clinical,
analytical and quality control data, regulatory submissions, correspondence and
communications, and marketing, distribution, pricing, cost, manufacturing,
patent and legal data or descriptions), and (ii) compositions of matter, assays,
cell lines, vectors, plasmids and other materials, including Development Data.

1.114   "Labelling and Packaging" means labelling and packaging of the Drug
Product, including insertion of materials such as patient inserts, patient
medication guides, professional inserts and any other written, printed or
graphic materials accompanying the Product considered to be part of the Finished
Drug Product, and its handling, storage, quality control, quality assurance,
testing and related activities of the Product in connection with the foregoing.

1.115   "Laws" means all laws, statutes, rules, regulations, directives,
decisions, ordinances, guidelines and other pronouncements of any Governmental
Authority.

1.116   "Licensed Antibody" means (a) the humanized monoclonal antibody
designated by MorphoSys as "MOR208" or “tafasitamab” or “XmAb5574” the amino
acid sequence of which

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is disclosed in EXHIBIT 1 and/or (b) all derivative, follow-on and backup
molecules thereof in all cases owned or Controlled by MorphoSys on the Execution
Date or during the Term, (c) all derivative, follow-on and backup molecules,
invented jointly with COMPANY at any time during the Term to the extent not
forbidden by the Xencor Agreement and/or (d) any other anti-CD19 monoclonal
antibodies owned or Controlled by MorphoSys as of the Execution Date or during
the Term. “Licensed Antibody” excludes XmAb5871 and all Antibodies in the
XmAb5871 Program.

1.117   "Losses" has the meaning set forth in Section 14.1.

1.118   "MAA" means a Marketing Authorization application in the form of a BLA
in the US, a MAA in Europe, a JNDA in Japan or a comparable filing or filing
serving to apply for Marketing Authorization in any other regulatory
jurisdiction.

1.119   "M&A Event" has the meaning set forth in Section 18.1.

1.120   "Manufacturing" or "Manufacture" means all activities related to the
manufacturing of the Licensed Antibody or a Product (both whether finished or
not) or a Placebo thereof, or a combination or comparator product, or any
ingredient thereof, including manufacturing for clinical use or commercial sale,
in-process and lot release testing, release, certification, filling, Labelling
and Packaging, quality assurance activities related to such aforementioned
manufacturing of the Licensed Antibody, Product, combination or comparator
product as well as handling and storage of the Licensed Antibody or Product or a
Placebo thereof.

1.121   "Manufacturing Development Activities" means development of test
methods, stability testing, formulation development, manufacturing development,
process development, quality assurance activities, quality control activities,
qualification and validation activities, development activities for analytical
test methods, analytical testing, release testing, generation of reference
materials, manufacturing process validation, scale-up, and all other activities,
including CMC-related activities, necessary for or related to the development of
Manufacture of Licensed Antibody, Placebo and Product for clinical or commercial
use in the Field as far as directly allocable to or reasonably useful for the
development of Manufacture for the supply for or Regulatory Approvals in any
country worldwide.

1.122   "Marketing Authorization" means, with respect to a Product, the
possession of all approvals (including supplements, amendments), licenses,
registrations and authorizations of any national (e.g., the FDA), supra-national
(e.g., the European Commission), regional, state or local regulatory agency,
department, bureau, commission, council or other governmental authority,
necessary for the manufacture, distribution, use and sale of such Product in a
regulatory jurisdiction. For the avoidance of doubt, “Marketing Authorization”
shall not include Pricing Approval.

1.123   "Material Breach" has the meaning set forth in Section 17.2(a).

1.124   "MCL" means Mantle Cell Lymphoma (including any line of treatment,
including first line, second line and third line, and including
relapsed/refractory forms). For clarity, any of the above forms or lines of
therapy to treat Mantle Cell Lymphoma can achieve the milestone events as set
out in Section 8.2.

1.125   "Medical Affairs Activities" means non-promotional activities designed
to ensure or improve appropriate medical use of, conduct medical education of,
or further research regarding, Licensed Antibody(ies) or Product(s), including
by way of example: (i) activities of

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medical science liaisons; (ii) the provision of grants or sponsorships to
support continuing medical education, symposia, or Third Party research related
to the Product; (iii) the development, publication and dissemination of
publications relating to the Product and/or related disease or therapeutic
indication; (iv) medical information services provided in response to inquiries
communicated via Sales Representatives or received by letter, phone call, email
or other means of communication; (v) presentation of relevant medical
information to third-party payers, advocacy (including patient advocacy groups)
and health policy groups; (vi) the conduct of advisory board meetings and other
meetings with Healthcare Professionals; and (vii) Non-NDA Studies.

1.126   "Medical Affairs Activities Costs" means costs and expenses [***] the
Medical Affairs Activities conducted pursuant to the Agreement and the
Development Plan and Co-Commercialization Plan (as applicable) then in effect,
incurred by a Party [***] Medical Affairs Activities in the Co-Commercialization
Territory in accordance with the Joint Development Budget and
Co-Commercialization Budget (as applicable), [***]. For the avoidance of doubt,
to the extent costs are partly directly attributable to Medical Affairs
Activities and partly attributable to other activities of COMPANY or MorphoSys
(in particular Medical Affairs Activities for products controlled by COMPANY
that are not Licensed Antibody or Product), such costs shall constitute “Medical
Affairs Activities Costs” on a pro rata basis, which calculation shall be agreed
between the Parties in good faith.

1.127   “MorphoSys Annual Development Report" means, for each calendar year, the
written report that describes MorphoSys’ past and planned Development activities
for Licensed Antibody or Product in the Field for that year, and covers other
subject matter as called for in Section 3.14(b).

1.128   "MorphoSys Background Patents" means (a) all patents and patent
applications listed in EXHIBIT 2;  (b) all patent applications (including
provisional and utility applications) claiming priority to or common priority
with or based on any of the foregoing, including all divisionals, continuations,
continuations-in-part, patents of addition and substitutions of any of the
foregoing; (c) all patents issuing on any of the foregoing, and all reissues,
re-examinations, renewals and extensions of any of the foregoing, (d) all
counterparts to the foregoing in other countries; and (e) all supplementary
protection certificates, restoration or extension of patent term and other
similar rights of MorphoSys and its Affiliates based on any of the
foregoing.  At the reasonable request of COMPANY, but no more than once per
[***], MorphoSys shall provide COMPANY with an updated list of MorphoSys
Background Patents and correct any typographical errors.

1.129   "MorphoSys Core Improvement Inventions" means any and all Product
Inventions, for which MorphoSys (or its Affiliate) has (meaning that it employs
or has engaged as a consultant) at least one (1) person who would be a properly
named inventor on the US Patent claiming such invention, that were invented in
the course of MorphoSys’ or its Affiliate’s Product activities during the Term,
and (a) relate to enhancing the antibody-dependent cytotoxic activity of an Fc
in comparison to human wild type IgG1 antibodies, including, but not limited to,
ADCC, CDC, and/or phagocytosis, and (b) are not claimed in patents all of the
claims of which are limited by CD19, any other target, or by CDR or specificity
of the Antibody.

1.130   "MorphoSys Foreground Patents" means any Patent claiming a MorphoSys
Invention.

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1.131   "MorphoSys Funded Development Activities" means Independent
Trials-related activities performed by or on behalf of MorphoSys or its
Affiliates (or Sublicensee(s) or subcontractor(s)) for Product.

1.132   "MorphoSys Invention" means an Invention that is conceived solely by
employees of MorphoSys or its Affiliates or of a Third Party under an obligation
of assignment to MorphoSys or its Affiliates.

1.133   "MorphoSys Know-How" means all Know-How that MorphoSys or its Affiliate
Controls during the Term that relates in any way to any Product, Licensed
Antibody or a method of Developing, Manufacturing, using (including methods of
administration and dosing regimens) or testing of (or in the case of testing, of
or for the presence of) any of the foregoing or any article necessary or
reasonably useful to practice or use (including those present during the
practice or use of) any such Product, Licensed Antibody or method.  The
MorphoSys Know-How includes all clinical data generated in clinical trials of
Product by or for MorphoSys or its Affiliates. To avoid doubt, MorphoSys
Know-How does not include Know-How relating to the manufacture of the Licensed
Antibody and Product that is Controlled by [***] on the Execution Date. Without
limiting the generality of the definition set forth in this Section, the
MorphoSys Know-How on the Execution Date is listed in more detail in EXHIBIT 4A
hereto.

1.134   "MorphoSys Patent" means any MorphoSys Background Patent and MorphoSys
Foreground Patent.

1.135   "MorphoSys Trial(s)" means the Trials outlined in EXHIBIT 8A, [***].

1.136   "MZL" means Marginal Zone Lymphoma (including any line of treatment,
including first line, second line and third line, and including
relapsed/refractory forms). For clarity, any of the above forms or lines of
therapy to treat Marginal Zone Lymphoma can achieve the milestone events as set
out in Section 8.2.

1.137   "Net Sales" means the gross amount invoiced by a Party or its Affiliates
or any Sublicensee(s) for the sale of Product in the Territory, less any of the
following applicable deductions related to such sale and included in the
invoiced amounts:

[***]

In the event that a Product is sold as part of a Combination Product, Net Sales
of the Product, for the purpose of determining royalty payments, shall be
determined by [***].

Net Sales excludes [***].

Net Sales includes [***].

Net Sales amounts shall be determined from the books and records of a Party and
its Affiliates maintained in accordance with GAAP consistently applied [***].

1.138   "NHL" means non-Hodgkins lymphoma, including but not limited to DLBCL,
FL, marginal zone lymphoma and mantle cell lymphoma (including any line of
treatment, including first line, second line and third line, and including
relapsed/refractory forms).

1.139   "Non-Breaching Party" has the meaning described in Section 17.2(a).

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1.140   “Non-NDA Study” means a Trial that is either (a) an investigator
initiated trial, (b) Early Access Program, (c) interventional health economics
and outcomes research (HEOR), (d) non-interventional retrospective or
prospective study, or (e) Post-Marketing Authorization Trial, in each case (a)
through (e) above such Trial shall not be required by, or are a commitment to,
Regulatory Authorities.

1.141   "Other Licensee(s)" means any Third Party to whom Xencor or any of its
Affiliates has granted a license or sublicense to research, develop, manufacture
and/or commercialize any XmAb5871 Product.

1.142   "Patent" means any patent application or patent anywhere in the world,
including all of the following kinds: provisional, utility, divisional,
continuation, continuation-in-part, and substitution applications; and utility,
re-issue, re-examination, renewal and extended patents, and patents of addition,
and any supplementary protection certificates, restoration of patent terms and
other similar rights.

1.143   "Patent Challenge" has the meaning set forth in Section 11.20.

1.144   “Personal Data” means any information relating to an identified or
identifiable natural person.

1.145   "Pivotal Trial" means a Trial (or – in case of a multiphase clinical
trial – those parts of a clinical trial) intended and/or sufficient to provide
affirmative evidence for a drug Marketing Authorization approval, including but
not limited to a Phase 3 Trial.

1.146   "Phase 1 Trial" means, with respect to a Product, a Trial (or -- in case
of a multi-phase clinical trial -- those parts of a clinical trial) in line with
the provisions of 21CFR312, Section 21 (a).

1.147   "Phase 2 Trial" means, with respect to a Product, a Trial (or -- in case
of a multi-phase clinical trial -- those parts of a clinical trial) in line with
the provisions of 21CFR312, Section 21 (b).

1.148   "Phase 3 Trial" means, with respect to a Product, a Trial (or -- in case
of a multi-phase clinical trial -- those parts of a clinical trial) in line with
the provisions of 21CFR312, Section 21 (c).

1.149   “Placebo” means a substance or mixture of substances lacking presence of
an active pharmaceutical ingredient, manufactured for purposes of control
treatment in blinded clinical trials with Product.

1.150   "PMDA" means the Pharmaceuticals and Medical Devices Agency in Japan or
any successor agency thereto.

1.151   "Post-Marketing Authorization Trial" means with respect to Product, a
Trial occurring after Marketing Authorization in a given Indication, including
post-market requirement and commitment studies that are required of or agreed to
by the Sponsor and that gather additional information about the Product's
safety, efficacy, or optimal use within the Indication covered by the Marketing
Authorization, including phase IV Trials and confirmatory Trials.

1.152   "Pre-Launch" means all activities undertaken prior to and in preparation
for the launch of the Product in a given country or region.  Pre-Launch shall
include all activities directed to market research, advisory boards, medical
education, disease-related public relations, sales

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force training and other pre-launch activities prior to the First Commercial
Sale of the Product in a given country or region.

1.153   "Pre-Tax Profit (Loss)" means, for the purposes of this Agreement, for a
given period of time, all Net Sales in the Co-Commercialization Territory during
such period, less the sum of both Parties’ [***]. For sake of clarity, Pre-Tax
Profit (Loss) shall be determined in accordance with GAAP consistently applied
for all costs other than FTE Costs, which costs shall be determined as set forth
in this Agreement, prior to application of any income taxes. In the event that
there is overlap among any of those deductions (i)-(vii) and the deductions
(a)-(e) under the Net Sales definition, each individual item shall only be
deducted once in each Pre-Tax Profit (Loss) calculation.

1.154   "Pre-Tax Profit (Loss) Share" has the meaning set forth in Section 7.7.

1.155   "Pricing Activities" means activities by or on behalf of the Parties or
their Affiliates (or their Sublicensee(s) or subcontractor(s)) with respect to
(a) preparation, filing, obtaining and maintaining Pricing Approvals,
(b) Pricing Materials, (c) calls and meetings with Governmental Authorities in
relation to Pricing Approvals and/or Pricing Materials, all with respect to
Licensed Antibody(ies) and/or Product(s).

1.156   "Pricing Approval" means the approval, agreement, determination or
decision from a Governmental Authority or a private payer establishing the final
net price and reimbursement for the Product for sale in a given country or
regulatory jurisdiction, in such country or other regulatory jurisdiction prior
to or subsequent to the marketing and sale of the Product in such country or
regulatory jurisdiction.

1.157   "Pricing Costs" means [***] Pricing Activities in relation to the
Product. [***].

1.158   "Pricing Materials" means applications, submissions, notifications,
communications, correspondence, registrations and/or other filings submitted to,
made to, received from or otherwise conducted with a Governmental Authority that
are necessary in order to obtain and maintain Pricing Approvals in a particular
country or regulatory jurisdiction.

1.159   "Product" means any product for use in the Field comprising or
containing a Licensed Antibody, alone or in combination with one or more other
active ingredients in all forms, in current and future formulations, dosage
forms and strengths, and delivery modes, including any improvements to any of
the foregoing.

1.160   "Product Inventions" means any and all patentable Inventions that
constitute or relate in any way to (a) the Licensed Antibody, Product, Antibody
in the XmAb5871 Program, or pharmaceutical composition containing any such
Antibody, (b) any method of making, using (including methods of administration
and dosing regimens) or testing (in the case of testing, of or for the presence
of) any of the foregoing, and/or (c) any article necessary or useful to practice
(including those present during the practice of) any method referred to in
clause (b) (including cell lines, vectors and plasmids used in production).

1.161   “Product Liability Expenses” means [***].

1.162   "Product Marks" means the trademarks for use in connection with the
Commercialization of the Product, including the trade dress, style of packaging,
logos, internet domain names, trade names and other proprietary names for the
Product used in connection

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with the Commercialization of the Product. For clarity, Product Marks shall not
include the corporate names and logos of COMPANY or MorphoSys.

1.163   "Pro Rata Percentage" means, in the context of costs, expenses, fees and
payments sharing between the Parties under this Agreement, the following
proportionate allocation:(a) with respect to COMPANY, fifty-five percent (55%),
and (b) with respect to MorphoSys, forty-five percent (45%). For clarity, for
Co-Commercialization Costs in the Co-Commercialization Territory, the Pro Rata
Percentage shall not apply but the principles set forth in Section 7.7 shall
apply.

1.164   "Regulatory Activities" means activities by or on behalf of the Parties
or their Affiliates (or their Sublicensee(s) or subcontractor(s)) with respect
to (a) preparation, filing, obtaining and maintaining Regulatory Approvals
(b) Regulatory Materials, (c) calls and meetings with Regulatory Authorities,
all with respect to Licensed Antibody(ies) and/or Product(s).

1.165   "Regulatory Approvals" means all necessary approvals (including INDs,
Marketing Authorizations and, in each case any supplements and amendments
thereto), licenses, registrations or authorizations of any Governmental
Authority, necessary for the Development, Manufacture, distribution, use,
promotion, importing, sale and commercialization of the Product in a given
country or regulatory jurisdiction, except for Pricing Approvals.

1.166   "Regulatory Authority" means any Governmental Authority in any
jurisdiction of the world involved in the granting of Marketing Authorization
and/or authorizations for clinical trials for pharmaceutical products or medical
devices (including regulated diagnostics).

1.167   "Regulatory Costs" means [***] Regulatory Activities. [***] Regulatory
Costs shall exclude Development Costs, Commercialization Costs, Manufacturing
costs and Medical Affairs Activities Costs.

1.168   "Regulatory Data" means any and all research data, pharmacology data,
chemistry, manufacturing and control data, preclinical data, clinical data and
all other documentation submitted, or required to be submitted, to Regulatory
Authorities in association with obtaining or maintaining all Regulatory
Approvals and Pricing Approval for the Product in the Territories (including
relevant parts of any applicable Drug Master Files ("DMFs"), Chemistry,
Manufacturing and Control ("CMC") data, Common Technical Document ("CTD") or
similar documentation).

1.169   "Regulatory Materials" means regulatory applications, submissions,
notifications, communications, correspondence, registrations and/or other
filings submitted to, made to, received from or otherwise conducted with a
Regulatory Authority that are necessary in order to Develop, Manufacture, obtain
and maintain Regulatory Approvals, market, sell or otherwise Commercialize the
Product in a particular country or regulatory jurisdiction. Regulatory Materials
include materials relating to pre-IND meetings, INDs, pre-MAA meetings, MAAs,
presentations, responses, and applications for other Regulatory Approvals,
excluding Pricing Materials.

1.170   “ROW Territory” means the COMPANY Territory excluding the European
Region and Japan.

1.171   "Royalty Term" has the meaning set forth in Section 8.3(c).

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1.172   "Sales Representative" means an authorized salesperson or agent who has
been qualified by either Party under the Party’s respective policies and
procedures to sell a Product, whether employed or otherwise contracted by a
Party.

1.173   “Second Position Detail” means a Detail in which the applicable
pharmaceutical product is Detailed in the second position (i.e., no more than
one other product is presented to or discussed with the Healthcare Professional
before such Product) and the second most predominant portion of time is devoted
to the Detailing of such pharmaceutical product.

1.174   "Sole Funded Development Activities" means either a MorphoSys Funded
Development Activity and/or COMPANY Funded Development Activity.

1.175   “Sole Funded Development Activity Budget” has the meaning set forth in
Section 3.5.

1.176   “Sole Funded Development Activity Plan” has the meaning set forth in
Section 3.5.

1.177   "Sponsor" means the Party (or such Party's Affiliate or sublicensee)
taking responsibility for the initiation and management, and/or financing of a
Trial in accordance with applicable Laws. For the avoidance of doubt, the
allocation of costs for Development activities in the internal relationship
between the Parties under this Agreement shall not be decisive to determine
which Party is the Sponsor of a Trial under this definition.

1.178   "Sublicense Agreement" means a sublicense or other right (including any
option for a sublicense) for any Licensed Antibody, specifically excluding
rights granted to Distributors.

1.179   "Sublicensee" means a Third Party to whom a Party (or its Affiliate) has
granted a (sub)license, specifically excluding distributors and excluding
contract manufacturing organizations with a right to Manufacture on behalf of a
Party (or its Affiliate or its Sublicensee) only.

1.180   "Supply Agreement" has the meaning set forth in Section 6.1.

1.181   "Target" means CD19.

1.182   "Technology Transfer" has the meaning assigned to it in Section 6.6(a).

1.183   "Term" has the meaning assigned to it in Section 17.1(a).

1.184   "Territory" means, collectively, the Co-Commercialization Territory and
the COMPANY Territory.

1.185   "Third Party" means any person or entity other than a Party or an
Affiliate of a Party.

1.186   "Third Party Patents" means all Patents owned by any Third Party (other
than Xencor or [***]) that a Party reasonably determines would be necessary for
the research, development, manufacture (whether for development or
Commercialization activities), use or Commercialization of any Licensed Antibody
or Product.

1.187   "Third Party Payments" means [***].

1.188   "TPP" means the target product profile for the Product in the Field
worldwide.

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1.189   "Trial" means any clinical study or clinical trial (including
interventional clinical trials), Independent Trials and Sole Funded Development
Activities in which the Product is administered or otherwise evaluated in humans
(including any Post-Marketing Authorization Trial, Non-NDA Studies, paediatric
trials) or any non-interventional, retrospective or observational studies
related to the Product.

1.190   "US" means the United States of America and its respective territories,
districts, commonwealths and possessions (including Guam and Puerto Rico).

1.191   “US Dollar” means U.S. Dollars and all references to “dollars” or “$”
herein shall mean U.S. Dollars.

1.192   “US Government Price Calculations and Reporting” has the meaning set
forth in Section 4.5.

1.193   "Valid Claim" means (a) a claim of an issued and unexpired patent which
has not been found to be unpatentable, invalid or unenforceable by a court or
other authority having jurisdiction, from which decision no appeal is taken or
can be taken; and (b) a claim of a pending application, which pending
application (i) has not been pending for more than seven (7) years from the date
of its earliest priority date, and (ii) which claim has not been finally
abandoned. For the avoidance of doubt, any claim of an application which
directly or indirectly claims priority to any application filed more than [***]
years from the date of its earliest priority date shall not be a Valid Claim
unless and until such claim becomes the claim of an issued and unexpired patent
falling within subsection (i) of this Section.

1.194   "Wild Type IgG 1" means a monoclonal anti-CD19 Antibody, which has
identical variable regions as XmAb5574 and XmAb5871 and a wild type IgG 1
backbone and the amino acid sequence of which is set forth in EXHIBIT 9D.

1.195   "Xencor" means XENCOR, INC., a Delaware corporation with its principal
offices at 111 West Lemon Avenue, Monrovia, CA 91016.

1.196   "Xencor Agreement" means the collaboration and license agreement entered
into by and between MorphoSys and Xencor on June 27, 2010, under which MorphoSys
obtained an exclusive license to further develop and commercialize MOR208
worldwide. A redacted version of the Xencor Agreement was provided to COMPANY.

1.197   "Xencor Agreement Effective Date" means the effective date of the Xencor
Agreement, i.e. 27 June 2010.

1.198   "Xencor Agreement Term" shall mean the term of the Xencor Agreement.

1.199   "Xencor Background Patents" means (a) all patents and patent
applications listed in EXHIBIT 3;  (b) all patent applications (including
provisional and utility applications) claiming priority to or common priority
with or based on any of the foregoing, including all divisionals, continuations,
continuations-in-part, patents of addition and substitutions of any of the
foregoing; all patents issuing on any of the foregoing, and all reissues,
re-examinations, renewals and extensions of any of the foregoing, all
counterparts to the foregoing in other countries; and all supplementary
protection certificates, restoration or extension of patent term and other
similar rights of MorphoSys and its Affiliates based on any of the foregoing;
(c) all Patents, for which Xencor (or its Affiliate) has (meaning that Xencor
(or its Affiliate) employs or has engaged as a consultant) at least one (1)
person who would be a properly named

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inventor on the U.S. patent claiming such invention, that were invented in the
course of Xencor’s (or its Affiliate’s) Product and/or Licensed Antibody and/or
XmAb5871 Program activities and for which a Patent was filed before the
Execution Date; including Xencor Patents filed before the Execution Date, and
(d) all Patents other than the Patents listed in EXHIBIT 3 Controlled by Xencor
or its Affiliate during the Xencor Agreement Term and claiming priority to a
Patent in existence prior to the Execution Date that Cover Licensed Antibody
and/or Product, all to the extent Controlled by MorphoSys on the Execution Date,
but excluding after a Xencor Change of Control all Patents of the acquirer
and/or the acquiring corporate family existing prior to or on the date of such
Xencor Change of Control, claiming priority to such a Patent existing prior or
on such date, or owned or controlled by such acquirer and/or the acquiring
corporate family independently of Xencor (for clarity, in the case where Xencor
is merged into another entity, the references here to "Xencor" and
"independently of Xencor" mean to refer to "the merged entity" and
"independently of the merged entity").  For the avoidance of doubt, all Patents
that qualified as Patents under (d) prior to the date of such Xencor Change of
Control shall remain part of Xencor Background Patents during the Term.  To
avoid doubt, Xencor Background Patents exclude Patents on Xencor’s technologies
for protein and/or antibody design, such exclusion including Xencor’s PDA®
technology.

1.200   "Xencor Candidate Specific Product Invention Patents" means Xencor
Background Patents and Xencor Product Invention Patents, both solely related to
a Product.

1.201   "Xencor Change of Control" means (a) any acquisition, sale or merger of
Xencor (or all or substantially all of its assets), regardless of the form of
the transaction (specifically including stock sales, asset sales, and reverse
transactions), or (b) Xencor becoming Affiliated with any [***].

1.202   "Xencor Foreground Patents" means the Patents described in EXHIBIT 5,
all to the extent Controlled by MorphoSys after the Execution Date during the
Term.

1.203   "Xencor Know-How" means all unpatented Know-How that (i) is owned or
Controlled by Xencor or its Affiliate as of the Xencor Agreement Effective Date,
or owned or Controlled by Xencor or its Affiliate thereafter during the
collaboration term of the Xencor Agreement, which is already expired, and (ii)
is necessary or useful for Licensed Antibody, and/or Product development and/or
commercialization (including Know-How relating to any method of making, using
(including methods of administration and dosing regimens) or testing of (or in
the case of testing, of or for the presence of) or Manufacturing of a Licensed
Antibody and/or Product) or any article necessary or useful to practice
(including those present during the practice of any such method) any of the
foregoing; but specifically excluding computational protein design methods and
drug discovery (but not development) methods and Know-How of an acquirer and/or
the acquiring corporate family existing prior to or on the date of a Xencor
Change of Control or independently of Xencor thereafter (for clarity, in the
case where Xencor is merged into another entity, the references here to "Xencor"
and "independently of Xencor" mean to refer to "the merged entity" and
"independently of the merged entity"). Without limiting the generality of the
definition set forth in this Section, the Xencor Know-How on the Execution Date
is listed in more detail in EXHIBIT 4B hereto.

1.204   "Xencor Payments" means the royalty and milestone payments due by
MorphoSys to Xencor under the Xencor Agreement.

1.205   "Xencor Product Inventions" means any and all Product Inventions, for
which Xencor (or its Affiliate) has (meaning that it employs or has engaged as a
consultant) at least one (1)

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person who would be a properly named inventor on the US Patent claiming such
invention, that were invented in the course of Xencor’s (or its Affiliate’s)
Product and/or XmAb5871 Program activities during the Term.

1.206   "Xencor Product Invention Patents" means all Patents claiming Xencor
Product Invention(s).

1.207   “Xencor US Royalties” means [***].

1.208   "XmAb5871" means the monoclonal anti-CD19 Antibody that Xencor referred
to as XmAb5871 as of the Xencor Agreement Effective Date, the amino acid
sequence of which is set forth in EXHIBIT 9A.

1.209   "XmAb5871 Product" means any pharmaceutical composition containing any
Antibody of the XmAb5871 Program.

1.210   "XmAb5871 Program", "XmAb5871 Program Antibodies", and "XmAb5871
Antibodies" means all anti-CD19 Antibodies that do not contain any of the Fc
variants in EXHIBIT 9B (as “variant” is defined in EXHIBIT 9B) and that both (1)
(meaning either of (a) or (b)), and (2): (1) either of: (a) the Fc of such
Antibody contains solely a variant listed in EXHIBIT 9C (as “variant” is defined
in EXHIBIT 9C); provided, however, that such Antibody is not low- or
afucosylated, unless such low- or afucosylated Antibody meets the definition of
clause (b) below; or (b) do not have reproducibly higher antibody-dependent
cytotoxic activity (including ADCC, CDC, and/or phagocytosis) than XmAb5871 and
Wild Type IgG 1, which shall be the case if both (i) such Antibody does not
increase the Affinity Constant of Binding to FcgRI by more than a factor of
[***] compared to Wild Type IgG 1, does not increase the Affinity Constant of
Binding to FcgRIIIa by more than a factor of [***] compared to Wild Type IgG 1,
does not have an absolute level of maximal lysis in a CDC activity assay (as set
forth in EXHIBIT 9E) of more than [***] percent ([***]%) greater than the
absolute level of maximal lysis of Wild Type IgG 1, and does have an Affinity
Constant of Binding to FcgRIIb that is more than [***] times higher than
XmAb5574, and (ii) such Antibody does not have an Affinity Constant of Binding
to FcgRIIa 131 Arg that is higher than [***] of such Antibody’s Affinity
Constant of Binding to FcgRIIb, and does not have an Affinity Constant of
Binding to FcgRIIa 131His that is more than [***] times higher than Wild Type
IgG 1 AND (2) are not antibody-drug conjugates, unless such conjugate inhibits
immune function and does not cause either directly or indirectly a cytotoxic
effect on target cells. "Affinity Constant of Binding" means the affinity of an
Antibody Fc to a Fcg receptor as determined using the protocol in EXHIBIT 9E.
The Affinity Constant of Binding is increased, greater or higher if the KA value
is nominally increased; as an example a KA of 107 1/M is increased, greater or
higher than 106 1/M.

 

2.          LICENSES AND SUBLICENSES

2.1       License Grant from MorphoSys.  Subject to the terms and conditions of
this Agreement, and, with respect to Xencor Background Patents, Xencor
Foreground Patents and Xencor Know-How, to the extent MorphoSys is entitled
under the Xencor Agreement to grant the license rights under this Section 2.1,
MorphoSys hereby grants to COMPANY:

(a)        an (i) exclusive, royalty-bearing (in accordance with Section 8.3),
sublicense under the Xencor Background Patents and Xencor Know-How to research,
have

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researched, Develop, have Developed, make, have made, use, have used, sell, have
sold, offer for sale, have offered for sale, Commercialize, have Commercialized,
import, have imported, export and have exported any Licensed Antibody and/or the
Product(s) in the Field in the COMPANY Territory; and a (ii) co-exclusive
(together with MorphoSys and its Affiliates and Sublicensees, if any),
chargeable (subject to the Pre-Tax Profit (Loss) Share in accordance with
Section 7.7) sublicense under the same, to do the same in the
Co-Commercialization Territory solely in accordance with the Development Plan
and the Co-Commercialization Plan;

(b)        an (i) exclusive, royalty-bearing (in accordance with Section 8.3)
license under the MorphoSys Background Patents, MorphoSys Foreground Patents,
MorphoSys Know-How and MorphoSys' interest in any Joint Foreground Patents to
research, have researched, Develop, have Developed, make, have made, use, have
used, sell, have sold, offer for sale, have offered for sale, Commercialize,
have Commercialized, import, have imported, export and have exported any
Licensed Antibody and/or the Product(s) in the Field in the COMPANY Territory;
and a (ii) co-exclusive (together with MorphoSys and its Affiliates and
Sublicensees, if any), chargeable (subject to the Pre-Tax Profit (Loss) Share in
accordance with Section 7.7) license under the same, to do the same in the
Co-Commercialization Territory solely in accordance with the Development Plan
and the Co-Commercialization Plan;

(c)        an exclusive, royalty-bearing (in accordance with Section 8.3),
sublicense and license respectively to all rights to make and use all Xencor
Know-How and all MorphoSys Know-How in the Field in the COMPANY Territory solely
in order to practice the license of Section 2.1(a) and (b) (and specifically
excluding all uses in support of activities outside the scope of the license in
Section 2.1(a) and (b));

(d)        a  (i) non-exclusive, royalty-free sublicense under the Xencor
Foreground Patents to research, have researched, Develop, have Developed, make,
have made, use, have used, sell, have sold, offer for sale, have offered for
sale, Commercialize, have Commercialized, import, have imported, export and have
exported Licensed Antibody and/or Product(s) in the Co-Commercialization
Territory solely in accordance with the Co-Commercialization Plan and (ii) an
exclusive, royalty-free sublicense to MorphoSys' non-exclusive license under the
Xencor Foreground Patents, if any, to research, have researched, Develop, have
Developed, make, have made, use, have used, sell, have sold, offer for sale,
have offered for sale, Commercialize and have Commercialized, import, have
imported, export and have exported Licensed Antibody and/or Product(s) in the
Field in the COMPANY Territory.  To avoid doubt, the royalty-free nature of the
license of this Section 2.1(d) shall not alter in any way the royalty-bearing
nature of the license of Section 2.1(a), 2.1(b) or of Section 2.1(e), even if
applying to the same Product; and

(e)        an (i) exclusive, royalty-bearing (in accordance with Section 8.3),
license under the Existing Product Marks to research, have researched, Develop,
have Developed, make, have made, use, have used, sell, have sold, offer for
sale, have offered for sale, Commercialize, have Commercialized, import, have
imported, export and have exported the Licensed Antibody and/or the Product(s)
in the Field in the COMPANY Territory; and a (ii) co-exclusive (together with
MorphoSys and its Affiliates and Sublicensees, if any), chargeable (subject to
the Pre-Tax Profit (Loss) Share in accordance with Section 7.7) license under
the same, to do the same in the Co-

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Commercialization Territory solely in accordance with the Development Plan and
the Co-Commercialization Plan.

2.2       Limitation.

(a)        The license grants under Section 2.1(a) to (d) do not include the
right to research, have researched, Develop, have Developed, make, have made,
use, have used, sell, have sold, offer for sale, have offered for sale,
Commercialize, have Commercialized, import, have imported, export and have
exported any Antibody that is [***].

(b)        The license grants under Section 2.1(a) to (d) to make and have made
Licensed Antibody and/or the Product(s) are subject to (i) the COMPANY's right
to have independently Manufactured the Licensed Antibody and/or the Product(s)
[***].

(c)        The license grants under Section 2.1(a) to (b) are exclusive in the
COMPANY Territory, even as to MorphoSys and its Affiliates, to Commercialize the
Product(s) in the Field in the COMPANY Territory; provided, however, that
MorphoSys retains the right to perform Development Activities and Non-NDA
Studies subject to Section 9.2(e)(ii)(4) worldwide pursuant to the Development
Plan and this Agreement, including the continuation of MorphoSys Trials and the
performance of Independent Trials.

(d)        The license grants under Section 2.1(a) to (d) do not include the
right to use any Know-How or Patents developed or generated by MorphoSys, its
Affiliates or licensees exclusively for use outside of the rights granted and
activities contemplated under this Agreement.

(e)        The licenses and sublicenses granted to COMPANY in Section 2.1 shall
be sublicensable solely as provided in Section 2.5, but shall otherwise be
non-assignable and non-transferable (except as explicitly permitted by
Article 17 – Term and Termination – or Section 18.1 – Assignment).

(f)         COMPANY shall not, and shall procure that its Affiliates and
Sublicensees shall not, anywhere in the world, directly or indirectly, sue
MorphoSys or its Affiliates and licensees based on a Patent Controlled by
COMPANY or any of its Affiliates or Sublicensees as of the Execution Date that
Covers a Licensed Antibody and/or a Product for infringement of such Patent due
to MorphoSys', its Affiliates' or licensees' Development of Licensed Antibodies
and/or Product(s) in the Field in the Territory as agreed under the Development
Plan, or Commercialization of Licensed Antibodies and/or Product(s) in the Field
in the Co-Commercialization Territory.

2.3       Acknowledgements and Obligations of COMPANY regarding Sublicense.

COMPANY acknowledges and agrees that MorphoSys will notify Xencor promptly after
the Execution Date of the sublicenses granted to COMPANY in Section 2.1 and that
MorphoSys will provide Xencor with a copy of this Agreement for the sole purpose
of enabling Xencor to verify whether this Agreement is in accordance with the
Xencor Agreement. The copy of this Agreement that MorphoSys will provide to
Xencor will be redacted by MorphoSys with respect to development and commercial
plans, and with respect to financial information. COMPANY acknowledges that
under the Xencor Agreement, Xencor shall ensure that no information of such copy
is disclosed to Xencor personnel other than Xencor officers, or to any Third
Party

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other than counsel to Xencor, except solely to the extent required by applicable
Laws or to assert Xencor’s rights under the Xencor Agreement (with any further
redactions MorphoSys requests that are consistent with the legal requirement, or
sufficient for Xencor to assert Xencor’s rights under the Xencor Agreement,
meaning, that – with respect to the latter – MorphoSys shall not expand such
redactions in a way that limits Xencor’s ability to assert its rights under the
Xencor Agreement).

2.4       License Grant from COMPANY.  As consideration for all the rights
granted by MorphoSys to COMPANY hereunder, subject to the terms and conditions
of this Agreement, COMPANY hereby grants to MorphoSys:

(a)        A co-exclusive (together with COMPANY), royalty-free, sublicensable
(through one (1) or more tiers) license under the COMPANY Foreground Patents and
the COMPANY Know-How and COMPANY's interest in any Joint Foreground Patents to
research, have researched, Develop, have Developed, make, have made, use, have
used, sell, have sold, offer for sale, have offered for sale, Commercialize,
have Commercialized, import, have imported, export and have exported the
Licensed Antibody and/or the Product(s) in the Field in the Co-Commercialization
Territory;

(b)        a non-exclusive, royalty-free, sublicensable (through one (1) or more
tiers) license under the COMPANY Foreground Patents and the COMPANY Know-How and
COMPANY's interest in any Joint Foreground Patents, to perform Development
Activities worldwide, solely in accordance with the Development Plan, including
MorphoSys Funded Development Activities;

(c)        a non-exclusive, royalty-free, sublicensable (through one (1) or more
tiers) license under any COMPANY Foreground Patents that contain only claims
that recite the sequence or make reference to the sequence of the CDRs or
variable regions, or portions thereof (whether or not also providing for
homology to such sequences), of Licensed Antibody and/or XmAb5871 and/or any and
all Indications or applications thereof to research, have researched, Develop,
have Developed, make, have made, use, have used, sell, have sold, offer for
sale, have offered for sale, Commercialize, have Commercialized, import, have
imported, export and have exported XmAb5871 Program Antibodies worldwide for any
and all fields and applications; and

(d)        an option for MorphoSys, [***] after a Marketing Authorization has
been obtained by COMPANY for the EU and after launch of Product in Germany, to
co-Detail the Product(s) in Germany in accordance with a Germany co-Detailing
agreement with customary compliance and other provisions to govern any
co-Detailing in Germany (the “Germany Co-Detailing Agreement”). Such option
shall be exercisable by written notice by MorphoSys to COMPANY. Within [***]
Business Days after COMPANY’s receipt of such written notice by MorphoSys,
COMPANY shall enable MorphoSys’ co-Detailing efforts by providing access to all
necessary information, documentation and support required.  Within [***] months
after receipt of such information, documentation and support, the Parties shall
enter into the Germany Co-Detailing Agreement, which shall include a
co-Detailing plan that would be consistent with COMPANY’s Commercialization Plan
and strategy in the COMPANY Territory that allows MorphoSys to provide up to
fifty percent (50%) of the FTEs of the Sales Representatives in Germany [***]
months after agreement of such plan and as set forth in such plan, or within a
timeframe otherwise mutually agreed between the Parties, the costs for
MorphoSys’ co-Detailing activities to be fully borne by COMPANY, details to

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be set forth in the Germany Co-Detailing Agreement, including the FTE rate.  To
the extent MorphoSys’ co-Detailing costs are partly directly attributable to
co-Detailing activities and partly attributable to other activities of MorphoSys
(in particular Commercialization activities for products controlled by MorphoSys
that are not Licensed Antibody or Product), such costs shall constitute
co-Detailing costs on a pro rata basis, which calculation shall be agreed
between the Parties in good faith.

2.5       Sublicenses by COMPANY. COMPANY shall be entitled to grant sublicenses
under its licenses and sublicenses granted under Section 2.1, subject to all of
the following and to any rights retained by MorphoSys under this Agreement:

(a)        Notification/Approval of MorphoSys. With respect to the COMPANY
Territory, COMPANY shall have the right to grant sublicenses without MorphoSys'
prior approval, provided, however, that COMPANY shall promptly notify MorphoSys
after granting a sublicense to any Third Party other than an Affiliate and shall
provide MorphoSys with a copy of each such Sublicense Agreement with a Third
Party within [***] calendar days for the sole purpose of verifying whether the
Sublicense Agreement is in accordance with this Agreement.  Such copy may be
redacted as COMPANY may reasonably determine with respect to sensitive financial
information and confidential information solely relating to matters or products
other than Products or Licensed Antibody. MorphoSys shall ensure that no
information of such copy is disclosed to any Third Party other than a counsel of
MorphoSys, except solely to the extent required by applicable Laws (provided
that MorphoSys shall provide COMPANY with notice sufficient to allow COMPANY to
seek a protective order, and that MorphoSys shall only disclose such portion of
such Sublicense Agreement as required) or to assert MorphoSys’ rights under this
Agreement (with any further redactions COMPANY requests that are consistent with
the legal requirement, or sufficient for MorphoSys to assert MorphoSys’ rights
under this Agreement, meaning, that – with respect to the latter – COMPANY shall
not expand such redactions in a way that limits MorphoSys’ ability to assert its
rights hereunder). The preceding sentence does not limit the right of MorphoSys
to notify Xencor of sublicenses granted by COMPANY and to provide Xencor with a
copy of such Sublicense Agreement in accordance with Section 2.3 and Section
2.5(b), redacted as provided above. With respect to the Co-Commercialization
Territory, any grant of a sublicense shall require the prior written approval of
MorphoSys. For clarity, Sublicense Agreements of COMPANY with its Affiliates
shall be consistent with this Agreement.

(b)        Consistency Requirement. COMPANY and its Sublicensees may only
sublicense or further sublicense if the sublicense or further Sublicense
Agreement is on terms consistent with this Agreement, including this Section
2.5. Further, COMPANY shall use Commercially Reasonable Efforts to obtain from
each Sublicensee obligations in the Sublicense Agreement for the Sublicensee to
comply with Section 17.7 as if the Sublicensee were COMPANY, on the same or
better terms as provided for in Section 17.7 (or to avoid doubt, obligations in
the Sublicense Agreement for the Sublicensee to provide the rights of Section
17.7 to COMPANY in case the Sublicense Agreement terminates, and for these to be
passed on by COMPANY to MorphoSys, or if so requested, to Xencor in case this
Agreement also terminates).  In any event, COMPANY shall provide in each
Sublicense Agreement that whatever rights (if any) and terms with respect to the
subject matter of Section 17.7 are granted to COMPANY in case such Sublicense
terminates shall be passed on to

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MorphoSys, or where provided under the Xencor Agreement and if so requested, to
Xencor if this Agreement also terminates.  Also in any event, COMPANY shall in
each Sublicense Agreement obtain at a minimum the following: the co-Detailing
option and the license to MorphoSys under COMPANY Foreground Patents as set
forth under Section 2.4, including to the extent granted under those certain
COMPANY Foreground Patents of the Sublicensee, shall survive in case the
Sublicense Agreement terminates.  In case the Sublicense Agreement terminates,
there shall be a non-exclusive, royalty-free, irrevocable, sublicensable
(through one (1) or more tiers without consent) license back to COMPANY under
those certain COMPANY Foreground Patents as set forth under Section 2.4(b) to
research, have researched, make, have made, use, have used, sell, have sold,
offer for sale, have offered for sale, Commercialize, have Commercialized,
import, have imported, export and have exported Licensed Antibody and/or
Products; which license shall be passed on to MorphoSys or, if so requested by
MorphoSys, to Xencor if this Agreement also terminates.

(c)        Performance by Sublicensee(s).  The activities and achievements of
any Sublicensee(s) shall be counted towards each Party's performance under this
Agreement.

2.6       Registration of Licenses.  Each Party and each Party's Sublicensees
shall have the right to register – to the extent possible under the respectively
applicable Laws – the licenses granted under Sections 2.1 and 2.4 and
sublicenses granted under such licenses in the respectively relevant registers.
Upon the other Party's or the other Party's Sublicensee's request each Party
shall provide to the other Party or the other Party's Sublicensee and execute
all documents and instruments that may be required to perfect such registration
of a license.

2.7       Reservation of Rights; No Implied Licenses.  No right, title or
interest is granted by either Party whether expressly or by implication to or
under any Patents or Know-How, other than those rights and licenses expressly
granted in this Agreement. Each Party reserves to itself all rights not
expressly granted under this Agreement. Subject to the covenants agreed by the
Parties hereunder this Agreement shall not be deemed to restrict a Party from
exploiting any of its rights not expressly granted to the other Party under this
Agreement.

2.8       Use of Patents and Know-How. Each Party hereby covenants that it (and
its Affiliates and Sublicensees) shall not practice any Patents or Know-How (to
avoid doubt, including any and all research materials provided during the
Development Activities) licensed to the other Party under this Agreement,
outside the scope of the licenses granted to the other Party under this
Agreement.

2.9       Coordination of Sublicenses and Rights of Other Licensees With This
Agreement. COMPANY shall ensure that its agreements with Sublicensees and
further Sublicensees are consistent with and impose obligations consistent with
the applicable terms and conditions regarding Sublicensees set forth in this
Agreement, including Sections 2.5, 2.8, 2.9, 2.10, 3.8, 3.15, 4.9, 8.3(d) to
(g), and 14.2 (the Sublicensee shall make an equivalent indemnification of the
MorphoSys Indemnitees), and 17.3. Subject to Section 2.5(b), COMPANY shall in
particular require its Sublicensees to provide to COMPANY ownership of or a
non-exclusive, sublicenseable (through one (1) or more tiers) license under
Sublicensee’s Product Invention Patents that contain only claims that recite the
sequence or make reference to the sequence of the CDRs or variable regions, or
portions thereof (whether or not also

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providing for homology to such sequences) of Licensed Antibody and/or XmAb5871
and/or any and all indications or applications thereof, which license as
sublicensed to COMPANY shall be free of additional payments (including
royalties). Information provided by a Sublicensee (or of a Sublicensee provided
by COMPANY) to MorphoSys under this Section 2.9 shall be treated as Confidential
Information of COMPANY.

2.10     Additional Restrictions on Sublicensing. Notwithstanding each Party’s
sublicensing rights in this Article 2, neither Party shall be permitted to
sublicense, except to Affiliates, (i) any of the Development Activities
allocated to it under the Development Plan (other than any activities that are
primarily operational in nature) related to a COMPANY Trial, MorphoSys Trial or
Global Trial, and (ii) any Co-Commercialization rights in the
Co-Commercialization Territory; both (i) and (ii) without the other Party’s
prior written consent.

2.11     Liability for Sublicensees. COMPANY shall monitor compliance with and
enforce any Sublicense Agreements against its Sublicensees, and shall be jointly
and severally liable for the operations, acts and omissions of any Sublicensee
as if such operations, acts or omissions were carried out by COMPANY itself.

 

3.          TRANSFER AND DEVELOPMENT OF PRODUCTS

3.1       Transfer of Licensed Know How. Within [***] Business Days after the
Effective Date, MorphoSys shall provide COMPANY with electronic copies of the
information contained in the Data Room regarding relevant MorphoSys Know-How and
Xencor Know-How (the “Initial Know-How Transfer”).  Thereafter, during the Term,
to the extent there exists Xencor Know-How or MorphoSys Know-How that was not
included in the Initial Know-How Transfer, and that is necessary or useful for
COMPANY to conduct the Development, Manufacture and Commercialization activities
under this Agreement, MorphoSys shall make available to COMPANY within
reasonable time such additional Xencor Know-How or MorphoSys Know-How, including
the MorphoSys Know-How and Xencor Know-How as set forth in EXHIBIT 4A and
EXHIBIT 4B, as COMPANY shall reasonably request in writing.

3.2       Overview of Development; General Responsibilities.  Subject to the
terms and conditions of this Agreement, the Parties shall collaborate with
respect to the Development of the Licensed Antibody and the Product in the
Field, as provided under this Agreement and as set forth in the Development
Plan, provided however, that MorphoSys shall be the Sponsor of [***], in both
the Co-Commercialization Territory and the COMPANY Territory, and COMPANY shall
be the Sponsor of [***] all as set forth in Section 3.6 and Section 3.7 below
and in the Development Plan.

3.3       Development Plan.  The Parties shall conduct the Development
Activities in accordance with the Development Plan and as further specified in
this Agreement.  The Development Plan shall set forth, among other things, the
following Development Activities:

(a)        preclinical studies, toxicology studies, pharmaco-economic studies
and Trials evaluating the safety and/or efficacy including Phase 1 Trials, Phase
2 Trials, Phase 3 Trials, Pivotal Trials, in each case, together with all
protocols, endpoints and investigators conducting such trials;

(b)        Non-NDA Studies and Post-Marketing Authorization Trials and studies;

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(c)        regulatory plans and other elements of obtaining and maintaining
Regulatory Approvals;

(d)        the Joint Development Budget and the qualification of each
Development Activity as a Joint Development Activity, a Manufacturing
Development Activity, a MorphoSys Funded Development Activity or a COMPANY
Funded Development Activity (and within this qualification whether such COMPANY
Funded Development Activity is a COMPANY Discretionary Manufacturing Activity);

(e)        the allocation of the Joint Development Activities to be conducted by
each Party and the timeline for completing such Joint Development Activities;

(f)         the plans and timeline for preparing the necessary Regulatory
Materials/Pricing Materials and for obtaining and/or maintaining Regulatory
Approvals/Pricing Approvals in the Territories;

(g)        the Manufacturing Development Activities and other Manufacturing
process development activities (including CMC related activities), as well as
the plans, amounts and timelines for the Manufacture and supply of Product,
Placebo, combination and comparator products necessary for the Development,
taking into account the respective supply chain timelines and inventory of
stock; and

(h)        the number of FTEs required for the performance of the Development
Plan.

For the avoidance of doubt, the Development Plan shall include also Trials and
regulatory plans of the Parties with respect to Sole Funded Development
Activities and shall not be limited to the Co-Commercialization Territory.  The
Initial Development Plan attached hereto as EXHIBIT 6 shall be updated in
accordance with this Section 3.3 within [***] days of the Effective Date.

3.4       Updating and Amending Development Plan and Joint Development Budget.
 On or before [***] during the Term, the JDC shall submit to the JSC for
approval the Development Plan (including the Joint Development Budget contained
therein), which shall cover the Development Activities to be conducted during
the upcoming [***] calendar years, including amendments to ongoing Development
Activities, and the JDC shall, every [***] months, review, amend and update, as
appropriate, the then-current Development Plan (including the Joint Development
Budget) to reflect any changes, any current or forecast budget overruns,
reprioritizations of, or additions to the Development Plan, always taking into
account the Manufacturing capacities and commitments, and other Third
Party-dependant factors. Once reviewed by the JDC pursuant to Section 9.5(c) and
approved by the JSC (or otherwise decided upon pursuant to Sections 9.2(e) or
9.3), the amended Development Plan (including the Joint Development Budget
contained therein) shall become effective and supersede the previous Development
Plan and Joint Development Budget as of the date of such approval or at such
other time as decided by the JSC (or otherwise decided upon pursuant to Section
9.2(e) or Section 9.3).

3.5       New Development Activities. From time to time during the Term, in
accordance with the timelines set forth in Section 3.4, either Party may submit
to the JDC an expansion of the Development Plan to cover new Development
Activities (including proposals to make any Non-NDA Study a Joint Development
Activity) that are not amending ongoing Joint Development Activity (e.g. a new
Trial) and that are not yet included in the Development Plan with respect to the
Product in the Territory in the Field for the JDC’s review and referral for
decision to the

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JSC.  The proposing Party shall provide a detailed proposal for such new
Development Activity, including plans for design, budget, timelines, territorial
scope, supply plan for Product (and Placebo, combination or comparator product,
where applicable), proposed operational responsibilities of the Parties,
technical feasibility, implications for future technical development in CMC and
a rationale for conducting such Development activity either as Joint Development
Activity or Sole Funded Development Activity, if applicable.  Once reviewed by
the JDC pursuant to Section 9.5(c) and approved by the JSC either as Joint
Development Activity or as Sole Funded Development Activity, the updated
Development Plan (including the Joint Development Budget contained therein)
shall become effective and supersede the previous Development Plan and Joint
Development Budget as of the date of such approval, always taking into account
the Manufacturing capacities and commitments, and other Third Party-dependant
factors. Notwithstanding the foregoing, no Party shall at any time be forced
into any new “Joint Development Activity” that is not just amending an ongoing
Joint Development Activity (e.g. a new Trial), i.e. if a Party rejects a
submitted new Development activity as a Joint Development Activity, such new
Development activity may only become a Sole Funded Development Activity, which
shall then be subject to the “buy-in” option set forth in Section 7.6(b).  For
the avoidance of doubt, any Trial described in this Section 3.5 that is solely
designed or required to obtain and maintain Regulatory Approval in a
jurisdiction of the COMPANY Territory shall always be regarded as COMPANY Funded
Development Activity, and Development Data resulting from such Trial shall be
used as set forth in Section 3.10(d).

If a Party (the “Proposing Party”) submits to the JDC a proposed update to the
Development Plan pursuant to this Section 3.5 to conduct a Trial that may
support further Development or Regulatory Approval of a Product as a monotherapy
or combination therapy in the COMPANY Territory and/or the Co-Commercialization
Territory, and the JDC does not approve such proposed update as a Joint
Development Activity within [***] days of presentation of such update to the JDC
pursuant to this Section 3.5, then the Proposing Party shall have the right to
conduct, fund and support the relevant proposed Trial as an Independent Trial,
at its discretion and at its sole expense, and such study shall not be added to
the Development Plan as a Joint Development Activity but as a Sole Funded
Development Activity, subject to the following terms:

At least [***] months prior to commencing the Sole Funded Development Activity,
the Proposing Party shall submit to the other Party via the JDC a detailed
protocol and timeline (the “Sole Funded Development Activity Plan”) and initial
budget that outlines the anticipated Development Costs (the “Sole Funded
Development Activity Budget”).  The Proposing Party shall reasonably consider
the comments provided by the non-Proposing Party’s JDC representative with
respect to such activities, including with respect to the design and conduct of
applicable Trials and any safety or dosing concerns raised by the non-Proposing
Party.  If the non-Proposing Party reasonably believes that there are reasons
stipulated in Section 9.2(e)(iv) or (v), and notifies this to the Proposing
Party at least [***] months after the Proposing Party's submission of the
detailed protocol and timeline, the Parties will refer the decision making to
the JSC which will then be made pursuant to Section 9.2(e) or Section 9.3.

3.6       Specific MorphoSys Obligations regarding [***] and Development
Activities.  MorphoSys shall use Commercially Reasonable Efforts to continue to
fulfil its responsibilities and conduct the Development Activities as Sponsor
for [***], in accordance with applicable Laws, GCP and the Development
Plan.  Such conduct shall be made in close cooperation with COMPANY to the
extent permitted by applicable Laws.  In cases where the Parties may not

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reach an agreement on any activities which are directly linked to MorphoSys’
responsibilities as a Sponsor of MorphoSys Trials as outlined in the Development
Plan and applicable Laws, MorphoSys shall retain the right to act according to
its own decision, provided that MorphoSys shall undertake all necessary efforts
to take COMPANY’s view into account, as far as legally feasible and subject to
the final decision making authority provisions as set forth in
Section 9.2(e).  Without limiting the foregoing, MorphoSys shall [***] in
accordance with the protocol and the timelines outlined in the Development Plan.

In addition to the obligations under Section 9.4 (Development Project Team) and
Section 9.5 (Joint Development Committee), MorphoSys shall inform COMPANY
regarding the status of [***], and MorphoSys’ Development Activities and other
relevant on-going pre-clinical activities through progress reports submitted to
the JDC meetings and once yearly in writing. Such reports shall include copies
of any preliminary reports and final reports and other information or data
reasonably requested by COMPANY if available at the time. MorphoSys' conduct of
[***], shall be regarded as Joint Development Activities and is subject to the
cost sharing under Section 7.1. During the conduct of [***], MorphoSys shall
provide COMPANY with reasonable advance notice and a copy of briefing material
and application dossiers of any meeting or substantive telephone conference with
any Regulatory Authority relating to [***], and shall, upon COMPANY’s request,
permit COMPANY to participate in any such meeting or telephone conference, to
the extent legally permitted.  In addition, MorphoSys shall (i) furnish to
COMPANY copies of all substantive correspondence that MorphoSys receives from
any Regulatory Authority in connection with [***], (ii) coordinate with COMPANY
any substantive communication submitted to any Regulatory Authority in
connection with the [***], and (iii) provide to COMPANY reasonably detailed
minutes of any meetings or substantive telephone conferences relating to
[***].  Notwithstanding the above, MorphoSys shall not be required to share with
COMPANY any information which MorphoSys is not permitted to share under
applicable Laws.

3.7       Specific COMPANY Obligations regarding [***] and Development
Activities.  COMPANY shall use Commercially Reasonable Efforts to fulfil its
responsibilities and conduct the Development Activities as Sponsor for [***] in
accordance with applicable Laws, GCP and the Development Plan.  Such conduct
shall be made in close cooperation with MorphoSys to the extent permitted by
applicable Laws.  In cases where the Parties may not reach an agreement on any
activities which are directly linked to COMPANY’s responsibilities as a Sponsor
of such Trial as outlined in the Development Plan and applicable Laws, COMPANY
shall retain the right to act according to its own decision, provided that
COMPANY shall undertake all necessary efforts to take MorphoSys’ view into
account, as far as legally feasible and subject to the final decision making
authority provisions as set forth in Section 9.2(e).  For clarity, for each
MorphoSys Trial, MorphoSys shall have the deciding vote for the Trial design and
for COMPANY Trial, COMPANY shall have the deciding vote for the Trial design.

In addition to the obligations under Section 9.4 (Development Project Team) and
Section 9.5 (Joint Development Committee), COMPANY shall inform MorphoSys
regarding the status of [***] and COMPANY’s Development Activities through
progress reports submitted to the JDC meetings and once yearly in writing. Such
reports shall include copies of any preliminary reports and final reports and
other information or data reasonably requested by MorphoSys if available at the
time. COMPANY’s conduct of [***] shall be regarded as Joint Development
Activities and is subject to the cost sharing under Section 7.1. During the
conduct of [***], COMPANY shall provide MorphoSys with reasonable advance notice
and a copy of briefing material and application dossiers of any meeting or
substantive telephone conference with

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any Regulatory Authority relating to [***], and shall, upon MorphoSys’ request,
permit MorphoSys to participate in any such meeting or telephone conference, to
the extent legally permitted.  In addition, COMPANY shall (i) furnish to
MorphoSys copies of all substantive correspondence that COMPANY receives from
any Regulatory Authority in connection with [***], (ii) coordinate with
MorphoSys any substantive communication submitted to any Regulatory Authority in
connection with [***], and (iii) provide to MorphoSys reasonably detailed
minutes of any meetings or substantive telephone conferences relating to
[***].  Notwithstanding the above, COMPANY shall not be required to share with
MorphoSys any information which COMPANY is not permitted to share under
applicable Laws.

3.8       Diligence.  Each Party shall use Commercially Reasonable Efforts (i)
to Develop the Licensed Antibody and the Product(s) and to obtain and maintain
Regulatory Approval for one (1) or more therapeutic, prophylactic or palliative
Products in the Field in their respective Territory (i.e. MorphoSys in the
Co-Commercialization Territory and COMPANY in the COMPANY Territory and the
Co-Commercialization Territory), (ii) to collaborate with respect to the
Development of the Licensed Antibody and the Product(s) in the Field in the
Territory, and (iii) carry out the Joint Development Activities assigned to it
under the Development Plan and in accordance with the Joint Development Budget
and time frames set forth in the Development Plan. The Parties shall conduct the
Development based on their respective experience, capabilities and capacity and
as agreed to in the Development Plan; each Party shall utilize adequately
skilled personnel to perform or oversee, as applicable, the Development and
Manufacturing of the Product, in accordance with the terms of this Agreement.
Neither Party shall be relieved of its diligence obligations under this
Agreement by entering into Sublicense Agreements. The activities and
achievements of any Sublicensee(s) shall be counted towards each Party's
performance under this Agreement.

3.9       Specific COMPANY Obligations. Without limiting COMPANY's obligations
in Section 3.8 above, COMPANY shall in any case:

(a)        use Commercially Reasonable Efforts to achieve the milestone events
as set out in Section 8.2 for Indications in the Joint Development Plan;

(b)        use Commercially Reasonable Efforts to develop, at least one (1)
therapeutic, prophylactic or palliative Product in [***];

(c)        file an IND in [***] and perform a Trial in [***] with the intent to
seek Regulatory Approval in [***]; both in a reasonable timeline;

(d)        where available and commercially reasonable [***], conduct an Early
Access Program for the Product in [***] in advance of the first Marketing
Authorization of the Product in [***]; and

(e)        conduct Trials in accordance with all applicable Laws.

The Parties acknowledge and agree that any breach of this Section 3.9 by COMPANY
may constitute a Material Breach of this Agreement giving rise to the
termination right set forth in Section 17.2(a).

3.10     Development Data.  All Development Data shall be owned and shared by
the Parties as set forth in this Section 3.10:

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(a)        Joint Development Data shall be jointly owned by both Parties and
shall be regarded as COMPANY Know-How and MorphoSys Know-How for all purposes
under this Agreement and shall be regarded as the Confidential Information of
both Parties. With respect to the data relating to a Party’s proprietary
molecule not otherwise subject to the licenses under this Agreement but included
in Joint Development Data, the other Party may use such data solely in
connection with the Development and Commercialization of the Product, and such
data related to the proprietary molecule shall be considered the Confidential
Information of the Party which owns such molecule.

(b)        Sole Funded Development Data shall be owned solely and exclusively by
the Party generating such data, which shall be Confidential Information of such
Party.

(c)        With respect to Joint Development Data generated by or on behalf of a
Party, its Affiliates or Sublicensees or sublicensees, as applicable, such Party
shall promptly provide the other Party with copies of reports and summaries
thereof, in each case as such reports and summaries become available to such
Party, its Affiliates or Sublicensees or sublicensees.  Each Party will share
all Joint Development Data generated by it or on its behalf, its Affiliates or
Sublicensees or sublicensees, as applicable with the other Party [***], and,
subject to this Section 3.10, the Party receiving such Joint Development Data is
entitled to disclose such Joint Development Data to its Affiliates and
Sublicensees or sublicensees, as applicable only for use inside its Territory in
accordance with the terms of this Agreement.  Each Party shall ensure that its
Affiliates and Sublicensees or sublicensees, as applicable, agree to the
disclosure of Joint Development Data to the other Party, its Affiliates and
Sublicensees or sublicensees, as applicable.

(d)        Each Party shall promptly provide the other Party with copies of
relevant data, including safety data and medical data, from any Sole Funded
Development Activity as such safety data and medical data becomes available to
such Party, its Affiliates or Sublicensees or sublicensees and any other data
required by Regulatory Authorities; provided, however, that such (i) safety data
shall be for use in fulfilling each Party's pharmacovigilance responsibilities
as set forth in Section 4.7(c) or as required by Regulatory Authorities, and
(ii) medical data shall only be for use in responding to medical inquiries or as
required by Regulatory Authorities, but the other Party, its Affiliates or
Sublicensees or sublicensees shall not use such medical data in support of
efficacy claims in any Regulatory Approval application, unless such Party has
elected to the “buy-in” option set forth in Section 7.6(b).  Notwithstanding the
foregoing, either Party shall be free to use any such Sole Funded Development
Data that is in the public domain.

3.11     Certain Additional Restrictions.  Each Party agrees and acknowledges
that it and its Affiliates and Sublicensees shall not conduct any Development or
Regulatory Activities of the Product(s) except in accordance with a Development
Plan established pursuant to this Agreement.

3.12     Allocation of Operational Work Between the Parties.  The Parties shall
discuss in good faith through the JDC the allocation of the activities to be
performed under the Development Plan between the Parties, including for the
MorphoSys Trials.

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3.13     Records.  Each Party shall maintain current and accurate records of all
work conducted by or on behalf of a Party and its Affiliates under the
Development Plan, and all data and other information resulting from such work
(which records shall include, as applicable, books, records, reports, research
notes, charts, graphs, comments, computations, analyses, recordings,
photographs, computer programs and documentation thereof (e.g., samples of
materials and other graphic or written data generated in connection with such
Development Activities).  Such records shall properly reflect all work done and
results achieved in the performance of such Development Activities in sufficient
detail and in good scientific manner appropriate for regulatory and patent
purposes. Such records shall be properly retained and archived according to
applicable good pharmacovigilance practice, GLP, GCP and/or GMP standards.  Each
Party shall document such Development Activities, including Trials, to be
conducted pursuant to the Development Plan, in formal written study reports upon
completion of such activity according to applicable national and international
(e.g., ICH, GCP and GLP) guidelines and Manufacturing. All Trial activities and
Development Activities should be documented by setting up, maintaining and
controlling a trial master file according to ICH-GCP and subject to an audit
plan to be agreed to by the Parties.

3.14     Progress Reports; Annual Development Report.

(a)        COMPANY Annual Development Report.  By [***], but subject to Section
3.15, COMPANY shall provide to MorphoSys the COMPANY Annual Development Report.
The COMPANY Annual Development Report shall include in reasonable detail: (i) a
summary of COMPANY’s Development Activities in the previous year (including
dosage, Trial design and Trial endpoints, protocols, clinical study reports,
Product being tested, technical development and quality observations; material
meetings, minutes, correspondence with Regulatory Authorities relating to
Licensed Antibody and/or Product(s) in the COMPANY Territory; (ii) MAAs relating
to Licensed Antibody and/or Product(s) in the COMPANY Territory planned for
filing; (iii) data reports; publications; conferences; all patent applications
filed by COMPANY or an Affiliate relating to Licensed Antibody and/or
Product(s); (iv) COMPANY's Manufacturing activities, if any; (v) actual patient
and site recruitment and projections of the planned patient and site recruitment
activities; and (vi) a summary of COMPANY’s planned Development Activities in
the following [***] years, to the extent available. COMPANY shall further report
to MorphoSys any material change to the COMPANY Annual Development Report,
including any material change, within [***] calendar days after its occurrence.
Within [***] calendar days after each submission of an annual report(s) to
Regulatory Authorities, COMPANY shall also provide to MorphoSys such of its (or
its Affiliate’s) annual report(s) relating to Licensed Antibody or Product(s).
With respect to annual reports to the Regulatory Authorities relating to
Licensed Antibody or Product(s) submitted to the Regulatory Authorities by a
Sublicensee, COMPANY shall use Commercially Reasonable Efforts to obtain such
reports and the right from such Sublicensee to share such reports with
MorphoSys. MorphoSys shall treat such COMPANY Annual Development Reports and
such other annual report(s) to the Regulatory Authorities from COMPANY, its
Affiliate or, if applicable, its Sublicensee as COMPANY’s Confidential
Information and shall not distribute such report(s) to any Third Party without
prior written consent by COMPANY, except that, in derogation of Section 16,
Xencor will be permitted to receive such reports from MorphoSys under
appropriate confidentiality provisions. COMPANY shall, within [***] Business
Days, notify MorphoSys in writing once it becomes aware that patient and/or site
recruitment for [***] or any Global Trials, for which COMPANY is the Sponsor, is
below the

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projections in the latest COMPANY Annual Development Report. The Parties shall
convene without undue delay and discuss in good faith potential measures and
timeplans for implementation. Each Party shall have the right, but not the
obligation, to intervene and provide support to the other Party in the
implementation of the measures to drive patient and site recruitment for [***]
and Global Trials as agreed between the Parties.

(b)        MorphoSys Annual Development Report. By [***], but subject to Section
3.15, MorphoSys shall provide to COMPANY the MorphoSys Annual Development
Report. The MorphoSys Annual Development Report shall include in reasonable
detail: (i) a summary of MorphoSys’ Development Activities in the previous
calendar year (including dosage, Trial design and Trial endpoints, protocols,
clinical study reports, Product being tested relating to Licensed Antibody
and/or Product(s) in the Co-Commercialization Territory; material meetings,
minutes, correspondence with Regulatory Authorities relating to Licensed
Antibody and/or Product(s) in the Co-Commercialization Territory; (ii) BLAs
relating to Licensed Antibody and/or Product(s) in the Co-Commercialization
Territory planned for filing; (iii) data reports, publications, conferences, all
patent applications filed by MorphoSys or an Affiliate relating to Licensed
Antibody and/or Product(s); (iv) MorphoSys’ Manufacturing activities, if any;
(v) actual patient and site recruitment and projections of the planned patient
and site recruitment activities; and (vi) a summary of MorphoSys’ planned
Development Activities in the upcoming [***] calendar years, to the extent
available. MorphoSys shall further summarize to COMPANY any material change to
the information described in the MorphoSys Annual Development Report during the
next regularly-scheduled JDC meeting. Within [***] calendar days after each
submission of an annual report(s) to Regulatory Authorities, MorphoSys shall
also provide to COMPANY such of its (or its Affiliates) annual report(s)
relating to Licensed Antibody or Product(s). With respect to annual reports to
the Regulatory Authorities relating to Licensed Antibody or Product(s) submitted
to the Regulatory Authorities by a Sublicensee, MorphoSys shall use Commercially
Reasonable Efforts to obtain such reports and the right from such Sublicensee to
share such reports with COMPANY. COMPANY shall treat such MorphoSys Annual
Development Reports and such other annual report(s) to the Regulatory
Authorities from MorphoSys, its Affiliate or, if applicable, its Sublicensee as
MorphoSys’ Confidential Information and shall not distribute such report(s) to
any Third Party without prior written consent by MorphoSys. MorphoSys shall,
within [***] Business Days, notify COMPANY in writing once it becomes aware that
patient and/or site recruitment for Global Trials conducted in the
Co-Commercialization Territory is below the projections in the latest MorphoSys
Annual Development Report. The Parties shall convene without undue delay and
discuss in good faith potential measures and timeplans for implementation. Each
Party shall have the right, but not the obligation, to intervene and provide
support to the other Party in the implementation of the measures to drive
patient and site recruitment for [***] and Global Trials as agreed between the
Parties.

3.15     Affiliate/Sublicensee Activities.  Each Party shall include such
Party’s and its respective Affiliates’ and Sublicensees’ accomplishments and
activities (past and planned) in the relevant Annual Development Report with the
same level of detail as if these had been achieved and conducted by such Party.

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3.16     Status Updates in the Territories by Both Parties. Without limiting the
foregoing obligations of each Party under Section 3.13, 3.14 and 3.15, each
Party shall provide the JDC with reports detailing its respective Development
Activities and Manufacturing under the Development Plan and the results thereof
at least [***] prior to any JDC meeting, but in any event, on at least a
calendar quarter basis.  Without limiting the foregoing, each Party shall
promptly, but in any event within [***] calendar days after receipt thereof,
provide the other Party with copies of any material documents or correspondence
received from any Regulatory Authority related to such Development Activities.

3.17     Compliance.  In conducting any Development, Manufacture,
Commercialization activities and Regulatory Activities under this Agreement,
each of COMPANY and its Affiliates and Sublicensee(s), and MorphoSys and its
Affiliates, shall: (a) use Commercially Reasonable Efforts to ensure that its
employees, agents, clinical institutions and clinical investigators as well as
any further entities actively involved in the conduct of development work (such
as contract research organizations, contract manufacturing organizations,
vendors, laboratories, etc.) comply with all applicable Laws with respect to
Licensed Antibody and/or Products, including (as applicable): the Federal Food,
Drug and Cosmetic Act, as amended (“FFDCA”), the Public Health Service Act
(PHSA), the rules governing medicinal products in the European Union and
including Directive 2001/83/EC and Regulation 726/2004/EC and applicable
national legislation regulatory provisions regarding protection of human
subjects, and, except to the extent contrary to applicable Law, the spirit and
principles of the self-regulatory codes of The Pharmaceutical Research and
Manufacturers of America (“PhRMA”) and the European Federation of Pharmaceutical
Industry and Associates (“EFPIA”), the rules relating to financial disclosure by
clinical investigators, Institutional Review Boards (IRB) and independent ethics
committees, GCP, GLP, GMP and Good Distribution Practices, IND regulations, and
any conditions imposed by a reviewing Governmental Authority or Ethics
Committee/IRB, and comparable statutes and regulatory requirements in other
jurisdictions; and (b) not, to the best of its knowledge, utilize, in conducting
such studies, any person or entity that at such time is debarred by, or that, at
such time, is under investigation by the FDA or other Governmental Authority for
debarment, exclusion, or other sanction under the U.S. FFDCA, the U.S. Social
Security Act, and comparable statutes and regulatory requirements in other
jurisdictions.

3.18     Compensation for Commercial Impact.

(a)  If MorphoSys conducts or supports a Trial as a MorphoSys Funded Development
Activity in any one or more countries of the COMPANY Territory, which Trial
(i) enrolls at least [***] patients planned per protocol or (ii) enrolls less
than [***] patients but cumulatively covers a total of at least [***] patients
planned per protocol when taken together with other Trials conducted or
supported as MorphoSys Funded Development Activities in [***] during the Term,
and where in either of of (i) or (ii) such Trials target the same patient
population for which a Product has, at the time such patients are enrolled,
already received Regulatory Approval in any such countries and is being sold in
any such countries; then, for [***] during which MorphoSys conducts or supports
such Trial, MorphoSys shall compensate COMPANY for its lost profit due to lost
Net Sales for such Product as calculated by COMPANY, taking into account,
without limitation: [***].  In the event MorphoSys reasonably disagrees with the
accuracy of the calculation provided by COMPANY, and the Finance Working Group
cannot resolve the matter, MorphoSys shall have the right to refer the matter
for determination by an Expert in accordance with Section 9.3, and the Expert
shall decide the matter taking into consideration the above factors (A) through
(F).  For clarity, if a MorphoSys Funded Development

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Activity studies a Product in a combination treatment regimen, it shall be
subject to the foregoing provisions even though such Product may be approved
only as a monotherapy or for use in a different combination.

(b)  If a Party conducts or supports a Trial as Sole Funded Development Activity
in the Co-Commercialization Territory, which Trial (i) enrolls at least [***]
patients planned per protocol or (ii) enrolls less than [***] patients but
cumulatively covers a total of at least [***] patients planned per protocol when
taken together with other Trials conducted or supported as Sole Funded
Development Activity in [***] during the Term; where in either of (i) or (ii)
such Trial targets the same patient population for which a Product has, at the
time such patients are enrolled, already received Regulatory Approval in the
Co-Commercialization Territory and is being sold in the Co-Commercialization
Territory, then, for [***] during which such Party conducts or supports such
Trial, such Party will compensate the other Party for its loss under the Pre-Tax
Profit (Loss) Share due to the conduct of such Trials as calculated by the
Parties through the Finance Working Group, taking into account, without
limitation: [***].  In the event the Parties cannot agree on the calculation,
and the Finance Working Group cannot resolve the matter, either Party shall have
the right to refer the matter for determination by an Expert in accordance with
Section 9.3, and the Expert shall decide the matter taking into consideration
the above factors (A) through (D). For clarity, if a Sole Funded Development
Activity studies a Product in a combination treatment regimen, it shall be
subject to the foregoing provisions even though such Product may be approved
only as a monotherapy or for use in a different combination.

 

4.         REGULATORY ACTIVITIES AND PRICING ACTIVITIES

4.1       Diligence; Ownership of Regulatory Approvals and Pricing Approvals.

(a)        General Regulatory Activities and Pricing Activities in COMPANY
Territory.  COMPANY shall be responsible for all Regulatory Activities and
Pricing Activities and shall use Commercially Reasonable Efforts in preparing
all Regulatory Materials and Pricing Materials necessary or desirable for
obtaining and maintaining Regulatory Approvals and Pricing Approvals, as
applicable, in the COMPANY Territory in the Field (including in connection with
Labelling and Packaging for the Product in the COMPANY Territory) in accordance
with the Development Plan and the COMPANY Commercialization Plan.  MorphoSys
shall have the right to review any essential Regulatory Materials and [***]
related to the Licensed Antibody and Product and may provide advice to COMPANY
on the proposed strategy and documentation for submission in the COMPANY
Territory and COMPANY shall reasonably consider such comments in good faith in
preparing such materials.  COMPANY shall, subject to Section 4.1(c), prepare and
submit such Regulatory Materials, MAAs and Pricing Materials, as applicable, to
the applicable Governmental Authorities in the COMPANY Territory.  Subject to
Section 5.2(b), COMPANY shall use Commercially Reasonable Efforts toward
obtaining and maintaining Regulatory Approvals and Pricing Approvals, as
applicable, for Product as a therapeutic, prophylactic or palliative product in
the countries and regulatory jurisdictions in the COMPANY Territory, in its own
name, in a commercially reasonable time and manner.  To the extent not
prohibited by applicable Laws and feasible based on scheduling timelines,
MorphoSys shall be entitled, [***], to attend key meetings and scheduled calls
with the relevant Governmental Authorities

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in the COMPANY Territory with respect to obtaining or maintaining the Regulatory
Approvals and [***], as applicable, for the Product in the Field.  COMPANY shall
be responsible for and [***] the Product in the COMPANY Territory and, for
clarity, shall [***] to the extent MorphoSys is performing [***] or supporting
[***] as agreed between the Parties.  For the avoidace of doubt, the exercise of
MorphoSys’ rights to review materials and provide advice to COMPANY as described
above shall [***].

(b)        Specific Regulatory Obligations in COMPANY Territory. COMPANY shall
use Commercially Reasonable Efforts to file an MAA with [***] and with the
Regulatory Authorities for [***] within [***] months after final tables,
listings and figures of any Pivotal Trial in any indication becoming available
from a Joint Development Activity, provided such Pivotal Trial has achieved
COMPANY’s target product profile (including Trial efficacy endpoints,
therapeutic index, and commercial potential) and such MAA is reasonably believed
by COMPANY to be sufficient for obtaining Regulatory Approval.  For [***],
COMPANY shall use Commercially Reasonable Efforts to generate Regulatory Data
that is reasonably necessary to obtain Regulatory Approval in [***], as
applicable, and shall use Commercially Reasonable Efforts to file an MAA in
[***], as applicable, with the applicable Regulatory Authorities within [***]
months after final tables, listings and figures of the Trials for generating
such data are available, provided such Trial has achieved COMPANY’s target
product profile (including Trial efficacy endpoints, therapeutic index, and
commercial potential) and such MAA is reasonably believed by COMPANY to be
sufficient for obtaining Regulatory Approval in [***], as applicable. The
Parties acknowledge and agree that any breach of this obligation by COMPANY may
constitute a Material Breach of this Agreement giving rise to the termination
right set forth in Section 17.2(a).

(c)        Regulatory Activities in the EU.  Without limiting COMPANY's rights
and responsibility for preparation of Regulatory Materials and Pricing Materials
under Section 4.1.(a) and the draft version of the transition plan attached
hereto as EXHIBIT 17, MorphoSys shall use Commercially Reasonable Efforts to
continue to (i) prepare Regulatory Materials for Product in the European Region
and to prepare the MAA in the name of COMPANY or its designated Affiliate and
(ii) be the primary contact point for the EMA, including leading the
registration procedure and all meetings with rapporteurs, EMA and CHMP; for the
first submission of a MAA in the European Region based on the L-MIND
(MOR208C203) Trial, RE-MIND Trial and RE-MIND2 Trial until the grant of such
Marketing Authorization for the EU. Such continuation shall be made in close
cooperation and alignment with COMPANY and COMPANY representatives shall be
permitted to attend key meetings and scheduled calls between MorphoSys and the
Regulatory Authorities to the extent permitted by applicable Laws, and subject
to Section 9.2(e)(ii).  It is the shared objective of both Parties to file the
EU MAA in COMPANY’s (or its Affiliate’s) name no later than [***] (assuming
Regulatory Authority feedback is supportive).  In the event that the Parties
determine that it is not reasonably possible to file the EU MAA in COMPANY’s
name [***], the Chief Medical Officers (or equivalent functions) of both
companies shall discuss in good faith the pros and cons of delaying the MAA
filing (to file at a later date in COMPANY’s name) or to file in MorphoSys’ name
on or [***].  In the event of disagreement, the matter shall be referred to the
Parties’ Chief Executive Officers who shall discuss in good faith and shall
reach agreement (without recourse to external Experts as described in Section
9.2(e)) whether to: (a) file the MAA with the EMA in the name of MorphoSys (or
its Affiliate) on or before [***], or (b) file the MAA with the EMA in the name
of COMPANY

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(or its Affiliate) after [***].  In the event that the Parties’ Chief Executive
Officers agree on option (a) as the preferred course, MorphoSys will exercise
Commercially Reasonable Efforts to transfer the MAA to COMPANY (or its
designated Affiliate) as soon as possible after filing.  COMPANY shall be
responsible for preparing and submitting all future Marketing Authorizations in
COMPANY Territory.

(d)        General Regulatory Activities and Pricing Activities in the
Co-Commercialization Territory. MorphoSys shall be responsible for the
preparation of all Regulatory Materials and Pricing Materials necessary or
desirable for obtaining and maintaining Regulatory Approvals and Pricing
Approvals, as applicable, in the Co-Commercialization Territory (including in
connection with Labelling and Packaging for the Product in the
Co-Commercialization Territory) in accordance with the Development Plan and the
Co-Commercialization Plan.  The Parties shall discuss and agree on (i) the
regulatory strategy for filing and maintaining Regulatory Approvals in the
Co-Commercialization Territory through the JDC and in alignment with the JCC and
(ii) notwithstanding the provisions of Section 4.1, to the extent that [***] for
sale of the Product in the Co-Commercialization Territory is/are required, the
strategy for obtaining and maintaining [***] through the JCC.  COMPANY shall
have the right to attend meetings and scheduled calls with the relevant
Governmental Authorities in the Co-Commercialization Territory and to
participate in the preparation and review of any Regulatory Materials and
[***].  MorphoSys shall use good faith efforts to incorporate into any
Regulatory Materials and [***] reasonable comments from COMPANY.  MorphoSys
shall submit such Regulatory Materials, MAAs and Pricing Materials, as
applicable, to the applicable Governmental Authorities in the
Co-Commercialization Territory. [***].  Regulatory Activities in the
Co-Commercialization Territory shall be subject to an audit plan to be agreed to
by the Parties.

4.2       Ownership of Regulatory Approvals and Pricing Approvals.  Subject to
Section 7.1 (Development Cost Sharing) or Section 7.6 (Buy-In), all Regulatory
Approvals, and Pricing Approvals, if applicable, for the Product in the
Co-Commercialization Territory shall be in the name of MorphoSys and MorphoSys
shall own (i.e., hold the BLA and Marketing Authorization in its name) all
right, title and interest in and to all such Regulatory Approvals, and Pricing
Approvals, if applicable, as applicable, and all related Regulatory Materials
and Pricing Materials. Subject to Section 4.1(c) and Section 6.8, all Regulatory
Approvals, and Pricing Approvals, if applicable, for the Product in the COMPANY
Territory in the Field shall be in the name of COMPANY and COMPANY shall own
(i.e., hold each applicable MAA and Marketing Authorization in its name) all
right, title and interest in and to all such Regulatory Approvals, and Pricing
Approvals, if applicable, and all related Regulatory Materials and Pricing
Materials. The Parties shall, for the avoidance of doubt, also after receipt of
Marketing Authorizations, exchange Regulatory Materials and [***] through the
JDC or JCC, as applicable, and each Party may use the Regulatory Materials and
[***] received from the other Party solely for maintaining Regulatory Approvals
and [***], as applicable, in its respective Territory in accordance with this
Agreement, provided such Party co-funded the relevant Trial in accordance with
Section 7.1 or elected the buy-in in accordance with Section 7.6. Each Party
shall reasonably cooperate with and provide reasonable assistance to the other
Party in connection with all activities undertaken by such Party relating to
obtaining and maintaining the Regulatory Approvals.

4.3       Pricing Approvals.  Notwithstanding the provisions of Section 4.1,
MorphoSys shall (to the extent permitted by applicable Laws) be solely
responsible for and shall use

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Commercially Reasonable Efforts toward obtaining and maintaining Pricing
Approval(s) in the Co-Commercialization Territory in its own name, in accordance
with the Development Plan and the Co-Commercialization Plan.  [***].
Notwithstanding the provisions of Section 4.1, to the extent that a given
country or regulatory jurisdiction in the COMPANY Territory requires Pricing
Approval for sale of the Product in such country or regulatory jurisdiction,
COMPANY shall be solely responsible for and shall use Commercially Reasonable
Efforts toward obtaining and maintaining such Pricing Approval in its own name
following the receipt of the Marketing Authorization in such country or
regulatory jurisdiction, subject to Section 9.7(c)(xiii).  For clarity, COMPANY
shall have the right to determine the timing of seeking Pricing Approval,
including the right to sequence or defer seeking Pricing Approval in accordance
with COMPANY’S Commercialization strategy.  [***].

4.4       Reporting and Review.  Each Party shall keep the other Party
reasonably and regularly informed in connection with the preparation of all
material Regulatory Materials and [***], Governmental Authority review of
Regulatory Materials and Pricing Materials, Regulatory Approvals and Pricing
Approvals, as applicable, with respect to the Product. Upon reasonable request,
each Party shall provide the other Party, in a timely manner, with copies of all
material notices, questions, and requests for information in tangible form which
it receives from a Governmental Authority with respect to the Product; provided,
however, that such Party shall have the right to redact any information to the
extent not related to the Product.

4.5       Price Reporting Obligations.  Except as otherwise agreed by the
Parties, MorphoSys shall be responsible for all federal and state government
price reporting and disclosure obligations for Product sold in the
Co-Commercialization Territory (“US Government Price Calculations and
Reporting”).  US Government Price Calculations and Reporting may include, but
shall not be limited to, any U.S. federal, state or other jurisdiction legal
reporting or compliance obligation with respect to a Product under the
applicable statutes, rules, and regulatory guidance relating to the Medicaid
Rebate Program, the Medicare Program, the Public Health Service 340B Program,
the Department of Veterans Affairs Master Agreement, the Federal Supply Schedule
contract, and applicable state or other jurisdiction laws.

4.6       Strategy; Communications. The Parties agree to coordinate, through the
JDC and JCC, as applicable, the regulatory strategy for filing and maintaining
Regulatory Approvals and [***] in the Co-Commercialization Territory and the
COMPANY Territory.  The Parties shall generally cooperate in communicating with
Regulatory Authorities having jurisdiction regarding the Product in the
Territory and each Party shall keep the other Party informed of planned
regulatory submissions and material communications, either on its own initiative
in accordance with this Agreement or as a result of such a Regulatory Authority
initiating contact with such Party in connection therewith.  Each Party shall
promptly provide, and cause its Affiliates, its Sublicensees, and distributors
to provide, the other Party with copies of regulatory submissions to, and
material communications with, any Regulatory Authorities.  Notwithstanding the
foregoing, except as may be required by applicable Laws, neither Party shall,
with respect to the Product, communicate with any Regulatory Authority regarding
the Product on a significant issue, unless consistent with the Development Plan
or requested or permitted in writing to do so by the other Party, or unless so
ordered by such Regulatory Authority, in which case such Party shall immediately
notify the other Party of such order and shall, to the extent permitted by
applicable Laws, take no further actions or communicate with such Regulatory
Authority further until the Parties have agreed (in the case of the
Co-Commercialization Territory), or discussed (in the case of the COMPANY
Territory) as to how

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to proceed.  All communications with Regulatory Authorities regarding the
Product shall be undertaken as provided for in this Agreement.

4.7       Pharmacovigilance.

(a)        MorphoSys Trials and COMPANY Trial. For the[***], MorphoSys shall be
responsible for the collection, review, assessment, tracking and filing of
information related to adverse events associated with the Product in accordance
with applicable Laws and this Agreement and shall ensure that, in such
Development of the Product, it will record, investigate, summarize, notify,
report and review all adverse events in accordance with applicable Laws.  For
[***], COMPANY shall be responsible for the collection, review, assessment,
tracking and filing of information related to adverse events associated with the
Product in accordance with applicable Laws and this Agreement and shall ensure
that, in such Development of the Product, it will record, investigate,
summarize, notify, report and review all adverse events in accordance with
applicable Laws.

(b)        Exchange of Adverse Event Reports. Each Party shall keep the other
Party informed of (i) any Serious Adverse Event (“SAE”) within a reasonable
period of time after such SAE is identified or reported and (ii) any Suspected
Unexpected Serious Adverse Reaction (“SUSAR”) as soon as reasonably possible
after such SUSAR is identified or reported and in any event at the same time as
any reporting of such SUSAR to any Regulatory Authority, independent of whether
such SUSAR or SAE occurred under a Joint Development Activity or a Sole Funded
Development Activity. The Parties shall cooperate in the preparation, review and
submission of development safety update reports and periodic safety update
reports. The costs of establishing and maintaining the global safety database
for the Product shall be shared in accordance with the Pro Rata Percentage.

(c)        Pharmacovigilance Agreement. The safety representatives from each of
the Parties shall meet and agree upon a written pharmacovigilance agreement for
exchanging adverse event and other safety information relating to the Product
within [***] days after the Effective Date (the “Pharmacovigilance Agreement”);
provided, however, that during Development and Commercialization MorphoSys shall
be responsible for maintaining the global safety database for the Product. Such
written Pharmacovigilance Agreement shall ensure that adverse event and other
safety information is exchanged, and pharmacovigilance obligations fulfilled,
according to a schedule that will permit each Party (and its Affiliates,
sublicensees or subcontractors) to comply with applicable Laws, current
standards for pharmacovigilance practice and regulatory requirements. Each Party
reserves the rights to qualify via an audit pharmacovigilance processes and
systems. Details will be defined in the Pharmacovigilance Agreement.  [***]
shall be responsible for developing and maintaining core documents such as the
Reference Safety Information section of the investigator brochure, aggregate
safety reports (Periodic Adverse Drug Experience Report, Periodic Safety Update
Reports, Development Safety Update Reports, etc.) and a core RMP; provided that
[***] shall provide [***] a right to review and comment on such materials, which
comments [***] shall consider in good faith.  [***] shall also be responsible
for global signal management in the [***] and for signal reporting in the [***].
[***] shall be responsible for signal reporting in the [***].

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(d)        MorphoSys Obligations. For [***], (for which MorphoSys’
responsibilities are addressed in Section 4.7(a) above), for which MorphoSys is
the Sponsor, and for Commercialization, MorphoSys shall be responsible for the
collection, review, assessment, tracking and filing of information related to
adverse events associated with the Product in the COMPANY Territory or the
Co-Commercialization Territory (whether or not Marketing Authorization has been
achieved), in each case in accordance with applicable Laws and this Agreement,
and MorphoSys shall ensure that, in the Development and Commercialization of the
Product, it will record, investigate, summarize, notify, report and review all
adverse events in accordance with applicable Laws, as further described in the
Pharmacovigilance Agreement.

(e)        COMPANY Obligations. For [***] (for which COMPANY’s responsibilities
are addressed in Section 4.7(a) above), for which COMPANY is the Sponsor,
COMPANY shall be responsible for the collection, review, assessment, tracking
and filing of information related to adverse events associated with the Product
in the Co-Commercialization Territory or the COMPANY Territory (whether or not
Marketing Authorization has been achieved), in each case in accordance with
applicable Laws and this Agreement, and COMPANY shall ensure that, in the
Development and Commercialization of the Product, it will record, investigate,
summarize, notify, report and review all adverse events in accordance with
applicable Laws, as further described in the Pharmacovigilance Agreement.

4.8       Governmental Authority Communications Received by a Party.  Each Party
shall promptly inform the other Party of notification of any action by, or
notification or other information (including any notice, audit notice,
inspection notice, notice of initiation by Governmental Authorities of
investigations, document or information requests, inspections, detentions,
seizures or injunctions concerning the Product or this Agreement) which it
receives (directly or indirectly) from any Governmental Authority in the
Territory, whether in relation to the Co-Commercialization Territory or in the
COMPANY Territory, which (i) raises any material concerns regarding the quality,
safety or efficacy of the Product, (ii) indicates or suggests a potential
material liability of either Party to Third Parties in connection with the
Product, (iii) is reasonably likely to lead to a recall, market withdrawal or
market notification with respect to the Product, (iv) relates to expedited
exchange of individual case safety reports and periodic safety reports with
respect to the Product, or product complaints, and which may have an adverse
impact on Regulatory Approvals or the continued Commercialization of the Product
or (v)  raises any material concerns regarding the compliance of either Party
(or any of their respective Sublicensees, distributors, or subcontractors) with
Laws related to the Product or this Agreement.  MorphoSys shall be solely
responsible for responding to any such communications relating to the Product in
the Co-Commercialization Territory and COMPANY shall be solely responsible for
responding to any such communications relating to the Product in the COMPANY
Territory in the Field.  Each Party shall reasonably cooperate with and assist
the other Party in complying with regulatory obligations, including by providing
to the other Party, within [***] Business Days (or such shorter period required
by a Governmental Authority) after a request, such information and documentation
which is in such Party’s possession as may be necessary or reasonably helpful
for the other Party to prepare a response to an inquiry from a Governmental
Authority with respect to the Product.  Each Party shall promptly provide, and
ensure that its Affiliates and sublicensees provide the other Party with a copy
of all material correspondence received from a Regulatory Authority specifically
regarding the matters referred to above.

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4.9       Recall, Withdrawal, or Market Notification of Product.  In the event
that any Governmental Authority suggests, threatens, recommends or initiates any
action to remove the Product from the market whether in the Co-Commercialization
Territory or in the COMPANY Territory (in whole or in part, including in
clinical Trials), the Party receiving notice thereof shall notify the other
Party of such communication promptly, but in no event later than [***], after
receipt thereof.  Notwithstanding the foregoing, in all cases MorphoSys shall
determine whether to initiate any recall, withdrawal or market notification of
the Product in the Co-Commercialization Territory, and COMPANY shall determine
whether to initiate any such recall, withdrawal or market notification of the
Product in the COMPANY Territory, including the scope of such recall or
withdrawal (e.g., a full or partial recall, or a temporary or permanent recall)
or market notification; provided, however, that before MorphoSys or COMPANY (as
the case may be) initiates a recall, withdrawal or market notification, the
Parties shall promptly meet and discuss in good faith the reasons therefor and
each Party shall take the other Party’s comments under good faith consideration;
further provided, that such discussions shall not delay any action that
MorphoSys or COMPANY (as the case may be) reasonably believes has to be taken in
relation to any recall, withdrawal or market notification.  In the event of any
such recall, withdrawal or market notification, MorphoSys or COMPANY (as the
case may be) shall determine the necessary actions to be taken, and shall
implement such action, with the other Party providing reasonable input (which
the first Party shall in good faith consider and incorporate into any recall,
withdrawal or market notification strategy) and reasonably necessary assistance,
to conduct such recall, withdrawal or market notification.  Without limiting the
foregoing, each Party shall have the right to propose that a Product recall,
withdrawal or market notification should be initiated by the other Party, but
such other Party shall make the final decision whether the recall, withdrawal or
market notification will be initiated in its respective Territory.  Each Party
shall at all times utilize a batch tracing system which will enable it to
identify, on a prompt basis, customers within its Territory who have been
supplied with Product of any particular batch, and to recall such Product from
such customers. Details of recalls’ management shall be dealt with in the Supply
Agreement.

4.10     Cost Allocation re Recall; Withdrawal or Market Notification.  All
direct costs and expenses associated with implementing a recall, withdrawal or
market notification with respect to the Product in any territory shall be
allocated between COMPANY and MorphoSys as follows:

[***]

5.          COMMERCIALIZATION OF PRODUCTS

5.1       Commercialization Efforts

(a)        JCC Oversight. The JCC shall oversee all Commercialization of
Products in the Field, both in the Co-Commercialization Territory and in the
COMPANY Territory.

(b)        Commercialization Principles. It is the intent of the Parties that
Commercialization of Products will be conducted in accordance with the following
principles, and the JCC (or JSC, or the Executive Officers, or the Expert, as
applicable) shall take into account and attempt to implement the following
principles in its decision-making, including in the preparation, review and
approval of the Co-Commercialization Plan and the COMPANY Commercialization
Plan, and any updates to and amendments of such plans, and otherwise when
allocating Commercialization responsibilities between the Parties in accordance
with this Agreement:

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(i)              MorphoSys shall have the right, but not the obligation, to
provide up to fifty percent (50%) of the overall Commercialization efforts
(including but not limited to market access, patient support, marketing, sales
and medical affairs functions) on an FTE basis for Co-Commercialization of the
Product(s) in the Co-Commercialization Territory. By way of example,
MorphoSys/COMPANY may provide [***]/[***]% of the Sales Representatives,
[***]/[***]% of the market access FTEs and [***]/[***]% of the medical
scientific liaison FTEs out of the 100% of FTEs determined to be required for
each commercial function as set forth in the Co-Commercialization Plan.  The JCC
shall periodically (as determined by the JCC) review the efforts contributed by
each Party (including any shortfall). At least [***] months prior to anticipated
launch in the Co-Commercialization Territory, MorphoSys shall notify COMPANY of
the level of Commercialization effort that MorphoSys will provide in the
Co-Commercialization Territory following launch.

(ii)             The Co-Commercialization Plan shall include a meaningful role
for both Parties. In allocating responsibilities between the Parties, the JCC
(or the JSC, or the Executive Officers, or the Expert, if applicable) shall take
into consideration each Party’s expertise, capabilities, staffing and available
resources to take on such activities, as well as the Parties’ intention to
provide MorphoSys an opportunity to build and expand its expertise,
capabilities, staffing and available resources in connection with performing
Commercialization activities allocated to it.

(iii)            To the extent efforts or costs for the Co-Commercialization
activities cannot be attributed solely to the Co-Commercialization of the
Product(s) hereunder but are incurred partly also for activities related to
product(s) that are not the Product, then such efforts and costs shall only be
taken into account on a pro rata basis, which shall be agreed between the
Parties in good faith.

(c)        Lead Parties. In collaboration with COMPANY, MorphoSys shall lead the
strategic aspects of the Parties’ Commercialization of the Product in the Field
in the Co-Commercialization Territory, as set forth in Section 5.3 and shall
lead the overall strategic Product positioning, branding, core messaging, and
overall medical congress strategy and global medical education strategy with
respect to global Commercialization in the Territory. In its role as lead Party
with respect to such aspects in the Co-Commercialization Territory, MorphoSys
shall be responsible for, amongst other things, setting the price. For
operational efforts in the Co-Commercialization Territory, the Parties will
distribute the responsibilities according to the outline of the
Co-Commercialization Plan as set forth in EXHIBIT 14.  Notwithstanding the
foregoing, COMPANY shall lead the operational efforts regarding Medical Affairs
Activities in the Territory. COMPANY shall lead the strategic and operational
efforts to Commercialize the Product in the Field in the COMPANY Territory as
set forth in Section 5.2, in alignment with the overall strategic Product
positioning, branding, core messaging, and overall medical congress strategy and
global medical education strategy with respect to global Commercialization as
set forth above.  In its role as lead Party with respect to such aspects in the
COMPANY Territory, COMPANY shall be responsible for among other things, setting
the price. Notwithstanding anything in this Section, in case of disputes the
final decision making shall be made in accordance with Section 9.2(e).

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(d)        Activities and Participation.

(i)      Each Party shall use Commercially Reasonable Efforts to execute and to
perform, or cause to be performed, the activities assigned to it under the
Co-Commercialization Plan and the COMPANY Commercialization Plan. The Parties
shall reasonably cooperate to effectuate implementation of Commercialization of
Products in the Field in the Co-Commercialization Territory as set forth in the
Co-Commercialization Plan. Notwithstanding anything to the contrary contained
herein, a Party or its Affiliate shall not be obligated to undertake or continue
any Commercialization activities with respect to the Licensed Antibody or
Products if such Party (or Affiliate) reasonably determines that performance of
such Commercialization activity would violate applicable Law or if a Regulatory
Authority determines that such Commercialization activities with respect to the
Licensed Antibody or Product would pose an unacceptable safety risk to patients.

(ii)     With respect to activities allocated to COMPANY under the
Co-Commercialization Plan, COMPANY agrees to reasonably cooperate as MorphoSys
may request to provide MorphoSys an opportunity to observe and participate in
COMPANY’s and its Affiliates’ performance of such activities.

(iii)    Within [***] months after commercial launch of a Product in the first
of the European Major Markets, MorphoSys shall have the right to designate up to
[***] representatives of MorphoSys (the "MorphoSys Representatives") to
participate in COMPANY’s (or its Affiliates’) strategic planning of
Commercialization of Products in the COMPANY Territory [***]. It is the intent
of the Parties that any such MorphoSys Representatives shall be an integral part
of the team that brings the Products to market in the COMPANY Territory. COMPANY
shall use Commercially Reasonable Efforts to inform and involve the MorphoSys
Representatives in COMPANY’s internal strategic discussions regarding the
Commercialization of Products in the COMPANY Territory, including meetings of
COMPANY’s (or its Affiliates’) designated brand value team or equivalent, and to
keep the MorphoSys Representatives informed and involved in strategic
discussions regarding implementation of Commercialization of Products in the
COMPANY Territory.

(e)        Subcontracting.

(i)      If either Party (or its Affiliate) desires to subcontract any of its
assigned Co-Commercialization activities, such Party shall first discuss it with
the other Party and take into account and reasonably consider using the other
Party for such subcontracted activities, taking into account (balanced with
other factors) the capabilities of the other Party and potential impact on costs
and profits, as a potential alternative to subcontracting such activities to a
Third Party. In the event that any Commercialization activity allocated to a
Party under the Co-

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Commercialization Plan is subcontracted to the other Party (as opposed to being
allocated to such Party under the Co-Commercialization Plan), then the
sub-contracting Party remains ultimately responsible under this Agreement for
the conduct of such activities and the subcontractor Party shall conduct such
activities under the management of, and as directed by, the sub-contracting
Party, consistent with the terms of this Agreement and all applicable Laws.

(ii)     Notwithstanding the foregoing, the subcontracting Party (or Party whose
Affiliate enters into a subcontract) shall remain liable under this Agreement
for the performance of all its obligations under this Agreement and shall be
responsible and liable for compliance by its subcontractors with the applicable
provisions of this Agreement.

5.2       COMPANY Territory.

(a)        General. Subject to the terms and conditions of this Agreement,
applicable Law, Section 5.1 and the COMPANY Commercialization Plan as set forth
in Section 5.2(e), COMPANY shall be solely responsible for the Commercialization
of the Products in the COMPANY Territory in the Field during the Term,
including:

(i)      the setting of Product prices in the COMPANY Territory;

(ii)     subject to Section 5.6, the selection and protection of relevant
trademarks in the COMPANY Territory; and

(iii)    subject to Section 4, all Regulatory Activities in connection with any
Commercialization of the Products in the COMPANY Territory.

(b)        Specific COMPANY Obligations. COMPANY shall use Commercially
Reasonable Efforts to Commercialize at least one therapeutic, prophylactic or
palliative Product in the Field in each country or jurisdiction in the COMPANY
Territory in which COMPANY, its Affiliates and/or Sublicensees have received
both Marketing Authorization and, if applicable, Pricing Approval for such
Product(s).  In particular, COMPANY shall use Commercially Reasonable Efforts
to:

(i)      obtain Regulatory Approvals and Pricing Approvals, and Commercialize
the Product(s) in [***];

(ii)     position the Product in First Line Detailing or Second Line Detailing
in [***] after it has been launched;

(iii)    engage in outreach activities with the goal of covering up to [***]
percent ([***]%) of patient potential in [***] after the Product(s) has/have
been launched; and

(iv)    not promote any Product together or in close connection with a product
that competes targeting the same (or a subset of the same) patient population as
the Product in [***], unless such product is to be used in combination with the
Product.

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The Parties acknowledge and agree that any breach of this Section 5.2(b) with
respect to obligations relating to [***] may constitute a Material Breach of
this Agreement giving rise to the termination right set forth in
Section 17.2(a). For clarity, for purposes of this Section 5.2(b), with respect
to [***], COMPANY’s obligation to use Commercially Reasonable Efforts with
respect to a given Product shall also take into account [***].

(c)        Booking Sales. COMPANY shall book all sales of Product(s) in the
COMPANY Territory, and shall be responsible, among other things, in the COMPANY
Territory for (i) receiving, accepting and filing orders for the Product, (ii)
handling all returns of the Product, (iii) controlling invoicing, order
processing and collection of accounts receivable for the sales of the Product,
and (iv) warehousing and distributing of Product(s), all in accordance with
GAAP. If MorphoSys receives any orders for a Product in or for the COMPANY
Territory, it shall refer such orders to COMPANY.

(d)        Cost of Commercialization and Medical Affairs Activities in the
COMPANY Territory. Subject to the terms and conditions of this Agreement,
COMPANY shall be responsible for [***] in the COMPANY Territory.

(e)        COMPANY Commercialization Plan.  COMPANY will be solely responsible
for developing a COMPANY Commercialization Plan that shall define the overall
commercial strategy and detail the operational activities of COMPANY, its
Affiliates and Sublicensees in the COMPANY Territory (and shall, for clarity, be
consistent with the overall strategic Product positioning, branding, core
messaging, and overall medical congress strategy and global medical education
strategy with respect to the global Commercialization in the Territory),
including:

(i)      Regional go-to market models (e.g. Sales Representatives allocation,
medical scientific liaisons allocation, other FTEs, spend);

(ii)     Country-specific market access and pricing strategy;

(iii)    Regional marketing strategy, e.g. positioning, value proposition and
core messaging;

(iv)    Regional specific market insights and key performance indicators;

(v)     Regional medical activity plan and congresses; and

(vi)    the plans and timeline for preparing the necessary Pricing Materials and
for obtaining and/or maintaining Pricing Approvals in the Territories.

Such COMPANY Commercialization Plan shall be presented to the JCC and approved
by the JSC, within [***] calendar days after the Effective Date.

(f)       COMPANY Reports.  In addition to sharing information on the
Commercialization activities of COMPANY in the COMPANY Territory through the
JCC, as set forth in Section 9.7(c), COMPANY shall provide to MorphoSys a verbal
update on Commercialization activities in the COMPANY Territory for each JCC
meeting and a written update on its Commercialization activities for the
Product(s) in the COMPANY Territory on a regional or on a country-by-country
basis no less than twice every calendar year. Moreover, COMPANY shall submit in
writing to MorphoSys,

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as long as existent through the JCC, and otherwise directly to MorphoSys, such
other summary reports as MorphoSys may reasonably request from time to time
during the Term with respect to material activities undertaken by COMPANY for
the Product(s) in the Field in the COMPANY Territory, including general market
conditions and general sales information.

5.3       Co-Commercialization Territory.

(a)        General.  Subject to the terms and conditions of this Agreement, the
Co-Commercialization Plan and the Co-Commercialization Budget, the Parties shall
be jointly responsible for the Co-Commercialization of the Product(s) in the
Co-Commercialization Territory, in the Field, during the Term, including:

(i)      US brand strategy, US go-to market model, positioning, value
proposition and core messaging,

(ii)     market access activities,

(iii)    patient advocacy activities,

(iv)    marketing and sales activities,

(v)     market insights activities,

(vi)    Medical Affairs Activities,

(vii)   congress and medical education activities,

(viii)  subject to Section 5.6, the selection and protection of relevant
trademarks in the Co-Commercialization Territory, and

(ix)    subject to Section 4, all Regulatory Activities in connection with any
such Co-Commercialization of the Product(s) in the Co-Commercialization
Territory.

Co-Commercialization of the Product(s) will apply to all indications for which
the Product(s) is/are planned to receive (according to the Development Plan and
Co-Commercialization Plan) or has/have received Regulatory Approval and, if
applicable, Pricing Approval, in the Co-Commercialization Territory, whether
based on a Joint Development Activity or a Sole Funded Development Activity.

(b)        Specific Obligations. The Parties shall use Commercially Reasonable
Efforts to Commercialize at least one (1) therapeutic, prophylactic or
palliative Product in the Field in the Co-Commercialization Territory as soon as
Marketing Authorization and, if applicable, Pricing Approval for such Product
have been received.  In particular, the Parties shall use Commercially
Reasonable Efforts to:

(i)      position the Product in First Position Detail or Second Position Detail
in the Co-Commercialization Territory,

(ii)     ensure a minimum coverage of [***] percent ([***]%) of patient
potential, and

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(iii)    not promote any Product together or in close connection with a product
targeting the same (or a subset of the same) patient population as the Product
in the Co-Commercialization Territory, unless such product is to be used in
combination with the Product.

The Parties acknowledge and agree that any breach of this Section 5.3(b) may
constitute a Material Breach of this Agreement giving rise to the termination
right set forth in Section 17.2(a).

(c)        Booking Sales. MorphoSys or its Affiliate shall book all sales of
Product(s) in the Co-Commercialization Territory in accordance with the
Co-Commercialization Plan, and shall be responsible, among other things, in the
Co-Commercialization Territory for (i) receiving, accepting and filing orders
for the Product, (ii) handling all returns of the Product, (iii) controlling
invoicing, order processing and collection of accounts receivable for the sales
of the Product, and (iv) warehousing and distributing of Product(s); whereby
MorphoSys or its Affiliate shall be the contractual party to the final
customer.  The allocation of responsibilities and activities under
Co-Commercialization Plan shall be made in a manner that permits MorphoSys or
its Affiliate to book all sales of Product(s) in the Co-Commercialization
Territory in accordance with GAAP. If COMPANY receives any orders for a Product
in the Co-Commercialization Territory, it shall refer such orders to MorphoSys
or its Affiliate.

(d)        Pre-Tax Profit (Loss) Share. The Parties shall equally share the
Pre-Tax Profit (Loss) of the Co-Commercialization in the Co-Commercialization
Territory pursuant to Section 7.7.

(e)        Co-Commercialization Plan.  The Parties will jointly develop and
mutually agree through the JCC on a Co-Commercialization Plan and a
Co-Commercialization Budget that shall define the overall commercial strategy
and detail the operational activities, requirements and responsibilities of each
Party. The initial Co-Commercialization Plan and Co-Commercialization Budget
shall be approved by the JSC within [***] days after the Effective Date. The
Co-Commercialization Plan shall be based on the Co-Commercialization Plan
outline attached hereto as EXHIBIT 14, and the Co-Commercialization Budget shall
be based on the Co-Commercialization Budget outline attached hereto as EXHIBIT
15, and shall include, inter alia,

(i)      the overall strategy and the operational details of engagement of, and
relationships with, all stakeholders within the Co-Commercialization Territory,
including Government Officials, patient access/advocacy groups, Healthcare
Professionals, education providers, medical congress organizers, and pricing and
access related groups,

(ii)     alignment on external spend to support the overall strategy,

(iii)    alignment on number of Commercial FTEs from each Party,

(iv)    the specific overall responsibility of MorphoSys for Labelling and
Packaging, Distribution and logistics services in the Co-Commercialization
Territory, and

(v)     the specific overall responsibility of COMPANY for Medical Affairs
Activities in cooperation with MorphoSys in the Territory.

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(f)         Sales Force. Both Parties shall ensure that all Sales
Representatives Detailing the Product in the Co-Commercialization Territory will
be required to complete the same training and certification process. In
particular, the Parties will be jointly responsible for the training of both
Parties’ Sales Representatives and will prepare and implement a training program
and training materials for such Sales Representatives, including Detail
scripts.  Without limiting the generality of the foregoing, each Party shall:

(i)      be solely responsible for recruiting, hiring and maintaining its sales
force of Sales Representatives, including determining incentive compensations,
for the Commercialization of the Product in accordance with its standard
procedures and the requirements of this Agreement;

(ii)     be responsible for the activities of its Sales Representatives,
including compliance by its Sales Representatives with training and Detailing
requirements and ensuring Sales Representatives have and maintain all
credentials, licenses, or other governmental or institutional approvals
necessary to engage in Detailing and related activities;

(iii)    ensure that any of its Sales Representatives involved in the
Commercialization of the Product will not have any legal or regulatory
disqualifications, bars or sanctions, including but not limited to any
suspension or revocation of required credentials, licensing, or other
governmental or institutional approvals necessary to engage in Detailing and
related activities, or any record of debarment, exclusion, or other sanction
under the U.S. Federal Food, Drug, and Cosmetic Act, the U.S. Social Security
Act, and comparable statutes and regulatory requirements in other jurisdictions;
and

(iv)    maintain records and otherwise establish procedures to ensure compliance
with all applicable Laws and professional requirements that apply to the
Commercialization of the Product.

(g)        Detailing in the Co-Commercialization Territory. If either Party
undertakes Detail calls promoting a product in addition to the Product, it shall
comply with Section 5.3(b), and will be reimbursed following an allocation key
that depends on the number of products, including the Product, that a Sales
Representative discusses in such Detail call ([***]).

5.4       Legal Compliance.  Each Party shall, and shall ensure that its
Affiliates and sublicensees and subcontracting parties, in Commercializing the
Product(s) in the Field, comply with all applicable Laws, including all
applicable Regulatory Approvals for the Product in its respective Territory and
have in place a compliance program consistent therewith.  In addition, neither
Party nor its Affiliates or sublicensees shall use in any capacity, in
connection with its Commercialization of the Product hereunder, any person who
has been debarred pursuant to Section 306 of the FD&C Act, or who is the subject
of a conviction described in such section, and each Party shall inform the other
Party in writing immediately if it or any person who is performing services for
each Party hereunder is debarred or is the subject of a conviction described in
Section 306 (or similar Laws outside of the US), or if any action, suit, claim,
investigation or legal administrative proceeding is pending or, to such Party’s

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knowledge, is threatened, relating to the debarment of such Party or any person
used in any capacity by such Party in connection with its Commercialization of
the Product(s) hereunder. Each Party shall be responsible for reporting its own
expenditures in compliance with the Physician Payments Sunshine Act, subject to
further agreement between the Parties as to any information exchange necessary
to properly calculate and report spending on research and development which
understanding shall be documented in the Co-Commercialization Plan.

5.5       Promotional Materials.

(a)        COMPANY Territory.  The Parties will seek to align on and discuss
core messages in promotional materials (including digital communications on
websites) related to the Product for use in the COMPANY Territory in accordance
with the Regulatory Approvals and applicable Laws.  Such coordination by the
Parties is intended to ensure that such promotional materials take into account
the Global Brand Strategy for the Product.  The Parties shall exchange samples
of regional materials only (i.e. excluding any specific country related
materials) in the English language of its promotional materials related to the
Product for information and comment (and each Party shall consider any such
comments in good faith) prior to distributing such promotional materials (for
clarity, such samples need only be submitted for each different type of
promotional material, as opposed to each item of promotional material needing to
be submitted).  To the extent either Party wants to include any trademarks
Controlled by the other Party in the promotional materials or on the Product
packaging or labelling, such Party may include, upon the other Party’s prior
written approval only, on a royalty-free basis such trademarks and shall comply
with the other Party’s then-current guidelines for trademark usage, a copy of
which shall be requested from the Party intending to use the Controlled
trademark; provided, however, that COMPANY shall be responsible for the
finalization and use of promotional materials in the COMPANY Territory. For (i)
any media release by COMPANY referencing the Product, COMPANY shall include the
statement set forth in EXHIBIT 18 in the section containing background
information on the Product; and for (ii) any peer-reviewed publication COMPANY
shall include the identical statement set forth in EXHIBIT 18 in e.g. the
Materials and Methods section, the acknowledgements or the references at the
discretion of the lead author and publisher. COMPANY shall own all right, title
and interest in and to any promotional materials created by or on behalf of it
hereunder relating to the Product in the COMPANY Territory.

(b)        Co-Commercialization Territory.  The Parties shall develop
promotional materials for use in the Co-Commercialization Territory by both
Parties and their Affiliates that comply with each Party’s applicable policies,
SOPs, the Co-Commercialization Plan, and Applicable Laws and Regulatory
Approvals. Copies of all promotional materials used by COMPANY and MorphoSys and
their Affiliates in the Co-Commercialization Territory shall be archived by
COMPANY and/or MorphoSys, as applicable, in accordance with applicable Laws. The
promotional materials developed by the Parties shall be reviewed and approved by
the JCC. The JCC shall establish and implement a review process to ensure that
both Parties’ compliance officers and legal departments certify compliance of
the promotional materials with applicable Laws and policies of the Parties.  If
the Parties cannot agree upon the content of a particular promotional material,
the matter may be referred to the legal departments of the Parties, and then to
the JCC for resolution, subject to the final approval of the Parties’ respective
compliance officers and legal departments.  If the

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Parties’ compliance officers or legal departments are unable to mutually approve
the content of a particular promotional material in accordance with the
immediately preceding sentence, then such promotional material shall include the
content approved by the Party with the more conservative compliance or legal
position regarding such content. The Parties shall jointly own all right, title
and interest in and to any promotional materials created hereunder relating to
the Product(s) in the Co-Commercialization Territory. Promotional material in
the Co-Commercialization Territory shall include logos of MorphoSys and COMPANY
(or the other entity marketing the Product) at equal size.

(c)        Use of Promotional Materials Exclusively for the Product. The Parties
will only use promotional materials, and any aspects thereof uniquely tied to
the related Product, exclusively in connection with the Commercialization of
such Product in the COMPANY Territory and in the Co-Commercialization Territory
in the Field in accordance with the terms of this Agreement, and shall not use,
or allow any other person to use, any such promotional materials except in
accordance with this Agreement.

5.6       Product Marks

(a)        Product Mark.

(i)      The Parties shall be jointly responsible for:

(1)   establishing a global branding for the Product, including identifying and
selecting Product Marks and trademark standards for any Product Marks to be
adopted as well as global look and feel of Products and Product packaging in the
Territory ("Global Branding"). COMPANY and MorphoSys (and its Affiliates and
sublicensees respectively) shall only use the Product Marks pursuant to the
terms of this Agreement (i) to identify the Product(s) and (ii) in connection
with the Commercialization of the Product(s), and COMPANY and MorphoSys shall
not (and shall ensure that each of their Affiliates and sublicensees do not) use
such Product Marks in the course of trade to identify, or otherwise in
connection with, any other products, and

(2)   aligning on a global brand strategy, which shall encompass Product
positioning, alignment on core messages, discussing strategy related to
commercial terms of sale, setting strategy for key opinion leader engagement
("Global Brand Strategy"). Such Global Brand Strategy may be updated from time
to time by mutual agreement by the Parties. If the Parties do not mutually agree
on the above, COMPANY shall have the right to decide on the brand strategy for
the Product(s) in the COMPANY Territory, taking into account MorphoSys’
comments, and the Parties shall jointly decide on the brand strategy for the
Product(s) in the Co-Commercialization Territory.

(ii)     The Parties shall maintain, at all times, high quality standards for
all materials, products and services for which the Product Marks are

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used, which standards shall be no less than the standards of quality that have
been maintained for the materials, products or services provided by the
respective Party prior to the date of this Agreement.

(iii)    To the extent permissible by Regulatory Authorities and applicable Law,
COMPANY and MorphoSys shall use the same Product Mark in the COMPANY Territory
and the Co-Commercialization Territory (a "Global Product Mark").  Any Global
Product Mark, which is not an Existing Product Mark, shall be co-owned by
COMPANY and MorphoSys in all countries and regions in which such Global Product
Mark is applied for, registered, or used.  Where joint ownership is not possible
or is impracticable under applicable Laws, the Parties shall discuss in good
faith possible solutions. The Parties shall only use any Global Product Mark in
the form as agreed upon between the Parties.  Any Existing Product Mark shall be
solely owned by MorphoSys in all countries and regions in which such Existing
Product Mark is applied for, registered, or used and is subject to the license
in Section 2.1(e).

(iv)    [***] shall have the obligation to prepare, file, prosecute and maintain
the Global Product Marks in the [***], and [***] shall have the obligation to
prepare, file, prosecute and maintain the Global Product Marks in the [***]. In
the event that either Party intends not to prepare, file, prosecute, or maintain
a Global Product Mark in [***], such Party shall provide reasonable prior
written notice to the other Party of such intention (which notice shall, in any
event, be given no later than [***] weeks prior to the next deadline for any
action that may be taken with respect to such Global Product Mark in [***]), and
the other Party shall thereupon have the option, in its sole discretion, to
assume the control and direction of the preparation, filing, prosecution, and
maintenance of such Global Product Mark in [***].  Upon the continuing Party’s
written exercise of such option to the non-continuing Party, the continuing
Party shall assume responsibility and full control for the preparation, filing,
prosecution, and maintenance of any such Global Product Mark, and the continuing
Party shall [***].  The non-continuing Party shall assign to the continuing
Party its interest in such Global Product Mark and shall execute such documents
and perform such acts, [***], as may be reasonably necessary to permit the
continuing Party to file such Global Product Mark application, and/or to
prosecute and/or maintain such Global Product Mark.

(v)     Whether or not a Global Product Mark is adopted by the Parties,
alternative Product Marks may need to be selected upon the Regulatory
Authority’s request, provided they are consistent with the Global Brand Strategy
initially agreed between the Parties to the extent practicable. The use of an
alternative Product Mark by a Party requires the prior written consent of the
other Party, such consent not to be unreasonably withheld. If one of the Parties
needs to use an alternative Product Mark instead of a Global Product Mark that
has been adopted by the Parties, the Parties will enter into good faith
negotiations on whether the application, registration and use of such
alternative

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Product Mark is indeed feasible, in particular in view of the Global Brand
Strategy agreed upon between the Parties.

(vi)    Any Product Marks, which are not Existing Product Marks and which are
used exclusively within the COMPANY Territory shall be owned by COMPANY.
 COMPANY, [***], shall control the filing, prosecution, enforcement (subject to
Section 5.6(b)) and maintenance of the Product Marks used exclusively in the
COMPANY Territory.

(vii)   Any Product Marks used exclusively within the Co-Commercialization
Territory shall be owned by MorphoSys.  MorphoSys, [***], shall control the
filing, prosecution, enforcement (subject to Section 5.6(b)) and maintenance of
the Product Marks used exclusively in the Co-Commercialization Territory.

(b)        Infringement of the Product Mark.  In the event that either Party
becomes aware of any infringement of the Product Marks by a Third Party
including, but not limited to, the existence of conflicting trademarks or
company names of Third Parties in the Territory, such Party shall promptly
notify the other Party and the Parties shall consult with each other in good
faith with respect thereto.  Neither of the Parties is under an obligation to
monitor the market for Third Party use of the Product Marks.  Each Party shall,
at its sole discretion, have the right to determine how to proceed with respect
to such infringement [***], including by the institution of legal proceedings
against such Third Party, [***].  If a Party does not bring an action against
such infringement of a Product Mark [***] within [***] calendar days after
notification thereof to or by the respective Party, then the other Party shall
have the right, but not the obligation, to bring, [***], an appropriate action
[***] against any person or entity engaged in such infringement and [***];
whereby the latter Party shall not initiate such legal action without first
conferring with the former Party and considering in good faith the former
Party's reasons for not bringing any such action.  If requested to do so, the
Parties shall reasonably cooperate with any and all action initiated by the
other Party, [***]. If an infringement of a Global Product Mark occurs [***],
the Parties will consult fully with each other to agree on the requisite course
of action.

(c)        Acknowledgments.  Each Party acknowledges the sole ownership by the
other Party and validity of all trademarks, trade dress, logos and slogans and
related elements of a Global Brand Strategy (other than jointly owned Global
Product Marks) owned by the other Party and used or intended to be used in
connection with the Commercialization of the Product in the other Party’s
Territory, in accordance with this Agreement.  Each Party agrees that it will
not at any time during or after the Term assert or claim any interest in, or do
anything which may adversely affect the validity or enforceability of, any
copyright, trademark, trade dress, logo or slogan owned by the other Party and
used or intended to be used on or in connection with the marketing or sale of
the Product in accordance with this Agreement.  Neither Party will register,
seek to register or cause to be registered any copyrights, trademarks, trade
dress, logos or slogans owned by the other Party and used or intended to be used
on or in connection with the marketing or sale of the Product or any variation
thereof, under any applicable Laws providing for registration of copyrights,
trademarks, service marks, trade names or fictitious names (including as an
Internet domain name) or similar Laws, in such other Party’s Territory, without
the other Party’s prior written consent (in its sole discretion).  Each Party
agrees that all use of the other Party’s trademarks, names and

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logos will inure to the benefit of such other Party, including all goodwill in
connection therewith.  To the extent a Global Product Mark is used in the
Co-Commercialization Territory and the COMPANY Territory, the Parties shall
jointly own rights to any internet domain names incorporating the Global Product
Mark or any variation or part of such Global Product Mark as its URL address or
any part of such address under the country code top level domains corresponding
to the countries of its respective Territory.  With respect to generic top-level
domains, the Parties shall jointly determine if the Global Product Mark shall be
registered under the respective domains and which Party shall be entitled to
register a respective domain name. Each Party shall be responsible for all costs
incurred with respect to the Internet domain names registered by such Party.

(d)        Sublicensee. Licenses granted by COMPANY to a Sublicensee or by
MorphoSys to a sublicensee under a Product Mark or a Global Product Mark have to
be consistent with this Section 5.6 and shall impose on the Sublicensee or
sublicensee respectively obligations at least as strict as the Parties’
obligations under this Section 5.6. Except for licenses to Affiliates of either
Party, licenses under a Global Product Mark shall not be granted by either Party
without the prior written consent of the other Party, which shall not be
unreasonably withheld.

5.7       Display of Trade Names/Logos. To the extent legally permitted by
applicable Laws and compliant with Regulatory Approvals and each Party’s
applicable SOPs (in each case, as approved by the JCC), all Labelling and
Packaging materials, labels and Promotional Materials relating to Products in
the Field in the Co-Commercialization Territory shall display the then-current
MorphoSys trade name/logo in a size equal to the size of the logo of COMPANY (or
the other entity marketing the Product).

 

6.         MANUFACTURE OF PRODUCTS AND SUPPLY

6.1       General.

(a)        Supply of Product through MorphoSys.  Subject to COMPANY's right to
[***], MorphoSys shall use Commercially Reasonable Efforts to source [***] (i)
the demands of Licensed Antibody and Product for the conduct of the MorphoSys
Trials pursuant to Section 6.2, (ii) to supply COMPANY with Drug Product for
Development Activities other than MorphoSys Trials pursuant to Section 6.3, and
(iii) to supply COMPANY with Drug Product for Commercialization pursuant to
Section 6.4; all subject to [***]. The Parties shall use Commercially Reasonable
Efforts to conclude within [***] after the Effective Date, a supply agreement
(including a quality agreement to be concluded with [***] after the Effective
Date) ("Supply Agreement"), for the clinical and commercial supply to COMPANY of
the Drug Product and, where applicable, combination or comparator products.  In
any case COMPANY shall be responsible for Labelling and Packaging of the Product
to be Commercialized in the COMPANY Territory and/or for COMPANY Funded
Development Activities. At least [***] prior to the termination or expiration of
[***] the Parties shall discuss in good faith either Party’s responsibility and
the source for further supply in the JMC.

(b)        Right of COMPANY to [***].  As of the Effective Date, COMPANY shall
have the right to [***]. Until such time, MorphoSys shall (a) continue to use
Commercially Reasonable Efforts to source Drug Product [***] as set forth in
Section 6.1(a) and (b)

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consult with and, subject to confidentiality obligations [***]. At the request
of either Party, the Parties agree to discuss in good faith the advantages and
disadvantages of having COMPANY [***] for Commercialization in COMPANY Territory
or for supply for Trials in the Territory. At the request of COMPANY to [***],
subject to the obligations of MorphoSys [***], MorphoSys agrees that COMPANY may
have Manufactured the Licensed Antibody or the Product(s) for Commercialization
in the COMPANY Territory [***] and (A) COMPANY shall take into account
MorphoSys’ reasonable commercial interests (which for purposes of this Section
shall mean [***], and (B) MorphoSys shall use Commercially Reasonable Efforts to
support COMPANY in its reasonable efforts to have such [***] to MorphoSys and
COMPANY, respectively, shall be provided according to the following:

(i)      Unless otherwise agreed between the Parties, MorphoSys shall supply the
Co-Commercialization Territory and MorphoSys Trials [***], COMPANY shall supply
COMPANY Territory for Commercialization in the COMPANY Territory [***], and
supply for COMPANY Funded Development Activities, COMPANY Trial and Global
Trials to be agreed between the Parties;

(ii)     Unless otherwise agreed between the Parties, MorphoSys shall use
Commercially Reasonable Efforts to support COMPANY in obtaining Third Party
licenses which may be needed for the Manufacture of Product on COMPANY’s behalf,
[***], if applicable, [***]; for clarity, all other costs of the direct supply
under this Section 6.1(b) shall be borne by [***]; provided that MorphoSys shall
use Commercially Reasonable Efforts to [***];

(iii)    The Parties shall cooperate and align in their negotiations [***] in
order to [***]; in any case, the terms of [***] to MorphoSys or COMPANY under an
[***] shall [***];

(iv)    The Parties shall [***];

(v)     The Parties shall agree on a mechanism to share any Product-specific
equipment, cell lines and resins used [***] to maximize efficiency;

(vi)    The Parties shall consult, cooperate and align on process improvements
or changes to ensure that the Manufacturing processes do not diverge;

(vii)   In the event that the Manufacturing process needs to be changed for one
or more countries, the Parties shall keep each other informed about such changes
and secure access to such changed process for the other Party upon request; and

(viii)  The Parties shall aim to keep a common master dossier, and if not
possible, consult, cooperate and align how to achieve creation and maintenance
of the dossiers efficiently and to the benefit of both Parties.

Without limiting COMPANY's right to have Manufactured the Licensed Antibody or
the Product(s) for Commercialization in the COMPANY Territory [***], the Parties
will agree

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in good faith on the details of the transition and implementation of the [***]
the Supply Agreement. COMPANY will use Commercially Reasonable Efforts to
support MorphoSys in its efforts to [***] in accordance with the above (i) to
(viii).

6.2       Clinical Supply for the MorphoSys Trials.  MorphoSys shall use
Commercially Reasonable Efforts to source and to supply the demands of
GMP-compliant (if legally required) Licensed Antibody and Finished Drug Product,
and if applicable Placebo, combination or comparator product(s) (including
Labelling and Packaging) for the conduct of the MorphoSys Trials, subject to
[***]. All costs related to such supply shall be regarded as [***].

6.3       Clinical Supply for Further Clinical Development. MorphoSys shall use
Commercially Reasonable Efforts to [***] the demands of GMP-compliant (if
legally required) Drug Product and Placebo in accordance with the Development
Plan and the Supply Agreement (i) for the conduct of Joint Development
activities other than the MorphoSys Trials, including COMPANY Trial, and (ii)
for the conduct of any Sole Funded Development Activity, provided that the
supply for the purposes of (i) above shall have preference to the supply for the
purposes of (ii) above, and provided further that MorphoSys’ above obligation to
use Commercially Reasonable Efforts to source Drug Product shall no longer apply
with respect to supply in the COMPANY Territory once COMPANY directly sources
Product [***].  Supply with Drug Product and Placebo for Joint Development
Activities under this Section 6.3 shall be regarded as [***], whereas Supply
with Drug Product and Placebo for COMPANY Funded Development Activities will be
[***]. Combination products Controlled by a Party and used for Joint Development
Activities shall be provided by such Party [***]. Labelling and Packaging of the
Drug Product for Global Trials that are Joint Development Activities shall be
discussed in the JMC and the associated costs shall be regarded as [***].

6.4       Commercial Supply. MorphoSys shall use Commercially Reasonable Efforts
to source Drug Product [***] the demands of GMP-compliant Drug Product for
Commercialization in the COMPANY Territory and the Co-Commercialization
Territory, provided that MorphoSys’ above obligation to use Commercially
Reasonable Efforts to source Drug Product shall no longer apply with respect to
supply in the COMPANY Territory once COMPANY [***]. Supply of COMPANY with Drug
Product for Commercialization in COMPANY Territory will be [***].  Supply of
COMPANY with Drug Product for Commercialization in the Co-Commercialization
Territory will be [***]. In case of a Technology Transfer to the COMPANY or to
another Third Party manufacturer under a COMPANY Discretionary Activity
according to Section 6.6(c), COMPANY shall use Commercially Reasonable Efforts
to source Drug Product and to supply the Parties with GMP-compliant Drug Product
for Commercialization in the Co-Commercialization Territory, if necessary
according to the Co-Commercialization Plan. Supply in such a case will be [***],
subject to a supply agreement to be mutually agreed between the Parties in good
faith; in addition Section 6.6(c) shall apply with regard to [***].

6.5       Forecasting and Ordering.  For the supply of Product through
MorphoSys, COMPANY shall provide its forecasts in alignment with its capacity
reservation plan, and submit binding orders for clinical and commercial demand
of Drug Product, both with respect to the COMPANY Territory and the
Co-Commercialization Territory, to MorphoSys in sufficient time before MorphoSys
is required to submit its forecast and [***] so that MorphoSys can forward
COMPANY's [***] for Manufacturing campaigns in accordance with the timelines of
[***]. MorphoSys shall use Commercially Reasonable Efforts to supply COMPANY
with Drug Product [***].

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6.6       Technology Transfer to COMPANY or Third Party.

(a)        General. If after discussion in the JMC and decision of the JSC, and
subject to COMPANY’s final decision-making authority set forth in Section
9.2(e)(ii)(3), there will be a transfer of [***] ("Technology Transfer"),
MorphoSys agrees to use Commercially Reasonable Efforts to (i) [***] (ii)
support the Technology Transfer to COMPANY or COMPANY Affiliate or a Third Party
manufacturer, [***]. For any Technology Transfer or further technology transfer
(for clarity, including transfers pursuant to Section 6.6(b) and 6.6(c) Sections
6.1(b)(ii), 6.1(b)(iii), 6.1(b)(vi) and 6.1(b)(vii) shall apply. Any other
technology transfer than the Technology Transfer will be subject to the mutual
agreement of the Parties, provided that such technology transfer
[***].  MorphoSys has not taken, and shall not take, any actions [***] described
in this Section 6.6.  No more than [***] time during any [***] month period,
MorphoSys shall have the right to request and obtain, in accordance with the
Supply Agreement, a technology transfer of the Manufacturing Process of the
Product from COMPANY or any of its Affiliate or Third Party manufacturer, to
MorphoSys, a MorphoSys Affiliate or any Third Party within a reasonable time
after request, [***] if COMPANY desires at a later point in time to source
Licensed Antibody or Drug Product from MORPHOSYS, a MorphoSys Affiliate or the
Third Party.  COMPANY’s right to the Technology Transfer to a Third Party under
this Section shall be conditioned upon COMPANY ensuring that the new applicable
Third Party agreement shall provide for at least one (1) further technology
transfer to MorphoSys, its Affiliates or Third Party manufacturer, and COMPANY
using Commercially Reasonable Efforts to obtain the right to additional
technology transfers.  In order to facilitate such future technology transfer,
[***], COMPANY shall (A) allow MorphoSys to be present in person during the
performance of the key steps of the Technology Transfer, and in any case during
the rendering of in-person advice and instructions [***] in the course of the
Technology Transfer, and (B) upon request of MorphoSys provide to MorphoSys
access to the Manufacturing documentation.

(b)        Technology Transfer for Development or Commercial Supply for both
Parties. If both Parties agree (for clarity, beyond the discussions in the JMC
and the JSC where neither Party shall have the final say and, for clarity, this
Section 6.6(b) shall not limit the right of COMPANY to pursue a Technology
Transfer [***] pursuant to Section 6.6(a) or Section 9.2(e)(ii)) that a
Technology Transfer or a further technology transfer to a Third Party for
Development or Commercial supply will be pursued for supply of both Parties as
provided under this Agreement, the Parties will discuss and agree on the Third
Party manufacturer or COMPANY or COMPANY Affiliate to be the manufacturer as
sole or second supplier of Product; except as otherwise agreed by the Parties,
such agreed Technology Transfer or further technology transfer will be regarded
as [***]. Supply by a Third Party manufacturer or by COMPANY or an Affiliate as
manufacturer shall be charged as follows: if such supply is for the (i)
Co-Commercialization in the Co-Commercialization Territory, the related costs
[***] and/or (ii) Trials for the Co-Commercialization Territory and/or Global
Trials, the related cost [***]. In addition, [***].

(c)        Technology Transfer for Development or Commercial Supply for COMPANY.
If COMPANY requests to initiate a Technology Transfer or a further technology
transfer in connection with the Development or Commercial supply in the COMPANY
Territory, it shall bring this request to the JMC for discussion and decision by
the JSC. If the JSC decides in accordance with Section 9.2(e)(ii)(3) that
COMPANY

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may pursue such transfer, COMPANY shall designate itself, an Affiliate or a
Third Party manufacturer, in each case that is acceptable, in case of a
Technology Transfer [***]; the activities relating to such requested Technology
Transfer will be regarded as [***]. In case of such transfer, COMPANY shall
ensure that, if MorphoSys desires at a later point in time to source Licensed
Antibody or Drug Product from the COMPANY, COMPANY’s Affiliate or its Third
Party manufacturer, as the case may be, for the (i) Co-Commercialization in the
Co-Commercialization Territory at [***] and/or (ii) Trials for the
Co-Commercialization Territory and/or Global Trials at [***]; the cost for such
respective supply shall [***] and COMPANY shall use Commercially Reasonable
Efforts to ensure such supply to MorphoSys would be [***], for which COMPANY
sources the Licensed Antibody or Drug Product from such manufacturer or
Manufactures itself for the COMPANY Territory; provided, however, that (A) the
Parties will agree in good faith [***].

(d)        Supply after a Technology Transfer [***] or after a further
technology transfer. In case of a Technology Transfer or a further technology
transfer to a Third Party manufacturer by either Party (the “Transferring
Party”), the Transferring Party shall, through the JMC, keep the other Party
(the “Non-Transferring Party”) closely informed regarding the negotiation and
execution of the supply agreement between the Transferring Party and the Third
Party manufacturer and shall reasonably consider the Non-Transferring Party's
input thereto. The Transferring Party shall use Commercially Reasonable Efforts
to ensure that, if the Non-Transferring Party is or will be supplied by the
Transferring Party by use of such Third Party manufacturer, that the
Non-Transferring Party shall receive the benefit of any rights and remedies with
respect to damages and indemnification that are available to the Transferring
Party in respect of such Third Party manufacturer's breach of representations or
warranties or other obligations under such supply agreement, to the same extent
as the Transferring Party.  In case the Non-Transferring Party seeks to be
supplied by the Transferring Party by use of the Transferring Party's Third
Party manufacturer, the Parties will negotiate in good faith a supply agreement
between the Parties, which supply agreement shall comply with and implement the
principles for liability and indemnification as set out [***], as applicable,
including if the Third Party manufacturer under such supply agreement is [***].
In case of a Technology Transfer or a further technology transfer not to a Third
Party manufacturer but to either Party for such Party's own Manufacture and in
case such Party also supplies the other Party, the Parties shall negotiate a
supply agreement between the Parties for such supply, which supply agreement
shall comply with and implement the principles for liability and indemnification
as set out [***], as applicable.

6.7       [***] Supply. Subject to Section 6.4, except to the extent that (i)
COMPANY sources product directly for the COMPANY Territory [***] pursuant to
Section 6.1(b), or (ii) that COMPANY, any Affiliate of COMPANY, or a Third Party
supplies the Product after a Technology Transfer pursuant to Section 6.6 above,
MorphoSys and COMPANY shall and shall ensure that its Affiliates, Sublicensees
and distributors source and purchase all of their clinical and commercial
requirements of the Product for Development Activities, including for MorphoSys
Funded Development Activities and COMPANY Funded Development Activities or for
Commercialization via MorphoSys [***].  Without limiting the foregoing, subject
to Section 6.6(a) and (c), as of the Effective Date COMPANY shall have the right
to identify and qualify a [***] manufacturer for eventual clinical and
commercial supply for the COMPANY Territory following any Technology Transfer
after reasonable consultation with MorphoSys, but in any

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event at COMPANY’S sole discretion.  To the extent legally permissible,
MorphoSys and its Affiliates shall not, and MorphoSys shall use Commercially
Reasonable Efforts to ensure that its Sublicensees and distributors do not,
supply any Third Party with the Licensed Antibody or Product for [***] supply of
the COMPANY Territory.

6.8       CMC Data. In the case where MorphoSys sources Drug Product [***] and
supplies the demands of Drug Product for Commercialization in the COMPANY
Territory, the Co-Commercialization Territory, or Global Trials, MorphoSys will
[***] to obtain [***] the CMC related sections of the dossier, as necessary to
prepare Regulatory Materials for the European Union and, upon COMPANY's request
and to the extent possible, also for any other jurisdictions in the COMPANY
Territory. MorphoSys shall own and MorphoSys shall maintain the master dossier
for the Co-Commercialization Territory and MorphoSys and COMPANY shall co-own
and MorphoSys and COMPANY shall jointly maintain the master dossier for the
COMPANY Territory, in each case to the extent legally possible, and Parties
shall discuss in good faith whether the master dossier shall be co-owned at a
certain point in time. Related CMC activities reasonably useful for the
MorphoSys Trials and Global Trials will be regarded as [***]; related CMC
activities not reasonably useful for the MorphoSys Trials and Global Trials will
be regarded as [***]. Certain confidential CMC information that is not specific
to the Licensed Antibody or Drug Product (e.g., manufacturing trade secrets) may
be provided by [***] directly to Regulatory Authorities and may not be disclosed
to [***]. For the avoidance of doubt, the Parties shall exchange CMC information
through the JMC and each Party may use CMC information received from the other
Party. In the case where more than one Party is responsible for supply, either
under each Party’s supply relationship [***] or under each Party’s supply
relationship with a Third Party manufacturer or COMPANY or COMPANY Affiliate,
the Parties shall aim to keep a common master dossier, and if not possible
consult, cooperate and align how to achieve creation and maintenance of the
dossiers efficiently and to the benefit of both Parties.

 

7.         SHARING OF JOINT DEVELOPMENT COSTS AND PRE-TAX PROFIT (LOSS) SHARE

7.1       Development Costs Sharing Principle.  Beginning as of the Execution
Date the Parties shall share all Joint Development Costs set forth in the
Development Plan in accordance with the Pro Rata Percentage as set forth in the
applicable Development Plan. Joint Development Costs will be shared on a GAAP
accrual basis, so that each Party can accurately report expenses in its
financial statements. Each Party shall invoice the other Party  by providing
copies of all invoices received from Third Parties and records of the number of
FTEs, in accordance with Section 7.8.  ln order to ensure that the Parties have
received sufficient funds, Development Costs will be shared once they are
incurred and invoiced by a Party or invoiced by a Third Party.  For the
avoidance of doubt, Development activities carried out by MorphoSys prior to the
Execution Date may not conform with the Development Plan inasmuch as the
Development Plan first came into existence as of the Execution Date.

7.2       Development Costs not shared. All Development costs and Manufacturing
costs for [***] Funded Development Activities shall be [***]. All Development
costs and Manufacturing costs for [***] Funded Development Activities
(including, for the avoidance of doubt, [***]), shall be [***].

7.3       Development and Co-Commercialization Budget Overruns.  Each Party
shall promptly inform the other Party upon determining that it is likely to
exceed the budget amounts

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set forth in the annual Joint Development Budget or in the Co-Commercialization
Budget (each a “Budget”).  To the extent that a Budget for a particular calendar
year is exceeded by less than [***] percent ([***]%), each Party shall bear its
share of such excess amount as set forth in Section 7.1 and Section 7.7(a), as
applicable. To the extent that a Budget for a particular calendar year is
exceeded by more than [***] percent ([***]%) (such excess over [***] percent
([***]%), the "Excess Amount"), COMPANY shall fully bear its share of such
Excess Amount; and COMPANY shall also initially (subject to the following) bear
MorphoSys’ share if MorphoSys so requests the company to do so, subject to
repayment as follows. COMPANY shall deduct such MorphoSys share of such Excess
Amount (or parts of it, as applicable) from future milestone and/or royalties
payments due to MorphoSys under this Agreement, provided that no milestone
payment may be reduced by more than [***] percent ([***]%) and no royalty
payments shall be reduced to represent less than [***] percent ([***]%) of Net
Sales at any time.  In the event that any portion of the Excess Amount of
MorphoSys that was borne in accordance with the previous sentence by COMPANY
remains outstanding and not reimbursed to COMPANY for [***] months or longer,
then COMPANY may invoice MorphoSys for payment of such portion, plus interest on
such amount at an annual rate of [***] percent ([***]%) from the date the
payment to MorphoSys by the COMPANY was originally due, and MorphoSys shall pay
to the COMPANY any such invoiced amount in accordance with Section 8.5.

7.4       Calculation of Development Costs Sharing, Forecasts and Currency.

(a)        Within [***] Business Days of the end of any calendar quarter, each
Party shall submit a calculation of all Joint Development Costs (including
accurate records and books of accounts containing all data reasonably required
for the calculation and verification of FTEs used by each Party in accordance
with GAAP and the Development Plan) in accordance with GAAP on an accrual basis,
incurred by such Party which may be subject to a reimbursement or cost sharing
under this Agreement.

(b)        In addition, each Party shall submit an updated forecast of the Joint
Development Costs for the next [***] calendar quarters. Each Party shall be
entitled to audit the cost calculations claimed by the other Party under this
Section 7.4 and the audit provisions set forth in Section 8.3(g) shall apply
mutatis mutandis to any such audit.

(c)        Joint Development Costs incurred in Euros or US dollars shall not be
converted and shall be payable in Euros or US dollars, as the case may be,
whereas Joint Development Costs incurred in other currencies than Euros or US
dollars shall be converted to US dollars using [***].  The Party incurring such
Joint Development Costs shall provide to the other Party a true, accurate and
complete report of the [***] exchange rate used in the calculation. All payments
will be made without deduction of exchange, collection or other charges.

7.5       Development and Commercial FTE Costs.  With respect to Development or
Commercial-related FTE costs, which a Party is obligated to bear and then submit
to the other Party for sharing or reimbursement, as the case may be, each Party
shall calculate its costs using the relevant FTE Rate as set forth in Section
1.29 and Section 1.58, respectively.

7.6       Sole Funded Development Activities and Data Buy-In Mechanism.

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(a)        Responsibility for Sole Funded Development Activities. Subject to
Section 3.5, each Party shall be fully responsible for its Sole Funded
Development Activities.

(b)        Sole Funded Development Data Buy-In Option. Either Party (such Party,
the “Buy-In Party”) shall have the right to use the other Party’s Sole Funded
Development Data the same way it may use Joint Development Data under this
Agreement (including, for clarity, Sole Funded Development Data resulting from
Non-NDA Studies that are Independent Trials), subject to the payment of (i) a
buy-in fee constituting [***] incurred as of delivery of the buy-in notice
(including internal and Out-of-Pocket Costs) for such Development activities
that it would have otherwise been required to pay in accordance with the Pro
Rata Percentage if such Development activities had been Joint Development
Activities and (ii) its Pro Rata Percentage of Development Costs that are
incurred after delivery of the buy-in notice whereby, with effect as of delivery
of the buy-in notice, (A) such Development Costs shall be considered part of
Joint Development Costs, (B) the respective Development activity shall be
considered part of the Joint Development Plan, and (C) budget overruns shall be
considered Budget overruns as governed by Section 7.3.  Such buy-in payment
shall entitle the Buy-In Party to use only the Development Data of the Sole
Funded Development Activity that the Buy-In Party elected to participate in and
so paid for.

7.7       Co-Commercialization Costs – Pre-Tax Profit (Loss) Share.

(a)        Principles. The Parties shall share Pre-Tax Profit (Loss) as follows:
(i) MorphoSys shall be entitled to (and bear) fifty percent (50%) of Pre-Tax
Profit (Loss); and (ii) COMPANY shall be entitled to (and bear) fifty percent
(50%) of Pre-Tax Profit (Loss) ("Pre-Tax Profit (Loss) Share"). The Pre-Tax
Profit (Loss) calculation shall exclude [***]. It is further understood that
allowable costs to be deducted from Net Sales in the Co-Commercialization
Territory as set forth in the Definitions of Pre-Tax Profit (Loss) and Pre-Tax
Profit (Loss) Share shall include [***]. To the extent any Commercialization
activity is conducted in the Co-Commercialization Territory (or an External Cost
or Commercial FTE cost is incurred) in support of Product(s) but also in support
of other products, services or efforts of a Party or are not solely attributable
to Product(s), then the External Costs and Commercial FTE costs thereof shall be
only included in the Pre-Tax Profit (Loss) calculation as allowable costs pro
rata for Product.

(b)        Report of Costs under the Pre-Tax Profit (Loss) Share. The Parties
shall furnish to each other a written report for [***] showing the [***]; in
each case, solely to the extent incurred with respect to the
Co-Commercialization Territory during such [***]. Such reports shall be
furnished in reasonable detail for performing the Pre-Tax Profit (Loss) Share
calculation. Such reports shall be due no later than [***] calendar days
following the end of each [***].

(c)        Report on Net Sales in Co-Commercialization Territory and
Reconciliation Calculation. MorphoSys shall compile and furnish to COMPANY a
written report for each [***] showing the amount and calculation of the Net
Sales for such [***] in the Co-Commercialization Territory. The report shall
include gross sales and the calculation of Net Sales thereon, including the
amount of any deductions provided for in the definition of Net Sales (broken
down by category as enumerated in such definition).  In addition, MorphoSys
shall perform a reconciliation calculation to ensure that each

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Party bears and receives its share of Pre-Tax Profit (Loss) as set forth under
this Agreement. Such report shall be due no later than [***] calendar days
following the end of each [***] and such reconciliation calculation shall be due
no later than [***] calendar days following the end of each [***].  The
reconciliation procedures shall also include for each Party to keep the other
Party informed [***], on a regular ongoing basis, about forecasts of Net Sales
of Product(s) in the Co-Commercialization Territory and forecasts of Pre-Tax
Profit (Loss) in the Co-Commercialization Territory.  In addition, taking into
account the reasonable need of COMPANY to have such information for revenue
forecasts and guidance, MorphoSys shall provide to COMPANY on a regular, ongoing
basis, [***] estimates with regard to the Net Sales levels in the
Co-Commercialization Territory.

(d)        Reconciliation Payment. The amounts resulting from the reconciliation
calculation of the Pre-Tax Profit (Loss) Share under Section 7.7(c) shall be
payable for each [***] after performance of such calculation as set forth in
Section 7.7(c) by MorphoSys or, as applicable, by COMPANY, within [***] calendar
days of receipt of a respective undisputed invoice of the other Party.  All
items of the Pre-Tax Profit (Loss) Share being part of the reconciliation
calculation in currencies other than US dollars shall be converted into US
dollars by using the average closing exchange rate reported by Bloomberg for the
respective quarter.

(e)        Audits. Each Party shall be entitled to audit the cost reports and
calculations of the Pre-Tax Profit (Loss) claimed by the other Party under this
Section 7.7 and the audit provisions set forth in Section 8.3(f) shall apply
mutatis mutandis to any such audit.

(f)         Record Keeping.  MorphoSys shall keep and shall ensure that its
Affiliates and Sublicensees keep, in accordance with GAAP, books and accounts of
record in connection with the sales and other dispositions of Products in the
Co-Commercialization Territory (including use in Trials, or provision on a
compassionate use basis or as marketing samples) in sufficient detail to permit
accurate determination of all figures necessary for verification of the Pre-Tax
Profit (Loss) Share hereunder.  MorphoSys and its Affiliates and Sublicensees
shall maintain such records for a period of at least [***] years after the end
of the [***] in which they were generated and make such records available upon
request following the audit provisions set forth in Section 8.3 (g) which shall
apply mutatis mutandis to any such audit.

7.8       Finance Working Group. Within [***] calendar days after the Effective
Date, each Party shall appoint two senior finance representatives who shall
together form a joint working group (the "Finance Working Group"), which shall
report to the JSC. The Finance Working Group shall include individuals from each
Party with expertise in the areas of accounting, cost allocation, budgeting and
financial reporting. The Finance Working Group shall be responsible for: (i)
coordinating and conducting the accounting, reporting, reconciliation and other
related activities set forth in this Agreement, (ii) advising and providing
support to the JSC, and the other committees if applicable, with respect to
financial, accounting, budgeting, reporting and other issues that may arise in
connection with the various plans and corresponding budgets for activities
hereunder, (iii) reviewing relevant FTE costs and External Costs incurred by the
Parties and their Affiliates hereunder, (iv) recommending for approval by the
JSC any changes to reporting procedures, (v) coordinating or performing the
budgeting, consolidation, completion and review of the Pre-Tax Profit (Loss)
Share in accordance with the reconciliation procedures set forth in Section 7.7
and as set forth in the Definitions of Pre-Tax Profit (Loss)

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and Pre-Tax Profit (Loss) Share, including budgeting and calculation of
allowable costs, (vi) performing and reviewing calculations for the
reconciliation of payments, (vii) reviewing and detailing the reconciliation
methodology and Pre-Tax Profit (Loss) Share calculation and determination of
allowable costs, and recommending for approval by the JSC any changes to such
methodology, determination and details, (viii) coordinating audits, and
discussing and attempting to resolve discrepancies or issues arising from such
audits. If the Finance Working Group does not approve such methodologies and
costs brought forward by a Party or is unable to resolve any disputes or
differences, the matter shall be brought to the JSC. For any Dispute unresolved
by the JSC related to Commercial Manufacturing Costs in the COMPANY Territory
referred to in Section 6.4, if the Executive Officers are also unable to resolve
such Dispute, such Dispute shall be directly brought to the Expert for decision
under Section 9.3. For the purpose of the reporting due under Sections 7.4(a)
and 7.7, each Party shall provide the actual number of their FTEs (per Trial and
per function) having worked for such Party in performance of this Agreement to
the extent such FTEs are to be included in defined costs to be allocated between
the Parties under this Agreement. The Finance Working Group will agree on a
process to provide each Party with all necessary information that is required to
close each respective Party’s books under the applicable GAAP.

8.         FINANCIAL TERMS

8.1       License Fee and Contribution.

(a)         Initial License Fee. COMPANY shall pay to MorphoSys a one-time,
non-creditable, non-refundable, upfront and initial license fee of US dollar
seven hundred fifty million (USD 750,000,000).  This initial license fee shall
be due on the Effective Date and payable by COMPANY within [***] Business Days
after the Effective Date.

(b)         Contribution to Equity.  COMPANY shall purchase from MorphoSys
ordinary shares of MorphoSys in bearer form with no par value and a notional
value attributable to each share of €1.00 in the form of American Depositary
Shares against a total consideration of US dollar one hundred fifty million (USD
150,000,000), subject to the terms and conditions of EXHIBIT 16.

8.2       Milestone Payments.

(a)        Development / Regulatory Milestones.  COMPANY shall pay the following
non-refundable and non-creditable milestone payments to MorphoSys, each due upon
the first achievement of each milestone event indicated below (whether achieved
by or on behalf of either Party or its Affiliate, Sublicensee or any other
entity acting on behalf of any of them) with respect to the first Product
achieving such milestone event. COMPANY shall notify MorphoSys upon achievement
of any milestone event as set forth below and shall pay the applicable milestone
payment within [***] calendar days of achievement of such milestone event:

 

Oncology:

Milestone event

Milestone
payment (in US
dollars)

 

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[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

Total oncology development & regulatory milestones

535 million

 

 

Autoimmune Indications**:

Milestone event

Milestone
payment (in US
dollars)

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

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[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

Total autoimmune development & regulatory milestones

205 million

 

AutoImmune Indications Alternative Milestones***:

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

 

For each Regulatory Approval referred to in this table, “Approval” shall mean a
final or a conditional approval or approval on exceptional circumstances.

Each milestone payment would be payable only upon first achievement of such
milestone for the first Product and no amounts would be due for subsequent or
repeated achievements of the same milestone by another Product.

If any milestone event occurs without one of the preceding milestone events
occurring in such country, the milestone payment to be made in such country with
respect to the preceding milestone event would be paid at the same time as the
payment for the

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subsequent milestone event.  For example, if there is a filing of the first MAA
in the 1st Autoimmune Indication, any Phase 1, Phase 2, or Phase 3 Trial
milestones for such 1st Autoimmune Indication, if not previously paid, shall be
paid at the time of such first MAA filing.*COMPANY would pay [***] percent
([***]%), [***] percent ([***]%) and [***] percent ([***]%) of each European
approval milestone upon achievement of Pricing Approval in each of the [***],
respectively.

**COMPANY would only pay these autoimmune milestones listed above if they are
triggered based on a Trial that is a COMPANY Funded Development Activity.

***COMPANY would only pay these autoimmune milestones listed above if they are
triggered based on a Trial that is a Joint Development Activity, in both cases
excluding any non-NDA Studies.

For all purposes under this Section, whether an Indication is “1st”, “2nd”,
“3rd” or “4th” (if applicable) for any given milestone event will be determined
not based on which Indication started first in development, but on which
indication first achieves the milestone event.

(b)        Sales Milestones.  COMPANY shall notify MorphoSys upon achievement of
any milestone event as set forth below and, within [***] calendar days of the
first (1st) occurrence of any of the following milestone events, COMPANY shall
make the following one-time, non-creditable, non-refundable payments to
MorphoSys based on Net Sales in any calendar year in the COMPANY Territory
(across all Products and all indications) in accordance with the invoicing
process outlined in Section 8.5:

 

Milestone event (in US dollars)

Payment
(in US dollars)

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

Total Sales Milestones

315 million

 

For the avoidance of doubt, if more than one of the above Net Sales thresholds
are achieved for the first time in the same calendar year, all such achieved
milestone payments that were not previously paid will become due at such time.

(c)        Disputes on whether a development milestone event or a sales
milestone event has occurred shall be settled according to Section 18.3(b).

8.3       Royalties from COMPANY.

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(a)        Royalties for Products in the European Region and Japan.  In further
consideration of the licenses granted by MorphoSys to COMPANY, COMPANY shall pay
to MorphoSys tiered royalties on incremental annual Net Sales of Products in the
European Region and Japan:

 

Net Sales of Products in European Region and Japan in any calendar year (in US
dollars)

Royalty Rate

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

 

The royalty rates under this Section are incremental with respect to the annual
Net Sales of Products. As an example, if Products achieve in any given calendar
year [***] US dollar (USD [***]) in Net Sales in the COMPANY Territory, then a
[***] percent ([***]%) royalty shall be paid on the first [***] dollars (USD
[***]), a [***] percent ([***]%) royalty shall be paid on the next [***] dollars
(USD [***]), and a [***] percent ([***]%) royalty shall be paid on the remaining
[***] dollars (USD [***]).

(b)         Net Sales of Products in ROW Territory.  In further consideration of
the licenses granted by MorphoSys to COMPANY, COMPANY shall pay to MorphoSys a
royalty of [***] percent ([***]%) of Net Sales of Products in the ROW Territory.

(c)         Royalty Term. The royalties under Section 8.3 shall be paid by
COMPANY to MorphoSys during the Royalty Term. "Royalty Term" means the time from
[***] of a Product in a given country in the COMPANY Territory on a
country-by-country and Product-by-Product basis and until the last to occur of:
(i) the expiration of the last Valid Claim Covering such Product within the
Xencor Background Patents, MorphoSys Background Patents, Joint Foreground
Patents and MorphoSys Foreground Patents in such country, (ii) [***] years after
the first post-Marketing Authorization sale of such Product in such country and
(iii) expiration of the regulatory exclusivity for such Product in such country.
The royalties payable with respect to Net Sales of Products shall be reduced by
[***] percent ([***]%) of the otherwise applicable rates, with respect to Net
Sales of a Product in a country during any portion of the Royalty Term to the
extent there is no such Valid Claim in such country; provided, however, that,
subject to Section 8.10, the royalty payments due in any calendar quarter during
the Royalty Term shall in no case amount to less than [***] percent ([***]%) of
Net Sales of Products in the COMPANY Territory. COMPANY has selected this
royalty scheme from among other choices available to COMPANY as the most
appropriate and convenient

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approach to determine the value of the licenses granted by MorphoSys to COMPANY
hereunder.

(d)        Reporting of Net Sales and Monthly Forecast.  Within [***] calendar
days of the end of each calendar quarter for which royalties are due, COMPANY
shall deliver to MorphoSys a written report setting forth the following
information for such calendar quarter, on a Product-by-Product,
country-by-country and COMPANY Territory-wide basis (a) Net Sales of each
Product, gross sales associated therewith and the calculation of Net Sales
thereon, including the amount of any deductions provided for in the definition
of Net Sales (broken down by category as enumerated in such definition), and (b)
the royalties due hereunder for the sale of each such Product.  No reports under
this Section 8.3(d) shall be due for any such Product before the [***] of such
Product or after the Royalty Term for such Product has expired in all countries
in the COMPANY Territory.  The total royalty due for the sale of all such
Products during such calendar quarter shall be calculated in accordance with
this Section 8.3. In addition, taking into account the reasonable need of
MorphoSys to have such information for revenue forecasts and guidance, COMPANY
shall provide to MorphoSys on a regular, ongoing basis, [***] estimates with
regard to the Net Sales levels in [***].

(e)        Currency.  Royalties on Net Sales in Euros or US dollars shall not be
converted and shall be payable in Euros or US dollars, as the case may be,
whereas royalties on Net Sales in other currencies than US dollars or Euros
shall be converted to US dollars or Euros using the average of the exchange rate
as reported by [***] (or a successor entity) during the calendar quarter to
which such payment pertains.  With any payment in relation to which a currency
conversion is performed to calculate the amount of payment due, each such
invoice or report shall include the currency conversion and rate used as a
separate line item. All payments will be made without deduction of exchange,
collection or other charges.

(f)         Record Keeping.  In accordance with GAAP, COMPANY shall keep and
shall ensure that its Affiliates and Sublicensees keep books and accounts of
record in connection with the sales and other dispositions of Products
(including use in Trials, or provision on a compassionate use basis or as
marketing samples) in sufficient detail to permit accurate determination of all
figures necessary for verification of royalties or other payments to be paid
hereunder.  COMPANY and its Affiliates and Sublicensees shall maintain such
records for a period of at least [***] years after the end of the calendar
quarter in which they were generated and make such records available to
MorphoSys or an independent certified public accounting firm reviewing such
documents and records on behalf of Xencor and being selected by Xencor.

(g)        Audits.  Upon [***] calendar days prior notice from MorphoSys,
COMPANY shall permit an independent certified public accounting firm selected by
MorphoSys, to examine the relevant books and records of COMPANY and its
Affiliates and Sublicensees as may be reasonably necessary to verify the amounts
reported by COMPANY in accordance with Section 8.3(d) and the payment of
royalties hereunder. An examination by MorphoSys under this Section 8.3(g) shall
occur not more than once in any calendar year and shall be limited to the
pertinent books and records for any calendar year ending not more than [***]
years before the date of the request. The accounting firm shall be provided
access to such books and records at COMPANY’s or its Affiliates’ or
Sublicensees’ facility(ies) where such books and records are

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normally kept and such examination shall be conducted during COMPANY’s or its
Affiliates’ or Sublicensees’ facility(ies), normal business hours. COMPANY may
require the accounting firm to sign a reasonably acceptable non-disclosure
agreement before providing the accounting firm with access to COMPANY’s or its
Affiliates’ or Sublicensees’ facilities or records.  Upon completion of the
audit, the accounting firm shall provide both COMPANY and MorphoSys a written
report disclosing any discrepancies in the reports submitted by COMPANY or the
royalties paid by COMPANY, and, in each case, the specific details concerning
any discrepancies. MorphoSys shall be entitled to report the results of any such
audit to Xencor. If such accounting firm concludes that additional royalties
were due to MorphoSys, then COMPANY will pay to MorphoSys the additional
royalties within [***] calendar days of the date COMPANY receives such
accountant’s written report plus interest in the amount of [***] percentage
point above the then-applicable rate on the deposit facility of the [***] per
annum.  Further, if the amount of such underpayments exceeds more than [***]
percent ([***]%) of the amount that was properly payable to MorphoSys, then
COMPANY shall reimburse MorphoSys for MorphoSys’ costs in connection with the
audit (otherwise such audit shall be at MorphoSys’ cost).  If such accounting
firm concludes that COMPANY overpaid royalties to MorphoSys, then MorphoSys will
refund such overpayments to COMPANY plus interest in the amount of [***]
percentage point above the then-applicable rate on the deposit facility of the
[***] per annum, within [***] calendar days of the date MorphoSys receives such
accountant’s report.

8.4       Third Party Licenses and Third Party Payments.

(a)        General.  If either Party determines that it may be desirable to
obtain a license from a Third Party, such Party shall promptly notify the other
Party of such determination in writing giving detailed reasoning and the Parties
shall discuss, through the JSC, the necessity or usefulness to obtain such Third
Party's license.

(b)        Third Party Payments.  Except as otherwise set forth in Section
11.15, in the event the Parties agree to seek a license from a Third Party,
[***] shall have the first right to reasonably lead negotiations and conclude
such license for the [***]. [***] shall have the right to participate in any
such negotiation.  In the event [***] seeks a license from a Third Party for the
[***] shall have the first right to reasonably lead negotiations and conclude
such license for the [***]. [***] shall have the right to participate in any
such negotiation.  Whichever Party negotiates such Third Party license shall
keep the other Party informed and shall take due account of the other Party's
interests, and such other Party shall provide any assistance reasonably
requested.  In the event the Parties agree during the Term to seek a Third Party
license, the Parties shall [***] all Third Party Payments that are due on or
after the Execution Date to Third Parties in relation to any Licensed Antibody
or Products (i) in accordance with [***] if such license is worldwide and (ii)
in accordance with [***] if such license is limited to the Co-Commercialization
Territory.  For the avoidance of doubt, this Section 8.4 does not apply for
payments made which are [***].  In the event the Parties disagree as to whether
to seek a license from a Third Party but [***] has reasonably determined that it
would be less burdensome and/or more efficient to Develop and Commercialize the
Product in the [***] shall have the right to negotiate and conclude such license
in its own name and for the [***], provided that [***] in the Field in the [***]
and provided further that if [***] obtains a license from a Third Party in the
[***] that is necessary for

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Commercialization of the Product in the form as existing on the Execution Date,
in the [***].

(c)        Third Party Licenses under Issued Specific Composition Patents.  If
MorphoSys or COMPANY enter into any agreement with a Third Party for a license
under an issued Patent which Covers the specific composition of matter of: (i)
XmAb5574 due to and because of the sequence of its Fv or of its Fc variants, or
of (ii) the Xencor High-ADCC/CDC Fc variants of any other Licensed Antibody
which is under development or commercialization by MorphoSys or its Affiliate(s)
or COMPANY or its Affiliate(s) due to and because of the sequence of such Xencor
High-ADCC/CDC Fc variants ("Issued Specific Composition Patents") to avoid
doubt, an issued Patent will "Cover the specific composition" via a use claim if
the scope of the use claims is limited to uses of such specific composition of
matter due to and because of the sequence (meaning the Fv or Fc variants in the
case of XmAb5574 and the Xencor High-ADCC/CDC Fc variants of such other Licensed
Antibody) (and the foregoing specifically excluding Patents that apply due to
any chemical modification thereto not present in the form thereof having been
tested in the Xencor Phase 1 Trial), then [***] percent ([***]%) of the net
sales royalties actually paid to the Third Party under such license with respect
to Net Sales in any given calendar quarter in any given country may be offset
against the royalty that would otherwise have been payable to MorphoSys with
respect to such Net Sales in such calendar quarter; provided, however, that the
foregoing reduction shall not reduce the royalty owed to MorphoSys in any given
calendar quarter below [***] percent ([***]%) of Net Sales of Products in the
COMPANY Territory.

(d)        Payments under the Xencor Agreement.  During the Term, MorphoSys
shall be responsible for making the Xencor Payments to Xencor, provided,
however, that Xencor US Royalties shall be shared in accordance with the Pre-Tax
Profit (Loss) Share.

8.5       General Payment Terms. Unless otherwise specified, (i) COMPANY shall
make all payments under this Agreement, including the initial license fee and
the milestone payments due to MorphoSys under this Agreement, in US dollars, and
the royalty payments as set forth in Sections 8.3(a) and (b), and (ii) both
Parties shall make all payments to each other under the Pre-Tax Profit (Loss)
Share reconciliation to each other in US dollars. All payments under this
Agreement are exclusive of applicable statutory value-added tax (VAT), if any,
which shall be listed separately on each invoice. All payments other than
royalties due under this Agreement shall be made to the respective Party within
[***] calendar days, unless otherwise set forth in this Agreement, following the
receipt of an invoice, which shall in no case be sent prior to the respective
due date. All royalty payments are due and payable within [***] calendar days
upon receipt of an invoice from MorphoSys, which shall in no case be sent prior
to the receipt of the Net Sales report provided by COMPANY pursuant to Section
8.3(d). Each payment under this Agreement shall be made by electronic transfer
in immediately available funds via bank wire transfer to such bank account as
the respective Party shall designate in writing to the other Party at least
[***] calendar days before the payment is due. For the purpose of this Section
8.5, “VAT” means, in the EU, value-added tax calculated in accordance with
Council Directive 2006/112/EC and, in a jurisdiction outside the EU, any
equivalent tax. The Parties will cooperate in good faith to obtain any potential
exemptions or reductions from VAT which may be levied on any payments and
provide all necessary data and documents.

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8.6       Late Payment. Unless otherwise set forth in this Agreement, all
payments under this Agreement shall bear interest from the date due until paid
at a rate equal to [***] percentage points above the then-applicable rate on the
deposit facility of the [***] per annum.

8.7       Withholding Tax. If Laws, rules or regulations require withholding of
income taxes or other taxes imposed upon payments by a Party (“Payer”) to the
other Party (“Payee”), the Payer shall support the Payee in obtaining the
benefit of any relevant tax treaties to minimize as far as reasonably possible
any taxes which may be levied on any payments. If either Party is entitled under
any applicable tax treaty to a reduction of the rate of, or the elimination of,
applicable withholding tax, it may deliver to the other Party or the appropriate
Governmental Authority (with the assistance of the other Party to the extent
that this is reasonably required and is expressly requested in writing) the
prescribed forms necessary to reduce the applicable rate of withholding or to
relieve the other Party of its obligation to withhold tax, and the other Party
shall apply the reduced rate of withholding tax, or dispense with withholding
tax, as the case may be, provided that the other Party has received evidence of
such delivery of all applicable forms (and, if necessary, its receipt of
appropriate governmental authorization) at least [***] calendar days prior to
the time that the payment is due.  If, in accordance with the foregoing, a Party
withholds any amount, it shall make timely payment to the proper taxing
authority of the withheld amount, and send to the other Party proof of such
payment within [***] days following such latter payment.

8.8       Consistent Methodology. For the avoidance of doubt, all calculations
hereunder shall be made in accordance with the applicable budgets, definitions
and terms set forth in this Agreement, the applicable Exhibits, accounting
policies and methodologies as agreed by the Finance Working Group and in
accordance with GAAP.

8.9       Blocked Payments. In the event that, by reason of Laws in any country,
it becomes impossible or illegal for a Party or its Affiliates to transfer, or
have transferred on its behalf, payments to the other Party, such blocked Party
shall promptly notify the other Party of the conditions preventing such transfer
and such distribution fees or other payments shall be deposited in local
currency in the relevant country to the credit of the receiving Party in a
recognized banking institution within a period of [***] calendar days designated
by the receiving Party.

8.10     Limitation to royalty deductions allowed. Notwithstanding anything to
the contrary in this Agreement (except with respect to [***], the royalty
payments due in any calendar quarter to MorphoSys under this Agreement shall
never be reduced to less than [***] percent ([***]%) of the Net Sales in such
calendar quarter, whether by application of deductions allowed hereunder or
otherwise, provided that in the event a deduction by COMPANY is disallowed in a
particular calendar quarter by reason of this limitation (whether because of
this Section 8.10 or other similar limitations in this Agreement), such
disallowed deduction may be carried forward and deducted by COMPANY to the
extent permissible in the next calendar quarter only.

 

9.         GOVERNANCE

9.1       General Committee Authority.  Each committee formed under this
Agreement shall have solely the powers expressly assigned to it in this
Agreement. No committee shall have any power to amend, modify, or waive
compliance with this Agreement.

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9.2       Joint Steering Committee.

(a)        Purpose of the Joint Steering Committee ("JSC").  The JSC shall have
the authority to make decisions with respect to activities which have strategic
importance to the Development, Manufacture or Commercialization of the Licensed
Antibody and Product as well as unresolved disputes from the JDC, JMC and JCC
pursuant to Sections 9.5(e), 9.6(e) or 9.7(e), respectively.

(b)        Formation and Composition of JSC.  The Parties shall form the JSC
shortly after the Execution Date to start planning prior to the Effective Date.
Each Party shall initially appoint two (2) representatives to the JSC, with one
(1) representative having knowledge, expertise or responsibility in the
strategic research and development of products similar to the Product and the
other representative having knowledge, expertise or responsibility in the
strategic commercialization of products similar to the Products, both
representatives being on senior management level.  In addition to its JSC
representatives, a Party may have other personnel attend JSC meetings for
informational purposes. Each Party may replace its JSC representatives at any
time upon written notice to the other Party. MorphoSys and COMPANY shall
alternate on a yearly basis the chair of the JSC. The chairperson shall be
responsible for administering JSC meetings, but shall have no additional powers
or rights beyond those held by the other representatives on the JSC.

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

(i)      Discuss and decide upon the overall strategy for Developing,
Commercializing and Manufacturing the Licensed Antibody and Product in both the
Co-Commercialization Territory and the COMPANY Territory, including approval of
the Development Plan, Joint Development Budget, the TPP, the overall strategy
for seeking Regulatory Approvals and Pricing Approvals, the Co-Commercialization
Plan, the Co-Commercialization Budget and including discussing and reviewing the
COMPANY Commercialization Plan and approval of alignment of COMPANY
Commercialization Plan with the overall strategic Product positioning, branding,
core messaging, and overall medical congress strategy and global medical
education strategy with respect to global Commercialization in the Territory;

(ii)     Approve the COMPANY Commercialization Plan, the Co-Commercialization
Plan and the Co-Commercialization Budget, and any updates and amendments
thereto;

(iii)    Approve additional Global Trials, including Independent Trials, and
other material amendments of the Development Plan, including the determination
of proposed new Development activities as either Joint Development Activity or
Sole Funded Development Activity, subject to Section 3.5;

(iv)    Approve the strategic aspects of material Regulatory Activities and
material Pricing Activities in the Territory;

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(v)     Discuss and decide upon the overall global strategy for Commercializing
the Product and material Pricing Activities in both the Co-Commercialization
Territory and the COMPANY Territory;

(vi)    Discuss and decide responsibility for the Common Technical Document
(CTD);

(vii)   Consider in good faith any reasonable concerns of a Party that a Sole
Funded Development Activity or investigator initiated Trial might adversely
affect in a material way the value proposition of Licensed Antibody or Product,
by, as non-limiting examples, positioning Licensed Antibody or Product in a
niche or addressing a significant number of patients that would otherwise be
treated within the label of an already existing Regulatory Approval for Product;

(viii)  Review and approve COMPANY’s demand and sales forecasts for the COMPANY
Territory and the Parties’ demand and sales forecast for the
Co-Commercialization Territory and the respective timelines after reconciliation
by the JMC;

(ix)    Discuss and approve a potential Technology Transfer and the related
supply chain strategy after discussion of the same in the JMC;

(x)     Discuss and review new in-license agreements for Third Party licenses in
accordance with Section 8.4(a) and 8.4(b); and

(xi)    Oversee the JDC, JMC, JCC and Finance Working Group (as defined in
Section 7.8), approve proposals, plans and Pre-Tax Profit (Loss) Share
calculation methodology presented by these committees or group and decide upon
issues, which these committees referred to the JSC pursuant to Section 9.5(e),
Section 9.6(e), Section 9.7(e) or Section 7.8 and coordinate matters that affect
more than one of such committees.

(d)        JSC Meetings.  The JSC shall meet at least [***], unless otherwise
agreed between the JSC members. Either Party may also call a special meeting of
the JSC (by videoconference or teleconference) with at least [***] calendar days
prior written notice to the other Party in the event such Party reasonably
believes that a significant strategic matter must be addressed prior to the next
scheduled meeting.  The JSC may meet in person, by videoconference or by
teleconference.  There shall be at least one (1) meeting in person per year.
In-person JSC meetings shall be held at locations alternately selected by
MorphoSys and by COMPANY.  Meetings of the JSC shall be effective only if both
JSC representatives of each Party are present or participating in such
meeting.  Each Party shall report to the JSC on all strategically important
issues relating to the Development, Manufacture or Commercialization of Licensed
Antibody or Product promptly after such issues arise.  Each Party shall bear the
expense of its respective JSC representatives’ participation in JSC
meetings.  The chairperson shall be responsible for preparing reasonably
detailed written minutes of JSC meetings that reflect all decisions made at such
meetings.  The JSC chairperson shall send draft meeting minutes to each member
of the JSC for review and approval within [***] Business Days after each JSC
meeting.  Minutes shall be deemed approved unless

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one or more members of the JSC object to the accuracy of such minutes within
[***] Business Days of receipt.

(e)        JSC Decision-Making.  The JSC shall act and decide by consensus. Each
Party shall have one (1) vote on behalf of that Party; the members of one Party
can only cast one joint vote. The JSC shall use commercially reasonable efforts
to resolve the matters within its roles and functions. If the JSC cannot reach
consensus within [***] weeks on any issue that comes before the JSC for which
the JSC is responsible under this Agreement, then the Parties shall immediately
refer the matter to the chief executive officers or presidents (“Executive
Officers”) for attempted resolution by good faith negotiations within [***]
calendar days after such notice is received. If the Executive Officers are
unable to resolve such dispute within [***] calendar days after such dispute is
first referred to them, then:

(i)      Subject to Section 9.2(e) (iv), (v) and (vi), and Section 9.2(f),
MorphoSys shall have the final decision making authority, if such dispute
relates to any of the following:

(1)   any MorphoSys Trials (for clarity including [***], subject to
Section 3.7);

(2)   strategic decisions related to Joint Development Activities in the
Territory;

(3)   operational decisions related to Joint Development Activities in the
Co-Commercialization Territory;

(4)   strategic and operational decisions related to Regulatory Activities in
the Co-Commercialization Territory;

(5)   Manufacturing [***] (subject to Section 9.2(e)(ii)(2);

(6)   strategic and operational aspects of Commercialization of the Product
(including, for clarity, Product pricing decisions) in the Co-Commercialization
Territory and strategic aspects regarding Medical Affairs Activities in the
Co-Commercialization Territory, except as set forth in Section 9.2(e)(ii)(5);

(7)   strategic Product positioning, branding, core messaging, and overall
medical congress strategy and global medical education strategy with respect to
global Commercialization in the Territory;

(8)   MorphoSys Funded Development Activities, including amendments hereto;

(9)   MorphoSys’ compliance with any agreement existing on Execution Date, as
amended, with a Third Party to which MorphoSys is the contractual party
(including the Xencor Agreement and [***]);

(10) MorphoSys’ compliance with its responsibilities or legal obligations as the
Sponsor of a Trial; and

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(11) Non-NDA Studies in the Co-Commercialization Territory.

(ii)     Subject to Section 9.2(e)(iii), (iv), (v) and (vi), and Section 9.2(f),
COMPANY shall have the final decision making authority, if such dispute relates
to any of the following:

(1)   COMPANY Trial;

(2)   operational decisions related to Joint Development Activities in the
COMPANY Territory;

(3)   the Technology Transfer and further technology transfers;

(4)   Commercialization activities of the Product (including for clarity,
Product pricing decisions) in the COMPANY Territory;

(5)   operational activities regarding Medical Affairs Activities in the
Co-Commercialization Territory and strategic and operational activities
regarding Medical Affairs Activities in the COMPANY Territory;

(6)   COMPANY Funded Development Activities, including amendments thereto;

(7)   strategic and operational decisions regarding Regulatory Activities in the
COMPANY Territory; and

(8)   COMPANY’s compliance with its responsibilities or legal obligations as the
Sponsor of a Trial; and

(9)   Non-NDA Studies in the COMPANY Territory.

(iii)    Subject to Section 9.2(e)(iv), (v) and (vi), and Section 9.2(f),
MorphoSys shall have the final decision making authority, if any dispute relates
to any issue for which each Party would otherwise have the final say according
to the foregoing (i) and (ii) (i.e. overlap of final decisions);

(iv)    The respective Party shall not have the final decision making authority
under each of (i), (ii) and (iii) above and the other Party shall have a veto
right (and if such veto right is exercised, no action shall be taken with
respect to the applicable decision), if the other Party reasonably believes and
shows that the outcome of such Party's decision or its execution:

(1)   would materially amend any mutually agreed Joint Development Activity
(including the MorphoSys Trials and COMPANY Trial) or mutually agreed
Co-Commercialization Plan and Co-Commercialization Budget;

(2)   may result in a material safety issue for the Product;

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(3)   would cause or oblige such other Party to violate Laws or breach
agreements with Third Parties validly existing on Execution Date, in case of
MorphoSys, in particular but not limited to, the [***];

(4)   in case of a Technology Transfer or a further technology transfer, such
transfer, would in any regard, adversely affect the supply of Product in, with
respect to COMPANY, the COMPANY Territory, or with respect to either Party, the
Co-Commercialization Territory, and Trials; an increase in the supply price
[***], due to a Technology Transfer shall be deemed such an adverse effect, if
COMPANY does not commit in writing to fully bear such [***];

(5)   will increase the overall financial burden of such other Party by more
than [***] percent ([***]%) in sharing Joint Development Costs pursuant Section
7.1 or Co-Commercialization Costs or Medical Affairs Activities Costs pursuant
to Section 7.7.

(v)     The respective Party shall not have the final decision making authority
under each of (i), (ii) and (iii) above and the other Party may refer the matter
for determination by an Expert in accordance with Section 9.3, (y) if such other
Party reasonably believes and shows that the outcome of such Party's decision or
its execution might adversely affect in a material way the Licensed Antibody
and/or the Product or the Development, Regulatory Activities, Manufacture or
Commercialization of the Licensed Antibody and/or the Product in the
Co-Commercialization Territory or the COMPANY Territory, , or (z) in the event a
Party disputes the obligation to pay or to share compensation or the calculation
made in accordance with Section 3.18.

(vi)    Neither Party shall have the final decision making authority if the
dispute was initially brought to the JSC’s attention by the Finance Working
Group and as such relates to a specific financial and/or accounting matter
resulting from Section 7. Such dispute may be referred to an Expert in
accordance with Section 9.3, if it was not resolved by the JSC, nor by the
Executive Officers.

(f)         Limitations to a Party's Decision Making Authority. Notwithstanding
the foregoing provisions of Section 9.2(e), neither Party shall exercise its
right to finally resolve a dispute hereunder in a manner that excuses such Party
from any of its obligations specifically enumerated under this Agreement or in a
manner that negates any consent rights or other rights specifically allocated to
the other Party under this Agreement.  In addition, in resolving a dispute
hereunder each Party shall act in good faith and in a commercially reasonable
manner.  While a disputed matter remains unresolved, all previously agreed upon
rights and obligations of each Party with respect to such disputed matter in the
Development Plan shall continue to remain in effect.  Nothing in this
Section 9.2(f), shall affect the right of a Party to exercise its rights or
remedies for a breach of this Agreement by the other Party (in particular, but
not limited to, firm obligations and obligations to use Commercially Reasonable
Efforts, violations of payment obligations, breach of the other Party's
intellectual property rights, violations of Confidentiality).

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9.3       Expert Decision. If a dispute remains unresolved pursuant to
Section 9.2(e)(v), on which neither Party has the deciding vote, then upon
written request by either Party to the other Party, the Parties shall promptly
negotiate in good faith to appoint an appropriate expert ("Expert").  If the
Parties are unable to agree on an Expert by mutual written agreement within
seven (7) calendar days after the receipt by a Party of the written request in
the immediately preceding sentence, the Expert shall be appointed by the
International Centre for Expertise of the International Chamber of Commerce
(“ICC”) under its rules of expertise; provided, however, that initially, the
Parties shall [***] the fees charged by ICC upon appointment of the Expert.  The
Parties will then promptly make available the same set of documents supporting
their proposals to the mutually agreed Expert or the appointed Expert, as the
case may be.  Such Expert shall have the right to meet with the Parties, either
alone or together, as necessary to make a determination. Each Party shall submit
to such Expert and exchange with each other in advance of such Expert’s review
their last, best offers.  Such Expert shall be limited to awarding only one or
the other of the offers submitted.  No later than [***] calendar days after the
agreement or designation of such Expert, as the case may be, such Expert shall
make a determination.  Such Expert shall provide the Parties with a written
statement setting forth the basis of the determination in connection
therewith.  The decision of such Expert shall be final and conclusive and
binding on the Parties and their Affiliates and Sublicensees, absent manifest
error. The costs of such Expert shall be borne [***].  The Parties shall use
their good faith efforts to expedite the processes set forth in Section 9.2(e)
and this Section 9.3.

9.4       Development Project Team.  As soon as reasonably practicable after the
formation of the JDC, the JDC will establish a development project team (the
“Development Project Team”) that will meet by teleconference (i) on a [***]
basis for the first [***] months after establishment of the Development Project
Team and (ii) at least [***] thereafter for such period agreed by the Parties,
in each case to discuss the status, safety and efficacy data (if available)
emerging from each MorphoSys Trial and any Global Trial that is a Joint
Development Activity. The Development Project Team will consist of the lead
clinician and clinical scientist for each applicable Trial and their respective
counterparts from the Party not conducting such Clinical Study. Development
Project Team members will have the right to join the weekly safety call with
lead Trial investigators, and have contemporaneous access to any material safety
data and all key efficacy data, including: (a) interim analyses, (b) first
interpretable results, (c) draft tables, listings and figures, (d) final tables,
listings and figures from such Trial.

9.5       Joint Development Committee.

(a)        Purpose of the Joint Development Committee ("JDC"). The JDC shall
govern and oversee the global Development Activities of Licensed Antibody and
Products in the Territory in the Field, as long as a Product is in Development
in any country of the Territory in the Field.

(b)        Formation and Composition of JDC.  The Parties shall form a JDC
promptly after the Execution Date to start planning Development activities prior
to the Effective Date. Each Party shall initially appoint three (3)
representatives to the JDC, with each representative having knowledge, expertise
or responsibility in the research, development and regulatory activities of
products similar to the Products and the appropriate seniority. The JDC may
change its size from time to time by mutual consent of its members; provided,
however, that the JDC shall consist at all times of an equal number of
representatives of each of MorphoSys and COMPANY. In addition to its JDC
representatives, a Party may have other personnel attend JDC meetings for
informational purposes. Each Party may replace its JDC representatives at any
time

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upon written notice to the other Party. MorphoSys and COMPANY shall alternate on
a yearly basis the chair of the JDC. The chairperson shall be responsible for
administering JDC meetings, but shall have no additional powers or rights beyond
those held by the other representatives on the JDC. The JDC may constitute
working groups for addressing specific matters under its responsibility.

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

(i)      Manage and oversee the preparation and implementation of the
Development Plan;

(ii)     Review, discuss and approve non-material amendments to the Development
Plan;

(iii)    Every [***] months, review, discuss, amend, update and submit to the
JSC for approval:  the Development Plan (subject to Section 3.6), including the
Joint Development Budget, the TPP, and any material amendments thereto; review
and discuss proposals for new Development Activities pursuant to Section 3.5 and
seek input from the JCC;

(iv)    Decide upon which Party will be responsible for the performance of the
various activities set forth in the Development Plan on the basis of each
Party’s respective experience, capabilities and capacity as set forth in Section
3.11, including which Party will be the Sponsor of a new Global Trial that is a
Joint Development Activity;

(v)     Oversee the conduct and progress of all Trials required as set forth in
the Development Plan, including compliance with Laws and applicable GLP, GCP
and/or GMP standards, mitigation actions, e.g. clinical Trial liaison activities
and medical scientific activities, in order to improve Trial recruitment and
Trial site engagement and any Development Activities;

(vi)    Align with the Medical Affairs function with regards to Early Access
Programs and investigator initiated Trials;

(vii)   Review and discuss the progress of any Sole Funded Development Activity;

(viii)  Coordinate and facilitate the exchange of information between the
Parties under this Agreement regarding the strategy for implementing the
Development Activities, including sharing and reviewing of Development Data
created pursuant to this Agreement and establishing procedures for the efficient
and prompt sharing of information and materials and Know-How reasonably
necessary or useful for the Development of the Product in the Territory;

(ix)    Coordinate and facilitate exchange by both Parties of Regulatory Data
and Regulatory Materials in support of filings, facility inspections and Product
launch in the Co-Commercialization Territory and the

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COMPANY Territory; review, discuss and, with respect to Joint Development
Activities only, approve the design of the Trial protocols and endpoints;

(x)     Discuss and agree on the regulatory strategy for filing and maintaining
Regulatory Approvals in the Co-Commercialization Territory, in alignment with
the JCC;

(xi)    Review and discuss the regulatory strategy for filing and maintaining
Regulatory Approvals in the COMPANY Territory, in alignment with the JCC;

(xii)   Review and discuss the contents of all submissions to Regulatory
Authorities and Governmental Authorities in the Territory for Regulatory
Approvals, Regulatory Materials and all necessary filing and registration
activities related thereto;

(xiii)  Discuss and agree on all matters related to the maintenance of each
Party’s safety database and the global safety database, as applicable;

(xiv)  Review, discuss and oversee issues regarding pharmacovigilance and safety
in both the Co-Commercialization Territory and the COMPANY Territory;

(xv)   Review and provide comments to the JMC regarding Manufacturing
Development Activities and discuss progress and issues concerning Manufacturing
Development Activities;

(xvi)  Review and discuss demand forecasts and timelines of Drug Product for
supply of the Development Activities under the Supply Agreement and report such
demand forecasts and timelines to the JMC;

(xvii) Discuss and agree the publication strategy for Development Data;

(xviii) Review and discuss subcontractors (e.g. contract research organizations,
and vendors) and collaboration partners for Joint Development Activities
(subject to qualification of such subcontractors in accordance with Laws, GMP
and GDP), and report the proposed subcontractors to the JSC for approval; decide
on thresholds for seeking the other Party’s approval to engage such
subcontractors and partners, and decide which Party (or the Parties) negotiates
the respective agreements and signs such agreements with such subcontractor,
with the other Party’s prior approval;

(xix)  Review results of subcontracted Joint Development Activities.

(d)        JDC Meetings.  The JDC shall meet once per [***] unless otherwise
agreed between the JDC members. Either Party may also call a special meeting of
the JDC (by videoconference or teleconference) with at least [***] calendar days
prior written notice to the other Party in the event such Party reasonably
believes that a significant matter must be addressed prior to the next scheduled
meeting.  The JDC may meet in person, by videoconference or by
teleconference.  There shall be at least one (1)

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meeting in person per year. In-person JDC meetings shall be held at locations
alternately selected by MorphoSys and by COMPANY.  Meetings of the JDC shall be
effective only if all JDC representatives of each Party are present or
participating in such meeting.  Each Party shall report to the JDC on all
material issues relating to the Development of any Licensed Antibody or Product
promptly after such issues arise.  Each Party shall bear the expense of its
respective JDC representatives’ participation in JDC meetings.  The chairperson
shall be responsible for preparing reasonably detailed written minutes of JDC
meetings that reflect all decisions made at such meetings.  The JDC chairperson
shall send draft meeting minutes to each member of the JDC for review and
approval within [***] Business Days after each JDC meeting.  Minutes shall be
deemed approved unless one or more members of the JDC object to the accuracy of
such minutes within [***] Business Days of receipt.

(e)        JDC Decision-Making. Subject to Section 9.5(c), the JDC shall have
the authority to make decisions with respect to the Development of Licensed
Antibodies and Products in the Territory in the Field. The JDC shall act by
consensus. Each representative from each Party shall have one (1) vote on behalf
of that Party. If the JDC cannot reach consensus within [***] Business Days on
any issue that comes before the JDC for which the JDC is responsible, then the
Parties shall immediately refer such matter to the Chief Development Officer at
MorphoSys and the Chief Medical Officer at COMPANY ("Designated JDC Officers")
for resolution. In the event of a Dispute between COMPANY and MorphoSys that
cannot be resolved within [***] Business Days by the Designated JDC Officers
with respect to matters concerning the Development, the Designated JDC Officers
shall refer the issue to the JSC which will decide upon the matter pursuant to
Section 9.2(e).

9.6       Joint Manufacturing Committee.

(a)        Purpose of the Joint Manufacturing Committee ("JMC"). The JMC shall
discuss and shall have the authority to make decisions only as expressly set out
in Section 9.6(c) below.

(b)        Formation and Composition of JMC. The Parties shall form a JMC
promptly after the Execution Date to start planning Development activities prior
to the Effective Date. Each Party shall initially appoint two (2)
representatives to the JMC, with each representative having knowledge, expertise
or responsibility in the manufacturing of products similar to the Products and
the appropriate seniority. The JMC may change its size from time to time by
mutual consent of its members; provided, however, that the JMC shall consist at
all times of an equal number of representatives of each of MorphoSys and
COMPANY. In addition to its JMC representatives, a Party may have other persons
attend JMC meetings for informational purposes, including also representatives
of [***] if appropriate. Each Party may replace its JMC representatives at any
time upon written notice to the other Party. MorphoSys and COMPANY shall
alternate on a yearly basis the chair of the JMC. The chairperson shall be
responsible for administering JMC meetings, but shall have no additional powers
or rights beyond those held by the other representatives on the JMC. The JMC may
constitute working groups for addressing specific matters under its
responsibility.

(c)      Specific Responsibilities of the JMC. The JMC shall in particular:

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(i)      Discuss and approve the Manufacturing Development Activities and
discuss progress and issues concerning Manufacturing Development Activities and
COMPANY Discretionary Manufacturing Development Activities, all in accordance
with the Development Plan;

(ii)     Oversee, discuss and approve the overall supply chain management and
related regulatory strategy, forecasting procedures, as well as contingency
plans;

(iii)    Facilitate, to the extent permitted under this Agreement, exchange of
CMC information;

(iv)    Discuss the need and scope of a potential Technology Transfer and review
potential Third Party manufacturers (and COMPANY as manufacturer) capabilities
for provision of Drug Product, Drug Substance and analytical test methods, and
oversee the Technology Transfer where agreed by the Parties through the JSC and
[***];

(v)     Review, discuss and reconcile demand and sales forecasts and timelines
of Drug Product for supply of the Development Activities and Commercialization
in the Territory after discussion of such demand and sales forecasts and
timelines in the JDC and/or JCC, as the case may be, and report such reconciled
demand and sales forecasts and timelines to the JSC for approval;

(vi)    Review and discuss any material issues and problems relating to the
Manufacture of Products, including shortages, delays and non-compliances;
discuss and approve remediation plans and corrective actions;

(vii)   Review and discuss potential Third Party vendors for e.g. (a) Labelling
and Packaging of the Drug Product and (b) Distribution of the Finished Drug
Product; for Global Trials that are Joint Development Activities and for
Co-Commercialization in the Co-Commercialization Territory, and report the
proposed Third Party vendors to the JSC for approval. All Third Party vendors
shall undergo successful qualification by the quality assurance function of the
Party being responsible for contracting the Third Party; and

(viii)  Facilitate the involvement of the respective other Party in cases set
out under Section 6.6(d).

(d)        JMC Meetings.  The JMC shall meet at least [***], unless otherwise
agreed between the JMC members, and as needed for the forecasting mechanism
under the [***]. Either Party may also call a special meeting of the JMC (by
videoconference or teleconference) by at least [***] calendar days prior written
notice to the other Party in the event such Party reasonably believes that a
significant matter must be addressed prior to the next scheduled meeting.  The
JMC may meet in person, by videoconference, or by teleconference.  There shall
be at least one (1) meeting in person per year.  In-person JMC meetings shall be
held at locations alternately selected by MorphoSys and by COMPANY.  Meetings of
the JMC shall be effective only if both JMC representatives of each Party are
present or participating in such

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meeting.  Each Party shall report to the JMC on all material issues relating to
the Manufacturing of Products promptly after such issues arise.  Each Party
shall bear the expense of its respective JMC members’ participation in JMC
meetings.  The chairperson shall be responsible for preparing reasonably
detailed written minutes of JMC meetings that reflect all decisions made at such
meetings.  The JMC chairperson shall send meeting minutes to each member of the
JMC for review and approval within [***] Business Days after each JMC
meeting.  Minutes shall be deemed approved unless one or more members of the JMC
object to the accuracy of such minutes within [***] Business Days of receipt.

(e)        JMC Decision-Making.  The JMC shall act by consensus. Each
representative from each Party shall have one (1) vote on behalf of that
Party.  If the JMC cannot reach consensus within [***] Business Days on any
issue that comes before the JMC for which the JMC is responsible, then the
Parties shall refer such matter to the relevant Chief Officers at MorphoSys and
COMPANY ("Designated JMC Officers") for resolution. In the event of a Dispute
between COMPANY and MorphoSys that cannot be resolved within [***] Business Days
by the Designated JMC Officers with respect to matters concerning the
Manufacturing, the Designated JMC Officers shall refer the issue to the JSC
which will decide upon the matter pursuant to Section 9.2(e).

9.7       Joint Commercialization Committee.

(a)        Purpose of the Joint Commercialization Committee ("JCC"). The JCC
shall govern and oversee the global Commercialization of Product in the
Territory in the Field, as long as a Product is Commercialized in any country of
the Territory in the Field.

(b)        Formation and Composition of JCC.  The Parties shall form a JCC
within [***] calendar days following the Execution Date.  Each Party shall
initially appoint two (2) representatives to the JCC, with each representative
having knowledge, expertise or responsibility in the commercialization of
products similar to the Products and the appropriate seniority. The JCC may
change its size from time to time by mutual consent of its members; provided,
however, that the JCC shall consist at all times of an equal number of
representatives of each of MorphoSys and COMPANY.  In addition to its JCC
representatives, a Party may have other persons attend JCC meetings for
informational purposes.  Each Party may replace its JCC representatives at any
time upon written notice to the other Party. The JCC shall be chaired by [***].
The chairperson shall be responsible for administering JCC meetings, but shall
have no additional powers or rights beyond those held by the other
representatives on the JCC. The JCC may constitute working groups for addressing
specific matters under its responsibility.

(c)        Specific Responsibilities of the JCC.  In combination with all the
responsibilities of the JCC set forth in Article 5, the JCC shall in particular
with respect to the Product in the Field:

(i)      Oversee and align on the overall global Commercialization strategy, in
particular global market access, global marketing and global medical affairs
strategies in the Territory;

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(ii)     Serve as a conduit for sharing information, knowledge and expertise
relating to the Commercialization of the Product, and the principles of
information-sharing with respect to Commercialization in Co-Commercialization
Territory and in the COMPANY Territory shall be reciprocal;

(iii)    Align, oversee and implement the Global Brand Strategy for Product(s)
for use in the Field in the Territory;

(iv)    Discuss and agree on the Co-Commercialization Plan and the
Co-Commercialization Budget and any updates and amendments thereto;

(v)     Review and discuss the COMPANY Commercialization Plan and any updates
and amendments thereto, whereby COMPANY shall consider in good faith any
comments by MorphoSys with regards to the above;

(vi)    Share and discuss information on the Commercialization activities of
COMPANY under this Agreement in the COMPANY Territory, including launch
sequences, Pre-Launch and post-launch activities;

(vii)   Review and discuss demand and sales forecasts and timelines of Drug
Product for supply of the Commercialization in the Territory under the Supply
Agreement and report such demand and sales forecasts and timelines to the JMC;

(viii)  Review and provide comments to the JMC regarding supply chain
management, forecasting procedures, and issues of material shortages;

(ix)    Share and discuss information on competitor activities with relevance
for the Commercialization of the Product;

(x)     Review and facilitate public relations and align on communication
strategy related to Product enquiries;

(xi)    Review and discuss [***] in the Territory;

(xii)   Discuss and agree on the [***] for the Co-Commercialization of the
Product in the Co-Commercialization Territory, whereby MorphoSys shall have the
final decision, in particular with respect to setting the price;

(xiii)  Discuss and agree on the [***] for Commercialization of the Product in
the COMPANY Territory, to the extent legally permitted, whereby COMPANY shall
have the final decision, in particular with respect to setting the price;

(xiv)  Discuss and agree on the strategy for receiving and maintaining [***] of
the Product in European Major Markets, Canada, Australia, Israel, Japan, South
Korea, Brazil, Argentina, Russia, India, China, Hong Kong and Mexico where
applicable;

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(xv)   Oversee and align Medical Affairs Activities of each Party, subject to
Section 5.1(c) and 5.3(e)(v), and align with the JDC with regards to Early
Access Programs and investigator initiated Trials; and

(xvi)  Oversee and align marketing and sales activities, market access
activities, patient advocacy activities, and market insight activities of the
Parties, in the Co-Commercialization Territory.

(d)        JCC Meetings.  The JCC shall meet at least once per [***], unless
otherwise agreed between the JCC members. Either Party may also call a special
meeting of the JCC (by videoconference or teleconference) by at least [***]
calendar days prior written notice to the other Party in the event such Party
reasonably believes that a significant matter must be addressed prior to the
next scheduled meeting.  The JCC may meet in person, by videoconference, or by
teleconference.  There shall be at least one (1) meeting in person per
year.  In-person JCC meetings shall be held at locations alternately selected by
MorphoSys and by COMPANY.  Meetings of the JCC shall be effective only if both
JCC representatives of each Party are present or participating in such
meeting.  Each Party shall report to the JCC on all material issues relating to
the Commercialization of Products promptly after such issues arise.  Each Party
shall bear the expense of its respective JCC members’ participation in JCC
meetings.  The chairperson shall be responsible for preparing reasonably
detailed written minutes of JCC meetings that reflect all discussions held at
such meetings.  The JCC chairperson shall send meeting minutes to each member of
the JCC for review and approval within [***] Business Days after each JCC
meeting.  Minutes shall be deemed approved unless one or more members of the JCC
object to the accuracy of such minutes within [***] Business Days of receipt.

(e)        JCC Decision-Making.  The JCC shall act by consensus. Each
representative from each Party shall have one (1) vote on behalf of that
Party.  If the JCC cannot reach consensus within [***] Business Days on any
issue that comes before the JCC for which the JCC is responsible, then the
Parties shall refer such matter to the relevant Chief Officers at MorphoSys and
COMPANY ("Designated JCC Officers") for resolution. In the event of a Dispute
between COMPANY and MorphoSys that cannot be resolved within [***] Business Days
by the Designated JCC Officers with respect to matters concerning the
Commercialization, the Designated JCC Officers shall refer the issue to the JSC
which will decide upon the matter pursuant to Section 9.2(e).

9.8       Compliance Subcommittee.

(a)        Within [***] days after the Effective Date, the JSC will establish a
joint compliance sub-committee of the JSC (the “Compliance Subcommittee”), and
establish the roles and responsibilities, to facilitate the coordination between
the Parties with respect to each of its respective compliance obligations that
relate to the Co-Commercialization and Co-Detailing in Germany, if applicable.

(b)       Each Party shall initially appoint two (2) representatives to the
Compliance Subcommittee, with each representative having knowledge, expertise or
responsibility in compliance and the appropriate seniority. The Compliance
Subcommittee may change its size from time to time by mutual consent of its
representatives; provided, however, that the Compliance Subcommittee shall
consist at all times of an equal number of representatives of each of MorphoSys

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and COMPANY. In addition to its Compliance Subcommittee representatives, a Party
may have other persons attend Compliance Subcommittee meetings for informational
purposes, including representatives of [***] if appropriate. Each Party may
replace its Compliance Subcommittee representatives at any time upon written
notice to the other Party. The Compliance Subcommittee may establish working
groups for addressing specific matters under its responsibility.

(c)        Specific Responsibilities of the Compliance Subcommittee. The
Compliance Subcommittee shall in particular:

(i)          At least [***] months prior to the first Regulatory Approval of a
Product in the Co-Commercialization Territory or, if earlier, prior to the
execution of a Co-Detailing plan pursuant to the MorphoSys Co-Detail option
described in Section 2.4(d), coordinate and exchange relevant information about
those aspects of each Party’s respective compliance programs that are necessary
for each Party to adequately perform its activities under this Agreement in a
manner consistent with Laws and the regulations, requirements, and best
practices promulgated by applicable Regulatory Authorities;

(ii)         Participate in the establishment and implementation of the review
process of promotional materials pursuant to Section 5.5(b);

(iii)        Establish a process for the Parties to review and approve joint
activities in the Co-Commercialization Territory and, if applicable, in Germany
following the exercise of the MorphoSys co-Detail option described in Section
2.4(d);

(iv)        Resolve significant discrepancies between the Parties’ respective
compliance policies, procedures, and systems which come to the attention of the
Parties and relevant to each of the Parties to comply with its obligations under
applicable Laws;

(v)         Manage compliance with any agreements and settlements with
Governmental Authorities to which either of the Parties or their Affiliates
engaged in Co-Commercialization of the Product are subject; and

(vi)        Perform other such duties as may be specifically delegated to the
Compliance Subcommittee under this Agreement by the JSC.

(c)         Compliance Subcommittee Meetings.  The Compliance Subcommittee shall
meet at least once [***] (in person or by teleconference), unless otherwise
agreed among the Compliance Subcommittee representatives. Each Party shall
report to the Compliance Subcommittee on all material compliance issues that may
impact performance of the other Party under this Agreement or is relevant to
each of the Parties to comply with its obligations under applicable Laws
promptly after such issues arise.  Each Party shall bear the expense of its
respective Compliance Subcommittee representatives’ participation in Compliance
Subcommittee meetings.  Minutes shall be deemed approved unless one or more
representatives of the Compliance Subcommittee object to the accuracy of such
minutes within [***] Business Days of receipt.

(d)  Compliance Subcommittee Decision-Making.  If the Compliance Subcommittee
disagree on any important compliance matter, then the Parties shall refer such
matter to the relevant Chief Officers at MorphoSys and COMPANY ("Designated

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Compliance Subcommittee Officers") for resolution. In the event of a Dispute
between COMPANY and MorphoSys that cannot be resolved within [***] Business Days
by the Designated Compliance Subcommittee Officers, the Designated Compliance
Subcommittee Officers shall refer the issue to the JSC, which will decide upon
the matter pursuant to Section 9.2(e).

9.9       Discontinuation of a Committee.  Except as otherwise specifically
stated in this Agreement, each committee formed under this Agreement shall
continue to exist until the JSC agrees by consensus to disband such
committee.  Once the committee is disbanded as provided above, such committee
shall have no further obligations under this Agreement and all decisions
previously allocated to such committee shall thereafter be made by the JSC.

9.10     Alliance Managers. Promptly after the Execution Date, each Party shall
appoint a senior representative to act as a coordinator and alliance manager
(the "Alliance Manager").  Each Party may, at any time, replace its Alliance
Manager with another suitably qualified individual, on written notice to the
other Party.  The Alliance Managers shall be primarily responsible for
facilitating communications between the Parties and coordinating the Parties’
activities under this Agreement.

 

10.       INVENTIONS

10.1     Ownership of COMPANY Inventions, MorphoSys Inventions and Joint
Inventions.

(a)        MorphoSys Inventions and COMPANY Inventions. To the extent such
Inventions do not belong to Xencor under the Xencor Agreement, as between the
Parties, MorphoSys shall solely own, and it alone shall have the right to apply
for, Patents for any MorphoSys Inventions and COMPANY shall solely own, and it
alone shall have the right to apply for, Patents for any COMPANY Inventions.

(b)        Joint Inventions. Subject to Section 10.1(c) below, Joint Inventions
and Joint Foreground Patents shall be jointly owned by the Parties. MorphoSys
and COMPANY shall each own an undivided one-half interest in any Joint
Inventions and any Patents claiming such Joint Inventions, in each case without
obligation to account to the other for the exploitation thereof within its
respective own Territory and subject to the restrictions set forth in this
Agreement. The Parties shall agree in good faith on the exploitation of Joint
Inventions and Joint Foreground Patents for activities that are not related to
the Licensed Antibody or Product.

(c)        MorphoSys Core Improvement Inventions. COMPANY acknowledges that
MorphoSys is obliged to assign MorphoSys Core Improvement Inventions to Xencor
under the Xencor Agreement and that consequently MorphoSys and COMPANY will
assign their interests in any Joint Inventions which constitute MorphoSys Core
Improvement Inventions to Xencor.

10.2     Mutual Support. Each Party shall effectuate that the ownership rights
of all Inventions that are developed, made or conceived under this Agreement
shall vest in the respective Party or Parties in accordance with the ownership
principles described in Section 10.1.  Each Party shall require any Affiliates,
employees, consultants, Sublicensees or independent contractors performing an
activity pursuant to this Agreement to assign all Inventions that are the
subject

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of patent applications claiming Inventions that are developed, made or conceived
by such Affiliates, employees, consultants, Sublicensees or independent
contractors to MorphoSys and/or COMPANY according to the ownership principles
described in Section 10.1.

10.3     Disclosures; Disputes Regarding Inventions. Each Party shall promptly
disclose to the other Party all Inventions made by it (meaning by its, its
Affiliates' or its Sublicensee's employees, consultants, or independent
contractors) under this Agreement, including Joint Inventions.  Before filing an
application, divisional or continuation of (i) a Candidate-Specific Patent, (ii)
a MorphoSys Patent, (iii) a COMPANY Foreground Patent, (iv) a Joint Foreground
Patent or (v) Xencor Candidate Specific Product Invention Patent, the filing
Party shall provide the other Party with a copy of any proposed patent
application at least thirty (30) Business Days before filing such application.
If the non-filing Party believes that the filing Party’s proposed patent
application discloses Confidential Information of the non-filing Party, the
non-filing Party shall so notify the filing Party within [***] Business Days
before filing of the application, and the filing Party shall amend its proposed
application to comply with the confidentiality provisions of this Agreement. If
the Parties disagree as to whether an Invention is a Joint Invention, a
MorphoSys Invention or a COMPANY Invention, and are unable to reach agreement
within [***] calendar days after commencing discussions, then the Parties shall
agree on and nominate one external patent counsel to determine inventorship.

 

11.       PROSECUTION AND ENFORCEMENT OF INTELLECTUAL PROPERTY RIGHTS

11.1     Cooperation regarding Patent Prosecution and Patent Strategy.

The Parties shall, within [***] calendar days after the Execution Date,
establish a routine intellectual property call. The intellectual property call
shall provide a collaborative forum for the Parties to address intellectual
property matters under this Agreement and shall (a) be the primary point of
contact for the Parties regarding the exchange of information on filing,
prosecution, maintenance, enforcement and defense matters of (i)
Candidate-Specific Patents, (ii) MorphoSys Patents, (iii) COMPANY Foreground
Patents, (iv) Joint Foreground Patents and (v) Xencor Candidate Specific Product
Invention Patents, as set forth in Article 11, (b) review and discuss the
overall strategy for obtaining, maintaining and enforcing patent protection and
aligning the patenting strategy with other exclusivities available for the
Product and (c) discuss the selection of the Product Marks and the filing,
prosecution, maintenance, enforcement and defense of such matters, subject to
Section 5.6. The forum shall also be responsible for discussing prosecution
strategy with the goal of achieving strong and robust Patents. The prosecuting
Party shall consider in good faith the comments of the other Party with respect
to strategies for filing and prosecuting such Patents. If the non-prosecuting
Party fails to provide its comments reasonably in advance of the deadline for
filing or otherwise responding to the patent authorities, the prosecuting Party
shall be free to act without consideration of the non-prosecuting Party’s
comments. The Parties shall also strive to coordinate and align their activities
under this Agreement in a professional and pro-active manner. In addition, each
Party shall provide to the other Party all data, information and materials
necessary to meet any disclosure obligations, e.g. to the USPTO under 37 CFR
1.56. Additionally, in the event either Party determines that it requires a
license to Third Party IP to Commercialize the Product, such matter shall be
discussed as well.

11.2     Patent Prosecution of Xencor Background Patents.

 

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(a)        Xencor Background Patents.  Subject to Sections 11.2.(c) and 11.7 and
if not specified differently below, [***] has the sole right in its sole
discretion to perform the filing, prosecution and maintenance of the Xencor
Background Patents on a worldwide basis.

(b)        Broader Anti-CD19 Patents.  [***] has the sole right in its sole
discretion to perform the filing, prosecution and maintenance of the Broader
Anti-CD19 Patents worldwide. With respect to the prosecution and maintenance
costs, [***] bears [***] percent ([***]%), while [***] bears the remaining [***]
percent ([***]%).

(c)        Candidate-Specific Patents. [***] shall be solely responsible, in its
own discretion, to perform the prosecution and maintenance of Candidate-Specific
Patents in the [***] and [***] for the prosecution and maintenance [***] shall
be [***], while [***] shall be solely responsible, in its own discretion, to
perform the prosecution and maintenance of Candidate-Specific Patents [***] and
shall be responsible for all of the [***] in the [***].

11.3     Patent Prosecution of Xencor Foreground Patents.

(a)        MorphoSys Core Improvement Inventions.  Under the Xencor Agreement
Xencor has the sole right in its sole discretion to perform the filing,
prosecution and maintenance of the MorphoSys Core Improvement Inventions on a
worldwide basis.

(b)        Xencor Foreground Patents.  Under the Xencor Agreement, but subject
to Section 11.6, Xencor is responsible to perform the filing, prosecution and
maintenance of Xencor Foreground Patents on a worldwide basis.

11.4     Patent Prosecution of MorphoSys Background Patents.

(a)        Initial Phase/Patent Filing. [***] shall be responsible for drafting
and filing of a MorphoSys Background Patent up to the stage of entry into the
national/regional phases.

(b)        MorphoSys Background Patents in the Co-Commercialization Territory. 
[***], in the [***] shall have the right to prepare, file, prosecute (including
any reissues, re-examinations, post-grant proceedings, requests for patent term
extensions, supplementary protection certificates, interferences, derivation
proceedings, supplemental examinations) and maintain the MorphoSys Background
Patents.

(c)        MorphoSys Background Patents in the COMPANY Territory.  [***], in the
[***] shall have the right, to prepare, file, prosecute (including any reissues,
re-examinations, post-grant proceedings, requests for patent term extensions,
supplementary protection certificates, interferences, derivation proceedings,
supplemental examinations) and maintain the MorphoSys Background Patents,
provided that with respect to Patent family [***] (as specified in EXHIBIT 2)
 [***] shall align with the co-owner of Patent family [***] with respect to the
prosecution and maintenance of such Patents in the [***].

 

11.5     Patent Prosecution of MorphoSys Foreground Patents.

 

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(a)        Initial Phase/Patent Filing. [***] shall be responsible for drafting
and filing of a MorphoSys Foreground Patent up to the stage of entry into the
national/regional phases.

(b)        Prosecution and Maintenance. [***] shall have the right to prepare,
file, prosecute (including any reissues, re-examinations, post-grant
proceedings, requests for patent term extensions, supplementary protection
certificates, interferences, derivation proceedings, supplemental examinations)
and maintain the MorphoSys Foreground Patents in the [***].

11.6     Patent Prosecution of COMPANY Foreground Patents.

(a)        Initial Phase/Patent Filing. [***] shall be responsible for drafting
and filing of a COMPANY Foreground Patent up to the stage of entry into the
national/regional phases.

(b)        Prosecution and Maintenance. [***] shall have the right to prepare,
file, prosecute (including any reissues, re-examinations, post-grant
proceedings, requests for patent term extensions, supplementary protection
certificates, interferences, derivation proceedings, supplemental examinations)
and maintain the COMPANY Foreground Patents in the [***].

11.7     Xencor Candidate Specific Patents.

(a)        Initial Phase/Patent Filing of Xencor Candidate Specific Product
Invention Patents.  [***] decide on the optimal strategy for drafting, filing,
prosecution and maintenance of Xencor Candidate Specific Patents, including the
content and the timing of a respective patent application.

(b)        National/Regional Phases.  Upon entry into the national/regional
phases, [***] shall have the right, to prepare, file, prosecute (including any
reissues, re-examinations, post-grant proceedings, requests for patent term
extensions, supplementary protection certificates, interferences, derivation
proceedings, supplemental examinations) and maintain the Xencor Candidate
Specific Patents in the [***] and [***] shall have the right, to prepare, file,
prosecute (including any reissues, re-examinations, post-grant proceedings,
requests for patent term extensions, supplementary protection certificates,
interferences, derivation proceedings, supplemental examinations and defense of
oppositions) and maintain the Xencor Candidate Specific Patents in the [***]. 
[***] shall closely cooperate on all prosecutional matters.

11.8     Patent Prosecution of Joint Foreground Patents.

(a)        Initial Phase/Patent Filing. Each Party shall promptly disclose to
the other in writing, and shall ensure that its Affiliates, or licensees and
Sublicensees, and its and their employees, agents and contractors so disclose,
the development, making, conception or reduction to practice of any Joint
Inventions. [***] decide on the optimal strategy for drafting, filing,
prosecution and maintenance of Joint Foreground Patents for Joint Inventions.
Such decision shall include the content and the timing of a respective patent
application for the respective Joint Invention.

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(b)        National/Regional Phases.  Unless otherwise agreed, upon entry into
the national/regional phases, [***] shall have the right, to prepare, file,
prosecute (including any reissues, re-examinations, post-grant proceedings,
requests for patent term extensions, supplementary protection certificates,
interferences, derivation proceedings, supplemental examinations) and maintain
Joint Foreground Patents in the [***] and [***] shall have the right, to
prepare, file, prosecute (including any reissues, re-examinations, post-grant
proceedings, requests for patent term extensions, supplementary protection
certificates, interferences, derivation proceedings, supplemental examinations
and defense of oppositions) and maintain Joint Foreground Patents in the
[***].  The Parties shall closely cooperate on all prosecutional matters.

11.9     Right to Take Over.  In the event that [***] intends not to prepare,
file, prosecute, or maintain (i) a Candidate-Specific Patent, (ii) a MorphoSys
Patent, (iii) a COMPANY Foreground Patent, (iv) a Joint Foreground Patent or
(vi) a Xencor Candidate Specific Product Invention Patent in any country or
jurisdiction within its respective Territory, [***] shall provide reasonable
prior written notice to [***] of such intention (which notice shall, in any
event, be given no later than [***] weeks prior to the next deadline for any
action that may be taken with respect to such Patent in the respective
Territory), and [***] shall thereupon have the option, in its sole discretion,
to assume the control and direction of the preparation, filing, prosecution, and
maintenance of such Patent.  Upon [***] written exercise of such option to [***]
, [***] shall assume responsibility and full control for the preparation,
filing, prosecution, and maintenance of any such Patent, and [***] shall
[***].  [***] shall assign to [***] its interest in such Patent and shall
execute such documents and perform such acts, [***], as may be reasonably
necessary to permit [***] to file such patent application, and/or to prosecute
and/or maintain such Patent.

In addition, and unless not agreed otherwise between the Parties, [***] shall
prosecute, maintain and enforce the Xencor Background Patents and Xencor
Foreground Patents in the event that that [***] abandons or does not enforce,
its patent rights, to the extent permissible [***], provided that in the event
that [***] intends not to prepare, file, prosecute, or maintain a Xencor
Background Patents and Xencor Foreground Patents in any country or jurisdiction,
[***] shall provide reasonable prior written notice to [***] of such intention
and the procedure set forth under the first paragraph under this Section 11.9
shall apply accordingly.

11.10   Costs.  From and after the Effective Date:

(a)        Before the entry of the national/regional phase the costs of
drafting, filing, prosecution and maintenance of (i) a Candidate-Specific
Patent, (ii) a MorphoSys Background Patent, (iii) a Joint Foreground Patent or
(iv) Xencor Candidate Specific Product Invention Patent shall be [***].
Thereafter, the costs of prosecution and maintenance of (i) a Candidate-Specific
Patent, (ii) a MorphoSys Background Patent, (iii) a Joint Foreground Patent or
(iv) Xencor Candidate Specific Product Invention Patent in the [***] shall be
[***] and the costs of prosecution and maintenance of (i) a Candidate-Specific
Patent, (ii) a MorphoSys Background Patent, (iii) a Joint Foreground Patent or
(iv) Xencor Candidate Specific Product Invention Patent [***] shall be [***],
provided that with respect to Patent family [***] (as specified in EXHIBIT 2)
 [***] with respect to the drafting, filing, prosecution and maintenance of such
Patents in the [***].

(b)        Before the entry of the national/regional phase the costs of
drafting, filing, prosecution and maintenance of a MorphoSys Foreground Patent
shall be [***].

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Thereafter, the costs of prosecution and maintenance of a MorphoSys Foreground
Patent [***] shall be [***].

(c)        Before the entry of the national/regional phase the costs of
drafting, filing, prosecution and maintenance of a COMPANY Foreground Patent
shall be [***]. Thereafter, the costs of prosecution and maintenance of a
COMPANY Foreground Patent [***] shall be [***].

(d)        Costs that are incurred [***] under this Section 11.10 shall be
invoiced on a day-to-day basis, and paid as set forth in Section 8.5.

11.11   Patent Term Extensions.  The Parties shall mutually discuss in good
faith on patent term extensions, whereas (a) [***] shall have the sole right in
its sole discretion and at its sole expense to apply to extend the patent term
of (i) a Candidate-Specific Patent, (ii) a MorphoSys Patent, (iii) a COMPANY
Foreground Patent, (iv) a Joint Foreground Patent or (vi) a Xencor Candidate
Specific Product Invention Patent with respect to a Product in the [***] and (b)
[***] shall have the sole right in its sole discretion and at its sole expense
to apply to extend the patent term of (i) a Candidate-Specific Patent, (ii) a
MorphoSys Patent, (iii) a COMPANY Foreground Patent, (iv) a Joint Foreground
Patent or (vi) a Xencor Candidate Specific Product Invention Patent with respect
to a Product in the [***], subject to the procedures set forth in the Xencor
Agreement and the patent term extension Laws or Supplemental Protection
Certificate Laws. Upon the other Party's request each Party shall provide to the
other Party and execute all documents and instruments that may be reasonably
required to record or perfect an application for patent term extension of the
respective other Party.  With respect to clauses (i) and (vi) above, [***] will
negotiate in good faith to reach mutual agreement with [***] on patent term
extensions.  If, following such negotiations the [***] are unable to agree on a
strategy for patent term extensions, [***] shall assert its final
decision-making authority rights in accordance with the Xencor Agreement, with
the exception of [***].

11.12   Patent Enforcement.

(a)        Notification. Each Party shall promptly notify the other Party in
writing if the notifying Party reasonably believes that any Xencor Background
Patent, MorphoSys Patent, COMPANY Foreground Patent or any Joint Foreground
Patent is being or has been infringed or misappropriated in any territory by a
Third Party.

(b)        Enforcement in Co-Commercialization Territory.  [***] shall [***]
with respect to the enforcement of any Candidate-Specific Patent, MorphoSys
Patent, or any Joint Foreground Patent with respect to all past, present and
future activities or conduct of a Third Party in the [***] that may constitute
an infringement of the respective Candidate-Specific Patent, MorphoSys Patent,
or Joint Foreground Patent.

(c)        Enforcement in COMPANY Territory.  [***] shall have the first right,
but not the obligation, to enforce any Candidate-Specific Patent, MorphoSys
Background Patent, COMPANY Foreground Patent or any Joint Foreground
Patent  with respect to all past, present and future activities or conduct of a
Third Party in the [***] that may constitute an infringement of the respective
Candidate-Specific Patent, MorphoSys Background Patent, COMPANY Foreground
Patent or Joint Foreground Patent, provided that with respect to Patent family
[***] (as specified in EXHIBIT 2)  [***] shall cooperate with the co-owner of
Patent family [***] with respect to the enforcement of such Patents in the
[***].

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(d)        Coordination.  [***] does not require the consent of [***] to bring
an enforcement action in the [***] and with respect to the [***], any
enforcement action by [***] requires the consent of [***].  [***] shall
reasonably consider [***] comments, if any, on any such enforcement activities,
but for the avoidance of doubt, [***], as the case may be, shall control the
litigation in all respects and shall make all decisions in its own discretion,
subject only to the provisions regarding settlement provided below in
Section 11.13.

(e)        [***] Back-up Right for Third Party Infringement of a
Candidate-Specific Patent.  If [***], do not bring action to prevent or abate
Third Party Patent Infringement within [***] calendar days within their [***]
after notification thereof to or by [***] pursuant to Section 11.12(a), then
[***] has the right, but not the obligation, to bring, [***], an appropriate
action in the respective Territory against any person or entity engaged in such
Third Party Patent Infringement of a Candidate-Specific Patent directly or
contributorily; whereby [***] is obliged [***] not to initiate legal action
without first conferring with [***] and considering in good faith [***] reasons
for not bringing any such action. [***] acknowledge that [***] does not require
the consent of [***], to bring such an enforcement action and that [***] to
control the litigation in all respects and shall make all decisions in its own
discretion, subject only to the provisions regarding settlement provided below
in Section 11.13.

(f)         Xencor Background Patents and Xencor Foreground Patents. [***]
acknowledge that with respect to any Infringement of any Xencor Background
Patent which is not a Candidate-Specific Patent and Xencor Foreground Patent by
Product activities within the scope of the license [***] ("Shared Patent
Competitive Infringement"), [***] has the first right, but not the obligation,
to enforce the Xencor Background Patents which are not Candidate-Specific
Patents and Xencor Foreground Patents [***].  [***] further acknowledge that
[***] and that [***] shall keep [***] reasonably informed of [***] activities
related to prevention or abatement of Shared Patent Competitive Infringement and
considers [***] comments on any such activities.  If [***] brings suit against a
Third Party to enforce Xencor Background Patents which are not
Candidate-Specific Patents and Xencor Foreground Patents against Shared Patent
Competitive Infringement, [***], shall have the right, at [***] consent, to join
the proceedings as a plaintiff, whereby, [***] shall have the right to join the
proceedings in the [***] and [***] shall have the right to join the proceedings
in the [***], and whereby the respective joining Party [***] depending on the
extent of the respective joining Party's participation. If [***] does not bring
action to prevent or abate Shared Patent Competitive Infringement within [***]
calendar days (or initiate the exchange of patent lists within [***] calendar
days of receiving notice of a Biosimilar application within the framework of the
Biologics Price Competition and Innovation Act or any foreign equivalent), after
notification thereof to or by [***] pursuant to Section 11.12(a), then, [***],
(i) [***] have the right, but not the obligation, to bring, [***], an
appropriate action in the [***] against any person or entity engaged in such
Shared Patent Competitive Infringement directly or contributorily and retain all
related recoveries and (ii) [***] has the right, but not the obligation, to
bring, [***], an appropriate action in the [***] against any person or entity
engaged in such Shared Patent Competitive Infringement directly or
contributorily [***];  provided, however,  [***] shall not initiate legal action
without first conferring with [***] and considering in good faith [***] reasons
for not bringing any such action.

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(g)        Infringement of MorphoSys Background Patents by Activities with
respect to XmAb5871 Program Antibodies by Third Parties.  [***] acknowledge that
as to the MorphoSys Background Patents, [***] shall have the right to enforce
them against Third Party research, development, manufacture, use, sale, offer
for sale, importation or exportation of XmAb5871 Program Antibodies ([***]).
[***] agree that, [***] shall have the above right to enforce MorphoSys
Background Patents in the Co-Commercialization Territory, while [***] shall have
such right in the [***]. [***] undertakes to, as required [***], discuss with
[***] in good faith any concerns [***] may have with respect to such enforcement
for a period of not less than [***] calendar days before initiating the
enforcement of a MorphoSys Background Patent in [***].  Under [***] only has the
right to enforce MorphoSys Background Patents against Third Party research,
development, manufacture, use, sale, offer for sale, importation or exportation
of XmAb5871 Program Antibodies ([***]) if [***] grants its withholdable consent
for [***] to do so.  [***] may request such consent and will meet and confer
with [***] as to the proposed enforcement. [***] shall have the right to grant
its withholdable consent for [***] and to meet and confer with [***] with regard
to requests for consent of [***] which relate to the [***] while [***] shall
have such right with regard to requests for consent of [***] which relate to the
[***].  If [***] elects to enforce, and [***], consents, then [***], shall
cooperate by being joined in name as a party plaintiff ([***]) and under the
[***] shall not knowingly take any position in the suit that would make any
admission as to the unenforceability or invalidity of any MorphoSys Background
Patent, unless [***], approves of such position or has already taken such
position in litigation.

(h)        Participation of [***] with Respect to Infringement Suits.  [***]
acknowledge (i) that [***] if [***] brings an action against infringement [***]
bringing the action shall maintain control of the action and [***] shall be
entitled to separate representation in such matter by counsel of its own choice
[***], and [***] shall cooperate fully with [***] bringing such action including
by being joined as a party plaintiff if necessary to obtain standing for such
action ([***] of the [***], including [***] of [***] being joined), (ii) that
[***] related to cooperation with [***] bringing the action will be [***] on an
on-going basis, and (iii) [***] the above rights and obligations under (i), (ii)
and (iii) shall apply to [***] with regard to [***] and to [***] with regard to
[***].

(i)         Other Xencor Background Patents. Should any Xencor Background Patent
not be covered by the above provisions under Sections 11.12(b) to (g), then the
following shall apply: To the extent that [***] or pursuant to applicable Laws
has the right to enforce such Xencor Background Patent against activities
infringing such Xencor Background Patent or to support such enforcement, e.g. by
joining infringement proceedings, [***] shall have such right (but not the
obligation) within [***] while [***] shall have such right (but not the
obligation) within [***].

(j)         Right to Take Over. If [***] fails to institute or defend such
litigation or otherwise take steps to remedy the infringement of a
Candidate-Specific Patent, MorphoSys Patent, COMPANY Foreground Patent or any
Joint Foreground Patent, within [***] calendar days (or any shorter period
required by applicable Laws) of the date [***] has provided notice to [***] of
such infringement or claim pursuant to Section 11.12(a), then [***] will have
the right (but not the obligation), [***], to bring or defend any such suit,
action or proceeding by counsel of its own choice. [***] elects not to take
steps will have the right, [***], to be represented in any such action by
counsel of its own choice. In case of nullity actions, opposition proceedings or
other proceedings challenging the

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validity of a Candidate-Specific Patent, MorphoSys Patent, COMPANY Foreground
Patent or any Joint Foreground Patent [***] having the first right to defend
such action pursuant to Sections 11.12(b), 11.12(c),11.12(f), and 11.12(h) and
above shall during the [***] calendar days period pursuant to sentence 1 in any
event carry out all steps and activities required to prevent that the respective
Patent is invalidated or otherwise deteriorated by way of a default judgment or
a similar decision of the responsible legal body following from the failure of
[***] to carry out certain steps and/or activities required by the applicable
Laws and procedural rules.

(k)        Enforcement of step in rights. Notwithstanding anything to the
contrary in the foregoing, to the extent that [***] has step in rights to
enforce any Candidate-Specific Patent or other Xencor Background Patent, [***]
shall not exercise such right with respect to any Candidate-Specific Patent or
other Xencor Background Patent without [***] prior written consent, which
consent shall not be unreasonably withheld.

11.13   Settlement.

(a)        [***] shall not settle a claim brought under Section 11.12 involving
a Candidate-Specific Patent, a Xencor Background Patent, a MorphoSys Patent, a
COMPANY Foreground Patent or a Joint Foreground Patent in a manner that would
[***], or make any admission as to invalidity or unenforceability of any
Candidate-Specific Patent, MorphoSys Patent, COMPANY Foreground Patent or Joint
Foreground Patent in each case without the prior written consent of [***] (which
consent shall not be unreasonably withheld, conditioned or delayed).

(b)        [***] shall not settle a claim brought under Section 11.12 involving
a Candidate-Specific Patent, a MorphoSys Patent, a COMPANY Foreground Patent or
a Joint Foreground Patent in a manner that would [***], or make any admission as
to invalidity or unenforceability of any Candidate-Specific Patent, MorphoSys
Patent, COMPANY Foreground Patent or Joint Foreground Patent in each case
without the prior written consent of [***] (which consent shall not be
unreasonably withheld, conditioned or delayed).

11.14   Allocation of Proceeds.  Any settlements, damages or other monetary
awards (a "Recovery") recovered pursuant to a suit, action or proceeding brought
pursuant to Article 11 will be allocated, [***]:

[***]

11.15   Infringement of Third-Party Rights.

(a)   If the Development, Manufacture or Commercialization of the Product by
either Party, its Affiliates, Sublicensees, as applicable, or other licensees
becomes the subject of a Third Party’s claim or assertion of infringement of a
Patent relating to the Manufacture, use, sale, offer for sale or importation of
a Product, the Party first having notice of the claim or assertion shall
promptly notify the other Party, and the Parties shall promptly confer to
consider the claim or assertion and the appropriate course of
action.  [***].  In any event, the Parties shall reasonably assist one another
and cooperate in any such litigation at the other Party’s request and expense.

[***]

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11.16   Patent Oppositions and Other Proceedings. If either Party desires to
bring an opposition, action for declaratory judgment, nullity action,
interference, re-examination or other attack upon the validity, title or
enforceability of a Patent owned or controlled by a Third Party that covers or
may cover the Manufacture, use for the Field or sale of any Product, such Party
shall notify the other Party. The Parties shall closely cooperate on such
oppositions and other proceedings.

11.17   Affiliates / Sublicensees. To the extent this Agreement provides for
such rights of COMPANY, COMPANY may grant to its Affiliates or Sublicensees its
rights to prosecute any Candidate-Specific Patent, MorphoSys Background Patent,
COMPANY Foreground Patent, Xencor Candidate Specific Patents and/or any Joint
Foreground Patent as set forth in Sections 11.2 (c), 11.4, 11.6, 11.7 and 11.8.

11.18   Compensation to Inventors. As between the Parties, only MorphoSys shall
be responsible for any compensation and any other payments due to the inventors
of any Patents owned or co-owned by MorphoSys and only COMPANY shall be
responsible for any compensation and any other payments due to the inventors of
any Patents owned or co-owned by COMPANY. With respect to Joint Patents, each
Party shall be responsible for compensating its own inventors.

11.19   Patent Assistance. Each Party shall do or procure to be done all such
acts and things, and execute or procure the execution of all such documents, as
the other Party may from time to time reasonably request to assist the other
Party in the preparation, filing, prosecution, maintenance and enforcement
activities described in this Article 11.

11.20   Patent Challenges. [***].

 

12.       NON-COMPETE

12.1     Non-Compete Obligation. During the Term, neither Party shall, and will
ensure that its Affiliates and Sublicensees (and, with respect to Sublicensees,
to the extent permitted by applicable Law) performing Commercialization related
functions will not, directly or indirectly, clinically develop, have clinically
developed, commercialize or have commercialized a Competing Product in the Field
in the Territory; unless the Parties mutually agree on the terms and conditions
to jointly Develop and Commercialize in their respective Territory such
Competing Product. A breach of this Section 12.1 may constitute a Material
Breach of this Agreement giving rise to the termination right set forth in
Section 17.2(a); provided that in case of a Change of Control of a Party as set
forth in Section 12.2, such Party shall not be regarded as being in Material
Breach of this Agreement, if the Acquirer (as defined below) already develops or
commercializes a Competing Product at the time of the Change of Control.

12.2     Change of Control by Acquirer. In case a Party or any of its Affiliates
undergoes a Change of Control, such Party will notify the other Party as
reasonably possible in advance, however no later than upon effective date of
such Change of Control.

(a)         The Third Party taking over control ("Acquirer") shall confirm in
writing within [***] Business Days after the effective date of the Change of
Control to the other Party that it will continue to perform the Development and
Commercialization of Licensed Antibody and/or Product under this Agreement
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Development Plan, Co-Commercialization Plan and COMPANY Commercialization Plan,
including respective budgets.

(b)        In case the Acquirer or any of its Affiliates directly or indirectly
clinically develops, has clinically developed, commercializes or has
commercialized a Competing Product, the acquiree ("Acquiree") will indicate this
fact in its abovementioned notification under 12.2(a) to the other Party. The
Acquiree shall, and shall ensure that Acquirer shall as well, meet with the
other Party within [***] months after closing the transaction of such Change of
Control to discuss the Development and Commercialization plan of the Acquirer
for Licensed Antibody and Products.

(c)        In case such Acquirer or any of its Affiliates directly or indirectly
clinically develops, has clinically developed, commercializes or has
commercialized a Competing Product, the Acquirer shall confirm in its
abovementioned notification under 12.2(a) to the other Party that it will (i)
perform the Development in the Territory and Commercialization in the Territory
of Licensed Antibody and/or Product according to a development and
commercialization plan which is at least as strenuous as the last Development
Plan for the Territory and the Co-Commercialization Plan for the
Co-Commercialization Territory and the COMPANY Commercialization Plan for the
COMPANY Territory (if applicable) of the Acquiree prior to the Change of Control
and which provides for at least similar efforts for Licensed Antibody(ies) and
Product(s) as for the development and commercialization of the Acquirer’s
Competing Product; (ii) devote at least as much effort to the Development and
Commercialization of Licensed Antibody and/or Product as to the development and
commercialization of the Competing Product; and (iii) within [***] days after
the effective date of such Change of Control, set-up and maintain totally
separate and distinct teams in all areas and on all levels below the
Vice-President or General Manager level, as applicable, with appropriate
firewalls and boundaries in place to prevent any sharing of any information that
is related to the Product (including Development, Manufacture and
Commercialization thereof) and the development, manufacture and
commercialization of the Competing Product, including handle such Competing
Product by a team of sales representatives and medical affairs representatives
of such Party that is different from the teams that handle the Product(s).  A
breach of this Section may constitute a Material Breach of this Agreement giving
rise to the termination right set forth in Section 17.2(a).

 

13.       REPRESENTATION AND WARRANTIES, COVENANTS

13.1     Reciprocal Representations and Warranties. Each Party represents and
warrants to the other Party that:

(a)        It is duly organized and validly existing under the Laws of its state
or country of incorporation, and has full corporate power and authority to enter
into this Agreement and to carry out the provisions hereof;

(b)        This Agreement is a legal and valid obligation binding upon its
execution and enforceable against it in accordance with its terms and
conditions;

(c)        The execution, delivery and performance of this Agreement by such
Party has been duly authorized by all necessary corporate action, and the person
executing this

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Agreement on behalf of such Party has been duly authorized to do so by all
requisite corporate actions;

(d)        The execution, delivery and performance of this Agreement by it does
not conflict with any agreement, instrument or understanding, oral or written,
to which it is a party or by which it may be bound, nor violate any material Law
or regulation of any court, governmental body or administrative or other agency
having jurisdiction over it;

(e)        It has not granted, and shall not grant during the Term of the
Agreement, any right to any Third Party which would conflict with the rights
granted to the other Party hereunder.

13.2     MorphoSys Warranties.  Except as disclosed in EXHIBIT 19 ("Disclosure
Schedule"), MorphoSys hereby warrants and represents to COMPANY as of the
Execution Date that:

(a)        MorphoSys has the right to grant the licenses under the Xencor
Foreground Patents, Xencor Background Patents, Xencor Know-How, MorphoSys
Patents, MorphoSys Know-How and MorphoSys' interest in any Joint Foreground
Patents as set forth in this Agreement and for COMPANY’s use in any Indication
in the Field;

(b)        Xencor Background Patents listed on EXHIBIT 3 and MorphoSys
Background Patents listed on EXHIBIT 2, save for the Patent family [***] (as
specified in EXHIBIT 2) which is co-owned by MorphoSys, Xencor Know-How listed
on EXHIBIT 4B and MorphoSys Know-How listed on EXHIBIT 4A are Controlled by
MorphoSys free and clear of any liens, charges, and encumbrances or licenses in
the Field, to the extent needed in order to grant the license as set forth in
this Agreement;

(c)        MorphoSys has not received from any Third Party any written notice
stating any claim that any Patent right owned or controlled by such Third Party
would be infringed by the Development, Manufacture, Commercialization of
Licensed Antibody or Product;

(d)        To MorphoSys’ Knowledge, the Xencor Background Patents,and the
MorphoSys Patents which are granted Patents on the Execution Date are valid and
enforceable and MorphoSys has complied with all applicable Laws in all material
respects and duties of candor with respect to the filing, prosecution and
maintenance of the Xencor Background Patents, and the MorphoSys
Patents.  MorphoSys has paid (with respect to the MorphoSys Patents for which it
is responsible for prosecution and maintenance) and, to MorphoSys’ Knowledge,
Xencor has paid (with respect to the Xencor Background Patents for which Xencor
is responsible for prosecution and maintenance), all maintenance and annuity
fees with respect to the MorphoSys Patents, Xencor Background Patents due as of
the Effective Date.  To MorphoSys’ Knowledge, no action or proceeding regarding
inventorship of a MorphoSys Patent, or to MorphoSys’ knowledge, regarding
inventorship of a Xencor Background Patent or Xencor Foreground Patent, has been
brought or threatened in writing; "MorphoSys' Knowledge" means, when referring
to the knowledge of MorphoSys, the actual knowledge of MorphoSys’ personnel with
the following titles: [***].

(e)        MorphoSys has provided to COMPANY in the Data Room true and correct
partially-redacted copies of the [***] and the Xencor Agreement in their current
form, which agreements are in full force and effect. MorphoSys is not in breach
of either of

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the Xencor Agreement or the [***].  MorphoSys has not received any written
notice of breach of the [***] or the Xencor Agreement.  To MorphoSys’ Knowledge
(i) Xencor is not in breach of the Xencor Agreement and (ii) [***]; and
MorphoSys has not received any written notice of breach of the [***] or the
Xencor Agreement.  MorphoSys applied reasonable efforts to ensure that none of
the redactions made to the [***] and the Xencor Agreement provided to COMPANY by
MorphoSys contain provisions that would be reasonably considered material to
COMPANY’S assessment of the transaction underlying this Agreement or the terms
of this Agreement;

(f)         MorphoSys has complied with all applicable Law in all material
respects in conducting the MorphoSys Trials;

(g)        The Development of any Licensed Antibody and/or the Product(s) by
MorphoSys, or to MorphoSys’ Knowledge with respect to any subcontractors, as of
the Effective Date has been carried out in all material respects in accordance
with all applicable Laws and applicable GLP, GCP and/or GMP standards, and
MorphoSys is not aware of any problems concerning the safety or efficacy of any
Licensed Antibody and/or the Product(s) raised by any Regulatory Authority with
respect thereto;

(h)        MorphoSys and its Affiliates have complied with the Data Protection
Laws in all material respects at all times in accessing, collecting, using or
otherwise processing any Personal Data in connection with the Development of any
Licensed Antibody and/or the Product(s), including by entering into appropriate
contractual arrangements with any Third Parties, and to MorphoSys' Knowledge, no
material claim, action, proceeding, suit, investigation or complaint: (a) is
pending by or against MorphoSys or its Affiliates; or (b) has been threatened by
or against MorphoSys or its Affiliates, alleging a violation or potential
violation of any person’s rights in relation to their Personal Data under Data
Protection Laws; and

(i)         MorphoSys US Inc., a Delaware corporation, is a wholly owned
subsidiary of MorphoSys AG.

13.3     COMPANY Warranties. COMPANY hereby warrants, covenants and represents
to MorphoSys as of the Execution Date that:

(a)      COMPANY and its Affiliates do not own or Control any Competing Product;

(b)     Subject to the representations and indemnities expressly contained in
this Agreement, COMPANY accepts the Licensed Antibody program in the condition
it is in on the Execution Date, based upon its own inspection, examination and
determination with respect thereto (including the due diligence investigation
conducted by it), without reliance upon any express or implied representations
or warranties of any nature of MorphoSys or any employee, advisor or other
representative of MorphoSys.

13.4     Additional MorphoSys Covenant.  MorphoSys agrees that, during the Term:

(a)        it will not, and will cause its Affiliates not to (i) terminate,
whether for convenience or otherwise, the Xencor Agreement without COMPANY’s
prior written consent; (ii) terminate, whether for convenience or otherwise, the
[***] without COMPANY’s prior written consent, which after the consummation of a
successful Technology Transfer for Development and Commercial Supply in

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the COMPANY Territory and the Co-Commercialization Territory pursuant to Section
6.6 shall not be unreasonably withheld, or (iii)  [***] or the Xencor Agreement
in any manner that would materially adversely affect the rights granted to
COMPANY hereunder without COMPANY’s prior written consent; and

(b)       it will, and will cause its Affiliates to comply in all material
respects with the terms of the Xencor Agreement and the [***].

13.5     DISCLAIMER OF WARRANTY.  EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN
SECTIONS 13.1 TO 13.3, THE PATENTS AND KNOW-HOW PROVIDED BY EACH PARTY HEREUNDER
ARE PROVIDED “AS IS” AND EACH PARTY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES
OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION THE WARRANTIES OF
DESIGN, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT OF
THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES OR ARISING FROM A COURSE OF
DEALING, USAGE OR TRADE PRACTICES, IN ALL CASES WITH RESPECT TO THE PATENTS AND
KNOW-HOW OR OTHERWISE WITH RESPECT TO THE ACTIVITIES UNDER THIS
AGREEMENT.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EACH PARTY
EXPRESSLY DOES NOT WARRANT (I) THE SUCCESS OF ACTIVITIES PERFORMED PURSUANT TO
THIS AGREEMENT OR (II) THE SAFETY, EFFICACY OR USEFULNESS FOR ANY PURPOSE OF THE
PATENTS OR KNOW-HOW IT PROVIDES UNDER THIS AGREEMENT OR THE SUBJECT MATTER OF
THEM.

 

14.       INDEMNIFICATION AND INSURANCE

14.1     Indemnification by MorphoSys.

(a)        General Indemnification by MorphoSys.  MorphoSys shall defend,
indemnify and hold harmless COMPANY, its Affiliates, and their respective
directors, officers, employees and agents ("COMPANY Indemnitees") from and
against any losses, damages, liabilities, fines, amounts paid in settlements,
costs and expenses (including reasonable attorneys’ fees and expenses)
(collectively, "Losses") in connection with any demand, claim, action or
proceeding brought or initiated by a Third Party (each, a "Third Party Claim")
to the extent arising from or occurring as a result of or in connection with
(i) MorphoSys’, its Affiliates or its Sublicensees’ exercise of rights under
this Agreement, including the Development, storage, handling, use,
Commercialization, or importation of any Licensed Antibody or Product by
MorphoSys or any of its Affiliates or Sublicensees in or for the
Co-Commercialization Territory (ii) any breach by MorphoSys of its
representations, warranties, covenant or obligations under this Agreement, (iii)
any Product in the Co-Commercialization Territory that MorphoSys expressly and
deliberately decides not to withdraw, recall or provide any market notification
in accordance with Section 4.9 although COMPANY and one or more competent
Regulatory Authorities expressly recommended in writing to MorphoSys the
withdrawal, recall or provision of any market notification with respect to such
Product, or (iv) the gross negligence or wilful misconduct of any MorphoSys
Indemnitee; provided, however,  with regards to (i) through (iv) above,
excluding [***] (which, for clarity, shall be

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governed solely by Section 14.1(b), (c) and (d), as applicable) and except to
the extent that COMPANY has an indemnification obligation pursuant to Section
14.2 for such Loss and provided that COMPANY Indemnitees comply with the
procedure set forth in Section 14.3 and except to the extent that such Losses
are in connection with any demand, claim, action or proceeding brought by a
Third Party relating to the Patent of a Third Party or relating to [***] as of
the Execution Date under the [***].

(b)       Indemnification by MorphoSys regarding [***].

(i)         Subject to the limitations set out in subsections 14.1(b)(ii), (iii)
and (iv) below, MorphoSys shall indemnify and hold harmless COMPANY, its
Affiliated Companies and its and its Affiliated Companies' Representatives from
and against any third party (as each of Affiliated Companies and  Affiliated
Companies' Representatives  is understood in the [***]) claim with respect to
Licensed Antibody or Product [***],  (A) to COMPANY for the COMPANY Territory or
(B) for Commercialization by the Parties in the Co-Commercialization Territory,
in each case of (A) or (B), to the extent such third party claims are arising
from (1) [***] negligent or willful breach of [***] representations and
warranties given in [***] (2) [***] negligent or willful non-compliance with its
obligations under the [***], or (3) a Third Party patent holder asserting a
claim that [***] use of its intellectual property rights in connection with
[***] performance of its services [***] the Licensed Antibody or the Product
infringes such Third Party’s intellectual property rights, in each case of (1)
through (3) above, except to the extent (I) COMPANY has contributed to such
third party claims by COMPANY’s, its Affiliated Companies or its Affiliated
Companies' Representatives' negligent or wilful breach of its representations or
warranties given under Sections 13.1 or 13.3, or by COMPANY’s, its Affiliated
Companies or its Affiliated Companies’ Representatives' negligent or wilful
non-compliance with its obligations under this Agreement, (II) such third party
claims result from COMPANY’s use of the rights or licences granted by MorphoSys
hereunder not in accordance with this Agreement or (III) COMPANY has an
indemnification obligation pursuant to Section 14.2.

(ii)        The following shall apply to the above obligation of MorphoSys:

(1)     Notwithstanding anything to the contrary set forth in Section 14.1(b)(i)
above, MorphoSys’ indemnification obligations thereunder with respect to seeking
indemnification from [***] shall be limited to MorphoSys being obligated to use
diligent efforts to exercise its rights, to the extent available, under [***]
provided that, in considering diligent efforts hereunder, MorphoSys shall take
into account the interests of COMPANY to be remedied under this Section 14.1(b).

(2)     MorphoSys’ indemnification and liability obligation under this Section
14.1(b) shall be limited to and shall in terms of scope and extent in no respect
exceed [***]. Further, MorphoSys shall be entitled to defend itself against a
claim brought under Section 14.1(b), including by asserting the same defenses,
which are available to and ultimately asserted by [***] against a

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respective claim brought against [***]; the limitation periods applicable under
the [***] for such claim under [***] shall apply for a claim brought under
Section 14.1(b) of this Agreement against MorphoSys.

(3)     Without limiting the foregoing subsections 14.1(b)(ii)(1) and (2),
MorphoSys’ obligations under Section 14.1(b)(i) shall always be subject to the
following DISCLAIMER OF DAMAGES under (y) and subject to the following CAPS
under (z):

(y)   EXCEPT FOR CASES OF WILLFUL MISCONDUCT AND SUCH CASES WHERE A LIMITATION
OF LIABILITY OR A LIMITATION OF INDEMNIFICATION OBLIGATIONS IS NOT PERMITTED
UNDER [***] LAW, FOR WHICH CASES THERE SHALL BE NO LIMITATION OF LIABILITY OR
INDEMNIFICATION OBLIGATIONS, IN NO EVENT, EITHER DIRECTLY OR BY WAY OF
INDEMNIFICATION, AND IRRESPECTIVE OF THE THEORY OF LIABILITY, OF WHETHER BREACH
OF CONTRACT, TORT OR OTHERWISE, SHALL MORPHOSYS BE LIABLE AND/OR INDEMNIFY FOR
ANY INCIDENTAL, INDIRECT, EXEMPLARY, SPECIAL, PUNITIVE, ENHANCED, OR
CONSEQUENTIAL DAMAGES (THE AFOREMENTIONED TERMS TO BE INTERPRETED UNDER THE
RESPECTIVE LAWS [***]) ARISING FROM, RELATED TO OR IN CONNECTION WITH THIS
SECTION 14.1(b) INCLUDING, WITHOUT LIMITATION ANY CLAIMS FOR DAMAGES BY THIRD
PARTIES, CLAIMS FOR DAMAGES BASED UPON LOST PROFITS, LOSS OF REPUTATION OR LOSS
OF GOODWILL, EVEN IF MORPHOSYS HAS BEEN ADVISED OF THE POSSIBLITY OF SUCH
DAMAGES. PROVIDED, HOWEVER, THAT THIS DISCLAIMER OF CONSEQUENTIAL DAMAGES SHALL
NOT APPLY IF AND TO THE EXTENT MORPHOSYS IS OBLIGATED TO INDEMNIFY ONE OR MORE
PARTIES UNDER SECTION 14.1(b)(i) FOR (A) THIRD PARTY CLAIMS FOR DAMAGES CAUSED
BY A RECALL, (B) THIRD PARTY CLAIMS RELATING TO DEATH OR BODILY HARM CAUSED BY
[***] PRODUCT OR (C) THIRD PARTY CLAIMS FOR BREACH OF THIRD PARTY INTELLECTUAL
PROPERTY RIGHTS BY [***], (D) BREACH OF [***] CONFIDENTIALITY OBLIGATIONS
ARISING UNDER [***].

MORPHOSYS' OBLIGATION UNDER SECTION 14.1(b) SHALL, TO THE FULL EXTENT ALLOWABLE
UNDER APPLICABLE LAW, NOT COVER ANY REMEDY, COMPENSATION OR INDEMNIFICATION FOR
LOSS OF THE VALUE OF THE PRODUCT DUE TO A NEGLIGENT OR WILLFUL BREACH OF [***]).

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ALL AFOREMENTIONED, TO THE FULL EXTENT ALLOWABLE UNDER APPLICABLE LAW, WILL BE
SUBJECT TO THE OTHER LIMITATIONS, CAPS AND REQUIREMENTS SET OUT IN THIS SECTION
14.1(b)(ii).

(z)   THE AFOREMENTIONED OBLIGATION OF MORPHOSYS UNDER SECTION 14.1(b) SHALL, TO
THE FULL EXTENT ALLOWABLE UNDER [***] LAW, further BE SUBJECT TO THE LIMITATIONS
AND CAPS WHICH APPLY TO MORPHOSYS', ITS AFFILIATED COMPANIES’ AND ITS OR ITS
AFFILIATED COMPANIES' REPRESENTATIVES' CLAIMS AS SET FORTH IN [***], PROVIDED
THAT IF AND TO THE EXTENT SUCH LIMITATIONS AND CAPS ARE MORE RESTRICTIVE THAN
THOSE SET FORTH IN THIS SECTION 14.1(b)(ii) AND, IN CASE MORPHOSYS IS OBLIGATED
TOWARDS COMPANY PURSUANT TO SECTION 14.1(b)(iii), IN ADDITION AS SET FORTH IN
[***] AND ALL SUCH LIMITATIONS SHALL LIKEWISE APPLY MUTATIS MUTANDIS FOR
MORPHOSYS' OBLIGATIONS UNDER THIS SECTION 14.1(b). THE AFOREMENTIONED PROVISIONS
ARE SET OUT IN EXHIBIT 20 WHICH IS HEREBY INCORPORATED INTO, AND SHALL BE AN
INTEGRAL PART OF, THIS SECTION 14.1(b).

(4) To be eligible to be indemnified pursuant to this Section 14.1(b), [***]
shall provide [***] with prompt notice of the third party claim giving rise to
the indemnification obligation arising pursuant to this Section 14.1(b) and, to
the extent legally possible, giving [***] the [***] ability to defend (with the
reasonable cooperation of [***] or settle any such claim, provided, however,
that [***] shall not enter into any settlement that admits fault, wrongdoing or
damages without [***] written consent, such consent not to be unreasonably
withheld or delayed. [***] shall have the right to participate, [***] and with
counsel of its choice, in the defense of any claim or suit that has been assumed
by the [***] subject to the relevant terms of [***].

(5) In the event that, on the one side, [***], and, on the other side, [***] are
held jointly liable for any third party claims, the party which satisfies such
third party may demand adjustment of advancements from the other party [***],
provided, however, that [***] accepts that [***] shall (i) only be obligated to
compensate within [***] and (ii) be entitled to demand from the other party or
parties adjustments that exceed the limits of [***].

(iii)       For the purpose of this Section 14.1(b) the term 'Affiliated
Companies' and the term 'Representative' shall be defined and interpreted as
under [***]. Except as explicitly set forth in Section 14.1(b)(i) or Section
14.1(b)(ii) above, Section 14.1(b) and EXHIBIT 20 shall be interpreted under
[***] law [***] and in the same manner as interpreted in [***].

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(iv)      Subject to Section 11.15, if [***] determines that it may be desirable
to obtain a license from a Third Party to settle a claim by Third Party patent
holder asserting that [***] designated by [***], use of its intellectual
property rights in connection with such [***] of its services when [***]
infringes such Third Party’s intellectual property rights, [***] shall promptly
notify [***] of such determination in writing giving detailed reasoning and the
Parties shall discuss, through the JSC, the necessity or usefulness to obtain
such Third Party's license.  [***] shall have the first right to reasonably lead
negotiations and conclude such license for [***].  [***] shall have the right to
participate in any such negotiation. [***] shall keep [***] informed and shall
take due account of [***] interests, and [***] shall provide any assistance
reasonably requested. In case a license is concluded, [***] such Third Party
Payments in accordance with [***] with respect to [***]. With respect to such
Third Party Payments relating to the [***].

(v)       THE REMEDIES SET FORTH IN SECTION 14.1(b)(i), AND THE REMEDIES SET
FORTH IN SECTION 11.15 WITH RESPECT TO [***] CLAIMS, CONSTITUTE COMPANY'S (AND
ITS AFFILIATED COMPANIES' AND ITS AND ITS AFFILIATED COMPANIES REPRESENTATIVES')
SOLE AND EXCLUSIVE REMEDY WITH RESPECT TO CLAIMS SUBJECT TO LIABILITY AND
INDEMNIFICATION UNDER THIS SECTION 14.1(b) AND SECTION 11.15.

(c)       Liability/Indemnification for [***] Product [***].  Except in case of
a [***], in which case this Section 14.1(c) shall not apply, MorphoSys shall (A)
be liable for Losses or (B) defend, indemnify and hold harmless COMPANY
Indemnitees from and against any Losses in connection with any Third Party
Claim, each with respect to Licensed Antibody or Product [***] for the
Co-Commercialization Territory or the Company Territory to the extent arising
from or occurring as a result of or in connection with (i) [***] (ii) [***], or
(iii) a Third Party patent holder asserting a claim that [***] infringe its
rights, in each case of (i) through (iii) above, except to the extent any
COMPANY Indemnity has contributed to Losses or Third Party claims by COMPANY's’
breach of COMPANY's representations or warranties given under Sections 13.1 or
13.2, or by COMPANY Indemnitees' negligent or wilful non-compliance with its
obligations under this Agreement or [***] and further except to the extent that
COMPANY has an indemnification obligation pursuant to Section 14.2 or under
[***], provided however that all indemnification obligations set forth in this
Section 14.1(c) shall be limited to and shall in terms of scope, extent and
limitations in no respect exceed what MorphoSys and/or its Affiliates are
entitled to claim, if any, from [***]. THE REMEDIES SET FORTH IN THIS SECTION
14.1(c) CONSTITUTE COMPANY'S (AND ITS AFFILIATES’) SOLE AND EXCLUSIVE REMEDY
WITH RESPECT TO CLAIMS SUBJECT TO THIS SECTION 14.1(c).

(d)       Indemnification for [***] Product.  Except in case of [***], in which
case this Section 14.1(d) shall not apply, MorphoSys shall defend, indemnify and
hold harmless, COMPANY Indemnitees from and against any Losses in connection

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with any Third Party Claim with respect to Licensed Antibody or Product [***] to
the extent arising from or occurring as a result of or in connection with (i)
any of MorphoSys’ or its Affiliate's breach of MorphoSys’ or its Affiliate's
representations and warranties [***] (ii) MorphoSys' or its Affiliate’s
non-compliance with its obligations [***], or (iii) a Third Party patent holder
asserting a claim that MorphoSys' or its Affiliate's use of its intellectual
property rights or [***] infringe its rights, in each case of (i) through (iii)
above, except to the extent COMPANY has contributed to Third Party claims by any
COMPANY’s breach of its representations or warranties given under Sections 13.1
or 13.2 or, or by any COMPANY Indemnitees' non-compliance with its obligations
under this Agreement or [***] and further except to the extent that Company has
an indemnification obligation pursuant to Section 14.12.

14.2     Indemnification by COMPANY.

(a)       General Indemnification. COMPANY shall defend, indemnify and hold
harmless MorphoSys, its Affiliates, and their respective directors, officers,
employees, and agents ("MorphoSys Indemnitees") from and against any Losses in
connection with any Third Party Claim to the extent arising from or occurring as
a result of or in connection with: (i) COMPANY’s, its Affiliates’ or its
Sublicensees’ exercise of rights under this Agreement, including the
Development, storage, handling, use, Commercialization, or importation of any
Licensed Antibody or Product by COMPANY or any of its Affiliates or Sublicensees
in or for the COMPANY Territory, (ii) COMPANY’s, its Affiliates’ or
Sublicensees’ exercise of the rights granted under this Agreement with respect
to the Co-Commercialization Territory, including the Co-Commercialization of any
Licensed Antibody or Product by COMPANY or any of its Affiliates or Sublicensees
in or for the Co-Commercialization Territory, (iii) any breach by COMPANY of its
representations, warranties, covenants or obligations under this Agreement, or
(iv) the gross negligence or wilful misconduct of any COMPANY Indemnitee;
provided, however,  with regards to (i) through (iv) above, excluding [***]
(which, for clarity, shall be governed solely by Section 14.214.1(b) and (c))
and except to the extent that MorphoSys has an indemnification obligation
pursuant to Section 14.1 for such Loss and provided that MorphoSys Indemnitees
comply with the procedure set forth in Section 14.3.

(b)       Liability/Indemnification for [***] Product [***].  COMPANY shall (A)
be liable for Losses or (B) defend, indemnify and hold harmless MorphoSys
Indemnitees from and against any Losses in connection with any Third Party
Claim, each with respect to Licensed Antibody or Product [***] to the extent
arising from or occurring as a result of or in connection with (i) [***] (ii)
[***], or (iii) a Third Party patent holder asserting a claim that   [***]
infringe its rights, in each case of (i) – (iii) above, except to the extent
MorphoSys has contributed to Losses or Third Party claims by MorphoSys’ breach
of its representations or warranties given under Sections 13.1 or 13.2, or by
any MorphoSys Indemnity's non-compliance with its obligations under this
Agreement or [***] and further except to the extent that MorphoSys has an
indemnification obligation pursuant to Section 14.1 or [***];provided, however
that all indemnification obligations set forth in this Section 14.2(b) shall be
limited to and shall in terms of scope, extent and

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limitations in no respect exceed what COMPANY and/or its Affiliates are entitled
to claim, if any, from [***]. THE REMEDIES SET FORTH IN THIS SECTION 14.2(b)
CONSTITUTE MORPHOSYS' (AND ITS AFFILIATES’) SOLE AND EXCLUSIVE REMEDY WITH
RESPECT TO CLAIMS SUBJECT TO THIS SECTION 14.2(b).

(c)       Indemnification for [***] Product. COMPANY shall defend, indemnify and
hold harmless MorphoSys Indemnitees from and against any Losses in connection
with any Third Party Claim with respect to Licensed Antibody or Product [***] to
the extent arising from or occurring as a result of or in connection with (i)
COMPANY’s or its Affiliate's breach of COMPANY’s or its Affiliate's
representations and warranties in [***] (ii) COMPANY's or its Affiliate’s
non-compliance with its obligations under [***], or (iii) a Third Party patent
holder asserting a claim that COMPANY's or its Affiliate's use of its
intellectual property rights or [***], in each case of (i) – (iii) above, except
to the extent MorphoSys has contributed to Third Party claims by MorphoSys’
breach of its representations or warranties given under Sections 13.1 or 13.2,
or by any MorphoSys Indemnity’s non-compliance with its obligations under this
Agreement or [***] and further except to the extent that MorphoSys has an
indemnification obligation pursuant to Section 14.1.

14.3     Indemnification Procedure. Subject to the indemnification procedure for
the indemnification in Section 14.2(b) as set out in Section 14.1(b)(ii), the
following shall apply to all indemnification claims under this Agreement:

(a)       Notice of Claim.  All indemnification claims in respect of a Party,
its Affiliates or their respective directors, officers, employees and agents
(collectively, the "Indemnitees" and each an "Indemnitee") shall be made solely
by such Party to this Agreement (the "Indemnified Party"). The Indemnified Party
shall give the indemnifying Party (the "Indemnifying Party") prompt written
notice (an "Indemnification Claim Notice") of any Third Party Claim or discovery
of fact upon which such Indemnified Party intends to base a request for
indemnification under Section 14.1 or Section 14.2; provided, however, that the
failure to give such prompt written notice shall not relieve Indemnifying Party
of its indemnification obligation under this Agreement except and only to the
extent that the Indemnifying Party is actually prejudiced as a result of such
failure.  In no event shall the Indemnifying Party be liable for any Losses that
result from any delay in providing such notice.  Each Indemnification Claim
Notice must contain a description of the Third Party Claim and the nature and
amount of such Loss (to the extent that the nature and amount of such Loss are
known at such time). The Indemnified Party shall furnish promptly to the
Indemnifying Party copies of all papers and official documents received in
respect of any Losses.

(b)       Control of Defense.  At its option, the Indemnifying Party may assume
the defense of any Third Party Claim by giving written notice to the Indemnified
Party within [***] calendar days after the Indemnifying Party’s receipt of an
Indemnification Claim Notice.  Upon assuming the defense of a Third Party Claim,
the Indemnifying Party may appoint as lead counsel in the defense of the Third
Party Claim any legal counsel of its own choice.  In the event the Indemnifying
Party assumes the defense of a Third Party Claim, the

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Indemnified Party shall immediately deliver to the Indemnifying Party all
original notices and documents (including court papers) received by any
Indemnitee in connection with the Third Party Claim. Should the Indemnifying
Party assume the defense of a Third Party Claim, the Indemnifying Party shall
not be liable to the Indemnified Party or any other Indemnitee for any legal
expenses subsequently incurred by such Indemnified Party or other Indemnitee in
connection with the analysis, defense or settlement of the Third Party Claim.

(c)       Right to Participate in Defense.  Without limiting Section 14.3(b)
above, any Indemnitee shall be entitled to participate in, but not control, the
defense of such Third Party Claim and to employ counsel of its choice for such
purpose; provided, however, that such employment shall be [***] unless (i) the
employment thereof has been specifically authorized by the Indemnifying Party in
writing, or (ii) the Indemnifying Party has failed to assume the defense and
employ counsel in accordance with Section 14.3(b) (in which case the Indemnified
Party shall control the defense).

(d)       Settlement.  [***].

(e)       Cooperation.  The Indemnified Party will, and shall cause each other
Indemnitee to, cooperate in the defense or prosecution thereof and shall furnish
such records, information and testimony, provide such witnesses and attend such
conferences, discovery proceedings, hearings, trials and appeals as may be
reasonably requested in connection with the defense or prosecution of any Third
Party Claim.  Such cooperation shall include access during normal business hours
afforded to the Indemnifying Party to, and reasonable retention by the
Indemnified Party of, records and information that are reasonably relevant to
such Third Party Claim, and making Indemnitees and other employees and agents
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder, and the Indemnifying Party shall
[***] the Indemnified Party for [***].

14.4     Expenses.  [***].

14.5     Insurance.  Each Party shall have and maintain such types and amounts
of liability insurance, including by self-insurance, as is normal and customary
in the industry generally for parties similarly situated, and shall upon request
provide the other Party with a certificate of insurance in that regard, along
with any amendments and revisions thereto.

 

15.       LIMITATION OF LIABILITY

15.1     EXCLUSION OF INDIRECT DAMAGES.  IN NO EVENT SHALL EITHER PARTY BE
LIABLE UNDER THIS AGREEMENT FOR ANY SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL
OR PUNITIVE DAMAGES, HOWEVER CAUSED, ON ANY THEORY OF LIABILITY AND WHETHER OR
NOT SUCH DAMAGES WERE FORESEEABLE AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES, ARISING UNDER ANY CAUSE OF ACTION AND
ARISING IN ANY WAY OUT OF THIS AGREEMENT.  THE FOREGOING LIMITATIONS SHALL NOT
APPLY TO AN AWARD OF ENHANCED DAMAGES AVAILABLE UNDER 3 U.S.C. § 284 FOR WILFUL
PATENT INFRINGEMENT. THIS LIMITATION OF LIABILITY DOES NOT APPLY IN CASES

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OF (I) WILFUL MISCONDUCT OR GROSS NEGLIGENCE, (II) DEATH OR PERSONAL INJURY
CAUSED BY A PARTY’S OR ITS EMPLOYEES, AGENTS OR SUBCONTRACTORS NEGLIGENCE TO THE
EXTENT SUCH EXCLUSION IS PROHIBITED BY APPLICABLE LAWS (III) BREACHES OF ARTICLE
16 (CONFIDENTIALITY), (IV) BREACHES OF ARTICLE 12 (NON-COMPETE), AND (V) A
PARTY’S INDEMNIFICATION OBLIGATIONS UNDER SECTIONS 14.1(a), (c) OR (d) OR 14.2;
FOR CLARITY, FOR THE INDEMNIFICATION OBLIGATION UNDER SECTION 14.1(b) THE
LIMITATIONS AND CAPS SET OUT IN SUCH SECTION 14.1(b) SHALL APPLY IN PLACE OF
THIS SECTION 15.

EXCLUSION OF LIABILITY [***].  EXCEPT FOR CASES OF WILLFUL MISCONDUCT OR SUCH
CASES WHERE A LIMITATION OF LIABILITY IS NOT PERMITTED UNDER APPLICABLE LAW,
SECTIONS 14.1(b), 14.1(c), 14.2(b), 11.15, OR 15.3 SHALL BE EACH PARTY’S (AND
ITS AFFILIATES’) SOLE AND EXCLUSIVE REMEDY, AND EACH PARTY HEREBY DISCLAIMS ANY
OTHER LIABILITY, IRRESPECTIVE OF THE THEORY OF LIABILITY, WHETHER BREACH OF
CONTRACT, TORT OR OTHERWISE, IN CONNECTION WITH [***].

 

16.       CONFIDENTIALITY

16.1     Definition.  During the Term and subject to the terms and conditions of
this Agreement, a Party or its Affiliates (a "Disclosing Party") may communicate
to the other Party or its Affiliates (a "Receiving Party") confidential
information in connection with this Agreement or the performance of its
obligations, or the use of its rights hereunder, including scientific and
Manufacturing information and plans, strategies, marketing, sales and business
plans, pricing and financials, personnel matters, present or future products,
sales, suppliers, customers, employees, investors or businesses (collectively,
"Confidential Information").  Without limiting the foregoing, "Confidential
Information" is hereby deemed to include any information exchanged between the
Parties pursuant to that certain Confidential Disclosure Agreement between the
Parties dated as of [***] (“CDA”), as amended on [***] (“CDA Amendment”), which
shall both be superseded by this Article 16, except (a) with respect to the
non-solicitation provisions under Section 4 of the CDA Amendment and (b) with
respect to the standstill provisions under Section 5 of the CDA Amendment; which
shall all remain effective for the purposes of this Agreement.

16.2     Exclusions.  Notwithstanding the foregoing, information of a Disclosing
Party shall not be deemed Confidential Information with respect to a Receiving
Party for purposes of this Agreement if such information:

(a)        was already known to the Receiving Party, as evidenced by their
written records, other than under an obligation of confidentiality or non-use,
at the time of disclosure to the Receiving Party or its Affiliates;

(b)        was generally available or was otherwise part of the public domain at
the time of its disclosure to the Receiving Party;

(c)        became generally available or otherwise became part of the public
domain after its disclosure to the Receiving Party, through no fault of or
breach of its obligations under this Article 16 by the Receiving Party;

(d)        was disclosed to the Receiving Party, other than under an obligation
of confidentiality or non-use, by a Third Party who had no obligation to the
Party that

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controls such information and know-how not to disclose such information or
know-how to others; or

(e)        was independently discovered or developed by the Receiving Party or
its Affiliates, as evidenced by their written records, without the use of, and
by personnel who had no access to, Confidential Information belonging to the
Party that controls such information and know-how.

16.3     Disclosure and Use Restriction. Except as expressly provided herein,
the Parties agree that, during the Term and for [***] years thereafter, a
Receiving Party shall keep completely confidential and shall not publish or
otherwise disclose and shall not use for any purpose except for the purposes
contemplated by this Agreement any Confidential Information of a Disclosing
Party. In particular, a Party shall not use any Confidential Information
disclosed in any governance committee hereunder for its other products,
strategies, and for that purpose, COMPANY and MorphoSys shall ensure that the
persons having access to MorphoSys Know-How, COMPANY Know-How, Development Data,
Regulatory Materials, Pricing Materials and other Product-related information
(e.g. governance committees members) shall not use Confidential Information of
the other Party for any product (including any Competing Product) of the
respective Party.

16.4     Authorized Disclosure.  A Receiving Party may disclose Confidential
Information of a Disclosing Party to the extent that such disclosure is:

(a)        made in response to a valid order of a court of competent
jurisdiction or other governmental or regulatory body of competent jurisdiction;
provided, however, that such Receiving Party shall first have given notice to
the Disclosing Party and given the Disclosing Party reasonable opportunity to
quash such order and to obtain a protective order requiring that the
Confidential Information and documents that are the subject of such order be
held in confidence by such court or governmental or regulatory body or, if
disclosed, be used only for the purposes for which the order was issued; and
further provided that if a disclosure order is not quashed or a protective order
is not obtained, the Confidential Information disclosed in response to such
court or governmental order shall be limited to that information which is
legally required to be disclosed in response to such court or governmental
order;

(b)        otherwise required by Law; provided, however, subject to
Section 16.6, that the Disclosing Party shall provide the Receiving Party with
notice of such disclosure in advance thereof to the extent practicable;

(c)        made by such Party to regulatory authorities as required in
connection with any regulatory filing or application; provided. however, that
reasonable measures shall be taken to assure confidential treatment of such
information;

(d)        made by a Receiving Party, in connection with the performance of this
Agreement, to directors, officers, employees, legal and financial advisors,
consultants, representatives or agents who have a need to know such information,
each of whom prior to disclosure must be bound by obligations of confidentiality
and non-use at least similar in scope to those set forth in this Article 14;

(e)        made by a Receiving Party on a need-to-know-basis to (i) existing or
potential acquirers or merger candidates; (ii) existing or potential
Sublicensees or existing or potential contractors (to the extent contemplated
hereunder); (iii) investment bankers;

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(iv) existing or potential investors, venture capital firms or other financial
institutions or investors for purposes of obtaining financing; or to Affiliates
or Sublicensees, each of whom prior to disclosure must be bound by obligations
of confidentiality and non-use  equivalent in scope to those set forth in this
Article 16 or in accordance with applicable industry standards but for no less
than five (5) years from disclosure;

(f)         made by the Receiving Party with the prior written consent of the
Disclosing Party.

16.5     Use of Name.  Neither Party may make public use of the other Party’s
name except (i) in connection with announcements and other disclosures relating
to this Agreement and the activities contemplated hereby as permitted in Section
16.6, (ii) as required by applicable Laws, (iii) as expressly permitted under
this Agreement, and (iv) otherwise as agreed in writing by such other Party.

16.6     Press Releases and Publications.

(a)        Public Disclosures.  The Parties have mutually agreed on a press
release announcing the execution of this Agreement, which is attached hereto as
EXHIBIT 10.  Subject to Section 16.7, for subsequent press releases and other
written public disclosures relating to this Agreement or the Parties’
relationship hereunder (each, a "Public Disclosure"), each Party shall submit to
the other Party a draft of such Public Disclosures for review and comment by the
other Party at least [***] full Business Days prior to the date on which such
Party plans to release such Public Disclosure. In addition, and subject to the
requirements of applicable securities and other Laws governing such disclosures,
(i) COMPANY shall include the statement as set forth in EXHIBIT 18 in the
section containing background information on the Product of each of COMPANY's
Public Disclosures and each public announcements referencing the Licensed
Antibody and/or Product(s), and (ii) each Party shall use good faith efforts to
notify the other Party in advance of any significant public announcement
regarding Licensed Antibody’s and/or Products’ performance and achievements
under this Agreement.  In case of any disclosure after the Execution Date that
is required by Laws as reasonably advised by the Disclosing Party’s counsel,
such Party will provide the other Party with prompt notice of the required
disclosure, such other Party shall not be entitled to withhold consent, but the
Parties shall work together in good faith to find a mutually acceptable manner
in which to make the disclosure.

(b)        Ad hoc Requirements.  If a Party is unable to comply with the
foregoing [***]-Business Day notice requirement because of a legal obligation or
stock exchange requirement to make more rapid disclosure, such Party shall not
be in breach of this Agreement but shall in that case give telephone and email
notice to a senior executive of the other Party and provide a draft disclosure
with as much notice as possible prior to the release of such Public Disclosure.
The Parties however acknowledge that for so-called "ad hoc" announcements
required under the German Securities Act, no prior notice may be possible.

(c)        Public Domain.  A Party may publicly disclose, without regard to the
preceding requirements of this Section 16.6, information that was previously
disclosed in a Public Disclosure that was in compliance with such requirements.

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(d)        Milestone Reporting.  Both Parties agree that as part of their
corporate communications policy and standard practice, MorphoSys and/or COMPANY
may announce the achievement of payment-bearing milestones under this Agreement
and the related due amounts, and each Party shall be permitted to do so in
accordance with applicable reporting standards.

(e)        Development Results.  Each Party (and/or its Affiliates or
Sublicensees) under this Agreement may wish to publish the results of research
and development under this Agreement.  In order to safeguard intellectual
property rights, the Party (or Affiliate or Sublicensee) wishing to publish or
otherwise publicly disclose the results of such research and development shall
first submit a draft of each proposed manuscript or presentation or poster to
the other Party for review, comment and consideration of appropriate patent
action at least [***] weeks prior to any submission for publication or other
public disclosure.  Within [***] Business Days of receipt of the pre-publication
materials, such other Party shall advise the Party seeking publication as to
whether a patent application shall be prepared and filed or whether trade secret
protection should be pursued and, if so, such other Party shall determine the
appropriate timing and content of any such publications. Approval of a
publication shall not be unreasonably withheld, conditioned or delayed.

16.7     Terms of Agreement.  The Parties agree that the terms of this Agreement
are confidential and shall not be disclosed by either Party to any Third Party
(except to a Party’s professional advisor and as permitted for Confidential
Information under Sections 16.4 and 16.6) without prior written permission of
the other Party; provided, however, that (i) either Party may make any filings
of this Agreement required by Law or regulation in any country as set forth in
Section 16.8; and (ii) that MorphoSys and COMPANY may disclose, without the
other Party’s prior written permission, to prospective investors that are under
confidentiality obligations no less stringent than those hereunder the
individual milestone amounts, royalty rate and royalty tiers payable under this
Agreement; and further provided that a Party may publicly disclose information
that was previously disclosed in compliance with Section 16.7 and 16.8.

16.8     SEC Filings.  The Parties acknowledge that they may be obligated to
make a filing (including to file a copy of this Agreement) with the United
States Securities and Exchange Commission ("SEC") or other Governmental
Authorities.  Each Party shall be entitled to make such a required filing,
provided that it shall (i) submit in connection with such filing a redacted copy
of this Agreement in the form to be agreed between the Parties within [***]
calendar days of the Execution Date (the "Redacted Agreement"), (ii) request,
and use Commercially Reasonable Efforts consistent with applicable Laws to
obtain, confidential treatment of all terms redacted from this Agreement, as
reflected in the Redacted Agreement, for a period of at least [***] years, (iii)
promptly deliver to each other Party any written correspondence received by it
or its representatives from such Governmental Authority with respect to such
confidential treatment request and promptly advise each other Party of any other
material communications between it or its representatives with such Governmental
Authority with respect to such confidential treatment request, (iv) upon the
written request of any other Party, if legally justifiable, request an
appropriate extension of the term of the confidential treatment period, and (v)
if such Governmental Authority requests any changes to the redactions set forth
in the Redacted Agreement, use Commercially Reasonable Efforts consistent with
applicable Laws to support the redactions in the Redacted Agreement as
originally filed and not agree to any changes to the Redacted Agreement without,
to the extent practical, first

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discussing such changes with each other Party and taking each other Party’s
comments into consideration when deciding whether to agree to such changes. Each
Party shall be responsible for its own legal and other external costs in
connection with any such filing, registration or notification.

 

17.       TERM AND TERMINATION

17.1     Term and Expiration.

(a)        Term. The term of this Agreement shall commence as of the Execution
Date and, unless earlier terminated in accordance with this Article 17 or under
Section 18.21(c), shall expire upon the payment of the last applicable payment
under this Agreement (the "Term").

(b)        Expiration. Upon expiration of the Term, COMPANY shall retain the
licenses granted in Section 2.1 as non-exclusive, irrevocable, perpetual, fully
paid-up licenses and MorphoSys shall retain the licenses under Section 2.4 as
irrevocable, perpetual, fully-paid-up licenses.

(c)        No relief from Existing Obligations. Expiration or termination of
this Agreement shall not relieve the Parties of any obligation accruing prior to
such expiration or termination (including payment obligations).

17.2     Termination for Material Breach, Insolvency and Patent Challenge.

(a)        Termination for Breach.  Any material failure by a Party ("Breaching
Party") to comply with any of its material obligations contained in this
Agreement (such failure a "Material Breach") shall entitle the other Party
("Non-Breaching Party") to give to the Breaching Party written notice specifying
the nature of the Material Breach, requiring the Breaching Party to make good or
otherwise cure such Material Breach. If such Material Breach is not cured within
[***] calendar days after the receipt of notice pursuant to this Section (except
for a Material Breach consisting of non-payment, in which case the cure period
shall be [***] calendar days) (the “Cure Period”), the Non-Breaching Party shall
be entitled to terminate with immediate effect (unless such Material Breach
(excluding any payment breach), by its nature, cannot reasonably be cured within
the Cure Period, and the Breaching Party has (i) notified the Non-Breaching
Party of its plan for curing such Material Breach, (ii) commenced and sustained
the required efforts to cure such Material Breach during the Cure Period, and
(iii) ultimately does cure such Material Breach within [***] calendar days after
the end of the Cure Period, or such longer period as may be agreed upon between
the Parties)  by providing a written notice pursuant to this Section 17.2
("Termination Notice") to the Breaching Party and without prejudice to any of
its other rights conferred on it by this Agreement and other remedies available
under applicable Laws.

(b)        Termination for Insolvency.  A Party shall be entitled to terminate
with immediate effect by providing a Termination Notice to the other Party and
without prejudice to any of its other rights conferred on it by this Agreement
and other remedies available under applicable Laws in case (i) of a Material
Breach due to lack of financial resources of the other Party, (ii) filing for or
institution of bankruptcy, reorganization, liquidation or receivership
proceeding, or (iii) upon an assignment of a substantial

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portion of the assets for the benefit of the other Party's creditors; provided,
however, that such termination (with immediate effect) shall remain effective
only if such proceeding is not dismissed within [***] calendar days after the
filing thereof.

17.3     Termination on Patent Challenge.  In case of a Patent Challenge, in
addition to any other remedies that MorphoSys may have, including those remedies
set forth in Section 11.20, MorphoSys shall be entitled to terminate this
Agreement with immediate effect by providing a Termination Notice to COMPANY.
COMPANY shall include in all Sublicense Agreements provisions as set forth in
Section 11.20 that COMPANY is permitted to terminate such Sublicense
Agreement.  If a Sublicensee directly, or indirectly through assistance granted
to a Third Party, undertakes a Patent Challenge of any such Patent, then COMPANY
upon receipt of notice from MorphoSys of such Patent Challenge shall immediately
terminate the applicable Sublicense Agreement.  If COMPANY fails to so terminate
such Sublicense Agreement, MorphoSys may terminate this Agreement.
Notwithstanding the above, COMPANY shall include provisions in all Sublicense
Agreements that in case of a Patent Challenge by a Sublicensee allow for a
termination of such Sublicense Agreement by COMPANY.

17.4     Termination of Entire Agreement or Country-by-Country Basis.  The
Parties can exercise their respective termination rights as stipulated in
Section 17.2 either with regard to the Agreement in its entirety or on a
country-by-country basis, as the case may be, at their sole discretion. In the
event of any termination on a country by country basis, Section 17.7 or 17.8
shall only apply to the countries which have been terminated.

17.5     No Final Say after Notice of Termination.  COMPANY shall no longer have
the right to exercise its final say on the JSC pursuant to Section 9.2(e) for
any purpose other than with respect to ongoing regulatory obligations, including
to amend the Development Plan, after MorphoSys has filed a Termination Notice,
and all decisions of matters where COMPANY had final decision making authority
pursuant to Section 9.2(e) shall thereafter be taken by mutual agreement of the
Parties.

17.6     Termination for Convenience.  After the [***] anniversary of the
Effective Date, COMPANY shall have the right for convenience to file a [***]
prior written notice of termination of this Agreement to MorphoSys (such period,
the “Notice Period”).  During the Notice Period, COMPANY shall continue to fund
Development Activities as provided under this Agreement. If any Trial(s) or
other Development Activities with Licensed Antibody or Product will still be
on-going at the end of the Notice Period, then MorphoSys shall notify COMPANY in
writing at least [***] calendar days after delivery of the applicable
termination notice, which of the following MorphoSys elects, on a Development
Activity-by-Development Activity basis, and COMPANY shall (and ensure that its
Affiliates or Sublicensees) comply with and carry out MorphoSys’ election: (i)
COMPANY shall (and ensure that its Affiliates or Sublicensees) continue such
on-going Trial(s) or Development Activities  at MorphoSys’ costs, or
(ii) transfer sponsorship (if applicable) of such on-going Trial(s) or
Development Activities to MorphoSys, or if so requested by MorphoSys, to Xencor
on a reasonable timeline (such transfer to take place no later than the
expiration of the Notice Period, to the extent practically possible) and [***]
for such transfer and perform as stipulated in Section 17.8(k)(i); or  (iii)
COMPANY shall (and ensure that its Affiliates or Sublicensees) wind down or
assist in the wind down the Trial(s) or Development Activities and shall be
[***] associated with such wind-down, and shall continue to comply with all
remaining obligations and commitments made to Regulatory Authorities by COMPANY
and by Affiliates or Sublicensees (including if applicable, patient registries),
to the extent the compliance with such obligations and commitments is required
by

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applicable Laws, at [***]. For clarity and unless requested otherwise by
MorphoSys, during the Notice Period COMPANY shall continue performing
Commercialization activities in the COMPANY Territory and Co-Commercialization
activities in the Co-Commercialization Territory in accordance with the terms of
this Agreement, including the Co-Commercialization Plan.

In addition, COMPANY shall [***].  If, prior to COMPANY’s exercise of its right
to terminate this Agreement under this Section 17.6, COMPANY has achieved [***]
with respect to (y) any Product in [***], based on a [***], then MorphoSys shall
pay COMPANY a [***] percent ([***]%) royalty on Net Sales of such Product sold
by MorphoSys in the COMPANY Territory following the Notice Period during the
Royalty Term or (z) any Product in the Co-Commercialization Territory, based on
[***], then MorphoSys shall pay COMPANY [***] percent ([***]%) royalty on Net
Sales of such Product sold by MorphoSys in the Co-Commercialization Territory
following the Notice Period during the Royalty Term.   The provisions of Section
8.4 and 8.5 shall survive any termination of this Agreement pursuant to this
Section 17.6.

17.7     Consequences upon COMPANY's Termination Notice.

(a)         Upon Termination Notice by COMPANY under 17.2(a) (Material Breach by
MorphoSys) or 17.2(b) (Insolvency of MorphoSys) the effects of termination shall
apply as stipulated in this Section 17.7, without prejudice to any of its other
rights conferred on COMPANY by this Agreement and other remedies available under
applicable Laws, except that the continuation of contribution by COMPANY under
Section 17.7(h) shall in this case be limited to [***] calendar days.

(b)         Further, if COMPANY submits to MorphoSys a Termination Notice:

(i)      provided that either Party has received [***] for a Product in
country(ies) within the (y) COMPANY Territory based on [***], MorphoSys shall
pay, as consideration for the assignments and transfers, and licenses or
contributions as stipulated in this Section 17.7, to COMPANY royalties on Net
Sales of such Product in such country(ies) within the COMPANY Territory at the
rate of [***] percent ([***]%) or (z) Co-Commercialization Territory based on
[***], MorphoSys shall pay, as consideration for the assignments and transfers,
and licenses or contributions as stipulated in this Section 17.7, to COMPANY
royalties on Net Sales of such Product in the Co-Commercialization Territory at
the rate of [***] percent ([***]%); Section 8.3 (b) – (f) shall apply
accordingly. For clarity, MorphoSys shall not be obligated to (a) pay any
royalties to COMPANY in the COMPANY Territory in case of a termination before
COMPANY has received [***] in any country of the COMPANY Territory based on
[***] or (b) pay any royalties to COMPANY in the Co-Commercialization Territory
in case of a termination before MorphoSys has received [***] in the
Co-Commercialization Territory based on [***], and this clause shall not be
deemed to limit any other right or remedy of the COMPANY under this Agreement in
the event of a termination of this Agreement by the COMPANY; and

(ii)     COMPANY shall be entitled during a period of [***] calendar days
following the effective date of termination of this Agreement to sell in

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the COMPANY Territory any inventory of Products that remains on hand as of the
effective date of the termination. COMPANY shall pay MorphoSys the royalties
applicable to such sales in accordance with the terms and conditions of this
Agreement. At any time within [***] calendar days after the effective date of
termination with respect to any country(ies) in the COMPANY Territory, MorphoSys
shall have the right, upon written notification to COMPANY, to purchase from
COMPANY [***] any or all of the inventory of Products held by COMPANY as of the
date of such notification.

(c)         Each of COMPANY’s Third Party Sublicensees with respect to any
affected Products in any affected country at such time shall continue to have
the rights and license set forth in their Sublicense Agreements, subject to the
continued performance of their obligations thereunder; provided, however, that
such Third Party Sublicensee agrees in writing that the Sublicense Agreements be
transferred from COMPANY to MorphoSys so that MorphoSys is entitled to enforce
all relevant terms and conditions of such Sublicense Agreement directly against
such Third Party Sublicensee, except that MorphoSys shall not be bound to
perform any duties or obligations set forth in any Sublicense Agreements that
extend beyond the duties and obligations of MorphoSys set forth in this
Agreement; and further provided that such Third Party Sublicensee is not then in
breach of its Sublicense Agreement.

17.8     MorphoSys’ Rights upon MorphoSys’ Termination Notice and Effects of
MorphoSys’ Termination.  Upon a Termination Notice by MorphoSys under Section
17.2(a) (Material Breach by COMPANY), Section 17.2(b) (Insolvency of COMPANY),
or Section 17.2(c) (Patent Challenge) or Section 17.6 (Termination for
Convenience), COMPANY shall, subject to Section 17.4 or, if applicable, Section
17.6, transfer to MorphoSys the full MOR208 program, including the following:

(a)        License Termination.  The licenses granted by MorphoSys to COMPANY
under Article 2 shall terminate and COMPANY, its Affiliates and Sublicensees,
and all Third Parties working on behalf of any of the foregoing, shall
immediately stop using all Xencor Know-How, MorphoSys Know-How, Licensed
Antibodies and Products, and stop all activities covered by the Patents licensed
to COMPANY under Section 2.1 and COMPANY shall transfer prosecution, maintenance
and enforcement of such Patents to MorphoSys.

(b)        Termination of Co-Commercialization.  The Co-Commercialization in the
Co-Commercialization Territory and the Pre-Tax Profit (Loss) Share shall
terminate. For clarity, MorphoSys may continue Commercialization in the
Territory at its convenience and COMPANY shall cooperate to transfer all
Commercialization activities ongoing by or on behalf of COMPANY, its Affiliates
and Sublicensees to MorphoSys.

(c)        Return of Licensed Know-How; Transfer of Know-how. Within [***]
calendar days following such termination, COMPANY shall (and ensure that its
Affiliates or Sublicensees) return to MorphoSys all then still existing Xencor
Know-How, and MorphoSys Know-How received from MorphoSys as well as any Joint
Development Data.  COMPANY shall (and ensure that its Affiliates or
Sublicensees) upon MorphoSys’ request (at no cost to MorphoSys) transfer to
MorphoSys or its designee any COMPANY Know-How; such transfer shall be effected
by the delivery of documents, to the extent such COMPANY Know-How is embodied in
documents, and

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to the extent that such Know-How is not fully embodied in documents, COMPANY
shall (and ensure that its Affiliates or Sublicensees) make its employees and
agents who have knowledge of such Know-How in addition to that embodied in
documents available to MorphoSys for interviews and demonstrations to effect
such transfer. Further, MorphoSys shall have the right to use COMPANY Funded
Development Data the same way MorphoSys may use Joint Development Data under
this Agreement, subject to the payment of a buy-in fee equivalent to [***].

(d)        Survival and Extension of Granted License. The licenses granted to
MorphoSys pursuant to Section 2.4 shall survive and become perpetual,
irrevocable, royalty-free, and fully paid; provided, however, that all such
licenses shall, from the effect of the applicable termination notice, also grant
MorphoSys the right to research, have researched, develop, have developed, make,
have made, use, have used, sell, have sold, offer for sale, have offered for
sale, import, have imported, export and have exported the Licensed Antibody
and/or the Product(s) (i) inside the Field inside the Territory and (ii) in all
other fields.  COMPANY shall (and ensure that its Affiliates or Sublicensees)
transfer prosecution, maintenance and enforcement of Patents licensed under
Section 2.4 to MorphoSys. If COMPANY (or any Affiliate or Sublicensee) needs to
make any payments specifically related to Licensed Antibody(ies) or Products to
any Third Party for such Know-How of COMPANY or such technology claimed in a
Patent Controlled by COMPANY, before COMPANY grants to MorphoSys such license,
COMPANY shall first provide MorphoSys in writing with information about such
payments, and MorphoSys shall request such license grant, and upon such request,
MorphoSys shall commit to reimburse COMPANY (or Affiliate or Sublicensee) for
such payments.

(e)        Contract Transfer and/or Assignment.  To the extent requested by
MorphoSys in writing within [***] calendar days following the applicable
termination notice, COMPANY shall (and ensure that its Affiliates or
Sublicensees) transfer and/or assign to MorphoSys or, if so requested by
MorphoSys, to Xencor all or specific licenses, manufacturing agreements and
other contracts specific to Licensed Antibody and Products (including clinical
trial, Manufacturing agreements, sublicensing and Distribution agreements with
respect thereto), to the extent such licenses and other contracts are in effect
as of the date of such termination and such transfer and/or assignment is
permitted under the contract. COMPANY shall (and ensure that its Affiliates or
Sublicensees) provide copies for review, but only to the extent permitted under
such contracts, to enable MorphoSys and/or Xencor to make such decision within
[***] calendar days after the applicable termination notice. To the extent that
any such agreement or contract is not assignable by COMPANY (or Affiliate or
Sublicensee), upon the request of MorphoSys, COMPANY shall (and ensure that its
Affiliates or Sublicensees) cooperate in good faith and use diligent efforts to
allow MorphoSys or any Affiliate or Third Party designated by MorphoSys to
obtain and to enjoy the benefits of such agreement in the form of a license or
other right to the extent COMPANY (or Affiliate or Sublicensee) has the right
and ability to do so.

(f)         Trademarks, Copyrights, other IP. To the extent requested by
MorphoSys in writing within [***] calendar days following the applicable
termination notice, to the extent permitted by applicable Laws, COMPANY shall
(and ensure that its Affiliates or Sublicensees) transfer or otherwise
exclusively license any intellectual property rights to MorphoSys or, if so
requested by MorphoSys, to Xencor to (i) all Product Marks

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controlled by COMPANY (or Affiliate or Sublicensee) used in connection with the
Commercialization of Licensed Antibody and/or Products in the Territory, (ii) to
its part of the ownership in Global Product Marks and (iii) to its rights
(including copyrights), title or interest in the promotional materials, package
inserts and marketing materials, including marketing plans, for the Product used
in the Territory, all (i), (ii) and (iii) including any goodwill associated
therewith, and any registrations, applications and any internet domain name
registrations and slogans, all to the extent related to the Product.

(g)        Regulatory and Data Transfer. To the extent requested by MorphoSys in
writing within [***] calendar days following the applicable termination notice
and to the full extent permitted by Laws, COMPANY shall (and ensure that its
Affiliates or Sublicensees) take all actions reasonably necessary to transfer to
MorphoSys, or if so requested by MorphoSys, to Xencor, all Development Data
(including all raw clinical data, SAS datasets, trial master files, Regulatory
Data and regulatory correspondence and minutes of meetings with Governmental
Authorities), Commercialisation data, including market research data, INDs,
MAAs, Marketing Authorizations, Pricing Approvals and other regulatory filings
related to Licensed Antibody or Product that COMPANY or its Affiliates or
Sublicensees holds as of the time of such termination, and any other
documentation or data needed in accordance with International Conference of
Harmonization E6 Good Clinical Practice: Consolidated Guidance), in each case of
the foregoing to the extent reasonably required to support continued clinical
and other Development and Commercialization. COMPANY shall (or ensure that its
Affiliates or Sublicensees) appoint MorphoSys or a designated Third Party as
COMPANY’s agent for all Product-related matters involving regulatory authorities
until all Marketing Authorizations and other regulatory filings and approvals
have been transferred to MorphoSys or its designee, it being agreed that both
Parties shall use reasonable and diligent efforts to have this transfer occur as
rapidly as feasible. If the effective date of termination is after First
Commercial Sale of a Product, then COMPANY (or ensure that its Affiliates or
Sublicensees) shall appoint MorphoSys or a designated Third Party as its
exclusive distributor of such Product and grant MorphoSys the right to appoint
sub-distributors, until such time as all Marketing Authorizations have been
transferred to MorphoSys or its designee it being agreed that both Parties shall
use reasonable and diligent efforts to have this transfer occur as rapidly as
feasible.

(h)        Continuation of COMPANY Ongoing Trials. If any Trial(s) with Licensed
Antibody or Product are on-going at the time of termination, then MorphoSys
shall notify COMPANY in writing within [***] calendar days after the applicable
termination notice, which of the following MorphoSys elects and COMPANY shall
(and ensure that its Affiliates or Sublicensees) comply with and carry out
MorphoSys’ election:

(i)      COMPANY shall (and ensure that its Affiliates or Sublicensees) continue
such on-going Trial(s) and/or transfer sponsorship (if applicable) of such
on-going Trial(s) to MorphoSys, or if so requested by MorphoSys, to Xencor on a
reasonable timeline and shall bear the costs as stipulated in Section 17.8(i);
or

(ii)     COMPANY shall (and ensure that its Affiliates or Sublicensees) wind
down the Trial and shall be fully and solely responsible for [***], and shall
continue to comply with all remaining obligations and

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commitments made to Regulatory Authorities by COMPANY and by Affiliates or
Sublicensees (including if applicable, patient registries), to the extent the
compliance with such obligations and commitments is required by applicable Laws,
[***].

(i)         Continuation of Contribution. If this Agreement is terminated by
MorphoSys in accordance with Section 17.2(a) (Material Breach by COMPANY),
Section 17.2(b) (Insolvency of COMPANY), or Section 17.2(c) (Patent Challenge),
and subject to the applicable termination notice, COMPANY shall continue to be
responsible [***] until the earlier of (i) MorphoSys has concluded an agreement
with a Third Party subject to which such Third Party receives a license or
licenses to (A) Develop and Commercialize the Product in the COMPANY Territory
and Co-Commercialization Territory in the Field or (B) to Commercialize the
Product in the COMPANY Territory and Co-Commercialization Territory in the Field
or (ii) [***] months after the applicable termination notice. If, within [***]
months after the applicable termination notice, MorphoSys has entered into an
agreement with a Third Party subject to which such Third Party receives a
license to Develop and/or Commercialize the Product in the Field in the COMPANY
Territory and Co-Commercialization Territory, under which good faith and arm’s
length agreement such Third Party is obligated to pay to MorphoSys upfront fees
and near-term [***] milestone payments, with such payments being in the
aggregate at least [***] times the amount of Joint Development Costs paid by
COMPANY to MorphoSys under this Agreement, then, promptly following receipt by
MorphoSys of at least such aggregate payments from such Third Party, MorphoSys
will [***] of the amount of Joint Development Costs paid by COMPANY under this
Section 17.8(i). Except as stipulated in this Section (i), MorphoSys shall not
be obligated [***].

(j)         No Further Representations. COMPANY shall (and ensure that its
Affiliates and Sublicensees) discontinue making any representation regarding its
status as a licensee of MorphoSys for Licensed Antibody and Product and shall
cease conducting all activities with respect to the Commercializing and
Co-Commercializing all of the foregoing.

(k)        Transition Assistance.

(i)      To the extent reasonably permissible under the circumstances at the
time, and to the extent requested by MorphoSys in writing [***] calendar days
following the applicable termination notice, COMPANY shall (and ensure that its
Affiliates and Sublicensees) provide such assistance as may be reasonably
necessary to transfer and/or transition over a reasonable period of time to
MorphoSys, or if so requested by MorphoSys, to Xencor any rights, items and
contracts specified under 17.8(b), (d), (e), (f) and (g), including COMPANY
Know-How, Product Marks, Global Product Marks, Development Data, Regulatory
Data, Regulatory Materials, and Regulatory Approvals, (including contracts with
contract research organisations, contract Manufacturing organisations and
distributors) specific to Licensed Antibody or the Products with respect
thereto, and provided that MorphoSys agrees to assume financial responsibility
and all other obligations towards Third Parties under any licenses or contracts
(other than the case where COMPANY has failed to obtain royalty-free

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rights under those certain Xencor Patents licensed to MorphoSys under Section
2.4(b)).

(ii)     In addition, to the extent that COMPANY or a COMPANY Affiliate is then
manufacturing itself (respectively) Products and upon MorphoSys' request in
writing within [***] calendar days after the applicable termination notice,
COMPANY shall use Commercially Reasonable Efforts to (or ensure that its
Affiliate) continue to manufacture Products for MorphoSys' or Xencor’s use until
the earlier of (i) [***] years and if reasonably required by MorphoSys to fully
accomplish the technology transfer without supply interruption then [***] (for a
total in that case of [***]) after the effective date of termination, and (ii)
such time as MorphoSys has validated an alternative manufacturer (including
[***]), and quantities of Product supplied by such manufacturer may legally be
sold. Any such Product shall be supplied to MorphoSys and MorphoSys shall [***]
COMPANY at COMPANY’s (or its Affiliate’s) [***], determined in accordance with
GAAP.

(l)         Remaining Inventories. MorphoSys shall have the right to purchase
from COMPANY (or its Affiliate) all of the inventory of Products held by COMPANY
(or its Affiliate) as of the effective date of termination at [***], determined
in accordance with GAAP.

(m)       Affiliates. COMPANY shall ensure that its Affiliates comply with
Section 17.8 as if they were COMPANY.

17.9     Survival. Notwithstanding anything to the contrary contained herein,
the following provisions shall survive any expiration or termination of this
Agreement:  Articles 1, 7 (with respect to wind down of activities and
obligations thereunder), 10, 14, 15, 16, 17, 18 (other than Section 18.21),
Sections: 2.7, 2.8, 3.12, 8.3(f), 8.3(g), 8.5, 8.6, 8.7, 8.9, 8.10, 11.4, 11.15,
13.5, and any other Section or clause, which by its nature should survive.
Except as set forth in this Section 17.9 or otherwise expressly set forth
herein, upon termination or expiration of this Agreement all other rights and
obligations shall cease.

 

18.       MISCELLANEOUS

18.1     Assignment.  MorphoSys interests in this Agreement shall be assignable
to Xencor in case of termination of the Xencor Agreement. Without limiting the
foregoing, neither this Agreement nor any right or obligation hereunder may be
assigned or otherwise transferred by a Party to any Third Party without the
prior written consent of the other Party; provided, however, that each Party
may, without such consent, assign this Agreement in its entirety (i) to such
Party’s Affiliate (for so long as the relationship of affiliation endures) or
(ii), subject to Section 12.3, if such Party merges with, or all or
substantially all of its business or assets are acquired by another entity
(whether by merger, sale of assets, sale of stock or otherwise), to the Party’s
merger partner or the Acquirer as part of such acquisition (each of (i) and
(ii), an “M&A Event”). Each Party agrees that, notwithstanding any provisions of
this Agreement to the contrary, if this Agreement is assigned by a Party in
connection with an M&A Event, such assignment shall not provide the
non-assigning Party with rights or access to intellectual

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property or technology of the merger partner or acquirer of the assigning Party
existing prior to such M&A Event. Any permitted assignment shall be binding on
the successors of the assigning Party. In addition, notwithstanding anything
express or implied in this Agreement, if MorphoSys and/or COMPANY becomes part
of the corporate family of a larger pharmaceutical or biopharmaceutical company,
then under no circumstances shall any entities in that family other than
MorphoSys and/or COMPANY and its respective Affiliates prior to joining the
corporate family, be deemed to be “Affiliates” of MorphoSys or COMPANY for
purposes of the intellectual property definitions in this Agreement. Other than
an assignment under the first sentence of this Section 18.1, any assignment or
attempted assignment by either Party in violation of the terms of this Section
shall be null and void.

18.2     Severability. If any provision of this Agreement is held to be illegal,
invalid or unenforceable under any present or future Laws, and if the rights or
obligations of either Party under this Agreement shall not be materially and
adversely affected thereby, (i) such provision shall be fully severable, (ii)
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, (iii) the remaining
provisions of this Agreement shall remain in full force and effect and shall not
be affected by the illegal, invalid or unenforceable provision or by its
severance here from, and (iv) in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible and reasonably acceptable
to the Parties herein.

18.3     Governing Law, Dispute Resolution.

(a)        Governing Law, Jurisdiction. This Agreement, and any disputes between
the Parties related to or arising out of this Agreement (including the Parties’
relationship created hereby, the negotiations for and entry into this Agreement,
its conclusion, binding effect, amendment, coverage, termination, or the
performance or alleged non-performance of a Party of its obligations under this
Agreement) (each a "Dispute"), shall be governed by the Laws of [***], without
regard to any choice of law principle that would require the application of the
Law of another jurisdiction. The United Nations Convention on Contracts for
International Sales of Goods (CISG) shall not apply to this Agreement.
Notwithstanding the foregoing, the obligations under Section [***] shall be
interpreted under [***] law except as otherwise specified in such Section.

(b)        Dispute Resolution. The Parties recognize that disputes as to certain
matters may from time to time arise which relate to either Party's rights and/or
obligations hereunder. It is the intent and objective of the Parties to
establish procedures to facilitate the resolution of such disputes in an
expedient manner by mutual cooperation and without resort to litigation.
Accordingly, subject to the specific resolution process set forth under Sections
9.2(e) and 9.3 for certain controversies, any Dispute, including any such
Dispute involving Affiliates of any Party shall be resolved as set forth in
EXHIBIT 11.

(c)        Injunctive Relief. Notwithstanding the foregoing, nothing in this
Section shall limit either Party’s right to seek immediate temporary injunctive
or other temporary equitable relief whenever the facts or circumstances would
permit a Party to seek such relief in a court of competent jurisdiction.

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18.4     Notices.  All notices or other communications that are required or
permitted hereunder shall be in writing and delivered personally, sent by
facsimile (and promptly confirmed by personal delivery or overnight courier as
provided herein), or sent by internationally-recognized overnight courier
addressed as follows:

 

If to MorphoSys, to:

 

MorphoSys AG

Semmelweisstrasse 7

82152 Planegg

Germany

Attention: CEO

Facsimile: +49 89 899 27 5310

 

If to COMPANY, to:

 

Incyte Corporation

1801 Augustine Cut-Off

Wilmington, DE 19803

USA

Attention: CEO

With a copy to: General Counsel

 

or to such other address as the Party to whom notice is to be given may have
furnished to the other Party in writing in accordance herewith. Any such
communication shall be deemed to have been given when delivered. It is
understood and agreed that this Section is not intended to govern the day-to-day
business communications necessary between the Parties in performing their
duties, in due course, under the terms of this Agreement.

 

18.5     Entire Agreement, Modifications.  This Agreement, including the
Exhibits attached hereto, each of which is hereby incorporated and made part of
in this Agreement by reference, sets forth and constitutes the entire agreement
and understanding between the Parties with respect to the subject matter hereof
and supersedes all prior agreements, understanding, promises and
representations, whether written or oral, with respect thereto, provided,
however, that the Confidential Disclosure Agreement between the Parties dated as
of [***], shall remain partially in effect as set forth in Section 16.1.  Each
Party confirms that it is not relying on any representations or warranties of
the other Party except as specifically set forth herein.  No amendment or
modification of this Agreement shall be binding upon the Parties unless in
writing and duly executed by authorized representatives of both Parties.

18.6     Force Majeure.  Neither Party shall be liable for failure of or delay
in performing obligations set forth in this Agreement, and neither shall be
deemed in breach of its obligations, if such failure or delay is due to natural
disasters or any causes beyond the reasonable control of such Party.  In event
of such force majeure, the Party affected thereby shall use reasonable efforts
to cure or overcome the same and resume performance of its obligations
hereunder.

18.7     Relationship of MorphoSys AG and MorphoSys Inc. With regard to the
performance of this Agreement the following shall apply:

(a)        MorphoSys Obligations. In case this Agreement imposes an obligation
on "MorphoSys" (for clarity, as being defined as MorphoSys AG and MorphoSys
Inc.), the

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respective MorphoSys Party which, at the sole discretion of MorphoSys, in the
internal relationship between these MorphoSys Parties is responsible for this
obligation, shall be obligated to fulfil such obligation; provided, however,
that MorphoSys Inc. may only perform obligations under this Agreement so long as
it remains a subsidiary of MorphoSys AG. In case neither of MorphoSys AG or
MorphoSys Inc. performs the respective obligation, COMPANY shall be entitled to
enforce such right towards both MorphoSys Parties for performance of the
respective obligation; however, COMPANY’s rights and remedies for enforcement
shall be without duplication and the respective obligations of MorphoSys will be
deemed fulfilled if either MorphoSys AG or MorphoSys Inc. fulfilled the
respective obligation.

(b)        COMPANY's Obligation. In case this Agreement imposes an obligation on
COMPANY, either MorphoSys AG or MorphoSys Inc. shall be entitled to enforce such
right towards COMPANY; however, MorphoSys AG and MorphoSys Inc. can only claim
performance once and the respective obligation will be deemed fulfilled if
COMPANY has fulfilled the respective obligations towards either MorphoSys AG and
MorphoSys Inc.

18.8     Relationship of the Parties.  It is expressly agreed that the Parties’
relationship under this Agreement is strictly one of licensor-licensee, and that
this Agreement does not create or constitute a partnership, joint venture or
agency.  Neither Party shall have the authority to make any statements,
representations or commitments of any kind, or to take any action, which shall
be binding (or purport to be binding) on the other.

18.9     Mutual Duty of Good Faith.  The Parties undertake to be loyal to one
another. Each Party shall inform the other immediately of all events that arise
during the Term and that may affect its conduct.  Both Parties undertake not to
actively entice away the respective other Party’s employees who are or were
involved in the performance of any activities under this Agreement, prior to
expiration of a blocking period of [***] months following the Execution Date;
provided, however, that the foregoing provision will not prevent any of the
Parties from (i) employing or engaging any such person who contacts a Party on
his or her own initiative without any direct or indirect solicitation by or
encouragement from such Party, (ii) engaging in general solicitations not
specifically targeted at such persons or employing or engaging any such person
who contacts a Party’s response to such general solicitation or (iii) employing
or engaging any such person who no longer works for a Party at the time the
other Party first commence employment discussions with such person.

18.10   Waiver.  Any term or condition of this Agreement may be waived at any
time by the Party that is entitled to the benefit thereof, but no such waiver
shall be effective unless set forth in a written instrument duly executed by or
on behalf of the Party waiving such term or condition.  The waiver by either
Party hereto of any right hereunder or of claims based on the failure to perform
or a breach by the other Party shall not be deemed a waiver of any other right
hereunder or of any other breach or failure by said other Party whether of a
similar nature or otherwise.

18.11   No Benefit to Third Parties.  This Agreement is for the sole benefit of
the Parties hereto and their successors and permitted assigns, and it shall not
be construed as conferring any rights on any other parties, except as expressly
set forth in this Agreement.

18.12   Further Assurance.  Each Party shall duly execute and deliver, or cause
to be duly executed and delivered, such further instruments and do and cause to
be done such further

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acts and things, including the filing of such assignments, agreements, documents
and instruments, as may be necessary or as the other Party may reasonably
request in connection with this Agreement and the performance thereunder, or to
carry out more effectively the provisions and purposes, or to better assure and
confirm unto such other Party its rights and remedies under this Agreement.

18.13   English Language.  This Agreement has been written and executed in the
English language as used in the United States of America and shall be
interpreted in accordance with the English language as used in the United States
of America.  Any translation by a Party into any other language shall not be an
official version thereof, and in the event of any conflict in interpretation
between the English version and such translation, the English version shall
control.

18.14   No Drafting Party.  This Agreement has been submitted to the scrutiny
of, and has been negotiated by, both Parties and their counsel, and shall be
given a fair and reasonable interpretation in accordance with its terms, without
consideration or weight being given to any such terms having been drafted by any
Party or its counsel.  No rule of strict construction shall be applied against
either Party.

18.15   Anti-Corruption and Bribery.  Each Party shall, and its officers,
directors, employees, agents, representatives, or any other person acting on its
behalf (collectively its “Representatives”) shall, comply at all times with all
applicable Laws combating bribery and corruption, including the U.S. Foreign
Corrupt Practices Act, the U.K. Bribery Act, the bribery provisions in the
German Criminal Code ("Anti-Bribery Laws").  Each Party further represents and
warrants that neither it nor any of its Representatives has offered to pay,
paid, or accepted, and undertakes that neither it nor any of its Representatives
will offer, pay, or accept, any bribes (including any improper advantages, such
as, but not limited to, cash or cash equivalents, improper gifts, excessive
entertainment, lavish travel, substantial favors etc.) to or by any person
(including, in particular, any Government Official or Healthcare Professional of
any jurisdiction) to secure or retain a business advantage for such Party’s own
benefit, the benefit of the other Party under or in connection with this
Agreement, or for the benefit of any other party. Each Party shall take
appropriate steps, in particular maintain and effectively enforce internal
policies and procedures, to ensure that Representatives will not breach any
Anti-Bribery Laws. Each Party shall be responsible for any breach of
Anti-Bribery Laws by its Representatives under or in connection with this
Agreement. In addition, Each Party shall ensure that any person engaged by such
Party for purposes of performing services or providing goods under or in
connection with this Agreement does so only on the basis of a written contract
which imposes on and secures from such person terms equivalent to those imposed
on each Party in this and the foregoing paragraphs of this Section. Any material
breach of any obligation under this Section by a Party or its Representatives
may entitle the other Party to terminate this Agreement in accordance with
Section 17.2(a) and claim any damages resulting from such breach.

18.16   Trade Controls. Each Party will perform all activities under this
Agreement in compliance with all applicable Export Controls and Economic
Sanctions Laws, including all applicable U.S. and EU laws, regulations, and
orders imposing trade sanctions on countries (including their governments,
residents, and entities organized under the laws of or operating from such
countries), individuals, or entities and/or regulating the export, re-export,
transfer, disclosure, or provision of commodities, software, technology, or
services.

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18.17   Protection of Personal Data. Each Party shall comply with all applicable
Data Protection Laws. The Parties agree that the collection, processing and
disclosure of personal data, including but not limited to personal data (as
defined by privacy Laws) related to study participants (e.g. health and medical
information), investigators and any study staff (e.g., name, hospital or clinic
address and phone number, curriculum vitae) is subject to compliance with
privacy Laws. Each Party undertakes to comply with the requirements set forth in
applicable privacy Laws.  Within [***] days from the Execution Date, and prior
to the processing of personal data, the Parties shall enter into a Data
Processing Agreement in accordance with privacy Laws, in substantially the form
attached hereto as EXHIBIT 13,  which shall be incorporated by reference herein,
that establishes the Parties’ obligations to each other and with regard to the
personal data to be processed including but not limited to Regulation (EU)
2016/679 and of the Council of 27 April 2016, on the protection of natural
persons with regard to the processing of personal data and on the free movement
of such data, the EU general data protection regulation (GDPR) repealing
Directive 95/46/EC.

18.18   Construction. Except where the context otherwise requires, wherever
used, the use of any gender shall be applicable to all genders and the word "or"
is used in the inclusive sense (and/or).  The captions of this Agreement are for
convenience of reference only and in no way define, describe, extend or limit
the scope or intent of this Agreement or the intent of any provision contained
in this Agreement.  The term "including" as used herein means including, without
limiting the generality of any description preceding such term. The word "any"
means "any" unless otherwise clearly indicated by context.  Unless the context
requires otherwise, (i) any definition of or reference to any agreement,
instrument or other document refer to such agreement, instrument or other
document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein or therein), (ii) any reference to any Laws refer to such Laws
as from time to time enacted, repealed or amended, (iii) the words "herein",
"hereof" and "hereunder", and words of similar import, refer to this Agreement
in its entirety and not to any particular provision hereof, and (iv) all
references herein to Sections and Exhibits, unless otherwise specifically
provided, refer to the Sections and Exhibits of this Agreement. Definitions
using the singular shall be applicable also to the plural and vice-versa.
Headings are for convenience only.

18.19   Cumulative Remedies.  Except to the extent otherwise expressly set forth
in this Agreement, the rights and remedies of the Parties set forth herein or
otherwise available at law or equity are cumulative and not alternative or
exclusive.

18.20   Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. If any signature is
delivered by facsimile transmission or by e-mail delivery of a “PDF” format data
file, such signature shall create a valid and binding obligation of the Party
executing (or on whose behalf such signature is executed) with the same force
and effect as if such facsimile or “PDF” signature page were an original
thereof, provided that such facsimile or “PDF” signature is confirmed by an
original signature.

18.21   Anti-Trust Filing.

(a)        Each of the Parties shall prepare and make appropriate filings under
the HSR Act and other applicable antitrust regulations and laws in all required
jurisdictions relating to the transaction contemplated by this Agreement as soon
as reasonably practicable after the Execution Date (but not later than [***]
Business Days, unless the

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Parties mutually agree otherwise) (“HSR Filing Date”).  The Parties agree to
cooperate in the Clearance process and to furnish promptly to the FTC, the
Antitrust Division of the DOJ and any other agency or authority requiring
antitrust filing in any other jurisdiction, any information reasonably requested
by them in connection with such filings.  In the event a provision of this
Agreement needs to be deleted or substantially revised in order to obtain
Clearance of this transaction, the Parties will negotiate in good faith an
amendment to this Agreement.  Each Party shall bear its own expenses in
connection with the Parties’ cooperation under this Section 18.21 except that
COMPANY shall pay all filing fees due with respect to any filings under the HSR
Act, in Germany and in Austria.

(b)        Other than the provisions of this Section 18.21 and Section 16, the
rights and obligations of the Parties under this Agreement shall not become
effective until the Effective Date.  Upon the occurrence of the Effective Date,
all provisions of this Agreement shall become effective automatically without
the need for further action by the Parties.

(c)        In the event that Clearance is not obtained within [***] calendar
days after the HSR Filing Date, or such other date as the Parties may mutually
agree, this Agreement may be terminated by any Party on written notice to the
other Party.

(d)        Upon the terms and subject to the conditions of this Agreement, each
of the Parties shall (i) make promptly its respective filings and thereafter
make any other required submissions, under the HSR Act and any other applicable
Law with respect to this Agreement, if required, and (ii) use its best efforts
to take, or cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable Laws to
consummate and make effective this transaction, and the other transactions
contemplated by this Agreement, including using its best efforts to obtain all
permits, consents, approvals, authorizations, qualifications and orders of
Governmental Authorities as are necessary for the consummation of the
transactions contemplated by this Agreement and to fulfill the conditions to
this Agreement; provided, that the term “best efforts” as used in this Section
18.21(d) shall not require any Party to (a) sell, divest (including through a
license or a reversion of licensed or assigned rights), hold separate, transfer,
or dispose of any portion of the assets, operations, rights, product lines, or
businesses, or interests therein, of itself or any of its Affiliates (or consent
to any of the foregoing actions), (b) restrain, restrict, prohibit or limit the
ability of any Party to conduct its business or own its assets (or consent to
any of the foregoing actions) or (c) litigate or otherwise formally oppose any
determination (whether judicial or administrative in nature) by a Governmental
Authority seeking to challenge the transactions contemplated by this Agreement
or impose any of the restrictions referenced in clause (a) or (b) above.

 

[END OF CONTRACT TERMS – SIGNATURE PAGE TO FOLLOW ON NEXT PAGE]

 

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IN WITNESS WHEREOF, and intending to be legally bound hereby, the Parties have
caused this collaboration and license agreement to be executed by their
respective duly authorized officers.

 

 

MorphoSys AG

 

 

 

 

 

By:

 

 

By:

 

Name:

 

 

Name:

 

Title:

 

 

Title:

 

 

 

MorphoSys US Inc.

 

 

 

 

 

By:

 

 

By:

 

Name:

 

 

Name:

 

Title:

 

 

Title:

 

 

 

INCYTE CORPORATION

 

 

 

 

 

By:

 

 

By:

 

Name:

 

 

Name:

 

Title:

 

 

Title:

 

 

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EXHIBITS to Collaboration and License Agreement:

 

EXHIBIT 1       AMINO ACID SEQUENCE OF LICENSED ANTIBODY (MOR208)

EXHIBIT 2       MORPHOSYS BACKGROUND PATENTS

EXHIBIT 3       XENCOR BACKGROUND PATENTS

EXHIBIT 4       KNOW-HOW

EXHIBIT 5       XENCOR FOREGROUND PATENTS

EXHIBIT 6       DEVELOPMENT PLAN OUTLINE

EXHIBIT 7       JOINT DEVELOPMENT BUDGET OUTLINE

EXHIBIT 8A     MORPHOSYS TRIALS OUTLINE

EXHIBIT 8B     COMPANY TRIAL OUTLINE

EXHIBIT 8C    COMPANY JAPAN TRIAL OUTLINE

EXHIBIT 9       XMAB5871

EXHIBIT 10     PRESS RELEASE

EXHIBIT 11     DISPUTE RESOLUTION PROCEDURE

EXHIBIT 12     EXISTING PRODUCT MARKS

EXHIBIT 13     DATA PROCESSING AGREEMENT

EXHIBIT 14     CO-COMMERCIALIZATION PLAN OUTLINE

EXHIBIT 15     CO-COMMERCIALIZATION BUDGET OUTLINE

EXHIBIT 16     CONTRIBUTION TO EQUITY AND SHARE ISSUANCE

EXHIBIT 17     TRANSITION PLAN DRAFT

EXHIBIT 18     STATEMENT FOR COMPANY’S MEDIA RELEASES AND PUBLICATIONS

EXHIBIT 19     DISCLOSURE SCHEDULE

EXHIBIT 20     ADDITIONAL CAP RE OBLIGATION UNDER SECTION 14.1(B)(II)(3)(Z)

 

 

127

 

 

EXHIBITS:

 

EXHIBIT 1       AMINO ACID SEQUENCE OF LICENSED ANTIBODY (MOR208)

EXHIBIT 2       MORPHOSYS BACKGROUND PATENTS

EXHIBIT 3       XENCOR BACKGROUND PATENTS

EXHIBIT 4       KNOW-HOW

EXHIBIT 5       XENCOR FOREGROUND PATENTS

EXHIBIT 6       DEVELOPMENT PLAN OUTLINE

EXHIBIT 7       JOINT DEVELOPMENT BUDGET OUTLINE

EXHIBIT 8A     MORPHOSYS TRIALS OUTLINE

EXHIBIT 8B     COMPANY TRIAL(I) OUTLINE

EXHIBIT 8C    COMPANY JAPAN TRIAL OUTLINE

EXHIBIT 9       XMAB5871

EXHIBIT 10     PRESS RELEASE

EXHIBIT 11     DISPUTE RESOLUTION PROCEDURE

EXHIBIT 12     EXISTING PRODUCT MARKS

EXHIBIT 13     DATA PROCESSING AGREEMENT

EXHIBIT 14     CO-COMMERCIALIZATION PLAN OUTLINE

EXHIBIT 15     CO-COMMERCIALIZATION BUDGET OUTLINE

EXHIBIT 16     CONTRIBUTION TO EQUITY AND SHARE ISSUANCE

EXHIBIT 17     TRANSITION PLAN

EXHIBIT 18     STATEMENT FOR COMPANY’S MEDIA RELEASES AND PUBLICATIONS

EXHIBIT 19     DISCLOSURE SCHEDULE

EXHIBIT 20     ADDITIONAL CAP RE OBLIGATION UNDER SECTION 14.1(B)(II)(3)(Z)

 

 

 

 

EXHIBIT 1

AMINO ACID SEQUENCE OF LICENSED ANTIBODY (MOR208)

 

[***]

 

 

 

 

EXHIBIT 2

MORPHOSYS BACKGROUND PATENTS

[***]

 

 

 

 

EXHIBIT 3

XENCOR BACKGROUND PATENTS

 

[***]

 

 

 

 

EXHIBIT 4

KNOW-HOW

[***]

 

 

 

 

EXHIBIT 5

Xencor Foreground Patents

[***]

 

 

 

 

EXHIBIT 6

DEVELOPMENT PLAN OUTLINE

[***]

 

 

 

 

EXHIBIT 7

JOINT DEVELOPMENT BUDGET OUTLINE

 

[***]

 

 

 

 

EXHIBIT 8A

MORPHOSYS TRIALS OUTLINE

 

[***]

 

 

 

 

EXHIBIT 8B

COMPANY TRIAL(I) OUTLINE

 

[***]

 

 

 

 

EXHIBIT 8C

COMPANY JAPAN TRIAL OUTLINE

[***]

 

 

 

 

EXHIBIT 9

XMAB5871

 

[***]

 

 

 

EXHIBIT 10

 

PRESS RELEASE

 

Media Release

Planegg/Munich, Germany, and Wilmington, Delaware, U.S., January 12/13, 2020

 

MorphoSys and Incyte Sign Global Collaboration and License Agreement for
Tafasitamab

-        MorphoSys and Incyte to co-commercialize tafasitamab in the U.S.

-        Incyte has exclusive commercialization rights outside of the U.S.

-           MorphoSys and Incyte to host joint conference call on January 13,
2020 at 7:00am PST / 4:00pm CET

MorphoSys AG (FSE: MOR; Prime Standard Segment; MDAX & TecDAX; NASDAQ: MOR) and
Incyte Corporation (NASDAQ: INCY) announced today that the companies have
entered into a collaboration and license agreement to further develop and
commercialize MorphoSys’ proprietary anti-CD19 antibody tafasitamab (MOR208)
globally. Tafasitamab is an Fc-engineered antibody against CD19 currently in
clinical development for the treatment of B cell malignancies. MorphoSys and
Incyte will co-commercialize tafasitamab in the U.S., while Incyte has exclusive
commercialization rights outside of the U.S.

“The global partnership with Incyte is an important step towards unlocking the
full potential of tafasitamab and achieving our goal of rapidly bringing
tafasitamab to patients inside and outside of the U.S.,” said Jean-Paul Kress,
M.D., Chief Executive Officer of MorphoSys. “The combination of our strong
antibody and drug development expertise partnered with Incyte’s well-established
hematology-oncology experience and their commercial operations in key
territories has the potential to significantly broaden the tafasitamab
opportunity. We are pleased to work with Incyte to jointly improve the lives of
patients suffering from DLBCL and other devastating diseases.”

“Bringing together Incyte’s expertise and MorphoSys‘ commitment to innovation
will allow us to make tafasitamab widely available to patients with cancer, upon
approval,” said Hervé Hoppenot, CEO of Incyte. “We look forward to collaborating
closely with the team at MorphoSys and adding tafasitamab to our portfolio of
oncology candidates as part of our committment to bringing new, advanced
treatment options to patients and the clinical community around the world.”

Under the terms of the agreement, MorphoSys will receive an upfront payment of
$750 million and, in addition, Incyte will make an equity investment into
MorphoSys of $150 million in new American Depositary Shares (ADS) of MorphoSys
at a premium to the share price at signing of the agreement. Depending on the
achievement of certain developmental, regulatory and commercial milestones,
MorphoSys will be eligible to receive milestone payments amounting to up to $1.1
billion. MorphoSys will also receive tiered royalties on ex-U.S. net sales of
tafasitamab in a mid-teens to mid-twenties percentage range of net sales.

In the U.S., MorphoSys and Incyte will co-commercialize tafasitamab, with
MorphoSys leading the commercialization strategy and booking all revenues from
sales of tafasitamab. Incyte and MorphoSys will be jointly responsible for
commercialization activities in the U.S. and will share profits and losses on a
50:50 basis. Outside the U.S., Incyte will have exclusive commercialization
rights, and will lead the commercialization strategy and book all revenues from
sales of tafasitamab, paying MorphoSys royalties on ex-U.S. net sales.

 

 

 

Furthermore, the companies will share development costs associated with global
and U.S.-specific trials at a rate of 55% (Incyte) to 45% (MorphoSys); Incyte
will cover 100% of the future development costs for trials that are specific to
ex-U.S. countries.

Both parties have agreed to co-develop tafasitamab broadly in
relapsed/refractory diffuse large B cell lymphoma (r/r DLBCL), frontline DLBCL
as well as additional indications beyond DLBCL, such as follicular lymphoma
(FL), marginal zone lymphoma (MZL) and chronic lymphocytic leukemia (CLL).
Incyte will be responsible for initiating a combination study of its
investigational PI3K-delta inhibitor parsaclisib and tafasitamab in r/r B cell
malignancies. Further, Incyte will be responsible for leading any potential
registration-enabling studies in CLL and a phase 3 trial in r/r FL/MZL.
MorphoSys will continue to be responsible for its currently ongoing clinical
trials of tafasitamab in non-Hodgkin lymphoma (NHL), CLL, r/r DLBCL and
frontline DLBCL. The parties will share responsibility in starting additional
global trials, and Incyte intends to pursue development in additional
territories including Japan and China.

MorphoSys recently submitted a Biologics License Application (BLA) for
tafasitamab, in combination with lenalidomide, to the U.S. Food and Drug
Administration (FDA) for the treatment of r/r DLBCL; the FDA decision regarding
a potential approval is expected by mid-2020. The submission of a Marketing
Authorization Application (MAA) to the European Medicines Agency (EMA) in r/r
DLBCL is planned for mid-2020.

The agreement between MorphoSys and Incyte, including the equity investment, is
subject to clearance by the U.S. antitrust authorities under the
Hart-Scott-Rodino Act as well as by the German and Austrian antitrust
authorities, and will become effective as soon as these conditions have been
met.

 

MorphoSys and Incyte will host a joint conference call on January 13, 2020 at
7:00am PST/ 4:00pm CET.

Dial-in numbers for the conference call on Monday, January 13, 2020 at 7:00am
PST; 3:00pm GMT; 10:00am EST; 04:00pm CET:

For Germany:

+49 69 201 744 220

For the U.K.:

+44 203 009 2470

For the U.S.:

+1 877 423 0830

 

 

Participant PIN:

55656540#

 

Please dial in 10 minutes before the beginning of the conference.

A live webcast will be made available at www.morphosys.com and at
investor.incyte.com.

 

About Tafasitamab

Tafasitamab is an investigational humanized Fc-engineered monoclonal antibody
directed against CD19. In 2010, MorphoSys licensed exclusive worldwide rights to
develop and commercialize tafasitamab from Xencor, Inc. Tafasitamab incorporates
an XmAb® engineered Fc domain, which is intended to lead to a significant
potentiation of antibody-dependent cell-mediated cytotoxicity (ADCC) and
antibody-dependent

 

 

 

cellular phagocytosis (ADCP), thus aiming to improve a key mechanism of tumor
cell killing. MorphoSys is clinically investigating tafasitamab as a therapeutic
option in B cell malignancies in a number of ongoing combination trials. An
open-label phase 2 combination trial (L-MIND study) is investigating the safety
and efficacy of tafasitamab in combination with lenalidomide in patients with
relapsed/refractory DLBCL who are not eligible for high-dose chemotherapy (HDC)
and autologous stem cell transplantation (ASCT). Based on interim data from
L-MIND, in October 2017 the U.S. FDA granted Breakthrough Therapy Designation
for tafasitamab plus lenalidomide in this patient population. Re-MIND, the
real-world data lenalidomide alone matched control cohort met its primary
endpoint in October 2019, demonstrating clinical superiority of the
tafasitamab/lenalidomide combination compared to lenalidomide alone. The ongoing
phase 3 study B-MIND assesses the combination of tafasitamab and bendamustine
versus rituximab and bendamustine in r/r DLBCL. In addition, tafasitamab is
currently being investigated in patients with relapsed/refractory CLL/SLL after
discontinuation of a prior Bruton tyrosine kinase (BTK) inhibitor therapy (e.g.
ibrutinib) in combination with idelalisib or venetoclax.

 

About MorphoSys

MorphoSys (FSE & NASDAQ: MOR) is a clinical-stage biopharmaceutical company
dedicated to the discovery, development and commercialization of exceptional,
innovative therapies for patients suffering from serious diseases. The focus is
on cancer. Based on its leading expertise in antibody, protein and peptide
technologies, MorphoSys, together with its partners, has developed and
contributed to the development of more than 100 product candidates, of which 28
are currently in clinical development. In 2017, Tremfya®, marketed by Janssen
for the treatment of plaque psoriasis, became the first drug based on
MorphoSys’s antibody technology to receive regulatory approval. The Company’s
most advanced proprietary product candidate, tafasitamab (MOR208), has been
granted U.S. FDA breakthrough therapy designation for the treatment of patients
with relapsed/refractory diffuse large B-cell lymphoma (DLBCL). Headquartered
near Munich, Germany, the MorphoSys group, including the fully owned U.S.
subsidiary MorphoSys US Inc., has approximately 405 employees. More information
at https://www.morphosys.com.

 

HuCAL®, HuCAL GOLD®, HuCAL PLATINUM®, CysDisplay®, RapMAT®, arYla®, Ylanthia®,
100 billion high potentials®, Slonomics®, Lanthio Pharma®, LanthioPep® and
ENFORCERTM are trademarks of the MorphoSys Group. Tremfya® is a trademark of
Janssen Biotech, Inc. XmAb® is a trademark of Xencor, Inc.

 

About Parsaclisib

Parsaclisib (INCB50465) is a highly selective and potent inhibitor of the
phosphatidylinositol 3-kinase delta (PI3Kδ) isoform. PI3Kδ is an important
target implicated in malignant B-cell growth, survival and proliferation, and
its inhibition has potential as a mechanism to treat hematologic malignancies
and a variety of B-cell mediated and antibody-driven diseases beyond oncology.
The CITADEL (Clinical Investigation of TArgeted PI3K-DELta Inhibition in
Lymphomas) clinical trial program is currently evaluating parsaclisib in several
ongoing Phase 2 trials as a treatment for non-Hodgkin lymphomas (follicular,
marginal zone and mantle cell). Parsaclisib is also being studied for patients
with autoimmune hemolytic anemia and as part of a combination therapy for
patients with myeloproliferative neoplasms and non-Hodgkin lymphomas including
diffuse large B-cell lymphoma.

 

About Incyte Corporation

Incyte is a Wilmington, Delaware-based, global biopharmaceutical company focused
on finding solutions for serious unmet medical needs through the discovery,
development and commercialization of proprietary therapeutics. For additional
information on Incyte, please visit Incyte.com and follow @Incyte.

 

MorphoSys forward looking statements

This communication contains certain forward-looking statements concerning the
MorphoSys group of companies, including the expectations regarding the licensing
agreement for tafasitamab, the further clinical development of tafasitamab,
interactions with regulatory authorities and expectations regarding regulatory
filings and possible approvals for tafasitamab as well as the potential future
commercialization of tafasitamab. The forward-looking statements contained
herein represent the judgment of MorphoSys as of the date of this release and
involve known and unknown risks and uncertainties, which might cause the actual
results, financial condition and liquidity, performance or achievements of
MorphoSys, or industry

 

 

 

results, to be materially different from any historic or future results,
financial conditions and liquidity, performance or achievements expressed or
implied by such forward-looking statements. In addition, even if MorphoSys'
results, performance, financial condition and liquidity, and the development of
the industry in which it operates are consistent with such forward-looking
statements, they may not be predictive of results or developments in future
periods. Among the factors that may result in differences are MorphoSys'
expectations regarding the licensing agreement for tafasitamab, the further
clinical development of tafasitamab, interactions with regulatory authorities
and expectations regarding regulatory filings and possible approvals for
tafasitamab as well as the potential future commercialization of tafasitamab,
MorphoSys' reliance on collaborations with third parties, estimating the
commercial potential of its development programs and other risks indicated in
the risk factors included in MorphoSys’s Annual Report on Form 20-F and other
filings with the US Securities and Exchange Commission. Given these
uncertainties, the reader is advised not to place any undue reliance on such
forward-looking statements. These forward-looking statements speak only as of
the date of publication of this document. MorphoSys expressly disclaims any
obligation to update any such forward-looking statements in this document to
reflect any change in its expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is based or that
may affect the likelihood that actual results will differ from those set forth
in the forward-looking statements, unless specifically required by law or
regulation.

 

Incyte forward looking statements

Except for the historical information set forth herein, the matters set forth in
this press release contain predictions, estimates and other forward-looking
statements, including without limitation statements regarding: whether the
planned transaction will close within the expected timeframe or ever; whether
tafasitamab will be approved for use in humans anywhere or will be
commercialized anywhere successfully or at all; whether the MAA for tafacitinib
will be submitted within the expected timeframe or at all; whether tafasitamab
or parsaclisib will be effective in the treatment of the indications discussed
in this press release; whether this collaboration will broaden the potential
market for tafasitamab; and whether and when any of the milestone payments or
royalties under this collaboration will ever be paid by Incyte. These
forward-looking statements are subject to risks and uncertainties that may cause
actual results to differ materially, including unanticipated developments in and
risks related to: obtaining regulatory approval for this planned collaboration;
research and development efforts related to the collaboration programs; the
possibility that results of clinical trials may be unsuccessful or insufficient
to meet applicable regulatory standards or warrant continued development; other
market or economic factors, including other scientific developments;
unanticipated delays; the effects of market competition; risks associated with
relationships between collaboration partners; the impact of governmental actions
regarding pricing, importation and reimbursement for pharmaceuticals; and such
other risks detailed from time to time in each company’s reports filed with the
Securities and Exchange Commission, including Incyte’s quarterly report on Form
10-Q for the quarter ended September 30, 2019 and MorphoSys’s Annual Report on
Form 20-F for the fiscal year ended December 31, 2018. Each party disclaims any
intent or obligation to update these forward-looking statements.

 

 

 

 

For more information, please contact:

MorphoSys AG

 

Dr. Sarah Fakih

Vice President Corporate Communications & IR
Tel: +49 (0) 89 / 899 27-26663

Sarah.Fakih@morphosys.com

 

 

 

Dr. Julia Neugebauer

Director Corporate Communications & IR
Tel: +49 (0) 89 / 899 27-179

Julia.Neugebauer@morphosys.com

 

 

 

Dr. Verena Kupas

Associate Director Corporate Communications & IR
Tel: +49 (0) 89 / 899 27-26814

Verena.Kupas@morphosys.com

 

 

 

Incyte Corporation

Catalina Loveman

Executive Director, Public Affairs

Tel: +1 302 498 6171

cloveman@incyte.com

 

Dr. Michael Booth

Division Vice President, Investor Relations & Corporate Responsibility

Tel: +1 302 498 5914

mbooth@incyte.com

 

 

 

 

EXHIBIT 11

 

Dispute Resolution Procedure

 

(a)        Any Dispute shall be brought to the attention of a senior management
representative of each Party, who shall attempt to resolve the Dispute in good
faith. If, however, the senior management representatives of the Parties are
unable to resolve a Dispute, the CEOs or presidents (or their respective
designee, provided the designee has authority to resolve the Dispute) of the
Parties shall on the request of any of the Parties attempt in good faith to
promptly resolve such Dispute within [***] calendar days. The limitation period
with respect to claims relating to a dispute submitted to CEOs or presidents as
provided for above is suspended by submission of the dispute until [***] after
lapse of the aforementioned period of time.

(b)         If the CEOs or presidents or permitted designees are unable to
resolve such Dispute within such period, either Party may submit the Dispute to
final and binding arbitration in accordance with the [***]; provided, however,
any dispute regarding the validity, scope or enforceability of patents licensed
under this Agreement shall be submitted to a court of competent jurisdiction.
The arbitration shall be conducted in the English language by [***] appointed in
accordance with the [***], with the exception that the sole arbitrator or the
President shall be nominated by the Parties. The place of arbitration is [***].

(c)         The costs of the arbitration as well as all reasonable out-of-pocket
costs (including, without limitation, reasonable attorneys' fees and reasonable
travel expenses) shall be borne [***].

(d)         Except as may be required by applicable Laws, neither Party, nor any
Affiliate thereof, nor an arbitrator may disclose the existence, content or
result of any arbitration held with respect to this Agreement without the prior
written consent of both Parties.  The Parties mutually agree that all
information, documents, testimony, exhibits and other written, recorded, graphic
or other information produced, exchanged or used in any way in any arbitration
proceeding under this Section are designated as confidential and shall not be
disclosed to anyone other than the Parties, their attorneys and advisors, and
the arbitrators.  Furthermore, any and all documents, materials or other
information designated as confidential that are produced to or received by the
other Party or any Affiliate as part of the arbitration proceeding shall be
returned to the Party that produced or provided such materials within [***]
calendar days of the conclusion of the arbitration, or such materials shall be
certified in writing to have been destroyed within [***] calendar days of the
conclusion of the arbitration; provided, however, that the Parties and their
counsel may retain copies of briefs and other papers filed with the arbitrators
that contain or constitute such confidential material, so long as such briefs
and other papers are maintained according to the confidentiality provisions of
this Agreement.

(e)         By agreeing to arbitration neither Party intends to deprive any
competent court having jurisdiction to issue a pre-arbitral injunction,
pre-arbitral attachment or other order in aid of the arbitration proceedings and
the enforcement of any award or injunction in aid of the arbitration
proceedings.  Without prejudice to such provisional remedies in aid of
arbitration as may be available under the jurisdiction of a national court, the
arbitration panel shall have full authority to grant provisional remedies and to
award damages for failure of any Party to respect the arbitration panel’s order
to that effect.

(f)          The arbitral tribunal shall [***].

(g)         If a Party fails to make the payment of any advance on costs fixed
by the [***], and if the other Party makes the payment in lieu of the defaulting
Party, the arbitral tribunal may, at the request of the paying Party, issue a
separate award for reimbursement of the payment. Alternatively, the paying Party
may ask the arbitral tribunal to order interim or conservatory measures, or it
may, at its discretion, apply the competent state courts.

 

 

 

 

EXHIBIT 12

EXISTING PRODUCT MARKS

 

[***]

 

 

 

 

EXHIBIT 13

 

DATA PROCESSING AGREEMENT

 

(JOINT CONTROLLER VERSION)

 

This Data Processing Agreement (“DPA”) is effective on <<Insert Effective Date>>
(“DPA Effective Date”) and is between MorphoSys AG (“MorphoSys”), acting on its
own behalf and as an agent for each MorphoSys Affiliate and <<Insert COMPANY
Name >> (“COMPANY”) as an agent for each COMPANY Affiliate, each a “Party” and
together, “Parties”.

 

WHEREAS, the Parties entered into a separate collaboration and license agreement
(the “Agreement”) effective as of <<Insert Agreement Effective Date>> for the
further development and commercialization of tafasitamab worldwide.

 

WHEREAS, this DPA is being entered into between the Parties to establish the
data protection duties and obligations between them regarding Shared Personal
Data (defined below), where the Parties are acting as Joint Controllers (defined
below) and this DPA forms part of, and should be read in conjunction with, the
Agreement.

 

NOW THEREFORE, in consideration of the mutual obligations set out herein, the
Parties hereby agree to the terms and conditions as follows:

 

1.            DEFINITIONS.  IN THIS DPA, THE FOLLOWING TERMS SHALL HAVE THE
MEANINGS SET OUT BELOW.

 

 

 

"Agreement" means any existing agreement entered into between the Parties
pursuant to which collaboration activities involve Shared Personal Data;

“Affiliate" means an entity that owns or controls, is owned or controlled by or
is or under common control or ownership, where control is defined as the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of an entity, whether through ownership
of voting securities, by contract or otherwise;

"Controller",  "Data Subject", “Joint Controller”, "Personal Data”,
"Process/Processing", "Processor", and "Special Categories of Personal Data"
shall have the same meaning as in the Data Protection Laws (and its derivatives)
as may apply;

"Data Protection Laws" means the EU General Data Protection Regulation 2016/679
(“GDPR”) (and its derivatives), Directive 2002/58/EC (as transposed into
domestic legislation of each European Union Member State or Member State of the
EEA)  and any other applicable data protection laws, regulations, codes of
practice, codes of conduct, guidance issued by any relevant Supervisory
Authority in the relevant jurisdiction relating to the protection of natural
persons with regard to Personal Data, privacy or Applicable Law  amending,
replacing or superseding any of the foregoing  and in particular,
following  exit by the United Kingdom from the European Union, or, and to the
extent applicable, the data protection or privacy laws of any other country
including, without limitation, Switzerland;

"EEA" means the European Economic Area;

"Permitted Purposes" the purposes for which Processing of Shared Personal Data
is permitted, as set out in Annex 1 to this DPA;

"Personal Data Breach" means a breach of security leading to the accidental or
unlawful destruction, loss, alteration, unauthorised disclosure of, or access
to, Shared Personal Data transmitted, stored or otherwise Processed;

“Shared Personal Data” means Personal Data that is provided by a Party and
Processed by the other Party or any of each Party’s Affiliates whereby each
Party is acting as a Joint Controller of the Personal Data.

"Standard Contractual Clauses" means the standard contractual clauses for the
transfer of personal data to controllers established in third countries which do
not ensure an adequate level of protection as set out in Commission Decision
C(2004)5721; and

"Supervisory Authority" means (a) an independent public authority which is
established by a European Union Member State or member of the EEA pursuant to
Article 51 GDPR; and (b) any similar regulatory authority responsible for the
enforcement of Data Protection Laws.

2.            ROLES OF THE PARTIES.  IN THE COURSE OF THE PARTIES’ PERFORMANCE
OF WORK UNDER THE AGREEMENT, THE PARTIES ACKNOWLEDGE THAT EACH PROCESSES SHARED
PERSONAL DATA AS JOINT CONTROLLERS.  ACCORDINGLY, EACH PARTY HEREBY UNDERTAKES
TO COMPLY WITH THE PROVISIONS SET OUT IN THIS DPA WITH RESPECT TO ITS PROCESSING
OF SHARED PERSONAL DATA.

3.            COMPLIANCE WITH LAW.  EACH OF THE PARTIES SHALL COMPLY WITH ITS
RESPECTIVE OBLIGATIONS UNDER APPLICABLE DATA PROTECTION LAWS IN RELATION TO ITS
PROCESSING OF SHARED PERSONAL DATA PURSUANT TO THE AGREEMENT (INCLUDING THIS
DPA).

4.            GENERAL OBLIGATIONS.

4.1        In respect of its Processing of Shared Personal Data as Joint
Controllers, each Party shall undertake to:

4.1.1           not Process Shared Personal Data in a way that is incompatible
with the Permitted Purposes;

 

 

 

4.1.2            not Process Shared Personal Data for longer than is necessary
to carry out the Permitted Purposes (other than to comply with a requirement of
EU, Member State or UK applicable laws to which the Parties are subject);

4.1.3           take all measures required pursuant to Article 32 of the GDPR,
and, where the Personal Data is Processed in a jurisdiction other than in the
EEA, shall comply with the obligations set out in the relevant schedule, to
ensure the security of Processing of Shared Personal Data, including (where
relevant) each of the technical and organisational measures listed in Annex 3;

4.1.4           ensure that persons authorized to process Shared Personal Data
have undertaken appropriate training in relation to Data Protection Laws;
committed themselves to confidentiality or are under an appropriate statutory
obligation of confidentiality;

4.1.5           ensure that, in relation to any Processors appointed by a Party:

4.1.5.1        appropriate, documented due diligence is carried out on such
Processor(s) prior to its appointment to ensure that, to the reasonable
satisfaction of the respective Party, it is able to comply with (and that it
will be in a position to ensure the the Party’s compliance with) all relevant
provisions of the Data Protection Laws; and

4.1.5.2        the Party (or such Party’s Affiliate, provided that the Party has
express third party rights) has entered into a contract with the Processor which
incorporates all necessary provisions of the Data Protection Laws.

4.2        Each Party shall co-operate with the other, to the extent reasonably
requested, in relation to:

(i)          any requests from Data Subjects to exercise rights under applicable
Data Protection Laws;

(ii)         any other communication from a Data Subject concerning the
Processing of Shared Personal Data; and

(iii)        any communication from a Supervisory Authority concerning either
the Processing of Shared Personal Data, or compliance with the Data Protection
Laws in relation to the Shared Personal Data.

5.            PERSONAL DATA BREACH.

5.1        Each Party shall notify the other and the other Party’s Affiliate (as
applicable) as set forth in Section 9.3 below without undue delay upon becoming
aware of or reasonably suspecting a Personal Data Breach.

5.2        In the event of a Personal Data Breach, the Party and its
Affiliate(s) shall not inform any third party without first obtaining the prior
written consent of the other Party, and each Party’s relevant Affiliate (if
applicable), unless notification is required by EU or Member State law to which
the Party or its Affiliate is subject, in which case the Party or its Affiliate
shall to the extent permitted by such law inform the other Party or its
Affiliate(s) of that legal requirement, provide a copy of the proposed
notification and consider any comments made by the Party or its Affiliate(s)
before notifying the Personal Data Breach.

5.3        Each Party shall co-operate with the other, to the extent reasonably
requested, in relation to any notifications to Supervisory Authorities or to
Data Subjects, which are required following a Personal Data Breach.

5.4        The Parties acknowledge that they are Joint Controllers regarding the
determination of the purposes and means of Processing of Shared Personal Data
under the Agreement.  This

 

 

 

DPA constitutes an arrangement setting out the respective responsibilities of
the Parties, as Joint Controllers, for compliance with the obligations under
applicable Data Protection Laws.

6.            JOINT CONTROLLERS’ OBLIGATIONS.

6.1        As Joint Controllers, the Parties agree that they shall:

6.1.1           Each maintain a register of their processing activities in the
context of the services provided or received under the Agreement.  The register
shall contain at least the required information under the applicable Data
Protection Laws;

6.1.2           Co-operate to ensure that Data Subjects are provided with all
information regarding the Processing of the Shared Personal Data to which they
are entitled under applicable Data Protection Laws;

6.1.3           Except where an express request is made by a Data Subject to
liaise directly with the other Party, be responsible for responding to all
requests from Data Subjects to exercise rights under applicable Data Protection
Laws (in relation to which the Party shall provide the other Party with
reasonable assistance upon request). Notwithstanding the foregoing, a Party
shall notify the other Party immediately upon receiving any such request always
in accordance with Section 9.3 below, and shall take due account of the other
Party’s views when responding to a request on behalf of the Parties;

6.1.4           Each its own retention periods in respect of the Shared Personal
Data which it Processes. The Parties shall not Process Shared Personal Data for
longer than is necessary to carry out the Permitted Purposes set out in Annex 1;

6.1.5           Except where the Data Protection Laws or other applicable laws
provide otherwise, be jointly and severally liable towards Data Subjects for all
damages they have suffered in the framework of the Processing of Shared Personal
Data under the Agreement. In the event that one of the Parties is addressed or
subpoenaed in that regard that Party shall immediately inform the other Party
thereof in accordance with Section 9.3 below.

7.            ASSURANCE.  IN ADDITION TO ANY AUDIT RIGHTS GRANTED PURSUANT TO
THE AGREEMENT, A PARTY SHALL MAKE AVAILABLE TO THE OTHER PARTY ON REQUEST ALL
INFORMATION NECESSARY TO DEMONSTRATE COMPLIANCE WITH THIS DPA AND THE APPLICABLE
DATA PROTECTION LAWS.

8.          INTERNATIONAL TRANSFERS

8.1        A Party shall not (and shall ensure that each appointed Processor
shall not) transfer Shared Personal Data outside of the EEA, Switzerland, or any
other jurisdiction except in accordance with the applicable Data Protection
Laws.

8.2        Without prejudice to the foregoing, each Party consents to the
Processing of Shared Personal Data by the other Party in accordance with the
following when Personal Data is transferred out of the EEA or Switzerland

 

 

 

8.2.1 Processing of Shared Personal Data by a Party or its Processor(s) in a
country which is considered an adequate country by the European Commission; or

8.2.2 Processing of Shared Personal Data by a Party or its Processor(s) in third
countries (countries not recognized as adequate per the European Commission)
provided that: (a) a Party enters into Standard Contractual Clauses and the
Standard Contractual Clauses shall come into effect on the commencement of an
International Transfer among any Parties to the Standard Contractual Clauses; or

8.2.3 A Party or its Processor(s) is Privacy Shield certified and maintain such
accreditation.  In the event a Party or its Processor(s) fails to maintain such
accreditation, it shall notify the other party immediately and the Parties agree
that they will enter into Standard Contractual Clauses or terminate Services and
this DPA.

<<PLACEHOLDER: Insert transfer language for jurisdictions outside of the
EEA/Switzerland as applicable (Annex 4).>>

9.          TERMINATION

9.1        Subject to Section 8.2, the Parties agree that this DPA shall
terminate automatically upon termination of the Agreement.

9.2        Any obligation imposed on either Party under this DPA in relation to
the Processing of Shared Personal Data shall survive any termination or
expiration of this DPA.

10.        MISCELLANEOUS

10.1      Governing Law.  This DPA shall be governed by the governing law of the
Agreement.

10.2      Entire Agreement; Order of Precedence.  This DPA, together with all
Annexes attached hereto and incorporated herein by reference, constitutes the
final, complete and exclusive agreement of the Parties with respect to the
subject matter hereof and supersedes all prior understanding and agreements
relating to its subject matter.  With regard to the subject matter of this DPA,
in the event of inconsistencies between the provisions of this DPA and any other
agreements (including but not limited to the Agreement) between the Parties, the
provisions of this DPA shall prevail with regard to the Parties’ data protection
obligations for Shared Personal Data of a Data Subject from a European Union
Member State or member state of the EEA.  In the event of any conflict or
inconsistency between this DPA and the Standard Contractual Clauses (if entered
into), the Standard Contractual Clauses shall prevail.

10.3      Notices.  Any general notice to be given to a Party under or in
connection with this DPA shall be in writing and shall be delivered (i)
personally; (ii) by a globally recognized overnight courier; or (iii) by
certified mail, postage prepaid, return receipt requested, or its
equivalent.  Such notices shall be deemed given upon receipt.

 

 

 

If any such notice is sent via Section 10.3, any such notice shall be sent to
the Party at the applicable address set forth below or to such other address as
to which the Party has given written notice thereof.

In the event of notices to be provided by any Party where time is of the essence
in accordance with this DPA as a result of: (a) Personal Data Breach; (b) Data
Subject request; or (c) inquiry/communication from a Supervisory Authority, such
notices to be given by a Party to the other Party shall be emailed to the email
address set forth below.

 

If to COMPANY:

General Notices:

Global Privacy Officer

1801 Augustine Cut-off

Wilmington, Delaware 19803

United States

 

In the Event of Personal Data Breach:

cybersecurity@COMPANY.com

 

In the Event of Data Subject Rights Request/Inquiry from a Supervisory
Authority:

privacy@COMPANY.com

If to MorphoSys AG:

General Notices:

Data Protection Officer

Semmelweisstrasse 7

82152 Planegg

Germany

 

In the Event of Personal Data Breach:

datenschutz@morphosy.com

 

In the Event of Data Subject Rights Request/Inquiry from a Supervisory
Authority:

datenschutz@morphosy.com

 

10.4      Costs of Compliance; Modification. Compliance by either Party with the
provisions of this DPA or any amendments hereto will be at no additional cost to
the other Party.  If either Party wishes to vary any terms to this DPA or any
Annexes attached hereto, no variation shall be valid or effective unless it is
in writing and is duly signed or executed by each Party by their respective
authorized representatives at no additional cost to the other Party.

10.5      Changes in Data Protection Laws.  The Parties may notify each other in
writing from time to time of any variations to this DPA which are required as a
result of a change in Data Protection Laws including without limitation to the
generality of the foregoing, any variations which are: (i) required as a result
of any changes to United Kingdom Data Protection Laws following any exit of the
United Kingdom from the European Union; or (ii) required to take account of
any  new data transfer mechanisms for the purposes of Section 7.   Any such
variations shall take effect on the date falling thirty (30) calendar days after
the date such written notice is received by either Party.

10.6      Severance.  Should any provision of this DPA be invalid or
unenforceable, then the remainder of this DPA shall remain valid and in force.
The invalid or unenforceable provision shall be either (i) amended as necessary
to ensure its validity and enforceability, while preserving the Parties’
intentions as closely as possible or, if this is not possible, (ii) construed in
a manner as if the invalid or unenforceable part had never been contained
therein.

 

 

 

10.7      Third party rights.  Either Party’s Affiliate(s) may enforce any term
of this DPA which is expressly or implicitly intended to benefit it.

IN WITNESS WHEREOF, the Parties hereto, by their authorized representatives,
have executed this DPA, effective as of the Effective Date first written above.

 

<<Insert COMPANY Name>>

 

MorphoSys AG

 

 

 

 

 

 

By:

 

 

By:

 

Name:

 

 

Name:

 

Title:

 

 

Title:

 

Date:

 

 

Date:

 

 

 

 

 

 

 

 

 

 

 

 

 

MorphoSys AG

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

Date:

 

 

 

 

 

 

ANNEX 1: PERMITTED PURPOSES & DETAILS OF PROCESSING SHARED PERSONAL DATA

 

A)   Either Party may jointly Process the Shared Personal Data for the following
purposes (the "Permitted Purposes")

     Personal Data may be Processed by the Parties in furtherance of
co-development activities established under the terms of the Agreement.

B)   This section includes certain Details of the Processing of Shared Personal
Data as required by Article 28(3) GDPR.

(1) Subject Matter and Duration of the Processing of Shared Personal Data:

The subject matter and duration of the Processing of the Shared Personal Data
are set out in this DPA.

(2) The Nature and Purpose of the Processing of Shared Personal Data:

The Parties are performing their respective activities under the terms of the
Agreement, which involve the Processing of Shared Personal Data. The scope of
the activities to be performed are set out in the Agreement, and the Shared
Personal Data will be Processed by the Parties to in accordance with the terms
of this DPA.

(3) The Types of Shared Personal Data to be Processed:

     Basic identification data (e.g. name, address, email, telephone, date of
birth etc.)

     Medical/health data (e.g.  blood type, urine test, x-rays, physical exams,
known conditions, medical survey or questionnaire results, results of other
procedures (specify) etc.)

     Genetic data (e.g. chromosomal, deoxyribonucleic acid (DNA) or ribonucleic
acid (RNA) data, other elements enabling equivalent information to be obtained
etc.)

     Biometric data (e.g. iris or retina scan, facial image, fingerprint, full
body scan, dactyloscopic data)

     Financial data (e.g. bank account number)

     Location data

     Other sensitive data (e.g. race or ethnic origin)

(4) The categories of Data Subject to whom the Parties’ Personal Data relates:

     Pharmaceutical Trial Participants

     Trial Doctors and Medical Professionals

     Employees, agents, contractors, representatives, vendors of both COMPANY
and MorphoSys

(5) The Obligations and Rights of the Parties and their respective Affiliates:

The obligations and rights of the Parties and their respective Affiliates are
set out in this DPA.

 

 

 

 

(6) The Processing Operations Carried Out in Relation to the Shared Personal
Data:

The following Processing operations carried out in relation to the Shared
Personal Data, for the Permitted Purposes of , the scope of which are set out in
this Agreement are as follows:

 

     Collecting and recording the data;

     Hosting the data;

     Organizing the data;

     Adapting or altering the data;

     Consulting or retrieving the data;

     Disclosing or transferring the data

 

 

 

 

ANNEX 2: STANDARD CONTRACTUAL CLAUSES

Between

 

 

..............................................................

 

 

(name)

 

 

..............................................................

 

 

(address and country of establishment)

 

 

(hereinafter the data exporter)

 

 

 

 

 

 

and

 

 

 

 

 

 

 

..............................................................

 

(name)

 

 

..............................................................

 

 

(address and country of establishment)

 

 

(hereinafter data importer)

 

 

 

 

 

 

each a party; together the parties.

 

1. DEFINITIONS

 

    For the purposes of the clauses:

 

(a)  personal data,  special categories of data/sensitive data,
 process/processing,  controller,  processor,  data subject and supervisory
authority/authority shall have the same meaning as in Directive 95/46/EC of 24
October 1995 (whereby the authority shall mean the competent data protection
authority in the territory in which the data exporter is established);

 

(b)  the data exporter shall mean the controller who transfers the personal
data;

 

(c)  the data importer shall mean the controller who agrees to receive from the
data exporter personal data for further processing in accordance with the terms
of these clauses and who is not subject to a third country’s system ensuring
adequate protection;

 

(d)  clauses shall mean these contractual clauses, which are a free-standing
document that does not incorporate commercial business terms established by the
parties under separate commercial arrangements.

 

The details of the transfer (as well as the personal data covered) are specified
in Annex B, which forms an integral part of the clauses.

 

2.  OBLIGATIONS OF THE DATA EXPORTER

 

    The data exporter warrants and undertakes that:

 

 

 

 

(a)  The personal data have been collected, processed and transferred in
accordance with the laws applicable to the data exporter.

 

(b)  It has used reasonable efforts to determine that the data importer is able
to satisfy its legal obligations under these clauses.

 

(c)  It will provide the data importer, when so requested, with copies of
relevant data protection laws or references to them (where relevant, and not
including legal advice) of the country in which the data exporter is
established.

 

(d)  It will respond to enquiries from data subjects and the authority
concerning processing of the personal data by the data importer, unless the
parties have agreed that the data importer will so respond, in which case the
data exporter will still respond to the extent reasonably possible and with the
information reasonably available to it if the data importer is unwilling or
unable to respond. Responses will be made within a reasonable time.

 

(e)  It will make available, upon request, a copy of the clauses to data
subjects who are third party beneficiaries under Clause 3, unless the clauses
contain confidential information, in which case it may remove such information.
Where information is removed, the data exporter shall inform data subjects in
writing of the reason for removal and of their right to draw the removal to the
attention of the authority. However, the data exporter shall abide by a decision
of the authority regarding access to the full text of the clauses by data
subjects, as long as data subjects have agreed to respect the confidentiality of
the confidential information removed. The data exporter shall also provide a
copy of the clauses to the authority where required.

 

3.  OBLIGATIONS OF THE DATA IMPORTER

 

    The data importer warrants and undertakes that:

 

(a)  It will have in place appropriate technical and organisational measures to
protect the personal data against accidental or unlawful destruction or
accidental loss, alteration, unauthorised disclosure or access, and which
provide a level of security appropriate to the risk represented by the
processing and the nature of the data to be protected.

 

(b)  It will have in place procedures so that any third party it authorises to
have access to the personal data, including processors, will respect and
maintain the confidentiality and security of the personal data. Any person
acting under the authority of the data importer, including a data processor,
shall be obligated to process the personal data only on instructions from the
data importer. This provision does not apply to persons authorised or required
by law or regulation to have access to the personal data.

 

(c)  It has no reason to believe, at the time of entering into these clauses, in
the existence of any local laws that would have a substantial adverse effect on
the guarantees provided for under these clauses, and it will inform the data
exporter (which will pass such notification on to the authority where required)
if it becomes aware of any such laws.

 

(d)  It will process the personal data for purposes described in Annex B, and
has the legal authority to give the warranties and fulfil the undertakings set
out in these clauses.

 

(e)  It will identify to the data exporter a contact point within its
organisation authorised to respond to enquiries concerning processing of the
personal data, and will cooperate in good faith with the data exporter, the data
subject and the authority concerning all such enquiries within a reasonable
time. In case of legal dissolution of the data exporter, or if the parties have
so agreed, the data importer will assume responsibility for compliance with the
provisions of Clause 1(e).

 

(f)  At the request of the data exporter, it will provide the data exporter with
evidence of financial resources sufficient to fulfil its responsibilities under
Clause 3 (which may include insurance coverage).

 

(g)  Upon reasonable request of the data exporter, it will submit its data
processing facilities, data files and documentation needed for processing to
reviewing, auditing and/or certifying by the data exporter (or any independent
or impartial inspection agents or auditors, selected by the data exporter and
not

 

 

 

reasonably objected to by the data importer) to ascertain compliance with the
warranties and undertakings in these clauses, with reasonable notice and during
regular business hours. The request will be subject to any necessary consent or
approval from a regulatory or supervisory authority within the country of the
data importer, which consent or approval the data importer will attempt to
obtain in a timely fashion.

 

(h)  It will process the personal data, at its option, in accordance with:

 

(i)  the data protection laws of the country in which the data exporter is
established, or

 

(ii)  the relevant provisions of any Commission decision pursuant to Article
25(6) of Directive 95/46/EC, where the data importer complies with the relevant
provisions of such an authorisation or decision and is based in a country to
which such an authorisation or decision pertains, but is not covered by such
authorisation or decision for the purposes of the transfer(s) of the personal
data, or

 

(iii)  the data processing principles set forth in Annex A.

 

Data importer to indicate which option it selects:

 

 

(iii)

 

 

Initials of data importer:

 

 

.............................

 

 

 

(i)  It will not disclose or transfer the personal data to a third party data
controller located outside the European Economic Area (EEA) unless it notifies
the data exporter about the transfer and

 

(i)  the third party data controller processes the personal data in accordance
with a Commission decision finding that a third country provides adequate
protection, or

 

(ii)  the third party data controller becomes a signatory to these clauses or
another data transfer agreement approved by a competent authority in the EU, or

 

(iii)  data subjects have been given the opportunity to object, after having
been informed of the purposes of the transfer, the categories of recipients and
the fact that the countries to which data is exported may have different data
protection standards, or

 

(iv)  with regard to onward transfers of sensitive data, data subjects have
given their unambiguous consent to the onward transfer

 

4.  LIABILITY AND THIRD PARTY RIGHTS

 

(a)  Each party shall be liable to the other parties for damages it causes by
any breach of these clauses. Liability as between the parties is limited to
actual damage suffered. Punitive damages (i.e. damages intended to punish a
party for its outrageous conduct) are specifically excluded. Each party shall be
liable to data subjects for damages it causes by any breach of third party
rights under these clauses. This does not affect the liability of the data
exporter under its data protection law.

 

(b)  The parties agree that a data subject shall have the right to enforce as a
third party beneficiary this clause and clauses Clause 1(b),  Clause 1(d),
 Clause 1(e),  Clause 2(a),  Clause 2(c),  Clause 2(d),  Clause 2(e),  Clause
2(h),  Clause 2(i),  Clause 3(a),  Clause 5,  Clause 6(d)and Clause 7 against
the data importer or the data exporter, for their respective breach of their
contractual obligations, with regard to his personal data, and accept
jurisdiction for this purpose in the data exporter’s country of establishment.
In cases involving allegations of breach by the data importer, the data subject
must first request the data exporter

 

 

 

to take appropriate action to enforce his rights against the data importer; if
the data exporter does not take such action within a reasonable period (which
under normal circumstances would be one month), the data subject may then
enforce his rights against the data importer directly. A data subject is
entitled to proceed directly against a data exporter that has failed to use
reasonable efforts to determine that the data importer is able to satisfy its
legal obligations under these clauses (the data exporter shall have the burden
to prove that it took reasonable efforts).

 

5.  LAW APPLICABLE TO THE CLAUSES

 

    These clauses shall be governed by the law of the country in which the data
exporter is established, with the exception of the laws and regulations relating
to processing of the personal data by the data importer under Clause 2(h) which
shall apply only if so selected by the data importer under that clause.

 

6.  RESOLUTION OF DISPUTES WITH DATA SUBJECTS OR THE AUTHORITY

 

(a)  In the event of a dispute or claim brought by a data subject or the
authority concerning the processing of the personal data against either or both
of the parties, the parties will inform each other about any such disputes or
claims, and will cooperate with a view to settling them amicably in a timely
fashion.

 

(b)  The parties agree to respond to any generally available non-binding
mediation procedure initiated by a data subject or by the authority. If they do
participate in the proceedings, the parties may elect to do so remotely (such as
by telephone or other electronic means). The parties also agree to consider
participating in any other arbitration, mediation or other dispute resolution
proceedings developed for data protection disputes.

 

(c)  Each party shall abide by a decision of a competent court of the data
exporter’s country of establishment or of the authority which is final and
against which no further appeal is possible.

 

7.  TERMINATION

 

(a)  In the event that the data importer is in breach of its obligations under
these clauses, then the data exporter may temporarily suspend the transfer of
personal data to the data importer until the breach is repaired or the contract
is terminated.

 

(b)  In the event that:

 

(i)  the transfer of personal data to the data importer has been temporarily
suspended by the data exporter for longer than one month pursuant to Clause
6(a);

 

(ii)  compliance by the data importer with these clauses would put it in breach
of its legal or regulatory obligations in the country of import;

 

(iii)  the data importer is in substantial or persistent breach of any
warranties or undertakings given by it under these clauses;

 

(iv)  a final decision against which no further appeal is possible of a
competent court of the data exporter’s country of establishment or of the
authority rules that there has been a breach of the clauses by the data importer
or the data exporter; or

 

(v)  a petition is presented for the administration or winding up of the data
importer, whether in its personal or business capacity, which petition is not
dismissed within the applicable period for such dismissal under applicable law;
a winding up order is made; a receiver is appointed over any of its assets; a
trustee in bankruptcy is appointed, if the data importer is an individual; a
company voluntary arrangement is commenced by it; or any equivalent event in any
jurisdiction occurs

 

then the data exporter, without prejudice to any other rights which it may have
against the data importer, shall be entitled to terminate these clauses, in
which case the authority shall be informed where required. In cases covered by
Clause 6.1(b)(i),  Clause 6.1(b)(ii), or Clause 6.1(b)(iv) above the data
importer may also terminate these clauses.

 

(c)  Either party may terminate these clauses if

 

 

 

(i)  any Commission positive adequacy decision under Article 25(6) of Directive
95/46/EC (or any superseding text) is issued in relation to the country (or a
sector thereof) to which the data is transferred and processed by the data
importer, or

 

(ii)  Directive 95/46/EC (or any superseding text) becomes directly applicable
in such country.

 

(d)  The parties agree that the termination of these clauses at any time, in any
circumstances and for whatever reason (except for termination under Clause 6(c)
does not exempt them from the obligations and/or conditions under the clauses as
regards the processing of the personal data transferred.

 

8.  VARIATION OF THESE CLAUSES

 

    The parties may not modify these clauses except to update any information in
Annex B, in which case they will inform the authority where required. This does
not preclude the parties from adding additional commercial clauses where
required.

 

9.  DESCRIPTION OF THE TRANSFER

 

    The details of the transfer and of the personal data are specified in Annex
B. The parties agree that Annex B may contain confidential business information
which they will not disclose to third parties, except as required by law or in
response to a competent regulatory or government agency, or as required under
Clause 1(e). The parties may execute additional annexes to cover additional
transfers, which will be submitted to the authority where required. Annex B may,
in the alternative, be drafted to cover multiple transfers.

 

Dated:.............................

 

 

 

 

 

 

 

 

 

DATA EXPORTER

 

 

DATA IMPORTER

 

 

..................................................

 

..................................................

 

 

..................................................

 

..................................................

 

 

 

 

 

 

 

ANNEX A

DATA PROCESSING PRINCIPLES

 

1. Purpose limitation: Personal data may be processed and subsequently used or
further communicated only for purposes described in Annex B or subsequently
authorised by the data subject.

 

2. Data quality and proportionality: Personal data must be accurate and, where
necessary, kept up to date. The personal data must be adequate, relevant and not
excessive in relation to the purposes for which they are transferred and further
processed.

 

3. Transparency: Data subjects must be provided with information necessary to
ensure fair processing (such as information about the purposes of processing and
about the transfer), unless such information has already been given by the data
exporter.

 

4. Security and confidentiality: Technical and organisational security measures
must be taken by the data controller that are appropriate to the risks, such as
against accidental or unlawful destruction or accidental loss, alteration,
unauthorised disclosure or access, presented by the processing. Any person
acting under the authority of the data controller, including a processor, must
not process the data except on instructions from the data controller.

 

5. Rights of access, rectification, deletion and objection: As provided in
Article 12 of Directive 95/46/EC, data subjects must, whether directly or via a
third party, be provided with the personal information about them that an
organisation holds, except for requests which are manifestly abusive, based on
unreasonable intervals or their number or repetitive or systematic nature, or
for which access need not be granted under the law of the country of the data
exporter. Provided that the authority has given its prior approval, access need
also not be granted when doing so would be likely to seriously harm the
interests of the data importer or other organisations dealing with the data
importer and such interests are not overridden by the interests for fundamental
rights and freedoms of the data subject. The sources of the personal data need
not be identified when this is not possible by reasonable efforts, or where the
rights of persons other than the individual would be violated. Data subjects
must be able to have the personal information about them rectified, amended, or
deleted where it is inaccurate or processed against these principles. If there
are compelling grounds to doubt the legitimacy of the request, the organisation
may require further justifications before proceeding to rectification, amendment
or deletion. Notification of any rectification, amendment or deletion to third
parties to whom the data have been disclosed need not be made when this involves
a disproportionate effort. A data subject must also be able to object to the
processing of the personal data relating to him if there are compelling
legitimate grounds relating to his particular situation. The burden of proof for
any refusal rests on the data importer, and the data subject may always
challenge a refusal before the authority.

 

6. Sensitive data: The data importer shall take such additional measures (e.g.
relating to security) as are necessary to protect such sensitive data in
accordance with its obligations under Clause 2.

 

7. Data used for marketing purposes: Where data are processed for the purposes
of direct marketing, effective procedures should exist allowing the data subject
at any time to “opt-out” from having his data used for such purposes.

 

8. Automated decisions: For purposes hereof “automated decision” shall mean a
decision by the data exporter or the data importer which produces legal effects
concerning a data subject or significantly affects a data subject and which is
based solely on automated processing of personal data intended to evaluate
certain personal aspects relating to him, such as his performance at work,
creditworthiness, reliability, conduct, etc. The data importer shall not make
any automated decisions concerning data subjects, except when:

 

(a) such decisions are made by the data importer in entering into or performing
a contract with the data subject, and

 

(ii) (the data subject is given an opportunity to discuss the results of a
relevant automated decision with a representative of the parties making such
decision or otherwise to make representations to that parties.

 

or

 

(b) where otherwise provided by the law of the data exporter.

 

 

 

 

ANNEX B

 

DESCRIPTION OF THE TRANSFER

 

(To be completed by the parties)

 

 

Data subjects

 

See Annex 1

 

 

The personal data transferred concern the following categories of data subjects:

 

 

See Annex 1

 

 

 

 

Contact points for data protection enquiries:

 

See DPA

 

 

 

 

ANNEX 3: TECHNICAL AND ORGANIZATIONAL SECURITY MEASURES

 

(A)  Data Processing

The Parties must assess and reduce the scope of data access and processing
limited to what is strictly necessary for the performance of the Agreement.

 

(B)  Confidentiality

The Parties shall ensure:

1.    Access to Personal Data stored or Processed is limited to members of its
personnel on a strict need-to-know basis.  For the avoidance of doubt,
“personnel” includes employees, agents and contractors of Data Processor.

2.    Access to facilities where information systems are located is be limited
to authorized personnel who are specifically identified.

3.    Relevant personnel who are authorized to grant, alter or cancel authorized
access to data and resources have been appropriately identified.

4.    Authorization profiles are defined according to the roles and
responsibilities of its personnel in order to restrict access to Personal Data
to duly authorized users.

5.    Identification and authentication rules include things such as: (a)
automated de-provisioning of access to personnel who are no longer with the
respective Party; (b) personal users’ identifiers; (c) no default accounts; (d)
no accounts are shared among users; (e) authentication methods based on strong
password requirements; and/or (f) devices use officially recommended
cryptographic mechanisms or biometric devices.

 

(C)  Backups

The Parties shall ensure:

1.    Backups are performed frequently, tested regularly and stored off-site.

2.    Backups are secure by either encrypting the backups themselves or
encrypting data at the source, in either case storage is maintained at a secure
location.

 

(D)  Encryption

The Parties shall ensure:

1.    Data "at rest" is protected and is encrypted with AES-256 or stronger.

2.    Data in transit is protected by the Parties e.g. through TLS (1.1 or
higher) or hashing (SHA-2 or stronger).

3.    Personal Data and Parties’ proprietary data that is transferred/uploaded
to the provider is encrypted (according to specifications for “data in transit”
above) and secure.

 

(E)  Security of Infrastructure and Applications

The Parties shall ensure:

1.    Software patches are applied routinely and promptly.

2.    It performs regular penetration testing, vulnerability management, and
intrusion prevention.

3.    Applications, servers, storage, network devices, etc. are protected with
complex passwords. In addition resources, exposed to external access must be
protected by Multi-Factor authentication (MFA)

4.    Critical firmware and software updates are installed after successful
testing without delay.

5.    Users of the Parties' systems are required to notify the data privacy
officer and/or the IT Service Desk immediately if information is lost or stolen
in accordance with the Parties’ respective policies and the type of data
impacted (ie: personal data or confidential/proprietary data).

6.    It has dedicated points of contact responsible for dealing with reports of
information security breaches or failures.

7.    Audit logs and records of security incidents are maintained, are subject
to periodic review.

 

(F)  Development and Change Management Process

The Parties shall ensure:

1.    It follows standardized and documented procedures for coding,
configuration management, patch installation, and change management for all
systems (e.g. applications, servers, storage, network devices, etc.) involved in
delivery of contracted services.

 

 

 

 

(G)  Availability

The Parties must:

1.    Design core IT infrastructure failsafe and redundant.

2.    Have disaster recovery and backup-and-restore processes in place.

3.    Have a business continuity plan that addresses the prompt restoration of
the availability of and access to Parties’ Personal Data

 

(H)  Audits and Standards

The Parties must:

1.    Review or audit its security operations by external security experts on a
periodic basis.

2.    Comply with appropriate security standards.

 

(I)    Test and Development Environments

The Parties shall ensure that:

Only anonymized or dummy data are used in a non-production (e.g. test or
development, training) environment and that these environments are secured to
the same standard as production.

(J)   Traceability and Logs

The Parties must:

1.    Set up a logging process that records the relevant events (end users,
maintenance and administrative activities, unauthorized access to Personal Data,
abusive use of Personal Data, abnormalities, events related to security, etc.)
and allows for determinations of the origin of an incident and that these logs
are available to the Parties for e.g. incident investigation.

2.    Collaborate in the event of a security incident and help each other to
clarify the case, e.g. by secure exchange of relevant log data.Protect the
logging equipment and the logged information against sabotage and unauthorized
access.

 

(K)    Miscellaneous

The Parties must:

1.    Inform each other in case of a cyber security incident, data breach or any
other critical incident which may disrupt joint operations.

2.    Have policies and procedures relevant to Personal Data and IT security in
place.

3.    Have technical mechanisms and operational procedures in place to allow for
the prompt retrieval, erasure, blocking and restriction of Parties’ Personal
Data relating to a particular individual (i.e. an individual's personal data).

4.    Perform phishing trainings for ongoing security awareness for internal
users.

5.    Provide security awareness training for all personnel.

 

 

 

 

<<PLACEHOLDER: ANNEX 4: TERMS AND CONDITIONS OF TRANSFER OF PERSONAL DATA
SUBJECT TO <<INSERT COUNTRY>> DATA PROTECTION LAW>>

 

 

 

 

EXHIBIT 14

CO-COMMERCIALIZATION PLAN OUTLINE

[***]

 

 

 

EXHIBIT 15

CO-COMMERCIALIZATION BUDGET OUTLINE

[***]

 

 

 

EXHIBIT 16

CONTRIBUTION TO EQUITY AND SHARE ISSUANCE

(the “Purchase Agreement”)

 

A.  COMPANY shall acquire a stake in the share capital of MorphoSys through the
purchase from MorphoSys of new shares of MorphoSys in the form of American
Depositary Shares (“ADSs”), subject to the terms of the Agreement and the
further terms and conditions of this EXHIBIT 16 (“Purchase Agreement”).
“MorphoSys”, for the purpose of this EXHIBIT 16, including its Annexes, shall
mean MorphoSys AG only. In case of any conflicts or inconsistencies between the
terms of the Agreement and this EXHIBIT 16, the terms and conditions of this
EXHIBIT 16 shall prevail with respect to the subject matter hereof. As at the
Execution Date, the registered share capital of MorphoSys amounts to
€ 31,957,958, divided into 31,957,958 ordinary shares in bearer form with no par
value and a notional value attributable to each share of €1.00 (the "Existing
Shares"). All Existing Shares of MorphoSys are admitted to trading on the
regulated market (regulierter Markt) and to the sub-segment of the regulated
market with additional obligations arising from admission (Prime Standard) on
the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse).

 

B. MorphoSys is party to the Amended and Restated Deposit Agreement dated April
18, 2018, among MorphoSys, The Bank of New York Mellon, as depositary (the
“Depositary”) and the owners and holders of American Depositary Shares (the
“Deposit Agreement”), pursuant to which the Depositary has issued ADSs
representing one-quarter of an Existing Share. The ADSs are listed for quotation
on the Nasdaq Global Market (the “Nasdaq Market”).

 

C. The management board (Vorstand) of MorphoSys has been authorised, until 30
April 2022, to increase, with the consent of the supervisory board
(Aufsichtsrat) of MorphoSys, the share capital of MorphoSys by up to
€ 2,915,977.00 (the "Authorised Capital") through the issuance of new no-par
value bearer shares against cash contributions (the "Authorisation"). The
management board of MorphoSys is authorised to exclude, with the consent of the
supervisory board of MorphoSys, the subscription rights of the shareholders,
inter alia, in case of a capital increase

 

 

 

against contribution in cash, if the issue price of the newly issued shares is
not significantly lower than the market price of the Existing Shares prevailing
at the time of issuance and the number of shares issued does not exceed 10% of
the share capital of MorphoSys, neither at the time when the Authorisation has
become effective nor when it is used.

 

D. The new shares of MorphoSys underlying the new ADSs to be purchased by
COMPANY (the “New ADSs”) shall be created by way of a capital increase against
contribution in cash on the basis of the Authorisation and deposited with the
Depositary who will deliver the New ADSs purchased by COMPANY to COMPANY. Each
New ADS purchased by COMPANY will represent one-quarter of a New Share of
MorphoSys.

 

1.         ISSUE AND SUBSCRIPTION OF NEW SHARES

 

(a) Board Resolutions.  To the extent permitted by law, the management board of
MorphoSys shall, subject to the satisfaction of the conditions set forth in
Section 9(b) hereof, within [***] Business Days after the Effective Date (the
“Capital Increase Resolution Date”) resolve on an increase of the share capital
of MorphoSys pursuant to the Authorisation with exclusion of subscription rights
of the existing shareholders (the "Capital Increase") through the issuance of
the Final Number of New Shares against cash consideration at the Purchase Price
per New Share for the Aggregate Purchase Price admitting the COMPANY, or at the
COMPANY’s written request received by MorphoSys within [***] Business Days after
the Execution Date, the German credit institution selected by MorphoSys to act
as settlement agent (the “German Settlement Agent”) to subscribe for the New
Shares acting in its own name but for the account of COMPANY (the "Management
Board Resolution"; a draft of the resolution is attached hereto as Annex 1).

 

Immediately after passing the Management Board Resolution, the management board
of MorphoSys shall, to the extent permitted by law, ask the supervisory board of
MorphoSys to approve the Capital Increase under the Authorisation as well as the
issue of the New Shares at the Aggregate Purchase Price as resolved by the
Management Board (the "Supervisory Board Resolution", a draft of the resolution
is attached hereto as Annex 2).

 

 

 

 

“Purchase Price” shall mean a USD amount per New Share [***].

 

“Market Price” shall mean the closing market price of the ADSs as quoted on the
Nasdaq Stock Market.

 

“New Shares” shall mean new ordinary shares of MorphoSys in bearer form with no
par value and a notional value attributable to each share of €1.00, which shall
carry the same rights and obligations as the Existing Shares, except that they
shall carry dividend rights only from and including the fiscal year of MorphoSys
in which they have been issued.

 

[***]

 

“Final Number” shall mean such number of New Shares that results of the division
of (a) USD 150,000,000 by (b) the Purchase Price rounded down to the next full
New Share.

 

“Aggregate Purchase Price” shall mean the result of the multiplication of (a)
the Final Number of New Shares with (b) the Purchase Price.

 

(b) Payment of Aggregate Purchase Price; Subscription of New Shares.  COMPANY
shall, subject to the satisfaction of the conditions set forth in Section 9(a),
immediately upon receipt of copies of the Management Board Resolution and the
Supervisory Board Resolution by telefax or pdf-document attached to an email
(such date, the “Subscription Date”) (i) effect payment of the Aggregate
Purchase Price to an account of MorphoSys (the “Capital Increase Account”)
maintained with the German Settlement Agent as notified by MorphoSys to COMPANY
in due time prior to subscription and (ii) subscribe for, or, if COMPANY
appointed the German Settlement Agent as set forth in Section 1 (a), cause the
German Settlement Agent, acting in its own name but for the account of COMPANY,
to immediately subscribe for, the New Shares by way of executing and delivering
to MorphoSys a subscription certificate (Zeichnungsschein) (the “Subscription
Certificate”) for the New Shares in the form attached as Annex 3 hereto, duly
signed in duplicate form, and (iii) upon credit of the Aggregate Purchase Price
to the Capital Increase Account cause the German Settlement Agent to deliver to
MorphoSys a bank certificate (Einzahlungsbestätigung) in the form attached as
Annex 4 hereto (the “Bank Certificate”) confirming such credit.

 

 

 

 

(c) Registration of Capital Increase.  Without undue delay (unverzüglich) upon
receipt of the Subscription Certificate and Bank Certificate in accordance with
Section 1 (b) above and provided the Management Board Resolution and the
Supervisory Board Resolution have been passed in accordance with Section 1 (a)
above, MorphoSys shall use its [***] efforts to effect the registration of the
Capital Increase in the commercial register.

 

(d) Notification of German Settlement Agent.  Without undue delay (unverzüglich)
upon the registration of the Capital Increase with the commercial register (the
time of such registration referred to as the “Registration Time”), MorphoSys
shall, by telefax or pdf-document attached to an email, with two original
certified copies to follow promptly by courier, furnish the German Settlement
Agent with a certified copy of the registration notice of the commercial
register, a certified chronological excerpt from the commercial register and a
certified copy of the articles of association of MorphoSys, each evidencing such
Capital Increase.

 

(e) Delivery of Global Note. Without undue delay after Registration Time,
MorphoSys shall deliver to the German Settlement Agent one global share
certificate in the form set forth as Annex 5 hereto representing the New Shares.
COMPANY shall cause the German Settlement Agent, acting in its own name, but for
the account of COMPANY, to deliver such global share certificate to Clearstream
Banking AG, Frankfurt am Main (“Clearstream”), and procure the New Shares to be
credited to such securities account with a participant of Clearstream as the
Depositary may designate to enable the delivery by the Depositary of the New
ADSs in respect of the New Shares to COMPANY, as the case may be, by way of
book-entry.

 

2.         DELIVERY OF NEW ADSs

 

Without undue delay after confirmation of receipt of the New Shares by the
Depositary, MorphoSys shall instruct the Depositary to deliver four ADSs per New
Share representing such New Share free of payment to a securities account of
COMPANY as notified by COMPANY to MorphoSys or as the Depositary may otherwise
require in due time prior to Registration Time. COMPANY shall take all steps
necessary required by it to effect the delivery of the ADSs.

 

 

 

 

3.         REPRESENTATIONS REGARDING DELIVERY OF ADSs

 

COMPANY represents and warrants to MorphoSys that:

 

(a) COMPANY is acquiring the New ADSs for his own account as principal, not as a
nominee or agent, for investment purposes only, and not with a view to, or for,
resale, distribution or fractionalization thereof in whole or in part and no
other person has a direct or indirect beneficial interest in the amount of ADSs
COMPANY is acquiring. Further, COMPANY does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to the New
ADSs COMPANY is acquiring.

 

(b) COMPANY understands that the New ADSs have not been, and will not be,
registered under the U.S. Securities Act of 1933 (the “Securities Act”), and are
being sold in reliance upon a specific exemption from the registration
provisions of the Securities Act. COMPANY understands that the New ADSs are
“restricted securities” under applicable U.S. federal and state securities laws
and that, pursuant to these laws, COMPANY must hold the New ADSs indefinitely
unless they are registered with the U.S. Securities and Exchange Commission and
qualified by state authorities, or an exemption from such registration and
qualification requirements is available. COMPANY acknowledges that MorphoSys has
no obligation to register or qualify the ADSs.

 

(c) For so long as the New ADSs are “restricted securities” under the Securities
Act the New ADSs will not be fungible with all other ADSs issued pursuant to the
Deposit Agreement and will be subject to the following legend restricting
transfer or surrender for the purpose of withdrawal:

 

“THE AMERICAN DEPOSITARY SHARES TO WHICH THIS CONFIRMATION RELATES AND THE
ORDINARY SHARES (THE “SHARES”) OF MORPHOSYS AG (“MORPHOSYS”) REPRESENTED THEREBY
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 OR IN A
TRANSACTION THAT IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THAT

 

 

 

ACT, AS CONFIRMED BY AN OPINION OF COUNSEL THAT IS SATISFACTORY TO MORPHOSYS AND
THE DEPOSITARY, AND IN ACCORDANCE WITH ANY OTHER APPLICABLE SECURITIES LAWS.”

 

(d) So long as the above restriction applies, the New ADSs will not be eligible
for settlement through the Depositary Trust Corporation.

 

4.         REPRESENTATIONS OF MORPHOSYS

 

MorphoSys represents and warrants to COMPANY each of the matters set forth in
Annex 6 hereto.

 

5.         IMPLEMENTATION OF CAPITAL INCREASE; CONSEQUENCES IN CASE OF FAILURE

 

If the registration of the Capital Increase with the commercial register has not
been effected until [***] months after the Effective Date, 12:00 (Frankfurt
time), at the election of COMPANY, (i) the Parties shall reinitiate such efforts
for an additional [***]-month period, or (ii) the Subscription Certificate for
the New Shares shall, in accordance with its terms, expire and MorphoSys shall
without undue delay (unverzüglich) repay the Aggregate Purchase Price. If
COMPANY elects the option under (i) above, and the Capital Increase has not been
effected within such additional [***]-month period, then the consequence under
(ii) applies. Upon repayment to COMPANY of the foregoing amount, the Parties
shall have no further obligation to each other with respect to the matters set
forth in Section 8.1(b) of the Collaboration Agreement and this Purchase
Agreement.

 

6.         LISTING

 

MorphoSys undertakes to cause, without undue delay after Registration Time, the
New Shares to be admitted to trading on the regulated market (Regulierter Markt)
segment of the Frankfurt Stock Exchange and the sub-segment thereof with
additional post-admission obligations (Prime Standard), or any successor
thereof, and to use [***] efforts to maintain such listing.

 

7.         REMOVAL OF RESTRICTIVE LEGENDS

 

MorphoSys agrees that at such time as the New ADSs cease to be “restricted
securities” such that any legend of the type set forth in Section 3(c) is no
longer

 

 

 

required, MorphoSys shall, no later than [***] Business Days following notice by
COMPANY, use commercially reasonable efforts to cause the Depositary to remove
any such legend (including by causing the delivery of any required instructions
or legal opinions) and to facilitate any transfers of such New ADSs to an
unrestricted depositary facility.

 

8.         LOCK-UP

 

(a) Lock-up Period.  COMPANY hereby undertakes to MorphoSys that for a period of
eighteen (18) months following Registration Time (the "Lock-Up Period"), it will
not,

 

i.    sell, transfer, pledge, encumber or otherwise dispose of (verfügen über)
(including the granting of any option over or the creation of any form of trust
relationship in respect of) any New Shares or New ADSs;

ii.    enter into any agreement or transaction in respect of any voting rights
or other rights attaching to any New Shares or New ADSs;

iii.   enter into any transaction (including derivative transactions) or carry
out any other action that would be the economic equivalent of any of the above;

 

in each case without the prior written consent of the management board of
MorphoSys. The foregoing restrictions shall not apply to: (A) any transfers to
COMPANY’s Affiliates, (B) any transfers made following termination of the
Collaboration Agreement pursuant to Section 17.2(a) thereof where MorphoSys is
the Breaching Party and (C) any transfers in connection with or following a
MorphoSys Change of Control; provided that in each transfer pursuant to clause
(A), the transferee agrees to be bound in writing by the terms of this Purchase
Agreement prior to such transfer.

 

(b) Restriction on Sales following the Lock-Up Period.  Following the end of the
Lock-Up Period, COMPANY may only transfer, sell or otherwise dispose of, in any
three (3)-month period, 25% of the aggregate number of New Shares or New ADSs
subscribed to herein; provided that, notwithstanding the foregoing limitation,
COMPANY may sell up to 50% of the aggregate number of New Shares or New ADSs
subscribed to herein following the end of the Lock-Up Period in a sale to a
single purchaser (but in the event that any such sale to a single purchaser
exceeds 25% of the New Shares or New ADSs subscribed to herein, the number of
New Shares or New ADSs that may be sold in any other transactions within three
(3) months

 

 

 

of such sale to a single purchaser shall be reduced by such excess amount in
order to ensure that sales within any three (3)-month period from the first sale
to a single purchaser do not exceed in total 50% of the New Shares or New ADSs
subscribed to herein (including the New Shares or New ADSs sold in the first
sale to a single purchaser)). In the event COMPANY intends to sell more than 25%
of the aggregate number of New Shares or New ADSs subscribed to herein in a
single transaction, COMPANY shall notify and consult with MorphoSys about
offering to sell such New Shares or New ADSs to certain investors of MorphoSys
identified by MorphoSys.

 

9.         CONDITIONS TO SUBSCRIPTION

 

(a) COMPANY Conditions.  COMPANY’s obligations pursuant to Section 1(b) are
subject to the fulfillment of the following conditions (unless waived in writing
by COMPANY):

 

(i)         Representations and Warranties.  The representations and warranties
made by MorphoSys in Section 13.1 of the Agreement and Section 4 hereof shall be
true and correct as of the Execution Date and as of the Subscription Date as
though made on and as of the Subscription Date, except to the extent such
representations and warranties are specifically made as of a particular date, in
which case such representations and warranties shall be true and correct as of
such date; provided,  however, that for purposes of this Section 9(a), all such
representations and warranties of MorphoSys (other than Sections 1.1 and 1.2 in
Annex 6 hereto) shall be deemed to be true and correct for purposes of this
Section 9(a) unless the failure or failures of such representations and
warranties to be so true and correct, without regard to any “material”,
“materiality” or “Material Adverse Effect” qualifiers set forth therein,
constitute a Material Adverse Effect.

 

For purposes of this Purchase Agreement, “Material Adverse Effect” means any
change, event or occurrence (each, an “Effect”) that, individually or when taken
together with all other Effects that have occurred prior to the date of
determination of the occurrence of the Material Adverse Event, has had a
material adverse effect on the business,

 

 

 

properties, management, financial position, stockholders’ equity or results of
operations of MorphoSys and its subsidiaries taken as a whole or on the
performance by MorphoSys of its obligations under this Purchase Agreement or the
Agreement, except to the extent that any such Effect results from or arises out
of: (A) changes in conditions in the United States, German or global economy or
capital or financial markets generally, including changes in interest or
exchange rates, (B) changes in general political, economic or business
conditions in the United States and Germany thereof, (C) acts of war, sabotage
or terrorism, or any escalation or worsening of any such acts of war, sabotage
or terrorism, (D) earthquakes, hurricanes, floods or other natural disasters,
(E) changes or prospective changes in any applicable Laws or regulations or
applicable accounting regulations or principles or interpretation thereof or (F)
the execution, delivery and announcement of this Agreement and any actions
contemplated hereby or thereby, provided,  however, that the Effects excluded in
clauses (A), (B), (C) and (D) shall only be excluded to the extent such Effects
are not disproportionately adverse on MorphoSys and its subsidiaries as compared
to other companies operating in MorphoSys’s industry.

 

(ii)        Covenants.  All covenants and agreements contained in this Purchase
Agreement to be performed or complied with by MorphoSys on or prior to the
Subscription Date shall have been performed or complied with in all material
respects.

 

(iii)       No Material Adverse Effect.  From and after the Execution Date until
the Subscription Date, there shall have occurred no event that has caused a
Material Adverse Effect.

 

(b)        MorphoSys’s Conditions.  MorphoSys’s obligation to issue and sell the
New ADSs is subject to the fulfillment of the following conditions (unless
waived in writing by MorphoSys):

 

(i)         Representations and Warranties.  The representations and warranties
made by COMPANY in Section 3 hereof and Section 13.1 of the Agreement shall be
true and correct as of the Execution Date and as of the Subscription Date as
though made on and as of the Subscription Date.

 

 

 

Annex 1 to EXHIBIT 16

 

Management Board Resolution

 

 

 

 

 

 

 

 

English convenience translation

Niederschrift über eine
Beschlussfassung

des Vorstandes der MorphoSys AG ("Gesellschaft")

vom [•] 2020

__________________________________

 

 

Minutes of a
resolution of the

Management Board of MorphoSys AG ("Company")

of [•], 2020

________________________________

I.

 

 

I.

Aufgrund der von der Hauptversammlung am 17. Mai 2017 beschlossenen Ermächtigung
ist der Vorstand nach § 5 Abs. 6 der Satzung der Gesellschaft ermächtigt, mit
Zustimmung des Aufsichtsrats bis zum 30. April 2022 (einschließlich) das
Grundkapital der Gesellschaft gegen Bareinlagen einmalig oder mehrmalig um bis
zu € 2.915.977,00 durch Ausgabe von bis zu 2.915.977 neuen und auf den Inhaber
lautende Stückaktien zu erhöhen (im Folgenden "Genehmigtes Kapital 2017-I").

 

 

Based on the authorization resolved by the general meeting on May 17, 2017 and
§ 5(6) of the articles of the Company, the management board, with the approval
of the supervisory board, is authorized through and including April 30, 2022 to
increase the registered share capital of the Company against cash contributions
once or several times by up to € 2,915,977.00 through the issuance of up to
2,915,977 new no par-value bearer shares (defined as "Authorized Capital
2017-I").

Zugleich wurde der Vorstand ermächtigt, mit Zustimmung des Aufsichtsrats das
Bezugsrecht der Aktionäre unter anderem auszuschließen, wenn die neuen Aktien zu
einem Ausgabebetrag ausgegeben werden, der den Börsenpreis von Aktien gleicher
Ausstattung nicht wesentlich unterschreitet und die gemäß oder in entsprechender
Anwendung des § 186 Abs. 3 Satz 4 AktG gegen Bareinlagen unter Ausschluss des
Bezugsrechts während der Laufzeit dieser Ermächtigung ausgegebenen Aktien
insgesamt 10 % des Grundkapitals nicht überschreiten, und zwar weder zum
Zeitpunkt des Wirksamwerdens noch zum Zeitpunkt der Ausübung dieser
Ermächtigung.

 

 

At the same time, the management board was authorized to exclude the
subscription rights of the shareholders with the approval of the supervisory
board, inter alia, if the issue price for the new shares is not significantly
below the stock exchange price of shares conferring identical rights, and the
shares issued pursuant to Section 186 (3) sentence 4 German Stock Corporation
Act (either applied directly or accordingly) against cash consideration and with
exclusion of subscription rights during the term of this authorisation do not
exceed, in total, 10 % of the registered share capital neither at the time when
the authorization becomes effective nor at the time when it is used.

Weiter wurde der Vorstand ermächtigt, mit Zustimmung des Aufsichtsrats die
weiteren

 

 

Furthermore, the management board was authorized to determine the further

 

 

 

 

Einzelheiten der Kapitalerhöhung und ihrer Durchführung festzulegen.

 

 

details of the capital increase and its implementation with the approval of the
supervisory board.

Die Gesellschaft hat mit [COMPANY] eine Kollaboration zu [] vereinbart. Im
Zusammenhang mit dieser Kollaboration und zur Stärkung der künftigen
strategischen Zusammenarbeit möchte [COMPANY] ein Eigenkapitalinvestment bei der
Gesellschaft erbringen. [COMPANY] wird von der Gesellschaft [] neue auf den
Inhaber lautende Stückaktien in Form von American Depositary Shares ("ADS"), die
jeweils ein Viertel einer auf den Inhaber lautenden Stückaktie der Gesellschaft
vertreten, erwerben.

 

 

The Company has agreed on a collaboration with [COMPANY] regarding []. In the
context of this collaboration and in order to further strengthen the future
strategic collaboration, [] wishes to make an equity investment in the Company.
[COMPANY] shall purchase from the Company [] new no par-value bearer shares in
the form of American Depositary Shares ("ADS"), each representing one quarter of
a no par-value bearer share of the Company.

Zur Schaffung der neuen Aktien der Gesellschaft die den ADS unterliegen, werden
die nachfolgenden Beschlüsse gefasst.

 

 

The following resolutions are adopted for the creation of the new shares of the
Company underlying the ADS.

II.

 

 

II.

Der Vorstand hat nach ordnungsgemäßer Beratung einstimmig entschieden, dass eine
Ausgabe neuer Aktien an [COMPANY] aus dem Genehmigten Kapital 2017-I im
Interesse der Gesellschaft und ihrer Aktionäre liegt, um die langfristigen Ziele
der Gesellschaft zu erreichen. Demgemäß hat der Vorstand am [] [To be
completed: Procedure, e.g. physical meeting, conference call etc.] unter dem
Vorbehalt der Zustimmung des Aufsichtsrats einstimmig wie folgt entschieden:

 

 

After due consideration, the management board has unanimously decided that the
issuance of new shares from the Authorised Capital 2017-I to [COMPANY] is in the
best interest of the Company and its shareholders to achieve the Company's
long-term goals. Therefore, on [] the management board, subject to the approval
by the supervisory board, [To be completed: Procedure, e.g. physical meeting,
conference call etc.] unanimously decided by way of passing a resolution by as
follows:

1.     Unter [teilweiser] Ausnutzung des Genehmigten Kapitals 2017-I (§ 5 Abs. 6
der Satzung) wird das eingetragene Grundkapital der Gesellschaft von derzeit
€ [31.957.958,00] um € [•] auf € [•] gegen Bareinlage durch Ausgabe von [•]
neuen auf den Inhaber lautende Stückaktien ("Neue Aktien") erhöht
("Kapitalerhöhung").  

 

 

1.     By [partially] utilizing the Authorized Capital 2017-I (§ 5(6) of the
articles of the Company), the registered share capital of the Company from
currently € [31,957,958.00] is increased by € [•] to € [•] against cash
contributions by issuance of [•] new no par-value bearer shares (the "New
Shares") (the "Capital Increase").

 

 

 

 

2.     [Die Neuen Aktien sind ab dem am  1. Januar 2020 beginnenden
Geschäftsjahr voll gewinnanteilsberechtigt.]

 

 

2.     [The New Shares carry full dividend rights as of the financial year
commenced on January 1, 2020.]

 

 

 

 

 

3.     Der Ausgabebetrag beträgt € [•] je Neuer Aktie. Der Gesamtausgabebetrag
für die insgesamt [•] Neuen Aktien beläuft sich damit auf € [•].

 

 

3.     The issue price is € [•] per New Share. The total issue price for the [•]
New Shares amounts to € [•].

4.     Das gesetzliche Bezugsrecht der Aktionäre der Gesellschaft wird auf der
Grundlage der Ermächtigung in § 5 Abs. 6 der Satzung ausgeschlossen.

 

 

4.     Pursuant to the authorization in § 5(6) of the articles of the Company,
the subscription rights of the Company's shareholders are excluded.

5.     Zur Zeichnung der Neuen Aktien in eigenem Namen aber für Rechnung von
[COMPANY] wird [German Subscription Agent] zugelassen.

 

 

5.     The New Shares will be subscribed for by [German Subscription Agent],
acting in its own name but for the account of [COMPANY].

6.     Die Kosten der Kapitalerhöhung werden von der Gesellschaft getragen.

 

 

6.     The costs of the Capital Increase will be borne by the Company.

 

 

 

 

III.

 

 

III.

Diese Beschlüsse bedürfen der Zustimmung des Aufsichtsrats der Gesellschaft.

 

 

These resolutions require the consent of the Company’s supervisory board.

 

 

 

 

IV.

 

 

IV.

Als Vorsitzender des Vorstands stelle ich fest:

 

 

As chairman of the management board, I hereby declare the following:

1.     Sämtliche Mitglieder des Vorstands haben unter Verzicht auf alle durch
Gesetz oder Satzung vorgeschriebenen Form- und Fristerfordernisse für das Fassen
von Vorstandsbeschlüssen an der Beschlussfassung teilgenommen.

 

 

1.     All management board members took part in the adoption of the resolutions
and waived all requirements with regard to notice and form, whether imposed by
law or by the articles of association, for the passing of management board
resolutions.

2.     Sämtliche Mitglieder des Vorstands haben den unter II. genannten
Beschlussvorschlägen zugestimmt.

 

 

2.     All management board members have approved the proposed resolutions under
II. above.

3.     Damit wurden die Beschlüsse mit dem unter II. genannten Wortlaut gefasst.

 

 

3.     Therefore, the resolutions were adopted with the wording stated under II.
above.

Allein die deutsche Fassung dieses Beschlusses ist rechtlich bindend.

 

 

The German version of this resolution is legally binding only.

 

 

 

 

CONFIDENTIAL

 

 

Planegg, den / this      . [•] 2020

 

 

 

Dr. Jean-Paul Kress

 

Vorstandsvorsitzender

 

 

 

CONFIDENTIAL

 

 

Annex 2 to EXHIBIT 16

 

Supervisory Board Resolution

 

 

 

 

English convenience translation

Niederschrift über eine
Beschlussfassung

des Aufsichtsrats der MorphoSys AG ("Gesellschaft")

vom [•] 2020

__________________________________

 

 

Minutes of a
resolution of the

Supervisory Board of MorphoSys AG ("Company")

of [•], 2020

________________________________

I.

 

 

I.

Aufgrund der von der Hauptversammlung am 17. Mai 2017 beschlossenen Ermächtigung
und § 5 Abs. 6 der Satzung der Gesellschaft hat der Vorstand der Gesellschaft –
unter dem Vorbehalt der Zustimmung des Aufsichtsrats – am [•] 2020 den in der
Anlage dieser Niederschrift beigefügten Beschluss über die Erhöhung des
eingetragenen Grundkapitals von gegenwärtig € [31.957.958,00] um € [•] auf € [•]
gegen Bareinlage durch Ausgabe von [•]  neuen und auf den Inhaber lautenden
Stückaktien mit einem anteiligen Betrag am Grundkapital von € [•] je Aktie
("Neue Aktien") zum Ausgabebetrag von € 1,00 je Neuer Aktie gefasst
("Kapitalerhöhung").

 

 

Based on the authorization resolved by  the general meeting on May 17, 2017 and
§ 5(6) of the articles of the Company, the management board of the Company,
subject to the approval of the supervisory board, adopted on [•], 2020 the
enclosed resolution (Annex) regarding the increase of the registered share
capital of the Company against cash contributions from currently
€ [31,957,958.00] by € [•] to € [•] by issuance of [•]  new no par-value bearer
shares with a pro rata share in the share capital of € 1.00 per share (the "New
Shares") at an issue price of € [•] per New Share ("Capital Increase").

Das gesetzliche Bezugsrecht der Aktionäre wurde dabei auf der Grundlage der
Ermächtigung in § 5 Abs. 6 der Satzung ausgeschlossen. Zur Zeichnung der Neuen
Aktien wurde [German Subscription Agent] zugelassen.

 

 

The subscription rights of the Company's shareholders were excluded in
accordance with the authorization in § 5(6) of the articles of the Company. It
was further resolved that the New Shares shall be subscribed by [German
Subscription Agent].  

 

 

 

 

II.

 

 

II.

Der Aufsichtsrat hat am [•] 2020 im Wege des Umlaufbeschlussverfahrens per Email
(§ 10 Abs. 2 der Satzung) in Kenntnis des ihm als Anlage zu diesen
Beschlussvorschlägen übermittelten Vorstandsbeschlusses vom [•] 2020 über
folgende Beschlussvorschläge abgestimmt:

 

 

On [•], 2020, the supervisory board, having full knowledge of the management
board resolution of [•], 2020, which was forwarded to the supervisory board
together with these resolution proposals, resolved by way of an email-vote
(§ 10(2) of the articles) as follows:

 

 

CONFIDENTIAL

 

 

 

 

 

 

1.       Der Aufsichtsrat stimmt dem dieser Niederschrift als Anlage beigefügten
Beschluss des Vorstands vom [•] 2020 vollumfänglich zu.

 

 

1.      The supervisory board approves the resolution of the management board of
[•], 2020, the minutes of which are attached as Annex hereto, in full.

2.       Auf der Grundlage der Ermächtigung in § 5 Abs. 7 der Satzung wird die
Satzung in § 5 Abs. 1, Abs. 2 und Abs. 6 in Anpassung an die Kapitalerhöhung aus
dem Genehmigten Kapital 2017-I mit Wirkung vom Zeitpunkt der Eintragung der
Durchführung der Kapitalerhöhung im Handelsregister wie folgt neu gefasst:

 

 

2.      Based on the authorisation pursuant to § 5(7) of the articles of the
Company, with effect as of the date of the registration with the commercial
register of the execution of the Capital Increase from the Authorized Capital
2017-I, § 5(1), (2) and (6) of the articles shall be amended as follows:

a)      § 5 Abs. 1 der Satzung erhält folgende Fassung:

 

 

a)      § 5(1) of the articles is amended as follows:

"(1)      Das Grundkapital beträgt € [•]."

 

 

"(1)       The registered share capital amounts to € [•]."

b)      § 5 Abs. 2 der Satzung erhält folgende Fassung:

 

 

b)      § 5(2) of the articles is amended as follows:

"(2)      Das Grundkapital ist eingeteilt in [•]  auf den Inhaber lautende
nennwertlose Stückaktien."

 

 

"(2)       The share capital is divided into [•] no-par-value bearer shares."

c)       Satz 1 von § 5 Abs. 6 der Satzung wird wie folgt angepasst:

 

 

c)      Sentence 1 of § 5(6) of the articles is amended as follows:

"(1)      Der Vorstand ist ermächtigt, mit Zustimmung des Aufsichtsrats bis zum
30. April 2022 (einschließlich) das Grundkapital der Gesellschaft gegen
Bareinlagen einmalig oder mehrmalig um insgesamt bis zu [•] € durch Ausgabe von
bis zu [•] neuen und auf den Inhaber lautende Stückaktien zu erhöhen
(Genehmigtes Kapital 2017- I)."

 

 

"(1)      With the Supervisory Board´s consent, the Management Board is
authorized to increase the Company’s share capital by issuing a maximum of [•]
new no-par value bearer shares against contribution in cash up to an amount of €
[•] on one or several occasions until and including the date of April 30, 2022
(Authorized Capital 2017-I)."

d)      Die übrigen Satzungsbestimmungen bleiben unverändert.

 

 

d)      The other provisions of the articles remain unchanged.

3.       Die Mitglieder des Aufsichtsrats verzichten auf alle durch Gesetz und
Satzung vorgeschriebenen Form-

 

 

3.      The supervisory board members waive all requirements with regard to
notice and form, whether

 

 

CONFIDENTIAL

 

 

und Fristerfordernisse für das Fassen von Aufsichtsratsbeschlüssen in Bezug auf
diese Beschlussfassung.

 

 

imposed by law or by the articles of association both with respect to this
resolution.

 

 

 

 

III.

 

 

III.

Als Vorsitzender des Aufsichtsrats stelle ich fest:

 

 

As chairman of the supervisory board, I hereby declare the following:

1.       Sämtliche Mitglieder des Aufsichtsrats haben unter Verzicht auf alle
durch Gesetz oder Satzung vorgeschriebenen Form- und Fristerfordernisse für das
Fassen von Aufsichtsratsbeschlüssen an der Beschlussfassung teilgenommen.

 

 

1.    All supervisory board members took part in the adoption of the resolutions
and waived all requirements with regard to notice and form, whether imposed by
law or by the articles of association, for the passing of supervisory board
resolutions.

2.       Sämtliche Mitglieder des Aufsichtsrats haben den unter II. genannten
Beschlussvorschlägen zugestimmt.

 

 

2.    All supervisory board members have approved the resolution proposals
stated under II. above.

3.       Damit wurden die Beschlüsse mit dem unter II. genannten Wortlaut
gefasst.

 

 

3.     Therefore, the resolutions were adopted with the wording stated under II.
above.

Allein die deutsche Fassung dieser Beschlüsse ist rechtlich bindend.

 

 

Only the German version of this resolution is legally binding.

 

 

 

 

Confidential

Supervisory Board Resolution – Capital Increase

 

 

 

                   , den / this      . [•] 2020

 

 

 

Dr. Marc Cluzel

 

Aufsichtsratsvorsitzender

 

 

Anlage/Annex:

Beschluss des Vorstands vom      .  [•] 2020 (Kopie) /

Resolution of the management board dated [•]      , 2020 (copy)

 

 

 

CONFIDENTIAL

 

Annex 3 to EXHIBIT 16

 

Subscription Certificate

 

 

 

 

 

 

 

 

 

 

English Convenience Translation

 

Zeichnungsschein

 

 

Subscription Certificate

Der Vorstand der MorphoSys AG, eingetragen im Handelsregister des Amtsgerichts
München unter HRB 121023 (die „Gesellschaft“) ist auf Grund der am 17. Mai 2017
von der ordentlichen Hauptversammlung der Gesellschaft beschlossenen
Ermächtigung nach § 5 Abs. (6) der Satzung der Gesellschaft ermächtigt, mit
Zustimmung des Aufsichtsrats bis zum 30. April 2022 (einschließlich) das
Grundkapital der Gesellschaft gegen Bareinlagen einmalig oder mehrmalig um bis
zu € 2.915.977,00 durch Ausgabe von bis zu 2.915.977 neuen und auf den Inhaber
lautenden Stückaktien zu erhöhen (Genehmigtes Kapital 2017-I).

 

 

Based on the authorization resolved by the general meeting of MorphoSys AG
registered in the commercial register of the local court of Munich under HRB
121023 (the "Company") on May 17, 2017 and § 5(6) of the articles of the
Company, the management board, with the approval of the supervisory board, is
authorized through and including April 30, 2022 to increase the registered share
capital of the Company against cash contributions once or several times by up to
€ 2,915,977.00 through the issuance of up to 2,915,977 new no par-value bearer
shares (Authorized Capital 2017-I).

Zugleich wurde der Vorstand ermächtigt, mit Zustimmung des Aufsichtsrats das
Bezugsrecht der Aktionäre auszuschließen, wenn die neuen Aktien zu einem
Ausgabebetrag ausgegeben werden, der den Börsenpreis von Aktien gleicher
Ausstattung nicht wesentlich unterschreitet und die gemäß oder in entsprechender
An-wendung des § 186 Abs. 3 Satz 4 AktG gegen Bareinlagen unter Ausschluss des
Bezugsrechts während der Laufzeit dieser Ermächtigung ausgegebenen Aktien
insgesamt 10% des Grundkapitals nicht überschreiten, und zwar weder zum
Zeitpunkt des Wirksamwerdens noch zum Zeitpunkt der Ausübung dieser
Ermächtigung. Weiter wurde der Vorstand ermächtigt, mit Zustimmung des
Aufsichtsrats die weiteren Einzelheiten der Kapitalerhöhung und ihrer
Durchführung festzulegen.

 

 

At the same time, the management board was authorized to exclude the
sub-scription rights of the shareholders with the approval of the supervisory
board, inter alia, if the issue price for the new shares is not significantly
below the stock exchange price of shares conferring identical rights, and the
shares issued pursuant to Section 186 (3) sentence 4 German Stock Corporation
Act (either applied directly or accordingly) against cash consideration and with
exclusion of subscription rights during the term of this authorisation do not
exceed, in total, 10 % of the registered share capital neither at the time when
the authorization be-comes effective nor at the time when it is used.
Furthermore, the management board was authorized to determine the further
details of the capital increase and its implementation with the approval of the
supervisory board.

Im Rahmen dieser Ermächtigung hat der Vorstand am [●]. 2020 mit Zustimmung des
Aufsichtsrats vom [●]. 2020 beschlossen, unter [teilweiser]  Ausnutzung des
Genehmigten Kapitals 2017-I (§ 5 Abs. (6) der Satzung), das eingetragene 

 

 

Within this authorization and by [partially] utilizing the Authorized Capital
2017-I (§ 5(6) of the articles) the management board resolved on [] 2020 with
approval of the supervisory board on [] 2020 to increase the registered share
capital of the

 

 

CONFIDENTIAL

 

 

 

Grundkapital der Gesellschaft von derzeit € [31.957.958,00] um € [•] auf € [•]
gegen Bareinlage durch Ausgabe von [•] neuen auf den Inhaber lautenden
Stückaktien mit einem anteiligen Betrag am Grundkapital von € 1,00 je Aktie mit
voller Gewinnanteilsberechtigung ab dem am 1. Januar 2020 beginnenden
Geschäftsjahr und unter Ausschluss des Bezugsrechts der Aktionäre zu erhöhen.

 

 

Company under exclusion of subscription rights of the Company's shareholders
from currently € [31,957,958.00] by [] € to €  [] against cash contribution by
issuance of [] new no par-value bearer shares with a notional value in the
registered share capital of 1.00 € per share and carrying full dividend rights
as of the financial year commenced on January 1, 2020.

Die neuen Aktien werden jeweils zum Ausgabebetrag von € [] je neuer Aktie
ausgegeben.

 

 

The new shares shall be issued at the issue price of € [] per new share.

Zur Zeichnung der [•] neuen Aktien zum Ausgabebetrag von € [] je neuer Aktie
wurde ausschließlich [German Subscription Agent] in eigenem Namen aber für
Rechnung von [COMPANY]  zugelassen.

 

 

The [] new shares will be subscribed at the issue price of €  [] per new share
exclusively by [German Subscription Agent], acting in its own name but for the
account of [COMPANY].

Wir, die unterzeichnende  [German Subscription Agent], zeichnen und übernehmen
hiermit in eigenem Namen

[] Stück
(in Worten:[])

neue auf den Inhaber lautende Stückaktien der MorphoSys AG mit einem anteiligen
Betrag am Grundkapital von € 1,00 je Aktie und mit voller
Gewinnanteilsberechtigung ab dem am 1. Januar 2020 beginnenden Geschäftsjahr,
gegen Bareinlagen zu einem Ausgabebetrag von € [•]  je neuer Aktie und [COMPANY]
zahlt auf diese Aktien den Ausgabebetrag in Höhe von rund € [•] je neuer Aktie
und damit den gesamten Ausgabebetrag in Höhe von insgesamt

€ []
(in Worten: [] Euro)

auf das bei [German Subscription Agent], zins- und provisionsfrei geführte
Sonderkonto der Gesellschaft mit der Bezeichnung „[]“ ein.

 

 

We, the undersigned  [German Subscription Agent], hereby subscribe to and assume
in our own name

[]
(in words [])

new no par-value bearer shares of MorphoSys AG with a notional value in the
registered share capital of 1.00 € per share and carrying full dividend rights
as of the financial year commenced on January 1, 2020 against cash contribution
at the issue price of  € [] per new share and [COMPANY] pays on these shares
the issue price of  € [] per new share and thus the total issue price of

€ []
(in words:[] Euro).

 

to the special account of the Company at [German Subscription Agent], free of
interest and commis-sion with the name “[]”.

Die Zeichnung wird unverbindlich, wenn die Durchführung der Kapitalerhöhung
nicht bis zum [Insert: date [4] months after Effective Date] (12:00 Uhr MEZ) in
das Handelsregister der Gesellschaft

 

 

The subscription  will become null and void if the execution of the capital
increase has not been registered with the commercial register of the Company
until [Insert: date [4] months after Effective

 

 

CONFIDENTIAL

 

 

eingetragen worden ist.

 

 

Date] (12:00 hrs CET).

Die deutsche Fassung dieses Zeichnungsscheins ist alleine maßgebend.

 

 

The German version of this subscription certificate is solely decisive.

 

 

[], den / this  []

 

[]

 

_________________
[Name, function]

__________________
[Name, function]

 

 

 

CONFIDENTIAL

 

 

Annex 4 to EXHIBIT 16

 

Bank Confirmation

 

[German Subscription Agent - letterhead]

1. Ausfertigung

Bestätigung

Gemäß §§ 203 Abs. 1. S. 1, 188 Abs. 2 i.V. mit §§ 36 Abs. 2, 36a Abs. 1, 37
Abs. 1 AktG

(doppelt ausgestellt)

Zur Vorlage beim Amtsgericht München – Handelsregister – bestätigen wir hiermit
hinsichtlich der von dem Vorstand der Gesellschaft am [•] 2020 mit Zustimmung
des Aufsichtsrats vom [•] 2020 beschlossenen Kapitalerhöhung über insgesamt €
[•], dass wir heute der

MorphoSys AG

Planegg/Landkreis München

den vollen Ausgabebetrag von € [•] je neuer auf den Inhaber lautenden Stückaktie
mit einem anteiligen Betrag am Grundkapital von € 1,00 je Aktie der von der
[German Subscription Agent] gezeichneten Stück [•] neue Aktien, das sind
insgesamt

€ [•]

(in Worten: Euro [•])

auf einem bei uns geführten zins- und provisionsfreien „[•]“ der MorphoSys AG
gutgeschrieben haben.

Wir versichern, dass der eingezahlte Betrag vorbehaltlich der Eintragung der
Durchführung der Kapitalerhöhung in das Handelsregister endgültig zur freien
Verfügung des Vorstandes der MorphoSys AG steht.

[•], den [•] 2020

[German Subscription Agent]

vertreten durch

 

 

 

 

[•]

 

[•]

 

 

 

CONFIDENTIAL

 

 

Annex 5 to EXHIBIT 16

 

Global Share Certificate

 

 

MorphoSys AG

WKN

663 200

 

Planegg

ISIN

DE0006632003

 

 

Ordnungsnummer 22

 

Globalurkunde

 

 

 

 

 

über

 

 

[]  auf den Inhaber lautende Stammaktien (Stückaktien)

Stückenummern [32.072.628] bis zu []

Der Inhaber dieser Globalurkunde ist mit []  Stückaktien an der MorphoSys AG,
Planegg, nach Maßgabe der Satzung als Aktionär

beteiligt.

Die Anzahl der in dieser Globalurkunde verbrieften und begebenen Aktien ergibt
sich aus der aktuellen EDV-basierten Depotdokumentation der

Clearstream Banking AG, Frankfurt am Main

Diese Globalurkunde ist ausschließlich zur Verwahrung bei der Clearstream
Banking AG, Frankfurt am Main, bestimmt.

Zu dieser Globalurkunde wurde kein Globalgewinnanteilschein ausgefertigt.

Die in dieser Globalurkunde verbrieften Stückaktien sind ab 1. Januar 2020
gewinnanteilsberechtigt.

Planegg, im [] 2020

 

MorphoSys AG

 

 

 

 

 

Der Vorstand

 

Der Vorstand

 

 

 

CONFIDENTIAL

 

 

Annex 6 to EXHIBIT 16

 

Representations and Warranties of MorphoSys

 

MorphoSys hereby represents and warrants to COMPANY that:

 

1.1       Valid Issuance of New Shares and New ADS.   MorphoSys has all
requisite power and authority to issue and sell the New Shares and the New ADSs
and to perform its obligations under and to carry out the other transactions
contemplated by this Purchase Agreement. All of the New Shares and the New ADSs,
when issued, delivered and paid for as contemplated herein, will have been duly
authorized and will be validly issued, fully paid and non-assessable, free from
any liens, encumbrances or restrictions on transfer, including pre-emptive
rights, rights of first refusal or other similar rights, other than as arising
pursuant to this Purchase Agreement, as a result of any action by COMPANY or
under U.S. federal or state securities Laws.

 

1.2      No stop order.   No stop order or suspension of trading of the Existing
Shares or the ADSs has been imposed by the any Governmental Authority and
remains in effect.

 

1.3       No Conflicts.  The execution, delivery and performance of this
Purchase Agreement, the issuance and sale of the New ADSs or the New Shares and
the consummation of the transactions contemplated by this Purchase
Agreement  will not (i) conflict with or result in a breach or violation of any
of the terms or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of MorphoSys pursuant to, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which MorphoSys is a party, by
which MorphoSys is bound or to which any of the property or assets of MorphoSys
is subject, (ii) result in any violation of the provisions of the organizational
documents of MorphoSys or (iii) result in the violation of any law or statute or
any judgment, order, rule  or regulation of any court or arbitrator or
governmental or regulatory authority having jurisdiction over MorphoSys or any
of its subsidiaries, except, in the case of clauses (i) and (iii) above, for any
such conflict, breach, violation or default that would not, individually or in
the aggregate, have a Material Adverse Effect.

 

1.4       No Governmental Authority or Third Party Consents.  To MorphoSys’
Knowledge, no consent, approval, authorization, order, regulatory license,
registration or qualification of or with any court or arbitrator or governmental
or regulatory authority is required for the execution, delivery and performance
by MorphoSys of this Purchase Agreement or the issuance and sale of the New ADSs
or the New Shares, except (i) such filings as may be required to be made with
the SEC and with any state blue sky or other U.S or foreign securities
regulatory authority, which filings shall be made in a timely manner in
accordance with all applicable Laws, (ii) as required pursuant to the HSR Act or
under any other applicable competition, merger control, antitrust or similar Law
of any jurisdiction, (iii) the registration of the capital increase in relation
to the New Shares with the commercial register and (iv) the admission to trading
and introduction to trading of the New Shares by the Frankfurt Stock Exchange.

 

1.5       Litigation.  To MorphoSys’ Knowledge, there are no legal, governmental
or regulatory investigations, actions, suits or proceedings pending to which
MorphoSys is a

 

CONFIDENTIAL

 

 

party or to which any property of MorphoSys is subject that, individually or in
the aggregate, would reasonably be expected to have a Material Adverse Effect;
and no such investigations, actions, suits or proceedings are, to the Knowledge
of MorphoSys, threatened or contemplated by any governmental or regulatory
authority or others. For clarity, the aforementioned shall not cover proceedings
before patent or trademark offices.

 

1.6     Regulatory Licenses and Other Rights; Compliance with Laws.  MorphoSys
and its subsidiaries, to MorphoSys’ Knowledge, possess or are in the process of
obtaining all material regulatory licenses, certificates, permits and other
authorizations issued by, and have made all declarations and filings with, the
appropriate federal, state, local or foreign governmental or regulatory
authorities that are necessary for the ownership or lease of their respective
properties or the conduct of their respective businesses as described in
MorphoSys SEC Documents, except where the failure to possess or make the same
would not, individually or in the aggregate, have a Material Adverse Effect; and
except as described in MorphoSys SEC Documents and except where any revocation
would not, individually or in the aggregate, have a Material Adverse Effect,
neither MorphoSys nor any of its subsidiaries has received notice of any
revocation or modification of any such regulatory license, certificate, permit
or authorization or has any reason to believe that any such license,
certificate, permit or authorization will not be renewed.  MorphoSys and its
subsidiaries are, and at all times since April 19, 2018, have been, to
MorphoSys’ Knowledge, in compliance in all material respects with all statutes,
rules and regulations applicable to the ownership, packaging, processing, use,
distribution, import, or export of any product manufactured or distributed by
MorphoSys or its subsidiaries, except where such noncompliance would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

1.7     MorphoSys SEC Documents; Financial Statements; Nasdaq Market.

 

(a)        Since April 19, 2018, MorphoSys has timely filed all required
reports, schedules, forms, statements and other documents (including exhibits
and all other information incorporated therein) required to be filed or
furnished by it under the Securities Act and the Securities Exchange Act of
1934, as amended (the “Exchange Act”), and any required amendments to any of the
foregoing, with the SEC (the “MorphoSys SEC Documents”).  As of their respective
filing dates, each of the MorphoSys SEC Documents complied in all material
respects with the requirements of the Securities Act, the Exchange Act and the
rules and regulations of the SEC promulgated thereunder applicable to such
MorphoSys SEC Documents, and no MorphoSys SEC Documents when filed, declared
effective or mailed, as applicable, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.

 

(b)        As of the Execution Date, there are no outstanding or unresolved
comments in comment letters received from the SEC or its staff.

 

(c)        The financial statements of MorphoSys filed with the SEC for the
fiscal year ended December 31, 2018 and those it filed with the SEC for the
quarterly periods ended March 31, 2019; June 30, 2019; and September 30, 2019
present fairly in all material respects the financial position of MorphoSys and
its consolidated subsidiaries as of the dates indicated and the results of their
operations and the changes in their cash flows for the periods specified; such
financial statements have been prepared in conformity with IFRS applied on

 

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a consistent basis throughout the periods covered thereby, except as otherwise
disclosed therein and, in the case of unaudited, interim financial statements,
subject to normal year-end audit adjustments and the exclusion of certain
footnotes, and any supporting schedules included in MorphoSys SEC Documents
present fairly the information required to be stated therein.

 

(d)        The ADSs are listed on the Nasdaq Market, and MorphoSys has taken no
action designed to, or which is likely to have the effect of, terminating the
registration of the ADSs under the Exchange Act or delisting the ADSs from the
Nasdaq Market.  MorphoSys has not received any notification that, and has no
Knowledge that, the SEC or the Nasdaq Market is contemplating terminating such
listing or registration.

 

1.8     Absence of Certain Changes.  Except as disclosed in MorphoSys SEC
Documents, since September 30, 2019, there has not been any material change in
the capital stock, short-term debt or long-term debt of MorphoSys or any of its
subsidiaries, or any dividend or distribution of any kind declared, set aside
for payment, paid or made by MorphoSys on any class of capital stock, or any
change, event or development that has had or would reasonably be expected to
have a Material Adverse Effect.

 

1.9     Offering.  The offer, sale and issuance of the New ADSs to be issued in
conformity with the terms of this Purchase Agreement constitute transactions
which are exempt from the registration requirements of the Securities Act and
from all applicable state registration or qualification requirements.  Neither
MorphoSys nor any person or entity acting on its behalf will take any action
that would cause the loss of such exemption.

 

1.10     No Integration.  MorphoSys has not, directly or through any agent,
sold, offered for sale, solicited offers to buy or otherwise negotiated in
respect of, any security (as defined in the Securities Act), that is or will be
integrated with the sale of the New ADSs in a manner that would require
registration of the New ADSs under the Securities Act.

 

1.11     No General Solicitation.  Neither MorphoSys nor any person acting on
behalf of MorphoSys has offered or sold any of the New ADSs or the New Shares by
any form of general solicitation or general advertising.  MorphoSys has offered
the New ADSs for sale only to COMPANY.

 

1.12     Foreign Corrupt Practices.  To MorphoSys’ Knowledge neither MorphoSys
nor any agent or other person acting on behalf of MorphoSys, has, since April
19, 2018: (i) directly or indirectly used any funds for contributions, gifts,
entertainment or other expenses related to foreign or domestic political
activity which is unlawful in any material respect, (ii) made any payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds which is unlawful
in any material respect, (iii) failed to disclose fully any contribution made by
MorphoSys (or made by any person acting on its behalf of which MorphoSys is
aware) which is in violation of law in any material respect or (iv) violated in
any material respect any provision of the Foreign Corrupt Practices Act of 1977,
as amended, or any applicable non-U.S. anti-bribery Law.

 

1.13     Regulation M Compliance.  MorphoSys has not taken, directly or
indirectly, any action designed to or that would reasonably be expected to cause
or result in stabilization or manipulation of the price of the New ADSs to
facilitate their sale or resale.

 

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1.14     Office of Foreign Assets Control.  Neither MorphoSys nor, to MorphoSys’
Knowledge, any director, officer, agent, employee or Affiliate of MorphoSys is
currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department.

 

 

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EXHIBIT 17

TRANSITION PLAN  DRAFT

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EXHIBIT 18

STATEMENT FOR COMPANY’S MEDIA RELEASES AND PUBLICATIONS

 

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EXHIBIT 19

DISCLOSURE SCHEDULE

 

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EXHIBIT 20

ADDITIONAL CAP RE OBLIGATION UNDER SECTION 14.1(B)(II)(3)(Z)

 

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