In this task, you're given a passage that represents a legal contract or clause between multiple parties, followed by a question that needs to be answered. Based on the paragraph, you must write unambiguous answers to the questions and your answer must refer a specific phrase from the paragraph. If multiple answers seem to exist, write the answer that is the most plausible.

Example Input: Exhibit 10.24   ***Text Omitted and Filed Separately with the Securities and Exchange Commission. Confidential Treatment Requested Under 17 C.F.R. Sections 200.80(b)(4) and Rule 406 of the Securities Act of 1933, as amended.

   Collaboration Agreement, BII/ XENCOR



  Confidential

    COLLABORATION AGREEMENT   This Collaboration Agreement (Agreement) is made by and among     Xencor, Inc.  111 W. Lemon Ave. Monrovia, CA 91016 USA

(hereinafter called XENCOR),   and   Boehringer Ingelheim International GmbH   Binger Straße 173 55216 Ingelheim Germany   (hereinafter called BII)   (hereinafter BII an XENCOR each shall also be called Party and collectively Parties as the case may be).     EFFECTIVE DATE: February 10, 2012   1





  TABLE OF CONTENTS

                                                    1

  Definitions

  5

  1.1

  Acceptance Criteria   5

  1.2

  Affiliated Companies   5

  1.3

  Batch   5

  1.4

  BII Confidential Information and Know­How   5

  1.5

  BII Facility   6

  1.6

  BII Intellectual Property   6

  1.7

  BII Technology   6

  1.8

  Business Partner   6

  1.9

  Certificate of Analysis   6

  1.10

  Claim   6

  1.11

  CMO   6

  1.12

  Confidential Information­and Know­How   6

  1.13

  Confirmation of Compliance   6

  1.14

  Controlled Technology   6

  1.15

  cGMP   6

  1.16

  Deliverables   7

  1.17

  Due Date   7

  1.18

  Effective Date   7

  1.19

  FTE   7

  1.20

  Improvements   7

  1.21

  Knowledge   7

  1.22

  Latent Defects   7

  1.23

  Licensing Revenue   7

  1.24

  Losses   7

  1.25

  Major Territories   7

  1.26

  Material   7

  1.27

  MTA   7

  1.28

  Obvious Defects   8

  1.29

  Other Improvements   8

  1.30

  Principal Supplier   8

  1.31

  Process   8







    1.32

  Process Description   8

  1.33

  Product   8

  1.34

  Project   8

  1.35

  Project Fees   8

  1.36

  Project Manager   8

  1.37

  Project Plan   8

  1.38

  Project Team   8

  1.39

  QAA   9

  1.40

  Representatives   9

  1.41

  Service(s)   9

  1.42

  Specification(s)   9

  1.43

  Steering Committee   9

  1.44

  Technology   9

  1.45

  Technology Access Fee   9

  1.46

  Total Amount   9

  1.47

  XENCOR Confidential Information and Know­How   9

  1.48

  XENCOR Intellectual Property   9

  1.49

  XENCOR Technology   9

    2







                                                               2

  Cooperation between the Parties in the Course of a Project

  10

  2.1

  General

  10



 2.1.1   General

  10











 2.1.2   Priority

  10









  2.2

  Personnel

  10



 2.2.1   Designation of Project Manager

  10











 2.2.2   Project Team

  10











 2.2.3   Steering Committee

  11









  2.3

  Conduct of the Project and BII's Work and Tasks   11

  2.4

  Deliverables

  12

  2.5

  Nature of the Project

  12

  2.6

  Additional Work

  12

  2.7

  XENCOR Confidential Information and Know-How and Material

  12

  2.8

  Further Obligations of XENCOR

  13



 2.8.1   General

  13











 2.8.2   Obligations of XENCOR

  13











 2.8.3   Timelines and Information

  13









  3

  Payments

  14

  3.1

  Project Fee

  14



 3.1.1   Consideration for Services

  14











 3.1.2   Payment of the Project Fees

  14











 3.1.3   Invoicing

  15















     3.2

  Technology Access Fee

  15

  3.3

  VAT

  15







  4

  Delivery Terms of Product

  16

  4.1

  Delivery Terms

  16

  4.2

  Cancellation of Order

  17







  5

  Ownership and Use of Project Data

  17

  5.1

  Project Data

  17

  5.2

  Use of the Process; Right of Negotiation

  18



 5.2.1   Use of the Process outside this Agreement

  18











 5.2.2   Right of First Negotiation to Manufacture

  18











 5.2.3   Technology Access Fee and Technology Transfer

  20











 5.2.4   Payment Terms

  21











 5.2.5   License

  21









  5.3

  Acknowledgement

  21







  6

  Representations, Warranties and Indemnification

  22

  6.1

  Mutual Representations, Warranties and Covenants

  22

  6.2

  XENCOR Warranties

  22

  6.3

  BII Warranties

  22

  6.4

  Process for Defense of Infringement of Third Party Intellectual Property

  23

  6.5

  Disclaimer of Warranties

  24

    3







                                                       7

  Liability, Indemnification, Limitations and Insurance

  24

  7.1

  General

  24

  7.2

  Liability

  24

  7.3

  Indemnification

  25

  7.4

  Limitation of Liability and Indemnification Obligations

  25

  7.5

  Insurance

  26







  8

  Intellectual Property

  26

  8.1

  Existing Intellectual Property Rights

  26

  8.2

  New Intellectual Property, Project Results and Licenses

  26



 8.2.1   XENCOR

  26











 8.2.2   BII

  27











 8.2.3   Other Improvements

  27











 8.2.4   Licenses to Xencor

  27











 8.2.5   Licenses to BII

  27









  9

  Confidentiality

  28

  9.1

  General

  28

  9.2

  MTA Superseded

  30

  9.3

  Controlled Technology

  30







  10

  Term and Termination

  30

  10.1

  Term

  30

  10.2

  Termination of this Agreement

  30



 10.2.1



 30









 10.2.2



 30







  10.3

  Effects of Termination of this Agreement

  31









 10.3.2



 31









 10.3.3



 32







  10.4

  Surviving Provisions

  32







  11

  Miscellaneous

  32

  11.1

  Force Majeure

  32

  11.2

  Conflict with Improvements under the MTA

  33

  11.3

  Secrecy Agreement between the Parties

  33

  11.4

  Publicity

  33

  11.5

  Notices

  33

  11.6

  Applicable Law and Arbitration

  34

  11.7

  Entire Agreement

  34

  11.8

  Waiver; Amendment

  34

  11.9

  Severability

  35

  11.10

  Dispute Resolution

  35

  11.11

  Assignment

  35

  11.12

  Independent Contractors

  35

  11.13

  Counterparts

  35

    4

  Preamble   WHEREAS, XENCOR and an Affiliated Company (as defined below) of BII, the Boehringer Ingelheim Pharma GmbH & Co. KG, Birkendorfer Str. 65, 88397 Biberach, Germany (BI Pharma) entered into a Material Transfer and Initial Service Agreement dated as of June 28, 2011 relating to XENCOR's proprietary product, a monoclonal antibody directed against TNF­  known as Xtend­TNF or XmAb6755; and   WHEREAS, XENCOR is a company engaged in the design and development of biopharmaceutical drugs and is owner of a cell line expressing the Product (as defined below);   WHEREAS, BII has know-how and expertise to develop production processes for biopharmaceuticals towards commercial scale volumes and within international regulatory requirements;   WHEREAS, XENCOR and BII herewith agreed on a business collaboration for the mutual benefit of both Parties by having XENCOR providing the Material (as defined below) and the description of the Product and by having BII developing a fed­batch production process to have XENCOR's Product expressed from the Material in the quantity suitable for preclinical and completion of Phase 1 clinical testing; and   WHEREAS, as BII finances the Project in advance and receives a first right to negotiate to manufacture and payments at a later point in the future, XENCOR agrees, in order to make both Parties benefit from their collaboration, to use its commercially reasonable efforts to complete Phase 1 clinical testing of the Product and to find a business partner for the further development of the Product into a successful medicinal product;   NOW THEREFORE and in consideration of the mutual covenants set forth in this Agreement, BII and XENCOR hereby agree as follows:   1 Definitions   1.1 Acceptance Criteria





  shall mean either, (as the case may be) the following criteria with respect to a Batch of Product; (i) the preliminary specifications as agreed upon by the Parties with respect to the three (3) initial manufacturing runs as described in Section 2.5, or (ii) except as provided in clause (i), the Specifications accompanied by a Confirmation of Compliance and Certificate of Analysis.   1.2 Affiliated Companies   shall mean any company or business entity which controls, is controlled by, or is under common control with, either XENCOR or BII. For purposes of this definition, control shall mean the possession, directly or indirectly of the power to direct or cause the direction of the management and policies of an entity (other than a natural person), whether through the majority ownership of voting capital stock, by contract or otherwise.   1.3 Batch   shall mean Product from one fermentation run using the Process.   1.4 BII Confidential Information and Know­How   shall mean all existing or future technical or other information relating specifically to (a) the BII Facility, (b) the Process, (c) BII Intellectual Property, and/or (d) know-how for the development and manufacture of biopharmaceuticals generally, in each case (a)-(d) whether   5





  patented or not patented, including, without limitation, trade secrets, know-how, processes, concepts, experimental methods and results and business and scientific plans that are disclosed or supplied directly or indirectly to XENCOR or used in connection with the Project, but always excluding all confidential technical or other information of XENCOR specifically relating to XENCOR Technology.   1.5 BII Facility   shall mean the biotech buildings and all other buildings used by BII and/or its Affiliated Companies in performance of the Project in Fremont, CA, USA (it being understood that certain aspects of the Services may be performed in Germany, and, with respect thereto, such buildings in Germany used by BII and/or its Affiliated Companies in performance of the Project, shall also be deemed BII Facility).   1.6 BII Intellectual Property   shall have the meaning set forth in Section 8.2.2 hereof.   1.7 BII Technology   shall mean the Technology developed or obtained by or on behalf of BII or any of its Affiliated Companies without the use of the of XENCOR Confidential Information and Know-How or the Material, including without limitation, the Process.   1.8 Business Partner   shall have the meaning set forth in Section 2.8.2 hereof.   1.9 Certificate of Analysis   shall mean, with respect to a Batch, that complete and accurate document setting forth the conformance with the Specifications set forth in the QAA.   1.10 Claim   shall have the meaning set forth in section 6.4.(a)a) hereof.   1.11 CMO   shall mean Contract Manufacturing Organization.   1.12 Confidential Information­and Know­How   shall mean either or both Xencor Confidential Information and Know-How (as defined herein) or BII Confidential Information and Know- How (as defined herein), as applicable.   1.13 Confirmation of Compliance   shall mean BII's complete and accurate certificate, executed and delivered to XENCOR in connection with each Batch of Product, confirming that such Batch of Product was manufactured according to cGMP, the Process and applicable laws at the BI Facility, and setting forth any deviations therefrom and the results of final investigations performed by BII according to the QAA.   1.14 Controlled Technology   shall have the meaning specified in Section 9.3 hereof.   1.15 cGMP   shall mean current Good Manufacturing Practice regulations as codified in:   The Rules Governing Medicinal products supplied in the European Union: Volume 4 -Medicinal products supplied for Human and Veterinary Use: Good Manufacturing Practice, as amended from time to time; the United States Code of Federal Regulations, title 21, parts   6





  210, 211, 600 and 610, as amended from time to time; and the International Committee on Harmonisation and other comparable guidelines, directives or standards required by governmental authorities in the Major Territories or in any other country or countries agreed in writing by the Parties.   1.16 Deliverables   shall have the meaning specified in Section 2.4 hereof.   1.17 Due Date   shall have the meaning specified in Section 3.1.2 hereof.   1.18 Effective Date   shall mean the date of commencement of this Agreement as mentioned on the cover page above.   1.19 FTE   shall mean a fully allocated employee or consultant of BII and working on the Technology transfer with such time and effort to constitute the equivalent of one (1) employee on a full time basis consistent with normal business and scientific practice […***…].   1.20 Improvements   shall mean all discoveries and inventions, and all modifications, derivatives and improvements to Technology or new uses thereof (whether or not protectable under patent, trademark, copyright or similar laws) that are discovered, developed or reduced to practice by or on behalf of BII or any of its Affiliated Companies (alone or jointly with XENCOR) in the performance of this Agreement.   1.21 Knowledge   shall mean that which a Party knows or should have known following that inquiry a reasonable person would have made in light of the facts and circumstances.   1.22 Latent Defects   shall mean non-conformance of the Product with this Agreement other than Obvious Defects.   1.23 Licensing Revenue   shall have the meaning set forth in Section 3.1.2 hereof.   1.24 Losses   shall have the meaning set forth in Section 7.2.a hereof.   1.25 Major Territories   shall mean the United States, the European Union and/or Japan.   1.26 Material   shall mean the respective XENCOR proprietary cell line as laid down in detail in Appendix 1 and any know-how or data relating directly thereto and provided together with such cell line to BII by or on behalf of XENCOR (including any progeny or derivative thereof).   1.27 MTA   shall mean the Material Transfer and Initial Service Agreement entered into by XENCOR and BI Pharma on June 28, 2011 attached to this Agreement as Appendix 4.

***Confidential Treatment Requested   7





  1.28 Obvious Defects   shall mean any non-conformance of the Product with this Agreement, which is visible or easily detectable without any analysis in a laboratory, such as noticeable damages of the Product caused by the transport of Product.   1.29 Other Improvements   shall have the meaning set forth in Section 8.2.3 hereof.   1.30 Principal Supplier   shall mean the right to manufacture and supply commercial Product in the amount per annum of at least […***…] of the worldwide annual demand of commercial Product calculated based on XENCOR's reasonably forecasted request for commercial Product for the respective calendar year.   1.31 Process   shall mean all the respective steps involved in the process developed and performed by BII pursuant to this Agreement to produce the respective Product from the Material or having the Product expressed from the Material, including, without limitation, the manufacture, testing and packaging thereof.   1.32 Process Description   shall mean a controlled document, approved by authorized technical and quality representatives of both Parties, that documents the general outline of the respective Process. It includes all relevant Process parameters to be met and equipment and raw materials to be used.   1.33 Product   shall mean XENCOR's proprietary biopharmaceutical product, a monoclonal antibody directed against TNF­  known as Xtend­INF or XmAb6755, as further laid down in detail in Appendix 1, expressed from the Material disclosed by XENCOR to BII and formulated either as bulk drug substance or in final dosage form as drug product, as the context requires.   1.34 Project   shall mean the performance of the Services, including without limitation the Process development program for the Product.   1.35 Project Fees   shall have the meaning specified in Section 3.1 hereof.   1.36 Project Manager   shall have the meaning specified in Section 2.2.1 hereof.   1.37 Project Plan   shall mean the plan describing the Services to be performed by BII under the Project, including the Project timeline and the Project Fees, attached to this Agreement as Appendix 2.   1.38 Project Team   shall have the meaning specified in Section 2.2.2 hereof and at the Effective Date shall consist of the persons listed in Appendix 3.   1.39 QAA

***Confidential Treatment Requested   8





  shall mean the Quality (Assurance) Agreement entered into between the Parties simultaneously with this Agreement and attached hereto as Appendix 5.   1.40 Representatives   shall have the meaning specified in Section 7.3 a hereof.   1.41 Service(s)   shall mean those certain services performed by BII under this Agreement.   1.42 Specification(s)   shall mean all the tests, analytical methods and/or limits, and the results thereof, as applicable, agreed by the Parties, within which the Product has to conform to be considered acceptable by XENCOR for clinical use set forth in Appendix 6. The Parties are in agreement, that in the first instance they will agree on preliminary specifications which shall then be fixed to final Specifications in accordance with Section 2.5.   1.43 Steering Committee   shall have the meaning specified in Section 2.2.3 hereof.   1.44 Technology   shall mean all cDNA, cell lines, cell banks, master cell banks, constructs, reagents, antibodies and/or other tangible materials, methods, techniques, processes, trade secrets, copyrights, know-how, data, documentation, regulatory submissions, specifications and other intellectual property of any kind (whether or not protectable under patent, trademark, copyright or similar laws).   1.45 Technology Access Fee   is defined in Section 5.2.3.   1.46 Total Amount   shall have the meaning specified in Section 3.1.2 hereof.   1.47 XENCOR Confidential Information and Know­How   shall mean all existing or future technical or other information relating specifically to (a) the Material, (b) the Product (and any modification, derivative or fragment thereof), and/or (c) the XENCOR Technology, in each case (a), (b) and (c) whether patented or not patented, and including, without limitation, all know-how, trade secrets, inventions, patent applications, processes, concepts, experimental methods and any other information concerning XENCOR's financial situation, business plans, and its research and product designs, that are disclosed or supplied to BII in connection with the Project, but always excluding BII Confidential Information and Know-How.   1.48 XENCOR Intellectual Property   shall have the meaning specified in Section 8.2.1 hereof.   1.49 XENCOR Technology   shall mean (i) the Material, (ii) the Product, and any modifications, derivatives, or fragments thereof, and (iii) the Technology of XENCOR developed or obtained by or on behalf of XENCOR independent of and without the use of technical or other information disclosed or supplied by BII or its Affiliated Companies to XENCOR relating specifically to the BII Facility, the Process, BII Intellectual Property and/or know-how for the development and manufacturer of biopharmaceuticals generally, and which was introduced by XENCOR to the Project.   9





  2 Cooperation between the Parties in the Course of a Project   2.1 General   2.1.1 General   This Agreement sets forth the terms and conditions under which BII and XENCOR will perform their tasks regarding the Project. BII shall (by itself or by its Affiliated Companies) perform for XENCOR the Services as specified in this Agreement and the Project Plan and BII and XENCOR shall adhere to their obligations under this Agreement and the Project Plan.   2.1.2 Priority   In the event of a conflict or ambiguity between any term of this Agreement and an Appendix, the terms of this Agreement shall prevail. In case the Parties mutually agree that a specific Section of this Agreement shall be modified by the terms of a Project Plan (and that such term of the Project Plan shall prevail) for a specific Service, they may only do so by explicit reference to the Section of this Agreement that shall be modified.   2.2 Personnel   2.2.1 Designation of Project Manager   Upon commencement of the Project, BII and XFNCOR will each appoint a Project Manager, who will coordinate and supervise the Project including communication of all instructions and information concerning the Project to the other Party. The Project Manager will serve as the primary contact person for the other Party. Each Project Manager will be available on an agreed basis for consultation at prearranged times during the course of the Project. The Project Managers shall be copied on all correspondence by other Project Team members and all correspondence between the Parties. In the absence of the Project Manager, a substitute shall be appointed. Additional modes or methods of communication and decision making may be implemented with the mutual written consent of each Party. Each Party will use reasonable efforts to provide the other Party with […***…] prior written notice of any change in such Party's Project Manager.   2.2.2 Project Team   The Parties shall establish a Project Team consisting of representatives of each Party from the necessary disciplines and their respective Project Managers to (a) ensure the progress of the Project, (b) coordinate the performance of the Project, and (c) facilitate communication among the Parties. Each Project Team member shall have knowledge and ongoing familiarity with the Project and will possess the authority to make decisions on matters likely to be raised in the Project Team. Each Party shall have the right to substitute its members of the Project Team as needed from time to time by giving written notice to the other Party due time in advance.   The Project Team shall meet in person or by means of a video conference or teleconference on a periodic basis (a) as agreed by the Project Managers within [...***...] after written request for such meeting by either Party, or (b) as specified in the Project Plan (Appendix 2, as amended from time to time), but in any event, unless otherwise agreed in writing by the Parties, the Project Team shall meet at least one (1) time per calendar quarter (by means of a video conference or teleconference or in person, provided, however, that at least two (2) of these meetings per calendar year are held in person on an alternating basis between XENCOR's facilities and BII's facilities in Fremont, CA, USA).   The Project Team shall oversee the Project. Prior to each meeting of the Project Team the Parties will distribute to each other written copies of all materials, data and information arising out of the conduct of their activities hereunder.

***Confidential Treatment Requested   10





  Each Party shall bear its own costs associated with such meetings and communications. It is the right of each Party to call for a Project Team meeting according to the covenants of this Section 2.2 upon written request at any time.   The Parties shall alternate responsibility for preparing minutes of the meeting which shall be circulated promptly following the meeting.   The initial members of the Project Team and the Project Managers are set forth in Appendix 3 attached hereto which may be updated from time to time to reflect changes in the Project Team and/or Project Managers as provided in this Section 2.2.   2.2.3 Steering Committee   The Parties shall form a Steering Committee, to which each Party will appoint three (3) executive employees, including the Project Managers, all of whom shall be familiar with the Project. The Steering Committee shall have general oversight and review of the activities of the Project Team and shall resolve any issues referred to the Steering Committee by the Project Team. Each Party shall have the right to substitute its members of the Steering Committee as needed from time to time by giving written notice to the other Party due time in advance.   The Steering Committee shall meet within [...***...] after receipt of a written request by one Party to the other Party. The request shall describe the matter in dispute and the solution which the requesting Party proposes to be decided. Each Party shall bear its own costs associated with meetings and communications of the Steering Committee.   The Steering Committee will take action by unanimous consent of the Parties, with the representatives of BII collectively having a single vote and the representatives of XENCOR collectively having a single vote, or by a written resolution signed by all of the representatives. If the Steering Committee is unable to reach unanimous consent on a particular matter, then the matter will be referred to the chief executive officers of the Parties, who will use good faith efforts to resolve such matter, and the decision reached by mutual agreement of the chief executive officers of the Parties shall be final and binding on the Parties. If, (i) after good faith efforts, the chief executive officers of the Parties are unable to resolve such matter by mutual agreement, and (ii) such matter concerns the Product or the Process, but does not concern the BI Facility or the management of manufacturing slots, then the chief executive officer of XENCOR shall make the final decision about how to resolve such dispute, after good faith consideration of BII's position, which decision shall be final and binding on the Parties; provided, however, that, in resolving such matter, XENCOR's chief executive officer shall not have any authority to require BII or its Affiliated Companies to incur additional expenses or obligations not contemplated by this Agreement. In no event will the Steering Committee, or the executive officers of the Parties in resolving any Steering Committee matter, have any authority to amend or modify this Agreement; any such amendment or modification of this Agreement must be in accordance with Section 11.8. For the avoidance of doubt, nothing in this Section shall prevent any Party from seeking arbitration proceedings pursuant to Section 11.6 hereof with regard to any matters other than matters resolved by mutual agreement of the chief executive officers in accordance with this Section 2.2.3.   The members of the Steering Committee are set forth in Appendix 3 attached hereto, which may be updated from time to time to reflect changes in the Steering Committee as provided in this Section 2.2.3.   2.3 Conduct of the Project and BII's Work and Tasks   The Parties shall engage in the Project upon the terms and conditions set forth in this Agreement. In the course of this Agreement the Parties shall perform the Project as laid down and detailed in the Project Plan.   Each Party shall fully and reasonably cooperate with the other Party to provide appropriate information and assistance to the other Party in connection with the Project, responding in a

***Confidential Treatment Requested   11





  reasonable and timely manner with respect to all reasonable requests for information and approval. Neither Party shall be liable for any delays in its performance of the Project to the extent caused solely by the other Party's failure to provide in a reasonably timely manner any information or approval reasonably requested by the other Party.   The Parties shall assign a sufficient number of professionally qualified personnel to perform the Project and shall perform its tasks under this Agreement according to the generally acceptable professional and then current industry standards and subject to terms and conditions as set forth herein, at all times in compliance in all material respects with all requirements of applicable laws and regulations. The Parties will use commercially reasonable efforts to achieve the estimated timelines as laid down in the Project Plan.   Changes to the Project Plan, if any, shall require the written consent of both Parties.   2.4 Deliverables   BII will deliver such deliverables expressly laid down in detail in the Project Plan, including but not limited to the Product (the Deliverables) within the timelines laid down in the Project Plan to XENCOR. Following the completion of the activities required under the Project, BII will provide to XENCOR then available Product (if any), Batch records and a summary containing manufacturing and analytical testing, including without limitation, the information and the results of the development phase according to the workscope as further described in the Project Plan.   2.5 Nature of the Project   As the Product has never been produced by BII or on behalf of BII by its Affiliated Companies at the BI Facility, XENCOR acknowledges that the Project is experimental in nature and that no favorable or useful results can be assured by BII. However, after […***…], the Parties shall in good faith agree on a revision (if necessary) to the preliminary specifications for the Product (that have been mutually agreed upon by the Parties) that shall then be the Specifications for subsequent runs in subsequent campaigns that shall form a basis for rejection or acceptance of the respective Product produced in any additional runs at such scale under the provisions of Section 4.1, and, provided that the Process has not been materially changed (i.e. a change that is subject to the Change Control procedures of the QAA), the Project shall no longer be considered experimental in nature and the obligation to meet the respective Specification shall apply to all future runs at such scale.   2.6 Additional Work   In case the Parties mutually agree on additional work for the benefit of the Project by changing the Project Plan by written agreement of the Parties, BII shall perform such additional work to sustain the progress of the Project on conditions in terms of money, time and scope to be subject to agreement of the Parties hereto as set forth in the then amended Project plan.   2.7 XENCOR Confidential Information and Know-How and Material   To the extent not already transferred by XENCOR, XENCOR shall transfer the Material for the Project to BII to the BII Facility subject to the terms of this Section 2.7, and BII shall use or have used by its Affiliated Companies such Material solely to conduct the Project in accordance with the Project Plan, this Agreement, or as otherwise may be agreed to by the Parties in writing. The Material will not be used in connection with any animal studies or diagnosis, treatment or any activity in humans or for any use not directly related to the Project. BII's use of the Material will be in compliance with all applicable laws in the state or country where the Services are performed. BII accepts the Material with the knowledge that it is experimental. The Material may not be transferred or otherwise made available, in whole or in part, by BII to any other individual, entity or institution other than any Affiliated Companies

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  of BII without the prior written consent of XENCOR, which may be withheld by XENCOR for any reason. Such consent is hereby given for BII or its Affiliated Companies to transfer the Material for quality control testing performed by a third party on a blinded basis. For the avoidance of doubt, in the event of a transfer of Material to an Affiliated Company of BII or to any third party with the consent of XENCOR, BII shall ensure that the respective Affiliated Company or third party shall use such Material solely to conduct the Project in accordance with the Project Plan, this Agreement, or as otherwise may be agreed to by the Parties in writing and shall not transfer or otherwise make available, in whole or in part, the Material to any other individual, entity or institution.   The Material is the property of XENCOR. It is agreed that the transfer of the Material hereunder shall not constitute a sale of Material or a grant, option or license of any patent or other rights except to allow BII to perform the Project. XENCOR shall retain and have all right, title and interest in and to the Material.   XENCOR will inform BII in a timely manner about any safety issues of which XENCOR becomes aware relating to the handling of the Material and the Product after the date of the execution of this Agreement.   BII shall at all times take reasonable measures to protect the Material from loss or damage and in no event measures less than employed by BII in the protection of its own proprietary materials, and shall promptly notify XENCOR, if at any time it believes the Material has been damaged, lost or stolen.   XENCOR and BII hereby acknowledge and agree that XENCOR is providing XENCOR Confidential Information and Know-How to BII for its use by BII for the purposes of this Agreement, and BII will make use thereof solely for such purposes and XENCOR hereby consents to such use.   2.8 Further Obligations of XENCOR   2.8.1 General   The Parties acknowledge and agree, that. subject to the terms and conditions of this Agreement, BII substantially finances the Project at the costs and fees outlined in Appendix 2 in advance and receives payments at a later point in the future. Accordingly, XENCOR agrees, in order to make both Parties benefit from their collaboration, that the success of the collaboration between the Parties depends strongly on the fact whether or not XENCOR is able to find a suitable business partner for the further development of the Product into a successful medicinal product with one or more marketing authorisations worldwide.   2.8.2 Obligations of XENCOR   Therefore, XENCOR shall use commercially reasonable efforts to conduct and complete at its own cost and risk a Phase 1 clinical trial with the Product as described in Section 2.8.3 within the timelines set forth herein (subject to Section 2.8.3); and find one or more suitable third party/parties as business partner(s) for the further development of the Product into a medicinal product (Business Partner).   For the avoidance of doubt, XENCOR bears the sole responsibility for the conduct and completion of the clinical trials of the Product and the search for the Business Partner and shall bear all costs and expenses in connection therewith. In no event will it be a breach of this Agreement by XENCOR if the Phase 1 clinical trial or other clinical trials of the Product are not completed or an agreement is not entered into with a Business Partner so long as XENCOR uses commercially reasonable efforts to do so.   2.8.3 Timelines and Information   XENCOR shall use commercially reasonable efforts to conduct and complete a Phase 1 clinical trial of the Product in a timely fashion and to search for the Business Partner. A summary of the preliminary plan for the Phase 1 clinical trial of the Product to be conducted by XENCOR is attached as Appendix 7, it being understood that timing of such clinical trial   13





  may be delayed to the extent (i) caused primarily by BII's failure to provide Product conforming to the Specifications; or (ii) by safety issues relating to the Product; or (iii) by regulatory delays; or (iv) other causes outside the control of XENCOR.   XENCOR shall promptly provide BII notice of the completion and a summary overview of the outcome/observations of the Phase 1 clinical trial regarding the Product and a summary overview of any negotiations with a possible Business Partner regarding the further development of the Product. Moreover, XENCOR shall inform BII on an annual basis or, if there is good cause, upon request of BII (whichever is the case) about the actual status of such Phase 1 clinical trial or such negotiations, such request not to be more often than twice per year.   3 Payments   3.1 Project Fee   3.1.1 Consideration for Services   As consideration for the performance of BII's Services, XENCOR shall pay BII all fees to be paid to BII as set forth in the Project Plan (the Project Fees) according to the terms and conditions set forth in the following subsections of this Section 3.1.   The Project Fees as set forth in the Project Plan include BII's internal and out­of­pocket cost and expenses for its performance of the Project, including without limitation, ordinary and standard raw materials, components and consumables, and XENCOR shall not be obligated to make any payments with respect to any Services except the Project Fees or payments for additional work agreed upon according to Section 2.6 (which shall then be considered Project Fees).   3.1.2 Payment of the Project Fees   The Project Fees referred to in Section 3.1.1 above, together with interest at a […***…] percent ([...***...]%) annual interest rate on any unpaid Project Fees accruing from the earlier of (i) the date of completion of the clinical summary report for the Phase 1 clinical trials of the Product as planned according to Appendix 7 unless delayed as described in Section 2.8.3 or (ii) the date that is five (5) calendar years after the Effective Date (each of the alternatives above, the Due Date) until paid in full (the Project Fees together with any such interest, referred to as the Total Amount), shall become duly payable in accordance with the following schedule:   a. In case XENCOR has entered into an agreement with at least one Business Partner, then, beginning from the later of (i) the effective date of such agreement or (ii) the Due Date, XENCOR will pay BII the Total Amount in [...***...] installments of [...***...] of the [...***...] (defined below) that [...***...]; provided, however, that in no event will [...***...] of the annual Licensing Revenue [...***...]; provided that, for the avoidance of doubt, [...***...] shall be excluded from [...***...].

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  b. In case XENCOR decides to proceed with the further development of the Product without a Business Partner, XENCOR will pay BII the Total Amount in one or more lump sum payments within five (5) calendar years from the Due Date.   c. As long as XENCOR, notwithstanding its commercially reasonable efforts after the completion of the Phase 1 clinical trial either (i) is not able to further develop the Product for technical and/or scientific reasons or (ii) does not decide to proceed with the further development of the Product without a Business Partner and does not enter into an agreement with a Business Partner within two (2) calendar years from the Due Date, then XENCOR shall have no obligation to pay BII any or all of the Total Amount. For the avoidance of doubt, such obligations will become due as described in this Section 3.1.2, at any time XENCOR enters into an agreement with at least one Business Partner or further develops the Product within ten (10) calendar years following the Effective Date, as provided in Section 10.3.   3.1.3 Invoicing   XENCOR shall notify BII in writing of any of the circumstances listed in Section 3.1.2.a to 3.1.2.c. BII shall issue an invoice for the payments of the Total Amount agreed upon with XENCOR according to the payment schedule in Section 3.1.2 and payment of the Technology Access Fee, as applicable. The amount of the Project Fees and the interest (if any) will be shown separately in the invoice.   XENCOR shall make payments of all invoiced amounts for the payments of the Total Amount and of the Technology Access Fee due and payable in accordance with Section 5.2.3 and 5.2.4, as applicable [...***...] from the date of receipt of BII's invoice. If XENCOR fails to make timely payment of the invoiced amount, interest shall accrue on the amount of the Project Fees shown in the invoice at a fixed annual rate equal to the highest rate of interest quoted as the prime rate in The Wall Street Journal on the day that payment was due. All payments due under this Agreement shall be paid in US dollars by wire transfer or by such other means agreed to in writing by the Parties. XENCOR will provide at least twenty-four (24) hours advance notice to BII of each wire transfer to the bank account identified below or such other bank accounts as BII shall designate in writing.

       Account Name:

  [...***...]

  Account Number:

  [...***...]







Bank:

  [...***...]

  BIC (SWIFT-CODE):

  [...***...]

  IBAN:

  [...***...]

    3.2 Technology Access Fee   The Technology Access Fee (if any) is due according to Section 5.2.3 and 5.2.4 below. Section 3.1.3 shall apply accordingly.   3.3 VAT   All payments under this Agreement (including the Technology Access Fee) shall be understood as net payments without value added tax (VAT). VAT, if applicable, shall be added to the respective payment. The Parties will reasonably cooperate in completing and filing documents required under applicable law in connection with any refund of or credit for any such payment of VAT.

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  4 Delivery Terms of Product   4.1 Delivery Terms   BII shall (a) deliver to XENCOR or, (b) at the request of XENCOR, store, the agreed amounts of the Product produced according to the Project Plan in accordance with agreed upon schedule, at the price set forth in the Project Plan. Delivery of Product by BII shall be made [...***...] BII Facility (Incoterms 2010).   BII shall package and arrange for shipment of Product to the delivery address specified by XENCOR, all in accordance with the instructions of XENCOR provided that BII shall not be responsible for any damages with respect to Product or third party claims arising out of such arrangements for shipment of Product after delivery of such Product to the shipper in accordance with such instructions in accordance with XENCOR's instructions. Each shipment of cGMP Product will include a Certificate of Analysis, a Confirmation of Compliance and such other documentation as reasonably required to meet all applicable statutory and regulatory requirements. Delivery of the Product shall be subject to quality and other provisions set forth in the QAA. The Parties shall cooperate reasonably to obtain all customs licenses or permits necessary to ship the Product (the evaluation of which customs licenses or permits required shall be performed by XENCOR), and no shipment shall be made until such licenses or permits, if any, have been obtained.   XENCOR shall diligently examine all Product delivered under this Agreement as soon as practicable after receipt. Notice of all claims arising out of or relating to Obvious Defects shall be given in writing to BII within [...***...] after the date of XENCOR's receipt of Product, otherwise, such Product shall be considered free of any Obvious Defects as between BII and XENCOR. XENCOR shall make a damaged Product available for inspection and shall comply with the requirements of any insurance policy covering the Product, and BII shall offer XENCOR all reasonable assistance, at the cost and expense of XENCOR, in pursuing any claims arising out of the transportation of the Product.   Except as otherwise provided herein and as set forth in Section 2.5, XENCOR shall have [...***...] after the date of XENCOR's receipt of Product, for all claims arising out of or relating to any Latent Defects and to reject such delivered Product for Latent Defects; provided, however that XENCOR shall only be permitted to reject the Product if the Acceptance Criteria are not met.   If XENCOR determines after reviewing the relevant documentation and performing reasonable testing that any Batch does not meet the Acceptance Criteria, or if Product is determined by BII to be unsuitable for release, then the Parties will mutually agree, as promptly as reasonably possible, whether (a) to produce a new Batch at BII's cost and expense, including the costs of materials used in the manufacture of such Batch, or (b) to rework or reprocess the Batch, at BII's cost and expense, so that the Batch can be deemed to have been manufactured in compliance with cGMP and the agreed Process Description, and to conform to the Acceptance Criteria (provided that the Parties have mutually agreed in writing on any procedures for reworking or reprocessing a Batch). If the remedy set forth in either (a) or (b) is agreed to be performed by BII, then BII shall start the applicable work as soon as reasonably practicable, such that the next reasonably available (taking into consideration BII's entire contract manufacturing business) manufacturing slot shall be used by BII to produce Product, and BII will use commercially reasonable efforts to resupply within [...***...] but in any event no later than [...***...] from time of rejection by XENCOR. For the avoidance of doubt, if Product is not accepted by XENCOR as provided above, then BII's obligations set forth above shall apply both to the drug product and the bulk drug substance contained therein.   In the event XENCOR rejects the Product for Obvious Defects or Latent Defects as provided above, BII shall have the right to sample and retest the Product, which shall be done as soon as

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  practicable, provided that, if BII does not notify XENCOR in writing of its election to retest the Product within [...***...] after notice of rejection from XENCOR, BII shall be deemed to agree with XENCOR's rejection of the Product. In the event of a discrepancy between XENCOR's and BII' s test results such that one Party's results fall within the Acceptance Criteria and the other Party's test results fall outside the Acceptance Criteria, or there exists a dispute over whether such failure is due (in whole or in part) to acts or omissions of XENCOR or any third party after delivery, the Parties shall cause a testing laboratory agreeable to both Parties to perform comparative tests and/or analyses on samples of the alleged defective Product. The testing laboratory's results shall be in writing and shall be final and binding save for manifest error on the face of its report. Unless otherwise agreed to by the Parties in writing, the costs associated with such testing and review shall be borne by the Party against whom the testing laboratory result finally rules. The testing laboratory shall be required to enter into written undertakings of confidentiality no less burdensome than set forth or referred to by this Agreement.   4.2 Cancellation of Order   If XENCOR at any time cancels or postpones any campaign set forth in the Project Plan for the manufacture of Product for non-technical reasons later than [...***...] prior to the date on which inoculation of the respective production fermenter is to take place, XENCOR shall nevertheless be obliged to pay [...***...] percent ([...***...]%) of the Project Fees for such campaign to the extent that BII is not able to adequately use the respective capacity for such campaign alternatively (e.g. for production of any other material for any third party or itself) provided always that BII shall use its commercially reasonable efforts to use such capacity and mitigate any losses that may incur arising from such cancellation or postponement, including, for the avoidance of doubt, the reapplication of raw materials, if possible.   5 Ownership and Use of Project Data   5.1 Project Data   In consideration of the Project Fees:   a. BII shall carry out the Project by itself or by its Affiliated Companies) and provide XENCOR with a summary of the results from the Project, including manufacturing and analytical release and also shall provide XENCOR with a summary report about the results on the various stages of Process development;   b. BII shall supply XENCOR with data, results and information required to comply with any mandatory request of any applicable regulatory body in the Major Territories to comply with such regulatory body's requirements. BII shall provide complete Batch records for all cGMP runs and will provide to XENCOR all data reasonably necessary from all process development and manufacturing activities to enable XENCOR's preparation of any regulatory filings; and shall not unreasonably reject supplying data results and information required to comply with any requirement of any applicable regulatory body outside the Major Territories or cooperating with XENCOR's preparation of the chemistry, manufacturing and controls section of any regulatory filing supporting the clinical development of the Product in and outside the Major Territories.   BII shall bear the cost of such supply and cooperation by BII, provided that, if there are specific requirements of a given country that are significant and in addition to requirements of the Major Territories, the Parties will enter into good faith discussions whether additional resources and costs are required, with the intent of minimizing any additional cost to XENCOR.

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  c. Certain trade secret information may be provided by BII via DMF or similar filing (e.g. to a notified body) directly to the respective authorities.   d. For the avoidance of doubt, all summaries and/or reports generated as a result of the BII's performance under this Agreement and delivered to XENCOR by BII will be part of the Process and the sole and exclusive property of BII. Subject to XENCOR's confidentiality and non-use obligations hereunder and without affecting the ownership of Improvements as set forth in Section 8, BII hereby grants to XENCOR a non-exclusive, worldwide license to use and reproduce all such summaries and/or reports for all uses in connection with development activities relating to Product that do not involve manufacturing of Product (e.g., formulation work, toxicology studies or the development of a manufacturing process), regulatory activities relating to the Product and, to the extent necessary, any commercial activities relating to the Product, which XENCOR may sublicense in connection with any license of rights to the Product.   5.2 Use of the Process; Right of Negotiation   5.2.1 Use of the Process outside this Agreement   Except as set forth in this Agreement, the Process shall not be used by XENCOR or any third party outside the scope of this Agreement without the prior written consent of BII.   5.2.2 Right of First Negotiation to Manufacture   a. XENCOR hereby grants and will make an eventual Business Partner do so, BII a first right to negotiate to manufacture and supply Product for use in Phase 2 and 3 clinical trials. XENCOR shall provide BII written notice (i) of the completion of the Phase 1 clinical trials of the Product, which notice shall include reasonable documentation of the results of such Phase 1 clinical trials of the Product or (ii) that XENCOR has entered into an agreement with at least one Business Partner, whichever of (i) and (ii) occurs earlier. If BII provides XENCOR written notice of its exercise of the first right to negotiate within [...***...] after receipt of such written notice from XENCOR, then for a period of [...***...] following such written notice from BII or such longer period as agreed in writing by BII and XENCOR (or its Business Partner) (the Clinical Negotiation Period), XENCOR (or its Business Partner) and BII will negotiate in good faith an agreement for the manufacture and supply of Product for use in Phase 2 and 3 clinical trials, at market rate terms and conditions common for the contract manufacture of monoclonal antibodies within the contract manufacturing industry, to be mutually agreed in writing by the Parties. If BII does not provide written notice of its exercise of the first right to negotiate within such [...***...] period, XENCOR and any Business Partner shall be free to enter into one or more agreements with third parties for the manufacture and supply of Product for use in Phase 2 and 3 clinical trials. If BII provides written notice of its exercise of the first right to negotiate within such [...***...] period but BII and XENCOR (or its Business Partner) do not enter into such a contract manufacturing agreement within the Clinical Negotiation Period, XENCOR and any Business Partner shall be free to enter into one or more agreements with third parties for the manufacture and supply of Product for use in Phase 2 and 3 clinical trials (which may include an agreement for any Business Partner or its affiliate to manufacture and supply Product for clinical trials), provided that the supply price for Product is no more than [...***...] percent ([...***...]%) of the clinical supply price of Product last proposed by BII during the negotiations between the Parties (or BII and the Business Partner). If the supply price for Product proposed by a third party (which may include a Business Partner or its affiliate) is more than [...***...] percent ([...***...]%) of the clinical supply price of Product last proposed by BII during the negotiations between the Parties (or BII and the Business Partner) , XENCOR (or its Business Partner) shall provide written notice to BII that XENCOR (and its Business Partner) will accept the clinical supply price last proposed by BII, and BII and XENCOR (or its Business Partner) will enter into a contract manufacturing agreement reflecting such clinical supply price; provided that, if BII does not agree to enter into such contract

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  manufacturing agreement within [...***...] after such written notice, XENCOR (or its Business Partner) shall be free to enter into an agreement with a third party (or an agreement for the Business Partner or its affiliate to manufacture and supply Product).   b. In addition, if BI has exercised its first right of negotiation in Section 5.2.2.a, XENCOR hereby grants and will make an eventual Business Partner do so, BII a first right to negotiate to manufacture and supply commercial Product as Principal Supplier for a period up to the [...***...], starting with the first commercial launch of the Product. XENCOR shall provide BII written notice (i) of the decision to have the Product manufactured at a commercial scale and to launch the Product commercially or (ii) that XENCOR has entered into an agreement with at least one Business Partner, whichever of (i) and (ii) occurs earlier. If BII provides XENCOR written notice of its exercise of the first right to negotiate within [...***...] after receipt of such written notice from XENCOR, then for a period of [...***...] following such written notice, or such longer period as agreed in writing by BII and XENCOR (or its Business Partner) (the Commercial Negotiation Period), XENCOR (or its Business Partner) and BII will negotiate in good faith an agreement for the manufacture and supply of commercial Product as Principal Supplier, at market rate terms and conditions common for the contract manufacture of monoclonal antibodies within the contract manufacturing industry to be mutually agreed in writing by the Parties. If BII does not provide written notice of its exercise of the first right to negotiate within such [...***...] period, XENCOR and any Business Partner shall be free to enter into one or more agreements with third parties for the manufacture and supply of commercial Product (which may include an agreement for any Business Partner or its affiliate to manufacture and supply commercial Product). If BII provides written notice of its exercise of the first right to negotiate within such [...***...] period but BII and XENCOR (or its Business Partner) do not enter into such a contract manufacturing agreement within the Commercial Negotiation Period, XENCOR and any Business Partner shall be free to enter into one or more agreements with third parties for the manufacture and supply, of commercial Product (which may include an agreement for any Business Partner or its affiliate to manufacture and supply commercial Product); provided that the supply price for Product is no more than [...***...] percent ([...***...]%) of the commercial supply price of Product last proposed by BII during the negotiations between the Parties (or BII and the Business Partner). If the supply price for Product proposed by a third party (which may include a Business Partner or its affiliate) is more than [...***...] percent ([...***...]%) of the commercial supply price of Product last proposed by BII during the negotiations between the Parties (or BII and the Business Partner), XENCOR (or its Business Partner) shall provide written notice to BII that XENCOR (and its Business Partner) will accept the commercial supply price last proposed by BII, and BII and XENCOR (or its Business Partner) will enter into a contract manufacturing agreement reflecting such commercial supply price; provided that, if BII does not agree to enter into such contract manufacturing agreement within [...***...] after such written notice, XENCOR (or its Business Partner) shall be free to enter into an agreement with a third party (which may include an agreement for any Business Partner or its affiliate to manufacture and supply Product).   c. The right set forth in Section 5.2.2.b shall automatically terminate if BII does not exercise the first right of negotiation set forth in Section 5.2.2.a. The rights set forth in Section 5.2.2.a and b shall automatically terminate if BII does not produce a viable Process for manufacture of Product as evidenced by failure to produce cGMP Product within a timeframe reasonably and customary in the biopharmaceutical industry for companies of comparable size and the respective activities.   d. In both cases set forth above, in Section 5.2.2.a. and b., if BII exercises its first right of negotiation, BII and XENCOR (and/or its Business Partner, as applicable) will negotiate in good faith a respective contract manufacturing agreement based on the market rate

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  terms and conditions common for the contract manufacture of monoclonal antibodies within the contract manufacturing industry, it being understood that any such contract manufacturing agreement would provide for Technology transfer, payment of the Technology Access Fee (if applicable), and other terms set forth in Sections 5.2.3, 5.2.4 and 5.2.5 below.   e. Any use of the Process by XENCOR or any third party outside the terms and conditions set forth in such contract manufacturing agreement is always subject to the provisions set forth in Section 5.2.3 below.   f. In the event that BII elects not to exercise its first right of negotiation described in Section 5.2.2.a or 5.2.2.b, or, despite their commercially reasonably efforts and good faith negotiations the Parties (or BII and the Business Partner) are unable to agree upon a manufacturing agreement within the Clinical Negotiation Period or, Commercial Negotiation Period, as applicable; and/or XENCOR (and/or XENCOR's Business Partner) wishes to use the Process outside the terms and conditions set forth in a contract manufacturing agreement with BII, BII shall transfer the Process in accordance with Section 5.2.3 below.   g. All of BII's rights of negotiation set forth in this Secti6n 5.2.2 shall terminate upon payment of the Technology Access Fee by XENCOR.   5.2.3 Technology Access Fee and Technology Transfer   In the event that XENCOR wishes to use or have used (e.g. by a Business Partner) the Process outside this Agreement or the terms and conditions set forth in a contract manufacturing agreement with BII, except as provided below, XENCOR shall pay BII a technology access fee of three million five hundred thousand (3,500,000.00) US dollars (the Technology Access Fee).   In the event that XENCOR pays the Technology Access Fee set forth above, XENCOR shall have the right to use or have used (e.g. by a Business Partner) the Process worldwide for the manufacture of Product in accordance with the terms and conditions of this Agreement, without entering into a contract manufacturing agreement with BII.   Notwithstanding the foregoing, no Technology Access Fee shall be due or payable if BII does not produce a viable Process for manufacture of Product as evidenced by failure to produce cGMP Product within the timeframe agreed in the Project Plan or, if factors outside of the reasonable control of BII (such as e.g. a cell-line not suitable for production, delay in the growth of the cell line; shortage of raw materials and supplies, delay or non­performance of BII's suppliers, requests or orders of governments or regulatory authorities, etc.) require the timeframe in the Project Plan to be extended, the extended timeframe agreed upon in writing between BII and XENCOR that is reasonable and customary for paying customers in the biopharmaceutical industry for companies of comparable size and the respective activities. In addition, no Technology Access Fee shall be due or payable in connection with XENCOR's election to use or have used (e.g. by a Business Partner) the Process if (i) BII does not exercise its first right to negotiate under either Section 5.2.2.a or 5.2.2.b, (ii) BII exercises its first right to negotiate but demands a supply price for clinical/commercial supply of Product that exceeds the bid price for the clinical/ commercial supply of Product of a comparable quantity and quality by a third party biopharmaceutical CMO of comparable size and respective activities to BII and with registered headquarters in the Major Territories, or (iii) XENCOR (or its Business Partner) has entered into a contract manufacturing agreement with BII, but BII is not able to supply XENCOR and its Business Partners [...***...] of the Product required. For the avoidance of doubt, nothing in this Section 5.2.3 (ii) shall affect such contract manufacturing agreement or BII's position as Principal Supplier, but XENCOR may solely request the Technology Transfer pursuant to the following sentences of this Section without paying the Technology Access Fee in order to have manufactured the amount of Product missing to satisfy XENCOR's and its Business Partners' demand.

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  For the avoidance of doubt, the Technology Access Fee is only due one time, and if XENCOR pays the Technology Access Fee, except for the Project Fees, no additional amount will be payable for use or having used the Process worldwide.   The Technology Access Fee includes Technology transfer support of [...***...] FTEs of BII for a period of [...***...] for each of the [...***...] FTEs in a time frame of [...***...] beginning with XENCOR's written request to use or have used (e.g. by a Business Partner) the Process outside the terms and conditions set forth in a contract manufacturing agreement with BII. Further support of BII requested by XENCOR shall be reimbursed at an hourly rate of [...***...] US dollars. The Parties will agree upon the times when to render such Technology transfer support in good faith.   Promptly following XENCOR's election to use the Process, BII shall start to transfer the Process and all reasonably necessary related BII Confidential Information and Know-How) to XENCOR or such designee experienced in the biopharmaceutical production and shall use commercially reasonable efforts, taking into consideration BII's entire contract manufacturing business and other contract manufacturing contracts, to transfer the Process as quickly as possible (and in any event within [...***...] from receipt of XENCOR's written election notice). Both Parties agree and XENCOR will make its Business Partner agree that BII may, however, select the way how to render such support of any Technology transfer at its own discretion, in particular but not only any support of such Technology transfer to a company whose primary business is providing biopharmaceutical CMO services (including e.g. a Technology transfer outside the BI Facility), provided, however, that BII's exercise of such discretion is not unreasonable.   XENCOR and/or any third party may not use the Process outside the terms and conditions set forth in a contract manufacturing agreement with BII except as set forth in Section 5.2.2 and this Section 5.2.3 and provided that XENCOR or it Business Partner strictly adhere to the license conditions set forth in Sect ion 5.2.5 herein.   5.2.4 Payment Terms   The Technology Access Fee, as applicable, shall be paid to BII upon completion of the Technology transfer described in Section 5.2.3 and shall be payable in accordance with the provisions set forth under Sections 3.2 and 3.3 above. Parties agree that the Technology transfer shall be completed upon the transfer of Process and all reasonably necessary related BII Confidential Information and Know-How.   5.2.5 License   Subject to XENCOR's adherence to the obligations under this Agreement, BII hereby grants XENCOR a worldwide, irrevocable, exclusive, sublicensable and royalty free license to use the Process and all reasonably necessary related BII Confidential Information and Know- How, BII Technology and BII Intellectual Property for the sole purpose of making and having made the Product; provided that such license shall become effective only upon complete payment of the Technology Access Fee, as applicable.   5.3 Acknowledgement   The Parties acknowledge that nothing in this Agreement shall limit or restrict XENCOR, itself or with or through any third party, from developing and using any process (except for the Process) for the manufacture of any of its products, including the Product, provided that no BII Confidential Information and Know-How is used and XENCOR adheres to its confidentiality and non-use obligations hereunder and complies with the ownership of intellectual property and Improvements as set forth in Section 8 below.

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  6 Representations, Warranties and Indemnification   6.1 Mutual Representations, Warranties and Covenants   Each Party hereby represents, warrants and covenants to the other Party as follows as of the Effective Date:   a. it is a corporation duly organized and validly existing under the laws of the state or other jurisdiction of incorporation or formation; and   b. the execution, delivery and performance of this Agreement by such Party has been duly authorized by all requisite corporate action; and   c. it has full corporate authority to execute and deliver this Agreement and to perform its obligations hereunder, and the Agreement is binding upon it in accordance with it terms; and   d. it has the right, without restriction, to grant the licenses granted under this Agreement.   6.2 XENCOR Warranties   XENCOR hereby warrants that:   a. XENCOR has the right to provide the Material, the XENCOR Technology, the XENCOR Intellectual Property and all XENCOR Confidential. Information and Know-How under this Agreement and to the best of its Knowledge at the Effective Date that there are no third party rights that will limit or restrict use thereof by BII in accordance with this Agreement; and   b. to the best of its Knowledge at the Effective Date XENCOR is not aware of any special or unusual hazards involved in handling the Materials and/or Product of which it has failed to inform BII; and that it will inform BII immediately of any changes related thereto after the date of execution of this Agreement; and   c. at the Effective Date, no third party has asserted any claim or lawsuit against XENCOR claiming that use of the Material, XENCOR Technology, the XENCOR Intellectual Property and the XENCOR Confidential Information and Know-How infringes any intellectual property owned by a third party, and it will promptly notify BII in writing should it become aware of any claims by a third party asserting that use of such infringes any third part intellectual property rights owned by such third party.   d. it will use commercially reasonable efforts to conduct and complete a clinical trial phase 1 regarding the Product; and   e. it will use commercially reasonable efforts to find and enter into an agreement with a suitable Business Partner.   For avoidance of doubt, all XENCOR liability or indemnification obligations that might result from representations and the warranties under this Section 6 are always subject to the limitations set forth in Section 7.4 of this Agreement.   6.3 BII Warranties   BII hereby warrants that:   a. BI is entitled to use the BI Facility and BII Confidential Information and Know-How, for the purposes set forth in this Agreement; and   b. BII at the Effective Date, it is not aware of any special or unusual hazards that would arise as a result of its carrying out of the Projects as planned; and   c. at the Effective Date, it has not been debarred, nor is it subject to a pending debarment, and that it will not, to the best of its Knowledge, use in any capacity in connection with   22





  the Services under this Agreement any person, who has been debarred pursuant to section 306 of the FDCA, 21 U.S.C. § 335a, or who is the subject of a conviction described in such section. BII agrees to notify XENCOR in writing immediately if it has Knowledge that BII or any person who is performing Services is debarred or is the subject of a conviction described in section 306, or if any action, suit, claim, investigation, or proceeding is pending, or to BII's Knowledge, is threatened, relating to the debarment or conviction of BII or any person performing Services under this Agreement; and   d. to the best of its Knowledge at the Effective Date its performance under this Agreement including, but not limited to, the BII Technology and its use in the Process, by BII, XENCOR or a third party manufacturer of XENCOR does not infringe the intellectual property rights of any third party and it will promptly notify XENCOR in writing should it become aware of any claims asserting such infringement or of any third party intellectual property rights, that would be infringed by the BII Technology and its use in the Process. For the avoidance of doubt, the currently pending Cabilly dispute is excluded and will be addressed/ compensated by XENCOR once applicable: and   e. as of the Effective Date no third party has asserted any claim or lawsuit against BII claiming infringement of any intellectual property owned by a third party with relation to BII Technology and/or the Process, or any part or component thereof.   For avoidance of doubt, all BII liability or indemnification obligation that might result from representations and the warranties under this Section 6 are always subject to the limitations set forth in Section 7.4 of this Agreement.   6.4 Process for Defense of Infringement of Third Party Intellectual Property   Subject to each Party's indemnification obligations, in the event that there occurs a Claim (as defined below), the Parties shall follow the following procedures with respect to the defense of the Claim:   a. BII agrees that if a third party threatens or asserts any claim or files any lawsuit, claiming that BII Intellectual Property utilized under this Agreement and necessary for manufacture and production of the Product in accordance with this Agreement, including, without limitation, the BII Technology or the Process, or the use thereof, constitutes infringement of any intellectual property owned by a third party (each, a Claim), BII will promptly and timely inform XENCOR of such Claim, and BII shall have the first right to negotiate, litigate and/or settle any such Claim, and shall defend any such Claim unless it would not be commercially reasonable for BII to bear the reasonably anticipated losses, damages, costs and expenses arising from any settlement or judgment resulting from such Claim. For the avoidance of doubt, the term commercially reasonable, as used in this paragraph a. shall be determined (i) in the context of BII's entire business related to the intellectual property that is the subject to the Claim, where the Claim asserts infringement that impacts aspects of BII's business beyond the XENCOR relationship, and (ii) if the Claim asserts infringement that is limited only to activities performed for XENCOR, in the context of the entire relationship between XENCOR and BII.   b. BII will keep XENCOR reasonably informed about such negotiation or litigation at all times, including all material events related thereto, and in the event that the amounts paid or to be paid by BII in settlement of any such Claim or group of related or unrelated Claims appear reasonably likely to exceed, individually or in the aggregate, BII's indemnification obligations, or any contemplated settlement would place any obligations or restrictions upon XENCOR or the Product, then BII shall immediately inform XENCOR.   c. XENCOR shall not be responsible to pay for any costs of any settlement by BII of any Claim(s) (including, without limitation, any payments resulting of such settlement) that   23





  exceed BII's indemnification obligations or be bound by any obligations or restrictions agreed to by BII in any such settlement, in case such settlement is made without the prior written consent of XENCOR, which may be granted or withheld in its sole discretion.   d. In the case that BII decides not to negotiate, litigate or settle any Claim, XENCOR shall have the right to negotiate, litigate and settle any such Claim, and, provided that XENCOR decides to pursue such negotiation, litigation or settlement, BII will provide all commercially reasonable cooperation to XENCOR such that XENCOR may appropriately defend such Claims.   6.5 Disclaimer of Warranties   EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO ANY INTELLECTUAL PROPERTY, TECHNOLOGY, RIGHTS, RESULTS OF THE PROJECTS, MATERIAL, THE DELIVERABLES OR OTHER SUBJECT MATTER OF THIS AGREEMENT OR THAT THE PROJECTS WILL RESULT IN A COMMERCIALLY-VIABLE PROCESS, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABIIITY AND FITNESS FOR A PARTICULAR PURPOSE.   7 Liability, Indemnification, Limitations and Insurance   7.1 General   BII has no control over the manner in which XENCOR intends to use the results of the Project, the Product or the Deliverables, if any, obtained in the Project and in particular does not know or control how XENCOR intends to use such Product or results in clinical studies.   7.2 Liability   a. Of BII   Always subject Section 7.4, in consideration of the aspects set forth in Section 7.1, BII shall only be liable for any losses, damages, costs or expenses including, without limitation, reasonable attorneys' fees of any nature (Losses) incurred or suffered by XENCOR or its Affiliated Companies or any third party (including but not limited to Business Partners) to the extent such Losses are arising from either (i) BII's non­compliance with the warranties given under Sections 6.1 and 6.3 of this Agreement, or (ii) gross negligence or willful acts or omissions of BII or its Affiliated Companies in performing its obligations under this Agreement.   BII shall not be liable to XENCOR or be obligated to indemnify XENCOR or its Representatives under Section 7.3 for any Losses incurred or suffered by XENCOR, its Affiliated Companies or by any third party, arising out of any dispute or other claims or proceedings made by or brought against XENCOR and/or its Affiliated Companies with respect to XENCOR's use of any results of the Project, the Deliverables (including but not limited to the Product, if any), the Process, the BII Technology and/or the BII Confidential Information and Know-How, obtained (including but not limited to the use under a license that may be granted under this Agreement) under this Agreement including, without limitation, product liability claims, except to the extent such Losses are caused by the gross negligence or wilful acts or omissions of BII or its Affiliated Companies in performing its obligations under this Agreement, nor shall BII be responsible in any way for dealing with any such disputes, claims or proceedings.   24

  b. Of XENCOR   Always subject to Section 7.4, XENCOR shall be liable for any Losses incurred or suffered by BII, its Affiliated Companies or by any third party arising from either (i) XENCOR's non­compliance with the warranties given under Sections 6.1 and/or 6.2 of this Agreement, or (ii) BII's or XENCOR's use of XENCOR Confidential Information and Know­How, the Material, the XENCOR Intellectual Property and/or the XENCOR Technology in accordance with this Agreement, or (iii) XENCOR's use of the Deliverables (including but not limited to the Product, if any), or (iv) XENCOR' s use of the Process, the BII Technology, the BII Confidential Information and Know-How, and/or any other results of the Project or this Agreement, not in accordance with this Agreement.   XENCOR shall not be liable to BII or its Affiliated Companies or be ob1igated to indemnify BII or its Representatives under Section 7.3 for any Losses incurred or suffered by BII or its Affiliated Companies or any third party arising out of any dispute or other claims or proceedings made by or brought against BII or its Affiliated Companies with respect to BII's use of the BII Confidential Information and Know-How, the Material, the XENCOR Intellectual Property, and/or the XENCOR Technology or BII's use of the license granted to BII under Section 8.2.5.a outside the scope of this Agreement, in each case except to the extent such liability is caused by the gross negligence or wilful acts or omissions of XENCOR, or its Affiliated Companies in performing its obligations under this Agreement, nor shall XENCOR be responsible in any way for dealing with any such disputes, claims or proceedings.   7.3 Indemnification   a. BII's Indemnification Obligations   Always subject to Section 7.4, BII shall indemnify, defend and hold XENCOR, its Affiliated Companies and their respective officers, employees and agents (the Representatives) harmless from and against all Losses incurred by them as a result of third





party claims based on or resulting from (i) BII's non­compliance with the warranties given under Sections 6.1 and 6.3 of this Agreement, or (ii) any gross negligence or wilful acts or omissions of BII or any of its Affiliated Companies in performing its obligations under this Agreement.   b. XENCOR's Indemnification Obligations   Always subject to Section 7.4, XENCOR shall indemnify, defend and hold BII and its Representatives harmless from and against all Losses incurred by them as a result of third party claims based on or resulting from (i) BII's use of the XENCOR Confidential Information and Know-How, the Material, the XENCOR Intellectual Property and/or the XENCOR Technology in accordance with this Agreement; or (ii) XENCOR's non­compliance with the warranties given under Sections 6.1 and 6.2 of this Agreement, or (iii) XENCOR's use of the Deliverables (including but not limited to the Product, if any), or (iv) XENCOR' s use of the Process, the BII Technology, the BII Confidential Information and Know-How, and/or any other results of the Project or this Agreement, not in accordance with this Agreement.   7.4 Limitation of Liability and Indemnification Obligations   With the exception of wilful misconduct by a Party, and such cases where a limitation of liability and/or indemnification is not possible under applicable law, for which cases there shall be no limitation, any and all liability and/or indemnification obligations of each of BII and XENCOR under this Agreement shall be:   a. excluded for incidental, indirect, consequential, punitive or special damages (provided that the foregoing shall not exclude a Party's right to consequential or incidental   25





  damages for any negligent or intentional breach of confidentiality and non-use obligations under Section 9); and   b. each Party's aggregate liability and/or indemnification obligations towards the other Party under this Agreement shall not exceed an amount equal to the average annual aggregate amount paid or to be paid by XENCOR to BII hereunder; provided, however, that in the case of a Party's negligent or intentional breach of confidentiality and non­use obligations pursuant to Section 9, this limitation of liability shall be increased to twice the average annual aggregate amount paid or to be paid by XENCOR to BII hereunder;   provided however that the foregoing Subsections a. and b. of this Section 7.4 shall not limit XENCOR' s liability and indemnification obligation towards BII with respect to any third party claims according to clause (iii) and (iv) of Section 7.3 b. regarding any use of the Deliverables (in particular the Product) in humans and/or with respect to any third party claim that BII's use of the Material to manufacture the Product infringes any issued patent owed by such third party (excluding any such claim based specifically on use of the Process but not on the use of the Material).   7.5 Insurance   XENCOR and BII shall obtain and/or maintain during the term of this Agreement and for a period of [...***...] thereafter, liability insurance in amounts which are reasonable and customary in the biopharmaceutical industry for companies of comparable size and the respective activities (i.e. BII as CMO and XENCOR as sponsor/pharmaceutical company) at the respective place of business and such liability insurance shall insure against all mandatory liability, including liability for personal injury, physical injury and property damage. BII shall have the right to reasonably self insure.   8 Intellectual Property   8.1 Existing Intellectual Property Rights   BII hereby acknowledges that XENCOR is the owner of XENCOR Confidential Information and Know-How and the XENCOR Technology and BII shall acquire no rights, title or interest whatsoever in or to any of XENCOR Confidential Information and Know-How and/or XENCOR Technology, except as specifically provided for in this Agreement.   XENCOR hereby acknowledges that BII is the owner of BII Confidential Information and Know-How and the BII Technology and XENCOR shall acquire no rights, title or interest whatsoever in or to any of BII Confidential Information and Know-How and/or the BII Technology, except as specifically provided for in this Agreement.   8.2 New Intellectual Property, Project Results and Licenses   8.2.1 XENCOR   Improvements that (i) relate specifically to XENCOR Confidential Information and Know-How and/or the Product (or any modification, derivative or fragment thereof), and (ii) do not relate to BII Confidential Information and Know­How (collectively, XENCOR Intellectual Property), will be exclusively owned by XENCOR and XENCOR shall control patent prosecution and maintenance thereof. BII (on behalf of itself and its Affiliated Companies) agrees to assign and hereby assigns to XENCOR all right title and interest it may have in any XENCOR Intellectual Property. BII shall provide reasonable assistance to XENCOR for any action which may be necessary to assign or otherwise transfer any rights to XENCOR Intellectual Property contemplated by this Section 8.2.1. BII shall notify XENCOR within [...***...] of becoming aware of such XENCOR Intellectual Property.

***Confidential Treatment Requested   26





  8.2.2 BII   Improvements that (i) relate specifically to BII Confidential Information and Know-How, and (ii) do not relate to XENCOR Confidential Information and Know­How (collectively, BII Intellectual Property) will be exclusively owned by BII, and BII shall control patent prosecution and maintenance thereof. XENCOR agrees to assign and hereby assigns to BII all right title and interest it may have in any BII Intellectual Property. XENCOR shall provide reasonable assistance to BII for any action which may be necessary to assign or otherwise transfer such rights to BII Intellectual Property contemplated by this Section 8.2.2.   8.2.3 Other Improvements   Any Improvements that are neither XENCOR Intellectual Property nor BII Intellectual Property shall be defined as Other Improvements and shall be jointly owned by BII and XENCOR, with the Parties entitled to practice the same as joint owners, without duty of accounting to the other Party and with the right to license to others without consent of the other Party. BII shall notify XENCOR within [...***...] days of becoming aware of such Other Improvements. Each Party agrees to assign and hereby assigns to the other Party such right title and interest it may have in any Other Improvements as necessary to effect joint ownership of the Other Improvements by BII and XENCOR. Each Party shall provide reasonable assistance for any action which may be necessary to assign or otherwise transfer such rights to Other Improvements to Parties as joint owners. BII shall have the first right to prosecute and maintain patent rights within the Other Improvements, at its expense, provided that if BII elects not to prosecute or maintain an Other Improvement it shall provide written notice to XENCOR, and XENCOR may elect to take over responsibility for prosecution and maintenance of such Other Improvement, at its own expense, by providing written notice to BII, in which case all rights to such Other Improvement shall be assigned to XENCOR. For the avoidance of doubt, except as expressly stated otherwise in Section 10.3, Parties agree that XENCOR's use of the Process is always subject to Section 5.2.3, 5.2.4 and 5.2.5.   For the avoidance of doubt, (i) know-how pertaining to manufacturing of biopharmaceuticals generally and gained during the course of performing this Agreement may be freely used by BII in its biopharmaceutical business without any restrictions, provided, that, notwithstanding the foregoing, BII may not use any Other Improvement that relates specifically to the Product.   a. Each Party shall ensure that all of such Party's (or its Affiliated Company's) employees or contractors acting on its behalf pursuant to this Agreement are and will be obligated under a binding written agreement or by law to assign to such Party all inventions and rights on the inventions made under this Agreement so that such Party can comply with the terms of this Agreement.   b. Subject to the terms and conditions contained in this Agreement, BII shall be responsible for filing, prosecution and maintenance of patent applications and patents granted or generated under this Agreement and owned by BR. XENCOR shall be responsible for filing, prosecution and maintenance of patent applications and patents granted or generated under this Agreement and owned by XENCOR.   c. BII shall keep XENCOR and XENCOR shall keep BII reasonably informed about prosecution of any patent applications and maintenance of any patents generated under this Agreement.   8.2.4 Licenses to Xencor   BII grants to XENCOR the license set forth in Section 5.2.5 as provided therein.   8.2.5 Licenses to BII   a. Freedom to operate XENCOR hereby grants to BII and BII herewith accepts a non exclusive, worldwide, irrevocable, sublicensable (in several cascades), perpetual, royalty-free/fully paid up license under the XENCOR Intellectual Property to the extent it is generally applicable to the manufacturing of biopharmaceutical products, handling   27





  of cell lines and/or development of manufacturing processes, to use such XENCOR Intellectual Property in for the manufacture of biopharmaceutical products, handling of cell lines and/or development of manufacturing processes, but excluding any use with respect to the Product (or any modification, derivative or fragment thereof). BII expressly agrees not to practice any XENCOR Intellectual Property specific to the Product or for any purpose other than as expressly provided in this Section 8.2.5.   b. Performance of Project: During the term of this Agreement, XENCOR hereby grants to BII and BII hereby accepts for the purpose of pursuing the Project a non-exclusive, non-sub-licensable (except to Affiliated Companies), royalty-free, license to use the XENCOR Confidential Information and Know-How, the Material, the XENCOR Intellectual Property and/or any part of the Other Improvements for the sole purpose to develop the Process, and for the manufacturing of the Product for clinical purposes in accordance with this Agreement. BII expressly agrees not to use or practice any XENCOR Confidential Information and Know- How, the Material, and/or the XENCOR Intellectual Property for any purpose other than performance or the Services in accordance with this Agreement, except if otherwise expressly permitted in this Agreement.   9 Confidentiality   9.1 General   The Parties agree, for the duration of this Agreement and a term of [...***...] after the Effective Date: (a) to hold in strict confidence all Confidential Information and Know­How of a Party (Disclosing Party) or its Affiliated Companies which has been or will be made available to the other Party (Receiving Party) or its Affiliated Companies, and not to disclose such Confidential Information and Know­ How of the Disclosing Party to any third party whatsoever, (b) not to use such Confidential Information and Know-How of the Disclosing Party for any purpose other than those set forth herein. For clarification, all XENCOR Confidential Information and Know-How, XENCOR Technology and XENCOR Intellectual Property shall be Confidential Information and Know-How of XENCOR and XENCOR shall be the Disclosing Party and BII shall be the Receiving Party with respect thereto, and all BII Confidential Information and Know-How, BII Technology and BII Intellectual Property shall be Confidential Information and Know-How of BII and BII shall be the Disclosing Party and XENCOR shall be the Receiving Party with respect thereto.   The Receiving Party undertakes to protect the Disclosing Party's Confidential Information and Know ­How against unauthorized access by third parties using all commercially reasonable efforts.   If Confidential Information and Know-How is disclosed by Disclosing Party or its Affiliated Companies other than in written or electronic form, then Receiving Parties' obligations of confidentiality and non­use shall only apply if the Confidential Information and Know­How is indicated upon disclosure as being confidential and is then summarised electronically or in writing and provided to Receiving Party within [...***...] after initial disclosure. Notwithstanding the foregoing, in no event shall a failure to provide such an electronic or written summary preclude either Party from asserting that such information is Confidential Information and Know-How.   The obligations to keep secret, not to disclose and not to use the Disclosing Party's Confidential Information and Know­How or parts thereof shall not apply in the event that the respective Confidential Information or and Know-How such parts thereof:

***Confidential Treatment Requested   28





  a. can be shown by written documentation to have been known to Receiving Party or its Affiliated Companies prior to disclosure by the Disclosing Party or its Affiliated Companies hereunder or under the MTA (in no event will Confidential Information and Know- How of the Disclosing Party that is generated by the Receiving Party or its Affiliated Companies (e.g., Improvements that are XENCOR Intellectual Property) be considered to be known by the Receiving Party or its Affiliated Companies prior to disclosure by the Disclosing Party or its Affiliated Companies),   b. is or comes into the public domain by publication or otherwise through no breach of this Agreement or the MTA, or   c. can be shown by written documentation to have been made known to Receiving Party or its Affiliated Companies from another source free from any obligation of confidentiality and was not obtained either directly or indirectly from Disclosing Party or its Affiliated Companies, or   d. can be shown by written documentation to have been independently developed or created by Receiving Party or its Affiliated Companies without access to the other Party's Confidential Information and Know­How (in no event will Confidential Information and Know-How of the Disclosing Party that is generated by the Receiving Party or its Affiliated Companies (e.g., Improvements that are XENCOR Intellectual Property) be considered to be independently developed by the Receiving Party or its Affiliated Companies).   Confidential Information and Know-How not be deemed to be in the public domain merely because they may be derived from one or more items which are publicly known.   Receiving Party shall not disclose Disclosing Party Confidential Information and Know-How to any third party without the prior written consent of Disclosing Party, except to such of the Receiving Party's or its Affiliated Companies' responsible employees and/or advisors to whom it is necessary to disclose such Confidential Information and Know-How for purpose set forth herein. Before such Confidential Information and Know-How is disclosed to such employees and/or advisors, Receiving Party shall first impose on such employees and/or advisors confidentiality and non-use obligations not less stringent than those set forth herein, however, the imposition of such obligations shall not relieve Receiving Party of its obligations hereunder.   In the event that Receiving Party or its Affiliated Companies are required by law, regulation, rule, act or order of any governmental authority or agency to disclose the Disclosing Party's Confidential Information and Know­How, the Receiving Party or its Affiliated Companies shall be entitled to do so provided that Receiving Party shall first notify Disclosing Party forthwith of any such required disclosure and limit such disclosure as far as is possible under applicable law. Such disclosure shall, however, not relieve Receiving Party of its other obligations contained herein.   Furthermore, a Receiving Party may make such disclosures of the Disclosing Party's Confidential Information and Know­How to governmental entities to the extent reasonably necessary in connection with pursuit of intellectual property protection, development and commercialization activities related to the Product as contemplated by this Agreement, and approvals to use and sell the Product. Moreover, XENCOR may disclose BII Confidential Information and Know-How to entities (i) with whom XENCOR has (or may have) a marketing and/or development collaboration for the Product (including an actual or potential Business Partner) or (ii) that are actual or potential investors in or acquirers of XENCOR, to the extent reasonably necessary for the pursuit of such actual/ potential collaboration or relationship pursuant to (i) or (ii), and, in both cases, who have a specific need to know such information and who are bound by obligations of confidentiality and restrictions on use similar to those set forth in this Agreement, provided always that XENCOR may not disclose any BII   29





  Confidential Information and Know-How to any company whose primary business is providing biopharmaceutical CMO services except with BII's prior written consent.   9.2 MTA Superseded   The confidentiality and non-use obligations under the MTA shall be superseded hereby and all information disclosed pursuant to the MTA shall be Confidential Information and Know-How subject to this Agreement.   9.3 Controlled Technology   XENCOR hereby agrees and covenants that if it or its Affiliated Companies intend to provide Confidential Information and Know-How to BII or its Affiliated Companies that XENCOR has Knowledge may be listed on the Commerce Control List or the Chemical Weapons Convention Schedules of Chemicals, both contained within the U.S. Export Administration Regulations (hereinafter Controlled Technology), then XENCOR shall notify promptly BII of such Knowledge as soon as possible prior to such intended disclosure. In order for BII to take any appropriate precautionary actions before receipt of such Controlled Technology and to ensure compliance with U.S. export laws, XENCOR shall, before providing the Controlled Technology:   a. identify all Confidential Information and Know-How of XENCOR that may be Controlled Technology; and   b. inform BII, to the extent known to XENCOR, where the Controlled Technology is listed on the Commerce Control List or the Chemical Weapons Convention Schedules of Chemicals and what restrictions apply to the export or disclosure of the Controlled Technology under U.S. law.   XENCOR further agrees to cooperate with BII by providing upon request information and other assistance necessary for the export classification, export documentation and export licensing, if required, for the Controlled Technology under U.S. export laws.   In any event, XENCOR hereby agrees that it will not disclose Controlled Technology to BII or its Affiliated Companies without the express prior consent of BII.   10 Term and Termination   10.1 Term   This Agreement shall take effect as of the Effective Date and shall expire upon completion of the Project as set forth in the Project Plan and after payment of all payments due and payable according to this Agreement, unless terminated earlier in accordance with this Agreement.   10.2 Termination of this Agreement   10.2.1 If it is apparent to either Party at any stage of the Project that it will not be possible to carry out the Project for scientific, technical or business reasons, such Party may terminate this Agreement upon one hundred eighty (180) days prior written notice to the other Party.   10.2.2 Termination for Material Breach: This Agreement may be terminated at once by written notice by either Party, if the other Party breaches this Agreement in any material manner and shall have failed to remedy such default within thirty (30) days after written notice thereof from the terminating Party.   10.3 Effects of Termination of this Agreement   30





  10.3.1 Effect of Termination prior to completion of the Phase 1 clinical trial with the Product as described in Section 2.8.3.   a. In the event of termination by XENCOR according to Section 10.2.1 prior to completion of the Phase 1 clinical trial with the Product as described in Section 2.8.3 for technical and/or scientific reasons, XENCOR shall have no obligation to pay BII any or all of the Total Amount. For the avoidance of doubt, in such case, XENCOR may not use the Process outside BII, except as otherwise agreed in writing by XENCOR and BII.   b. In the event of termination by XENCOR according to Section 10.2.1 prior to completion of the Phase 1 clinical trial with the Product as described in Section 2.8.3. for any other reason than the reasons set forth under Section 10.3.1.a the Total Amount shall be limited to all non-cancellable expenses reasonably incurred by BII in accordance with the Project Plan prior to such termination in respect of the purchase of supplies or raw materials, and reasonable wind-down costs not to exceed sixty (60) days. BII shall mitigate all wind-down costs and non-cancellable expenses to the extent possible. Campaigns cancelled shall be paid as provided for in Section 4.2 above. For the avoidance of doubt, in such case, XENCOR many not use the Process outside BII, except as otherwise agreed in writing by XENCOR and BII.   c. In the event of termination by BII according to Section 10.2.1 prior to completion of the Phase 1 clinical trial with the Product, XENCOR shall have no obligation to pay BII any or all of the Total Amount. The use of the Process is subject to Section 5.2.3, 5.2.4 and 5.2.5.   d. In all of the foregoing cases a.-c., at the request of XENCOR and to the extent available at BII, BII shall destroy the Material or deliver the Material to XENCOR at XENCOR's cost and shall promptly return all XENCOR Confidential Information and Know­How to XENCOR; except for a copy and/or sample of each material for documentation purposes only, which shall remain to the confidentiality and non­use provisions in Section 9, and shall refrain from using the Material. Except for the foregoing, BII's responsibility to keep and store the Material and any other materials shall terminate one hundred eighty (180) days after expiration or termination of the respective Project or this Agreement.   In the foregoing cases a.-c., XENCOR shall promptly return all BII Confidential Information and Know-How to BII, except for a single copy and/or sample for documentation purposes only, which shall remain to the confidentiality and non-use provisions in Section 9, and shall refrain from using the Process, except as contemplated in Section 10.3.1.c or 10.3.1.d.   For the a voidance of doubt, in the event of a termination by XENCOR as contemplated in clause b of this Section 10.3.1, Section 3.1.2.c shall continue in effect, but Section 3.1.2 shall not survive in the event of any termination described in clause a. and c.   10.3.2 Effect of Termination after completion of the Phase 1 clinical trial with the Product as described in Section 2.8.3.   a. In the event of termination by XENCOR according to Section 10.2.1 after completion of the Phase 1 clinical trial with the Product as described in Section 2.8.3 for technical and/or scientific reasons, XENCOR shall have no obligation to pay BII any or all of the Total Amount. For the avoidance of doubt, in such case, XENCOR may not use the Process outside BII, except as otherwise agreed in writing by XENCOR and BII. For the avoidance of doubt, in the event of a termination as contemplated in this Section 10.3.2a, Section 3.1.2 c shall survive.   b. In the event of termination by XENCOR according to Section 10.2.1 after completion of the Phase 1 clinical trial with the Product as described in Section 2.8.3 for a reason not listed in Section 10.3.2.a, the Total Amount shall be limited to all non-cancellable expenses reasonably incurred by BII in accordance with the Project Plan prior to such   31





  termination in respect of the purchase of supplies or raw materials, and reasonable wind-down costs not to exceed sixty (60) days. BII shall mitigate all wind-down costs and non-cancellable expenses to the extent possible. Campaigns cancelled shall be paid as provided for in Section 4.2 above. For the avoidance of doubt, in the event of a termination as contemplated in this Section 10.3.2b, Section 3.1.2.c shall continue in effect. The use of the Process is subject to Sections 5.2.3, 5.2.4 and 5.2.5.   c. In the event of termination by BII according to Section 10.2.1 after completion of the Phase 1 clinical trial with the Product, XENCOR shall have no obligation to pay BII any or all of the Total Amount. The use of the Process is subject to Sections 5.2.3, 5.2.4 and 5.2.5. For the avoidance of doubt, in the event of a termination as contemplated in this Section 10.3.2c, Section 3.1.2 shall not survive.   10.3.3 Effect of Termination due to Material Breach   a. In case of a termination by BII according to Section 10.2.2, the Total Amount shall become immediately due and BII shall be free to claim for damages according to the applicable law and, subject to Section 7.4 above. All licenses granted by either Party to the other Party hereunder shall be null and void. For the avoidance of doubt, XENCOR may not use the Process outside BII, except as otherwise agreed in writing by XENCOR and BII; except that, if XENCOR has already exercised its rights under Sections 5.2.3, 5.2.4 and 5.2.5, all such rights granted prior to termination shall remain in effect.   b. In case of a termination by XENCOR according to Section 10.2.2, XENCOR shall have no obligation to pay BII any or all of the Total Amount, and subject to Section 7.4 above, XENCOR shall be free to claim for damages according to the applicable law. All licenses granted by XENCOR to BII hereunder shall be null and void. For the avoidance of doubt, Section 3.1.2 shall not survive in the event of termination as described in this Section 10.3.3.b. The use of the Process is subject to Sections 5.2.3, 5.2.4 and 5.2.5.   10.4 Surviving Provisions   Upon any expiration or termination of this Agreement by either Party pursuant to Section 10.2, all rights and obligations of the Parties under this Agreement shall terminate and be of no further force or effect, except as otherwise expressly set forth below in this Section 10.4 and in Section 10.3. The expiration or termination of this Agreement for any reason shall not release either Party from any liability that, at the time of such expiration or termination, has already accrued to the other Party or that is attributable to a period prior to such expiration or termination. The following provisions of this Agreement shall survive expiration or termination of this Agreement for any reason: Section 1 (Definitions), Section 3 (Payments) except as expressly set forth in Section 10.3; Section 5 (Ownership and Use of Project Data), Section 6.4 (Process for Defense of Infringement of Third Party Intellectual Property); Section 6.5 (Disclaimer of Warranties); Section 7 (Liability, Indemnification, Limitations and Insurance); Section 8 (Intellectual Property), but excluding the last sentence of the first paragraph of Section 8.2.3 (Other Improvements) referring to Sections 5.2.3, 5.2.4 and 5.2.4 except to the extent that those sections are expressly stated to survive termination as set forth in Section 10.3, and excluding Section 8.2.5b; Section 9 (Confidentiality); Section 10.3 (Effects of Termination of this Agreement), including the provisions referenced in Section 10.3 as continuing after termination, as applicable; Section 10.4 (Surviving Provisions); and Section 11 (Miscellaneous).   11 Miscellaneous   11.1 Force Majeure   Neither Party shall be in breach of this Agreement if there is any failure of performance under this Agreement (except for payment of any amounts due hereunder) occasioned by any reason   32





  beyond the control of either Party, including, without limitation, any act of God, fire, act of government or state, war, civil commotion, insurrection, embargo, prevention from or hindrance in obtaining energy or other utilities, or labour disputes of whatever nature.   11.2 Conflict with Improvements under the MTA   The Parties agree that with respect to the ownership of intellectual property rights and/or ownership of Improvements, this Agreement shall prevail over the terms and conditions of the MTA and shall also cover the term of the MTA.   11.3 Secrecy Agreement between the Parties   The Parties agree that all information exchanged pursuant to the Secrecy Agreement between the Parties with effectiveness as of June 28, 2011 shall be Confidential Information and Know-How protected in accordance with this Agreement, and such Secrecy Agreement shall be superseded by the terms of this Agreement and shall have no further force or effect.   11.4 Publicity   XENCOR or BII may issue the mutually agreed press release attached as Appendix 8 announcing the execution of this Agreement. Except as provided in the preceding sentence, no press release or other form of publicity regarding a Project or this Agreement shall be permitted by either Party to be published unless both Parties have indicated their consent to the form of the release in writing. The same applies, to any changes in the press release attached as Appendix 8. Nothing in this Section shall prevent the Parties from disclosing this Agreement, if and as far as required by applicable laws, rules or regulations. However, the disclosing Party shall inform the other Party well in advance whenever reasonably possible and shall provide the opportunity to comment on such required disclosure (e.g. under SEC rules). In addition, subject to XENCOR's compliance with Section 9.1, nothing in this Section shall prevent XENCOR from disclosing the status of development, regulatory approval or commercialization of the Product.   11.5 Notices   Any notice required or permitted to be given hereunder by either Party shall be in writing and shall be (i) delivered personally, (ii) sent by registered mail, return receipt requested, postage prepaid or (iii) delivered by facsimile with immediate confirmation of receipt, to the addresses or facsimile numbers set forth below:   If to BII:   Boehringer Ingelheim International GmbH Binger Straße 17355216 Ingelheim Federal Republic of Germany Attention: Mr. Alois Konrad (Global Dept. Biopharma Contract Manufacturing Business) Fax: 0049- 7351/54 - 4845 Phone: 0049- 7351/54 - 96145   33





  If to XENCOR:   111 West Lemon Avenue Monrovia, CA 91016 Attention: Chief Executive Officer Phone: (626) 305-5900 Fax: (626) 305-0350   11.6 Applicable Law and Arbitration   This Agreement shall be exclusively governed by and construed in accordance with the laws of the State of New York, USA without regard to its conflict of laws provisions.   The application of the UN Convention on Contracts for the International Sale of Goods is excluded.   The Parties agree that all disputes, claims or controversies arising out of, relating to, or in connection with this Agreement, including any question regarding its formation, existence, validity, enforceability, performance, interpretation, breach or termination, shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce (ICC) by one arbitrator appointed in accordance with said rules.   The exclusive place of arbitration shall be New York State of New York, USA and the proceedings shall be conducted in English language.   The award for arbitration shall be final and binding and may be enforced in any court of competent jurisdiction against BII or XENCOR. Nothing in this Section shall prevent any Party, before an arbitration has commenced hereunder or any time thereafter during such arbitration proceedings, from seeking conservatory and interim measures, including, but not limited to temporary restraining orders or preliminary injunctions, or their equivalent, from any court of competent jurisdiction.   The Parties further agree that   a. except as may be otherwise required by applicable laws, rules or regulations, neither Party, its witnesses, or the arbitrator may disclose the existence, content, results of the arbitration hereunder without prior written consent of both Parties; and   b. neither Party shall be required to give general discovery of documents, but may be required only to produce specific, identified documents, or narrow and specific categories of documents, which are relevant to the case and material to its outcome and reasonably believed to be in the custody, possession or control of the other Party; and   c. decisions ex aequo et bono or in equity are not permissible.   11.7 Entire Agreement   This Agreement (including the Exhibits and Schedules attached hereto) constitutes the entire agreement between the Parties relating to its subject matter and supersedes all prior or contemporaneous agreements, understandings or representations, either written or oral, between XENCOR and BII with respect to such subject matter (including the Secrecy Agreement effective as of June 28, 2011).   11.8 Waiver; Amendment   No waiver of any term, provision or condition of this Agreement whether by conduct or otherwise in any one or more instances shall be deemed to be or construed as a further or continuing waiver of any such term, provision or condition or of any other term, provision or   34

  condition of this Agreement. No amendment or modification of any provision of this Agreement shall be effective unless in writing signed by a duly authorized representative of each Party. No provision of this Agreement shall be varied, contradicted or explained by any oral agreement, course of dealing or performance or any other matter not set forth in an agreement in writing and signed by a duly authorized representative of each Party.   11.9 Severability   If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction all other provisions shall continue in full force and effect. The Parties hereby agree to attempt to substitute for any invalid or unenforceable provision a valid and enforceable provision which achieves to the greatest extent possible the economic legal and commercial objectives of the invalid or unenforceable provision.   11.10 Dispute Resolution   Any dispute relating to the Project shall first be submitted for resolution to the Steering Committee.   11.11 Assignment   This Agreement shall be binding upon the successors and assigns of the Parties and the name of a Party appearing herein shall be deemed to include, the names of its successors and assigns. This Agreement shall not be assignable by either Party, except with the written





consent of the other Party hereto; provided, however, that either Party may assign this Agreement without the other Party's consent to an acquiring party in connection with the transfer or sale of all or substantially all of the business of such Party to which this Agreement relates to such acquiring party, whether by merger, sale of stock, sale of assets or otherwise, provided that in the event of such a sale or transfer (whether this Agreement is actually assigned or is assumed by the acquiring party by operation of law (e.g,. in the context of a reverse triangular merger)).   11.12 Independent Contractors   Nothing in this Agreement is intended, or shall be deemed, to establish a joint venture or partnership (or any fiduciary duty) between XENCOR and BII. Neither Party to this Agreement shall have any express or implied right or authority to assume or create any obligations on behalf of, or in the name of, the other Party, or to bind the other Party to any contract, agreement or undertaking with any third party.   11.13 Counterparts   This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.   35





  IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the Effective Date.





  Monrovia, February 16 2012

  Biberach, February 13, 2012









  XENCOR, Inc.

  Boehringer Ingelheim International GmbH











 ppa.   ppa.







  /s/ Bassil Dahiyat





 /s/ Alois Konrad



 /s/ Dr. Andreas Felder   Bassil Dahiyat





 Alois Konrad



 Dr. Andreas Felder   President and CEO













  36





  List of Appendices:   Appendix 1: Material and Product   Appendix 2: Project Plan   Appendix 3: Members of the Project Team, Steering Committee and Chief Executive Officers   Appendix 4: MTA   Appendix 5: Quality Agreement   Appendix 6: Specifications, incl. shipping and packing instructions agreed by the Parties (to be attached upon agreement of the Parties)   Appendix 7: Summary Plan for Phase 1 Clinical Trials   Appendix 8: Press Release   37





  Appendix 1:   XmAb®6755 : Anti­TNF_Adalimumab_lgG1/2_M428L/N434S_Xtend Heavy Chain ORF (Protein) [...***...] [...***...]   [...***...]   [...***...] [...***...]   [...***...]

***Confidential Treatment Requested   38





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***Confidential Treatment Requested   39









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***Confidential Treatment Requested   40





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***Confidential Treatment Requested   41









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***Confidential Treatment Requested   42









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***Confidential Treatment Requested   43





  Appendix 2:   Appendix 2.1: Project Plan and Price Project Plan Xtend-TNF Process Development Manufacturing of Clinical Grade Material   44



  Appendix 2.1: Project Plan and Price Project Plan Xtend-TNF Process Development Manufacturing of Clinical Grade Material   Version of December 19, 2011   45





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***Confidential Treatment Requested   48





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***Confidential Treatment Requested   50





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***Confidential Treatment Requested   51





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***Confidential Treatment Requested   53





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***Confidential Treatment Requested   56





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***Confidential Treatment Requested   59





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***Confidential Treatment Requested   62





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***Confidential Treatment Requested   63





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***Confidential Treatment Requested   64

  Appendix 3:   Members of the Project Team and Steering Committee   […***…]   […***…]   […***…]   […***…]     […***…]   […***…]   […***…]   […***…]

***Confidential Treatment Requested   65





  Appendix 4:   MTA   […***…]     […***…]   […***…]   […***…]   […***…]   […***…]   […***…]   […***…]   […***…]   […***…]   […***…]   […***…]   […***…]

***Confidential Treatment Requested   66





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***Confidential Treatment Requested   67





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***Confidential Treatment Requested   68





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***Confidential Treatment Requested   69





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***Confidential Treatment Requested   70





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***Confidential Treatment Requested   71





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***Confidential Treatment Requested   72





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***Confidential Treatment Requested   73





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***Confidential Treatment Requested   74

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***Confidential Treatment Requested   75





  Appendix 5   Quality Agreement     […***…]   […***…]   […***…]     […***…]     […***…]   […***…]   […***…]   […***…]   […***…]     […***…]     […***…]     […***…]   […***…]   […***…]     […***…]

***Confidential Treatment Requested   76





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***Confidential Treatment Requested   77





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***Confidential Treatment Requested   78





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***Confidential Treatment Requested   79





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***Confidential Treatment Requested   80





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***Confidential Treatment Requested   81





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***Confidential Treatment Requested   82





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***Confidential Treatment Requested   83





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***Confidential Treatment Requested   84

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***Confidential Treatment Requested   85





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***Confidential Treatment Requested   86





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***Confidential Treatment Requested   87





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***Confidential Treatment Requested   88





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***Confidential Treatment Requested   89





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***Confidential Treatment Requested   90





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***Confidential Treatment Requested   91





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***Confidential Treatment Requested   92





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***Confidential Treatment Requested   93







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***Confidential Treatment Requested   94

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***Confidential Treatment Requested   95





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***Confidential Treatment Requested   96





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***Confidential Treatment Requested   97





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***Confidential Treatment Requested   98





  Appendix 6:   Specifications, incl. shipping and packing instructions agreed by the Parties (to be attached upon agreement of the Parties)   […***…]

***Confidential Treatment Requested   99





  Appendix 7:   Summary Plan for Phase I Clinical Trials   […***…]

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***Confidential Treatment Requested   100





  Appendix 8:   Press Release   February 8th, 2012   Boehringer Ingelheim GmbH Corporate Communications: Heidrun Thoma +49/6132 77 3966 Heidrun.Thoma@boehringer-ingelheim.com Twitter: www.twitter.com/boehringer   Xencor Media Contact Heidi Chokeir, Ph.D. Canale Communications Tel: 619-849-5377 heidi@canalecomm.com   Boehringer Ingelheim and Xencor Enter a Collaboration Agreement for the  Development, Manufacture, and Supply of Biosuperior Monoclonal Antibodies   Antibodies engineered with Xencor's proprietary Xtend™ technology for increasing antibody half­life   MONROVIA, Calif., USA and INGELHEIM, Germany — February 14 , 2012 — Xencor, Inc., a company using its proprietary Protein Design Automation® (PDA) platform technology to engineer next­generation antibodies, and Boehringer Ingelheim announced today a collaboration agreement for certain Xencor biosuperior monoclonal antibodies. Under the terms of the agreement, Boehringer Ingelheim will provide all manufacturing and product supply from preclinical through Phase I development. Xencor is responsible for preclinical and clinical studies and retains all development and commercial rights to products under the agreement. Upon successful advancement of clinical programs beyond Phase 1 development, Boehringer Ingelheim has certain manufacturing rights to supply clinical and commercial material to Xencor. Xencor has developed deep portfolio of biosuperior antibodies with the potential for superior clinical and commercial performance, and this collaboration agreement with Boehringer Ingelheim allows us to establish an important relationship with the leading global contract manufacturer of biologics, said Bassil Dahiyat, Ph.D., president and CEO of Xencor. Xencor and Boehringer Ingelheim will share the financial risk in early preclinical and clinical development with the incentive of sharing in future success of the programs.   We are delighted to start this collaboration with Xencor. It reflects one of our new business models in the contract manufacturing in which both parties are enabled to focus on their core competencies, stated Corporate Senior Vice President Simon Sturge at Boehringer Ingelheim Biopharmaceuticals. We are convinced that this creates a win­win situation for both parties. Xencor's lead biosuperior compound is an anti­TNF antibody engineered using the company's proprietary Xtend™ antibody engineering technology for increasing antibody half­life. Xencor expects to initiate a Phase 1 trial in 2013 potentially resulting in key human pharmacokinetic data validating Xtend technology.   101

th





  About Xencor, Inc.   Xencor, Inc. engineers superior biotherapeutics using its proprietary Protein Design Automation® technology platform, and is a leader in the field of antibody engineering to significantly improve antibody half-life, immune-regulatory function and potency. The company is advancing multiple XmAb® antibody drug candidates in the clinic, including XmAb®5871 targeting CD32b and CD19 for autoimmune diseases, and an anti­ CD30 candidate XmAb®2513 for the treatment of Hodgkin's lymphoma. Xencor is also advancing a portfolio of biosuperior versions of blockbuster antibody drugs engineered for superior half-life and dosing schedule. Xencor has entered into multiple partnerships with industry leaders such as Amgen, Pfizer, Centocor, MorphoSys, Boehringer Ingelheim, CSL Ltd. and Human Genome Sciences. In these partnerships Xencor is applying its suite of proprietary antibody Fc domains to improve antibody drug candidates for traits such as sustained half-life and/or potency. For more information, please visit www.xencor.com.   About Boehringer Ingelheim   The Boehringer Ingelheim group is one of the world's 20 leading pharmaceutical companies. Headquartered in Ingelheim, Germany, it operates globally with 145 affiliates in 50 countries and more than 42,000 employees. Since it was founded in 1885, the family-owned company has been committed for 125 years to researching, developing, manufacturing and marketing novel products of high therapeutic value for human and veterinary medicine.   Today, Boehringer Ingelheim is one of the world's leading companies for contract development and manufacture of biopharmaceuticals. All types of services from mammalian cell line or microbial strain development to final drug production can be delivered within a one-stop-shop concept. Boehringer Ingelheim delivers services for pre-clinical development up to global market supply with a strong commitment to its customers at its global manufacturing facilities for mammalian cell culture and microbial fermentation. Boehringer Ingelheim has brought 19 molecules to market and has many years of experience in multiple molecule classes such as monoclonal antibodies, recombinant proteins, interferons, enzymes, fusion molecules and plasmid DNA. Furthermore, high-titer platform technologies for new antibody mimetic formats such as scaffold proteins and antibody fragments are available for the manufacture of customer products. www.biopharma-cmo.com.   For more information, please contact:   Xencor Inc. Heidi Chokeir, Ph.D. Canale Communications for Xencor Tel: 619-849-5377 heidi@canalecomm.com   Boehringer Ingelheim GmbH Heidrun Thoma Corporate communications Boehringer Ingelheim GmbH 55216 Ingelheim/Germany Phone: +49/6132 77 3966   Twitter: www.twitter.com/boehringer More information: bio-cmo@boehringer-ingelheim.com   102 
Question: Highlight the parts (if any) of this contract related to Insurance that should be reviewed by a lawyer. Details: Is there a requirement for insurance that must be maintained by one party for the benefit of the counterparty?
Example Output: XENCOR and BII shall obtain and/or maintain during the term of this Agreement and for a period of [...***...] thereafter, liability insurance in amounts which are reasonable and customary in the biopharmaceutical industry for companies of comparable size and the respective activities (i.e. BII as CMO and XENCOR as sponsor/pharmaceutical company) at the respective place of business and such liability insurance shall insure against all mandatory liability, including liability for personal injury, physical injury and property damage.

Example Input: 1                                                                     Exhibit 10.2

                           CO-HOSTING AGREEMENT

  This Co-Hosting Agreement (the Agreement) is made by and between NETWORKS ASSOCIATES, INC., a Delaware corporation, doing business as Network Associates, Inc., with its principal place of business at 3965 Freedom Circle, Santa Clara, California 95054 (NAI), and SOFTWARE.NET CORPORATION, a Delaware corporation, a.k.a. Beyond.com, with its principal place of business at 1195 West Fremont Avenue, Sunnyvale, California 94087 (Co-Host). The Effective Date of this Agreement (herein called the Effective Date) is September 21, 1998.

                                 RECITALS

  WHEREAS, Co-Host owns various Internet locations, including the location set forth in Part 1 of Exhibit A hereto (the Co-Host Site) and markets software and computer hardware products from the Co-Host Site (herein referred to as the Goods).

  WHEREAS, Co-Host, as successor of Cybersource Corporation, and NAI are parties to an Electronic Software Distribution Agreement, dated as of September 1, 1997 regarding the electronic distribution of NAI's Goods (the ESD Agreement).

  WHEREAS, NAI has developed various Internet locations (the NAI Internet Sites) (with separate URL designations issued to NAI by InterNIC) (said designations being herein referred to individually as an URL) comprised of one or more file servers, with an Internet access at the applicable URL. Those portions of the NAI Internet Site or any future Internet locations developed by NAI which are accessible by members of the general public are referred to herein as the Originating Locations. NAI permits the maintenance of hot links from the Originating Locations to other Internet locations, whereby the end user can transfer from the NAI Internet Sites to the Co-Host Site by clicking the pointing device on highlighted text or images. Originating Locations does not include the McAffee Mall (as defined in Part 2 of Exhibit A) or web servers within a firewall or accessable only by passwords or other similarly restricted URLs (the Restricted Sites); provided, however, that the term Restricted Sites shall not include sites accessable only through online services (such as AOL) and other portals generally accessable to the public.

  WHEREAS, NAI and Co-Host desire to place a Co-Host hot link for the Goods at the Originating Locations and NAI and Co-Host desire to enter into certain additional agreements regarding such marketing opportunities through the Originating Locations.

  THEREFORE, in consideration of the foregoing, and of the mutual covenants and agreements hereinafter set forth, Co-Host and NAI have entered into the agreements hereinafter set forth.

                                    1

2      IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the Effective Date.

                                    SOFTWARE.NET CORPORATION                                        (a.k.a. Beyond.com)

ADDRESS FOR NOTICES 1195 West Fremont Avenue Sunnyvale, California 94087 Attention: President

                                    By:        /s/ JAMES R. LUSSIOR                                            -------------------------------------                                        Name:          James R. Lussior                                              -----------------------------------                                        Title: Vice President Business Operations                                               ----------------------------------                                        Date:               9/21/98                                              -----------------------------------

                                    NETWORKS ASSOCIATES, INC.

ADDRESS FOR NOTICES 3965 Freedom Circle Santa Clara, California 95054 Attention:  Vice President             Legal Affairs

                                    By:           /s/ PRABHAT K. GOTAL                                            -------------------------------------                                        Name:             Prabhat K. Gotal                                              -----------------------------------                                        Title:                CFO                                               ----------------------------------

Date: September 21, 1998





                                    2    3

                     TERMS AND CONDITIONS OF AGREEMENT

1.   LOCATION. During the Term (as defined in Section 6 (a) below), NAI shall      provide the following marketing considerations to Co-Host:

  (a)  Co-Hosting Rights. Co-Host shall be permitted to maintain on the           Online Service Page (as defined in Part 2 of Exhibit A) of the           Originating Locations in the manner set forth on Exhibit B hereto           (and on such other positions as are set forth on Exhibit B or as the           parties may mutually agree upon in writing from time to time) a hot           link to Internet locations specified by the Co-Host (the           Destination) from which Goods (other than Competitor's Goods           (hereinafter defined)) may be sold. The web pages at the Destination           shall be maintained in accordance with the requirements of this           Agreement, including without limitation, Section 2 hereof.           Competitor's Goods as used herein shall mean the Goods of any of the           persons or entities described on Part 1 of Exhibit C attached hereto           and made a part hereof. The Destination shall not contain any links to           any third party sites for the purchase of Competitor's Goods; provided           that the Destination will link to the Co-Host Site (which will sell           Competitor's Goods).

  (b)  Exclusive Positioning. Co-Host shall be the exclusive reseller of           software products (Software) at the Originating Locations. The           preceding sentence shall not prohibit NAI from (i) reselling Software           including NAI Goods (hereinafter defined) from the McAfee Mall; (ii)           referencing and linking to sites of strategic partners (other than           competitors of Co-Host listed on Part 2 of Exhibit C) which may also           be involved in the resale of Software from such sites; provided that           no Software may be purchased on the page of such site which is linked           to any Originating Location and further provided that the references           and links to the sites of strategic partners shall not be placed on           the Online Service Page; and (iii) advertising Software with banners,           buttons and other forms of online advertising; provided that any link           from such advertising takes the end user to the publisher of the           Software and not a reseller of Goods (other than Co-Host). For           example, an advertising banner or button for the Windows 98 software           program may link back to the website of Microsoft Corporation but not           the website of Dell Computer Corporation which is reselling the           program. Without limitation on the foregoing, NAI may co-host a           comparative shopping service on the Originating Locations. NAI will           obtain a written covenant that the comparative shopping co-host will           present sellers of Software in a neutral manner and upon request of           Co-Host will require removal or alteration of presentations by such           co-host on such co-hosted facility which Co-Host reasonably deems to           be non-neutral; provided, however, that, notwithstanding the           foregoing, Co-Host may be the featured or most prominent Software           reseller on any such service.

  (c)  Short Term Product Exclusives. For a period of fourteen (14) days           following release of any new NAI Goods or major version releases           (i.e., version 3.0 to 4.0) of existing NAI Goods, Co-Host shall be the           exclusive online seller of any such

                                    3    4

       release released during the Term. NAI Goods as used herein shall           mean retail desktop software products offered by NAI under the           McAfee brand or other NAI owned brand, which NAI makes available for           resale through distributors and resellers via the Internet.

  (d)  Reference Site. Co-Host may refer to the Originating Locations as a           Co-Host customer location and to NAI as a Co-Host customer hereunder           provided all such references shall be subject to the prior review and           approval of NAI, which approval will not be unreasonably withheld.

  (e)  Links to Online Service Page. Any end user accessing the principal           URLs of NAI (e.g., mcafee.com, cybermedia.com, pgp.com, tis.com) shall           be taken to the Online Service Page. Any end user accessing a buy           button on any of the Originating Locations shall be taken to the           Online Service Page. NAI shall not sell retail desktop consumer           products, including without limitation, NAI Goods from the NAI           Internet Sites (other than the McAfee Mall).

       NAI reserves the right to change the URL of the Originating Locations           from time to time and agrees to give Co-Host as much notice of any           such change as is practicable.

2.   MARKETING AND SALES.

  (a)  Placement of Order. In consideration of the Co-Hosting Fee set forth           in Part 3 of Exhibit A, NAI shall provide the marketing           consideration identified in Section 1 during the Term of this





       Agreement.

  (b)  Advertising Materials; Destination Operation. Co-Host shall provide to           NAI artwork and text materials with respect to the advertisement of           the Destination at the Originating Locations. Such artwork and           materials must be non-infringing, inoffensive, accurate, truthful and           otherwise comply with all applicable laws. Co-Host shall comply with           all applicable laws in connection with the operation of the           Destination, including without limitation, requirements regarding the           confidentiality of information concerning end users. NAI retains the           right, but not the obligation, to disapprove or remove any           advertisements or advertising materials it reasonably deems illegal,           inappropriate or otherwise inconsistent with the purposes of the           Originating Sites, without the consent of Co-Host.

  (c)  Use of Trademarks. Co-Host hereby grants to NAI a non-exclusive,           non-transferable, royalty-free license during the term of this           Agreement to use the trademarks, service marks and trade names of           Co-Host in connection with the advertising and promotion of the Goods           from the Originating Locations, provided that NAI complies with the           terms of Section 9(b) of the Web Site Services Agreement (as defined           below). Co-Host reserves the right to terminate the foregoing right,           after giving NAI notice and opportunity to cure the allegedly harmful           use, if in Co-Host's reasonable judgment, NAI's use of such           trademarks, service marks and trade names harms the business, image or           goodwill of Co-Host.

                                    4    5

  (d)  Limited Duty of Promotion. NAI shall have no duty or obligation to           advertise or promote the Goods, other than as set forth in this           Section 2. Except as expressly set forth herein (including, without           limitation, as set forth in this Section 2(d)), NAI does not,           expressly or impliedly, guaranty or warrant any results or level of           sales or customer leads to Co-Host. NAI reserves the right to cease           publication of the Originating Locations for brief periods from time           to time for maintenance or other purposes; provided that the           Originating Locations will comply with the same Uptime Requirements           specified with respect to the Managed Site in the Web Site Services           Agreement.

  (e)  Marketing Promotions. During the Term, Co-Host and NAI will regularly           discuss and implement mutually agreed upon jointly funded marketing           promotions. NAI and Co-Host hereby agree that the marketing promotions           set forth on Exhibit D hereto will be implemented as set forth on           Exhibit D.

  (f)  Distribution of Physical Products. NAI grants to Co-Host the right to           distribute physical copies of NAI's Goods to end users ordering from           the Managed Site, the Destination or Beyond.com upon the terms set           forth in Exhibit E attached hereto and made a part hereof.

3.   PAYMENT AND RECORDS.

  (a)  Fees. Subject to the provisions of Section 6 hereof, Co-Host shall pay           to NAI the amount designated in Part 3 of Exhibit A as the           Co-Hosting Fee upon the schedule set forth in such Part.

  (b)  Payment Terms. Except as set forth in such Part 3 of Exhibit A,           payments from Co-Host to NAI shall be due thirty (30) days from the           date of invoice. All payments will be made in United States dollars,           free of any taxes then currently applicable, at the address designated           above by NAI. Late payments shall bear interest at the lesser of: (i)           the maximum rate permitted by law, and (ii) the rate of 1.5% per month           from the due date until paid.

4.   EQUITABLE RELIEF. Each party acknowledges that any breach of its      obligations under this Agreement with respect to the proprietary rights or      confidential information of the other party will cause the other party      irreparable injury for which there are inadequate remedies at law, and      therefore such other party will be entitled to equitable relief in addition      to all other remedies provided by this Agreement or available at law.

5.   PROPRIETARY RIGHTS. NAI retains ownership of the NAI Internet Site, the      Originating Locations, the trademarks and all intellectual property rights      in connection with the NAI Internet Site, including without limitation, its      URL designations and all rights from InterNIC in connection therewith.      Co-Host and its licensors retain ownership of all intellectual property      rights in the advertising materials provided, the trademarks and all      intellectual property rights in connection with the Destination and the      Co-Host Site, including, without limitation, its URL designations and all      rights from InterNIC in connection therewith, and all of its other      intellectual property rights.

                                    5    6

6.   TERM AND TERMINATION.

  (a)  Term. This Agreement will commence on the Effective Date, and will           terminate on the third anniversary of the Effective Date (the Term),           unless earlier terminated as provided in this Agreement.





  (b)  Termination. A party may terminate this Agreement immediately: (i) if           the other party engages in any material unlawful business practice and           such practice continues uncured thirty (30) days following written           notice thereof, (ii) if the other party fails to perform any material           obligation, (which shall include, without limitation, the payment           obligations hereunder and compliance with the Uptime Requirements in           respect of the Originating Locations) or violates any material           restriction contained in this Agreement and such failure continues           uncured thirty (30) days following written notice thereof, (iii) by           such party if that certain Web Site Services Agreement between NAI and           Co-Host dated of even date herewith (the Web Site Services           Agreement) or the ESD Agreement is terminated by the other party,           (iv) if a receiver is appointed for the other party or its property,           (v) if the other party makes an assignment for the benefit of           creditors, (vi) if the other party becomes the subject of any           proceeding under any bankruptcy, insolvency or debtor's relief law,           (vii) upon ninety (90) days prior notice in writing by Co-Host at any           time after June 30, 2000, if the term of the Web Site Services           Agreement has not been renewed for an additional term of one (1) year           or more pursuant to its terms or (viii) if the party terminates the           Web Site Services Agreement by reason of the other party's material           default thereunder.

  (c)  Effect of Termination. Upon the effective date of the termination, all           outstanding invoices and other invoicable amounts will become due and           payable. Co-Host's contractual right to the marketing consideration           shall cease immediately upon the effective date of the termination.           Termination or expiration of this Agreement if by reason of material           breach by Co-Host shall not affect any of Co-Host's payment           obligations, all of which survive termination of this Agreement;           provided that, in (i) the event of termination of this Agreement by           Co-Host due to a material default by NAI, NAI shall pay to the Co-Host           the Liquidated Damages Amount (as defined in Part 2 of Exhibit A).

7.   CONFIDENTIALITY. Confidential Information disclosed by either party in      writing and marked as confidential, proprietary or the like (or      disclosed verbally if a written summary is provided within thirty days),      including any information relating to such party's research, development,      proprietary technology, product and marketing plans, finances, personnel      and business opportunities will be considered confidential information.      Each party will not use the other party's confidential information except      as required to achieve the objectives of this Agreement and will not      disclose such confidential information except to employees, agents and      contractors who have a need to know in the discharge of their duties under      this Agreement. Such restrictions will not apply to information that      becomes public knowledge other than through the disclosing party, is      independently developed by the non-disclosing party, or is lawfully      required to be disclosed by any governmental agency or otherwise required      to be disclosed by law.

                                    6    7

  Neither party will make any disclosure of, or statement covering, the terms      of this Agreement, including the financial terms, to any third parties      (other than its attorneys, accountants and professional consultants),      without obtaining the other's prior written consent, except as required by      court order or applicable regulatory authorities, including without      limitation, the rules and regulations of the Securities and Exchange      Commission, any stock exchange and the NASDAQ. The parties agree that under      their current understanding, disclosure of the financial terms of this      Agreement is not required under the foregoing rules and regulations. The      obligations of this Section 7 shall survive the termination of this      Agreement, under any circumstances. The parties shall make a joint press      release announcing the relationship, the timing and content of which shall      be subject to the mutual agreement of the parties.

8.   RELATIONSHIP OF THE PARTIES. The parties are independent contractors and      not partners, joint venturers or agents, and neither party may obligate the      other to any warranty or other obligation. Neither NAI nor Co-Host is by      virtue of this Agreement authorized as an agent or other representative of      the other party.

9.   REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION.

  (a)  Co-Host represents and warrants to NAI that Co-Host has all right,           title, ownership interest and/or marketing rights necessary to provide           the advertising materials to NAI, to perform its obligations hereunder           and to operate the Destination. Each party further represents and           warrants to the other that it has not entered into any agreements or           commitments which are inconsistent with or in conflict with the rights           granted or obligations incurred by the representing party in this           Agreement. Co-Host further represents and warrants that the           advertising materials supplied hereunder do not infringe any Covered           Country (hereinafter defined) copyright, trademark, or trade secret           right. Covered Country shall mean the United States of America and any           member state of the European Economic Union. Co-Host agrees that, if           notified promptly in writing and given sole control of the defense and           all related settlement negotiations, it will defend NAI, its           employees, officers and agents, against any claim based on an           allegation that (i) advertising materials supplied hereunder infringes           a Covered Country patent, copyright, trademark or state trade secret           right, or (ii) Co-Host violated any law, statute or ordinance or any           governmental or administrative order, rule or regulation with regard





       to the advertising materials, the operation of the Destination or the           manufacture, possession, distribution, use or sale of the Goods.           Co-Host will pay any resulting costs, damages and attorneys' fees           finally awarded by a court, or agreed to in settlement by Co-Host,           with respect to any such claims. NAI agrees that, if the advertising           materials become, or in Co-Host's opinion are likely to become, the           subject of an infringement claim, NAI will permit Co-Host, at           Co-Host's option and expense, to, among other things, procure the           right for NAI to continue marketing and using the advertising           materials, or to replace or modify them so that they become           non-infringing.

                                    7    8

  (b)  NAI represents and warrants that NAI has all right, title, ownership           interest and/or marketing rights necessary to operate the Originating           Locations, provide the Products to Co-Host, and the Products shall be           free and clear of all liens and encumbrances. NAI further represents           and warrants that it has not entered into any agreements or           commitments which are inconsistent with or in conflict with the rights           granted to Co-Host in this Agreement. NAI further represents and           warrants that the Products supplied hereunder do not infringe any           Covered Country patent, copyright, trademark, or trade secret right.           NAI agrees that, if notified promptly in writing and given sole           control of the defense and all related settlement negotiations, it           will defend Co-Host, its employees, officers and agents against any           claim based on an allegation that (i) a Product supplied hereunder           infringes a Covered Country patent, copyright, trademark or trade           secret right, or (ii) NAI violated any law, statute or ordinance or           any governmental or administrative order, rule or regulation with           regard to a Product or its manufacturer, possession, use or sale. NAI           will pay any resulting costs, damages and attorneys' fees finally           awarded by a court, or agreed to in settlement by NAI, with respect to           any such claims to the extent of the compensation received under this           Agreement. Co-Host agrees that, if the Products in the inventory of           Co-Host, or the operation thereof, become, or in NAI's opinion are           likely to become, the subject of an infringement claim, Co-Host will           permit NAI, at NAI's option and expense, to, among other things,           procure the right for Co-Host to continue marketing and using such           Products, or to replace or modify them so that they become           non-infringing. If neither of the foregoing alternatives is available           on terms that NAI deems reasonable, Co-Host will return such Products           on written request from NAI. NAI will grant Co-Host a credit equal to           the price paid by Co-Host for such returned Products, as adjusted for           discounts, returns and credits actually given, provided that such           returned Products are in an undamaged condition. NAI will have no           obligation to Co-Host with respect to infringement of patents,           copyrights, trademarks or trade secrets or other proprietary rights           beyond that stated in this Section 9(b).

  (c)  No Combination Claims. Notwithstanding Section 9(b), NAI will not be           liable to Co-Host for any claims to the extent they arise solely based           upon the combination, operation or use of any Product with equipment,           data or programming not supplied by NAI, or to the extent they arise           solely based upon the alteration or modification of the Products by           the Co-Host or the purchaser of such Products.

10.  LIMITATION OF LIABILITY. EXCEPT FOR CLAIMS UNDER SECTION 9 HEREOF, THE      LIABILITY OF A PARTY TO THE OTHER FOR DIRECT DAMAGES SHALL NOT EXCEED      FIFTEEN MILLION DOLLARS. EXCLUSIVE OF ANY CLAIMS BY THIRD PARTIES FOR      INJURY OR DAMAGES TO PERSONS OR TANGIBLE PROPERTY DIRECTLY CAUSED BY ANY      PRODUCT, NEITHER PARTY'S LIABILITY WITH REGARD TO THIS AGREEMENT OR THE      ADVERTISING MATERIALS, IF ANY, WILL INCLUDE CONSEQUENTIAL, INCIDENTAL,      SPECIAL OR OTHER INDIRECT DAMAGES, SUCH AS LOST PROFITS, EVEN IF

                                    8    9

  THE OTHER PARTY HAS KNOWLEDGE OF THE LIKELIHOOD OF SUCH DAMAGES.

11.  FORCE MAJEURE. Neither party shall be liable for the failure to perform any      of its obligations under this Agreement, except for payment obligations, if      such failure is caused by the occurrence of any event beyond the reasonable      control of such party, including without limitation, fire, flood, strikes      and other industrial disturbances, failure of raw materials suppliers,      failure of transport, accidents, transmission difficulties, phone service      interruptions, riots, insurrections, acts of God or orders of governmental      agencies.

12.  GENERAL.

  (a)  This Agreement, the Web Site Services Agreement and the certain ESD           Agreement between the parties set forth the entire agreement between           the parties on all subject matters and supercede all prior agreements           and understandings between the parties.

  (b)  This Agreement may not be changed, terminated or amended except in           writing. Whenever the consent of any party is required hereunder, such           consent may be given or withheld in such party's sole discretion and           with or without reason or cause, unless this Agreement states           otherwise.





  (c)  The parties agree that the terms and conditions of this Agreement           shall prevail over any contrary or additional terms in any purchase           order (unless agreed to in writing by both parties), sales           acknowledgment, confirmation or any other document issued by either           party affecting the purchase and/or sale of Goods. The terms of the           Exhibits to this Agreement shall be equal in importance to the terms           of the body of this Agreement.

  (d)  Either party's failure or delay in exercising any of its rights will           not constitute a waiver of such rights unless expressly waived in           writing. Neither party may assign this Agreement without the other's           prior written approval, except by operation of law or in connection           with the sale of substantially all of the assets of such party's           business or the acquisition of such party by a third party.

  (e)  This Agreement will be governed and interpreted according to the laws           of the State of California, without reference to principles of           conflicts of laws. Each party hereto expressly consents to the           personal jurisdiction of the state and federal courts located in Santa           Clara County, California, and expressly waives any defense to any           action based on inconvenient forum, choice of venue, lack of personal           jurisdiction, sufficiency of service of process or the like.

  (f)  In the event of any litigation or arbitral proceeding between they           parties regarding this Agreement, the advertising materials or the           obligations of the parties hereunder, the party not prevailing therein           shall pay the reasonable attorneys' fees and court costs of the party           prevailing therein.

                                    9    10

  (g)  If a court of law finds any provision of this Agreement unenforceable,           the parties agree to modify such provision to the extent necessary to           make it legal and enforceable while preserving its intent and the           economic effect of the unenforceable provision.

  (h)  Any notices and demands provided hereunder must be in writing and will           be deemed given upon the earlier of actual receipt or two (2) days           after being sent by overnight Federal Express or Express Mail, return           receipt requested, to the appropriate address set forth above, as such           contacts and addresses may be changed by written notice to the other           party.

                                    10    11

                                EXHIBIT A

                        Additional Agreement Terms                  (with location of first reference in Agreement)

1.   Destination                                                      (Recitals)

  www.mol.com or any successor site, which shall be the page to which traffic is directed from the public NAI URLs.

  Co-Host Site      www.beyond.com

2.   Certain Definitions

  1. Aggregate Revenue in any year of the Term shall mean the revenue generated in such year by (i) the sale of Goods to customers entering the Co-Host Site through the Destination,and (ii) sales of Goods from the Managed Site (as defined in the Web Site Services Agreement).

  2. Liquidated Damages Amount shall mean the difference between (i) the aggregate amount of the Co-Hosting Fee paid by Co-Host (the Aggregate Fee) and (ii) the Aggregate Fee multiplied by a number the numerator of which shall be the actual Aggregate Revenue through the effective date of termination of the Agreement and the denominator of which shall be the aggregate of the Minimum Revenue Targets through the effective date of the termination.

  3. McAfee Mall shall mean the same thing as the Managed Site under the Web Site Services Agreement.

  4. Online Service Page shall mean the general reference page for the NAI Sites established under the URL www.mol.com or any successor URL.

  5. Minimum Revenue Targets shall mean: (i) in the first (1st) year of the Term, Aggregate Revenues of not less than Nine Million Dollars ($9,000,000) and (ii) in the second (2nd) year of the Term, Aggregate Revenues of not less than Twelve Million Dollars ($12,000,000).

3.   Co-Hosting Fee                                              (Section 2(a))      Co-Host shall pay to NAI a Co-Hosting Fee in the following amounts:

  (a)  A non-refundable initial payment of Two Million Five Hundred Thousand           Dollars ($2,500,000) payable as follows: $2,000,000 on or before





       September 30, 1998, and the balance within sixty (60) days of the           execution of this Agreement.

                                    11    12

  (b)  Quarterly payments of $312,500 each, with the first payment being due           September 15, 1999, and on each December 15, March 15, June 15, and           September 15 thereafter during the Term unless (i) the Agreement is           terminated in accordance with Section 6 of the Agreement prior to such           date in which case no quarterly payments will be due following the           effective date of such termination or (ii) if the Minimum Revenue           Target (as defined in Part 2 of this Exhibit A) for the first year           of the Term is not achieved by the first anniversary of the Effective           Date, in which case no quarterly payments are payable until such time           as the Minimum Revenue Target for the first year of the Term is           achieved at which point Co-Host will resume making future quarterly           payments on the schedule and in the amount set forth above for the           duration of the Term or (iii) if the aggregate Minimum Revenue Targets           (as defined in Part 2 of this Exhibit A) for the first and second           year of the Term are not achieved by the second anniversary of the           Effective Date, then, even if the Minimum Revenue Target (as defined           in Part 2 of this Exhibit A) for the first year of the Term has been           achieved prior to such second Anniversary, no quarterly payments are           payable during the second year of the Term until such time as such           aggregate Minimum Revenue Target is achieved at which point Co-Host           will resume making future quarterly payments on the schedule and in           the amount set forth above for the duration of the Term. The parties           hereby agree to renegotiate in good faith a downward adjustment to the           foregoing quarterly payments in the event that the Minimum Revenue           Target for year one (1) is not achieved in the first year of this           Agreement.

                                    12    13

                                EXHIBIT B

     SPECIFICATIONS FOR HOT LINK FROM THE ONLINE SERVICE PAGE OF ANY                               ORIGINATING LOCATION

The hot link to the Co-Host site shall be no less prominent (whether is size, location or format) than any hot link to the McAfee Mall from the Online Service Page. In addition, in the event that any hot links to the McAfee Mall are located on any web page on the Originating Locations other than on the Online Service Page, then a hot link to the Co-Host Site shall all be located on such web page and shall be no less prominent (whether is size, location or format) than any hot link to the McAfee Mall. Notwithstanding the foregoing, the hot links to the Co-Host Site referred to above shall be no less prominent (whether in size, location or format) than any third party hot link on the Online Service Page or the Originating Locations.

                                    13    14

                                EXHIBIT C

                            COMPETITORS OF NAI

PART 1

Computer  Associates International, Inc. Symantec Corporation Check Point Software Internet Security Systems, Inc. Cisco Systems (only with respect to firewall products) Security Dynamics

                          COMPETITORS OF CO-HOST

PART 2

Microwarehouse CompUSA Insight PC Connection





Best Buy Circuit City Cyberian Outpost Digital River Egghead.com Programmers Paradise Office Max Online Software Store Office Depot Online Software Store Staples Online Software Store WalMart Online Software Store BuyDirect.com Barnes & Noble Online Software Store Amazon.com Software Store Dell Computer Online Software Store Gateway 2000 Online Software Store Software Street Techwave and related companies CDW Online Store

THE PARTIES AGREE TO ACT IN GOOD FAITH IN MODIFYING THE ABOVE LIST OF COMPETITORS.

                                    14    15

                                EXHIBIT D

                         Joint Marketing Programs

  PROGRAM:                                                   FUNDING:

1.   NAI will make five e-mail promotions during the fourth quarter of 1998 for      NAI products which will contain links to the Online Service Page.

2.   NAI will make available up to 500,000 impressions on the NAI Internet Sites      and ten percent (10%) of the impressions available on NAI's Upgrade/Update      site for advertising materials to promote Beyond.com.

                                    1    16

                                EXHIBIT E

                           DISTRIBUTION ADDENDUM

  WHEREAS, NAI owns and/or markets certain computer software and hardware products set forth on Exhibit A (Products).

  WHEREAS, Co-Host is an independent reseller of computer products to end users ordering products through web sites on the Internet operated by Co-Host.

  WHEREAS, Co-Host distributes electronic copies of the Products pursuant to the ESD Agreement.

  WHEREAS, Co-Host desires to distribute the Products and NAI desires to make the Products available to Co-Host for further distribution.

  THEREFORE, in consideration of the foregoing, and of the mutual covenants and agreements hereinafter set forth, NAI and Co-Host enter into the following additional agreements regarding the Products:

1.   APPOINTMENT. NAI appoints Co-Host as a non-exclusive distributor of the      Products to end users ordering the Products from the Destination or the      Co-Host Site, and Co-Host accepts this appointment. Co-Host shall      distribute the Products, as an independent reseller, at its own risk and      expense and subject to any such prices, contractual terms and conditions as      Co-Host may from time to time determine. Nothing in this Agreement shall      prohibit Co-Host from distributing competing products in the Territory. The      Territory as that term is used herein shall mean all countries in the      world except countries to which export or re-export of any Product, or the      direct products of any Product is prohibited by United States law without      first obtaining the permission of the United States Office of Export      Administration or its successor. Co-Host shall not have the right to assign      or otherwise transfer this Agreement or any rights herein granted to any      other person or entity, except by operation of law or in connection with      the sale of all of its assets, or the acquisition of the Co-Host by a third      party. Any such attempted assignment shall be void and the Agreement shall      remain in effect.

2.   DISTRIBUTION. Co-Host has the right to market and distribute the Products      subject to the license agreement that accompanies such Product. Co-Host may





  not engage in the rental of any of the Products. Co-Host shall not in any      event remove from or obscure upon any Products any labels placed thereon by      NAI containing statements of restrictions upon distribution, without the      prior written consent of NAI. NAI reserves the right in its sole discretion      and without liability to Co-Host to add additional Products, change the      prices for the Products pursuant to Section 5, modify the Products, change      the level of NAI's support for the Products and discontinue the      availability of any Product. Any addition or deletion from the list of      Products will be indicated by NAI's revision to the NAI price list, and NAI      will use reasonable efforts to provide Co-Host with thirty (30) days notice      prior to the effective date of such changes indicated on the NAI price      list.

                                    2    17

3.   MARKETING.

  (a)  General. Co-Host will use commercially reasonable efforts to market           the Products it orders to the best of its ability, and to that end           will (i) conduct marketing activities authorized by NAI, (ii) support           special promotions initiated by NAI, and (iii) maintain a sound           financial condition. Co-Host will conduct its business in a manner           that reflects favorably upon the Products and NAI.

  (b)  Advertising; Use of Trademarks. Co-Host may advertise and promote the           Products in a commercially reasonable manner and, subject to the           provisions of Section 5 of the Co-Hosting Agreement, may use           trademarks, service marks and trade names provided by NAI in           connection therewith, provided that all such promotions and           advertising will be consistent with NAI's general quality standards           and the provisions of Section 5 of the Co-Hosting Agreement. Unless           otherwise agreed upon in writing by NAI, Co-Host will submit each           advertisement and promotion to NAI for trademark review and approval           prior to initial release, which approval will not be unreasonably           delayed or withheld. All such usage which was not expressly approved           by NAI must be terminated immediately upon receipt of notice from NAI           to that effect.

  (c)  Trademarks Rights. NAI owns any and all trademarks, trade names, and           service marks for the Products (as noted in Section 5 of the           Co-Hosting Agreement). Such trademarks, trade names, and service marks           shall include all product names, the names Network Associates,           logos, designs, and other designations or brands used by NAI in           connection with the Products. Co-Host acknowledges and agrees that NAI           is not granting to Co-Host any rights in any Product trademark, trade           name, or service mark in or outside of the Territory.

4.   INSPECTIONS, RECORDS AND REPORTING.

  (a)  Sales Out Reports. Co-Host will provide to NAI within ten (10) days           after the end of each calendar month, a computer media data file in           the format established by NAI showing, for such month, Co-Host's total           sales, by customer and by Product from each location. If requested by           NAI, Co-Host shall provide such reports with respect to weekly periods           or bi-weekly periods prior to the end of the calendar month in which           such period occurs.

  (b)  Inventory Level Reports. Co-Host will provide to NAI on Monday of each           week, a computer media data file in the format established by NAI           showing Co-Host's current inventory levels of each Product (including           items in transit), and weekly runrate snapshots and the other           information reasonably requested by NAI.

  (c)  Records. For three (3) years after each calendar quarter during the           term of this Agreement, Co-Host will keep, at Co-Host's office, full           and accurate books of account and copies of all documents and other           materials for such quarter relating to this Agreement and Co-Host's           records, accounts and contracts relating to the distribution of the           Products.

                                    3    18

  (d)  Audit. NAI may inspect the records described in Sections 4(c) upon           demand from time to time. In addition, Co-Host agrees to allow NAI's           independent auditors to audit and analyze appropriate accounting           records of Co-Host from time to time (but not more than one every six           (6) months) to ensure compliance with all terms of this Agreement. Any           such audit shall be permitted by Co-Host within fifteen (15) days of           Co-Host's receipt of NAI's written request to audit, during normal           business hours. The cost of such an audit will be borne by NAI unless           a material discrepancy indicating inadequate record keeping or that           additional fees due to NAI are discovered, in which case the cost of           the audit shall be borne by Co-Host. A discrepancy shall be deemed           material if it involves payment or adjustment of more than five           percent of the amount reported in favor of NAI. Audits and inspections           shall not interfere unreasonably with Co-Host's business activities.]

5.   ORDERING AND PAYMENT.

  (a)  NAI's Acceptance. Any order for delivery of physical product placed





       with NAI is subject to acceptance by NAI within ten (10) days           following receipt by NAI. NAI may decline any order, in whole or in           part, and unless NAI accepts an order in writing, the order is           considered accepted only to the extent it is fulfilled.] The terms and           conditions of this Agreement and of the applicable NAI invoice or           confirmation will apply to each order accepted or shipped by NAI.           Electronic confirmation from an authorized NAI email address shall           have the same effect as a signed written confirmation. The provisions           of Co-Host's form of purchase order or other business forms will not           apply to any order notwithstanding NAI's acknowledgment or acceptance           of such order.

  (b)  Price to Co-Host. NAI will inform Co-Host as to its current suggested           retail price of the Products and standard discount or pricing granted           to NAI's traditional product distributors. During the term of this           Agreement, Co-Host will be invoiced on the basis of the discounts set           forth on Exhibit A of this Distribution Addendum. Discounts off           suggested retail price (SRP) for standard NAI Products shall exclude           tradeups, upgrade SKUs and special promotions, unless otherwise           indicated. NAI may change its SRP from time to time upon written           notice to Co-Host, which may take the form of a revised price list,           and NAI may notify Co-Host of a different discount from SRP in the           event NAI offers special promotional SRPs or Product prices in NAI's           discretion.

  (c)  Price Increase. If NAI increases its suggested retail price for any           Product (a product upgrade with a different part number will not be           the same Product) and there is a resulting increase in the price of           Products to Co-Host, NAI will give Co-Host thirty (30) days advance           notice of the effective date of any such increase and:

       (i)  NAI will honor the old price for any shipments of such Product                already in transit to Co-Host;

                                    4    19

       (ii) All additional orders following such thirty (30) day period will                be shipped at the new price;

      (iii) NAI has orders for such Product from Co-Host already booked into                NAI's order entry system at the time of such price increase or if                Co-Host orders additional Products during such thirty (30) day                period, then the price increase will not apply to that portion of                such orders which call for shipments of not more than the monthly                average quantity of such Products shipped to Co-Host in the three                month period preceding the date of the increase; and

       (iv) Orders for such Product in NAI's order entry system in excess of                the quantity specified in (iii) above will be shipped at the new                price unless they are canceled by Co-Host by written notice to                NAI, provided that such notice is received by NAI no later than                fifteen (15) days prior to the date of shipment specified in such                order.

  (d)  Price Decrease. If NAI decreases its suggested retail price for any           Product (a product upgrade with a different part number will not be           the same Product), the decrease will apply to all units of such           Product in Co-Host's inventory and orders in transit to Co-Host from           NAI that are in an unopened, salable condition as of the effective           date of the decrease, provided that such Products had been shipped to           Co-Host no more than ninety (90) days prior to such effective date. To           be eligible for such price protection, Co-Host must deliver to NAI           written evidence, signed by Co-Host, of an inventory of such Products           showing the number and location of each unit of Product for which           Co-Host claims price protection eligibility hereunder within thirty           (30) days of receiving notice of such price decreases. Such reduction           will constitute a credit on Co-Host's account for future orders from           NAI under this Agreement (unless the Agreement has terminated or           expired in which case such reduction will be refunded to the extent           that Co-Host does not owe NAI money) in an amount equal to the           difference between the net invoice price at which each such unit in           inventory was provided to Co-Host and the current price then           applicable for shipments of such Product to Co-Host hereunder.

  (e)  TAXES.

       (i)  All amounts payable by Co-Host to NAI under this Agreement are                exclusive of any tax, withholding tax, levy, or similar                governmental charge that may be assessed by any jurisdiction in                or outside the Territory except income and similar taxes levied                on and payable by NAI. Such taxes, withholding taxes, levies, and                governmental charges (collectively Taxes) include Taxes based                on sales, use, excise, import or export values/fees, value-added,                income, revenue, net worth, or may be the result of the delivery,                possession, or use of the Products, the execution or performance                of this Agreement or otherwise. Should any Taxes be due, Co-Host                agrees to pay such Taxes and indemnify NAI for any claim for

                                    5    20





            such Taxes demanded. Co-Host shall make no deduction from any                amounts owed to NAI for any Taxes. Co-Host covenants to NAI that                all Products distributed hereunder will be in the ordinary course                of Co-Host's business, and Co-Host agrees to provide NAI with                appropriate information and/or documentation satisfactory to the                applicable taxing authorities to substantiate any claim of                exemption from any Taxes.

       (ii) For all Taxes paid by Co-Host, Co-Host shall provide to NAI                within forty-five (45) days after the end of any quarter, a                certificate of tax payment documenting the payment and amount of                the Taxes paid during the preceding quarter.

6.   SHIPMENT, RISK OF LOSS AND DELIVERY.

  (a)  Shipment. All the physical Products will be shipped by NAI, F.C.A.           (Incoterms 1990) place of shipment. Co-Host is responsible for paying           all freight charges, transportation expenses, insurance charges, all           applicable taxes, duties, import and export fees and similar charges           associated with the delivery of the Products to Co-Host. All shipments           will be made using either any carrier approved by both Co-Host and           NAI. Co-Host will not without NAI's prior written consent, submit any           order calling for the shipment of a Product to more than a single           redistribution site.

  (b)  Risk of Loss. All risk of loss of or damage to the Products will pass           to Co-Host upon delivery by NAI to the common carrier. Co-Host will           bear the risk of loss or damage in transit.

  (c)  Partial Delivery. Unless Co-Host clearly advises NAI to the contrary           in writing NAI, may make partial shipments on account of Co-Host's           orders which shall, to be separately invoiced and paid for when due.

7.   RETURNS.

  (a)  Returned Merchandise Authorization. Notwithstanding anything to the           contrary herein contained, NAI will not issue credit to nor be           obligated to accept returns for any reason for any physical Products           unless NAI shall have previously issued a written Return Merchandise           Authorization (RMA). The preceding sentence governs whether or not           NAI is obligated to issue an RMA under this Agreement or applicable           law. RMAs must be in writing, signed by NAI and only authorize the           return of Products in good resalable conditions unless expressly           provided otherwise herein. If damaged goods are received pursuant to           an RMA, no credit shall be given by NAI with respect to such damaged           goods unless the RMA indicates otherwise. Co-Host shall be responsible           for all freight charges for goods returned pursuant to an RMA, unless           otherwise indicated herein or in the RMA.

  (b)  Customer Returns and Bad Box. Subject to Section 7 (a), Co-Host may,           during the term of this Agreement, obtain a credit against current or           future invoices from

                                    6    21

       NAI, for Products which have been returned by end users as defective,           or pursuant to the warranty stated in NAI's end user license. Such           credit will be in an amount equal to the original invoice price less           any discounts or other credits previously received. Co-Host shall also           have the ability to return for credit Products which have boxes that           are or become damaged, unless such damage was caused by Co-Host. An           offsetting purchase order must be placed for all bad box returns. In           the event of claims by end users of incomplete Product, NAI, at its           discretion, may supply to Co-Host, at no charge, any and all missing           materials which are supposed to be provided with the current release           of such Products or replace the entire Products in such situation.

  (c)  Discontinued Products. Co-Host may, during the term of this Agreement,           obtain a credit for the price paid by Co-Host to be applied against           current or future invoices, for all versions of Products shipped by           NAI within the previous ninety (90) days that NAI discontinues or           which are removed from NAI's current retail price list. Such credit           will be equal to the price paid by Co-Host for such obsolete Products,           less discounts received under Section 5 of this Agreements. All such           discontinued Products will be counted and inspected at the Inspection           Site by NAI's employee, and upon NAI's acceptance thereof (which will           be a condition of Co-Host's eligibility for a credit hereunder) such           Products will be promptly and completely destroyed or, if requested by           NAI, such Products or any portion thereof will be returned to NAI as           it directs. No Product shall be deemed discontinued if a later version           of the Product is still being offered by NAI and end users may obtain           the current version of such Product from NAI electronically at no           additional charge.

  (d)  Freight. Co-Host will pay all costs (including freight) associated           with the return of the Products to NAI and back to Co-Host as provided           herein, except that NAI will be responsible for all freight costs           associated with (i) the return of Products under Section 7(b), (ii)           the return of any discontinued or obsolete Products under Section           7(c), and (iii) the return of other Product updates agreed upon by NAI           and Co-Host.

8.   GENERAL.





  (a)  Co-Host agrees that it will not, directly or indirectly, export or           transmit the Product and technical data (or any part thereof) or any           process or service that is the direct product of the software and           documentation, to any group S or Z country specified in Supplement No.           1 of Section 770 of the Export Administration Regulations or to any           other country to which such export or transmission is restricted by           such regulation or statute, without the prior written consent, if           required, of the Office of Export Administration of the U.S.           Department of Commerce, or such other governmental entity as may have           jurisdiction over such export or transmission.

                                    7    22

  (b)  Co-Host acknowledges that some NAI Products hereto contain encryption           and some are export restricted (the Restricted Software) by the U.S.           Department of Commerce's Bureau of Export Administration (BXA).           Co-Host further acknowledges that for this reason, the export of such           items may subject the Co-Host or its executives to fines and/or other           severe penalties. Unless all required permits and/or approvals have           been obtained, Co-Host shall not export or re-export the Restricted           Software outside of the United States, whether directly or indirectly,           and will not cause, approve or otherwise facilitate others such as           agents, subsequent purchasers, licensees or any other third parties in           doing so. The parties agree to cooperate with each other with respect           to any application for any required licenses and approvals. However,           Co-Host acknowledges it is their ultimate responsibility to comply           with all export laws with respect to the Restricted Software and that           NAI has no further responsibility after the initial sale to the           Co-Host within the United States.

                                    8    23

                        EXHIBIT A TO EXHIBIT E

1.   PRODUCTS COVERED (RECITALS). Product(s) provided to Co-Host shall be all NAI Goods as that term is defined in Section 1 (c) of the Agreement and no other products.

2.   PRICES AND DISCOUNTS (SECTION 5(a)).

The standard discount or pricing granted to NAI's traditional Product distributors increased by four percentage points. 
Question: Highlight the parts (if any) of this contract related to Liquidated Damages that should be reviewed by a lawyer. Details: Does the contract contain a clause that would award either party liquidated damages for breach or a fee upon the termination of a contract (termination fee)?
Example Output: Termination or expiration of this Agreement if by reason of material           breach by Co-Host shall not affect any of Co-Host's payment           obligations, all of which survive termination of this Agreement;           provided that, in (i) the event of termination of this Agreement by           Co-Host due to a material default by NAI, NAI shall pay to the Co-Host           the Liquidated Damages Amount (as defined in Part 2 of Exhibit "A

Example Input: DIGITAL CINEMA DESTINATIONS CORP.     NETWORK AFFILIATE AGREEMENT     THIS NETWORK AFFILIATE AGREEMENT (this Agreement) is made as of this 14th day of March, 2011 by and between National CineMedia,  LLC, a Delaware limited liability company (NCM), and Digital Cinema Destinations Corp., a Delaware corporation (Network Affiliate and with  NCM, each a Party and collectively, the Parties).     BACKGROUND     WHEREAS, NCM operates a Digital Content Network of proprietary and third-party hardware and software pursuant to which the  Service may be digitally transmitted to equipment and facilities installed in, and displayed on movie screens, video display terminals and similar  equipment located in, movie theatres or other high traffic retail establishments, as further described herein;     WHEREAS, Network Affiliate owns and operates a theatre circuit with a patron base in excess of 400,000 patrons; and     WHEREAS, both Network Affiliate and NCM want to expand NCM's advertising footprint in the markets served by Network Affiliate;  and     WHEREAS, NCM and Network Affiliate want to enter into a strategic alliance under which NCM will provide the Service to Network  Affiliate, and Network Affiliate will accept and display the Service in its theatres, all on the terms set forth herein.     NOW, THEREFORE, in consideration of the premises and mutual covenants in this Agreement, and for other good and valuable  consideration, the receipt and sufficiency of which are hereby expressly acknowledged, and, intending to be legally bound hereby, the Parties  agree as follows:     ARTICLE I  DEFINITIONS     The following terms shall have the following meanings:     Advertising Revenue Share has the meaning assigned to it in Section 7.1.     Advertising Services means the advertising and promotional services (including the Digital Content Service, the Digital Carousel, the  Traditional Content Program, Lobby Promotions and Event Sponsorships) as described in Part A of Exhibit A.     Base Amount has the meaning assigned to it in Section 7.2.     Beverage Agreement means that certain Beverage Agreement, Pepsi dated January 1, 2011.       1

Source: DIGITAL CINEMA DESTINATIONS CORP., S-1, 12/20/2011





   Branded Slots has the meaning assigned to it in Section 3.6(b).     Change of Control has the meaning assigned to it in Section 14.8.     Confidential Information means any and all technical and non-technical information of or related to either Party, including, without  limitation, proprietary information, know-how, the NCM Property and Derived Works, and information related to or regarding either Party's  research and development, finances, suppliers, customers, business forecasts, and marketing plans, in whatever form disclosed or made available.  Confidential Information does not include information which: (i) the recipient can demonstrate was already known to it at the time of its receipt  hereunder; (ii) is or becomes generally available to the public other than by means of the recipient's breach of its obligations under this  Agreement; (iii) is independently obtained from a third party whose disclosure violates no duty of confidentiality; or (iv) is independently  developed by or on behalf of the recipient without use of or reliance on any Confidential Information furnished to it under this Agreement.     Costs has the meaning assigned to it in Section 10.1.     Derived Works has the meaning assigned to it in Section 12.2.     Digital Carousel means a loop of slide advertising with minimal branding and entertainment content which (i) is displayed before the  Pre-Feature Program in Digitized Theatres via the Digital Content Network and (ii) is displayed before the Traditional Content Program in Non- Digitized Theatres via a non-digital slide projector.     Digital Cinema Services means services related to the digital playback and display of feature films at a level of quality commensurate  with that of 35 mm film release prints that include high-resolution film scanners, digital image compression, high-speed data networking and  storage, and advanced digital projections.     Digital Content Network means a network of Equipment and third-party equipment and other facilities which provides for the  electronic transmission of digital content, directly or indirectly, from a centrally-controlled location to Theatres, resulting in the on-screen  exhibition of such content in such Theatres, either in Theatre auditoriums or on Lobby Screens.     Digital Content Service means the Pre-Feature Program, Policy Trailer and the Video Display Program.     Digitized Theatres means all Theatres that are connected to the Digital Content Network as of the Effective Date and all Theatres that  subsequently connect to the Digital Content Network, as of the date such connection is established.     Dispositions has the meaning assigned to it in Section 2.6.     Effective Date has the meaning assigned to it in Section 3.1.     Equipment means (a) the equipment and cabling which is necessary to schedule, distribute, play, reconcile and otherwise transmit and  receive transmission of the Digital Cinema Service, known as small d Equipment; and (b) the equipment and cabling which is necessary to  schedule, distribute, play, reconcile and otherwise transmit and receive transmission of the Digital Cinema Service, known as Big D Equipment.



  2

Source: DIGITAL CINEMA DESTINATIONS CORP., S-1, 12/20/2011





   Excluded Theatres has the meaning assigned to it in Section 3.10(a).     Exclusivity Exceptions has the meaning assigned to it in Section 6.1.     Flight has the meaning assigned to it in Section 3.2(a).     IMAX Screens has the meaning assigned to it in Section 3.10(b).     Infringement has the meaning assigned to it in Section 11.2.     Initial Term has the meaning assigned to it in Section 8.1.     Inventory means any advertising or other content.     Lobby Screen means a plasma, LED or other type of screen displaying digital or recorded content that is located inside a Theatre and  outside the auditoriums, or any other type of visual display mechanism that replaces such a screen.     Lobby Promotions has the meaning assigned to it in Part A of Exhibit A.     Marketing Materials has the meaning assigned to it in Section 5.3(a).     Minimum Fee has the meaning assigned to it in Section 7.2.     NCM has the meaning assigned to it in the preamble of this Agreement.     NCM Equipment has the meaning assigned to it in Section 2.3.     NCM Marks means the trademarks, service marks, logos, slogans and/or designs of NCM, each as identified on Exhibit C, in any and  all forms, formats, and styles.     NCM Property has the meaning assigned to it in Section 12.1.     NCM Quality Standards has the meaning assigned to it in Section 5.3(a).     Net Revenue has the meaning assigned to it in Section 7.1(b).     Network Affiliate has the meaning assigned to it in the preamble of this Agreement.     Network Affiliate Marks means the trademarks, service marks, logos, slogans and/or designs of Network Affiliate, each as identified  on Exhibit C, in and any and all forms, formats, and styles, and including the Brand.     Network Affiliate Quality Standards has the meaning assigned to it in Section 5.4(c).



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Source: DIGITAL CINEMA DESTINATIONS CORP., S-1, 12/20/2011





   Non-Digitized Theatres means Theatres that are not Digitized Theatres.     Party or Parties has the meaning assigned to it in the preamble of this Agreement.     Play List has the meaning assigned to it in Section 3.2(a).     Policy Trailer has the meaning assigned to it in Section 3.6(a).     Point-of-Sale Information has the meaning assigned to it in Section 5.1.     Pre-Feature Program means a program of digital content of between twenty (20) and thirty (30) minutes in length which is distributed  by NCM through the Digital Content Network for exhibition in Digitized Theatres prior to Showtime, or distributed non-digitally by some other  means, including DVD, for exhibition prior to Showtime in Non-Digitized Theatres.     Renewal Term has the meaning assigned to it in Section 8.1.     Representatives has the meaning assigned to it in Section 10.1.     Service means the Advertising Services and the Video Display Program.     Showtime means the advertised showtime for a feature film.     Software means the proprietary software owned and/or licensed by NCM or its affiliates and which is installed on the Equipment and  used in connection with delivery of the Service.     Term has the meaning assigned to it in Section 8.1.     Territory means the United States of America, its territories and possessions.     Theatre Advertising means advertisement of one or more of the following activities associated with operation of the Theatres: (A)  Network Affiliate's gift cards, loyalty programs and other items related to Network Affiliate's business in the Theatres (other than film related) and  (B) events presented by Network Affiliate. Additionally, Theatre Advertising shall include advertising, marketing and promotion of a local radio  station or stations (but with no mentions or promotions of any third party) with which Network Affiliate has entered into a barter transaction for  advertising of one or more of the Theatres by the radio station(s) in exchange solely for advertising the radio station or stations in one or more of  the Theatres, entered into for the purpose of generating increased attendance at the Theatres (the Strategic Program). Such advertising for the  Strategic Program may be placed in the Branded Slots, in Network Affiliate's slides exhibited in the Digital Carousel and in that portion of the Video  Display Program to which Network Affiliate has access for advertising (but for no more than one minute of time for every 30 minutes of Video  Display Program advertising). Strategic Programs may not be made on an exclusive basis. No more than one Strategic Program may be run in any  Theatre at any time.



  4

Source: DIGITAL CINEMA DESTINATIONS CORP., S-1, 12/20/2011





   Theatres means the individual Network Affiliate theatres listed on Exhibit B, as such list may be modified from time to time.     Traditional Content Program means advertising and other promotional content which is displayed on 35 mm film before Showtime.     Trailer means a promotion secured by Network Affiliate (which retains the exclusive rights to so secure for all of its Theatres) for a  feature film that is distributed by the distributor of the feature film for exhibition in the Theatres after Showtime.     Video Display Program means a program of digital content shown on Lobby Screens which is distributed by NCM through the Digital  Content Network for exhibition in Digitized Theatres, and non-digitally by some other means, including DVD, for exhibition in Non-Digitized  Theatres.     ARTICLE II  EQUIPMENT     Section 2.1 Equipment Purchase.     (a) Traditional. For those theatres listed on Exhibit B not equipped for Digital Content Service, NCM will promptly install a non- digital slide projector in each auditorium necessary to exhibit the Traditional Content Program.     (b) small d. Not later than six (6) months after NCM shall first deliver the Service to the Theatres, NCM will acquire the small d  Equipment and shall install such Equipment in the Network Affiliate Theatres indentified on Exhibit B, but NCM shall not be obligated to spend  more than $9,000 per screen. The cost of such small d Equipment shall be paid 100 percent (100%) by NCM. The type of equipment and technology  for such connectivity shall be at NCM's discretion.     (c) Big D. Network Affiliate, may at any time in its sole and absolute discretion, convert any of the Theatres so that Digital  Cinema Services can be provided, using technology commonly known Big D technology. Network Affiliate shall purchase or lease and shall install  such Big D Equipment in the Network Affiliate Theatres. The cost of such Big D Equipment shall be paid 100 percent (100%) by Network Affiliate.  The type of equipment and technology for such connectivity shall be subject to NCM's approval which shall not be unreasonably withheld,  conditioned or delayed.     Section 2.2 Operational Costs. All costs associated with Network Affiliate's use of the Equipment, including the cost of electricity,  telephone lines and the like, will be borne exclusively by Network Affiliate.     Section 2.3 Ownership of small d Equipment. NCM will own the small d Equipment it has purchased pursuant to Section 2.1(b) (the  NCM Equipment). NCM shall depreciate the cost of the NCM Equipment on a calendar quarterly basis, provided that the method used will result  in full depreciation at the end of the five-year period commencing on the Effective Date. Upon expiration or termination of the Agreement for any  reason, Network Affiliate shall pay NCM the value of the NCM Equipment, if any, that remains on NCM's financial statements as of the time of  such expiration or termination. Upon payment of such amount to NCM by Network Affiliate at the time of such expiration or termination, NCM's  ownership interest in the NCM Equipment will transfer to Network Affiliate.



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Source: DIGITAL CINEMA DESTINATIONS CORP., S-1, 12/20/2011





   Section 2.4 Ownership of Big D Equipment. Network Affiliate will own the Big D Equipment it has purchased or leased pursuant to  Section 2.1(c) (the Network Affiliate Equipment) and NCM disclaims any ownership interest, rights or liens in the Network Affiliate Equipment.     Section 2.5 Installation. Except as otherwise provided herein, NCM and/or its subcontractors shall be solely responsible for the  installation of all Equipment purchased pursuant to Section 2.1(a) or 2.1(b), and any Equipment necessary for connectivity under Section 2.1(c), as  well as for ancillary services such as software integration. The cost of such installation, including, without limitation, outside labor costs and out- of-pocket costs (whether payable to outside labor or incurred by employees and paid to third parties), shall be deemed capital investment costs  and shall be paid for one hundred percent (100%) by NCM. NCM shall use commercially reasonable efforts to install the Equipment in a manner  reasonably calculated not to disrupt Network Affiliate's operations, on such schedule as is reasonably determined by NCM from time to time and  reasonably agreed to in advance by Network Affiliate. Network Affiliate shall be solely responsible for obtaining any consents required for the  installation or use of any Equipment at any Theatre, including without limitation, governmental and landlord consents. Any relocation or  repositioning of any Equipment installed in any Theatre shall be performed only upon prior consultation with NCM. NCM and its subcontractors  shall at all times be provided reasonable access to the Theatres, as required to install the Equipment according to the installation rollout schedule,  and otherwise as reasonably necessary to perform its obligations and/or enforce its rights under this Agreement. Network Affiliate shall use  commercially reasonable efforts to ensure that all Equipment delivered to any Theatre or otherwise in the possession, custody or control of  Network Affiliate is secure and not accessible by authorized third parties.     Section 2.6 Dispositions and Additions of Theatres.     (a) Dispositions. Network Affiliate shall use commercially reasonable efforts to provide NCM at least six (6) months advance  written notice (or such lesser time for notice as may be practicable based upon the date of execution of the agreement for such disposition and the  disposition date) of the sale or other disposition of a Theatre, the loss of any Theatre lease, or its desire to permanently discontinue delivery of the  Service to a Theatre (collectively, a Disposition). Subject to the provisions of Section 2.3 with respect to transfer of title to NCM Equipment, at  least thirty (30) days prior to any Disposition, NCM shall be permitted to enter the affected Theatre(s) and remove any NCM Property. Except in  connection with a Disposition, Network Affiliate shall not be permitted to permanently discontinue Service to any Theatre without the prior written  consent of NCM, which consent will not be unreasonably withheld, conditioned or delayed. The costs of removal of NCM Equipment from any  Theatre to which Service has been permanently discontinued shall be borne by Network Affiliate.



  6

Source: DIGITAL CINEMA DESTINATIONS CORP., S-1, 12/20/2011





   (b) Acquisitions. Any Network Affiliate theatre built or acquired following the Effective Date shall, upon mutual agreement of  the parties, become a Theatre, and the capital costs of equipping all such new Theatres to receive the Service shall be as mutually agreed.     Section 2.7 Training. Network Affiliate agrees to permit NCM to provide training services to Network Affiliates' support staff and  customer service and other employees and agents. Network Affiliate shall cause its employees to attend such training and to follow the  instructions given by NCM in such training as well as in follow-up instructions, guidelines and manuals of any kind provided to Network Affiliate  by NCM.     ARTICLE III  DELIVERY OF THE SERVICE     Section 3.1 Transmission of the Service. On the Effective Date (the date on which NCM first provides the Service to the Theatres) NCM  shall provide all aspects of the Service to Network Affiliate and Network Affiliate shall exhibit and otherwise participate in such aspects of the  Service, on the terms and conditions set forth herein. During the Term, all Theatres will participate in the Service as either Digitized Theatres or  Non-Digitized Theatres. The Parties contemplate that the Effective Date will be on or about __________________________.     (a) Digitized Theatres. As of the Effective Date and during the Term, pursuant to the terms of Section 3.2, NCM will provide the  following Services to the Digitized Theatres, and all Digitized Theatres will participate in (i) the Digital Carousel during the period beginning after  the preceding feature film (or, in the case of the first feature film of the day, beginning after the opening of the auditorium doors for that film) until  the beginning of the Pre-Feature Program, (ii) the Pre-Feature Program, (iii) the Policy Trailer and (iv) the Video Display Program.     (b) Non-Digitized Theatres. As of the Effective Date and during the Term, pursuant to the terms of Section 3.2, NCM will provide  the following Services to the Non-Digitized Theatres, and all Non-Digitized Theatres will participate in (i) the slide carousel during the period  beginning after the preceding feature film (or, in the case of the first feature film of the day, beginning after the opening of the auditorium doors for  that film) until the beginning of the Traditional Content Program, (ii) the Traditional Content Program, (iii) the Policy Trailer and (iv) the Video  Display Program, but with respect to participation of Non-Digitized Theatre's participation in the Video Display Program, only to the extent that a  Non-Digitized Theatre has at least one Lobby Screen and has the requisite equipment necessary to participate in the Video Display Program. No  Non-Digitized Theatre will be obligated to participate in, nor will NCM be obligated to provide to any Non-Digitized Theatre, the Pre-Feature  Program.     (c) Lobby Promotions. NCM shall provide Lobby Promotions to Theatres and Theatres shall participate in Lobby Promotions as  described in Section 3.3.     (d) Conversion of Theatres. No Digitized Theatre shall become a Non-Digitized Theatre without the mutual agreement of  Network Affiliate and NCM.



  7

Source: DIGITAL CINEMA DESTINATIONS CORP., S-1, 12/20/2011





   Section 3.2 Content and Distribution of the Digital Content Service and Traditional Content Program.     (a) Distribution. On the Effective Date, NCM will commence distribution of the Digital Carousel, the Digital Content Service and  the Traditional Content Program to the Digitized Theatres and Non-Digitized Theatres, all as set forth above in Section 3.1. With respect to  Digitized Theatres, content shall be distributed through the Digital Content Network, via either NCM's satellite network or by NCM's or Network  Affiliate's landline network. Each of the Pre-Feature Program and the Video Display Program shall consist of Inventory comprising a single play list  (Play List). The Play List will be refreshed during the Term when and as determined by NCM but not less frequently than 12 times per year (each  a Flight).     (b) Pre-Feature Program. As of the Effective Date, the Pre-Feature Program shall consist of four (4) or more elements, including:  (i) commercial advertising; (ii) promotions for the Network Affiliate brand (including the Branded Slots), Concessions sold and services used by  Network Affiliate and other products and services in accordance with Section 3.6; (iii) interstitial content; and (iv) other entertainment  programming content which, while promotional of businesses or products, shall be primarily entertaining, educational or informational in nature,  rather than commercially inspired.     (c) Video Display Program. The elements of the Video Display Program shall be, generally, the same as those for the Pre-Feature  Program, and will include the Branded Slots. NCM specifically agrees that the Video Display Program will contain only material that has received,  or had it been rated would have received, an MPAA G or PG rating. Lobby Screens displaying the Video Display Program shall be located in  areas of Theatres of NCM's choosing (subject to Network Affiliate's reasonable consnent and operational constraints and provided relocation of  existing Lobby Screens is not required). Network Affiliate is obligated to provide a location for at least one Lobby Screen per Digitized Theatre  with ten or fewer screens, two Lobby Screens per Digitized Theatre with eleven to twenty screens and three Lobby Screens per Digitized Theatre  with more than twenty screens; provided, however, that Network Affiliate shall have no obligation to increase the number of Lobby Screens in any  Theatre that has at least one Lobby Screen that is capable of receiving the Video Display Program as of the Effective Date.     Section 3.3 Delivery of Lobby Promotions. On the Effective Date, NCM will make available to the Theatres the Lobby Promotions, and  Network Affiliate will accept such Lobby Promotions on the terms and conditions set forth herein.     (i) The Inventory of Lobby Promotions for each Theatre that Network Affiliate agrees to display pursuant to this  Agreement is set forth in Exhibit A-1. NCM may provide additional Lobby Promotions, subject to approval by Network Affiliate. NCM will take all  other actions necessary and prudent to ensure the delivery of Lobby Promotions as required under the terms hereof. NCM will inform Network  Affiliate of the length of time that Lobby Promotions and additional Lobby Promotions, if any, are to be displayed.



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Source: DIGITAL CINEMA DESTINATIONS CORP., S-1, 12/20/2011





   (ii) NCM covenants and agrees that Lobby Promotions provided pursuant to this Agreement will conform to all  standards and specifications of which Network Affiliate provides NCM reasonable notice during the Term, including without limitation standards  and specifications with respect to manufacturers and suppliers, sizing (e.g., cup and popcorn tub sizing), timing of delivery of concession supplies  to Theatres, reimbursement of incremental costs (e.g., cups, floor mats, plates) and the like. Lobby Promotions (i) will contain only material that has  received, or had it been rated would have received, an MPAA G or PG rating, (ii) that the only type of sampling that will be permitted is exit  sampling, (iii) to refrain from distributing chewing gum as part of any Lobby Promotion, other than attended sampling as patrons are exiting the  Theatre, (iv) not to permit a Lobby Promotion that would distribute or sample any item that is the same as or substantially similar to any item sold  at the Theatre's concession stand and (v) not to permit a Lobby Promotion involving fund raising on Theatre property.     (iii) NCM will be responsible for all costs and expenses associated with sourcing, production, delivery and execution of  Lobby Promotions to the Theatres, including incremental costs actually incurred by the Theatres in connection with Lobby Promotions. In its  discretion, Network Affiliate may make employees available to assist in Lobby Promotions requiring exit sampling; provided that NCM shall  reimburse Network Affiliate for the employees' time used to conduct the exit sampling at their customary wage.     Section 3.4 Content Standards. The Parties agree that (unless mutually agreed by the Parties with respect to clauses (i), (iii), (iv), (v) or  (vi)) all content within the Service will not contain content or other material that: (i) has received, or had it been rated would have received, an  MPAA X or NC-17 rating (or the equivalent), (ii) promotes illegal activity, (iii) promotes the use of tobacco, sexual aids, birth control, firearms,  weapons or similar products; (iv) promotes alcohol, except prior to R-rated films in the auditorium; (v) constitutes religious advertising (except  on a local basis, exhibiting time and location for local church services); (vi) constitutes political advertising or promotes gambling; (vii) promotes  theatres, theatre circuits or other entities that are competitive with Network Affiliate's theatre operating business or NCM; or (viii) otherwise  reflects negatively on Network Affiliate or adversely affects Network Affiliate's attendance as determined in Network Affiliate's reasonable  discretion. Additionally, the service will not contain any material that depicts or advertises products competitive to the Beverage Agreement  (except as an incidental product placement in content not created by NCM). Network Affiliate may, without liability, breach or otherwise, prevent  and/or take any other actions with respect to the use or distribution of content that violates the foregoing standards; provided, that with respect  to this Section 3.4(viii), Network Affiliate may opt out of such advertising only with respect to Theatres in the geographic locations identified,  which may include all of Network Affiliate's Theatres. If the Digital Content Service contains any content that violates the foregoing standards,  NCM will use commercially reasonable efforts to remove such content as soon as reasonably practical. If NCM fails to remove such content within  a reasonable time, Network Affiliate may discontinue the Digital Content Service in such auditoriums where such content is shown until the  violating content is removed and shall have no liability for such discontinuation. If any other elements of the Service contain any content that  violates the foregoing standards, NCM shall at Network Affiliate's request, or Network Affiliate acting on its own behalf may, upon giving written  notice to NCM, remove such content immediately.



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Source: DIGITAL CINEMA DESTINATIONS CORP., S-1, 12/20/2011





   Section 3.5 Development of the Program. All operational costs associated with NCM's procurement, preparation and delivery of the  Service (including Inventory and other promotional materials as provided herein) to the Theatres shall be borne exclusively by NCM. Except as  provided herein, all in-Theatre operational costs associated with Network Affiliate's receipt and exhibition of the Service within the Theatres shall  be borne exclusively by Network Affiliate. NCM will provide at its own expense all creative and post-production services necessary to ingest,  encode and otherwise prepare for distribution all other on-screen Inventory as part of the Digital Content Service. All on-screen Inventory  provided by Network Affiliate for inclusion in the Digital Content Service must (i) be submitted to NCM for review for compliance with (ii) and (iii)  below as NCM may reasonably request, but in any event at least twenty (20) business days before scheduled exhibition (unless otherwise  previously approved by NCM), (ii) satisfy the content restrictions enumerated in Section 3.4, and (iii) be fully produced in accordance with NCM's  technical specifications as promulgated by NCM from time to time (all as provided in written or electronic form to Network Affiliate), ready for  exhibition, as well as in accordance with applicable NCM commercial standards and operating policies, and all applicable federal, state and local  laws and regulations. Any Inventory provided by Network Affiliate for review and approval by NCM need not, once approved by NCM, be  resubmitted by Network Affiliate for approval in connection with any future use.     Section 3.6 Policy Trailer; Branded Slots.     (a) Policy Trailer. The policy trailer will be (i) up to 60 seconds, (ii) exhibited in the Theatres after Showtime, (iii) be customized to  include the name of the Network Affiliates Theatre business and (iii) used to feature content relating to Theatre policy and operations, and may  include (w) a policy service announcement that promotes appropriate theatre behavior, (x) promotions of Network Affiliate Concessions, (y) upon  prior written approval of Network Affiliate, other promotional materials of third-party products for which NCM sells advertising and is paid a fee  (the Policy Trailer). All costs associated with producing the Policy Trailer shall be borne by Network Affiliate.     (b) Branded Slot. The Digital Content Service will feature (i) up to two (2) minutes for Theatre Advertising (the Branded Slots)  in each Play List. Each Branded Slot may only exhibit Theatre Advertising. NCM is required to include no less than forty-five (45) seconds of  Branded Slots within the final fifteen (15) minutes of the Play List, fifteen (15) seconds of which shall be included within the final eleven (11)  minutes of the Play List; provided, that NCM may begin these Branded Slots up to one minute earlier when NCM expands the amount of  advertising units that follow these Branded Slots through the sale of additional advertising to third parties.     (c) Restrictions. Other than as permitted in Sections 3.6(a) or (b), neither the Policy Trailer nor the Branded Slot will not include  third-party advertising and/or third-party mentions for products and services, without NCM's prior written approval.     Section 3.7 Cooperation and Assistance. The Parties agree that the effectiveness and quality of the Service as provided by NCM are  dependent on the cooperation and operational support of both Parties.     (a) Network Affiliate agrees that it (and each of the Theatres) shall at all times during the Term provide NCM, at Network  Affiliate's own cost except as otherwise provided in this Agreement, with the following:



  10

Source: DIGITAL CINEMA DESTINATIONS CORP., S-1, 12/20/2011





   (i) internal resources and permissions as reasonably required to effectuate delivery of the Service, including without  limitation projection and sound technicians and other employees to assist with NCM Equipment installation and Digital Content Service  transmission;     (ii) unless unavailable, 24 (hour) by 7 (day) real time access via Network Affiliate's network assets in conformity with  Network Affiliate's network use and security policies (provided in advance to NCM and consistently applied with respect to other Network  Affiliate service providers) to the in-Theatre software and hardware components of the Digital Content Network, so that NCM can monitor the  distribution and playback of the Service and the Parties will reasonably cooperate to ensure that corrections or changes are made as required to  deliver the Service;     (iii) detailed playback information in a form, whether electronic or hard copy, and at such times as either Network  Affiliate or NCM shall reasonably request;     (iv) prompt notification of reception, playback or other technical problems associated with receipt of the Service;     (v) the results of quality audits performed by Network Affiliate periodically during the Term upon NCM's request and  at its direction to confirm playback compliance;     (vi) adequate opportunities to train Network Affiliate personnel, as provided in Section 2.7;     (vii) attendance data film-by-film, rating-by-rating and Theatre-by-Theatre for all Theatres, in an electronic form and in a  format agreed by the Parties, at such times as are consistent with Network Affiliate's internal reporting systems but in any event at least weekly;     (viii) at such times as NCM shall reasonably request but no more often than on a quarterly basis, a list of all Theatres,  including (i) identification of which Theatres are Digitized Theatres, (ii) the number of screens at each Theatre, and (iii) identification of any  Theatres that are not equipped with at least one Lobby Screen to display the Video Display Program; and     (ix) such other information regarding the Services as NCM may reasonably request from time to time;     (b) For the avoidance of doubt, information made available subject to this Section 3.7 shall be subject to the provisions of  Section 13.1 (Confidential Treatment). Network Affiliate agrees to be included in any compliance reporting NCM provides to its advertisers and  other content providers for proof of performance.     (c) NCM and Network Affiliate shall use commercially reasonable efforts to ensure that the Digital Content Network will be  integrated with any network for the delivery of Digital Cinema Services such that the Services can be delivered over such network.



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Source: DIGITAL CINEMA DESTINATIONS CORP., S-1, 12/20/2011





   Section 3.8 Trailers. Trailers that are exhibited in the Theatres shall not include the exhibition or display of any trademark, service mark,  logo or other branding of a party other than the film studio(s), distributor(s), production company(ies); provided, however, Trailers may include  incidental images of products or services which appear in the motion picture (e.g., product placements).     Section 3.9 Customer Access to Pre-Feature Program. Network Affiliate shall use its reasonable efforts to provide audiences access to  the Theatre auditorium for the Pre-Feature Program or Traditional Content Program, as applicable.     Section 3.10 Excluded Theatres; IMAX Screens.     (a) Excluded Theatres. Network Affiliate shall have the right to designate art house and draft house theatres that for purposes of  this Agreement shall be Excluded Theatres. The list of Excluded Theatres identified as of the Effective Date is set forth on Exhibit D. Network  Affiliate shall provide written or electronic notice to NCM, in the form specified by NCM, each time there is a change in its list of Excluded  Theatres. Excluded Theatres shall not be deemed Theatres for purposes of this Agreement. Excluded Theatres will not receive Advertising  Services. Excluded Theatres will not be considered for purposes of the calculation of Advertising Revenue Share. Notwithstanding the foregoing,  Excluded Theatres will be subject to the exclusivity obligations of Network Affiliate, as set forth in Section 6.1, to the same extent as a Theatre  hereunder. With respect to any Theatre subsequently designated as an Excluded Theatre, the parties will negotiate in good faith terms for the  discontinuation of delivery of the Service to such Excluded Theatre.     (b) IMAX Screens. All Theatre screens dedicated to the exhibition of films using IMAX technology shall be deemed IMAX  Screens. IMAX Screens will not receive, and Network Affiliate will have no duty to exhibit on any IMAX Screen, the Digital Carousel, the Pre- Feature Program or the Traditional Content Program; provided however, that Network Affiliate may elect to exhibit the Digital Carousel, the Pre- Feature Program or the Traditional Content Program on its IMAX Screens in its sole discretion. Notwithstanding the foregoing, all IMAX Screens  will be subject to the exclusivity obligations of Network Affiliate, as set forth in Section 6.1 to the same extent as a Theatre hereunder. Network  Affiliate will provide NCM prompt written notice of any additions to or deletions from its list of IMAX Screens, which list appears on Exhibit D.  Network Affiliate shall provide written or electronic notice to NCM, in the form specified by NCM, each time there is a change in its list of IMAX  Screens.     Section 3.11 Grand Openings; Employee Uniforms. Notwithstanding anything herein to the contrary, Network Affiliate shall not be  prohibited from: (i) promoting the grand opening of a Theatre or an Excluded Theatre, provided such promotional activity (x) may occur only for  the thirty (30) day period immediately preceding the opening of the theatre to the general public through the thirty (30) day period immediately  following the opening of the theatre to the general public, and (y) includes local advertising of such opening in exchange for the advertising of  local businesses only, provided any on-screen advertising related thereto shall be subject to availability of on-screen Inventory and limited to one  (1) advertisement thirty (30) seconds in length; and (ii) allowing advertising for the supplier of Network Affiliate employee uniforms to appear on  such uniforms, provided that not more than two individual instances of such advertising ,may appear on any such uniform at any one time.



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Source: DIGITAL CINEMA DESTINATIONS CORP., S-1, 12/20/2011





   Section 3.12 License. NCM hereby grants to Network Affiliate at no cost a limited, non-exclusive, non-transferable, non-sublicenseable,  royalty-free license in the Territory during the Term only to receive, store, convert or otherwise manage, display and exhibit the Service on the  Equipment at Theatres solely in connection with its performance of and subject to all of the terms and conditions of this Agreement. Network  Affiliate may not materially alter the Service or otherwise exhibit the Service in a manner resulting in a material change in an average viewer's  perception of the Service or any Service content, nor may Network Affiliate use or make the Service available for any purpose, at any location, or in  any manner not specifically authorized by this Agreement, including without limitation recording, copying or duplicating the Service or any  portion thereof. Network Affiliate shall at all times use the NCM Equipment and the Service in accordance with such policies and procedures of  NCM as NCM may reasonably impose from time to time. Each party shall be solely responsible for obtaining and providing all rights, licenses,  clearances and consents necessary for the use of any content it provides, or that is prepared or provided on its behalf, as contemplated herein,  except as may otherwise be agreed by the parties in writing; provided, however, that, notwithstanding anything herein that might be construed to  the contrary, NCM shall not be obligated to provide any right, license, clearance or consent necessary to permit the public exhibition of music in  the Theatres (except with respect to background music provided by NCM or its affiliates).     ARTICLE IV  MAINTENANCE AND SUPPORT; MAKE GOODS     Section 4.1 Maintenance Obligation.     (a) At any time that NCM Equipment is installed in any Theatre, Network Affiliate shall use its reasonable efforts to ensure there  is no loss or damage to such NCM Equipment as a result of the standard or foreseeable operations of the Theatres, and to prevent piracy or other  theft of inventory exhibited through the use of the NCM Equipment or otherwise in its possession or control. Network Affiliate further agrees to  keep all NCM Equipment, including without limitation video display terminals, clean, and to promptly notify NCM if any NCM Equipment is not  functioning properly. For any NCM Equipment located in Theatres or otherwise in Network Affiliate's possession or control, Network Affiliate  shall be responsible for any loss, theft or damage of or to NCM Equipment to the extent attributable to the negligence or wrongdoing of Network  Affiliate.     (b) Subject to the foregoing, NCM and/or its subcontractors shall keep and maintain Equipment installed in the Theatres in good  condition and repair. Network Affiliate shall provide NCM and/or its subcontractor's access to the Equipment and such other support services as  NCM and/or its subcontractors reasonably require to provide, or have provided, installation, maintenance and repair services as required  hereunder. Network Affiliate further agrees to require Theatre operations personnel to perform, at NCM's direction, reasonable basic daily  verification of on-screen performance (including written confirmation of on-screen image and audio clarity). More detailed quality audits may be  performed by NCM personnel. NCM will provide Network Affiliate copies of all audit report reconciliations.



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Source: DIGITAL CINEMA DESTINATIONS CORP., S-1, 12/20/2011





   Section 4.2 Software Support. Provided that Network Affiliate is not in breach of this Agreement, NCM shall make available to Network  Affiliate at no cost pursuant to the terms of the license in Section 5.1 below all Software updates and upgrades to the extent such updates and  upgrades have been or are being made generally commercially available by NCM. Unless otherwise agreed to in writing by NCM, Network Affiliate  shall not permit any third party to perform or provide any maintenance or support services with respect to the Digital Content Network or the  Software.     Section 4.3 Service Level Agreement. Network Affiliate agrees to take all actions during the Term that are within its control and  reasonably necessary to permit delivery of the Service to the Theatres as contemplated by this Agreement.     Section 4.4 Make Goods. In the event either Party fails to satisfy its obligation or other agreement to provide Inventory, the Inventory  provided by either Party deviates from the standards imposed under this Agreement, or Inventory is not transmitted or exhibited as part of the  Service due to the inadvertence, negligence or fault of either Party (as may result, for example, from the failure by either party to supply or maintain  equipment or other technology necessary for transmission of the Service as required hereunder), then the Party not at fault may, as its sole and  exclusive remedy therefor, require that the other Party, at its sole expense, deliver make goods sufficient to achieve the level of Inventory  content impressions which would have occurred but for the inadvertence, negligence or fault of the other Party. The parties agree that this  exclusive remedy is essential to the smooth operation of the Service and the consistent performance of the parties under this Agreement. The type  and placement of make goods shall be as mutually agreed, it being the intent of the parties that the value of the make goods shall be substantially  the same as that which the party not at fault would have ordinarily received under this Agreement. All make goods shall be provided in the Theatre  in which the corresponding Inventory would have been exhibited.     ARTICLE V  INTELLECTUAL PROPERTY     Section 5.1 Software License. Subject to the terms and conditions of this Agreement, NCM hereby grants to Network Affiliate, and  Network Affiliate hereby accepts, a non-exclusive, non-transferable, non-sublicenseable, royalty-free limited license to the object code version of  the Software on Equipment at Theatres solely for the limited purpose of performing this Agreement. The parties agree that, as part of the set-up  services NCM will establish one or more connections between the Software and Network Affiliate's point-of-sale software and such other software  of Network Affiliate as is required to deliver the Service. The parties agree that NCM will have real-time access through the connections to  Network Affiliate's point-of-sale software to Network Affiliate's ratings, show-time, and attendance information, as shall be mutually determined  by the parties (the Point-of-Sale Information). The Point-of-Sale Information shall be deemed the Confidential Information of Network Affiliate  for all purposes of this Agreement. The parties will cooperate to ensure that NCM does not receive access through Network Affiliate's point-of- sale software to any information of Network Affiliate other than the Point-of-Sale Information.



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Source: DIGITAL CINEMA DESTINATIONS CORP., S-1, 12/20/2011





   Section 5.2 Software Restrictions. Network Affiliate acknowledges that the Software and any and all components thereof constitute  valuable trade secrets of NCM or its affiliates or licensors. Accordingly, except as may be expressly permitted under this Agreement, Network  Affiliate shall not, nor shall it permit, cause, or authorize any other person or entity to:     (a) Use the Software for any purpose, at any location, or otherwise access the Software in any manner not specifically authorized  by this Agreement;     (b) Make or retain any copy of the Software, except as specifically authorized by this Agreement;     (c) Re-engineer, reverse engineer, decompile, or disassemble the Software or create or recreate the source code for the Software;     (d) Modify, adapt, translate, or create derivative works based upon the Software, or combine or merge any part of the Software  with or into any other software or documentation;     (e) Refer to or otherwise use the Software as part of any effort to develop a program having any functional attributes, visual  expression, or other features similar to those of the Software or to compete with NCM or its affiliates;     (f) Remove, erase, or tamper with any copyright or other proprietary notice printed or stamped on, affixed to, or encoded or  recorded in the Software, or fail to preserve all copyright and other proprietary notices in any copy of the Software made by Network Affiliate to  the extent copying is permitted by this Agreement;     (g) Sell, market, license, sublicense, distribute, or otherwise grant to any person or entity any right to use the Software or  Documentation;     (h) Use the Software to conduct any type of service bureau or time-sharing operation or to provide remote processing, network  processing, network telecommunications, or similar services to any person or entity, whether on a fee basis or otherwise; or     (i) Attempt to do any of the foregoing.     Section 5.3 License of the NCM Marks.     (a) Subject to the terms and conditions of this Agreement and such other standards, trademark usage guidelines and  specifications as are prescribed by NCM during the term of this Agreement (the NCM Quality Standards), NCM hereby grants to Network  Affiliate, and Network Affiliate hereby accepts, a non-exclusive, non-transferable (except in connection with an assignment of this Agreement in  accordance with Section 14.8 hereof), non-sublicenseable, limited license (i) to use the NCM Marks solely in connection with its receipt and  exhibition of the Service, as approved by NCM in writing in advance, and (ii) to use the NCM Marks in marketing or advertising materials  (Marketing Materials) that have been approved by NCM pursuant to the terms hereof. Network Affiliate acknowledges that NCM is and shall  remain the sole owner of the NCM Marks, including the goodwill of the business symbolized thereby. Network Affiliate recognizes the value of the  goodwill associated with the NCM Marks and acknowledges and agrees that any goodwill arising out of the use of the NCM Marks or any of them  by Network Affiliate shall inure to the sole benefit of NCM for all purposes hereof.



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Source: DIGITAL CINEMA DESTINATIONS CORP., S-1, 12/20/2011





   (b) Prior to using any Marketing Materials or depicting or presenting any NCM Mark in or on any Marketing Materials or  otherwise, Network Affiliate shall submit a sample of such Marketing Materials or other material to NCM for approval. NCM shall exercise  commercially reasonable efforts to approve or reject any such Marketing Materials or other material submitted to it for review within thirty (30)  days from the date of receipt by NCM. Network Affiliate shall not use, publish, or distribute any Marketing Materials or other material unless and  until NCM has approved it in writing. Upon receipt of such approval from NCM for a particular Marketing Materials or other material, Network  Affiliate shall not be obligated to submit to NCM substantially similar material for approval; provided, however, Network Affiliate shall timely  furnish samples of all such material to NCM. For the avoidance of doubt, nothing in this Subsection 5.3(b) shall limit or affect Network Affiliate's  obligations set forth in any other subsection of this Section 5.3 or any other provision of this Agreement.     (c) Any and all use or exercise of rights by Network Affiliate with respect to the NCM Marks shall be subject to and in  accordance with the NCM Quality Standards, and, without limiting such standards, subject to and in accordance with standards of quality and  specifications that conform to or exceed the highest quality standards and specifications achieved by NCM and its licensees in their use and  exercise of rights with respect to the NCM Marks. NCM shall have the right to change the NCM Quality Standards from time to time upon notice to  Network Affiliate.     (d) Network Affiliate shall cause the appropriate designation (TM) or (SM) or the registration symbol (R) to be placed  adjacent to the NCM Marks in connection with the use thereof and to indicate such additional or alternative information as NCM shall specify  from time to time concerning the use by Network Affiliate of the NCM Marks.     (e) Network Affiliate shall not use any NCM Mark in any manner that may reflect adversely on the image or quality symbolized  by the NCM Mark, or that may be detrimental to or tarnish the image or reputation of NCM. Notwithstanding anything herein to the contrary,  NCM shall have the right, at its sole option, to terminate or suspend the trademark license grant provided herein if NCM, in its sole discretion,  determines that Network Affiliate's use of the NCM Marks or any of them is in violation of the terms of this Agreement or of the NCM Quality  Standards, or is otherwise disparaging to NCM's image or reputation, and such use is not conformed to the terms of this Agreement of the NCM  Quality Standards within ten (10) days of receipt of written notice thereof. NCM's obligation to provide any Services dependant upon the use of  the NCM Marks will be suspended during the period of any such suspension or termination, and NCM will have no liability for any failure to  perform such Services during such time period.     (f) Network Affiliate agrees not to use or adopt (i) any trademark or service mark which is confusingly similar to, or a colorable  imitation of, any NCM Mark or any part thereof, (ii) any trademark or service mark in combination with any NCM Mark, or (iii) any NCM Mark in  connection with or for the benefit of any product or service of any other person or entity. Network Affiliate shall not engage in any conduct which  may place NCM or any NCM Mark in a negative light or context, and shall not represent that it owns or has any interest in any NCM Mark other  than as expressly granted herein, nor shall it contest or assist others in contesting the title or any rights of NCM (or any other owner) in and to any  NCM Mark.



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Source: DIGITAL CINEMA DESTINATIONS CORP., S-1, 12/20/2011





   Section 5.4 License of the Network Affiliate Marks.     (a) Subject to the terms and conditions of this Agreement, Network Affiliate hereby grants to NCM, and NCM hereby accepts, a  non-exclusive, non-transferable (except in connection with an assignment of this Agreement in accordance with Section 14.8 hereof), non- sublicenseable, limited license (i) to use the Network Affiliate Marks solely in connection with its delivery of the Service, as approved by Network  Affiliate in writing in advance, and (ii) to use the Network Affiliate Marks in Marketing Materials that have been approved by Network Affiliate  pursuant to the terms hereof. NCM acknowledges that Network Affiliate is and shall remain the sole owner of the Network Affiliate Marks,  including the goodwill of the business symbolized thereby. NCM recognizes the value of the goodwill associated with the Network Affiliate Marks  and acknowledges and agrees that any goodwill arising out of the use of the Network Affiliate Marks by NCM shall inure to the sole benefit of  Network Affiliate for all purposes hereof.     (b) Prior to using any Marketing Material or depicting or presenting any Network Affiliate Mark in or on any marketing or  advertising material or otherwise, NCM shall submit a sample of such Marketing Material or other material to Network Affiliate for approval.  Network Affiliate shall exercise commercially reasonable efforts to approve or reject any such Marketing Material or other material submitted to it  for review within thirty (30) days from the date of receipt by Network Affiliate. NCM shall not use, publish, or distribute any Marketing Material or  other material unless and until Network Affiliate has approved it in writing. Upon receipt of such approval from Network Affiliate for a particular  Marketing Material or other material, NCM shall not be obligated to submit to Network Affiliate substantially similar material for approval;  provided, however, NCM shall timely furnish samples of all such material to Network Affiliate. For the avoidance of doubt, nothing in this  Subsection 5.4(b) shall limit or affect NCM's obligations set forth in any other subsection of this Section 5.4 or any other provision of this  Agreement.     (c) Any and all use or exercise of rights by NCM with respect to the Network Affiliate Marks shall be in accordance with  standards of quality and specifications that conform to or exceed the highest quality standards and specifications achieved by Network Affiliate  and its licensees in their use and exercise of rights with respect to the Network Affiliate Marks, as well as, without limiting the foregoing, such  other standards, trademark usage guidelines, and specifications as are prescribed by Network Affiliate (the Network Affiliate Quality Standards).  Network Affiliate shall have the right to change the Network Affiliate Quality Standards from time to time upon notice to NCM.     (d) NCM shall cause the appropriate designation (TM) or (SM) or the registration symbol (R) to be placed adjacent to the  Network Affiliate Marks in connection with the use thereof and to indicate such additional or alternative information as Network Affiliate shall  specify from time to time concerning the use by NCM of the Network Affiliate Marks.



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Source: DIGITAL CINEMA DESTINATIONS CORP., S-1, 12/20/2011





   (e) NCM shall not use any Network Affiliate Mark in any manner that may reflect adversely on the image or quality symbolized  by the Network Affiliate Mark, or that may be detrimental to the image or reputation of Network Affiliate. Notwithstanding anything herein to the  contrary, Network Affiliate shall have the right, at its sole option, to terminate or suspend the trademark license grant provided herein if it  determines that NCM's use of the Network Affiliate Marks or any of them is in violation of its trademark usage guidelines or is otherwise  disparaging to its image or reputation, and such use is not conformed to such guidelines and other reasonable requests of Network Affiliate within  ten (10) days of receipt of written notice thereof. NCM's obligation to provide any Services dependant upon the use of the Network Affiliate Mark  will be suspended during the period of any such suspension or termination, and NCM will have no liability for any failure to perform such Services  during such time period.     (f) NCM agrees not to use (i) any trademark or service mark which is confusingly similar to, or a colorable imitation of, any  Network Affiliate Mark or any part thereof, (ii) any trademark or service mark in combination with any Network Affiliate Mark, or (iii) any Network  Affiliate Mark in connection with or for the benefit of any product or service of any other person or entity. NCM shall not engage in any conduct  which may place Network Affiliate or any Network Affiliate Mark in a negative light or context, and shall not represent that it owns or has any  interest in any Network Affiliate Mark other than as expressly granted herein, nor shall it contest or assist others in contesting the title or any  rights of Network Affiliate (or any other owner) in and to any Network Affiliate Mark.     ARTICLE VI  MANDATORY PARTICIPATION AND EXCLUSIVITY     Section 6.1 Mandatory Participation and Exclusivity. During the Term, except as expressly provided in this Agreement, including Section  3.6 (Policy Trailer; Branded Slots); those provisions of Part A of Exhibit A that permit Network Affiliate to engage in certain Lobby Promotions;  Section 3.11 (Grand Openings, Employee Uniforms), collectively, the Exclusivity Exceptions, Network Affiliate shall subscribe for and NCM shall  be the exclusive provider to the theatres of the services specifically set forth in the definition of the Service. Except as permitted by the  Exclusivity Exceptions, during the Term, Network Affiliate shall neither engage nor permit a third party (excluding third party designees of NCM as  provided hereunder) to provide, or itself provide, to any of Network Affiliate's theatres any of the services specifically set forth in the definition of  Service. Subject only to the Exclusivity Exceptions, NCM shall be Network Affiliate's exclusive representative with respect to the procurement of  Inventory (including without limitation all on-screen advertising) for the Advertising Services. NCM shall be responsible, at its own expense, for  the coordination and administration of Inventory placement, whether nationally, regionally or locally, including without limitation the acceptance  of insertion orders, invoicing advertisers and other content providers, and the acceptance and collection of payments therefrom. Any Inventory  which has not been sold as of the date for its scheduled exhibition shall be allocated to make goods, remnant advertising, and other revenue- generating advertising. Nothing in this Agreement shall limit or affect (i) NCM's ability to contract or enter into any relationship with any Person  or entity for any product, service, or otherwise, whether or not similar to any products or services provided by NCM under this Agreement, or (ii)  Network Affiliate's ability to contract or enter into any relationship with any Person or entity for any product, service, or otherwise, other than the  services that will be provided exclusively by NCM as set forth in this Section 6.1 and meetings promoted and scheduled by Network Affiliate  theatre personnel as previously referenced in this Section 6.1. All rights with respect to advertising and promotions not explicitly granted  hereunder are reserved to Network Affiliate, including without limitation Network Affiliate's ability to offer and sell advertising to any third party  on any website on the Internet, its telephone ticketing service or other alternative media sources used for ticketing.



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Source: DIGITAL CINEMA DESTINATIONS CORP., S-1, 12/20/2011





   ARTICLE VII  FEES     Section 7.1 Access Fee     (a) Digital Screen Usage Fee. On or before sixty (60) days after the end of each month during the Term, NCM shall pay to  Network Affiliate $30.00 per digitized screen (i.e., a screen connected to the Digital Content Network), provided Network Affiliate provides the  required attendance and screen count information as such information time frames are established by NCM on a monthly basis.     (b) Revenue Sharing. Each Party shall receive 50% of all Net Revenue derived from the sale of advertising Inventory that is  exhibited in the Theatres (the Advertising Revenue Share). For purposes of this Agreement, Net Revenue shall mean gross revenues from the  sale of advertising Inventory exhibited in the Theatres which is actually collected less refunds and any similar disbursements and any applicable  taxes or governmental charges other than ordinary income tax. Net Revenue shall include any revenue received by Network Affiliate, directly or  indirectly, through its use of or otherwise in connection with the Service and alternative or independent digital film distribution. Each party shall  render an accounting to the other on a monthly basis substantiating the calculation of Net Revenue payable during such month pursuant to  Section 8.3.     Section 7.2 Minimum Fee. For each twelve-month period following the Effective Date during the Term, and as long as Network Affiliate's  attendance base in the Theatres for the twelve (12) month period is equal to or greater than 400,000 patrons (the Base Amount), the amount paid  by NCM pursuant to Section 7.1(b) shall be not less than $ .17 per Theatre patron during such period with such amount increasing by 5% on each  anniversary of the Effective Date (the Minimum Fee). The Minimum Fee shall be prorated to account for (i) any periods during which Network  Affiliate's annual attendance base in the Theatres is lower than the Base Amount, and (ii) reductions in revenue associated with Network  Affiliate's rejection of content as permitted under Section 3.4. Any payments made in order to satisfy the Minimum Fee which can be  characterized as an advance of amounts due from advertising clients which is earned but not yet paid shall be deducted from the following  year's payments when such amounts have in fact been collected.     Section 7.3 Payment. Except as otherwise specifically provided in this Agreement, all amounts due by one Party to the other under this  Agreement, less any permitted deductions, shall be paid in full within sixty (60) days after the fiscal month in which such amounts were received  by the paying Party, or the receipt by the paying Party of an invoice therefore, as applicable.



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   Section 7.4 Audit. Each Party shall keep and maintain accurate books and records of all matters relating to the performance of its  obligations hereunder, including without limitation the sale of advertising, in accordance with generally accepted accounting principles. During the  Term and for a period of three (3) years thereafter, each Party, at its sole expense, shall, upon reasonable advance notice from the other party, make  such books and records available at its offices for inspection and audit by the other party, its employees and agents. Any audit with respect to  amounts payable by either party to the other party under this Agreement shall be limited to an audit with respect to amounts to be paid in the  current calendar year and immediately preceding calendar year only. Any period that has been audited pursuant to this Section shall not be  subject to any further audit. In the event an audit of the books and records of a party reveals an underpayment to the other party, the audited  party shall pay to the other party the amount of such underpayment. Any disputes between the Parties relating to the calculation of amounts owed  shall be referred to a mutually satisfactory independent public accounting firm that has not been employed by either party for the two (2) year  period immediately preceding the date of such referral. The determination of such firm shall be conclusive and binding on each party, and  judgment upon any such determination can be entered in any court having jurisdiction over the matter. Each Party shall bear one-half of the fees of  such firm. If the Parties cannot select such accounting firm, then the selection of such accounting firm shall be made by the American Arbitration  Association located in Denver, Colorado. In addition to the foregoing audit rights of the parties, during the Term, NCM and its authorized agents  shall have the right, upon reasonable advance notice, to inspect any Network Affiliate premises or facilities involved in the performance of this  Agreement to confirm the performance and satisfaction of Network Affiliate's obligations hereunder.     ARTICLE VIII  TERM AND TERMINATION     Section 8.1 Term. Unless earlier terminated as provided below, the term of this Agreement shall begin on the Effective Date and shall  continue for a period of five (5) years from the Effective Date (the Initial Term) after which this Agreement may be extended on mutual agreement  of the parties (a Renewal Term, and together with the Initial Term, the Term). If either party wishes to extend the Initial Term it shall provide  notice to the other not later than 180 days, nor sooner than 270 days, before the end of the Initial Term. The parties shall then engage in  discussions regarding renewal for a period of 30 days. If no agreement is reached during that 30-day period, then neither party shall have any  obligation to extend this Agreement beyond the Initial Term.     Section 8.2 Termination by Either Party. Either Party may terminate this Agreement, immediately, by giving written notice of termination  to the other, and without prejudice to any other rights or remedies the terminating party may have, if:



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   (a) The other Party breaches any material provision of this Agreement, other than any provision of Section 14.8 or Articles V or  XIII, and fails to cure such breach within thirty (30) days after receipt from the terminating party of written notice of the breach.     (b) The other Party breaches any provision of Section or 14.8 or Articles V or XIII, and, to the extent such breach is susceptible  to cure, fails to cure such breach within five (5) days after receipt from the terminating party of written notice of the breach. Notwithstanding  anything else to the contrary herein, if the breach is not susceptible to cure, this Agreement will terminate immediately as of such breach, with or  without any notice from the terminating party.     (c) (i) A voluntary petition is commenced by the other Party under the United States Bankruptcy Code, as amended, 11 U.S.C. §  101 et seq., (ii) the other Party has an involuntary petition commenced against it under the Bankruptcy Code and such petition is not dismissed  within sixty (60) days after filing, (iii) the other Party becomes insolvent, (iv) any substantial part of the other Party's property becomes subject to  any levy, seizure, assignment, application, or sale for or by any creditor or governmental agency, or (v) the other Party liquidates or otherwise  discontinues all or most of that portion of its business operations which are related to this Agreement.     Section 8.3 Termination by NCM. NCM may terminate this Agreement upon thirty (30) days written notice to Network Affiliate in the  event that distribution of the Service to all of the Theatres listed on Exhibit B is permanently discontinued.     Section 8.4 Survival. Sections 2.3, 5.2, 5.3, 5.4, 8.4, 8.5, 11.1, 11.2, 11.3 and 11.6 and Articles VII, IX, X, XII, and XV shall survive any  expiration or termination of this Agreement.     Section 8.5 Effect of Termination. Upon termination or expiration of this Agreement, and upon reasonable prior notice to Network  Affiliate, NCM shall be entitled to enter the Theatres upon reasonable prior written notice, and any other premises of Network Affiliate where any  NCM Property may be located, and recover any and all NCM Property, unless Network Affiliate chooses to purchase such Property based on a  straight line five year depreciated value. In addition, each Party shall promptly deliver to the other or, at the other Party's option, permit the other  Party to enter its premises and recover any Equipment in the first Party's possession, custody or control which may be owned by the other Party  pursuant to Section 2.3 hereof. Each Party shall fully cooperate in this effort. NCM shall be obligated to restore all premises from which it removes  NCM Property or Equipment to its previous condition, reasonable wear and tear excepted. In addition, any and all licenses granted by either party  to the other under this Agreement shall immediately terminate, and NCM shall be entitled to immediately discontinue the Service. Notwithstanding  termination of this Agreement, each party shall pay to the other, within five (5) days after the effective date of such termination, any and all fees  (including costs and expenses) owed hereunder as of such termination.     Section 8.6 Suspension of Services. On the occurrence of any event which would permit NCM to terminate this Agreement, in addition to  any and all other rights and remedies to which NCM may be entitled at law or in equity, NCM may, without terminating this Agreement, and in its  sole discretion and without further notice to Network Affiliate, suspend performance of any or all of its obligations under this Agreement  (including, without limitation, by activating internal controls in systems or software that are designed to deny Network Affiliate use of or access to  NCM Property) until and unless NCM determines, in its sole discretion and upon whatever conditions NCM chooses to impose on Network  Affiliate, to resume performance of some or all of the suspended obligations.



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   ARTICLE IX  REPRESENTATIONS AND WARRANTIES     Section 9.1 Representations and Warranties. Each party represents and warrants that:     (a) It (i) is duly formed and organized, validly existing, and in good standing under the laws of the jurisdiction of its formation  and incorporation and has the power and authority to carry on its business as carried on, and (ii) has the right to enter into this Agreement and to  perform its obligations under this Agreement and has the power and authority to execute and deliver this Agreement.     (b) Any registration, declaration, or filing with, or consent, approval, license, permit or other authorization or order by, any  governmental or regulatory authority, domestic or foreign, that is required to be obtained by it in connection with the valid execution, delivery,  acceptance and performance by it under this Agreement or the consummation by it of any transaction contemplated hereby has been completed,  made, or obtained, as the case may be.     (c) Each party is the exclusive owner of, or otherwise has or will have timely obtained all rights, licenses, clearances and  consents necessary to make the grants of rights made or otherwise perform its obligations under this Agreement.     (a) Neither party will at any time, except to the extent necessary to assert or defend its rights under this Agreement: (i) challenge  or otherwise do anything inconsistent with the other party's right, title or interest in its property, (ii) do or cause to be done or omit to do anything,  the doing, causing or omitting of which would contest or in any way impair or tend to impair the rights of the other party in its property, or (iii)  assist or cause any person or entity to do any of the foregoing.     Section 9.2 Disclaimers.     (a) Equipment Disclaimer. EXCEPT AS EXPRESSLY AND EXPLICITLY SET FORTH IN THIS ARTICLE, INCLUDING,  WITHOUT LIMITATION, ANY REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 9.1(c), ANY AND ALL INFORMATION,  PRODUCTS, AND SERVICES, INCLUDING, WITHOUT LIMITATION, THE NCM PROPERTY, IS PROVIDED AS IS AND WITH ALL  FAULTS AND NCM MAKES NO REPRESENTATIONS OR WARRANTIES, AND DISCLAIMS ALL REPRESENTATIONS AND  WARRANTIES, EXPRESS OR IMPLIED, WRITTEN OR ORAL, ARISING FROM COURSE OF DEALING, COURSE OF PERFORMANCE,  USAGE OF TRADE, OR OTHERWISE INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF TITLE, NON- INFRINGEMENT, MERCHANTABILITY, AND FITNESS FOR A PARTICULAR PURPOSE. NCM MAKES NO REPRESENTATION THAT THE  SERVICE WILL BE UNINTERRUPTED OR ERROR-FREE.



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   (b) Services Disclaimer. NCM DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES THAT THE SERVICE WILL BE  UNINTERRUPTED OR ERROR-FREE AND DISCLAIMS ANY WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE WITH REGARD  TO THE SERVICES.     ARTICLE X  INDEMNIFICATION     Section 10.1 Network Affiliate Indemnification. Network Affiliate shall defend, indemnify, and hold harmless NCM and its officers,  directors, shareholders, contractors, employees, representatives, agents, successors, and assigns (collectively, Representatives) from and  against any and all losses, obligations, risks, costs, liabilities, settlements, damages, judgments, awards, fines, penalties, and expenses (including,  without limitation, reasonable attorneys' fees) (collectively, Costs) suffered or incurred in connection with or as a result of, and from and against  any and all third party claims, suits, actions, or proceedings actually or allegedly arising out of, based upon, or relating to, (i) any breach by  Network Affiliate of Article IX, (ii) infringement by any information, content or other materials supplied by or on behalf of Network Affiliate  hereunder (including the Brand) of any third party U.S. patent, trademark, or copyright right arising from NCM's use of such materials in  accordance and compliance with this Agreement, provided such Costs have been finally awarded by a court of competent jurisdiction or approved  by Network Affiliate as part of a settlement, (iii) any use of any NCM Property other than as authorized by this Agreement, or (iv) Network  Affiliate's fraud, willful misconduct, or noncompliance with law.     Section 10.2 NCM General Indemnification. NCM shall defend, indemnify, and hold harmless Network Affiliate and its Representatives  from and against any and all Costs suffered or incurred in connection with or as a result of, and from and against any and all third party claims,  suits, actions, or proceedings actually or allegedly arising out of, based upon, or relating to, (i) any breach by NCM of Article IX, or (ii) NCM's  fraud, willful misconduct, or noncompliance with law.     Section 10.3 NCM Infringement Indemnification.     (a) Indemnifications Obligations. NCM shall defend, indemnify and hold harmless Network Affiliate and its Representatives  from and against any and all Costs suffered or incurred arising from any and all third party claims, suits, actions, or proceedings to the extent  actually or allegedly arising out of, based upon, or relating to any infringement by the NCM Property (but excluding any Equipment) of any third  party U.S. trademark, copyright, or patent issued as of the Effective Date, arising from Network Affiliate's use of the NCM Property in accordance  and compliance with this Agreement.



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   (b) Additional Remedies. In addition to, but not in limitation of, NCM's obligations under Section 10.3 (a) above, NCM may, at  its sole option, in the event that any claim, suit, proceeding, or action is brought or threatened for which NCM may be obligated under Section 10.3 (a) to indemnify Network Affiliate: (i) replace or modify the NCM Property to render it non-infringing; (ii) secure for Network Affiliate the right to  use the NCM Property; or (iii) terminate this Agreement under the provisions of Article X. In the event NCM chooses to terminate this Agreement  under Article X hereof, NCM shall refund to Network Affiliate the portion (if any) of the total amount of license fees actually paid to NCM by  Network Affiliate hereunder during the two-year period immediately preceding the date of the claim for indemnification, depreciated according to a  five-year straight line depreciation.     (c) Limitations of Obligations. NCM shall not have any liability to Network Affiliate under this Section 10.3 for any alleged  infringement based in any part on: (i) any Service content or Confidential Information supplied by or on behalf of Network Affiliate; (ii) the  combined use of the NCM Property with software or hardware products or other technology or materials not provided or owned by NCM; (iii)  additions or modifications to the NCM Property not made by NCM; (iv) use or installation of the NCM Property in accordance with designs or  specifications not provided by NCM; or (v) use of any legacy or superseded version of NCM Property if such infringement would have been  avoided by use of a more recent version of the NCM Property made available to Network Affiliate. The obligations under this Section 10.3 state the  entire liability of NCM and are Network Affiliate's sole and exclusive remedies, with respect to intellectual property infringement.     Section 10.4 Defense of Action. A Party offering indemnification or defense under this Article X (each, an Indemnitor) shall have the  right to control the defense and settlement of any and all claims, suits, proceedings, and actions for which such Indemnitor is obligated to  indemnify, hold harmless, and defend hereunder, but the Party or Representative of a Party receiving such indemnification or defense under this  Article X (each, the Indemnitee) shall have the right to participate in such claims, suits, proceedings, and actions at its own cost and expense.  An Indemnitor shall have no liability under this Article unless the Indemnitee gives notice of such claim to the Indemnitor promptly after the  Indemnitee learns of such claim so as to not prejudice the Indemnitor. Under no circumstance shall either party hereto settle or compromise or  consent to the entry of any judgment with respect to any claim, suit, proceeding, or action that is the subject of indemnification hereunder without  the prior written consent of the other party, which consent shall not be withheld or delayed unreasonably.     Section 10.5 Limitations.     (a) EXCEPT IN CONNECTION WITH A BREACH OF ARTICLE XIII OF THIS AGREEMENT AND WITH THE EXCEPTION OF  THE INDEMNIFICATION OBLIGATIONS OF THE PARTIES UNDER ARTICLE X, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE  OTHER PARTY OR ANY OTHER PERSON OR ENTITY FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, PUNITIVE,  EXEMPLARY, OR EXTRA-CONTRACTUAL DAMAGES OF ANY KIND WHATSOEVER ARISING FROM OR CONNECTED WITH THIS  AGREEMENT, INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOST REVENUES, OR LOSS OF BUSINESS, REGARDLESS OF LEGAL  THEORY, WHETHER OR NOT FORESEEABLE, EVEN IF EITHER PARTY HERETO HAS BEEN ADVISED OF THE POSSIBILITY OR  PROBABILITY OF SUCH DAMAGES AND EVEN IF THE REMEDIES OTHERWISE PROVIDED BY THIS AGREEMENT FAIL OF THEIR  ESSENTIAL PURPOSE. THE REMEDIES PROVIDED BY THIS AGREEMENT AND THE PROVISIONS OF THIS AGREEMENT ALLOCATE THE  RISKS OF THIS AGREEMENT BETWEEN THE PARTIES, SOME OF WHICH MAY BE UNKNOWN OR UNDERMINABLE. THESE  LIMITATIONS ARE A MATERIAL INDUCEMENT FOR THE PARTIES TO THIS AGREEMENT TO ENTER INTO THIS AGREEMENT, AND  THE PARTIES TO THIS AGREEMENT HAVE RELIED UPON THESE PROVISIONS IN DETERMINING WHETHER OR NOT TO ENTER INTO  THIS AGREEMENT.



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   (b) EXCEPT IN CONNECTION WITH A BREACH OF ARTICLE XIV HEREUNDER, AND WITH THE EXCEPTION OF THE  INDEMNIFICATION OBLIGATIONS OF THE PARTIES UNDER ARTICLE X, THE AGGREGATE TOTAL LIABILITY OF EITHER PARTY TO  THE OTHER PARTY AND TO ALL OTHER PERSONS AND ENTITIES UNDER THIS AGREEMENT SHALL UNDER NO CIRCUMSTANCES  EXCEED THE AMOUNT OF THE NET REVENUE RECEIVED BY NCM PURSUANT TO SECTION 7.2 OF THIS AGREEMENT DURING THE FIVE  (5) YEAR PERIOD PRECEDING SUCH LIABILITY, LESS IN ANY CASE THE AGGREGATE OF ANY AMOUNTS PAID BY NCM HEREUNDER  ON ACCOUNT OF PREVIOUS EVENTS OF LIABILITY.     ARTICLE XI  ADDITIONAL RIGHTS AND OBLIGATIONS     Section 11.1 Assistance. Each Party, upon the request of the other, shall perform any and all further acts and execute, acknowledge, and  deliver any and all documents which the other party determines in its sole reasonable judgment may be necessary, appropriate, or desirable to  carry out the intent and purposes of this Agreement, including without limitation to document, perfect, or enforce NCM's right, title, or interest in  and to any NCM Property or Derived Works.     Section 11.2 Infringement. Network Affiliate shall notify NCM promptly, in writing, of any alleged, actual or threatened infringement,  violation, misappropriation, imitation, simulation, or misuse of or interference with (Infringement) any NCM Property or Derived Work of which  Network Affiliate knows or which Network Affiliate has reason to suspect. NCM has the sole and exclusive right to determine whether to take any  action on or related to any such Infringements. NCM has the sole right to employ counsel of its choosing and to direct any litigation and  settlement of Infringement actions. Any recoveries, damages and costs recovered through such proceedings, suits, or hearings shall belong  exclusively to NCM.     Section 11.3 Non-Competition and Non-Solicitation.     (a) During the Term, except as otherwise provided in this Agreement, Network Affiliate and its affiliates agree not to engage or  participate in any business, hold equity interests, directly or indirectly, in another entity, whether currently existing or hereafter created, or  participate in any other joint venture that competes or would compete with any business that NCM is authorized to conduct in the Territory  pursuant to this Agreement, whether or not NCM is actually conducting such business in a particular portion of the Territory. The foregoing  restrictions shall not apply (i) in the event Network Affiliate or its affiliate acquires a competing business as an incidental part of an acquisition of  any other business that is not prohibited by the foregoing, if Network Affiliate disposes of the portion of such business that is a competing  business as soon as commercially reasonable, (ii) to any direct or indirect ownership or other equity investments by Network Affiliate or its  affiliates in such other competing business that represents in the aggregate less than 10% of the voting power of all outstanding equity of such  business, or (iii) in the event Network Affiliate enters into any agreement for the acquisition or installation of equipment or the provision of  services on customary terms that does not violate the exclusivity of NCM hereunder with any entity that has other businesses and provides other  services that may compete with NCM.



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   (b) During the Term and for a period of twelve (12) months thereafter Network Affiliate will not, without NCM's prior written  consent, either alone or in concert with others directly or indirectly solicit, entice, induce, or encourage: (i) any employee, contractor or agent of  NCM to terminate his or her employment, contractor or agency relationship with NCM, (ii) any client of NCM to discontinue using NCM's services  or products, (iii) any client of NCM to refer prospective clients to one or more competitors of NCM or to discontinue referring prospective clients  to NCM, (iv) any NCM employee, client, or prospective client to breach any agreement with NCM, or (v) any existing or proposed arrangement or  other community or institutional affiliation to discontinue the affiliation or relationship with NCM. For purposes of this Section 11.3 the term NCM  shall include NCM and its affiliates.     Section 11.4 Theatre Passes. Network Affiliate shall provide to NCM during each month of the Term 25 complimentary Theatre passes  that will not expire any earlier than 120 days from the date of issuance. The passes shall be provided to NCM at least 30 days prior to the month in  which such passes first become valid.     Section 11.5 Compliance with Law. Network Affiliate and NCM shall at all times operate and conduct its business, including, without  limitation, exercising its rights under this Agreement, in compliance with all applicable international, national, state, and local laws, rules, and  requirements.     Section 11.6 Insurance. Network Affiliate shall maintain with financially sound and reputable insurance companies insurance on the  Theatres and the Equipment in such amounts and against such perils as Network Affiliate deems adequate for its business. NCM shall maintain  with financially sound and reputable insurance companies insurance for its business and Equipment in such amounts and against such perils as  NCM deems adequate for its business, including the installation services set forth in Section 2.2 herein. Each Party will name the other Party  (including its agents, officers, directors, employees and affiliates) as an additional insured on such policies of insurance.     ARTICLE XII  OWNERSHIP     Section 12.1 NCM Property. As between NCM and Network Affiliate, NCM owns, solely and exclusively, any and all right, title, and  interest in and to the Service (including all Service content supplied by or on behalf of NCM, but excluding any Service content supplied by or on  behalf of Network Affiliate), the Marks, the Software, NCM's Confidential Information, the Digital Content Network, and any and all other data,  information, equipment (excluding any rights to Equipment held by Network Affiliate pursuant to Article II), material, inventions, discoveries,  processes, methods, technology, know-how, written works, software, works of visual art, audio works, and multimedia works provided, developed,  created, reduced to practice, conceived, or made available by or on behalf of NCM to Network Affiliate or used by NCM to perform any of its  obligations under or in connection with this Agreement, as well as any and all translations, improvements, adaptations, reproductions, look-and- feel attributes, and derivates thereof (collectively, the NCM Property), and, except as expressly and explicitly stated in this Agreement, reserves  all such right, title, and interest.



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   Section 12.2 Derived Works. Any and all data, information, and material created, conceived, reduced to practice, or developed by or on  behalf of either Party, whether alone, in connection with the other Party or any third party, including, without limitation, written works, processes,  methods, inventions, discoveries, software, works of visual art, audio works, look-and-feel attributes, and multimedia works, based on, using, or  derived from, in whole or in part, any NCM Property, whether or not done on NCM's facilities, with NCM's equipment, or by NCM personnel, and  any and all right, title, and interest therein and thereto (including, but not limited to, the right to sue for past infringement) (collectively, Derived  Works), shall be owned solely and exclusively by NCM, and Network Affiliate agrees to and hereby does assign, transfer, and convey to NCM  (and will ensure than any third party acting with or on behalf of Network Affiliate assigns, transfers, and conveys to NCM any and all right, title, or  interest in or to any Derived Work which it may at any time acquire by operation of law or otherwise. To the extent any Derived Works are  included in the Service, NCM hereby grants to Network Affiliate during the Term a non-exclusive, non-transferable, non-sublicenseable license to  such Derived Works solely for use in connection with the Service as expressly provided by this Agreement. The restrictions on use of the  Software set forth in Section 5.2 shall apply with equal force to Network Affiliate's use of any Derived Works, and such restrictions are hereby  incorporated in and made a part of this Section 12.2.     Section 12.3 No Title. This Agreement is not an agreement of sale, and no title or ownership interest in or to any NCM Property is  transferred to Network Affiliate as a result of or pursuant to this Agreement. Further, Network Affiliate acknowledges that its exercise of rights  with respect to the NCM Property shall not create in Network Affiliate any right, title or interest in or to any NCM Property and that all exercise of  rights with respect to the NCM Property and the goodwill symbolized thereby or connected therewith will inure solely to the benefit of NCM.     ARTICLE XIII  CONFIDENTIALITY     Section 13.1 Confidential Treatment. Each party acknowledges that the other's Confidential Information contains valuable trade secret  and proprietary information of that party. Each party agrees to permanently hold, and cause its personnel to hold, all Confidential Information of  the other party in strict confidence, except that each party may: (i) disclose the Confidential Information of the other party that is required to be  disclosed by governmental agencies, regulatory authorities, or pursuant to court order, but only to the extent such disclosure is required by law  and only if such party provides prompt prior written notice to the other party of the disclosure, and (ii) subject to the terms and conditions of this  Agreement, use the Confidential Information of the other party only to the extent necessary to perform its obligations under this Agreement.  Except as specifically permitted by this Agreement, neither party shall duplicate or use, or permit the duplication or use of, any Confidential  Information of the other party or disclose or permit the disclosure of such Confidential Information to any person or entity. Each party shall limit  use, possession, and disclosure of, and shall limit access to, the Confidential Information of the other party only to those of its employees or  representatives whose performance under this Agreement requires such use, possession, disclosure, or access and who have signed  confidentiality and non-disclosure agreements protecting the confidentiality of the Confidential Information at least to the same extent as such  information is protected under this Agreement. Any duplication, use, disclosure, or other act or omission by any person or entity that obtains  access to or possession of Confidential Information through the receiving party that would be a breach of this Agreement if committed by the  receiving party shall be a breach of this Agreement by the receiving party for which the receiving party shall be responsible. For the avoidance of  doubt, neither party shall issue any press release or other public announcement concerning this Agreement, including without limitation its  existence, without the prior written approval of the other party. It shall not be a violation of this XIII for a party to disclose to any person or entity  the tax treatment and tax structure of the transactions contemplated under this Agreement and all materials of any kind (including without  limitation opinions or other tax analyses) relating to such tax treatment or tax structure.



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   Section 13.2 Point-of-Sale Information. Due to the sensitive nature of the Point-of-Sale Information, NCM will establish a Chinese Wall  around the Point-of-Sale Information to prevent the disclosure of the Point-of-Sale Information under any circumstances to any theatre operator  that is a competitor of Network Affiliate, any employees or agents of any affiliate of NCM, including the board of directors thereof and employees  thereof with operational responsibility, except to the extent such employees or agents have a need to know such information to permit NCM's  performance under this Agreement. Notwithstanding the preceding sentence, but subject to the confidentiality restrictions of Section 13.1, NCM  shall be permitted to disclose the Point-of-Sale Information in aggregate form.     Section 13.3 Injunctive Relief. Due to the unique and proprietary nature of the NCM Property, the Derived Works and the Confidential  Information, it is understood and agreed that each party's remedies at law for a breach of this Article XIII will be inadequate and that each party  shall, in the event of any such breach or the threat of such breach, be entitled to equitable relief (including without limitation provisional and  permanent injunctive relief and specific performance). In addition, Network Affiliate hereby expressly waives the right to a hearing prior to the  issuance of any order by a court of competent jurisdiction granting possession of any NCM Property or Derived Work to NCM. The parties shall  be entitled to the relief described in this Section 13.3 without the requirement of posting a bond. Nothing stated herein shall limit any other  remedies provided under this Agreement or available to the parties at law.     ARTICLE XIV  MISCELLANEOUS     Section 14.1 Notices. All notices, consents, and other communications between the parties under or regarding this Agreement shall be in  writing and shall be sent to the recipient's address set forth in this section. Such communications shall be deemed to have been received on the  date actually received.



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Source: DIGITAL CINEMA DESTINATIONS CORP., S-1, 12/20/2011









  Either party may change its address for notices by giving written notice of the new address to the other party in accordance with this  section, but any element of such party's address that is not newly provided in such notice shall be deemed not to have changed.     Section 14.2 Waiver; Remedies. The waiver or failure of either party to exercise any right provided hereunder shall not be deemed a  waiver of such right in the future or a waiver of any other rights established under this Agreement. All remedies available to either party hereto for  breach of this Agreement are cumulative and may be exercised concurrently or separately, and the exercise of any one remedy shall not be deemed  an election of such remedy to the exclusion of other remedies.     Section 14.3 Severability. Should any term or provision of this Agreement be held to any extent unenforceable, invalid, or prohibited  under law, then such provision shall be deemed restated to reflect the original intention of the parties as nearly as possible in accordance with  applicable law and the remainder of this Agreement. The application of any term or provision restated pursuant hereto to persons, property, or  circumstances other than those as to which it is invalid, unenforceable, or prohibited, shall not be affected thereby, and each other term and  provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.     Section 14.4 Integration; Headings. This Agreement and the exhibits hereto (each of which is made a part hereof and incorporated herein  by this reference) constitute the complete and exclusive statement of the agreement between the parties with respect to the subject matter of this  Agreement, and this Agreement supersedes any and all other prior or contemporaneous oral or written communications, proposals,  representations, and agreements, express or implied. This Agreement may be amended only by mutual agreement expressed in writing and signed  by both parties. Headings used in this Agreement are for reference only and shall not affect the interpretation of this Agreement.     Section 14.5 Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an  ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or  burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.     Section 14.6 Non-Recourse. Notwithstanding anything contained in this Agreement to the contrary, it is expressly understood and  agreed by the parties hereto that each and every representation, warranty, covenant, undertaking and agreement made in this Agreement was not  made or intended to be made as a personal representation, undertaking, warranty, covenant, or agreement on the part of any individual or of any  partner, stockholder, member or other equity holder of either party hereto, and any recourse, whether in common law, in equity, by statute or  otherwise, against any such individual or entity is hereby forever waived and released.



  NCM: National CineMedia, LLC  9110 E. Nichols Ave., Suite 200  Centennial, CO 80112  Attention: Gene Hardy, Esq., EVP and General Counsel

  Network Affiliate: Digital Cinema Destinations Corp.  250 Broad Street  Westfield, New Jersey 07090  Attention: Bud Mayo, Chairman/CEO

  29

Source: DIGITAL CINEMA DESTINATIONS CORP., S-1, 12/20/2011





   Section 14.7 Dispute Resolution.     (a) Governing Law. This Agreement shall be binding on the Parties as of the date hereof and is to be construed in accordance  with and governed by the internal laws of the State of Delaware without giving effect to any choice of law rule that would cause the application of  the laws of any jurisdiction other than the internal laws of the State of Delaware to the rights and duties of the Parties.     (b) Jurisdiction. Each Party hereto agrees that any legal action or other legal proceeding relating to this Agreement or the  enforcement of any provision of this Agreement shall be brought or otherwise commenced exclusively in any state or federal court located in New  York, New York. Subject to the preceding sentence, each Party hereto:     (i) expressly and irrevocably consents and submits to the jurisdiction of each state and federal court located in New  York, New York (and each appellate court located in the State of New York) in connection with any such legal proceeding, including to enforce any  settlement, order or award;     (ii) consents to service of process in any such proceeding in any manner permitted by the laws of the State of New  York, and agrees that service of process by registered or certified mail, return receipt requested, at its address specified pursuant to Section 15.01  is reasonably calculated to give actual notice;     (iii) agrees that each state and federal court located in New York, New York shall be deemed to be a convenient forum;     (iv) waives and agrees not to assert (by way of motion, as a defense or otherwise), in any such legal proceeding  commenced in any state or federal court located in New York, New York, any claim that such Party is not subject personally to the jurisdiction of  such court, that such legal proceeding has been brought in an inconvenient forum, that the venue of such proceeding is improper or that this  Agreement or the subject matter hereof or thereof may not be enforced in or by such court; and     (v) agrees to the entry of an order to enforce any resolution, settlement, order or award made pursuant to this Section  by the state and federal courts located in New York, New York and in connection therewith hereby waives, and agrees not to assert by way of  motion, as a defense, or otherwise, any claim that such resolution, settlement, order or award is inconsistent with or violative of the laws or public  policy of the laws of the State of New York or any other jurisdiction.     (c) Costs and Expenses. In the event of any action or other proceeding relating to this Agreement or the enforcement of any  provision of this Agreement, the prevailing party (as determined by the court) shall be entitled to payment by the non-prevailing party of all costs  and expenses (including reasonable attorneys' fees) incurred by the prevailing party, including any costs and expenses incurred in connection  with any challenge to the jurisdiction or the convenience or propriety of venue of proceedings before any state or federal court located in New  York, New York.



  30

Source: DIGITAL CINEMA DESTINATIONS CORP., S-1, 12/20/2011





   Section 14.8 Assignment. Network Affiliate may not assign or transfer, by operation of law or otherwise, any of its rights under this  Agreement or delegate any of its duties under this Agreement to any third party without NCM's prior written consent, which consent shall not be  unreasonably withheld, conditioned or delayed. For the purposes of this Agreement, any change of control, merger, consolidation, or acquisition  of all or substantially all of the assets of Network Affiliate (collectively, a Change of Control) shall be deemed an assignment. This Agreement  shall not be assignable by either party unless the assignee expressly assumes in writing the obligations of the assignor hereunder. Any attempted  assignment in violation of this section shall be void.     Section 14.9 Force Majeure. Any delay in the performance of any duties or obligations of either party (except the payment of money  owed) will not be considered a breach of this Agreement if such delay is caused by a labor dispute, shortage of materials, fire, earthquake, flood, or  any other event beyond the control of such party, provided that such party uses reasonable efforts, under the circumstances, to notify the other  party of the circumstances causing the delay and to resume performance as soon as possible.     Section 14.10 Third Party Beneficiary. The parties hereto do not intend, nor shall any clause be interpreted, to create under this  Agreement any obligations or benefits to, or rights in, any third party from either NCM or Network Affiliate. Neither party hereto is granted any  right or authority to assume or create any obligation or responsibility, express or implied, on behalf of, or in the name of, the other party, or to bind  the other party in any matter or thing whatever. No affiliate of NCM shall have any liability or obligation pursuant to this Agreement. NCM shall be  solely responsible, and Network Affiliate agrees to look solely to NCM, for the satisfaction of NCM's obligations under this Agreement.     Section 14.11 Export. Network Affiliate acknowledges that the Software and the Confidential Information of NCM are subject to the  export controls of the United States. Network Affiliate acknowledges that it has no right to, and further agrees that it will not, export or otherwise  transfer or permit the transfer of any Software or Confidential Information of NCM outside the United States. Network Affiliate will defend,  indemnify, and hold harmless NCM from and against all fines, penalties, liabilities, damages, costs, and expenses incurred by NCM as a result of  any failure to comply with the preceding sentence.     Section 14.12 Independent Contractors. Network Affiliate's relationship to NCM is that of an independent contractor, and neither party  is an agent or partner of the other. Network Affiliate will not have, and will not represent to any third party that it has, any authority to act on  behalf of NCM.     Section 14.13 Counterparts. This Agreement may be executed in any number of separate counterparts each of which when executed and  delivered to the other party hereto shall be an original as against the party whose signature appears thereon, but all such counterparts shall  together constitute one and the same instrument.



  31

Source: DIGITAL CINEMA DESTINATIONS CORP., S-1, 12/20/2011





   IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.







  DIGITAL CINEMA DESTINATIONS CORP.         By: /s/ A. Dale Mayo          By: A. Dale Mayo    Name:     Title:

  NATIONAL CINEMEDIA, LLC        By: /s/ Robert W. Brouillette    Name: Robert W. Brouillette    Title: Senior Vice President

  32

Source: DIGITAL CINEMA DESTINATIONS CORP., S-1, 12/20/2011





   EXHIBIT A     Services



   All lobby promotions and other in-theatre promotional activities (excluding the Digital Content Service, the Traditional Content  Program and other on-screen content), but specifically excluding the following promotional activities (which Network Affiliate  shall retain the right to perform and have performed on its behalf):     promotional activities arising under the Beverage Agreement with Pepsi dated January 1, 2011 .      (1) poster case advertising and other lobby or in-theatre promotions for (w) film festivals or events organized by Network  Affiliate (unless such poster cases have been sold by NCM), (x) fundraising programs conducted by Network Affiliate for any  non-profit organizations, (y) full-length theatrical productions, and (z) Theatre Advertising;     (2) logos for Network Affiliate, beverage and concession suppliers on digital menu boards at the concession stand or digital  displays at the box office of manufacturers of such products;     (3) advertising and/or signage pursuant to the IMAX agreement (if applicable);     (4) any trademark, service mark, logo or other branding of Network Affiliate (or its theatre-operating Affiliates), film studio(s),  distributors and production companies; and     (5) advertising in the proposed playbill type Box Office magazine that may be distributed at the Theatres; provided, however,  that Network Affiliate shall insure that the restrictions and standards, including, without limitations those such as are set forth in  Article III of this Agreement, are imposed by Network Affiliate on or respect to any such advertising.

   The Digital Content Service (which includes the Pre-Feature Program, Policy Trailer and the Video Display Program), the Digital Carousel  and the Traditional Content Program, and all other on-screen content which is exhibited in Theatre auditoriums prior to the feature film  presentation, but specifically excluding Trailers.



A. Advertising Services consist of the following:

  Lobby Promotions means as follows:

  Digital Content Service, Digital Carousel and Traditional Content Program

  A-1

Source: DIGITAL CINEMA DESTINATIONS CORP., S-1, 12/20/2011





   EXHIBIT A-1     Network Affiliate  Inventory For Lobby Promotions     The Inventory of Lobby Promotions for each Theatre to which NCM has pre-approved access is as listed below. Per Flight (unless otherwise  specified below), NCM may provide each Theatre with any combination of Lobby Promotions as described below.

   *Pre approved vehicle list theatres onl y  **Background music optional



Item Inventory per Flight Quantity Spec          Box Office Handout 2 programs per Theatre Same 3x5 2-sided  (1 handout per transaction)             Exit Sampling 1 program per Theatre Same           Poster Case 1 program per Theatre varies (below) 27x40      Live Area 24x38  (1-11 screens: 1 poster; 12 screens: 2 posters; 13-20 screens: 3 posters; 21+ screens: 4 posters)         Tabling/Demo 1 program per Theatre 1 per client 4-6' table  (No active recruitment of patrons)             Vehicle/Motorcycle* 1 program per Theatre 1 per client           Background Music** 1 program per Theatre N/A N/A          Counter Cards 2 programs per Theatre 2-3 per client 13x16.5x4          Static Clings 1 program per Theatre 2-3 per client 4x6    per quarter             Lobby Display 2 programs per Theatre 1 per client 4'x6'          Lobby Standee 2 programs per Theatre 1 per client 3'x5'          Floor Mats 1 program per Theatre 1 per client 4x6'    per quarter

  A-1-1

Source: DIGITAL CINEMA DESTINATIONS CORP., S-1, 12/20/2011





   EXHIBIT B     Theatres     Rialto Theater  250 East Broad Street  Westfield, NJ 07090    Cranford Theater  25 North Avenue West  Cranford, NJ 07016    Bloomfield 8  863 Park Avenue  Bloomfield, CT 06002



  B-1

Source: DIGITAL CINEMA DESTINATIONS CORP., S-1, 12/20/2011





   EXHIBIT C     Marks     NCM Marks     National CineMedia     FirstLook     NCM        Network Affiliate Marks     DIGITAL CINEMA DESTINATIONS CORP.    Digiplex Destinations Cinema Reinvented



  C-1

Source: DIGITAL CINEMA DESTINATIONS CORP., S-1, 12/20/2011





   EXHIBIT D     Excluded Theatres and IMAX Screen        None



D-1

Source: DIGITAL CINEMA DESTINATIONS CORP., S-1, 12/20/2011 
Question: Highlight the parts (if any) of this contract related to Covenant Not To Sue that should be reviewed by a lawyer. Details: Is a party restricted from contesting the validity of the counterparty’s ownership of intellectual property or otherwise bringing a claim against the counterparty for matters unrelated to the contract?
Example Output:
NCM shall not engage in any conduct  which may place Network Affiliate or any Network Affiliate Mark in a negative light or context, and shall not represent that it owns or has any  interest in any Network Affiliate Mark other than as expressly granted herein, nor shall it contest or assist others in contesting the title or any  rights of Network Affiliate (or any other owner) in and to any Network Affiliate Mark.