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.
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Question: 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

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  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   80





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***Confidential Treatment Requested   81





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***Confidential Treatment Requested   85





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***Confidential Treatment Requested   86





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***Confidential Treatment Requested   87





  Exhibit 1     [...***...]

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***Confidential Treatment Requested   88





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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   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?

Answer: 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.


Question: JOINT DEVELOPMENT AND MARKETING AGREEMENT

BETWEEN

LECLANCHÉ SA

AND

OAK RIDGE ENERGY TECHNOLOGIES, INC.

1





1. 1.1.

1.2.

1.3.

This AGREEMENT is made on April 6, 2014, (Effective Date between:

LECLANCHÉ S.A., being a company organized and existing under the laws of Switzerland, having its registered office at Avenue des Sports 42, 1400 Yverdon-les-Bains, Switzerland (Leclanché), and

OAK RIDGE ENERGY TECHNOLOGIES INC, being a company organized and existing under the laws of United States of America, having its registered office at 751 North Drive, Suite 9, Melbourne, FL 32934, United States (Oak Ridge),

each a Party and together Parties.

WHEREAS Oak Ridge focuses on the licensing, further development, manufacturing and marketing of products incorporating thin film battery technologies.

WHEREAS Leclanché has developed and markets lithium-ion titanate cells using a proprietary technology and process and also designs and develops customized battery systems for OEM and other customers;

WHEREAS Leclanché is interested in marketing its products and services in the United States;

WHEREAS Oak Ridge is keen to develop its business and has the capability to market and support Leclanché market entry into the United States and is committed to allocate specific resources to provide such services;

WHEREAS both Parties wish to collaborate together to better evaluate the opportunities in the United States, assess how best to address these and generally support each other's business efforts in furtherance of supporting their respective customers based in North America;

NOW THEREFORE it is agreed as follows:

Definitions The term Affiliate as used herein with respect to a party means any partnership, joint venture, corporation of other form of enterprise that directly or indirectly controls, is controlled by or is under common control with such entity or person. For purposes hereof, control means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person or entity, whether through the ownership of voting securities, by contract or otherwise.

The term Subsidiary as used herein with respect to a party means any partnership, joint venture, corporation of other form of enterprise that is directly or indirectly controlled by such entity or person. For purposes hereof, control means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person or entity, whether through the ownership of voting securities, by contract or otherwise.

2

Confidential Information means all information in relation to this Agreement in





1.3.

a)

b)

2. 2.1.

a)

b)

c)

d) e) f)

g)

Confidential Information means all information in relation to this Agreement in whatever form that is disclosed by the Parties to each other and shall include without limitation information disclosed orally or in writing or in any other form, tangible or intangible, and whether furnished prior to, on or after the date of this Agreement, that is described as or provided under circumstances that would reasonably indicate that it is confidential, proprietary or a trade secret, including, but not limited to, information relating to Leclanché's technology, intellectual property, financial or business plans, affairs, methodologies, financial statements or projections, internal management tools and systems, products and product development plans, released or unreleased hardware or software products, sales and marketing plans and materials, clients, contacts and contracts, all files, books, records, documents, specifications, schematics, employee suggestions, papers, drawings, models, sketches of any kind or description, including electronic data recorded or retrieved by any means now in existence or at any time hereinafter developed. Confidential Information shall also include documents transferred to Oak Ridge that are prepared by or on behalf of Leclanché incorporating Confidential Information received from a third party, which is itself required to be treated as confidential. Confidential Information shall not include information or data which was or becomes:

generally available to the public, other than as a result of a breach of this undertaking;

available to the recipient Party on a non confidential basis from a source other than the disclosing Party or its advisers, provided that such source is not, insofar as the recipient Party is aware, bound by any obligations of confidentiality in respect of such information or data;

Market Evaluation - Phase 1 The Parties shall work together to better evaluate the market opportunities in the United States. A joint team shall be constituted, chaired by Anil Srivastava, a Board member of Oak Ridge, to undertake this study which shall be completed by May 31, 2014. The objectives of the study will be to:

build a picture of the key market participants, in particular key customer groups, solution integrators, BMS providers, EPC contractors etc., identify what alliances could /should be formed to enhance the joint offering; identify target business applications where the Leclanché technology could be deployed; gather market information on pricing points and value add opportunities; build economic business cases for key business applications; identify what certification processes need to be undertaken before products and services can be marketed in the United States, what the timelines are and what the estimated costs might be;

3

segregate opportunities by product groups (cells, home systems, industrial





g)

h)

i)

j)

2.2.

2.3.

3. 3.1.

4. 4.1.

4.2.

5. 5.1.

5.2.

5.3.

5.4.

5.5.

5.6.

segregate opportunities by product groups (cells, home systems, industrial systems, project related applications, e.g. frequency regulation); the structure that would be required to address the market in an effective manner; what element of the product assembly could be undertaken by Oak Ridge at its facility in Melbourne; how the trading relationship between the Parties should be structured i.e. whether Oak Ridge will be an agent or reseller and how this will be remunerated.

The output from Phase 1 shall be a market entry plan, that shall be presented to the management of both Parties. The Parties shall decide on further steps based on the marked entry plan.

Regular update calls will be organized by Oak Ridge and meetings shall be held in Melbourne, Florida.

Costs The costs of Mr Srivastava shall be borne by Oak Ridge. Otherwise each Party bears its own costs for Phase 1

Leclanché's Products and Services The Products offered by Leclanché are set out in Annex I. Pricing will be determined after Phase 1 is completed.

The Services offered by Leclanché include the customized design and development of battery systems to meet specific customer requirements. These Services are typically provided by Leclanché's Portable Business Unit. Examples of such Services are set out in Annex II.   Oak Ridge Responsibilities Oak Ridge shall be responsible for developing the sales and marketing for the Products and Services;

Oak Ridge shall dedicate sales and marketing personnel to develop the market;

Oak Ridge shall identify commercial opportunities and work with Leclanché to qualify these opportunities and prepare bids and quotations as necessary;

Oak Ridge shall participate at fairs and events and generally undertake all promotional activities that are required in order to promote the product;   Oak Ridge shall maintain a regular watch on market developments and shall share this with Leclanché on a regular basis;

Oak Ridge shall maintain a first level technical support capability to

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5.7.

6. 6.1.

6.2.

6.3.

6.4.

6.5.

6.6.

7. 7.1.

7.2.

7.3.

8. 8.1.

8.2.

9. 9.1.

address customer requirements and deal with any field issues expeditiously;

Oak Ridge shall arrange product liability and warranty insurance.

Leclanché Responsibilities Leclanché shall supply the Products and Services;

Leclanché shall provide training and documentation;

Leclanché shall work with Oak Ridge to examine what elements of the Products and Services can be supplied locally by Oak Ridge (e.g. assembly of pre- designed modules);

Leclanché shall generally support the commercial efforts of Oak Ridge in furtherance of the promotion and sales of the Products and Services;

Leclanché shall define the warranty conditions for the Products and Services and work with Oak Ridge to provide the information necessary to secure product liability and warranty insurance cover.

Leclanché shall assist Oak Ridge in preparing and submitting commercial bids.

Exclusivity Where Oak Ridge has identified a specific market opportunity which has been qualified together with Leclanché pursuant to 5.3 above, the Parties shall undertake to work exclusively with each other on such opportunities;

Otherwise there is no exclusivity expressed or implied by either Party.

The Parties shall nonetheless share information as is reasonably necessary to ensure that there is no confusion in the market how customer requirements are addressed. If conflicts were to arise, the Parties shall use their reasonable efforts to resolve any such conflicts in a manner that benefits the end customer.

Pricing Pricing for standard Products shall be defined after Phase 1 has been completed. Pricing for more complex projects shall be determined on a case by case basis.

Pricing for Services shall be quoted on a case by case basis depending on the customer specification.

Payment Terms In certain cases, Leclanché may request progress payments, including some element paid at the time of order. In the absence of a specific payment schedule, all payment terms are 30 days net from date of invoice.

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10. 10.1.

11. 11.1.

12. 12.1.

13. 13.1.

14. 14.1.

Intellectual Property Each party's intellectual property (IP) in existence as of the Effective Date shall remain such Party's property. Where appropriate and to the extent required, each party undertakes to grant a royalty free license to the other Party solely for the design and development of product(s) under this Agreement. There is no intended or implied transfer of either Party's Intellectual Property to the other.

Confidentiality The Parties shall keep strictly secret and confidential any and all confidential information relating to each other's business and/or to the contents of this Agreement and shall not, in any manner whatsoever, disclose or permit any of its agents, representatives, employees, attorneys, accountants or advisors to disclose any confidential information to any person or entity whatsoever without the prior written consent of the other Party. The Parties shall take all necessary steps to safeguard the secrecy and confidentiality of all confidential information and all materials and to ensure that such confidential information and material obtained in connection with this Agreement is disclosed only to authorized persons who need to know such information for the purpose of performing their duties on behalf of the company.

Non Solicitation The Parties are independent companies, and neither of them or anyone employed by them shall be deemed to be the employee, agent or legal agent of the other. Both Parties agree that during the Term of this Agreement and for a period of two (2) years following the termination, both Parties will not (i) solicit, encourage, or take any other action, which is intended, directly or indirectly, to induce any employee to terminate his or her employment with a Party; or (ii) interfere in any manner with the contractual or employment relationship between the Parties and any their employees.

Assignment Neither Party may assign, delegate, or transfer this Agreement or any of its rights or duties hereunder, without the prior written consent of the other Party. Any attempted assignment or delegation in violation of this section shall be void. The provisions of this Agreement shall be binding upon and inure to the benefit of the Parties, their successors and permitted assigns.

Force Majeure It is agreed that neither Party shall be liable for any delay or failure to perform its obligations hereunder in whole or in part when such delay or non- performance results from causes beyond such Party's control, including, but not limited to, fires, strikes, insurrections, riots, embargoes, shortages of motor vehicles, delays in transportation, inability to obtain

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14.2.

15. 15.1.

16. 16.1.

17. 17.1.

18. 18.1.

19. 19.1.

supplies of raw materials, or governmental requirements or regulations (Force Majeure Event).

In the event of the occurrence of a Force Majeure Event, the Party unable to perform will, i) promptly notify the other Party, ii) provide an estimate of the duration of the delay, iii) use its bests efforts to resume performance as quickly as possible, and iv) suspend performance only for the period of time as is necessary as a result of the Force Majeure event. Notwithstanding the above, neither Party is relieved of any liability for any delay or failure to perform its defense obligations with respect to third Party intellectual property rights. The Party not delayed may act, in its sole discretion, to terminate the affected order, or any part of the order, or suspend this Agreement in whole or in part, for the duration of the delaying cause.

Amendment No change, amendment or modification of any provision of this Agreement shall be valid unless set forth in a written instrument signed by the Parties.

Construction In the event that any provision of this Agreement conflicts with the law under which this Agreement is to be construed, or if any such provision is held invalid by a court with jurisdiction over a Party to this Agreement, such provision shall be deemed to be restated to reflect as nearly as possible the original intentions of the Parties in accordance with applicable law, and the remainder of this Agreement shall remain in full force and effect.

Severability If any of the provisions or clauses of this Agreement shall be or become void or be held invalid, all other provisions shall remain in full force and effect and the void or invalid provisions shall be forthwith replaced by other provisions to be agreed by the parties valid in form and substance and which shall accomplish as nearly as possible the purpose and intent of the void or invalid provisions in due course.

Announcements No announcements of this Agreement or any subsequent Agreement may be made by one Party without the consent of the other, save if required to do so for legal or regulatory reasons, in which case the Party initiating the announcement shall use reasonable efforts to obtain the comments (if any) of the other, but for avoidance of doubt nothing in this provisions shall inhibit the disclosing party from complying with its legal or regulatory obligations as it sees fit. In the event that one party is required to make an announcement without the knowledge of the other, it shall promptly send a copy of the announcement to the other party for information purposes.

No Waiver No waiver by either Party of any right or of a breach of any binding

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20. 20.1.

21. 21.1.

a)

b)

provision of this Agreement shall constitute a waiver of any other right or breach of any other provision, nor shall it be deemed to be a general waiver of such provision by such Party or to sanction any subsequent breach thereof by any other Party

Notice Any notice, approval, request, authorization, direction, or other communication under this Agreement shall be given in writing, directed to the addresses of the Parties set forth above, and shall be deemed to have been delivered and given for all purposes: (a) on the delivery date if delivered personally to the Party to whom the same is directed; (b) one (1) business day after deposit with a commercial overnight carrier with written verification of receipt; or (c) five (5) business days after the mailing date whether or not actually received, if sent by registered or recorded delivery post or any other means of rapid mail delivery for which a receipt is available to the Contact at the address of the Party to whom the same is directed.

Notices shall be addressed as follows:

Attn: Chief Executive Leclanché SA Avenue des Sports, 42 Yverdon-les-Bains, CH 1400 Switzerland

Attn: Chief Executive Oak Ridge Energy Technologies Inc., 751 North Drive, Suite 9, Melbourne, FL 32934, United States

Standstill The Parties acknowledge that both companies are publicly quoted companies and may before and/or during the course of this Agreement be in receipt of nonpublic information (including any Confidential Information) (together, Non Public Information) and agree to comply with all relevant laws and regulations applicable to market trading during the term of this Agreement and for a period of 12 months thereafter, and in particular agrees not to:

directly nor indirectly engage in any transactions on any exchange, regulated market or over-the-counter in (i) any securities issued by the Leclanché or any affiliated company or (ii) any derivative products the price of which is derived in whole or in substantial part from any such securities;

divulge directly or indirectly any Non Public Information to any third party without the written consent of Leclanché and if it is

8





22. 22.1.

a) b)

c)

22.2.

22.3.

22.4.

22.5.

23. 23.1.

23.2.

authorized to make such disclosure, shall impose standstill obligations on that third party consistent with this provision.

Term and Termination Subject to Article 22.2, this Agreement shall remain in force for an Initial Period of 1 year, which may be renewed by mutual consent for such period as the Parties may agree (Term), unless it is terminated earlier in accordance with this Agreement or for any of the following reasons:

if one Party is in default with its performance under this Agreement; in case of insolvency or bankruptcy of either Party, or in case of a change of control of one of the Parties; breach of any of the provisions of this Agreement by either Party that remains unremedied for a period of 30 days;

In the event that after Phase 1, the Parties conclude that it would not be economically viable to enter the US market as envisaged, this Agreement shall terminate forthwith and the Parties shall use reasonable efforts to assess whether to proceed with an alternative agreement or not.

If the Agreement is terminated, the Parties shall endeavour to ensure that assets contributed by each Party shall, so far as possible, be transferred back to that Party.

In the event of termination of this Agreement, neither Party shall have any obligation to continue the activities set forth herein, and all obligations and rights of the Parties shall terminate, with the exception of provision of Articles 9-21, and Article 23 of this Agreement, which shall survive expiration or termination.

Notwithstanding the above, termination of the Agreement will not have any effect on the rights and obligations of the Parties in respect of the assignment secured and or any RFQ at any stage of processing.

Governing Law and Jurisdiction This Agreement shall be governed by and construed in accordance with Swiss law. The conflict of law rules and the United Nations Convention on Contracts for the International Sale of Goods do not apply.

The Parties irrevocably agree that the courts of the city of Zurich have exclusive jurisdiction to settle any dispute or claim that arises out of or in connection with this Agreement.

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IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the dates written below.

For Oak Ridge Energy Technologies Inc For Leclanché SA

______________________________ Mr Craig Nelson Deputy CEO

/s/ Eric Wilkinson Mr Eric Wilkinson Deputy CEO

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Annex I

LECLANCHÉ PRODUCTS

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- - -

Annex II LECLANCHÉ SERVICES

Leclanché's Portable Business designs customized battery systems for original equipment manufacturers and other industrial / commercial customers. It focuses on three main markets:

military medical equipment ruggerdized industrial equipment

Examples of products that have ben developed for its customers include:

13 
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?

Answer: Oak Ridge shall arrange product liability and warranty insurance.


Question: Exhibit 10.31    PURSUANT TO 17 C.F.R. § 240.24B-2, CONFIDENTIAL INFORMATION (INDICATED BY {*****}) HAS BEEN OMITTED FROM THIS  DOCUMENT AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A  CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION     ACCURAY INCORPORATED  MULTIPLE LINAC AND MULTI-MODALITY   DISTRIBUTOR AGREEMENT     This Multiple LINAC and Multi-Modality Distributor Agreement (Agreement) is entered into by and between ACCURAY  INCORPORATED, a Delaware corporation with its executive offices located at 1310 Chesapeake Terrace, Sunnyvale, California 94089, USA  (Accuray), and SIEMENS AKTIENGESELLSCHAFT, a corporation formed under the laws of the Federal Republic of Germany, with its registered  offices located at Berlin and Munich (Siemens), as of June 8, 2010 (Effective Date).     RECITALS     Accuray manufactures and sells full-body radiosurgery systems using image-guided robotics, including the CyberKnife® Robotic  Radiosurgery System, which is FDA cleared in the United States to provide treatment planning and image-guided stereotactic radiosurgery and  precision radiotherapy for lesions, tumors and conditions anywhere in the body where radiation treatment is indicated.     In order to achieve its business objectives, Accuray relies on qualified distributors to market and distribute its products and services.     Accuray and Siemens have entered into that certain Strategic Alliance Agreement, dated as of the date hereof (the Strategic Alliance  Agreement), and such agreement provides that Accuray and Siemens shall enter into a distribution agreement for Multiple LINAC and Multi- Modality Purchases (as defined below).     Accuray wishes to appoint Distributor (as defined below) as a non-exclusive, worldwide distributor for the Products and Services to  Customer in connection with Multiple LINAC or Multi-Modality Purchases (as defined below), subject to the terms and conditions of this  Agreement, and Distributor wishes to accept such appointment.     NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants set forth below, the parties hereto hereby  agree as follows:     1. DEFINITIONS. Capitalized terms used, but not defined herein, shall have the meaning provided in the Strategic Alliance Agreement. The  following terms, as used herein, have the following meaning:     1.1. Accuray Regions means Accuray's sales regions (as of the Effective Date) of the Americas (North America and South America),  APAC (Asia Pacific, including Australia and other than India and Japan), EIMEA (Europe, India, Middle East, and Africa), and  Japan.     1.2. Customer means any person or business entity with whom Distributor enters into an agreement for Products or Services in  connection with a Multiple LINAC or Multi-Modality Purchase pursuant to this Agreement.     1.3. Distributor means Siemens, its Affiliates, or any Third Party which has been granted distribution rights whose scope includes the  Products and/or Services by Siemens.     1.4. Multiple LINAC or Multi-Modality Purchase means a Multiple LINAC Purchase or a Multi-Modality Purchase.





     1.5. Multi-Modality Purchase means the purchase, on a single purchase order, of at least one Distributor imaging product (e.g., CT, MR,  PET-CT) and at least one System.     1.6. Multiple LINAC Purchase means the purchase, on a single purchase order, of at least one Distributor linear accelerator product and  at least one System.     1.7. Product(s) means the System and/or related products manufactured by or for Accuray for use in the radiosurgery market, which  have been approved for sale in the Customer's geographic region.     1.8. Quote means a quote provided by Accuray to Distributor pursuant to Section 2.3 that will serve as the basis for the Product  configuration, Services, pricing and delivery schedule offered to a Customer by Distributor.     1.9. Service(s) means the performance of radiosurgery-related service(s) by Accuray or its distributors, which may include technical  support, training or installation of Products as specified in the Quote.     1.10. Service Agreements means the Accuray CyberKnife Service Agreement or such other service programs and agreements as may be  released or modified by Accuray from time to time.     1.11. Spare Parts means replacement or additional parts or Products used in connection with the System.     1.12. Specification(s) means the current written description of a Product or Service prepared by Accuray and provided to Distributor.     1.13. System(s) means the Accuray CyberKnife® Robotic Radiosurgery System or CyberKnife® VSI™ System, as applicable.     2. DISTRIBUTORSHIP     2.1. Appointment. Accuray hereby appoints Distributor as a non-exclusive, worldwide distributor of Products and Services to Customers  solely in connection with Multiple LINAC or Multi-Modality Purchases, not to the exclusion of Accuray itself or any of its other  current or future distributors and subject to the terms and conditions of this Agreement. By way of clarification, this Agreement  does not relate to any Cayman Product, including, without limitation, the distribution or sale thereof or any services related thereto.     2.2. Pricing.     2.2.1. Pricing of Products and Services shall be based upon Accuray's then current price lists for such Products and Services. The  current price list for Products and Services effective as of the Effective Date will be provided to Distributor  contemporaneously with the delivery of this fully executed Agreement to Distributor. Such price lists will be subject to  change from time to time in Accuray's sole discretion, and Accuray shall use commercially reasonable efforts to provide  Distributor with updated pricing on a regular basis, provided that pricing included in a Quote delivered by Accuray to  Distributor shall reflect Accuray's current up-to-date pricing unless otherwise agreed. Updated price lists shall not apply to  valid Quotes      2





     issued by Accuray and subject to acceptance by Distributor prior to the effective date of such updated price lists.     2.2.2. Notwithstanding the foregoing or anything to the contrary contained in this Agreement, Distributor may present for approval  to Accuray opportunities for sales of Products and Services at prices that differ from the prices set forth in the then current  price list. Accuray may, in its sole and absolute discretion, approve any such opportunity, and if approved in writing by  Accuray, Distributor shall otherwise be permitted to pursue such opportunity at such prices, which opportunity shall  otherwise be governed by and pursued pursuant to the terms of this Agreement.     2.3. Quote and Purchase Process. Distributor acknowledges and agrees that Accuray will determine the appropriate quote process to be  observed by the parties under this Agreement and may amend this process (other than the approval rights set forth in Section 2.3.2)  as notified to the Distributor reasonably in advance. In addition, Distributor acknowledges that each proposed sale of a Product or  Service under this Agreement is subject to the approval rights of Accuray set forth in Section 2.3.2. Accuray and Distributor will  comply with the following process for making sales of Products and Services in connection with Multiple LINAC or Multi-Modality  Purchases:     2.3.1. Opportunity. Once Distributor has identified a Customer opportunity in connection with a Multiple LINAC or Multi-Modality  Purchase, it shall request a Quote from Accuray based on the Product configuration and Services requested by the  Customer and the Accuray Region in which the Customer is located, and shall include such other information regarding the  Customer and the proposed opportunity as Accuray may reasonably request.     2.3.2. Quote. Following receipt of Distributor's Quote request, Accuray will determine whether to approve the issuance of a Quote  related to such request. Such determination shall be made in accordance with and subject to the conditions set forth in  Schedule 2.3.2 attached hereto. If Accuray approves the issuance of a Quote, Accuray shall issue a Quote to Distributor  based on the Product configuration and Services requested by the Customer, including pricing for such Products and  Services as provided in Section 2.2 above. The Quote issued by Accuray in relation to a Customer opportunity shall serve  as the basis of any offer made by Distributor to that Customer and shall remain valid for at least six months (unless earlier  declined by Distributor), and Distributor shall submit an amended Quote request to Accuray in the event adjustments to a  Quote are requested by the Customer. Any such amended Quote request from Distributor shall again be subject to the  Accuray approval process set forth in this Section 2.3.2.     3





     2.3.3. Purchase. To purchase Products or Services based on a Quote provided by Accuray, Distributor will issue a purchase order,  which shall include specific references to the quote number of such Quote (the Purchase Order). Accuray shall either  accept or reject such Purchase Order within two weeks after receipt thereof, with any failure to approve or disapprove of  such Purchase Order in such period constituting disapproval. Each purchase of Accuray Components and Interfaces shall  be accomplished and a Purchase Order may be accepted by the execution of the Purchase Order by an authorized  representative of Accuray. To the extent of any inconsistency between the Quote and the related Purchase Order, the  terms and conditions of such Quote shall govern and Distributor acknowledges and agrees that Accuray shall not be  bound by any terms, conditions or boilerplate language included in a Distributor purchase order submitted to Accuray.  The Purchase Order shall be delivered to Accuray via fax, electronic mail, or mail at the following address:     Accuray Incorporated  ATTN: Contracts Administration  1310 Chesapeake Terrace  Sunnyvale, CA 94089  Main: (408) 716-4600  Fax: (408) 789-4205  Email: Orders@accuray.com     2.3.4. Cancellation; Amendment; Conflict. Distributor may cancel the Purchase Order if Accuray has not executed such Purchase  Order within two weeks of receipt. Any amendment or addition to the Purchase Order shall only be effective if Distributor  and Accuray confirm such amendment or addition in writing. To the extent of any inconsistency between a Quote or a  Purchase Order and this Agreement, this Agreement shall prevail, unless such Quote or Purchase Order is signed by both  the CFO or General Counsel of Accuray and the CFO of Distributor, expressly refers to this Section 2.3.4, and states that  the Quote or Purchase Order is intended to supersede this Agreement.     2.4. Standard Lead Time. As of the Effective Time and to the best of Accuray's knowledge, Accuray's standard lead time for delivery of  Products is six months.     3. DUTIES OF DISTRIBUTOR     3.1. Independent Distributor. Distributor shall be and must at all times make it clear that it is an independent entity contracting with  Accuray, and is not the employee, representative or agent of Accuray. Distributor does not have the ability or authority to enter  into any legal agreements or obligations that would bind Accuray in any manner.     3.2. Market Knowledge, Promotion and Sales. Distributor will develop a thorough and complete understanding of the Products and  Services. Distributor will use its knowledge and understanding to identify and cultivate potential Customers. Distributor agrees to  use commercially reasonable efforts to introduce, promote the sale of, and obtain orders for the Products and Services in connection  with Multiple LINAC or Multi-Modality Purchases, including, without limitation, including the Products and Services in each of  Distributor's      4





     Oncology Care Systems price book and sales operation system, such that all of Distributor's sales representatives can access  quotations for Products and Services at least as easily as all other systems then available for purchase from Distributor. Moreover,  Distributor represents and warrants that, on the date hereof and during the Term of this Agreement and any extension thereof, it (i)  possesses the knowledge, experience, skills, and ability required to properly fulfill its obligations under this Agreement; and (ii) has  the required facilities, manpower, capacity, financial strength, and knowledge to market and distribute Accuray's Products and  Services in connection with Multiple LINAC or Multi-Modality Purchases.     3.3. Distributor Personnel. During the Term of this Agreement and any extension thereof, Distributor agrees to use commercially reasonable  efforts to employ qualified sales and technical personnel familiar with the Products and Services, including, without limitation, at  least one person in Distributor's Oncology Care Systems sales group with a primary responsibility for sales of Products, to perform  the marketing and sales requirements as set forth herein.     3.4. Distributor Personnel Sales Training. Distributor shall use commercially reasonable efforts to cause each of its Oncology Care Systems  sales personnel with any sales duties related to the Systems to attend any training provided by Accuray in such personnel's  Accuray Region pursuant to Section 4.12.     3.5. Offers. Distributor shall inform Accuray of all potential Customers for Multiple LINAC or Multi-Modality Purchases during the Term of  this Agreement or any extension thereof. Distributor shall offer such potential Customers only those Products or Services described  in then current price lists, and only in accordance with the applicable Customer Quote and this Agreement.     3.6. Purchase Schedule. For each sale completed by Distributor, the resulting contract for the sale of Products shall be between Distributor  and the Customer and the Service Agreement, if any, shall be between Accuray and the Customer or Accuray and the Distributor, as  determined pursuant to Section 4.8. For each such sale, Distributor must send a Purchase Order to Accuray at least six (6) months  prior to the expected shipment date.     3.7. Customer Complaints. Distributor shall report promptly and in writing to Accuray any complaints or expressions of dissatisfaction by  the Customers to Distributor relating to the Products or Services. Any such reports shall be provided to Accuray via electronic mail  to the following address: complaints@accuray.com.     3.8. Warranty. Distributor will not make any warranties or representations in Accuray's name or on Accuray's behalf other than the  warranty provided by Accuray pursuant to Section 4.6 unless approved in advance in writing by Accuray.     3.9. Service Agreements. Distributor will make commercially reasonable efforts to sell a Service Agreement to each Customer. For the  avoidance of doubt, (i) the obligations of the parties with respect to the Service Agreement are as set forth in Sections 3.6 and 4.8  and (ii) the failure of Distributor to sell a Service Agreement to any Customer shall not be deemed to be a breach of this Agreement.     3.10. Upgrades. Any Product upgrades released by Accuray (other than Bug Fixes and Safety Updates, which are addressed in Section  4.6.3 and 4.6.4 respectively) can be purchased at the discretion of the Distributor pursuant to the procedures set forth in Section 2.3.  Such      5





     upgrades will be available at the prices listed in the then current price list as of the date of the Quote (unless prior written approval  by Accuray for application of an earlier price list is obtained) for the upgrade, less any applicable discounts as specified in Exhibit A  hereto.     3.11. Compliance with Laws.     3.11.1. Compliance Generally. Distributor has and will have during the Term of this Agreement and any extension thereof the ability  to distribute, market and sell the Products and Services in accordance with the terms of this Agreement, in full compliance  with all governmental, regulatory and other requirements under any applicable law. Furthermore, Distributor agrees to  comply with all applicable international, national, regional and local laws applicable to the performance of its duties  hereunder or to any transactions involving the Products or Services contemplated hereunder.     3.11.2. United States Laws. Distributor understands that, because it is distributing the Products and Services of Accuray, a  corporation subject to the laws of the United States of America, Distributor must, when carrying out its duties pursuant to  this Agreement, avoid violations of certain of such laws. These include, but are not necessarily limited to, the following:     3.11.2.1. Restrictive Trade Practices or Boycotts, U.S. Code of Federal Regulations Title 15, Chapter VII, Part 760.     3.11.2.2. Foreign Corrupt Practices Act, U.S. Code Title 15, § 78.     3.11.2.3. Export Controls, imposed by U.S. Executive Order or implementing regulations of the U.S. Departments of  Commerce, Defense or Treasury.     3.11.3. No Illegal Activity. Neither party (nor their sub-distributors, if any (Sub-Distributors)) shall engage in any illegal activities.  A party will not be held responsible for any activities of the other party or the other party's Sub-Distributors that may be  considered to be illegal. For example, neither party supports the practice of bribes or under-the-table payments. Each party  will ensure a like clause is included in each agreement it has with its Sub-Distributors, and monitor activities of its Sub- Distributors closely. In the event a party deems that its good-will has been or may potentially be affected by any such  illegal activity of the other party or the other party's Sub-Distributors, then such party reserves the right to terminate this  Agreement or any portion thereof that relates to or is materially affected by such illegal activity with no further liability to  the other party or the other party's Sub-Distributors. Such party assumes no liability for such illegal activity and the other  party hereby indemnifies and holds such party, its officers and assigns, harmless from any loss, damage and liability  arising from or in connection with such illegal activity.     3.12. Sales Targets. Distributor shall not be subject to any minimum purchase requirements, but shall agree to the annual sales targets set  forth in Schedule 2.5(d)(i)(2) of the Strategic Alliance Agreement and to using its customary standard sales processes, including,  without limitation, the MTA process, with respect to sales of Systems.     6





     3.13. Affiliates; Distributors. Siemens shall cause any of its Affiliates or distributors purchasing Systems or Services pursuant to the terms  of this Agreement to agree to be bound by and comply with the terms and conditions of this Agreement and the provisions of the  Strategic Alliance Agreement related to or applicable to such purchase, unless such Affiliate or distributor is already party to a  distribution agreement for Products with Accuray.     4. DUTIES OF ACCURAY     4.1. Fulfillment and Shipment.     4.1.1. Fulfillment of Executed Purchase Orders. Accuray is responsible for ensuring that the Products supplied are of good quality as  further described below. Accuray will use commercially reasonable efforts to provide to Distributor or Customer, as  applicable, in a timely manner those Products and Services required to fill confirmed Purchase Orders received from  Distributor in accordance with the terms of this Agreement.     4.1.2. Shipment. All shipments shall be made F.C.A. Port of Oakland, California, USA. Transfer of risk from Accuray to Distributor  shall occur at such F.C.A. location as provided in F.C.A. terms and transfer of title shall occur at the same time. Distributor  may request Accuray to use a particular freight carrier, and Accuray agrees to do so, if feasible. If not feasible in Accuray's  reasonable judgment, then Accuray shall promptly advise Distributor of the reasons. If no such request is made, Accuray  shall ship in accordance with any instructions contained in the Purchase Order or via FedEx ground, with no extra  insurance. Accuray shall bill any actual freight costs to Distributor. Any supplementary shipping costs arising from the  need to meet the delivery deadline set forth in the Purchase Order by way of expedited delivery shall be borne by Accuray,  if such delivery deadline was at least six months after the submission of such Purchase Order by Distributor. For example, if  a Purchase Order was submitted on June 1, with a requested delivery date of December 1, any expedited delivery expenses  required in order to ensure delivery by December 1 shall be borne by Accuray, while if the requested delivery date was  October 1, any expedited delivery expenses required in order to ensure delivery by October 1 shall be borne by Distributor.     4.2. Product and Service Pricing. Accuray will provide its then current U.S. list pricing for its Products and Services to Siemens once per  year during the Term of this Agreement and any extension thereof, or upon request from Siemens. All prices will be stated in US  Dollars, unless another currency is agreed upon in writing by Accuray.     4.3. Product Specifications and Promotional Literature. Accuray will provide product specifications and promotional literature to Distributor  from time to time during the Term of this Agreement and any extension thereof. Distributor may use product specifications and  promotional literature in Distributor's dealings with Customers. Accuray may introduce changes and upgrades to the Products.  Accuray will use commercially reasonable efforts to give Distributor as much advance notice of upgrades as is feasible.     4.4. Regulatory Clearance. Accuray will be responsible for and will bear all expenses related to obtaining and maintaining any approvals,  permits and licenses required under any applicable law in order to sell, market and distribute the Products and Services to a  Customer in      7





     connection with Multiple LINAC or Multi-Modality Purchases, including any upgrades to or expanded usage of the Products;  provided, however, that if Accuray does not have a direct presence in or Accuray does not have a distributor for the sales of  Systems specifically for the country in which the Customer requests delivery, as a condition to any sale of Products or Services to  such Customer, Accuray may require Distributor (solely with the consent of Distributor) to enter into a distribution agreement with  Accuray pursuant to Section 3.2 of the Strategic Alliance Agreement providing, among other things, that Distributor will be  responsible for obtaining all such approvals, permits, and licenses for sales to such Customer. Distributor will provide any  assistance or documentation reasonably requested by Accuray and at Accuray's expenses to assist Accuray with its obligations  under this Section 4.4. Accuray will be registered as the sole owner of any rights, title and interest to any of the Products or Spare  Parts, as the case may be; provided, however, that should any applicable law or regulation require that Distributor alone be entitled  to such ownership rights, Distributor shall hold this approval as trustee for Accuray and hereby consents to transfer or sublicense  such approval to Accuray free of charge or to support Accuray in its efforts to re-obtain the approval for the benefit of Accuray or a  third party named by Accuray upon expiration or termination of this Agreement. Lists indicating, as of the Effective Date, (i) the  countries in which Accuray has obtained regulatory approvals for the Products and Services and (ii) the countries in which Accuray  has a direct presence or has a distributor for the sales of Systems specifically for such country are being delivered to Siemens  concurrently with the execution of this Agreement. Accuray shall provide to Siemens updates of such lists on a quarterly basis.     4.5. Import License. Accuray or its distributor will obtain and maintain all required import licenses, and shall serve as importer of record for  all Products and Services delivered in or into any country or region, other than the United States, pursuant to this Agreement;  provided, however, that if Accuray does not have a direct presence in or Accuray does not have a distributor specifically for the  sales of Systems in the country in which the Customer requests delivery, as a condition to any sale of Products or Services to such  Customer, Accuray may require Distributor (solely with the consent of Distributor) to enter into a distribution agreement with  Accuray pursuant to Section 3.2 of the Strategic Alliance Agreement providing, among other things, that Distributor will obtain and  maintain all required import licenses and will act as the importer of record for the Products and Services ordered by such Customer.     4.6. Warranty.     4.6.1. Scope of Warranty. Accuray will provide a warranty to each Customer that the Products will be free from material defects and  perform substantially in accordance with the written Specifications provided by Accuray as reflected in the regulatory  clearance at the time of sale for a period of one (1) year following Installation of the Products at Customer's facility, but not  to exceed eighteen (18) months following shipment of such Products to Distributor (Warranty Period). Installation of  the System shall occur upon completion by Accuray or the entity installing the System, as applicable, of Accuray's  acceptance test procedure demonstrating that the System substantially conforms to the written Specifications. If Accuray  does not perform the Installation, Distributor will notify Accuray in writing within ten (10) days following Installation  (including any testing procedures undertaken by Customer or its installation service provider). In no event shall  Distributor, Customer or their respective agents use the System (or any portion thereof) for any purpose before Installation  thereof without the express written approval of Accuray. Distributor      8





     shall indemnify and hold Accuray harmless from any such use. Accuray makes no warranty that the operation of any  software will be uninterrupted or error-free. Except as set forth in the preceding sentences, Accuray makes no warranties or  representations to Customers or to any other party regarding any Products or Services provided by Accuray. TO THE  FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ACCURAY DISCLAIMS ALL OTHER WARRANTIES AND  REPRESENTATIONS, WHETHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED  WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND ANY WARRANTIES  ARISING OUT OF COURSE OF DEALING OR USAGE OF TRADE.     4.6.2. Hardware and Software. If a Customer notifies Accuray in writing during the Warranty Period of a defect in a Product that  causes the Product to fail to conform to the foregoing warranty, Accuray shall at its option either repair or replace the non- conforming Product or, if in Accuray's opinion such repair or replacement is not commercially reasonable, Accuray shall  refund a pro-rated portion of the price paid by the Customer for such Product calculated based on a straight-line  depreciation over a 5-year period beginning on the date of delivery. This will be Accuray's sole and exclusive obligation  and such Customer's sole and exclusive remedy in relation to defective Products and parts.     4.6.3. Software and Bug Fixes. Notwithstanding Section 4.6.2, for a period of 10 years following Installation of a System, Accuray will  provide to Customer, without charge, Bug Fixes with respect to any software included in the System. This is Accuray's  sole and exclusive obligation and Customer's and Distributor's sole and exclusive remedy in relation to defective software.  By way of clarification, Accuray's sole obligation shall be to make such Bug Fixes available to Customer, and Accuray  shall have no obligation (unless otherwise agreed by the Customer and Accuray) for installation or implementation of such  Bug Fixes at the Customer's site. Bug Fix means an error correction or minor change in the existing software and/or  hardware configuration that is required in order to enable the existing software and/or hardware configuration to perform to  the existing functional specification(s).     4.6.4. Safety Updates. Notwithstanding Section 4.6.2 and any obligations according to law, for a period of 10 years following  Installation of a System, Accuray will provide to Customer, without charge, Safety Updates with respect to any hardware or  software included in the System. This is Accuray's sole and exclusive obligation and Customer's and Distributor's sole  and exclusive remedy in relation to any Safety Update required to be provided by applicable law in the Customer's  jurisdiction. By way of clarification, Accuray's sole obligation shall be to make such Safety Update available to Customer,  and Accuray shall have no obligation (unless otherwise agreed by the Customer and Accuray) for installation or  implementation of such Safety Update at the Customer's site. Safety Update means an error correction or change in the  existing software and/or hardware configuration that is required for safety in order to enable the existing software and/or  hardware configuration to perform to the existing functional specification(s) in accordance with applicable law in the  Customer's jurisdiction.     4.6.5. Warranty Exclusions. All warranty replacement of Products and parts shall be limited to malfunctions which are due and  traceable to defects in original material or workmanship of Products. The warranties set forth in this Section 4.6 shall be  void      9





     and of no further effect in the event of abuse, accident, alteration, misuse or neglect of Products, including but not limited  to user modification of the operating environment specified by Accuray and user modification of any software.     4.6.6. Warranty Basis. Any limitation of liability under any warranty contained herein shall be an integral part of such warranty,  which limits its scope (Section 444, second alternative German Civil Code shall not apply). Any limitation of liability for any  defects contained herein shall be void insofar as Accuray has intentionally failed to disclose such defect.     4.7. Installation. Unless otherwise agreed by Accuray and Distributor (including, without limitation, pursuant to the terms of any  distribution agreement entered into pursuant to Section 3.2 of the Strategic Alliance Agreement), Accuray shall be responsible for  installation of Accuray Products at Customer sites.     4.8. Service Agreements. Accuray will provide its then current Service Agreements to Distributor from time to time during the Term of this  Agreement and any extension thereof, or upon request from Distributor. All prices will be stated in US Dollars, unless another  currency is agreed upon in writing by Accuray. Such Service Agreements are to be offered to the Customer on the terms as set forth  in those agreements, unless otherwise agreed to in writing by an authorized representative of Accuray. Accuray shall execute a  Service Agreement with the Customer upon receipt of (i) a copy of such Service Agreement executed by the Customer, and (ii) any  payments then due under such Service Agreement; provided, however, that Accuray shall have no obligation to enter into such  Service Agreement if it materially deviates from the form Service Agreement provided to Distributor; provided, further, that if  Accuray does not have a direct presence in or Accuray does not have a distributor for the sales of Systems specifically for the  country in which the Customer requests Services, as a condition to any sale of Services to such Customer, Accuray may require  Distributor (solely with the consent of Distributor) to enter into a distribution agreement with Accuray pursuant to Section 3.2 of the  Strategic Alliance Agreement providing, among other things, that Distributor may (at its sole discretion) enter into such Service  Agreement with such Customer and will provide directly to such Customer the Services required to be performed under such Service  Agreement. If Accuray enters into such Service Agreement with such Customer, Accuray will be responsible for and will provide to  such Customer (either directly or through one or more of its distributors) the services required to be performed under such Service  Agreement.     4.9. Customer Training. If training of Customer's personnel is included in a Purchase Order confirmed by Accuray, Accuray will provide  such training in accordance with Accuray's then current training offerings and will coordinate with the Customer in order to provide  such training at Accuray's facility in Sunnyvale, California (or such other facility as may be agreed upon by Customer and  Accuray). For the purposes of such training, Accuray will be responsible for the travel and accommodation expenses of its  personnel, while Customer shall be responsible for the travel and accommodation expenses of its personnel. All Customer training  provided by Accuray will be conducted in English and, to the extent a Customer or its personnel do not have adequate English  language reading and comprehension skills, Accuray will provide an interpreter and translation services sufficient to enable the  Customer and its personnel to meaningfully and effectively participate in Accuray training courses.     10

      4.10. Customer Support. Unless otherwise agreed by Accuray and Distributor (including, without limitation, pursuant to the terms of any  distributorship agreement entered into pursuant to Section 3.2 of the Strategic Alliance Agreement), Accuray will provide guidance  to billing and reimbursement personnel of each Customer regarding regulatory and billing requirements and reimbursement for  treatment provided with Products under radiosurgery reimbursement codes. Accuray will coordinate and assist the Customer with  room evaluation, architecture support and quality assurance issues in relation to Customer installation sites.     4.11. Additional Support and Training. Accuray will provide additional service, support, or training in relation to Products or Services at  Customer's request, to be ordered separately and directly from Accuray, and priced on a time and materials basis according to  Accuray's then current price lists.     4.12. Distributor Personnel Sales Training. Accuray shall provide training of Distributor's sales personnel responsible for sales of Products  and Services to Distributor free of charge. Such training shall be at the times, in such locations, and in the scope agreed upon by  Distributor and Accuray in good faith; provided, however, that such training shall be provided to such Distributor personnel in  each Accuray Region at least once per year. Each party shall be responsible for all costs and expenses, including travel and lodging,  incurred by it or its personnel to attend or provide such training. Accuray will provide additional training to Distributor's personnel  as may be reasonably requested by Distributor on a time and materials basis according to Accuray's then current price lists.     4.13. Support of Distributor's Efforts. Accuray shall, at its own expense:     4.13.1. assign a dedicated marketing point of contact for Distributor's marketing and sales personnel, which employee may be based  at any of Distributor's facilities as requested by the Steering Committee; and     4.13.2. provide global sales and marketing support, including support for individual sales opportunities, to Distributor; provided,  however, that the scope, duration, location, availability, and timing of such support shall be subject to commercially  reasonable limits and shall be determined pursuant to Section 3.3(a)(iii) of the Strategic Alliance Agreement.     4.14. Compliance with Laws. Accuray will be responsible for complying with (i) applicable U.S. laws, (ii) where Products are being shipped  to Distributor and unless otherwise agreed by Accuray and Distributor, applicable laws, codes, registrations, regulations, and  ordinances related to the export of the Products to Distributor, and (iii) any other applicable laws as they pertain to the Products, the  regulatory clearance, and safety in accordance with Accuray's written Specifications for the intended use. In addition, Accuray  shall be responsible for compliance with any applicable law, code, registration, regulation, and ordinance related to the export of the  Products or Services to Customer and/or Distributor, if any (the Export Regulations), and Accuray shall be liable for any expenses  and/or damages incurred by Distributor due to any non-compliance with such Export Regulations by Accuray (unless Accuray is  not responsible for such non-compliance). Accuray shall advise Distributor in writing within two weeks of the confirmation of the  Purchase Order of any information or data required by Accuray to comply with an Export Regulation, including without limitation:





(a) All applicable export list numbers, including the Export Control      11





     Classification Number according to the U.S. Commerce Control List (ECCN);     (b) The statistical commodity code according to the current commodity classification for foreign trade statistics and the  HS (Harmonized System) coding;     (c) The country of origin (non-preferential origin); and     (d) Accuray's declaration of preferential origin (in case of European suppliers) or preferential certificates (in case of  non-European suppliers).     4.15. Spare Parts. Upon a termination of this Agreement, Accuray shall continue to make available to Customers support services on  commercially reasonable terms, including, without limitation, spare parts for the Systems for a minimum period of 10 years after the  last shipment of a System pursuant to this Agreement.     5. COMPENSATION AND PAYMENT     5.1. Orders. Distributor shall make an offer to a Customer based on the Quote provided by Accuray pursuant to the process set forth in  Section 2.3. Submission and acceptance of an order shall be completed pursuant to Section 2.3.3.     5.2. Purchase Price.     5.2.1. Distributor shall pay the prices listed in the applicable Purchase Order (unless prior written approval by Accuray for  application of an earlier price list is obtained) for the Products, including any Spare Parts, less any applicable discounts as  specified in Exhibit A hereto. Distributor shall receive a commission in the amount specified in Exhibit A hereto for any  Service Agreement entered into by Accuray with Customer pursuant to Section 4.8.     5.2.2. All costs of delivering the Products to the Distributor or Customer (including, but not limited to, costs for land, air and/or  ocean freight, insurance, port, customs and forwarding fees, if any), as well as any rigging and unloading of the Products,  shall be paid as provided in the F.C.A. terms. Unless advised otherwise, all prices quoted by Accuray include the cost of  packing and crating for delivery.     5.2.3. Taxes. By way of clarification, all Accuray prices referenced in this Agreement, and all other amounts payable by Distributor to Accuray pursuant to this Agreement are net of any value added tax or federal, state, county or municipal sales or use tax,  excise or similar charge, withholding tax, or other tax assessment (except for any taxes that are assessed against income)  (collectively, the Taxes). The parties agree that it is their intention that Accuray will not bear any economic burden  relating to the Taxes. Subject to the foregoing and to compliance with applicable laws, Accuray and Distributor agree to  cooperate with each other as reasonably requested to establish the responsibilities of the parties relating to the payment  and withholding of Taxes, filing of documents, and other matters in order to achieve an efficient tax result.     5.3. Compensation. Except as otherwise provided herein, Distributor's only compensation for its efforts on Accuray's behalf shall be the  margins it earns on the resale of Products and      12





     commissions on sales of Services, and Distributor shall bear all of the expenses which it incurs in making those efforts.  Notwithstanding the foregoing, in the event that Accuray does not approve the issuance of a Quote to a potential Customer and  later contracts directly (or through one of its distributors) with such potential Customer, of which Accuray shall inform Distributor  without undue delay, Distributor shall receive credit for any sales of Systems to such potential Customer pursuant to and subject to  the fulfillment of the conditions set forth in Section 3.4 of the Strategic Alliance Agreement.     5.4. Payment.     5.4.1. System Purchase Payments. Payment for the purchase of a System shall be made by Distributor to Accuray in US Dollars in  the form of either (1) an irrevocable trade finance letter of credit or (2) wire transfer as further described in Sections 5.4.1.1  (Letter of Credit) and 5.4.1.2 (Wire Transfer), respectively below. Accuray shall bear the cost of any bank charges assessed  by its bank for a letter of credit and any commission charge for a wire transfer. Past due balances on any reasonably  undisputed amount shall bear interest at the rate of 0.5% per month or, if lower, the maximum amount permitted by  applicable law. If Distributor is a business person (as defined in § 14 of the German Civil Code, BGB), the payment shall  be deemed past due only if Distributor fails to pay in response to a payment demand note received after payment becomes  due.     5.4.1.1. Letter of Credit. An irrevocable trade finance letter of credit issued by Distributor's bank, confirmed by a bank  designated by Accuray in all respects and delivered to Accuray upon the acceptance of the Purchase Order  by Accuray. The letter of credit will provide that Accuray can draw against the letter of credit according to the  following schedule:     5.4.1.1.1. US $100,000 (non-refundable but, in case of cancellation of the Purchase Order, automatically applied  to Distributor's next purchase of a System) upon Accuray's acceptance of the Purchase  Order, which must be at least four (4) months prior to the Distributor's proposed shipment  date; and     5.4.1.1.2. Balance upon presentation of documents by Accuray evidencing shipment of the Products to  Distributor or Customer as designated in the Purchase Order.     5.4.1.2. Wire Transfer. A wire transfer made in advance of the date payment is due, made in U.S. dollars, to a bank selected  by Accuray, according to the following schedule:     5.4.1.2.1. US $100,000 (non-refundable but, in case of cancellation of the Purchase Order, automatically applied  to Distributor's next purchase of a System) upon Accuray's acceptance of the Purchase  Order, which must be at least four (4) months prior to the Distributor's proposed shipment  date; and     13





     5.4.1.2.2. The remaining balance is due net 30 days after delivery by Accuray at the specified F.C.A. location  pursuant to Section 4.1.2 and receipt by Distributor of a reasonably undisputed invoice.     5.4.1.3. Tax Exempt Status. In the event that Customer claims tax exempt status in the country where the Accuray System is  to be installed, Customer must provide Accuray with sufficient evidence of such tax exempt status prior to  delivery of the Accuray System.     5.4.2. Products, Spare Parts and Upgrade Payments. Full payment of the purchase price for Products (other than Systems), Spare  Parts and upgrades shall be made by Distributor to Accuray in US Dollars by wire transfer to a bank selected by Accuray  and is due net 30 days after delivery by Accuray at the specified F.C.A. location pursuant to Section 4.1.2 and receipt by  Distributor of a reasonably undisputed invoice. Accuray shall bear the cost of any commission charge for a wire transfer.     5.4.3. Payments by Customers Direct to Accuray. If agreed to in writing by Accuray, Customers may make payments directly to  Accuray using the payment methods and schedules set forth in Sections 5.4.1.1 (Letter of Credit), 5.4.1.2 (Wire Transfer)  and 5.4.2 (Products, Spare Parts and Upgrade Payments) above. Should Customers make such payments to Accuray and  such payment include the Distributor's margin, then Accuray will pay such margin to Distributor once payment is received  from the Customer and cleared by Accuray's designated bank.     5.5. Collections. Notwithstanding Section 5.4.3 above, Distributor shall be solely responsible for determining the creditworthiness of and  collecting payment from its Customers. The risk of non-collection from the Customer will be borne entirely by Distributor, which  shall be responsible for making timely payment to Accuray for Products whether or not Distributor is successful in collecting from  its Customer. In the event that full payment is not received by Accuray, Accuray shall not be liable to Distributor for any margin or  commission unless and until it has received payment of amounts sufficient to cover the costs incurred by Accuray to provide the  applicable Products to Distributor and the applicable Services to Customer (Accuray Cost). Distributor acknowledges and agrees  that it shall not be entitled to receive payment of any margin or commission until Accuray has received payment of the Accuray  Cost amount in relation to the applicable Products and Services.     6. TERM AND TERMINATION     6.1. Term. Unless otherwise agreed in writing by Accuray and Distributor and subject to the termination rights contained in this Agreement,  this Agreement shall begin on the Effective Date and shall continue until the termination of the Strategic Alliance Agreement;  provided, however, that if a Termination Election relating to this Agreement is made pursuant to Section 10.3 of the Strategic  Alliance Agreement prior to such termination, this Agreement shall terminate 36 months after such Termination Election (the  Term).     6.2. Termination.     6.2.1. Breach. If either party commits a material breach of a material provision of this Agreement, if such breach was not excused as a  force majeure pursuant to Section 12.12, and if the breaching party has not cured such breach to the other party's      14





     reasonable satisfaction within 30 days after written notice from the other party specifying the nature of such breach, then  the other party shall have the right to terminate this Agreement upon delivery of written notice to the breaching Party.     6.2.2. Bankruptcy. A party may terminate this Agreement effective upon delivery of written notice to the other party if: (i) any  assignment for the benefit of the other party's creditors is made, (ii) the other party voluntarily files a petition in  bankruptcy or similar proceeding, (iii) the other party has such a petition in bankruptcy or similar proceeding involuntarily  filed against it, (iv) the other party is placed in an insolvency proceeding, (v) if an order is entered appointing a receiver or  trustee of the other party, or (vi) a levy or attachment is made against a substantial portion of the other party's assets, and,  with respect to any event set forth in clauses (iii) through (vi) above, such position, placement, order, levy or attachment is  not dismissed or removed within 30 days from the date of such event.     6.3. Effect of Termination. Upon expiration of the Term (or other termination of this Agreement):     6.3.1. Transition of Activities. Accuray and Distributor agree to negotiate in good faith an orderly transition of Distributor's  distribution responsibilities and activities to Accuray or a third party designated by Accuray and Distributor agrees to  assist in the transition.     6.3.2. Pending Obligations. Each party must continue to fulfill any obligations, including but not limited to pending Quotes, accrued  before the effective date of such termination.     6.3.3. Return of Materials. Distributor shall transfer to Accuray upon Accuray's request: any regulatory clearances, licenses or  permits obtained for conduct of the business pursuant to this Agreement; any Confidential Information; and other items as  negotiated in good faith between the parties. Furthermore, each of the parties agree to cooperate fully with the other for  any reasonable transition assistance required in the case of termination or expiration of this Agreement.     6.4. No Termination Compensation. Distributor waives any rights it may have to receive any compensation or indemnity upon termination  or expiration of this Agreement, other than as expressly provided in this Agreement. Distributor acknowledges that it has no  expectation and has received no assurances that any investment by Distributor in the promotion of the Products will be recovered  or recouped or that Distributor will obtain any anticipated amount of profits by virtue of this Agreement.     6.5. Accruals. No termination or expiration of this Agreement will terminate any obligation of payment which has accrued prior to the  effective date of such termination or expiration.     7. DISPUTE RESOLUTION. Any contractual issues or disputes arising out of or related to this Agreement shall be resolved pursuant to the  procedures set forth in Section 11.3 of the Strategic Alliance Agreement.     8. CONFIDENTIALITY. Accuray and Distributor agree that all Confidential Information furnished to a party or its Affiliates, employees,  consultants, and advisors in connection with this Agreement will      15





     be subject to and the parties' rights and obligations with respect to such Confidential Information shall be governed by the Confidentiality  Agreement.     9. INTELLECTUAL PROPERTY RIGHTS.     9.1. Notice of Infringement. Distributor undertakes to inform Accuray without undue delay if it first becomes aware of any possible  infringement by third parties of Accuray's proprietary rights, including, without limitation, a duplication of the Products or any other  patent, trademark or copyright or other infringement of Accuray's intellectual property rights in connection with the Products, and  to cooperate with Accuray at Accuray's sole expense regarding any legal action in relation to such infringement, which in  Accuray's judgment, is necessary or desirable.     9.2. Third Party Claims. If Distributor promptly notifies Accuray of a claim it has received or of which it becomes aware that the Products or  any part thereof purchased by Distributor hereunder infringes a third party's proprietary rights, then Accuray agrees, at its  discretion, either to (i) defend the claim at its expense, with the cooperation of Distributor, provided, that Accuray shall reimburse  Distributor for any reasonable costs or expenses actually incurred by Distributor in connection with providing such cooperation, or  (ii) make changes in the Product or part thereof so that they are at least functionally equivalent and non-infringing or replace the  Products with alternatives that are at least functionally equivalent to avoid the claim, or (iii) purchase the right to use such  proprietary right or (iv) refund to the purchaser the net book value of the Product less a reasonable deduction for use, wear and tear,  and depreciation upon Accuray taking possession of such Product. Notwithstanding Section 10.1, the foregoing states the entire  liability of Accuray with respect to infringement of patents or other proprietary rights by the Products or part thereof, or by their  operation. To remove all doubt, Accuray has no obligation regarding any claim based on any of the following: (a) modification of  the Products by any person other than Accuray; (b) combination, operation or use of the Products with other products, parts,  components, materials or accessories not provided by Accuray; or (c) infringement by a product not manufactured by Accuray.     9.3. Intellectual Property Ownership and License. Accuray and its licensors retain all intellectual property rights in the Products. Accuray  hereby grants Distributor or Customer a nonexclusive, non-transferable, royalty-free right to use the software provided in  connection with the Products only in machine readable form and only in combination with the Products with which such software is  provided. No such software shall be copied or decompiled in whole or in part by Distributor or Customer, and Distributor or  Customer shall not disclose or provide any such software, or any portion thereof, to any third party. Accuray hereby grants to  Customers of Products a non-exclusive, non-transferable and royalty-free license under any Patents owned by Accuray or the  licensing of which is controlled by Accuray that, but for this license, would be infringed by the use of such Products in accordance  with the applicable Specification. All rights in intellectual property not expressly granted hereunder are reserved by the owner of  such intellectual property.     9.4. Product Labeling. Products shall be labeled and identified at point of manufacture. Accuray shall be responsible for compliance with all  applicable local laws and regulations relating to labeling. Such labeling and identification shall be only as acceptable to Accuray and  may be altered or added to by Distributor only as previously agreed upon in writing by Accuray. The failure of Distributor to  comply with these provisions shall be considered a material default under the terms of this Agreement.     16





     9.5. Trademarks. Distributor acknowledges the validity and proprietary value of Accuray's trademarks including, but not limited to,  CyberKnife. Accuray shall retain sole ownership of all goodwill associated with the Products, as represented and symbolized by  the associated trademarks, and Distributor shall not register any of Accuray's trademarks in its name. Distributor undertakes to  display Accuray's trademarks solely in connection with identifying Accuray in the sale and marketing of Products hereunder.  Distributor shall not remove copyright notices or any trademarks from the Products. Distributor shall not be entitled to use said  trademarks in conjunction with Distributor's own trademarks or for any other purpose, except in the manner authorized by Accuray,  which authorization will not be unreasonably withheld and in compliance with distribution standards and specifications established  by Accuray. If Accuray determines in its sole discretion that Distributor is not meeting such standards and specifications,  Distributor shall immediately, at Accuray's instructions, take all steps necessary to ensure that such standards and specifications  are met or cease all further use and display of the trademarks. In the event of expiration or termination of this Agreement, Distributor  shall immediately discontinue all use of Accuray's trademarks except for the sale of Distributor's inventory of Products.     10. INDEMNITIES.     10.1. Accuray Indemnity. Accuray will defend or settle any action brought against Distributor and shall indemnify and hold Distributor  harmless from any liability, damages and expenses (including court costs and reasonable attorneys' fees) to the extent that it is  based upon a third-party claim that a Product, as provided by Accuray to Distributor under this Agreement, infringes any patent  issued in the United States, Germany, or in the country in which the Customer requested delivery of the Product or any copyright or  misappropriates any trade secret, and will pay any costs and damages made in settlement or awarded against Distributor in final  decision resulting from any such claim, provided that Distributor: (i) gives Accuray prompt notice of any such claim; (ii) gives  Accuray sole control of the defense and any related settlement of any such claim; and (iii) gives Accuray, at Accuray's expense, all  reasonable information, assistance and authority in connection with the foregoing. Accuray will not be bound by any settlement or  compromise that Distributor enters into without Accuray's express prior written consent.     10.2. Products Liability Indemnity. Accuray will defend or settle any action brought against Distributor and shall indemnify and hold  Distributor harmless from any liability, damages and expenses (including court costs and reasonable attorneys' fees) to the extent  that it is based upon a third-party claim that a Product, as provided by Accuray to Distributor under this Agreement is unsafe when  used according to Accuray's written Specifications for its intended use, and will pay any costs and damages made in settlement or  awarded against Distributor in final decision resulting from any such claim, provided that Distributor: (i) gives Accuray prompt  notice of any such claim; (ii) gives Accuray sole control of the defense and any related settlement of any such claim; and (iii) gives  Accuray, at Accuray's expense, all reasonable information, assistance and authority in connection with the foregoing. Accuray will  not be bound by any settlement or compromise that Distributor enters into without Accuray's express prior written consent.     10.3. Injunctions. If Distributor's rights to use and distribute a Product under the terms of this Agreement are, or in Accuray's opinion are  likely to be, enjoined due to the type of claim specified in Section 10.1 (Accuray Indemnity), then Accuray may, at its sole option  and expense: (i) procure for Distributor the right to continue to use and distribute such Product under the terms of this Agreement;  (ii) replace or modify such Product so that it is non-     17





     infringing; or (iii) if options (i) and (ii) above cannot be accomplished despite Accuray's reasonable efforts, then Accuray or  Distributor may terminate this Agreement with respect to such Product and Accuray shall credit to Distributor a pro-rated portion of  the amount paid for such Product based on a straight-line depreciation calculated over a 5-year period beginning on the date of  delivery of the Product, provided that all units of such Product are returned to Accuray in an undamaged condition.     10.4. Indemnity Exclusions. Notwithstanding the foregoing, Accuray will have no obligation under Sections 10.1 (Accuray Indemnity) or  10.2 (Products Liability Indemnity) for any third-party claim to the extent that such claim results from: (i) use of any Products not in  accordance with Accuray's written Specifications; (ii) use or combination of the Products with other items, such as other equipment,  processes, programming applications or materials not furnished by Accuray; (iii) compliance by Accuray with Distributor's or  Customers' designs, specifications or instructions; (iv) modifications to a Product not made by or at the express written direction of  Accuray; (v) Distributor's failure to use updated or modified Products provided by Accuray, provided that such updated or  modified Products would have avoided the basis for such claim; or (vi) Distributor's use or distribution of a Product other than in  accordance with this Agreement. The foregoing clauses (i) to (vi) are referred to collectively as Indemnity Exclusions.     10.5. Limitation. WITHOUT AFFECTING STRICT PRODUCT LIABILITY UNDER MANDATORY APPLICABLE LAW, THE FOREGOING  PROVISIONS OF THIS SECTION SET FORTH ACCURAY'S SOLE AND EXCLUSIVE LIABILITY AND DISTRIBUTOR'S SOLE  AND EXCLUSIVE REMEDY FOR ANY CLAIMS OF INFRINGEMENT OR MISAPPROPRIATION OF INTELLECTUAL PROPERTY  RIGHTS OR PROPRIETARY RIGHTS OF ANY KIND.     10.6. Distributor Indemnity. Distributor will defend or settle, indemnify and hold Accuray harmless from any liability, damages and expenses  (including court costs and reasonable attorneys' fees) to the extent based upon a third-party claim based on or otherwise  attributable to: (i) Distributor's acts or omissions not in accordance with this Agreement or (ii) any misrepresentations made by  Distributor with respect to Accuray or the Products or Services.     11. LIABILITY.     11.1. Liability for Death or Injury. The liability of any party with respect to death or injury to any person is subject to and governed by the  provisions of applicable law.     11.2. Limitation on Liability. WITHOUT AFFECTING STRICT PRODUCT LIABILITY UNDER MANDATORY APPLICABLE LAW,  SECTION 10, OR THE RESPECTIVE OBLIGATIONS OF THE PARTIES UNDER THE CONFIDENTIAILITY AGREEMENT AND  EXCEPT FOR BREACHES ASSOCIATED WITH THE UNAUTHORIZED USE OF INTELLECTUAL PROPERTY, IN NO EVENT  SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR  TORT DAMAGES, INCLUDING WITHOUT LIMITATION, ANY DAMAGES RESULTING FROM LOSS OF USE, LOSS OF DATA,  LOSS OF PROFITS OR LOSS OF BUSINESS ARISING OUT OF OR IN CONNECTION WITH THE MATTERS CONTEMPLATED  BY THIS AGREEMENT, WHETHER OR NOT A PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.     18





     11.3. Liability Cap. Without affecting Section 10 or the respective obligations of the parties under the Confidentiality Agreement and except  for any liability (i) relating to any breach associated with the unauthorized use of Intellectual Property, (ii) arising from the  intentional breach or willful misconduct of a party, or (iii) arising from the non-compliance with any mandatory applicable law or  regulation, the total aggregate liability of one party to another party for any claim relating to any breach of this Agreement (or any  Purchase Order or other agreement entered into in connection with this Agreement) (a Claim) shall be limited to the aggregate  amount of the purchase prices paid by Distributor to Accuray for Products pursuant to this Agreement (or any Purchase Order or  other Agreement entered into in connection with this Agreement) during the twelve calendar months preceding the date of the  notification to the other party of such Claim less any amounts paid or payable in respect of any other Claim of which the other party  was notified during such twelve month period.     11.4. Notice; No Waiver. Each party shall not unreasonably delay notification to the other party of any Claim. Nothing in this Section 11  shall be deemed a waiver by any party of any right to injunctive relief to the extent it is available to such party.     12. MISCELLANEOUS PROVISIONS     12.1. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the Federal Republic of Germany excluding the United Nations Convention on Contracts of International Sale of Goods (CISG) and the provisions of German private  international law.     12.2. Modification. Notwithstanding any provision to the contrary in this Agreement, Distributor and Accuray may agree, by execution of a  written agreement, to modify any term or provision of this Agreement, including, without limitation, the duties of the parties, the  Quote and Purchase Order approval procedure, the pricing of the Products and Services, and the payment terms, with respect to any  single or number of Customer opportunities, Quotes, or Purchase Orders.     12.3. Publicity. Both parties may not use the other party's name or trademarks on its literature, signs, or letterhead, nor may it make press  releases or other public statements disclosing its relationship under this Agreement or otherwise without the prior written consent  of the other party, which shall not be unreasonably withheld or delayed.     12.4. Goodwill. Distributor agrees that it will help develop and work to preserve the goodwill of Accuray, and will not unreasonably harm  that goodwill. In the event of termination of this Agreement for any reason, Distributor will not do anything to unreasonably harm  the goodwill of Accuray.     12.5. Titles. Titles of the various paragraphs and sections of this Agreement are for ease of reference only and are not intended to change  or limit the language contained in those paragraphs and sections.     12.6. Assignment. Neither this Agreement, nor any of the rights, interests, or obligations under this Agreement may be assigned or  delegated, in whole or in part, by operation of law or otherwise, by any party without the prior written consent of the other party,  and any such assignment without such prior written consent shall be null and void; provided, however, that this Agreement may be  assigned by a Party in connection with a Change in Control of such party, subject to the specific termination and other rights set  forth in the Strategic      19





     Alliance Agreement upon such Change in Control; provided, further, that Siemens may assign its rights and obligations under this  Agreement to any Distributor that agrees, in writing, to be bound by and comply with the terms and conditions of this Agreement  and the provisions of the Strategic Alliance Agreement, provided, that no such assignment shall relieve Siemens of its obligations  hereunder or thereunder if such Distributor does not perform such obligations. Subject to the foregoing, this Agreement will be  binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and permitted assigns.     12.7. Conduct.     12.7.1. Both parties prohibit the harassment of their employees and contractors in any form. They consider harassment of, or  discrimination against, their employees and affiliated persons a very serious matter and will investigate all complaints of  inappropriate conduct. Where the investigation uncover harassment or discrimination, the other party may take  reasonable corrective action, including, without limitation, termination of this Agreement for material breach.     12.7.2. During the Term, Accuray shall comply, in all material respects, with Siemens' Code of Conduct, attached hereto as Exhibit B  (the Code of Conduct). Siemens shall give Accuray written notice of any change to its Code of Conduct as soon as  reasonably practicable.     12.7.3. During the Term, Distributor shall comply, in all material respects, with the Business Conduct Guidelines of Siemens and all  other Siemens internal regulations and guidelines.     12.8. Quality Assurance Agreement. During the Term and in connection with its performance of its duties under this Agreement, Accuray  shall comply, in all material respects, with Siemens' Quality Assurance Agreement attached hereto as Exhibit C, with the exception of  any provisions thereof related to barcoding.     12.9. Notices. All notices and other communications hereunder shall be in writing and shall be deemed duly given (a) on the date of delivery  if delivered personally, (b) if by facsimile, upon written or electronic confirmation of receipt (if sent during business hours of the  recipient, otherwise on the next business day following such confirmation), (c) on the first business day following the date of  dispatch if delivered utilizing a next-day service by a recognized next-day courier, (d) on the earlier of confirmed receipt or the fifth  business day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All  notice hereunder shall be delivered to the addresses set forth below:     20



   12.10. Waiver. The waiver of any breach or default of any provision of this Agreement will not constitute a waiver of any other right  hereunder or of any subsequent breach or default.     12.11. Severability. If any provision of this Agreement is held invalid or unenforceable by a court of competent jurisdiction, the remaining  provisions of the Agreement will remain in full force and effect, and the provision affected will be construed so as to be enforceable  to the maximum extent permissible by law.     12.12. Survival. The expiration or termination of this Agreement for any reason will not release either party from any liabilities or obligations  set forth herein which (i) the parties have expressly agreed will survive any such expiration or termination; or (ii) remain to be  performed or by their nature would be intended to be applicable following any such termination or expiration. In addition to the  foregoing, the following provisions shall survive any termination or expiration of this Agreement: Section 3.8 (Warranty); Section  3.11 (Compliance with Laws); Section 4.6 (Warranty); Section 6.2 (Effect of Termination); Section 6.3 (No Termination  Compensation); Section 6.4 (Accruals); Section 7 (Dispute Resolution); Section 8 (Confidentiality); Section 9 (Intellectual Property  Rights); Section 10 (Indemnities), Section 11 (Liability) and Section 12 (Miscellaneous Provisions).     12.13. Force Majeure. Neither party will be responsible for any failure or delay in its performance under this Agreement (except for the  payment of money) due to causes beyond its reasonable control, including, but not limited to, labor disputes, strikes, lockouts,  shortages of or inability to obtain labor, energy, raw materials or supplies, war, acts of terror, riot, acts of God or governmental  action.     12.14. Amendments. Any amendment or modification of this Agreement must be made in writing and signed by duly authorized  representatives of each party. For Accuray, a duly authorized representative must be any of the following: CEO, CFO, General  Counsel or Associate General Counsel.     12.15. English Language Requirement. This Agreement is written in the English language as spoken and interpreted in the United States of  America, and such language and interpretation shall be controlling in all respects.     12.16. Foreign Currency. Distributor acknowledges and agrees that it shall assume all risk associated with any fluctuation of foreign  currency exchange rates associated with its pricing of Products and Services to Customers in a currency other than US Dollars. All  payments made by Distributor to Accuray shall be in US Dollars.     12.17. Entire Agreement. This Agreement and the Strategic Alliance Agreement contain the entire agreement of the parties hereto with

To Accuray:    To Distributor:         Accuray Incorporated    Siemens AG  Attention: Chief Financial Officer    Henkestr. 127  1310 Chesapeake Terrace    91054 Erlangen  Sunnyvale, CA 94089    Germany  Facsimile: +1 (408) 789-4205    Attn: Healthcare General Counsel, Ritva Sotamaa  with cc to: General Counsel    Facsimile: + 49/### - ## - ####





respect to the subject matter hereof, and supersedes all prior understandings, representations and warranties, written and oral. If  any part of the terms and conditions stated herein are held void or unenforceable, such part will be treated     21





     as severable, leaving valid the remainder of the terms and conditions. In case of any contradiction between this Agreement and the  Strategic Alliance Agreement, the terms of this Agreement shall prevail.     12.18. Counterparts. This Agreement may be executed in counterparts, each of which will be deemed an original, but all of which together  will constitute one and the same instrument.     SIGNATURE PAGE FOLLOWS     22





     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the Effective Date by their duly authorized representatives.  The parties acknowledge and agree that this Agreement does not become effective until it has been signed by all parties indicated below.

      SIGNATURE PAGE TO MULTIPLE LINAC AND MULTI-MODALITY DISTRIBUTOR AGREEMENT

DISTRIBUTOR:     ACCURAY INCORPORATED:             By: /s/ Christian Klaussner     By: /s/ Euan Thompson             Print name: Christian Klaussner     Print name: Euan Thomson             Title: HIM OCS CFO     Title: President and Chief Executive Officer             Date: June 8, 2010     Date: June 7, 2010                        By: /s/ Holger Schmidt     By: /s/ Darren Milliken             Print name: Holger Schmidt     Print name: Darren Milliken             Title: HIM OCS CEO     Title: Senior Vice President and General Counsel             Date: June 8, 2010     Date: June 7, 2010





     SCHEDULE 2.3.2     ACCEPTANCE PROCESS     · Accuray shall have 5 Business Days from date of the submission of a proposed Multiple LINAC Purchase or Multi-Modality Purchases by  Siemens in which to either give or withhold approval of such purchase, with any failure to approve or disapprove of such purchase in  such period constituting disapproval;     · Such approval may be given by either Accuray's applicable General Regional Manager or a corporate representative of Accuray, expressly  designated with such approval authority in writing by Accuray to Siemens;     · Siemens' shall provide any information concerning such proposed purchase and the proposed purchaser as is reasonably requested by  Accuray;     · Such approval of any such proposed purchase must not be unreasonably withheld or delayed;     · In determining whether to grant such approval, Accuray may consider, at a minimum:     · Existing exclusivity arrangements between Accuray and Third Parties;     · Prior and current contact with the proposed purchaser by either Party;     · Other commercial relationships that either Party may have with the proposed purchaser;     · Bona fide concerns about the suitability of the proposed purchaser; and     · Whether Accuray or any of its distributors have obtained any required regulatory clearances and/or import licenses required in  connection with the proposed purchase.





     EXHIBIT A     DISTRIBUTOR DISCOUNTS ON PRODUCTS AND SERVICES



* Siemens distributor channel discount.     Siemens Bundled Sales Price= (List Price (1- (Volume Discount + Distributor Discount))

      EXHIBIT B     SIEMENS CODE OF CONDUCT     SIEMENS     Code of Conduct for Siemens Suppliers     This Code of Conduct defines the basic requirements placed on Siemens' suppliers of goods and services concerning their responsibilities  towards their stakeholders and the environment. Siemens reserves the right to reasonably change the requirements of this Code of Conduct due to  changes of the Siemens Compliance Program. In such event Siemens expects the supplier to accept such reasonable changes.     The supplier declares herewith:     · Legal compliance     ·  to comply with the laws of the applicable legal system(s).     ·  Prohibition of corruption and bribery     · to tolerate no form of and not to engage in any form of corruption or bribery, including any payment or other form of benefit conferred  on any government official for the purpose of influencing decision making in violation of law.     ·  Respect for the basic human rights of employees     · to promote equal opportunities for and treatment of its employees irrespective of skin color, race, nationality, social background,  disabilities, sexual orientation, political or religious conviction, sex or age;  · to respect the personal dignity, privacy and rights of each individual;  · to refuse to employ or make anyone work against his will;  · to refuse to tolerate any unacceptable treatment of employees, such as mental cruelty, sexual harassment or discrimination;  · to prohibit behavior including gestures, language and physical contact, that is sexual, coercive, threatening, abusive or exploitative;  · to provide fair remuneration and to guarantee the applicable national statutory minimum wage;  · to comply with the maximum number of working hours laid down in the applicable laws;  · to recognize, as far as legally possible, the right of free association of employees and to neither favor nor discriminate against  members of employee organizations or trade unions.      · Prohibition of child labor     · to employ no workers under the age of 15 or, in those countries subject to the developing country exception of the ILO Convention  138, to employ no workers under the age of 14.      · Health and safety of employees     · to take responsibility for the health and safety of its employees;  · to control hazards and take the best reasonably possible precautionary measures against accidents and occupational diseases;  · to provide training and ensure that employees are educated in health and safety issues;  · to set up or use a reasonable occupational health & safety management system(1)

Discount Type

List Price   Range  USD     Volume   Discount     Distributor   Discount*  Volume Discounts - Tier # 1    {*****}   {*****}   {*****}  Volume Discounts - Tier # 2    {*****}   {*****}   {*****}  Volume Discounts - Tier # 3    {*****}   {*****}   {*****}  Volume Discounts - Tier # 4    {*****}   {*****}   {*****}  Volume Discounts - Tier # 5    {*****}   {*****}   {*****}  Volume Discounts - Tier # 6    {*****}   {*****}   {*****}  Volume Discounts - Tier # 7    {*****}   {*****}   {*****}  Volume Discounts - Tier # 8    {*****}   {*****}   {*****}  Volume Discounts - Tier # 9    {*****}   {*****}   {*****}  Volume Discounts - Tier # 10    {*****}   {*****}   {*****}  Volume Discounts - Tier # 11    {*****}   {*****}   {*****}  Volume Discounts - Tier # 12    {*****}   {*****}   {*****}





   · Environmental protection     · to act in accordance with the applicable statutory and international standards regarding environmental protection;  · to minimize environmental pollution and make continuous improvements in environmental protection;  · to set up or use a reasonable environmental management system(1)     ·  Supply chain     ·  to use reasonable efforts to promote among its suppliers compliance with this Code of Conduct;  · to comply with the principles of non discrimination with regard to supplier selection and treatment.

(1) For further information see www.siemens.com/procurement/cr/code-of-conduct

      EXHIBIT C     SIEMENS QUALITY ASSURANCE AGREEMENT     Please see attached.

      SIEMENS     For internal use only  Copyright © Siemens AG 2002. All rights reserved.     Quality Requirement Med     Identification of Products and basic  requirements for packaging  Requirements for Suppliers     QR Med 1 A1     Siemens Medical Solutions  and affiliated Companies     Issued by Med Quality Management & Regulatory Affairs     Released 2007-09-28 by the Med Quality Steering Board (QSB)  Valid from 2007-11-01     04798372 AND 02S 04     1









   2

Contents

    1 Purpose and scope 3       2 Definitions and abbreviations 3          2.1 Material No. 3    2.2 Revision 3    2.3 Serial No. 3    2.4 Data Identifier 3    2.5 Expiration date 4    2.6 Batch 4    2.7 Shelf life  4         3 Reference documents 4       4 Requirements 4          4.1 Identification of parts, components and systems 4    4.2 Labeling of parts, components, systems and its packaging 4    4.3 Spacing  6         5 Basic requirements for packaging 7       6 Literature 7       7 Transition and retrospective measures 7       8 Changes to prior version 7       9 Attachments 7

Author:

Gabriele Franz    AX QP         Reviewer:

Volker Glahn    QM&RA  Philippe Hoxter    CSQ





     1 Purpose and scope     For Siemens Medical Solutions it is a basic requirement that any part, component or system is identified the same way worldwide. This document  lists the minimum requirements for suppliers of Siemens Medical Solutions describing  · how parts, components and systems are identified with their attributes and  · how attributes are labeled both as plain text as well as barcode on products and its packaging. Detailed specifications with regards to the labeling  of products are defined for the individual product concerned.     2 Definitions and abbreviations      2.1 Material No.     The Siemens Medical Solutions Material No. is used to uniquely identify products (parts, components and systems). It consists of an 8-digit  identification no. assigned by Siemens Medical Solutions.     Previously, the term Part no. was also used; it is replaced by the term Material No..      2.2 Revision     The Revision (abbreviated Rev.) serves to distinguish between different update statuses of hardware. It is assigned by Siemens Medical  Solutions.     The English term Revision replaces the German term Erzeugnisstand (abbreviated ES) and Ausführungsstand (abbreviated AS).     2.3 Serial No.     The Serial No. is an identifying attribute used to uniquely identify hardware or software with the same Material No. .     For suppliers the Serial No. can consist of up to 15 alphanumeric digits; it is however recommended to use only a 6 digit numerical Serial No. where  possible.     The Serial No. may contain a dash (-) or a slash (/), but no other special characters (e.g. # + * ?). Spaces, lower-case letters or language-specific  characters (e.g. Ä, Ö, Ü) are not allowed within the Serial No. .     The characters L, SxxL or Sxx at the end or the beginning of the Serial No. should be avoided (xx = any alphanumerical character).     For any Serial No. that is numeric only (i.e. has no letters) it is allowed to omit printing of leading zeros („0).     It is recommended to use the Serial No. of the supplier if it complies with the principles described above.     2.4 Data Identifier     Data Identifiers are used in the barcode to indicate that the information following the Data Identifier is data of a certain attribute. The Data  Identifier enables the barcode reading program to recognize that the following information represents a certain type of attribute.     Data Identifiers to be used:

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1P    Material No.   2P   Revision (for packaging only)  S    Serial No.   Q   Quantity (for packaging only)  14D    Expiration date (for packaging only)   T   Batch (for packaging only)





     2.5 Expiration date     The format of the expiration date shall be definite and specified as follows: YYYYMMDD     2.6 Batch     The batch is an alphanumeric ident number with 10 digits, used to identify parts manufactured or shipped together. Is no batch provided on the  packing but required, a batch is initiated in the stock.     2.7 Shelf life     If a shelf life is defined for parts the shelf life has to be filed in calendar days. (365 days per year)     3 Reference documents     n.a.     4 Requirements     4.1 Identification of parts, components and systems     Non-serialized parts (including spare parts) and components are identified using a Material No. . If necessary, different statuses of a part,  component or system can be distinguished via the Revision.     Serialized parts, components and systems are identified using the combination of Material No. and Serial No. . In addition, the Revision may be  used to distinguish between different statuses of hardware.     4.2 Labeling of parts, components, systems and its packaging     In general, requirements with respect to labeling have to be defined for the product concerned. However, minimum requirements are specified in  order to allow proper identification throughout all processes involved. This chapter lists those minimum requirements.     For all material numbers specified by Siemens the parts and its packaging have to be labeled according to the requirements listed below. The label  depends on whether a part/component/system     · is serialized  · contains a revision level  · is classified as an IVK (Installed Volume Component)  · shall be handled by expiration date or batch     Siemens defines those requirements per individual Material No. .     4







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Color     Usually white label with black printing other colors are allowed as long as barcode/plain text  can be read         Barcode content    1P <Material No. >       S <Serial No.>         Additionally for packaging only    2P <product Revision>       Q <quantity of products in this packaging (numeric only), usually 1>              It is not allowed to label Revision and Quantity on product identification labels!              e.g.: 1P01234567 as barcode *) (1P) Model No. 01234567           S1001 as barcode *) (S) Serial No. 1001

   Each symbol structure with start and stop character including Data Identifier (e.g. 1P or  S), but without symbol check character.              No space allowed between Data Identifier and attribute.              It is not allowed to print any other information in the barcode fields described above.         Barcode type    Code 39 according to ISO/IEC 16388         Narrow element (bar or space)    Min. 0,17 mm         Ratio of wide element to narrow element    Min. 2,25 : 1         Barcode height    Min. 2 mm, typical 4mm         Plain text (below barcode)    (1P) Model No.: <Material No.>       (S) Serial No.: <Serial No.>         Additionally for packaging only    (2P) Revision: <product Revision>       (Q) Quantity: <quantity of products in this packaging (numeric only), usually 1>              It is not allowed to label Revision and Quantity on product identification labels!

   Data Identifier (e.g. 1P or S) in brackets in front of data element title (e.g. ''Model No.  or Serial No.) in plain text!              e.g.: (1P) Model No.: 01234567 *) (1p) Model No. 01234567       (S) Serial No.: 1001 *) (S) Serial No. 1001

   Note: Due to 21CFR1020.30 section e) the term Model No. shall be used instead of the  term Material No. in plain text on all labels.



It is not allowed to print any other information near the data fields described above. If any  other information is printed, it must be printed in a manner so that it can't be misinterpreted  as being part of the fields described above; this can be done by printing other information at  the very right side of the label.         Additionally for products only



For IVKs or System IVKs, the text IVK or SYSTEM IVK shall be printed on the very  right side of the label. It has to be ensured that this text can't be misinterpreted as being part  of the Serial No. ; this can be done by printing this text on a different level. [Siemens  Medical Solutions decides and specifies whether a product is an IVK or System IVK.]









Additionally for packing only    The Expiration date of parts with Shelf life is fixed below the quantity as following:       Expiration date: <date of expiration> YYYYMMDD

   For parts which require a Batch, the batch is fixed below the Expiration date as following:  AAAAAAAAAA              For a transition period the batch can also be fixed above the material number         Font    Universe, if not possible use similar font (e.g. Helvetica)

*) In case of limited space, it is possible to print the bar code next to (and not under) the clear text.     4.3 Spacing      Minimum distances are:





   5) Expiration date and 6) Batch can be printed in barcode additionally.

(A)    Horizontal distance from edge (quiet zone)   >5 mm  (B)    Vertical distance from edge   >2 mm  (C)    Vertical distance between printing areas   >1 mm

Legend:  a) printing area for barcode             b) printing area for plain text

For a transition period the batch can also be fixed above the material number     6





     5 Basic requirements for packaging     Especially for spare parts appropriate packaging are required for the global shipping process. Should those packaging contain wood, generally  non wood-packaging according IPPC (International Plant Protection Convention) shall be used, but fumigation of such packaging is not  allowed.     Packaging shall be designed in a suitable way to protect the packed good against transportation load according to IEC 60721-3-2 class's 2M2/2K4     International pictograms following the IEC 60601 series shall be used for parts which fall under specific restrictions for transport or storage.     The specification of packaging especially for spare parts is within the responsibility of the Business Unit responsible for the product.     6 Literature     ISO/IEC 16388 Information technology — Automatic identification and data capture techniques — Bar code symbology specifications — Code  39.     IEC 60721-3-2 Classification of environmental conditions — Part 3: Classification of groups of environmental parameters and their severities —  Section 2: Transportation     7 Transition and retrospective measures     n.a.     8 Changes to prior version     CR-No.: 2007-005  Changes to previous edition 04798372 AND 02S 03:     · Chapter 2: Reference document IEC 60721-3-2 added   · Chapter 5: Design of packaging changed     CR-No. 2006-008 (CR N06/0207)  Changes to previous edition 04798372 AND 02S 02:     · Title: Added: and basic requirements for packaging  · Chapter 3.4 Data Identifier for Expiration Date and Batch added  · Chapter 3.5 — 3.7: Completely new  · Chapter 4.2 Added: Expiration date and batch  · Chapter 4.3. Added: labeling of Expiration Date and Batch,  · Chapter 5: Completely new     CR-No. 2006-01, 2006-02  Changes to previous edition 4798372 AND 02S 01:     · Chapter 2, 4.2 : EN 800 replaced by ISO/IEC 16388  · Chapter 4.2 : general requirements at the beginning stated more clearly, footnote added     9 Attachments     n.a.     7 
Question: Highlight the parts (if any) of this contract related to Warranty Duration that should be reviewed by a lawyer. Details: What is the duration of any  warranty against defects or errors in technology, products, or services  provided under the contract?

Answer:
Notwithstanding Section 4.6.2 and any obligations according to law, for a period of 10 years following  Installation of a System, Accuray will provide to Customer, without charge, Safety Updates with respect to any hardware or  software included in the System.