Document:

Exhibit 10.23

 

***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.

 

[Execution Copy]

 

OPTION AND LICENSE AGREEMENT

 

This OPTION AND LICENSE AGREEMENT (this “Agreement”), effective as of January 28, 2013 (the “Effective Date”), is made by and between Alexion Pharmaceuticals, Inc., a Delaware corporation (“Alexion”), having a principal place of business at 352 Knotter Drive, Cheshire, Connecticut 06410, and Xencor, Inc., a Delaware corporation (“Xencor”), having a principal place of business at 111 West Lemon Avenue, Monrovia, California 91016.  Alexion and Xencor may each be referred to herein, individually, as a “Party” or, collectively, as the “Parties.”

 

BACKGROUND

 

A.                                    Xencor has developed certain proprietary technologies related to enhancing the biological properties of antibodies and protein molecules.

 

B.                                    Alexion is engaged in the discovery, research, development, and commercialization of pharmaceutical, biological and other products.

 

C.                                    Alexion desires to obtain from Xencor, and Xencor desires to grant to Alexion, (i) the exclusive right to conduct certain research activities with respect to incorporation of Xencor Fc Domains into Target Compounds and (ii) an option to practice an exclusive license to research, develop and commercialize Licensed Compounds and Licensed Products in the Field in the Territory (as such terms are defined below), subject to the terms and conditions set forth herein.

 

NOW THEREFORE, for and in consideration of the covenants, conditions, and undertakings hereinafter set forth, it is agreed by and between the Parties as follows:

 

ARTICLE 1

DEFINITIONS

 

As used in this Agreement, the following capitalized terms shall have the meanings indicated in this Article 1 below or elsewhere in this Agreement:

 

1.1                               “Acceptance” means, with respect to an Application, acceptance by the applicable Regulatory Authority of an Application; provided, that, acceptance will automatically be deemed to have occurred sixty days after such Application is filed with the applicable Regulatory Authority, unless such Regulatory Authority rejects such Application prior thereto.

 

1.2                               “Affiliate” means any entity that, directly or indirectly, controls, is controlled by or is under common control with a Party hereto.  For the purpose of this Section 1.2, “control” means the ownership or voting control of more than fifty percent (50%) of the outstanding voting securities or interest in capital or profits of an entity, or the right to direct or control the

 

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management or affairs of such entity, or the power to elect or appoint fifty percent (50%) or more of the members of the governing body of such entity.

 

1.3                               “Application” means any marketing authorization application or equivalent application, and all amendments and supplements thereto, filed with the applicable Regulatory Authority in a country or jurisdiction in the Territory (including any supra-national agency such as the EMA in the European Union), including a Biologics License Application as described in Title 21 of the United States Code of Federal Regulations, Part 601, et seq., or any equivalent application filed with the applicable Regulatory Authority in any other jurisdiction in the Territory.

 

1.4                               “Commercially Reasonable Efforts” means with respect to the efforts to be expended by Alexion with respect to a Commercial License, that level of efforts and resources, at the relevant point in time, that are of a substantially similar level of effort and resources expended for the development and commercialization of products that pharmaceutical companies of size and resources comparable to those of Alexion commonly exercise for a product of similar commercial potential at a similar stage in its lifecycle as a Licensed Product, taking into consideration all relevant factors at the time such efforts are expended.

 

1.5                               “Compound” means any Target Compound that incorporates any Xencor Fc Domain.

 

1.6                               “Control” means, with respect to inventions, discoveries, information, data or know-how or Patents, possession of the right (other than pursuant to this Agreement), whether arising by ownership, license, or other authorization, to grant a license or sublicense without breaching the terms of any agreement or other arrangement with, or violating the rights of any Third Party; “Controlled” and “Controlling” shall have their correlative meanings.

 

1.7                               “Fc Domain” means the Fc fragment of an antibody (meaning, e.g., IgG1 from residue 231 (or the analogous residue in any other IgG heavy chain) to the carboxy terminus thereof, where the sequence numbering is defined using the EU numbering system (Edelman, GM, et al., Proceedings of the National Academy of Sciences USA, vol. 63, p. 78, 1969)) as applied in the Kabat antibody sequence database, and any fragment or portion thereof, including naturally occurring fragments, naturally occurring variants of such fragments, and non-naturally occurring variants of such fragments.

 

1.8                               “Field” means the treatment, prevention or diagnosis of human diseases and disorders.

 

1.9                               “First Commercial Sale” means, with respect to a Product, the first sale to a Third Party of such Product in a given country following the receipt of Regulatory Approval for such Product in such country.

 

1.10                        “Governmental Authority” means any multi-national, federal, state, local, municipal, provincial or other governmental authority of any nature (including any department, agency, bureau, branch, office, commission, council, court or other tribunal).

 

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1.11                        “Information” means all technical and scientific know-how and information, pre-clinical and clinical trial results, computer programs, knowledge, technology, means, methods, processes, practices, formulas, techniques, procedures, technical assistance, designs, drawings, apparatus, written and oral representations of data, specifications, assembly procedures, schematics and other information of whatever nature and all other scientific, clinical, regulatory, marketing, financial and commercial information or data.

 

1.12                        “Initiation” means, with respect to any Phase 1 Trial, Phase 2 Trial or Phase 3 Trial, the first dosing of the first patient in such trial.

 

1.13                        “Major EU Country” means any of the following: England, France, Germany, Italy and/or Spain.

 

1.14                        “Net Sales” means monies received and other amounts collected by Alexion, its Affiliates and Sublicensees for sales of Licensed Products in the Territory by Alexion, its Affiliates and Sublicensees to Third Parties that are not Affiliates or Sublicensees of the selling party (unless such Affiliate or Sublicensee is the end user of such Licensed Product), less the following items, as allocable to Licensed Products (if not previously deducted in calculating the amount collected or in the monies received): [...***...].

 

1.15                        “Patents” means, in any country, (a) all patents (including, but not limited to, any inventor’s certificate, utility model, petty patent and design patent), including any reissue, re-examination, renewal or extension (including any supplementary protection certificate) of any patent, and any confirmation patent or patent of addition based on any patent, in such country; (b) patent applications, including any continuations, continuations-in-part, divisionals, provisionals, continued prosecution application, substitute applications, and any other patent application that claims priority from any patent.

 

1.16                        “Phase 1 Trial” means a human clinical trial in any country that would satisfy the requirements of 21 C.F.R. §312.21(a), as amended, or the comparable law in a country other than the United States.

 

1.17                        “Phase 2 Trial” means a human clinical trial in any country that would satisfy the requirements of 21 C.F.R. §312.21(b), as amended, or the comparable law in a country other than the United States; that is intended to support a preliminary determination as to whether a compound or product is safe for its intended use, and to provide preliminary information about such compound’s or product’s efficacy, in order to permit the design of further clinical trial(s).

 

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1.18                        “Phase 3 Trial” means a human clinical trial in any country that would satisfy the requirements of 21 C.F.R. §312.21(c), as amended, or the comparable law in a country other than the United States; that is intended as a pivotal efficacy and safety clinical trial; provided that if a Phase 2 Trial has not previously been completed, then a clinical trial shall not be deemed a “Phase 3 Trial” until the design of such clinical trial is acknowledged in writing by a Regulatory Authority (either prospectively or following completion of the clinical trial) to be sufficient for such clinical trial to be included as a pivotal efficacy and safety clinical trial in an Application.

 

1.19                        “Product” means, at a given time, any product Controlled or otherwise developed or commercialized by Alexion or any of its Affiliates or Sublicensees that contains or incorporates a Compound in any form or formulation, the making, using, selling, offering for sale or importing of which, but for the licenses, including the Commercial License, granted under this Agreement, would infringe a Valid Claim.

 

1.20                        “Regulatory Approval” means all approvals, licenses, registrations and authorizations of any governmental entity, including all pricing and, if required by the applicable Regulatory Authority, reimbursement approvals, that are necessary to market, sell and obtain reimbursement for a Product in a particular country.

 

1.21                        “Regulatory Authority” means, in a particular country or jurisdiction, any Governmental Authority that has the authority to regulate the manufacture, marketing, testing, pricing, or sale of drug products in such country or jurisdiction.

 

1.22                        “Research Term” means the period of time commencing on the Effective Date and continuing until the earlier to occur of (a) (i) the fifth anniversary of the Effective Date, or (ii) if Alexion exercises the Research Extension Option in accordance with this Agreement (including payment of the Research Extension Fee), the eighth anniversary of the Effective Date, and (b) termination of this Agreement.

 

1.23                        “Sublicensee” means any Third Party to whom Alexion has licensed or sublicensed any or all of the Xencor Technology.

 

1.24                        “Target” means each of any [...***...] including all variants and orthologs thereof, further including their respective fragments thereof, as exemplified (for illustrative purposes only) by [...***...].

 

1.25                        “Target Compound” means any of (a) any antibody that modulates and directly binds to a Target, (b) any molecule that modulates and directly binds to a Target or (c) any protein that contains a Target.

 

1.26                        “Territory” means worldwide.

 

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1.27                        “Third Party” means any entity other than Xencor or Alexion or an Affiliate of either of them.

 

1.28                        “U.S.” means the United States of America, including its territories and possessions.

 

1.29                        “Valid Claim” means a claim in an issued, unexpired patent included in the Xencor Patents, and which claim has not lapsed, been abandoned, been revoked or been held to be unpatentable, invalid or unenforceable by a decision of a court or other governmental agency or competent jurisdiction from which no appeal can be or is taken within the time allowed for appeal and which has not been admitted to be invalid or unenforceable through reissue, re-examination, disclaimer or otherwise.

 

1.30                        “Xencor Fc Domain” means any Fc Domain that is Controlled by Xencor during the Term and, when incorporated into a protein, is shown to or has been shown to enhance serum half-life or increase FcRn binding relative to a wild type Fc Domain.  Without limiting the foregoing, Xencor agrees that the Fc Domains that contain the following variants are “Xencor FC Domains” for purposes of this Agreement: [...***...].

 

1.31                        “Xencor Know-How” means all Information Controlled by Xencor on the Effective Date or during the Term that cover any Xencor Fc Domain to the extent reasonably necessary or useful to make, have made, use, sell, have sold, offer for sale or import any Compound in the Field in the Territory.

 

1.32                        “Xencor Patents” means all Patents Controlled by Xencor on the Effective Date or during the Term that claim or cover any Xencor Fc Domain to the extent reasonably necessary or useful to make, have made, use, sell, have sold, offer for sale or import any Compound in the Field in the Territory.  The Xencor Patents as of the Effective Date are listed in Exhibit 1.32 attached hereto.

 

1.33                        “Xencor Technology” means the Xencor Patents and Xencor Know-How.

 

ARTICLE 2

RESEARCH PROGRAM

 

2.1                               Conduct of the Research Program.  During the Research Term, Alexion (itself or with or through its Affiliates) shall conduct at its expense research activities, including performing human clinical trials (but subject to the limitations herein), relating to the incorporation of Xencor Fc Domains into Target Compounds (the “Research Program”); provided, however, that Alexion (and its Affiliates) shall not have the right to advance any Product beyond completion of one initial multi-dose human clinical trial without exercising a Commercial License with respect to such Product.  Alexion acknowledges that Xencor is not granting to Alexion any licenses under the Xencor Technology to conduct research activities other than those set forth herein.  The Research Program shall be conducted by or on behalf of Alexion and its Affiliates and Sublicensees in a good, scientific manner in compliance with all

 

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applicable laws and regulations and in accordance with the terms and conditions set forth in this Agreement.  Inventorship of inventions shall be determined in accordance with U.S. patent laws.  Alexion may perform any portion of the Research Program through one or more subcontractors; provided, however that Alexion shall remain responsible for the performance by its subcontractors and the compliance of its subcontractors with the provisions of this Agreement in connection with such performance.

 

2.2                               Reports.  During the Research Term, Alexion shall provide Xencor with an annual written summary of the results and progress of the Research Program, including any significant data and results in respect of Products.

 

2.3                               Research Term Extension.  Alexion shall have the right to extend the Research Term until the eighth anniversary of the Effective Date, by providing written notice thereof to Xencor and paying to Xencor the Research Term Extension Fee at any time prior to the fifth anniversary of the Effective Date.

 

ARTICLE 3

LICENSE AND OPTION

 

3.1                               Research License Grant to Alexion.  Subject to the terms and conditions of this Agreement, Xencor hereby grants to Alexion an exclusive (even as to Xencor) license, with a right to sublicense to Affiliates and subcontractors only, under the Xencor Technology to make and use Xencor Fc Domains for the purpose of incorporating Xencor Fc Domains into, and to evaluate, Target Compounds in the course of conducting the Research Program.  Alexion acknowledges that the license granted in this Section 3.1 shall not include any right or license to use the Xencor Technology for any purpose other than making and using Xencor Fc Domains to incorporate such Xencor Fc Domains into, and to evaluate, Target Compounds in the course of conducting the Research Program.

 

3.2                               Commercial License Option.

 

3.2.1                     Grant of Option.  Subject to the terms and conditions of this Agreement, Xencor hereby grants to Alexion the exclusive option, on a Target-by-Target basis (the “Option”) to practice a Commercial License (as defined below) with respect to any or all Targets, which Alexion may exercise at any time during the Research Term.

 

3.2.2                     Exercise of an Option.  Subject to the terms and conditions of this Agreement, Alexion may exercise an Option with respect to any or all Targets at any time during the Research Term by (a) sending written notice of such exercise (“Exercise Notice”) to Xencor, which exercise notice identifies the Target or Targets for which Alexion is exercising the Option, and (b) paying to Xencor the Option Fee for such Commercial License.  The exercise of an Option and the corresponding provisions of this Agreement that are triggered by the exercise of such Option shall become effective only upon payment in full of the Option Fee with respect to such Option.  At any time during the Research Term, an Option may be exercised, and the Commercial License practiced by Alexion, with respect to all Products that bind to or contain

 

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one or more Targets; provided, that Alexion pays the Option Fee with respect to each Target for which the Option is exercised as set forth in Article 5 below.

 

3.2.3                     Effect of Expiration or Termination of Research Term.  If Alexion does not exercise any Option during the Research Term, the Option and this Agreement shall terminate and be of no further force or effect.

 

3.3                               Commercial License.

 

3.3.1                     Commercial License Grant.  Subject to the terms and conditions of this Agreement, including without limitation Section 3.3.2, Xencor hereby grants to Alexion, an exclusive (even as to Xencor), worldwide, royalty-bearing license, including the right to sublicense in accordance with Section 3.4, under the Xencor Technology to research, develop, make, have made, use, sell, offer for sale, have sold and import Products that bind to or contain the Target(s) for which the Option is exercised (such Products for which the Option is exercised, the “Licensed Products”) in the Field in the Territory (the “Commercial License”).

 

3.3.2                     Right to Practice the Commercial License; Termination of the Commercial License.  Notwithstanding anything express or implied to the contrary herein, Alexion may not practice the Commercial License for a certain Product unless and until Alexion exercises the Option for the applicable Target with respect thereto in accordance with Section 3.2 and pays the applicable Option Fee.  On a Target by Target basis, if Alexion does not exercise the Option for a Target on or prior to the expiration or termination of the Research Term, then the Commercial License and Option with respect to such Target shall terminate and be of no further force and effect as of the earlier of the date of expiration or termination of the Research Term.

 

3.4                               Sublicense Rights.  Alexion may grant sublicenses under and within the scope of any Commercial License granted pursuant to Section 3.3.  Each sublicense granted by Alexion shall be consistent with all the terms and conditions of this Agreement, and subordinate thereto, and Alexion shall remain responsible to Xencor for all payments and royalties under any sublicense as if such events or sales were achieved or made by Alexion under this Agreement.  Within thirty days following execution of each sublicense agreement, Alexion shall provide Xencor with written notice of such sublicense and shall certify in such notice that the sublicense was granted in accordance with this Section 3.4.  In the event of any termination of this Agreement by Xencor pursuant to the terms hereof, all sublicenses granted by Alexion to Sublicensees pursuant to this Section 3.4 shall automatically become a direct license and obligation between Xencor and such Sublicensee with respect to the subject matter hereof with all rights of Alexion thereunder automatically becoming rights of Xencor (including all rights to receive payment) unless the Sublicensee is in material default under such sublicense at the time of termination of this Agreement; provided, that in no event shall Xencor have any obligations under such sublicense beyond the obligations of Xencor set forth in this Agreement unless otherwise agreed in writing by Xencor.

 

3.5                               No Implied Licenses.  Each Party acknowledges that the rights and licenses granted under this Article 3 and elsewhere in this Agreement are limited to the scope expressly granted.  Accordingly, except for the rights expressly granted under this Agreement, no right,

 

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title, or interest of any nature whatsoever is granted whether by implication, estoppel, reliance, or otherwise, by either Party to the other Party.  All rights with respect to Patents and other intellectual property rights that are not specifically granted herein are reserved to the owner thereof.  Without limiting the foregoing, Xencor reserves all rights to practice and use, and grant to Third Parties the right to practice and use, the Xencor Technology to incorporate Fc Domains into molecules other than Compounds or Products.

 

3.6                               Exclusivity.  Xencor will not, either itself or through a Third Party, (a) during the Research Term, grant to any Affiliate or Third Party a license under the Xencor Technology to research, develop, make, have made, use, sell, offer for sale, have sold or import Compounds or Products in the Field in the Territory and (b) during the Term, grant to any Affiliate or Third Party a license under the Xencor Technology to research, develop, make, have made, use, sell, offer for sale, have sold or import any Compounds for which the Option for a Commercial.  License with respect to the Target of such Compounds has been exercised in accordance with Section 3 or Licensed Products in the Field in the Territory.

 

ARTICLE 4

DEVELOPMENT AND COMMERCIALIZATION

 

4.1                               [Reserved].

 

4.2                               Diligence.  Subject to the terms and conditions of this Agreement, if Alexion exercises an Option in accordance with Section 3.2, then thereafter during the Term, with respect to each Target for which an Option is exercised, Alexion shall, at its expense, use Commercially Reasonable Efforts to develop and commercialize at least one Licensed Product that binds to or contains such Target in the Field in the Territory.

 

4.3                               Disclosure Regarding Alexion Efforts.  If Alexion exercises an Option in accordance with Section 3.2, then thereafter during the Term, Alexion shall provide annual written reports to Xencor summarizing the status of the development efforts of Alexion and its Affiliates and Sublicensees with respect to Licensed Products that bind to or contain the Target for which such Option was exercised.  Xencor’s right to receive such annual reports with respect to a Licensed Product shall terminate upon submission of the first Application in any of the United States, Europe or Japan for such Licensed Product.

 

ARTICLE 5

FEES AND ROYALTIES

 

5.1                               Upfront Fee.  Alexion shall pay to Xencor a non-refundable, non-creditable upfront fee equal to US$3,000,000 within fifteen days after the Effective Date.

 

5.2                               Research Term Extension Fee.  If Alexion elects to exercise the option to extend the Research Term to the eighth anniversary of the Effective Date pursuant to Section 2.3, Alexion shall pay to Xencor a non-creditable, non-refundable fee equal to US$[...***...],

 

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together with provision of the exercise notice, at any time prior to the fifth anniversary of the Effective Date.

 

5.3                               Annual Fee.  Alexion shall pay to Xencor a non-refundable, non-creditable annual fee equal to (a) US$[...***...] on or prior to each of the first, second, third and fourth anniversaries of the Effective Date, and (b) US$[...***...] if Alexion extends the Research Term pursuant to Section 2.3, on or prior to each of the fifth, sixth, and seventh anniversaries of the Effective Date.

 

5.4                               Option Exercise Fee.  If Alexion elects to exercise the Option for a particular Target pursuant to Section 3.2, Alexion shall pay to Xencor a non-creditable, non-refundable fee equal to US$[...***...] (the “Option Fee”) with respect to each Target for which the Option is exercised, together with provision of the Exercise Notice.  If Alexion exercises the Option with respect to more than one Target in a given Exercise Notice, Alexion shall pay the Option Fee with respect to each such Target.  If Alexion exercises the Option with respect to a Target and then subsequently exercises the Option with respect to another Target, Alexion shall pay the Option Fee for each such exercise.

 

5.5                               Milestones.

 

5.5.1                     Milestone Events.  Alexion shall provide written notice to Xencor within ten business days following the first occurrence of each of the milestone events set forth below with respect to a Product (in the case of Section 5.5.1(i)) or Licensed Product (whether such milestone is achieved by Alexion or any Affiliate or Sublicensee) for which a milestone payment is or may be due hereunder ([...***...]).  Subject to Section 5.5.3 below, within thirty days after the provision of such notice by Alexion, Alexion shall pay to Xencor the corresponding non-refundable, non-creditable milestone payment set forth below:

 

	
Milestone Event
    	
 
    	
Milestone Payment
    	
 
    
	
(i) [...***...]
    	
 
    	
US$
    	
[...***...]
    	
 
    
	
(ii) [...***...]
    	
 
    	
US$
    	
[...***...]
    	
 
    
	
(iii) [...***...]
    	
 
    	
US$
    	
[...***...]
    	
 
    
	
(iv) [...***...]
    	
 
    	
US$
    	
[...***...]
    	
 
    
	
(v) [...***...]
    	
 
    	
US$
    	
[...***...]
    	
 
    
	
(vi) [...***...]
    	
 
    	
US$
    	
[...***...]
    	
 
    
	
(vii) [...***...]
    	
 
    	
US$
    	
[...***...]
    	
 
    

 

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(viii) [...***...]
    	
 
    	
US$
    	
[...***...]
    	
 
    
	
(ix) [...***...]
    	
 
    	
US$
    	
[...***...]
    	
 
    
	
(x) [...***...]
    	
 
    	
US$
    	
[...***...]
    	
 
    
	
(xi) [...***...]
    	
 
    	
US$
    	
[...***...]
    	
 
    

 

5.5.2                     Milestones Payable for first Product for each Target.  Subject to Section 5.5.3, on a Target-by-Target basis the milestone payments set forth in Section 5.5.1 shall be payable one time for the first time such milestone event is achieved with respect to the first Product or Licensed Product for a particular Target to achieve such milestone event, regardless of the number of times such milestone event is achieved with respect to one or more Products or Licensed Products for a particular Target.  An aggregate of up to US$66,500,000 may be paid under Section 5.5.1 with respect to each Target.  In addition, notwithstanding anything to the contrary, on a Target-by-Target basis the milestone payment corresponding to the milestone event set forth in Section 5.5.1(i) shall be payable one time with respect to each Target when it is first achieved regardless of whether the Commercial License is exercised with respect to such Target at such time, subject to Section 5.5.3.

 

5.5.3                     [...***...].

 

5.6                               Royalties.  Alexion shall pay to Xencor a royalty equal to [...***...]% of Net Sales by Alexion, its Affiliates or Sublicensees, which may be paid directly by Alexion or an Affiliate of Alexion.  Royalties under this Section 5.6 shall be payable on a Licensed Product-by-Licensed Product and country-by-country basis during the Royalty Term for each Licensed Product in

 

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each country.  For the avoidance of doubt, no royalty is payable with respect to sales of Licensed Product in any country unless the sale of such Licensed Product in such country would, without the licenses granted under this Agreement, infringe a Valid Claim in such country at the time of sale.  The “Royalty Term” shall mean, with respect to a Licensed Product in a country, the period beginning on the date of First Commercial Sale of such Licensed Product in such country and expiring on the expiration date of the last-to-expire Valid Claim covering the sale of such Licensed Product in such country.  In no event shall Alexion have the right to offset, credit or otherwise reduce any royalties payable under this Agreement.

 

ARTICLE 6

PAYMENTS; BOOKS AND RECORDS

 

6.1                               Royalty Reports and Payments.  Royalties shall be calculated and reported for each calendar quarter and shall be paid within [...***...] after the end of each calendar quarter.  Each payment shall be accompanied by a report of Net Sales by Alexion, its Affiliates and Sublicensees which shall include [...***...].

 

6.2                               Payment Method.  All payments under this Agreement shall be made by bank wire transfer in immediately available funds to an account designated by the Xencor.  All amounts specified in this Agreement, and all payments made hereunder, are and shall be made in U.S. dollars.  Any payments due under this Agreement which are not paid by the date such payments are due under this Agreement (but excluding payments which are being disputed in good faith by Alexion), shall bear interest to the extent permitted by applicable law at the U.S. prime rate per annum quoted by The Wall Street Journal (U.S., Western Edition), or its successor, on the first business day after such payment is due, plus an additional [...***...], calculated on the number of days such payment is delinquent.  This Section 6.2 shall in no way limit any other remedies available to either Party.

 

6.3                               Currency Conversion.  Amounts payable to Xencor based on sales in currencies other than U.S. dollars shall be converted to U.S. dollars at the rate of exchange at the close of business on the date immediately prior to the date Alexion receives the amount.  The rate of exchange shall be the value of U.S. dollars calculated using Alexion’s then current internal foreign currency translation methodology actually used on a consistent basis in preparing its audited financial statements.

 

6.4                               Tax.  Xencor will pay any and all taxes levied on account of any payments made to it under this Agreement.  If any taxes are required to be withheld by Alexion, Alexion will (a) deduct such taxes from the payment made to Xencor, (b) timely pay the taxes to the proper taxing authority, and (c) send proof of payment to Xencor.

 

6.5                               Records; Audits.  During the Term and for a period of [...***...] thereafter, Alexion shall keep (and shall cause its Affiliates and Sublicensees to keep) complete and accurate records pertaining to the sale or other disposition of Licensed Products in sufficient

 

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detail to permit Xencor to confirm the accuracy of all payments due hereunder.  Xencor shall have the right to cause an independent, certified public accountant reasonably acceptable to Alexion to audit such records to confirm gross receipts, Net Sales and royalty payments for a period covering not more than the preceding [...***...].  Such audits may be exercised no more than once per calendar year during normal business hours upon reasonable prior written notice to Alexion.  No accounting period of Alexion shall be subject to audit more than one time by Xencor.  Adjustments shall be made by the parties to reflect the results of such audit.  Xencor shall bear the full cost of such audit unless such audit discloses an underpayment by Alexion of more than [...***...]% of the amount of royalty payments due under this Agreement, in which case, Alexion shall bear the full cost of such audit and shall promptly remit to Xencor the amount of any underpayment, plus interest calculated in accordance with Section 6.2.

 

ARTICLE 7

CONFIDENTIALITY

 

7.1                               Confidential Information.  Except to the extent expressly authorized by this Agreement or otherwise agreed in writing by the Parties, each Party agrees that, during the Term and for five (5) years thereafter, such Party shall keep confidential and shall not publish or otherwise disclose and shall not use for any purpose other than as expressly provided for in this Agreement any confidential or proprietary information furnished to it by or on behalf of the other party pursuant to this Agreement or the Confidentiality Agreement (collectively, “Confidential Information”).  Such Party (the “Receiving Party”) will maintain all Confidential Information of the other Party (the “Disclosing Party”) as confidential and will not disclose any such Confidential Information or use any such Confidential Information for any purpose, except (a) as expressly authorized by this Agreement, (b) as permitted by Section 7.2 or Section 7.3, or (c) to those of its and its Affiliates’ respective employees, agents, consultants, subcontractors and other representatives who require access to such Confidential Information to accomplish the purposes of this Agreement, provided that such persons are under obligations of confidentiality and non-use of the Confidential Information at least as stringent as those set forth in this Article 7.  The Receiving Party may use the Confidential Information only to the extent required to accomplish the purposes of this Agreement.  The Receiving Party will use at least the same standard of care as it uses to protect its own confidential information, but no less than reasonable care, to ensure that its and its Affiliates’ employees, agents, consultants, subcontractors and other representatives do not disclose or make any unauthorized use of the Confidential Information.  The Receiving Party will promptly notify the Disclosing Party upon discovery of any unauthorized use or disclosure of the Confidential Information.  For the avoidance of doubt, the terms of this Agreement and the existence of this Agreement is deemed “Confidential Information” of each Party.

 

7.2                               Authorized Disclosures.  The Receiving Party may disclose Confidential Information of the Disclosing Party as expressly permitted by this Agreement, or if and to the extent such disclosure is reasonably necessary in the following instances:

 

7.2.1                     filing or prosecuting Patents as permitted by this Agreement;

 

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7.2.2                     establishing or enforcing the Receiving Party’s rights under this Agreement;

 

7.2.3                     prosecuting or defending litigation as permitted by this Agreement;

 

7.2.4                     complying with a valid order of a court or other governmental body having jurisdiction or with applicable laws, rules and regulations; provided that the Receiving Party shall, except where impracticable or prohibited by law, give reasonable advance notice to the Disclosing Party of the required disclosure, and, at the Disclosing Party’s request and expense, cooperate with the Disclosing Party’s efforts to contest such required disclosure, to obtain a protective order preventing or limiting the disclosure or requiring that the Confidential Information so disclosed be used only for the purposes for which such disclosure is required, or to obtain other confidential treatment of the Confidential Information required to be disclosed.  In any event, the Receiving Party shall disclose only such Confidential Information as it is required by such order or applicable law, rule or regulation to disclose and shall only disclose such Confidential Information for the purpose and to the entity(ies) required by such order or applicable law, rule or regulation;

 

7.2.5                     in the case of Alexion, disclosure to actual or potential Sublicensees, provided, in each case, that any such Sublicensee has agreed in writing to be bound by obligations of confidentiality and non-use at least as stringent as those set forth in this Article 7, and that the Confidential Information so disclosed shall remain subject to this Article 7;

 

7.2.6                     disclosure of (i) a redacted form of this Agreement and/or (ii) a written summary of the terms of this Agreement (in each case of clauses (i) and (ii), but not any other Confidential Information) to actual or potential Third Party investors, funding sources or acquirers in connection with due diligence or similar investigations by such Third Parties, and in confidential financing documents, provided, in each case, that: (a) any such Third Party agrees in writing to be bound by reasonable obligations of confidentiality and non-use at least as stringent as those set forth in this Article 7, (b) Alexion’s company name, corporate address and any other information that could reasonably identify Alexion as the licensee under this Agreement or as a user of the Xencor Technology will be redacted or omitted from any disclosure, and (c) the Confidential Information so disclosed shall remain subject to this Article 7; and

 

7.2.7                     in addition to the authorized disclosures set forth in clauses 7.2.1 - 7.2.6, the Parties agree that Confidential Information shall not include:

 

(a)         information that is in the public domain at the time of disclosure hereunder or which subsequently comes within the public domain through no fault of or action by the Receiving Party;

 

(b)         information that is in the possession of the Receiving Party at the time of disclosure by the Disclosing Party hereunder, as evidenced by the Receiving Party’s prior written records;

 

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(c)          information that is obtained, after the date hereof, by the Receiving Party from any third party that is lawfully in possession of such information and not in violation of any contractual or legal obligation with respect to such information; and

 

(d)         information that is independently developed by the Receiving Party, after the date hereof, without the aid, application, use of or reference to information provided by the Disclosing Party, in each such case as evidenced by written records.

 

7.3                               Terms of this Agreement.  Each Party agrees not to disclose to any Third Party the terms of this Agreement without the prior written consent of the other Party, except as expressly permitted by Section 7.2.  Xencor and Alexion will not issue a press release announcing this Agreement, without the prior written consent of the other Party.  Thereafter, each Party may disclose the information contained in such press release without the need for further approval by the other Party.

 

ARTICLE 8

INTELLECTUAL PROPERTY

 

8.1                               Ownership.  Xencor shall at all times be and remain the sole and exclusive owner of any Xencor Fc Domain and Xencor Technology, subject only to the licenses granted to Alexion under Article 3.  Xencor acknowledges and agrees that nothing in this Section 8.1 limits, restricts or prohibits Alexion’s, its Affiliates’, or Sublicensees’ right to research, develop, make, have made, use, sell, offer for sale, have sold or import Products or Licensed Products pursuant to this Agreement and Xencor has no right, title or interest in any such Products or Licensed Products.

 

8.2                               Prosecution and Maintenance.  Xencor shall have the sole right, but not the obligation, at Xencor’s expense, to control and manage the preparation, filing, prosecution (including interferences, reissue proceedings and reexaminations) and maintenance of all Xencor Patents.  Alexion agrees to reasonably cooperate in the preparation, filing, prosecution and maintenance of Xencor Patents in the Territory under this Agreement and in the obtaining and maintenance of any patent extensions, supplementary protection certificates and the like with respect thereto.

 

8.3                               Enforcement and Defense.

 

8.3.1                     Notice.  Each Party shall promptly notify the other in writing of any alleged or threatened infringement of any Xencor Patent in the Field in the Territory of which they become aware.

 

8.3.2                     Enforcement and Defense.  Xencor shall have the sole right, but not the obligation (subject only to the rights of Alexion as set forth in this Section 8.3.2), to bring and control any action or proceeding with respect to infringement of any Xencor Patent, by competent and qualified patent litigation counsel of Xencor’s own choice. Alexion shall have the

 

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right to join, using its own counsel, any such action or proceeding involving a Competitive Product (as defined below); provided that, for clarity, Xencor shall maintain sole control over any such action or proceeding brought pursuant to this Section 8.3.2.  Any recovery received as a result of any action or proceeding brought by Xencor pursuant to this Section 8.3.2 shall be retained solely by Xencor, except that, to the extent that any such recovery is attributed to loss of sales of a Product(s) Controlled by Alexion, its Affiliates or Sublicensees, such recoveries shall be paid to Alexion (such amounts paid to Alexion, “Alexion Recoveries”).  Alexion Recoveries less all payments made by Alexion (or its Affiliates) to or on behalf of Xencor for reimbursement of legal fees and other expenses related to the applicable Alexion Recoveries shall be treated as Net Sales for purposes of royalty and sales milestone payment obligations pursuant to this Agreement.  With respect to any alleged infringement by a Third Party of a Xencor Patent as a result of the research, development, manufacture, use, sale, offer for sale or import of any product that contains or incorporates a Compound that binds to or contains the same Target as a Compound contained or incorporated (in any form or formulation) in a Product Controlled by Alexion or its Affiliates or Sublicensees and for which Alexion has exercised the Option (including payment of the applicable Option Fee) (any such Third Party product, a “Competitive Product”), Xencor shall timely and regularly confer with Alexion in good faith with respect to strategizing, preparing and presenting a patent enforcement action or proceeding against such Third Party and will consider all reasonable comments and recommendations of Alexion in connection therewith in good faith.  If, notwithstanding Xencor’s good faith consultation with Alexion, Xencor does not initiate and diligently prosecute an enforcement action or proceeding regarding infringement by a Third Party of a Xencor Patent as a result of the research, development, manufacture, use, offer for sale, sale or import of a Competitive Product within (a) [...***...] following the notice of alleged infringement pursuant to Section 8.3.1, or (b) [...***...] before the expiration of the statute of limitations, if any, set forth in the applicable laws and regulations for the filing of such action or proceeding, whichever comes first, and: (i) Alexion in good faith believes that (1) the research, development, manufacture, use, offer for sale, sale or import, as applicable, of the Competitive Product infringes a Xencor Patent (and Alexion acknowledges that, for clarity, any activity that falls within 271(e)(1) or another safe harbor under applicable law is not infringing activity) and (2) the failure to bring such an action or proceeding may result in a material diminution in value of the relevant Product (the “Affected Product”); (ii) neither Alexion nor its Affiliate nor its Sublicensee Controls or has the right to bring an enforcement action or proceeding with respect to any Patent (other than a Xencor Patent) that covers or claims the Competitive Product; and (iii) Alexion provides written notice of (i) and (ii) to Xencor (such notice, a “Notice of Enforcement”), then Xencor shall enforce the applicable Xencor Patent against such Third Party with respect to such Competitive Product using commercially reasonable efforts.  If, after delivery of a Notice of Enforcement, Xencor initiates a lawsuit to cause the cessation of the infringement by such Competitive Product, Xencor will use counsel selected by Xencor and reasonably acceptable to Alexion.  Xencor shall timely and regularly confer with Alexion with respect to strategizing, preparing and presenting any such action or proceeding and will consider all reasonable comments and recommendations of Alexion in connection therewith in good faith.  Alexion shall reimburse Xencor for all reasonable out-of-pocket expenses (including outside legal fees) incurred by Xencor in connection with any legal proceeding undertaken by Xencor as a result of the Notice of Enforcement to enforce the applicable Xencor Patent against such Third Party.  Alexion and

 

*** Confidential Treatment Requested

 

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Xencor agree to enter into a common interest agreement reasonably acceptable to the Parties in connection with any proceeding involving a Competitive Product.  Subject to the terms and conditions of this Agreement, Xencor shall have the sole right to settle or otherwise resolve any dispute with a Third Party involving the infringement of a Xencor Patent; provided that, in the case of any proceeding regarding infringement by a Third Party of a Xencor Patent as a result of the research, development, manufacture, use, offer for sale, sale or import of a Competitive Product only, such settlement or resolution does not, without Alexion’s prior written consent, (i) limit the rights of, or impose any obligation on, Alexion, its Affiliates or Sublicensees to market or sell Licensed Products, (ii) include a covenant by Xencor not to sue such Third Party or its Affiliates or Sublicensees, or (iii) require the payment of money by Alexion, its Affiliates or Sublicensees.

 

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ARTICLE 9

REPRESENTATIONS AND WARRANTIES

 

9.1                               Mutual Representations and Warranties.  Each party represents and warrants to the other, as of the Effective Date, that: (a) it is duly organized and validly existing under the laws of its jurisdiction of incorporation or formation, and has full corporate or other power and

 

*** Confidential Treatment Requested

 

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authority to enter into this Agreement and to carry out the provisions hereof; (b) it is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder, and the person or persons executing this Agreement on its behalf has been duly authorized to do so by all requisite corporate or partnership action; and (c) this Agreement is legally binding upon it, enforceable in accordance with its terms, and does not conflict with, breach or violate any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any law or regulation of any court, governmental body or administrative or other agency having jurisdiction over it.

 

9.2                               Xencor Representations and Warranties.  Xencor hereby represents and warrants to Alexion, as of the Effective Date, that: (a) Exhibit 1.32 attached hereto contains a true and complete list of the existing Xencor Patents; (b) Xencor is the sole owner of such listed Xencor Patents; (c) to Xencor’s knowledge, Xencor has disclosed in writing to Alexion (in form reasonably satisfactory to Alexion) a true and complete list of Third Party Patents of which Xencor is aware that are relevant to [...***...], with the understanding that the disclosure of one family member in a priority chain is sufficient to meet this representation and such disclosure shall be deemed to explicitly include the disclosure of all related patents and patent applications in the priority chain as well as all continuations, continuations-in-part, divisionals, reissues, reexaminations, inter partes reviews and oppositions, and all foreign equivalents, whether published or unpublished; (d) Xencor is not a party to any legal action, suit or proceeding relating to the Xencor Patents; (e) Xencor is not aware of any Patents or Information Controlled by Xencor, other than the Xencor Patents, that would be infringed or misappropriated as a result of the research, development, manufacture, sale or import of Xencor Fc Domains in the Territory; (f) Xencor has not received written notice that the practice of the inventions claimed by the Xencor Patents infringes the patent or other intellectual property rights of a Third Party; and (g) Xencor is not aware of any pending action, suit or proceeding claiming that the practice of the inventions claimed by the Xencor Patents infringes the patent or other intellectual property rights of a Third Party.  For clarity, all representations and warranties of Xencor in this Section 9.2 are made as of the Effective Date with respect to circumstances as they exist as of the Effective Date.

 

9.3                               Alexion Covenants.  Alexion covenants to Xencor that: (a) in the performance of its obligations and exercise of its rights under this Agreement, Alexion shall comply and shall cause its and its Affiliates’ employees and contractors to comply with all applicable laws, rules and regulations; and (b) Alexion is not debarred or disqualified under the United States Federal Food, Drug and Cosmetic Act or comparable applicable law, rule or regulation outside the U.S. in the Territory, and it does not, and will not during the Term, employ or use the services of any person or entity who is debarred or disqualified, in connection with activities relating to Compound or Product.  In the event that Alexion becomes aware of the debarment or disqualification or threatened debarment or disqualification of any person or entity providing services to Alexion, including Alexion itself and its Affiliates or Sublicensees, which directly or indirectly relate to activities under this Agreement, Xencor shall be promptly notified in writing and Alexion shall cease using any such person to perform any services under this Agreement.

 

9.4                               Disclaimer of Warranties.  Except as expressly set forth in this Agreement, THE TECHNOLOGY AND INTELLECTUAL PROPERTY RIGHTS PROVIDED BY EACH

 

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PARTY HEREUNDER ARE PROVIDED “AS IS,” AND EACH PARTY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE WARRANTIES OF DESIGN, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES, OR ARISING FROM A COURSE OF DEALING, USAGE OR TRADE PRACTICES.

 

9.5                               Limitation of Liability.  EXCEPT FOR LIABILITY FOR BREACH OF ARTICLE 7, NEITHER PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT OR ANY LICENSE GRANTED HEREUNDER; provided, however, that this Section 9.5 shall not limit either party’s indemnification obligations under Article 10.  For the avoidance of doubt, payments under Article 5 shall not be considered special, incidental, consequential or punitive damages.

 

ARTICLE 10

INDEMNIFICATION

 

10.1                        Indemnification by Alexion.  Alexion hereby agrees to save, defend, indemnify and hold harmless Xencor, its Affiliates and their respective officers, directors, employees, consultants and agents (the “Xencor Indemnitees”) from and against any and all losses, damages, liabilities, expenses and costs, including reasonable legal expense and attorneys’ fees (“Losses”), to which any Xencor Indemnitee may become subject as a result of any claim, demand, action or other proceeding by any Third Party to the extent such Losses arise out of (a) the research, development, manufacture, use, handling, storage, sale or other disposition of any Compound or Product by or on behalf of Alexion or any of its Affiliates or Sublicensees, (b) the gross negligence or willful misconduct of any Alexion Indemnitee (defined below), or (c) the breach by Alexion of any warranty, representation, covenant or agreement made by it in this Agreement; except, in each case, to the extent such Losses result from the negligence or willful misconduct of any Xencor Indemnitee or the breach by Xencor of any warranty, representation, covenant or agreement made by it in this Agreement, or from a claim by a Third Party that the research, development, manufacture, sale or import of a Licensed Product in the Territory infringes or misappropriates the Patents or Information Controlled by such Third Party due to the presence of a Xencor Fc Domain incorporated in the Licensed Product.

 

10.2                        Indemnification by Xencor.  Xencor hereby agrees to save, defend, indemnify and hold harmless Alexion, its Affiliates and Sublicensees and their respective officers, directors, employees, consultants and agents (the “Alexion Indemnitees”) from and against any and all Losses to which any Alexion Indemnitee may become subject as a result of any claim, demand, action or other proceeding by any Third Party to the extent such Losses arise out of (a) the gross negligence or willful misconduct of any Xencor Indemnitee, or (b) the breach by Xencor of any warranty, representation, covenant or agreement made by Xencor in this Agreement; in each case, except to the extent such Losses result from the negligence or willful misconduct of any Alexion Indemnitee or the breach by Alexion of any warranty, representation, covenant or agreement made by Alexion in this Agreement.

 

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10.3                        Procedure.  In the event a party seeks indemnification under Section 10.1 or 10.2, it shall inform the other party (the “Indemnifying Party”) of a claim as soon as reasonably practicable after such party (the “Indemnified Party”) receives notice of the claim (it being understood and agreed, however, that the failure by an Indemnified Party to give notice of a claim as provided in this Section 10.3 shall not relieve the Indemnifying Party of its indemnification obligation under this Agreement except and only to the extent that such Indemnifying Party is actually damaged as a result of such failure to give notice), shall permit the Indemnifying Party to assume direction and control of the defense of the claim (including the right to settle the claim solely for monetary consideration), and shall cooperate as requested (at the expense of the Indemnifying Party) in the defense of the claim.  The Indemnified Party shall not agree to any settlement of such action, suit, proceeding or claim without the prior written consent of the Indemnifying Party.  The Indemnifying Party shall not agree to any settlement of such action, suit, proceeding or claim or consent to any judgment in respect thereof that does not include a complete and unconditional release of the Indemnified Party from all liability with respect thereto, that imposes any liability or obligation on the Indemnified Party or that acknowledges fault by the Indemnified Party; in each case, without the prior written consent of the Indemnified Party.

 

10.4                        Insurance.  Alexion, at its own expense, shall maintain product liability and other appropriate insurance in an amount consistent with industry standards during the Term.  Alexion shall provide a certificate of insurance evidencing such coverage to Xencor upon request.

 

ARTICLE 11

TERM AND TERMINATION

 

11.1                        Term.  The term of this Agreement shall commence on the Effective Date and continue until (a) the end of the Research Term if Alexion has not exercised the Option with respect to any Commercial License in accordance with Section 3.2 by such date; or (b) if Alexion exercises the Option with respect to a Commercial License in accordance with Section 3.2, the expiration of the last Royalty Term, subject, in each case, to earlier termination pursuant to Section 11.2 (the “Term”).

 

11.2                        Termination.  A Party may terminate this Agreement for material breach of this Agreement by the other Party upon sixty days’ (or, in the case of non-payment breach, thirty days’) written notice specifying the nature of the breach, unless the breaching Party cures such breach within such sixty -day (or thirty-day, as applicable) period.  In addition, Xencor shall have the right to terminate this Agreement immediately upon written notice to Alexion, if Alexion, its Affiliate or Sublicensee directly, or through material assistance granted to a Third Party, commences any interference or opposition proceeding with respect to, or challenges the validity or enforceability of, any Xencor Patent; provided that Xencor may not terminate this Agreement if such action or assistance is required by law, regulation or statute.  Further, Alexion shall have the right to terminate this Agreement on a Target-by-Target basis upon ninety (90) days prior written notice to Xencor.

 

11.3                        Effects of Expiration or Termination.

 

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11.3.1              Upon full termination of this Agreement by either Party (excluding, for the avoidance of doubt, termination of this Agreement with respect to a particular Target), all rights and obligations of the parties hereunder (including, without limitation, the license granted by Xencor to Alexion hereunder and Xencor’s agreements under Section 3.6) shall terminate and be of no further force or effect.  In the event of any termination of this Agreement as to a particular Target, this Agreement (including, without limitation, the license granted by Xencor to Alexion hereunder with respect to such Target and Xencor’s agreements under Section 3.6 with respect to such Target) shall terminate solely with respect to such Target.

 

11.3.2              Upon expiration (but not earlier termination) of this Agreement, all licenses granted to Alexion hereunder that were in effect immediately prior to such expiration shall become fully-paid, royalty-free, irrevocable, and perpetual.

 

11.3.3              Within thirty days following the expiration or termination of this Agreement, each Party shall deliver to the other Party any and all Confidential Information of the other Party in its possession.

 

11.3.4              Neither expiration nor termination shall relieve either Party of any obligation accruing prior to such expiration or termination except that, in the case of expiration or termination of this Agreement during any Payment Suspension Period, all payment obligations that accrued but were not paid during such Payment Suspension Period pursuant to Section 8.3.2 shall be (i) with respect to Affected Products, automatically satisfied and discharged in full as of such expiration or termination and (ii) with respect to Licensed Products that are not Affected Products, automatically satisfied and discharged in an amount equal to fifty percent (50%) of such payment obligations as of such expiration or termination.  The obligations and rights of the parties under Sections 6.5, 9.4, 9.5, 11.3, 11.4 and 11.5 and Articles 1, 7, 10 (other than Section 10.4), 12 and 13 of this Agreement shall survive expiration or termination of this Agreement.

 

11.4                        Damages; Relief.  Termination of this Agreement shall not preclude either Party from claiming any other damages, compensation or relief that it may be entitled to hereunder.

 

11.5                        Bankruptcy Code.  All rights and licenses granted under or pursuant to this Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of Title 11 of the United States Code and other similar laws in any jurisdiction outside the U.S. (collectively, the “Bankruptcy Laws”), licenses of rights to be “intellectual property” as defined under the Bankruptcy Laws.  If a case is commenced during the Term by or against a Party under Bankruptcy Laws then, unless and until this Agreement is rejected as provided in such Bankruptcy Laws, such Party (in any capacity, including debtor-in-possession) and its successors and assigns (including a trustee) shall perform all of the obligations provided in this Agreement to be performed by such Party.  If a case is commenced during the Term by or against a Party under the Bankruptcy Laws, this Agreement is rejected as provided in the Bankruptcy Laws and the other Party elects to retain its rights hereunder as provided in the Bankruptcy Laws, then the Party subject to such case under the Bankruptcy Laws (in any capacity, including debtor-in-possession) and its successors and assigns (including a Title 11 trustee), shall provide to the other Party copies of all Information necessary for such other Party to prosecute, maintain and enjoy

 

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its rights under the terms of this Agreement promptly upon such other Party’s written request therefor.  All rights, powers and remedies of the non-bankrupt Party as provided herein are in addition to and not in substitution for any and all other rights, powers and remedies now or hereafter existing at law or in equity (including, without limitation, the Bankruptcy Laws) in the event of the commencement of a case by or against a Party under the Bankruptcy Laws.

 

ARTICLE 12

DISPUTE RESOLUTION

 

12.1                        Disputes.  If the Parties are unable to resolve any dispute or other matter arising out of or in connection with this Agreement, either Party may, by written notice to the other Party, have such dispute referred to the respective heads of Research and Development of the Parties, or such individuals as those heads may designate (provided such designees shall have a rank of vice president or higher and have decision-making authority), if the dispute refers to scientific matters relating to this Agreement and otherwise to the respective heads of Business Development and/or Licensing, or such individuals as those heads may designate (provided such designees shall have a rank of vice president or higher and have decision-making authority), for attempted resolution by good faith negotiations within thirty days after such notice is received (the “Initial Period”).  In such event, each Party shall cause its Research and Development heads or Business Development and/or Licensing heads or designees, as applicable, to meet face-to-face and be available to attempt to resolve such issue.  The Parties shall cooperate in an effort to limit the issues for consideration in such manner as narrowly as reasonably practicable in order to resolve the dispute.  If the heads of Research and Development or heads of Business Development and/or Licensing, as applicable, do not resolve such dispute within the Initial Period after notice is received, the dispute will be referred to the Chief Executive Officer of Xencor and either the Chief Executive Officer or an Executive Vice President of Alexion for attempted resolution by good faith negotiations within thirty days after the end of the Initial Period.  If the Chief Executive Officer of Xencor and Chief Executive Officer or Executive Vice President of Alexion are unable to resolve such dispute, then either Party may pursue all remedies available to such Party under law.

 

ARTICLE 13

MISCELLANEOUS

 

13.1                        Governing Law.  This Agreement and any dispute arising from the performance or breach hereof shall be (a) governed by and construed and enforced in accordance with, the laws of the State of Delaware, without reference to conflicts of laws principles, and (b) subject to the exclusive jurisdiction and venue of the Delaware state courts and the Federal courts located in Delaware, and the Parties hereby consent to the personal and exclusive jurisdiction and venue of these courts.

 

13.2                        Force Majeure.  Nonperformance of any Party (other than nonperformance of payment obligations) shall be excused to the extent that performance is rendered impossible by strike, fire, earthquake, flood, governmental acts or orders or restrictions, or any similar reason

 

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where failure to perform is beyond the reasonable control of the nonperforming Party.  In such event Alexion or Xencor, as the case may be, shall promptly notify the other Party of such inability and of the period for which such inability is anticipated to continue.  Without limiting the foregoing, the Party subject to such inability shall use commercially reasonable efforts to minimize the duration of any force majeure event.

 

13.3                        No Implied Waivers; Rights Cumulative.  No failure on the part of Alexion or Xencor to exercise and no delay in exercising any right under this Agreement, or provided by statute or at law or in equity or otherwise, shall impair, prejudice or constitute a waiver of any such right, nor shall any partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right.

 

13.4                        Independent Contractors.  Nothing contained in this Agreement is intended implicitly, or is to be construed, to constitute Alexion or Xencor as partners in the legal sense.  No Party shall have any express or implied right or authority to assume or create any obligations on behalf of or in the name of any other Party or to bind any other Party to any contract, agreement or undertaking with any Third Party.

 

13.5                        Notices.  All notices, requests and other communications hereunder shall be in writing and shall be personally delivered or sent by registered or certified mail, return receipt requested, postage prepaid; facsimile transmission (receipt verified); or express courier service (signature required), in each case to the respective address specified below, or such other address or fax number as may be specified in writing to the other Parties:

 

	
If   to Alexion:
    	
 
    	
Alexion   Pharmaceuticals, Inc.
    
	
 
    	
 
    	
352   Knotter Drive
    
	
 
    	
 
    	
Cheshire,   CT 06410
    
	
 
    	
 
    	
Attn:   Chief Legal Officer
    
	
 
    	
 
    	
Fax:   (203) 271-8198
    
	
 
    	
 
    	
 
    
	
If   to Xencor:
    	
 
    	
Xencor, Inc.
    
	
 
    	
 
    	
111   West Lemon Avenue
    
	
 
    	
 
    	
Monrovia,   CA 91016
    
	
 
    	
 
    	
Attn:   Chief Executive Officer
    
	
 
    	
 
    	
Fax:   (626) 305-0350
    
	
 
    
	
With a copy to (which shall not constitute   notice):
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Cooley   LLP
    
	
 
    	
 
    	
4401   Eastgate Mall
    
	
 
    	
 
    	
San   Diego, CA 92121-1909
    
	
 
    	
 
    	
Attn:   Tom Coll, Esq.
    
	
 
    	
 
    	
Fax:   (858) 550-6420
    

 

13.6                        Assignment.  This Agreement shall not be assignable by either Party to any Third Party without the prior written consent of the other Party; except that each Party may assign this

 

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Agreement, without the need to obtain the other Party’s consent, (a) to an entity that acquires substantially all of the business or assets of such Party pertaining to this Agreement, in each case whether by merger, transfer of assets, purchase of all outstanding shares or otherwise; provided that, intellectual property rights (including, without limitation, any Patents or Information) of the acquiring entity in such a transaction, if other than one of the Parties to this Agreement shall not be included in the technology licensed hereunder, or (b) to an Affiliate of such Party, provided that, in the case of such an assignment to an Affiliate, the assigning Party shall remain liable and responsible to the non-assigning Party hereto for the performance and observance of all such duties and obligations by such Affiliate.  Any assignment in contravention of the foregoing shall be void and of no effect.  Subject to the foregoing, this Agreement will be binding upon and will inure to the benefit of the Parties and their respective successors and assigns.  Any assignment of this Agreement in contravention of this Section 13.6 shall be null and void.

 

13.7                        Modification.  No amendment or modification of any provision of this Agreement shall be effective unless in writing signed by all Parties.  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 all Parties.

 

13.8                        Severability.  If any provision hereof should be held invalid, illegal or unenforceable in any jurisdiction, the Parties shall negotiate in good faith a valid, legal and enforceable substitute provision that most nearly reflects the original intent of the Parties and all other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in order to carry out the intentions of the Parties as nearly as may be possible.  Such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of such provision in any other jurisdiction.

 

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

 

13.10                 Entire Agreement.  This Agreement (including the Exhibits hereto) constitutes the entire agreement, both written and oral, with respect to the subject matter hereof, and supersedes all prior or contemporaneous understandings or agreements, whether written or oral, between Alexion and Xencor with respect to such subject matter.

 

13.11                 Interpretation.  The captions and headings to this Agreement are for convenience only, and are to be of no force or effect in construing or interpreting any of the provisions of this Agreement.  Unless specified to the contrary, references to Articles, Sections or Exhibits mean the particular Articles, Sections or Exhibits to this Agreement and references to this Agreement include all Exhibits hereto.  Unless context otherwise clearly requires, whenever used in this Agreement: (a) the words “include” or “including” shall be construed as incorporating, also, “but not limited to” or “without limitation;” (b) the word “day” or “year” shall mean a calendar day or year unless otherwise specified; (c) the words “hereof,” “herein,” “hereby” and derivative or similar words refer to this Agreement (including any Exhibits); and (d) the term “shall” means “will.”

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed and delivered in duplicate originals as of the Effective Date.

 

 

	
ALEXION   PHARMACEUTICALS, INC.
    	
 
    	
XENCOR, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   Leonard Bell
    	
 
    	
By:
    	
/s/   Bassil Dahiyat
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
Leonard   Bell
    	
 
    	
Name:
    	
Bassil   Dahiyat
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
Chief Executive Officer
    	
 
    	
Title:
    	
President and CEO
    

 

 

Exhibit 1.32

 

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*** Confidential Treatment Requested

 

 

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*** Confidential Treatment Requested

 

 

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*** Confidential Treatment RequestedExhibit 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 Know-How”
    	
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   Information-and Know-How”
    	
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 Know-How”
    	
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 “Xtend-TNF” 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 fed-batch 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 Know-How”

 

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 Information-and Know-How”

 

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 “Xtend-INF” or “XmAb6755”, as further laid down in detail in Appendix 1, expressed from the Material disclosed by XENCOR to BII and formulated either as bulk drug substance or in final dosage form as drug product, as the context requires.

 

1.34                        “Project”

 

shall mean the performance of the Services, including without limitation the Process development program for the Product.

 

1.35                        “Project Fees”

 

shall have the meaning specified in Section 3.1 hereof.

 

1.36                        “Project Manager”

 

shall have the meaning specified in Section 2.2.1 hereof.

 

1.37                        “Project Plan”

 

shall mean the plan describing the Services to be performed by BII under the Project, including the Project timeline and the Project Fees, attached to this Agreement as Appendix 2.

 

1.38                        “Project Team”

 

shall have the meaning specified in Section 2.2.2 hereof and at the Effective Date shall consist of the persons listed in Appendix 3.

 

1.39                        “QAA”

 

***Confidential Treatment Requested

 

8

 

shall mean the Quality (Assurance) Agreement entered into between the Parties simultaneously with this Agreement and attached hereto as Appendix 5.

 

1.40                        “Representatives”

 

shall have the meaning specified in Section 7.3 a hereof.

 

1.41                        “Service(s)”

 

shall mean those certain services performed by BII under this Agreement.

 

1.42                        “Specification(s)”

 

shall mean all the tests, analytical methods and/or limits, and the results thereof, as applicable, agreed by the Parties, within which the Product has to conform to be considered acceptable by XENCOR for clinical use set forth in Appendix 6. The Parties are in agreement, that in the first instance they will agree on preliminary specifications which shall then be fixed to final Specifications in accordance with Section 2.5.

 

1.43                        “Steering Committee”

 

shall have the meaning specified in Section 2.2.3 hereof.

 

1.44                        “Technology”

 

shall mean all cDNA, cell lines, cell banks, master cell banks, constructs, reagents, antibodies and/or other tangible materials, methods, techniques, processes, trade secrets, copyrights, know-how, data, documentation, regulatory submissions, specifications and other intellectual property of any kind (whether or not protectable under patent, trademark, copyright or similar laws).

 

1.45                        “Technology Access Fee”

 

is defined in Section 5.2.3.

 

1.46                        “Total Amount”

 

shall have the meaning specified in Section 3.1.2 hereof.

 

1.47                        “XENCOR Confidential Information and Know-How”

 

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.

 

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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

 

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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

 

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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 out-of-pocket 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[...***...] 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 [...***...], then, beginning from the later of [...***...] 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 [...***...] in one or more lump sum payments within [...***...] from the Due Date.

 

c.                                       [...***...] either [...***...], then [...***...].  For the avoidance of doubt, such obligations will become due as described in this Section 3.1.2, at any time [...***...], 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 [...***...] 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 non-performance 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.

 

***Confidential Treatment Requested

 

20

 

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.

 

***Confidential Treatment Requested

 

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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 non-compliance 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.

 

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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 non-compliance 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 Know-How, 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 non-compliance 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 non-compliance 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 non-use 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 Know-How (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 Know-How (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 Know-How 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 non-use shall only apply if the Confidential Information and Know-How 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 Know-How or parts thereof shall not apply in the event that the respective Confidential Information or and Know-How such parts thereof:

 

***Confidential Treatment Requested

 

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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 Know-How (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 Know-How, 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 Know-How 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 Know-How to XENCOR; except for a copy and/or sample of each material for documentation purposes only, which shall remain to the confidentiality and non-use 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

 

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Appendix 1:

 

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Appendix 2:

 

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***Confidential Treatment Requested

 

56

 

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***Confidential Treatment Requested

 

57

 

	
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***Confidential Treatment Requested

 

58

 

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59

 

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60

 

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61

 

	
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62

 

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63

 

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***Confidential Treatment Requested

 

64

 

Appendix 3:

 

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***Confidential Treatment Requested

 

65

 

Appendix 4:

 

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66

 

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67

 

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68

 

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69

 

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70

 

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71

 

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72

 

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73

 

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74

 

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75

 

Appendix 5

 

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76

 

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***Confidential Treatment Requested

 

77

 

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78

 

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***Confidential Treatment Requested

 

79

 

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80

 

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***Confidential Treatment Requested

 

81

 

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82

 

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83

 

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84

 

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85

 

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86

 

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***Confidential Treatment Requested

 

87

 

Exhibit 1

 

 

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***Confidential Treatment Requested

 

88

 

Exhibit 2

 

 

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***Confidential Treatment Requested

 

89

 

Exhibit 3

 

 

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***Confidential Treatment Requested

 

90

 

Exhibit 3

 

 

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***Confidential Treatment Requested

 

91

 

Exhibit 4

 

 

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***Confidential Treatment Requested

 

92

 

Exhibit 5

 

 

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***Confidential Treatment Requested

 

93

 

	
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***Confidential Treatment Requested

 

94

 

Exhibit 6

 

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***Confidential Treatment Requested

 

95

 

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***Confidential Treatment Requested

 

96

 

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***Confidential Treatment Requested

 

97

 

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***Confidential Treatment Requested

 

98

 

Appendix 6:

 

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***Confidential Treatment Requested

 

99

 

Appendix 7:

 

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***Confidential Treatment Requested

 

100

 

Appendix 8:

 

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***Confidential Treatment Requested

 

101

 

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***Confidential Treatment Requested

 

102

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00222-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00222-of-00352.parquet"}]]