Document:

Exhibit 10.17

 

FACTORING
AGREEMENT

 

This
Factoring Agreement (the “Agreement”) is made as of June 14, 2016, by and between CSNK Working Capital Finance Corp.
d/b/a Bay View Funding (“Buyer”) having a place of business at 2933 Bunker Hill Lane, Suite 210, Santa Clara, CA 95054-1152,
and Phunware, Inc., a Delaware corporation (“Seller”) having its principal place of business and chief executive office
at 7800 Shoal Credo Blvd, Suite 230S, Austin, TX 78757 with an additional address at 7800 Shoal Creek Blvd., Suite 210W, Austin,
TX 78757; 1209 Orange Street, Wilmington, DE 19801.

 

Section
1.DEFINITIONS. When used herein, the following terms shall have the following meanings:

 

		1.1	“Account
                                         Balance” shall mean, on any given day, the gross amount of all Purchased Receivables
                                         unpaid on that day.

 

		1.2	“Account
                                         Debtor” shall have the meaning set forth in the Uniform Commercial Code as
                                         enacted in the State of California (“UCC”) and shall include any person liable
                                         on any Receivable, including without limitation, any guarantor of the Receivable and
                                         any issuer of a letter of credit or banker’s acceptance.

 

		1.3	“ACH”
                                         shall mean the Automated Clearing House.

 

		1.4	“ACH
                                         Fee” shall mean $7.00 for all ACH charges incurred by Buyer.

 

		1.5	“Adjustments”
                                         shall mean all discounts, allowances, returns, disputes, counterclaims, offsets, defenses,
                                         rights of recoupment, rights of return, warranty claims, or short payments, asserted
                                         by or on behalf of any Account Debtor with respect to any Purchased Receivable.

 

		1.6	“Advance”
                                         shall have that meaning as set forth in Section 2.1 herein.

 

		1.7	“Advance
                                         Percentage” shall be eighty percent (80%).

 

		1.8	“Avoidance
                                         Claim” shall mean the assertion, complaint, judgment or otherwise against Buyer,
                                         that any payment Buyer received with respect to any Receivable, whether the amount related
                                         thereto was paid by the Account Debtor, the Seller, or on behalf of Seller or for its
                                         benefit, or any lien granted to Buyer is avoidable (or recoverable from Buyer) under
                                         the United States Bankruptcy Code; any other debtor relief statute, including but not
                                         limited to, preference claims, fraudulent transfer claims, or through receivership, assignment
                                         for the benefit of creditors or any equivalent recovery law, rule or regulation which
                                         relates to the adjustment of debtor and creditor relations.

 

		1.9	“Collections”
                                         shall mean all good funds received by Buyer from or on behalf of an Account Debtor with
                                         respect to Purchased Receivables.

 

		1.10	“Dispute”
                                         shall mean a dispute, claim, or defense of any kind whatsoever, whether valid or invalid,
                                         asserted by an Account Debtor, that may reduce the amount collectible by Buyer from art
                                         Account Debtor. Buyer is under no obligation to investigate the merits of any Dispute.

 

		1.11	“Early
                                         Termination Fee” shall have that meaning as set forth in Section 10 herein.

 

		1.12	“Event
                                         of Default” shall have that meaning as set forth in Section 9 herein.

 

		1.13	“Factoring
                                         Fee” shall have that meaning as set forth in Section 3.5 herein.

 

		1.14	“Initial
                                         Funding Date” shall mean the date in which Buyer makes the first purchase of
                                         any Receivable pursuant to this Agreement.

 

		1.15	“Insolvent”
                                         shall mean with respect to an Account Debtor that such Account Debtor has filed, or has
                                         had filed against it, any bankruptcy case, or has made an assignment for the benefit
                                         of creditors.

 

		1.16	“Invalid
                                         Invoice Fee” shall be Ten Percent (10%) of the face amount of any Purchased
                                         Receivable which violates Seller’s warranty in Section 6.1 herein.

 

		1.17	“Maximum
                                         Credit” shall have that meaning as set forth in Section 2.1 herein.

 

		1.18	“Misdirected
                                         Payment Fee” shall be Ten Percent (10%) of the face amount of any Purchased
                                         Receivable for which Seller violates the warranty set forth in Section 3.3 herein.

 

		1.19	“Missing
                                         Notation Fee” shall be Ten Percent (10%) of the face amount of any Purchased
                                         Receivable for which Seller violates the warranty set forth in Section 2.5 herein.

 

		1.20	“Obligations”
                                         shall mean the obligation to pay and perform when due all debts and all obligations,
                                         liabilities, covenants, agreements, guarantees, warranties and representations of Seller
                                         to Buyer, of any and every kind and nature, whether heretofore, now or hereafter owing,
                                         arising, due or payable from Seller to Buyer, howsoever created, incurred, acquired,
                                         arising or evidenced; whether primary, secondary, direct, absolute, contingent, fixed,
                                         secured, unsecured, or otherwise; whether as principal or guarantor; acquired by assignment,
                                         liquidated or unliquidated; certain or uncertain; determined or undetermined; due or
                                         to become du; as a result of present or future advances or otherwise; joint or individual;
                                         pursuant to or caused by Seller’s breach of this Agreement, or any other present
                                         or future agreement or instrument, or created by operation of law or otherwise; evidenced
                                         by a written instrument or oral; created dirtied), between Buyer and Seller or restitution
                                         claims owed by Seller to a third party and acquired by Buyer from such third party, monetary
                                         or nonmonetary.

 

    

     

    

 

		1.21	“Online
                                         Reporting Service” shall mean the system set up on buyer’s website where
                                         Seller provides Buyer with the pertinent data necessary for Buyer to purchase Receivables
                                         under this Agreement and otherwise administer this Agreement

 

		1.22	“Online
                                         Statement of Account” shall have that meaning as set forth in Section 3.1 herein.

 

		1.23	“Payment
                                         Period” shall be ninety (90) calendar days from an invoice date.

 

		1.24	“Purchased
                                         Receivables” shall mean all Receivables arising out of the invoices and other agreements
                                         identified on or delivered with any Schedule of Accounts delivered by Seller to Buyer
                                         which Buyer elects to purchase and for which Buyer makes an Advance.

 

		1.25	“Receivable”
                                         shall mean accounts, chattel paper, instruments, contract rights, documents, general
                                         intangibles, letters of credit, drafts, banker’s acceptances, and rights to payment,
                                         and all proceeds thereof.

 

		1.26	“Reconciliation
                                         Period” shall, unless otherwise notified by Buyer to Seller, mean a weekly calendar
                                         period.

 

		1.27	“Repurchased
                                         Receivable” than refer to a Purchased Receivable which the Seller has become obligated
                                         to Repurchase under Section 4.1 hereof.

 

		1.28	“Reserve”
                                         shall have that meaning as set forth in Section 2.4 herein.

 

		1.29	“Returned
                                         Check Fee“ Seller shall pay to Buyer a fee in the amount of $30.00 in the event
                                         a notice is received of a returned check for any payment processed on behalf of Seller.

 

		1.30	“Schedule
                                         of Accounts” shall mean a Bill of Sale signed by a representative of Seller which
                                         accurately identifies the Receivables which Buyer, at its election, may purchase, and
                                         includes for each such Receivable the correct amount owed by the Account Debtor, the
                                         name and address of the Account Debtor, the invoice number, and the invoice date.

 

		1.31	“Wire
                                         Fee” S15.95 for all domestic wire charges and $50.00 for all foreign wire charges
                                         incurred by Buyer.

 

		1.32	“Write
                                         Off Period” shall mean twelve (12) calendar months from the date Buyer purchases
                                         a Receivable.

 

		1.33	UCC
                                         Definitions: all other capitalized terms not otherwise defined herein shall have that
                                         meaning as set forth in the UCC as enacted in the State of California.

 

Section
2.PURCHASE AND SALE OF RECEIVABLES

 

		2.1	Acceptance
                                         of Receivables. Buyer shall have no obligation to purchase any Receivable listed
                                         on a Schedule of Accounts. Upon acceptance, Buyer shall pay to Seller the Advance Percentage
                                         of the face amount of each Receivable Buyer desires to purchase minus ACH Fee, Wire Fee,
                                         Repurchased Receivables, Adjustments and other Obligations which arc currently due under
                                         the Factoring Agreement. Such payment shall be the “Advance” with respect
                                         to such Receivable. The purchase price of any Receivables purchased hereunder shall be
                                         the sum of the Advance, plus any Reserve payable by Buyer to Seller relating to such
                                         Receivable. The aggregate amount of all outstanding Advances shall not at any time exceed
                                         the lesser of Three Million Dollars ($3,000,000) (the Maximum Credit) or an amount equal
                                         to the sum of all undisputed Purchased Receivables multiplied by the Advance Percentage.
                                         Seller shall not request and Buyer shall not make an Advance that would cause the resulting
                                         total of all Advances to exceed the foregoing limitation. In the event the aggregate
                                         outstanding Obligations shall at any time exceed the foregoing limitation, Seller shall
                                         immediately repay the Advance; in the amount of such excess.

 

		2.2	ACH
                                         Authorization. In order to facilitate the purchase of Receivables under this Agreement,
                                         and the payment of the Obligations, Seller irrevocably authorizes Buyer to initiate debits
                                         or credit; through the ACH or any other wire transfer system in effect.

 

		2.3	Effectiveness
                                         of Sale to Buyer. Effective upon Buyer’s payment of an Advance, and in consideration
                                         of the covenants of this Agreement, Seller will have absolutely sold, transferred and
                                         assigned to Buyer, all of Seller’s right, title and interest in and to each Purchased
                                         Receivable and all proceeds thereof

 

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		2.4	Establishment
                                         of a Reserve. Upon the purchase by Buyer of each Purchased Receivable, Buyer shall
                                         establish a Reserve. The Reserve shall be the amount by which the face amount of the
                                         Purchased Receivable exceeds the Advance or the Restive may be established from collections
                                         which Buyer may receive on any Account, Purchased Receivable, or Proceeds of any other
                                         Collateral (the “Reserve”). The Reserve shall be a book balance maintained
                                         on the records of Buyer and shall not be a segregated fund, and may be accumulated by
                                         Buyer, or released to Seiler, in any amount, in Buyer’s sole discretion. In order
                                         to facilitate the payment and performance of all Obligations, Buyer may, at any time,
                                         in its sole discretion: (a) adjust the Reserve upward or downward; or (b) pay into the
                                         Reserve collections received on any Account, Purchased Receivable, or the Proceeds of
                                         any other Collateral. Buyer’s maintenance of the Reserve shall not vest the Seller
                                         with any right title, or interest therein as it is understood that the Reserve is an
                                         account established to facilitate the payment and performance of all Obligations. Buyer
                                         in its discretion may increase the Reserve to account for any potential Avoidance

 

		2.5	Offer
                                         to Sell Receivables. Seller may, on the terms provided herein, from time to time
                                         factor, sell and assign to Buyer, Receivables acceptable to Buyer, in its sole discretion,
                                         at a discount below face value. Seller will notify each Account Debtor of a Receivable
                                         purchased by Buyer that all payments thereon must be made only to Buyer. Seller shall
                                         deliver to Buyer a signed Schedule of Accounts along with copies of invoices and purchase
                                         orders, contracts, and proof of delivery or completion of service, in a form acceptable
                                         to Buyer, in its sole discretion, with respect to any Receivable for which a request
                                         for purchase is made. Buyer shall be entitled to rely on all of the information provided
                                         by Seller to Buyer on the Schedule of Accounts and to rely on the signature on any Schedule
                                         of Accounts as an authorized authentication by Seller. Each invoice shall bear a notice,
                                         in form satisfactory to Buyer, that it has been sold and assigned to and is payable only
                                         to Buyer. Seller’s failure to include such notice on the invoice shall result in
                                         the payment of the Missing Notation Fee as liquidated damages, as such damages shall
                                         be difficult to calculate or ascertain.

 

Section
3.COLLECTION& CHARGES AND REMITTANCES

 

		3.1	Accounting.
                                         Seller shall immediately upon sale of Receivables to Buyer, make proper entries on its
                                         books and records disclosing the sale thereof to Buyer. Seller will immediately furnish
                                         Buyer financial statements, tax records and all other information as requested by Buyer.
                                         Buyer shall post all of Seller’s account activity on Buyer’s website, which
                                         shall constitute Seller’s Online Statement of Account. Buyer will not likely send
                                         Seller any hard copies of any of the activities which constitute Seller’s Online
                                         Statement of Account. Provided that there is no Event of Default, Buyer shall provide
                                         Seller with continuous access to Seller to view the Online Statement of Account. Seller
                                         shall be solely responsible for checking its Online Statement of Account. If Seller disputes
                                         any entry on the Online Statement of Account it shall, within thirty (30) days after
                                         the first posting of the event, send to Buyer a written exception to such event. Unless
                                         Buyer receives a timely written exception to the activity posted to the Online Statement
                                         of Account, within thirty (30) days after it is first posted, the Online Statement of
                                         Account shall become an account stated and be deemed accepted by Seller and shall be
                                         conclusive and binding upon the Seller.

 

		3.2	Audit
                                         Fees. Buyer or its designee may conduct examinations of the Collateral and Seller’s
                                         operations, unless an Event of Default has occurred and is continuing, in which event
                                         the number of audits conducted will be in Buyer’s reasonable discretion. Seller
                                         shall pay Buyer audit fees not to exceed 1,000.00 per day plus expenses per audit. Audit
                                         fees shall be payable upon demand by Buyer.

 

		3.3	Collections.
                                         All Collections will go directly to Buyer and Buyer shall apply all Collections to Seller’s
                                         Obligations hereunder in such order and manner as Buyer may determine in its sole discretion.
                                         Seller will bold in trust and safekeeping as the sole property of Buyer, and immediately
                                         turn over to Buyer, in identical form received, any payment on a Purchased Receivable,
                                         or Receivable assigned to Buyer under this Agreement, that comes into Seller’s
                                         possession. In the event Seller comes into possession of a remittance comprising payments
                                         of both a Purchased Receivable and Receivable which has not been purchased by Buyer,
                                         Seller shall hold same in accordance with the provisions set forth above and immediately
                                         turn same over to Buyer, in identical form received. Upon collection of such item and
                                         provided there is no Event of Default, Buyer shall remit to Seller its portion thereof.
                                         Seller’s failure to comply with its duties under this Section shall result in the
                                         imposition of the Misdirected Payment Fee as liquidated damages, as such damages shall
                                         be difficult to calculate or ascertain. Seller agrees to indemnify and save Buyer harmless
                                         from and against any and all claims, loss, costs and expenses caused by or arising out
                                         of the Receivables or any attempt by Buyer to collect same or resolve any Dispute.

 

		3.4	Crediting
                                         of Payments. For purposes of determining availability under this Agreement, payments
                                         on Purchased Receivables and other payments with respect to the collateral and Obligations
                                         will be credited to the Purchased Receivables of Seller upon the date of Buyer’s
                                         receipt of advice from Buyer’s bank that such payments have been credited to Buyer’s
                                         account or in the case of payments received directly in kind by Buyer, upon the date
                                         of Buyer’s deposit thereof at Buyer’s bank, subject in either case to final
                                         payment and collection. Solely for the purpose of calculating fees under this Agreement,
                                         payments on Purchased Receivables and other payments with respect to collateral and Obligations
                                         shall be deemed received by Buyer three (3) business days after the date of Buyer’s
                                         receipt of advice from Buyer’s bank that such payments have been credited to Buyer’s
                                         account or in the case of payments received directly in kind by Buyer, three (3) business
                                         days after the date of Buyer’s deposit thereof at Buyer’s bank, subject in
                                         either case to final payment and collection.

 

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		3.5	Factoring
                                         Fee. Seller shall pay to Buyer upon purchase of Receivables by Buyer, a Factoring
                                         Fee (“Factoring Fee”), calculated by taking one and eight-tenths of one percent
                                         (1.80%) of the gross face value of a Purchased Receivable for the first thirty (30) day
                                         period from the date said Purchased Receivable is first purchased by Buyer, and a Factoring
                                         Fee of sixty-five hundredths of one percent (0.65%) per ten (10) days thereafter (“Fee
                                         Period”) until the date said Purchased Receivable is paid in full or otherwise
                                         repurchased by Seller or otherwise written off by Buyer within the Write Off Period.

 

		3.5.1	Seller
                                         and Buyer acknowledge and agree that the sale of accounts contemplated and covered hereby
                                         are fully intended by the parties hereto as true sales governed by the provisions of
                                         Section 306.103 of the Texas Finance Code and Section 9.109(c) of the Texas Business
                                         and Commerce Code, as each may be amended from time to time, and, accordingly, legal
                                         and equitable title in all of Seller’s accounts sold to and purchased by Buyer
                                         from time to time hereunder will pass to Buyer.

 

		3.6	Invalid
                                         Invoice Fee. Seller shall pay Buyer the Invalid Invoice Fee immediately upon its
                                         accrual.

 

		3.7	Misdirected
                                         Payment Fee. Seller shall pay Buyer the Misdirected Payment Fee immediately upon
                                         its accrual.

 

		3.8	Missing
                                         Notation Fee. Seller shall pay Buyer the Missing Notation Fee immediately upon its
                                         accrual.

 

		3.9	Monthly
                                         Minimum Fee. Buyer would not have entered into this Agreement and agreed to provide
                                         Seller with the factoring arrangements hereunder unless Seller guaranteed Buyer that
                                         the sum of the Finance and Factoring Fees paid to Buyer in each month would be at least
                                         one half of one percent (0.50%) of the Maximum Credit (the “Monthly Minimum Fee’).
                                         In the event the aggregate Finance and Factoring Fees paid during any month is less than
                                         the Monthly Minimum Fee, then Seller shall pay to Buyer the amount of any deficiency
                                         (the “Supplemental Fee”), which shall be in addition to any other fees payable
                                         under this agreement. The Supplemental Fee, if any, for any month shall be calculated
                                         and due and payable on the first business day of the succeeding month and shall be payable
                                         for each month during the current Term of this Agreement regardless of whether this Agreement
                                         is terminated prior to the expiration of the then current term.

 

		3.10	Refund
                                         to Seller. Provided that there does not then exist an Event of Default, as defined
                                         in Section 9, or any event or condition that with notice, lapse of time or otherwise
                                         would constitute an Event of Default, Buyer shall refund to Seller, the amount, if any,
                                         which Buyer owes to Seller at the end of the Reconciliation Period according to the accounting
                                         prepared by Buyer for that Reconciliation Period (the “Refund”). The Refund
                                         shall be an amount equal to:

 

		3.10.1	The
                                         Reserve as of the beginning of that Reconciliation Period, plus

 

		3.10.2	The
                                         Reserve created for each Purchased Receivable paid during that Reconciliation Period,
                                         minus

 

		3.10.3	The
                                         Reserve created for each Repurchased Receivable, minus

 

		3.10.4	The
                                         total for that Reconciliation Period of

 

		3.10.4.1	Factoring
                                         Fee

 

		3.10.4.2	Adjustments
                                         and/or reserves for Avoidance Claims;

 

		3.10.4.3	Repurchased
                                         Receivables, to the extent Buyer has agreed to accept payment thereof by deduction from
                                         the Refund; and

 

		3.10.4.4	The
                                         Reserve for the Account Balance as of the first day of the following Reconciliation Period.

 

		3.10.4.5	In
                                         the event the formula set forth in this Section results in an amount due to Buyer from
                                         Seller, Seller shall immediately make such payment to Buyer or, in Buyer’s sole
                                         discretion, assign additional Receivables to Buyer.

 

		3.11	Standards
                                         Regarding Collections. Buyer’s collection activities with respect to any Receivable,
                                         whether or not a Dispute exists, does not obligate Buyer to engage a collection agency
                                         or commence a legal action to collect any Receivable. Seller acknowledges that Buyer
                                         is not a collection agency and does not provide debt collection services to Seller. If
                                         a Receivable is not paid, for any reason, Buyer, in its sole discretion may engage a
                                         collection agency, attorney or other service provider to collect the Receivable and any
                                         fees and costs associated therewith shall constitute part of the Obligations. Any actions
                                         which Buyer may take pursuant to this section, in its sole discretion, shall not alter
                                         Seller’s Obligations to repurchase any Receivable pursuant to Section 4 herein.

 

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Section
4.RECOURSE AND REPURCHASE OBLIGATIONS

 

		4.1	Seller’s
                                         Agreement to Repurchase. Seller agrees to pay to Buyer on demand, and repurchase
                                         in the full face amount, or any unpaid portion of, any Purchased Receivable:

 

		4.1.1	Which
                                         remains unpaid for the Payment Period;

 

		4.1.2	With
                                         respect to which there has been any breach of warranty or representation set forth in
                                         Section 6 hereof or any breach of any covenant contained in this Agreement; or

 

		4.1.3	With
                                         respect to which the Account Debtor asserts any Dispute.

 

Section
5.POWER OF ATTORNEY. Seller grants to Buyer an irrevocable power of attorney coupled with an interest authorizing
and permitting Buyer (acting through any of its employees, attorneys or agents) at any time, at its option but without obligation,
with or without notice to Seller, and at Seller’s sole expense, to do any or all of the following, in Seller’s name
or otherwise (a) Execute on behalf of Seller any document that Buyer may, in its sole discretion, deem advisable in order to perfect,
maintain or improve Buyer’s security interests in the Collateral or other real or personal property intended to constitute
Collateral, or in order to exercise a right of Seller or Buyer, or in order to fully consummate all the transactions contemplated
under this Agreement, and all other present and future agreements; (b) At any time after the occurrence of an Event of Default,
execute on behalf of Seller any document exercising, transferring or assigning any option to purchase, sell or otherwise dispose
of or to lease (as lessor or lessee) any real or personal property; (c) Execute on behalf of Seller, any invoices relating to
any Receivable, any draft against any Account Debtor and any notice to any Account Debtor, any proof of claim in bankruptcy, voting
rights in any bankruptcy case, any Notice of Lien, claim of mechanic’s, materialman’s or other lien, or assignment
of satisfaction of mechanic’s, materialman’s or other lien; (d) Take control in any manner of any cash or non-cash
items of payment or proceeds of Collateral; endorse the name of Seller upon any instruments, notes, acceptances, checks, drafts,
money orders, bills of lading, freight bills, chattel paper or other documents, evidence of payment or Collateral that may come
into Buyer’s possession; (e) Upon the occurrence of any Event of Default, to receive and open all mail addressed to Seller;
and, in the exercise of such right, Buyer shall have the right, in the name of Seller, to notify the Post Office authorities to
change the address for the delivery of mail addressed to Seller to such other address as Buyer may designate including, but not
limited to, Buyer’s own address; Buyer shall turn over to Seller all of such mail not relating to the Collateral; such right
to redirect mail granted to Buyer is irrevocable and Seller shall not have the right to notify the Post Office to change the address
for delivery after Buyer has exercised such right; (f) Upon the occurrence of any Event of Default, to direct any financial institution
which is a participant with Buyer in extensions of credit to or for the benefit of Seller, or which is the institution with which
any deposit account is maintained, to pay to Buyer all monies on deposit by Seller with said financial institution which are payable
by said financial institution to Seller, regardless of any loss of interest, charge or penalty as a result of payment before maturity;
(g) Endorse all checks and other forms of remittances received by Buyer “Pay to the Order of Bay View Funding,” or
in such other manner as Buyer may designate; (h) Pay, contest or settle any lien, charge, encumbrance, security interest and adverse
claim in or to any of the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the
same; (i) Grant extensions of time to pay, compromise claims and settle Receivables and the like for less than face value and
execute all releases and other documents in connection therewith; (j) Pay any sums required on account of Seller’s taxes
or to secure the release of any liens therefore, or both; (k) Settle and adjust, and give releases of, any insurance claim that
relates to any of the Collateral and obtain payment therefore, and make all determinations and decisions with respect to any such
policy of insurance and endorse Seller’s name on any check, draft, instrument or other item of payment or the proceeds of
such policies of insurance; (l) Instruct any accountant or other third party having custody or control of any books or records
belonging to, or relating to, Seller to give Buyer the same rights of access and other rights with respect thereto as Buyer has
under Section 6.2.9 of this Agreement; and (m) Take any action or pay any sum required of Seller pursuant to this Agreement, and
any other present or future agreements. Any and all sums paid and any and all costs expenses, liabilities, obligations and attorneys’
fees incurred by Buyer with respect to the foregoing shall be added to and become part of the Obligations and shall be payable
on demand. In no event shall Buyer’s rights under the foregoing power of attorney or any of Buyer’s other rights under
this Agreement be deemed to indicate that Buyer is in control of the business, management of properties of Seller.

 

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Section
6.SELLER’S WARRANTIES REPRESENTATIONS AND COVENANTS.

 

		6.1	Receivables’
                                         Warranties Representations and Covenants. To induce Buyer to buy Receivables and
                                         to render its services to Seller, and with full knowledge that the truth and accuracy
                                         of the following are being relied upon by the Buyer in determining whether to accept
                                         Receivables as Purchased Receivables, Seller represents, warrants, covenants and agrees,
                                         with respect to each Schedule of Accounts delivered to Buyer and each Receivable described
                                         therein, that:

 

		6.1.1	Seller
                                         is the absolute owner of each Receivable set Forth in the Schedule of Accounts and has
                                         full legal right to sell, transfer and assign such Receivables;

 

		6.1.2	The
                                         correct face amount of each Receivable is as set forth in the Schedule of Accounts and
                                         is not in Dispute;

 

		6.1.3	The
                                         payment of each Receivable is not contingent upon the fulfillment of any obligation or
                                         contract, past or future, and any and all obligations required of the Seller have been
                                         fulfilled as of the date of the Schedule of Accounts;

 

		6.1.4	Each
                                         Receivable set forth on the Schedule of Accounts is based on the actual sale and delivery
                                         of goods and/or services actually rendered on terms not to exceed thirty (30) days, does
                                         not represent a sale to a parent, subsidiary or affiliate of Seller, is presently due
                                         and owing to Seller, is not past due or in default, has not been previously sold, assigned,
                                         transferred, or pledged, is not a consignment sale or bill and hold transaction, and
                                         is free of any and all liens, security interests and encumbrances other than liens, security
                                         interests or encumbrances in favor of Buyer or any other division of or affiliate of
                                         Buyer;

 

		6.1.5	There
                                         are no defenses, offsets, or counterclaims against any of the Purchased Receivables,
                                         and no agreement has been made under which the Account Debtor may claim any deduction
                                         or discount, except as otherwise stated in the Schedule of Accounts;

 

		6.1.6	At
                                         the time that Buyer makes an Advance relating to a Receivable, the Account Debtors set
                                         forth in the Schedule of Accounts, are then not insolvent and Seller has no knowledge
                                         that the Account Debtors are insolvent or may become insolvent within the Payment Period;

 

		6.1.7	Seller
                                         shall not take or permit any action to countermand notification to Account Debtors of
                                         Buyer’s ownership of Purchased Receivables.

 

		6.1.8	Each
                                         Receivable shall be set forth in an invoice or written agreement subject to Buyer’s
                                         approval, and all contractual terms between Seller and the Account Debtor have been fully
                                         disclosed to Buyer.

 

		6.1.9	Seller’s
                                         failure to comply with the warranty in this Section shall result in the imposition of
                                         the Invalid Invoice Fee as liquidated damages as such damages shall be difficult to calculate
                                         or ascertain.

 

		6.2	Additional
                                         Warranties Representations and Covenants. In addition to the foregoing warranties,
                                         representations and covenants, to induce Buyer to buy Receivables and to render its services
                                         to Seller, Seller hereby represents, warrants, covenants and agrees that:

 

		6.2.1	Seller
                                         will not assign, transfer, sell or grant any security interest in any Collateral to any
                                         other party, without Buyer’s prior written consent;

 

		6.2.2	The
                                         Seller’s name, form of organization, place of business and the place where the
                                         records concerning all receivables herein referred to are kept is set forth at the beginning
                                         of this Agreement, and Seller will give Buyer thirty (30) days advance notice in writing
                                         if such name, organization, place of business or record keeping is to be changed or a
                                         new place of business or record keeping is to be added and shall execute any documents
                                         necessary to perfect Buyer’s interest in Purchased Receivables and the Collateral;

 

		6.2.3	Seller
                                         shall pay all of its gross payroll for employees, and all federal and state taxes, as
                                         and when due, including, without limitation, all payroll and withholding taxes and state
                                         sales taxes;

 

		6.2.4	Seller
                                         has not, as of the time Seller delivers to Buyer a Schedule of Accounts, or as of the
                                         time Seller accepts any Advance from Buyer, filed a voluntary petition for relief under
                                         the United States Bankruptcy Code or had filed against it an involuntary petition for
                                         relief;

 

		6.2.5	Seller,
                                         if a corporation, is duly incorporated, at all times, in good standing under the laws
                                         of the State of Delaware, and is duly qualified in all States where such qualification
                                         is required. Seller has all required licenses to operate its business and transacts business
                                         under no trade names or trade styles other than Simplikate Systems LLC; Senddroid; Tapir;
                                         30 Second Software, Inc.; Phuneware Inc.

 

		6.2.6	Seller
                                         is duly authorized to enter into this Agreement and to grant the security interest in
                                         the Collateral.

 

		6.2.7	Seller
                                         is now, and at all times hereafter, the sole and lawful owner of the Collateral, and
                                         with the security interest granted to Buyer, the Collateral shall be free and clear of
                                         any claims, liens, encumbrances or other interests therein.

 

    -6-

     

    

 

		6.2.8	All
                                         documents, reports, or other writings submitted to Buyer in connection with this Agreement
                                         shall be true and correct.

 

		6.2.9	Seller
                                         shall provide immediate access to Buyer to its business premises or any location where
                                         any of the Collateral is stored, in order to inspect the Seller’s business operations,
                                         Collateral or any books, records or computer data which relates to or contains any information
                                         concerning the Collateral.

 

		6.2.10	There
                                         is no fact which Seller has not disclosed to Buyer in writing which could materially
                                         adversely affect the Collateral, or business or financial condition of the Seller, or
                                         which are necessary to disclose in order to keep the foregoing representations from being
                                         misleading.

 

		6.2.11	Seller
                                         is not in violation of any federal, state or local law.

 

		6.2.12	Seller
                                         shall within five (5) business days notify Buyer in writing of any issue which may materially
                                         affect the Collateral or Seller’s business.

 

		6.2.13	Seller
                                         shall not sell any of the Collateral or its assets outside the ordinary course of its
                                         business.

 

		6.2.14	Any
                                         change in control or ownership of Seller shall require Buyer’s written consent

 

Section
7.NOTICE OF ADJUSTMENTS. In the event of a breach of any of the representations, warranties, or covenants set forth
in Section 6, or in the event any Dispute is asserted by any Account Debtor, Seller shall promptly advise Buyer and shall, subject
to the Buyer’s approval, resolve such disputes and advise Buyer of an Adjustment. Until the disputed Purchased Receivable
is repurchased by Seller and the full amount of the Purchased Receivable is paid, Buyer shall remain the absolute owner of any
Purchased Receivable which is subject to Adjustment or repurchase under Section 4.1 hereof; and any rejected, returned, or recovered
personal property, with the right to take possession thereof at any time.

 

Section
8.SECURITY INTEREST. As security and collateral for the Obligations, Seller hereby grants Buyer a continuing security
interest in, and assigns to Buyer, all of Seller’s right, title and interest in, all now owned and after acquired Accounts,
Equipment, Inventory, Financial Assets, Chattel Paper, Electronic Chattel Paper, Letters of Credit, Letters of Credit Rights,
General Intangibles, Investment Property, Deposit Accounts, Documents, Instruments, Supporting Obligations, Commercial Tort Claims,
the Reserve, motor vehicles, all books, records, files and computer data relating to the foregoing, and all proceeds (including
insurance proceeds) of the foregoing (the “Collateral”). Seller hereby authorizes Buyer to file any document it deems
necessary to perfect its security interest in the Collateral, including but not limited to UCC-1 financing statements and any
applicable amendments or continuation statements.

 

    -7-

     

    

 

Section
9.DEFAULT AND REMEDIES UPON DEFAULT.

 

		9.1	Events
                                         of Default. If any one or more of the following events shall occur, any such event
                                         shall constitute an Event of Default by Seller: (a) Any warranty, representation, statement,
                                         report or certificate made or delivered to Buyer by Seller or any of Seller’s officers,
                                         members, employees or agents now or hereafter is incorrect, false, untrue or misleading
                                         in any respect whatever; (b) Seller shall fail to perform or comply with or otherwise
                                         shall breach, any other term or condition contained in this Agreement, or any other agreement
                                         whether now or hereafter existing between Buyer and Seller, (c) Seller shall fail to
                                         pay or perform any other Obligation when due; (d) A material impairment of the prospect
                                         of payment or performance of the Obligations or a material impairment of the value of
                                         the Collateral or any impairment in the priority of Buyer’s security interests:
                                         (e) Any event shall arise which may result or actually result in the acceleration of
                                         the maturity of the indebtedness of Seller to others under my loan or other agreement
                                         or undertaking now or hereafter existing: (f) Seller shall fail promptly to perform or
                                         comply with any term or condition of any agreement now or hereafter existing with any
                                         third party resulting in an actual or potential material adverse effect on Seller’s
                                         business; (g) Any levy, assessment, attachment, seizure, lien or encumbrance for any
                                         case or reason whatsoever, upon all or any past of the Collateral or any other asset
                                         of Seller (unless discharged by payment, release or fully bonded against not more than
                                         ten (10) days after such event has occurred); (h) Dissolution, termination of existence,
                                         insolvency or business failure of Seller, or appointment of a receiver, trustee or custodian,
                                         for all or any part of the property of, assignment for the benefit of creditors by, or
                                         the commencement of any proceeding by or against Seller under any reorganization, bankruptcy,
                                         insolvency, arrangement, readjustment of debt, dissolution or liquidation law or statute
                                         of any jurisdiction, now or hereafter in effacer entry of a court order which enjoins,
                                         restrains or in any way prevents Seller from conducting all or any part of its business
                                         or failure to pay any foreign, federal, state or local tax or other debt of Seller, (i)
                                         A notice of lien, levy or assessment is filed of record with respect to any of Seller’s
                                         assets by the United States or any department, agency or instrumentality thereof, or
                                         by any state, county, municipal or other governmental agency, or if any taxes or debts
                                         now or hereafter owing to any one or more of them becomes a lien, whether choate or otherwise,
                                         upon ad or any of the Collateral or any other assets of Seller (other than a lien for
                                         real property taxes which are not yet due and payable); (j) Death or insolvency or incompetency
                                         of any guarantor of any or all of the Obligations; appointment of a conservator or guardian
                                         of the person of any such guarantor, appointment of a conservator, guardian; trustee,
                                         custodian or receiver of all or any cast of the assets, property or estate of any such
                                         guarantor; revocation or termination of, or limitation of liability upon, any guaranty
                                         of any or all of the Obligations; or commencement of proceedings by or against any guarantor
                                         or surety for Seller under any bankruptcy or insolvency law; or the breach by the Guarantor
                                         of any Obligation or any other agreement with Buyer; (k) Seller makes any payment on
                                         account of any indebtedness or obligation which has been subordinated to the Obligations
                                         or if any person who has subordinated such indebtedness or obligation terminates or in
                                         any way limits his subordination agreement; (l) Seller shall generally not pay its debts
                                         as they become due or shall enter into any agreement (whether written or oral), or offer
                                         to enter into any such agreement, with all or a significant number of its creditors regarding
                                         any moratorium or other indulgence with respect to its debts or the participation of
                                         such creditors or their representatives in the supervision, management or control of
                                         the business of Seller, (m) Seller shall conceal, remove or permit to be concealed or
                                         removed any part of its property, with intent to hinder, delay or defraud its creditors,
                                         or make or suffer any transfer of any of its property which may be fraudulent under any
                                         bankruptcy, fraudulent conveyance or similar law, or shall make any transfer of its property
                                         to or for the benefit of any creditor at a time when other creditors similarly situated
                                         have not been paid; (n) any change in ownership or control of Seller or (o) Buyer at
                                         any time, acting in good faith and in a commercially reasonable manner, deems itself
                                         insecure.

 

    -8-

     

    

 

		9.2	Remedies.
                                         Upon the occurrence of any Event of Default, and at any time thereafter, Buyer, at its
                                         option, and without notice or demand of any kind (all of which are hereby expressly waived
                                         by Sella) may do any one or more of the following (a) Cease advancing money or extending
                                         credit to or for the benefit of Seller under this Agreement, and any other document or
                                         agreement; (b) Accelerate and declare all or any part of the Obligations to be immediately
                                         due, payable, and performable, notwithstanding any deferred or installment payments allowed
                                         by any instrument evidencing or relating to any Obligation; (c) Take possession of any
                                         or all of the Collateral wherever it may be found, and for that purpose Seller hereby
                                         authorizes Buyer without judicial process to enter onto any of the Seller’s premises
                                         without hindrance to search for, take possession of, keep, store, or remove any of the
                                         Collateral and remain on such premises or cause a custodian to remain thereon in exclusive
                                         control thereof without charge for so long as Buyer deems necessary in order to complete
                                         the enforcement of its tights under this Agreement or any other agreement provided, however,
                                         that should Buyer seek to take possession of any or all of the Collateral by Court process
                                         or through a receiver, Seller hereby irrevocably waives: (i) any bond and any surety
                                         or security relating thereto required by any statute, court rule or otherwise as an incident
                                         to such possession; (ii) any demand for possession prior to the commencement of any suit
                                         or action to recover possession thereof; and (iii) any requirement that Buyer retain
                                         possession of and not dispose of any such Collateral until after trial or final judgment;
                                         (d) Require Seller to assemble any or all of the Collateral and make it available to
                                         Buyer at a place or places to be designated by Buyer which is reasonably convenient to
                                         Buyer and Seller, and to remove the Collateral to such locations as Buyer may deem advisable;
                                         (e) place a receiver in exclusive control of Seller’s business and/or any or all
                                         of the Collateral, in order to assist Buyer in enforcing its rights and remedies; (f)
                                         Sell, ship, reclaim, lease or otherwise dispose of all or any portion of the Collateral
                                         in its condition at the time Buyer obtains possession or after further manufacturing,
                                         processing or repair, at any one or more public and/or private sale(s) (including execution
                                         sales); in lots or in bulk; for cash, exchange for other property or on credit; and to
                                         adjourn any such sale from time to time without notice other than oral announcement at
                                         the rime scheduled for sale. Buyer shall have the right to conduct such disposition on
                                         Seller’s premises without charge for such time or times as Buyer deems fit, or
                                         on Buyer’s premises, or elsewhere and the Collateral need not be located at the
                                         place of disposition. Buyer may directly or through any affiliated company purchase or
                                         lease any Collateral at any such public disposition and, if permissible under applicable
                                         law, at any private disposition. Any sale or other disposition of Collateral shall not
                                         relieve Seller of any liability Seller may have if any Collateral is defective as to
                                         tide or physical condition at the time of sale; (g) Demand payment of, and collect any
                                         Accounts, Instruments, Chattel Paper, Supporting Obligations and General intangibles
                                         comprising part or all of the Collateral; or (h) Demand and receive possession of any
                                         of Seller’s federal and state income tax returns and the books, records and accounts
                                         utilized in the preparation thereof or referring thereto. Any and all attorneys’
                                         fees, expenses, costs, liabilities and obligations incurred by Buyer with respect to
                                         the foregoing shall be added to and become part of the Obligations, shall be due on demand,
                                         and shall bear interest at a rate equal to the highest interest rate applicable to any
                                         of the Obligations.

 

    -9-

     

    

 

		9.3	Application
                                         of Proceeds. The proceeds received by Buyer from the disposition of or collection
                                         of any of the Collateral shall be applied to such extent and in such manner as Buyer
                                         shall determine, in its sole discretion. If any deficiency shall arise, Seller shall
                                         remain liable to Buyer therefore. In the event that, as a result of the disposition of
                                         any of the Collateral, Buyer directly or indirectly enters into a credit transaction
                                         with any third party, Buyer shall have the option, exercisable at any time, in its sole
                                         discretion, of either reducing the Obligations by the principal amount of such credit
                                         transaction or deferring the reduction thereof until the actual receipt by Buyer of good
                                         funds therefore from such third party.

 

		9.4	Online
                                         Access. Upon an Event of Default, all of Seller’s rights and access to any
                                         online interne services that Buyer makes available to Seller shall be provisional pending
                                         Seller’s curing of all such Events of Default. During such period of time, Buyer
                                         may limit or terminate Seller’s access to online services. Seller acknowledges
                                         that the information Buyer makes available to Seller through online internet access,
                                         both before and after an Event of Default, constitutes and satisfies any duty to respond
                                         to a request for accounting or request regarding a statement of account that is referenced
                                         in the UCC.

 

		9.5	Standards
                                         of Commercial Reasonableness. After an Event of Default, the parties acknowledge
                                         that it shall be presumed commercially reasonable and Buyer shall have no duty to undertake
                                         to collect any Account, including those in which Buyer receives information from an Account
                                         Debtor that a Dispute exists. Furthermore, in the event Buyer undertakes to collect or
                                         enforce an obligation of an Account Debtor or any other person obligated on the Collateral
                                         and ascertains that the possibility of collection is outweighed by the likely costs and
                                         expenses that will be incurred, Buyer may at any such time cease any further collection
                                         efforts and such action shall be considered commercially reasonable. Before Seller may,
                                         under any circumstances, seek to hold Buyer responsible for taking any uncommercially
                                         reasonable action, Seller shall first notify Buyer in writing, of all of the reasons
                                         why Seller believes Buyer has acted in any uncommercially reasonable manner and advise
                                         Buyer of the action that Seller believes Buyer should take.

 

		9.6	Formation
                                         of New Entity. In the event Seller or any one or more of its principals, officers
                                         or directors during the term of this Agreement or while Seller remains liable to Buyer
                                         for any of the Obligations, (i) forms a new entity; or (ii) has failed to disclose to
                                         Buyer at the time of the Effective Date of this Agreement an existing entity, that does
                                         business similar to that of Seller, whether in the form of a corporation, partnership,
                                         limited liability company or otherwise, such entity shall be deemed to have expressly
                                         assumed the obligations due Buyer by Seller under the Agreement. Upon the formation of
                                         any such entity, Buyer, in addition to all of its available remedies, shall be deemed
                                         to have been granted an irrevocable power of attorney with authority to file a new financing
                                         statement with the appropriate secretary of state or UCC filing office naming the newly
                                         formed successor business or undisclosed existing business, as a debtor or new debtor.
                                         Buyer shall have the right to notify the successor entity’s or undisclosed existing
                                         entity’s Account Debtors of Buyer’s security interest, its right to collect
                                         all Accounts, and to notify any new secured party who has sought to obtain a competing
                                         security interest of Buyer’s right in such entity’s assets. Seller shall
                                         indemnify Buyer, pursuant to Section 13.3 herein, from any claims against Buyer which
                                         arises out of Buyer exercising any of its rights hereunder.

 

		9.7	Remedies
                                         Cumulative. In addition to the rights and remedies set forth in this Agreement, Buyer
                                         shall have all the other rights and remedies accorded a secured party under the UCC and
                                         under any and all other applicable laws and in any other instrument or agreement now
                                         or hereafter entered into between Buyer and Seller and all of such rights and remedies
                                         arc cumulative and none is exclusive. Exercise or partial exercise by Buyer of one or
                                         more of its rights or remedies shall not be deemed an election, nor bar Buyer from subsequent
                                         exercise or partial exercise of any other rights or remedies. The failure or delay of
                                         Buyer to exercise any rights or remedies shall not operate as a waiver thereof, but all
                                         rights and remedies shall continue in full force and effect until all of the Obligations
                                         have been fully paid and performed.

 

    -10-

     

    

 

Section
10.EFFECTIVENESS TERM. This Agreement shall only become effective upon execution and delivery by Seller and acceptance
by Buyer and, unless earlier terminated as provided in this Agreement, shall continue in full force and effect for an initial
term of one (1) month from the initial Funding Date and shall be deemed automatically renewed for successive one (1) month periods.
Unless earlier terminated as provided in this Agreement, all Obligations shall be due and payable in full at the expiration of
the last renewal term. This Agreement may be terminated prior to the end of the Initial Term or any renewal term (each, a ‘Term”)
as follows: (a) Seller may terminate this Agreement at the end of the Term without payment of an Early Termination Fee, provided
Seller gives at least seven (7) days written notice prior to the end of the initial Term poor to the end of the Initial Term or
any renewal term; (b) Seller may terminate this Agreement at any time after giving Buyer at least seven (7) days prior written
notice and paying Buyer an Early Termination Fee equal to one half of one percent (0.50%) of the Maximum Credit multiplied by
the number of months remaining in the then-current Term (the “Early Termination Fee). Any partial month remaining in such
Term shall constitute a full month for the purpose of calculating the Early Termination Fee. There shall be no Early Termination
Pee for the Initial Tem. Any such termination shall be effective upon payment to Buyer in full of all Obligations, including the
Early Termination Fee; and (c) This Agreement shall automatically terminate following the occurrence of an Event of Default under
Section 9. Upon any such termination following an Event of Default, all Obligations, including the Early Termination Fee, shall
be due and payable in full. In recognition of the Buyer’s right to have its attorneys’ fees and other expenses incurred
in connection with this Agreement secured by the Collateral, notwithstanding payment in full of all Obligations by Seller, Buyer
shall not be required to record any terminations or satisfactions of any of Buyer’s liens on the Collateral unless and until
Seller has executed and delivered to Buyer a general release in a form acceptable to Buyer. Seller understands that this Section
constitutes a waiver of its rights under Section 9-513 of the UCC.

 

Notwithstanding
the foregoing, any termination of this Agreement shall not affect Buyer’s security interest in the Collateral, Buyer’s
ownership of the Purchased Receivables, Buyer’s indemnity portion of the Obligations, any other tights granted to Buyer
or Seller’s Obligations, and this Agreement shall continue to be effective, and Buyer’s rights and remedies hereunder,
including rights granted under this Agreement, the UCC, at law or in equity shall survive such termination, until all Indemnity
Obligations, and other Obligations incurred under this Agreement or in connection herewith have been completed and satisfied in
full

 

Section
11.PARTICIPATIONS; ASSIGNMENTS. Seller understands that Buyer may from time to time transfer and assign its rights
under this Agreement to one or snore assignees. Seller hereby consents to these transfers and assignments by Buyer to one or more
assignees. Seller hereby consents that any such assignee may exercise the rights of the Buyer hereunder. Seller further hereby
consents and acknowledges that any and all defenses, claims or counterclaims that it may have against the Buyer shall be limited
to, and may only be brought against Buyer and may not extend to any assignee, including, but not limited to, any claims which
pertain to this Agreement Seller consents to Buyer releasing any and all information regarding Seller and any guarantors to any
assignee or potential assignee and waives any and all claims pertaining to the release of such information. Seller and Buyer intend
that any and all direct or indirect assignees of the Buyer of the type act forth above shall be the third party beneficiaries
of this Agreement

 

Section
12.ONLINE USER STANDARDS.

 

		12.1	Online
                                         Conducting of Business. Buyer and Seller intend to conduct virtually all of the transactions
                                         contemplated by this Agreement via email and Buyer’s Online Reporting Service.
                                         Buyer is the sole and exclusive owner of the Online Reporting Service. Seller hereby
                                         accepts a non-exclusive, non-transferable right to access the Online Reporting Service,
                                         upon the terms and subject to the conditions contained herein.

 

		12.2	Standards
                                         Regarding Conducting Business Online. Seller and Buyer agree as follows:

 

		12.2.1	Buyer
                                         shall have the right to terminate Seller’s access to the Online Reporting Service
                                         upon the occurrence of an Event of Default.

 

		12.2.2	Seller
                                         shall not: (i) copy die Online Reporting Service nor otherwise reproduce the same other
                                         than for normal system operation backup; (ii) translate, adapt, vary, or modify the Online
                                         Reporting Service; or (iii) disassemble, decompile or reverse engineer the Online Reporting
                                         Service.

 

		12.2.3	Buyer
                                         shall not be liable to Seller for any loss or damage whatsoever or howsoever caused,
                                         whether caused by tort (including negligence), breach of contract, or otherwise arising
                                         directly or indirectly in connection with the use of the Online Reporting Service.

 

		12.2.4	Buyer
                                         expressly excludes liability for any indirect, special, incidental or consequential loss
                                         or damage whether caused by tort (including negligence), breach of contract or otherwise,
                                         which may arise in respect of the Online Reporting Service, its use, or in respect of
                                         equipment or property, or for loss of profit, business, revenue, goodwill or anticipated
                                         savings.

 

    -11-

     

    

 

		12.2.5	Seller
                                         acknowledges that any and all of the copyright, trademarks, trade names, patents, trade
                                         secrets and other intellectual property rights subsisting in or used in connection with
                                         the Online Reporting Service, including all documentation and manuals relating thereto,
                                         arc, and shall remain, the sole property of the Buyer. Seller shall not, during or at
                                         any time after the expiry or termination of its use of the Online Reporting Service,
                                         in any way question or dispute the ownership by Buyer thereof.

 

		12.2.6	To
                                         the extent permitted by applicable law, Buyer excludes all warranties with respect to
                                         the Online Reporting Service, either express or implied, including, but not limited to,
                                         any implied warranties of satisfactory quality or fitness for any particular purpose.

 

		12.2.7	Seller
                                         is solely responsible for virus scanning the Online Reporting Service, and Buyer makes
                                         no representations or warranties regarding any virus associated with the Online Reporting
                                         Services.

 

		12.2.8	All
                                         information, data, drawings, specifications, documentation, software listings, source
                                         or object code which Buyer may have imparted and may from time to time impart to the
                                         Seller relating to the Online Reporting Service is proprietary and confidential. Seller
                                         hereby agrees that it shall use the same solely in accordance with the provisions of
                                         this Agreement and that it shall not, at any time during or after expiry or termination
                                         of this Agreement, disclose the same, whether directly or indirectly, to any third party.

 

Section
13.GENERAL.

 

		13.1	Notices.
                                         Any Written Notice to be given under this Agreement will be in writing addressed to the
                                         respective party as set forth in the heading to this Agreement and will be personally
                                         served, telecopied or sent by overnight courier service or United States mail and will
                                         be deemed to have been given: (a) if delivered in person, when delivered; (b) if delivered
                                         by telecopy or e-mail, on the date of transmission if transmitted on a Business Day before
                                         4:40 p.m. (Pacific Time) or, if not, on the next succeeding Business Day; (c) if delivered
                                         by overnight courier, two (2) days after delivery to such courier properly addressed;
                                         or (d) if by U.S. Mail, four (4) Business Days after depositing in the United States
                                         mall, with postage prepaid and properly addressed. If there is more than one Seller,
                                         notice to any shall constitute notice to all; if Seller is a corporation, partnership
                                         or limited liability company, the service upon any member of the Board of Directors,
                                         general partner, managing member, officer, employee or agent shall constitute service
                                         upon Seller.

 

		13.2	Payment
                                         in Full Checks. Seiler authorizes Buyer to accept, endorse and deposit on behalf
                                         of Seller any checks tendered by an Account Debtor “in full payment” of its
                                         obligation to Seller. Seller shall not assert against Buyer any claim arising therefrom,
                                         irrespective of whether such action by Buyer affects an accord and satisfaction of Seller’s
                                         claims, under Section 3-311 of the UCC.

 

		13.3	Indemnity.
                                         Seller shall indemnify and hold Buyer harmless from and against any and all Avoidance
                                         Actions, claims, debts, losses, demands, actions, causes of action, lawsuits damages,
                                         penalties, judgments, liabilities, costs and expenses (including, without limitation,
                                         attorneys’ fees), of any kind or nature which Buyer may sustain or incur in connection
                                         with, or arising from, this Agreement, any other present or future agreement, or the
                                         breach by Seller of any representation, warranty, covenant or provision contained herein
                                         or therein, or any other transaction contemplated hereby or thereby or relating hereto
                                         or thereto, or any other matter, cause or thing whatsoever, occurred, done, omitted or
                                         suffered to be done by Buyer relating in any way to Seller. Notwithstanding any other
                                         provision of this Agreement to the contrary, the indemnity agreement set forth in this
                                         Section shall survive termination of this Agreement and if Seller refuses to honor its
                                         obligation to indemnity Buyer, Buyer shall be entitled to all rights and remedies under
                                         this Agreement, the UCC, at law or in equity.

 

    -12-

     

    

 

		13.4	Attorneys’
                                         Fees and Costs. Seller shall forthwith pay to Buyer the amount of all actual attorneys’
                                         fees and all filing, recording, publication, search and other costs incurred by Buyer
                                         under and pursuant to this Agreement, or any other present or future agreement, or in
                                         connection with any transaction contemplated hereby or thereby, or with respect to the
                                         Collateral or the defense or enforcement of Buyer’s interests (whether or not Buyer
                                         files a lawsuit against Seller), including, without limitation, charges of auditors,
                                         set-up charges, bank charges, and all office and other expenses and costs. Without limiting
                                         the generality of the foregoing, Seller shall, with respect to each and all of the foregoing,
                                         pay all actual attorneys’ fees and costs Buyer incurs in order to: obtain legal
                                         advice, enforce, or seek to enforce, any of its rights; prosecute actions against, or
                                         defend actions by, Account Debtors; commence, intervene in, respond to, or defend any
                                         action or proceeding; initiate any complaint to be relieved of the effect of the automatic
                                         stay in bankruptcy in order to commence or continue any foreclosure or other disposition
                                         of the Collateral or to commence or continue any action or other proceeding against Seller
                                         for relating to the Collateral; file or prosecute a claim or right in any action or proceeding,
                                         including, but not limited to, any probate claim, bankruptcy claim, third-party claim,
                                         secured creditor claim or reclamation complaint, examine, audit, count, test, copy, or
                                         otherwise inspect any of the Collateral or any of Seller’s books and records; or
                                         protect, obtain possession of, lease, dispose of, or otherwise enforce any security interest
                                         in or lien on the Collateral or represent Buyer in any litigation with respect to Seller’s
                                         affairs. In the event Buyer brings any lawsuit against Seller predicated on a breach
                                         of this Agreement, or in any manner relates to this Agreement, Buyer shall be entitled
                                         to recover ice costs and attorneys’ fees, including, but not limited to, attorneys’
                                         fees and costs incurred in the enforcement of, execution upon or defense of any order,
                                         decree, award or judgment. All attorneys’ fees and costs to which Buyer may be
                                         entitled pursuant to this Section shall immediately become part of Seller’s Obligations
                                         and shall be due on demand.

 

		13.5	Benefit
                                         of Agreement. The provisions of this Agreement shall be binding upon and inure to
                                         the benefit of the respective successors, assigns, heirs, beneficiaries and representatives
                                         of the parties hereto; provided, however, that Seller may not assign or transfer any
                                         of its rights under this Agreement without the prior written consent of Buyer, and any
                                         prohibited assignment shall be void. No consent by Buyer to any assignment shall relieve
                                         Seller or any guarantor from its liability for the Obligations. Without limiting the
                                         generality of the foregoing, all rights and benefits of Buyer under this Agreement may
                                         be exercised by any institution with which Buyer maintains any rediscount, factoring
                                         or other relationship and by any other person or entity designated by Buyer.

 

		13.6	Joint
                                         and Several Liability. The liability of each Seller shall be joint and several and
                                         the compromise of any claim with, or the release of, any Seller shall not constitute
                                         a compromise with, or a release of, any other Seller.

 

		13.7	General
                                         Waivers. The failure of Buyer at any time or times hereafter to require Seller strictly
                                         to comply with any of the provisions, warranties, terms or conditions of this Agreement
                                         or any other present or future instrument or agreement between Seller and Buyer shall
                                         not waive or diminish any right of Buyer thereafter to demand and receive strict compliance
                                         therewith and with any other provision warranty, term and condition; and any waiver of
                                         any default shall not waive or affect any other default, whether prior or subsequent
                                         thereto and whether of the same or of a different type. None of the provisions, warranties,
                                         terms or conditions of this Agreement or other instrument or agreement now or hereafter
                                         executed by Seiler and delivered to Buyer shall be deemed to have been waived by any
                                         act or knowledge of Buyer or its agents or employees, but only by a specific written
                                         waiver signed by an officer of Buyer and delivered to Seller. Seller waives any and all
                                         notices or demands which Seller might be entitled to receive with respect to this Agreement,
                                         or any other agreement by virtue of any applicable law. Seller hereby waives demand,
                                         protest, notice of protest and notice of default or dishonor, notice of payment and nonpayment,
                                         release, compromise, settlement, extension or renewal of any commercial paper, instrument,
                                         Account, general intangible, document or guaranty at any time held by Buyer on which
                                         Seller is or may in any way be liable, and notice of any action taken by Buyer unless
                                         expressly required by this Agreement. Seller hereby ratifies and confirms whatever Buyer
                                         may do pursuant to this Agreement and agrees that Buyer shall not be liable for the safekeeping
                                         of the Collateral or any lass or damage thereto, or diminution in value thereof, from
                                         any cause whatsoever, any act or omission of any carrier, warehouseman, bailee, forwarding
                                         agent or other person, or any act of commission or any omission by Buyer or its officers,
                                         employees, agents, or attorneys, or any of its or their errors of judgment or mistakes
                                         of fact or of law.

 

		13.8	Electronic
                                         Signatures. The parties intend to conduct the business contemplated by this Agreement
                                         by electronic means. Each document, which is the subject of this Agreement, that a party
                                         has transmitted electronically to the other shall be intended as and constitute an original
                                         and deemed to contain a valid signature of the party for all purposes acknowledging,
                                         consenting to, authorizing and approving the terms of this Agreement or any subject matter
                                         applicable thereto. In furtherance of the above, Seller hereby authorizes Buyer to regard
                                         the Seller’s printed name or electronic approval for any document, agreement, assignment
                                         schedule or invoice as the equivalent of a manual signature by one of the Seller’s
                                         authorized officers or agents. Seller’s failure to promptly deliver to Buyer any
                                         schedule, report, statement or other information required by this Agreement or any document
                                         related thereto shall not affect, diminish, modify or otherwise limit Buyer’s security
                                         interests in the Collateral or rights and remedies under this Agreement. Buyer may rely
                                         upon, and assume the authenticity of, any such approval and material applicable to such
                                         approval as the duly confirmed, authorized and approved signature of Seller by the person
                                         approving same which constitute an Authenticated Record for purposes of the UCC and shall
                                         satisfy the requirements of any applicable statute of frauds.

 

    -13-

     

    

 

		13.9	Section
                                         Headings: Construction. Section headings are used herein for convenience only. Seller
                                         acknowledges that the same may not describe completely the subject matter of the applicable
                                         Section, and the same shall not be used in any manner to construe, limit, define or interpret
                                         any term or provision hereof. This Agreement has been fully reviewed and negotiated between
                                         the parties and no uncertainty or ambiguity in any term or provision of this Agreement
                                         shall be construed strictly against Buyer or Seller under any rule of construction or
                                         otherwise.

 

		13.10	Limitation
                                         of Actions. Seller agrees that any claim or cause of action by Seller against Buyer,
                                         its directors, officers, employees, agents, accountants or attorneys, based upon, arising
                                         from, or relating to this Agreement, or any other present or future agreement, or any
                                         other transaction contemplated hereby or thereby or relating hereto or thereto, or any
                                         other matter, cause or thing whatsoever, occurred, done, omitted or suffered to be done
                                         by Buyer, its directors, officers, employees, agents, accountants, or attorneys, relating
                                         in any way to Seller, shall be barred unless asserted by Seller by the commencement of
                                         an action or proceeding in a court of competent jurisdiction by the filing of a complaint
                                         within six (6) months after the first act, occurrence or omission upon which such claim
                                         or cause of action, or any part thereof is based, and the service of a summons and complaint
                                         on an officer of Buyer, or on any other person authorized to accept service on behalf
                                         of Buyer, within thirty (30) days thereafter. Seiler agrees that such six-month period
                                         provided herein shall not be waived, tolled, or extended except by the written consent
                                         of Buyer, in its sole and absolute discretion. This provision shall survive any termination,
                                         however arising, of this Agreement and any other present or future agreement.

 

		13.11	Severability.
                                         Should any provision, clause or condition of this Agreement be held by any court of competent
                                         jurisdiction to be void, invalid, inoperative:, or otherwise unenforceable, such defect
                                         shall not affect any other provision, clause or condition, and the remainder of this
                                         Agreement shall be effective as though such defective provision, clause or condition
                                         had not been a part hereof.

 

		13.12	Integration.
                                         This Agreement and such other written agreements, documents and instruments as may be
                                         executed in connection herewith shall be construed together and constitute the entire,
                                         only and complete agreement between Seller and Buyer, and all representations, warranties,
                                         agreements, and undertakings heretofore or contemporaneously made, which arc not set
                                         forth herein or therein, arc superseded hereby.

 

		13.13	Amendment.
                                         The terms and provisions of this Agreement may not be waived, altered, modified or amended
                                         except in a writing executed by Seller and a duly authorized officer of Buyer.

 

		13.14	Time
                                         of Essence. Time is of the essence in the performance by Seller of each and every
                                         obligation under this Agreement.

 

		13.15	Governing
                                         Law; Jurisdiction; Venue. This Agreement and all acts and transactions hereunder
                                         and thereunder and all rights and obligations of Buyer and Seller shall be governed,
                                         construed and interpreted in accordance with the internal laws of the State of California.
                                         Seller: (i) agrees that all actions or proceedings relating directly or indirectly this
                                         Agreement or any of the Obligations shall, at the sole option of Buyer, be litigated
                                         in courts located within said state, and that, at the sole option of Buyer, the exclusive
                                         venue therefore shall be Santa Clara County, California; (ii) consents to the jurisdiction
                                         and venue of any such court and consents to service of process in any such action or
                                         proceeding by personal delivery or any other method permitted by law; and (iii) waives
                                         any and all tights Seller may have to object to the jurisdiction of any such court, or
                                         to transfer or change the venue of any such action or proceeding.

 

		13.16	Waiver
                                         of Right to Jury Trial/ Judicial Reference/ Arbitration.

 

    -14-

     

    

 

		13.17	Jury
                                         Waiver. To the fullest extent permitted by applicable law, Buyer and Seller each
                                         hereby irrevocably and expressly waive all right to a trial by jury in any action, proceeding,
                                         or cross-complaint (whether based upon contract, tort, or otherwise) arising out of or
                                         relating to this Agreement, the obligations or any of the transactions contemplated hereby
                                         or thereby or the parties’ actions in the negotiation, administration, or enforcement
                                         hereof or thereof. Buyer and Seller each acknowledges that such waiver is made with full
                                         knowledge and understanding of the nature of the rights and benefits waived hereby, and
                                         with the benefit of advice of counsel of its choosing.

 

		13.17.1	Judicial
                                         Reference. Buyer and Seller each prefer that any dispute between them be resolved
                                         in litigation subject to the jury trial waiver set forth herein, but the California Supreme
                                         Court has held that such pre-dispute jury trial waivers are unenforceable. This section
                                         will be applicable until: (a) the California Supreme Court holds that a pre-dispute jury
                                         trial waiver provision similar to that contained herein is valid or enforceable; or (b)
                                         the California legislature passes legislation and the governor of the State of California
                                         signs into law a statute authorizing plc-dispute jury trial waivers and as a result such
                                         waivers became enforceable.

 

Accordingly,
Buyer and Seller each knowingly and voluntarily agree that any civil action or proceeding involving a dispute arising out of or
relating to this Agreement, shall be tried solely through a judicial reference as provided in sections 638 through 6452 of the
California Code of Civil Procedure CCCP”) and as described herein (the “Judicial Reference”). Buyer and Seller
further realize that by agreeing to Judicial Reference as provided in CCP sections 638 through 645.2, the parties will have waived
their rights to trial by jury.

 

Buyer
and Seller each further agree that the referee shall be a retired Judge or Justice selected by mutual written agreement of the
parties. If the panics do not agree, the referee shall be selected by the Trial Court. Buyer and Seller further agree that the
filing of any law and motion hearings or the initiation of any hearings to obtain any form of a pre-judgment remedy shall not
operate as a waiver of the parties’ right to trial solely through a Judicial Reference.

 

A
request for appointment of a referee may be heard on an ex parte or expedited basis, and Buyer and Seller agree that irreparable
harm would result if ex pane relief is not granted. The referee shall be appointed to sit with all the powers provided by law.
The referee shall be required to determine all issues in accordance with existing case law and the statutory laws of the State
of California. The rules of evidence applicable to proceedings at law in the State of California will be applicable to the reference
proceeding. The referee shall be empowered to enter equitable as well as legal relief, provide all temporary or provisional remedies,
enter equitable orders that will be binding on the parties and rule on any motion which would be authorized in a trial, including
without limitation motions for summary judgment or summary adjudication. The referee shall issue a decision pursuant to CCP section
644 and the referee’s decision shall be entered by the Court as a judgment or an order in the same manner as if the action
had been tried by the Court. The final judgment or order entered by the referee shall be fully appealable as provided by law.
Buyer and Seller reserve the right to receive findings of fact, conclusions of laws, a written statement of decision, and the
right to move for a new trial, which new trial, if granted, is also to be a reference proceeding under this provision.

 

		13.17.2	Arbitration.
                                         Although Buyer and Seller each prefer that any dispute between them be resolved solely
                                         through a bench trial or the judicial Reference as set forth in this section, the California
                                         Supreme Court has held that a trial court may refuse to enforce a Judicial Reference
                                         agreement, and deny a motion for appointment of a referee under CCP section 638, where
                                         there is a possibility of conflicting rulings on a common issue of law or fact, or based
                                         on considerations of judicial economy specifically, the duplication of efforts, increased
                                         costs, potential delays in resolution, and an unmitigated burden an the Superior Court.

 

Accordingly,
if the trial court refuses to enforce the appointment of a judicial referee (and no successor statute is enacted) Buyer and Seller
knowingly and voluntarily agree to submit and settle any dispute, controversy or claim arising out of relating to this Agreement
to arbitration. This Agreement to submit to arbitration is presently effective but shall be enforced only in the event that the
Jury Waiver and the Judicial Reference provision as set forth above and as provided in CCP sections 638 through 645.1, is held
unenforceable. The arbitration shall be conducted in Santa Clara, County, in the State of California and administered by a retired
Judge or Justice selected by mutual written agreement of the parties who shall be governed by the same procedure as if the parties
were proceeding by the above Judicial Reference procedure. Buyer and Seller further agree that the filing of any law and motion
hearings or the initiation of any hearings to obtain any form of a pre-judgment remedy shall not operate as a waiver of the parties’
tight to submit and settle any dispute, controversy or claim arising out of relating to this Agreement to arbitration.

 

The
arbitration procedure shall be governed by the substantive and procedural laws of the State of California, including all aspects
of its arbitration law pursuant to the California Arbitration Act (“CAA”), sections 1280 through 1294.2 of the Code
of Civil Procedure as amended from time to time. If a conflict exists between the provisions of the CAA and this Agreement, the
language of this Agreement shall control. Buyer and Seller shall have all rights of discovery and remedies as they would in a
California civil action pursuant to CCP section 1283.05, and the arbitration shall be governed by all of the applicable rules
set forth in the Civil Discovery Act, CCP sections 2016.010 through 2036.050. All rules of evidence applicable to proceedings
at law in the State of California will be applicable to the arbitration proceeding and the arbitrator is at all times required
to strictly conform to these rules. The arbitrator shall prepare in writing and provide to the parties an award including Factual
findings explaining the reasons on which their decision is based.

 

    -15-

     

    

 

The
arbitrator shall not have the power to commit (a) errors of law or legal reasoning, (b) errors of fact, or (c) errors with regards
to mixed questions of law and fact. In addition, the arbitrator shall not reach factual conclusions unsupported by substantial
evidence. Furthermore, the arbitrator shall not have the power to render an award (a) not based on proper admissible evidence,
(b) based on evidence not presented at the hearing, or (c) not in conformity with the substantive and procedural law of the Start
of California.

 

In
any arbitration arising out of or related to this Agreement, the arbitrator is not empowered to award punitive or exemplary damages,
except where permitted by statute, and Buyer and Seiler waive any right to recover any such damages.

 

If
the arbitrator exceeds any of the foregoing specific powers, the award may be vacated or corrected by filing a petition pursuant
to the CAA in the time frame provided in CCP sections 1280 through 1294.2 in the Superior Court for the County of Los Angeles,
in the State of California. The award is subject to review for legal error, factual error, confirmation, correction or vacatur
only in a California State Court of competent jurisdiction and only pursuant to the CAA.

 

In
reviewing the award, the Superior Court shall sit as if it were an Appellate Court, in all respects, including but not limited
to the scope of review. The decision of the Superior Court is, itself, subject to review by the California Appellate Courts. The
supervising Court shall have the power to review (a) whether the findings of fact rendered by the arbitrators are supported by
substantial evidence and (b) whether, as a matter of law based on such findings of Fact the award should be confirmed, corrected
or vacated. Upon such determination, judgment shall be entered in favor of either party consistent therewith.

 

If
any portion of this arbitration provision is held invalid or unenforceable, the remainder shall still be valid and enforceable
and the arbitrator and/or supervising Court as applicable shall have the power to amend the arbitration procedures set forth herein
so that this Agreement shall remain enforceable and binding.

 

Buyer
and Seller each acknowledge that the judicial referee or arbitrator will charge fees and costs to conduct the Judicial Reference
or arbitration. Buyer and Seller each agree to initially divide equally all Judicial Reference or arbitration fees and the compensation
of the judicial referee or arbitrator. Notwithstanding the foregoing, the parties each further acknowledge that the judicial referee
or arbitrator may decide that one party or the other is the prevailing party in which event the non-prevailing party will be obligated
to reimburse die prevailing party for all of the fees and costs imposed in connection with the Judicial Reference or the arbitration.

 

THE
REST OF THIS PAGE IS INTENTIONALLY BLANK

 

SIGNATURE
PAGE FOLLOWS

 

    -16-

     

    

 

IN
WITNESS WHEREOF, Seller has executed and delivered this Agreement for acceptance by Buyer as of the day and year above written.
If this Agreement is not witnessed by an authorized employee of Buyer, Seller must have their signature acknowledged by a Notary
Public.

 

	SELLER	 
	 	 	 
	PHUNWARE, INC.	 
	 	 	 
	By: 	/s/
    ALAN S. KNITOWSKI	 

 

	Name/Title: 	CEO	 

 

	Signer’s
    Driver’s license No. 	 	 

 

	BUYER	 
	 	 	 
	CSNK WORKING CAPITAL FINANCE CORP. D/B/A BAY VIEW FUNDING
	 	 	 
	By:	 	 
	Title:	     	 
	Date:	 	 

 

    -17-

     

    

 

VALIDITY
INDEMNIFICATION

 

June
14, 2016

 

CSNK
Working Capital Finance Corp. d/b/a Bay View Funding

2933
Bunker Hill Road, Suite 210

Santa
Clara, CA 95054

Telephone
#(650) 294-6600 FAX #(650) 294-7252

 

		RE:	Phunware,
                                         Inc. (“Seller”) and CSNK Working Capital Finance Corp. d/b/a Bay View Funding
                                         and any other Co-Buyer or Participant as specified in the Agreements (“Buyer”)
                                         as described in the FACTORING AGREEMENT dated June 14, 2016 and any subsequent amendments.

 

Gentlemen:

 

The
undersigned is the Chief Executive Officer of the Seller. In order to induce you to extend financial accommodations to the Seller
pursuant to the Factoring Agreement and other various financing agreements (the “Agreements”) with the Seller, the
undersigned, in his capacity as Chief Executive Officer of the Seller, hereby warrants and represents for so long as the undersigned
is an executive officer of the Seller to you as follows:

 

		1.	All
                                         Seller’s accounts which have been or will be reported to you by or on behalf of
                                         the Seller and in which you have purchased or hold a security interest (“Accounts”),
                                         whether such reports are in the form of agings, Invoice Transmittals, borrowing base
                                         certificates, collateral reports or financial statements, are genuine and in all respects
                                         what they purport to be, represent bona fide, undisputed obligations of Seller’s
                                         customers arising out of the performance of a service or the sale and completed delivery
                                         of merchandise sold by the Seller (the “Sold Goods”) in the ordinary course
                                         of its business in accordance with and in full and complete performance of customer’s
                                         (each, a “Customer”) order therefore, and have not been and will not be previously
                                         sold, assigned, transferred or pledged, and are and will be free of any encumbrance or
                                         lien.

 

		2.	All
                                         original checks, drafts, notes, letters of credit, acceptances and other proceeds of
                                         the Accounts, received by the Seller, will be held in trust for you and will immediately
                                         be forwarded to you upon receipt, in kind, in accordance with the terms of the Agreements.

 

		3.	Except
                                         as disclosed in writing to Buyer prior to sale of an Account to Buyer, none of the Accounts
                                         are or will be the subject of any offsets, defenses or counterclaims of any nature whatsoever,
                                         and Seller will not in any way impede or interfere with the normal collection and payment
                                         of the Accounts. No agreements have or will be made under which the account debtor for
                                         any of the Accounts may claim any deduction or discount, except as disclosed to you in
                                         writing.

 

		4.	Seller
                                         is presently solvent. The definition of solvent for the purpose of this Validity Indemnification
                                         shall mean Seller has not filed or has not had filed against it, any bankruptcy case,
                                         or has made assignment for the benefit of creditors.

 

		5.	The
                                         Sold Goods are and will be up to the point of sales, the sole and absolute property of
                                         the Seller, and the Accounts and Sold Goods will be free and clear of all liens and security
                                         interests, except your security interest.

 

		6.	The
                                         due dates of the Accounts will be as reported to you by or on behalf of the Seller.

 

		7.	Seller
                                         will promptly report to you all disputes, rejections, returns and resales of Sold Goods
                                         and all credits allowed by the Seller upon all Accounts.

 

		8.	All
                                         reports, which you receive from the Seller, including but not limited to those concerning
                                         its Accounts and its inventory, will be true and accurate except for minor inadvertent
                                         errors.

 

		9.	Seller
                                         will not sell its inventory except in the ordinary course of business.

 

    

     

    

 

Any
claims by Buyer with respect to any breach of the representations and warranties of the undersigned officer made by the undersigned
prior to the date the undersigned ceases to be an executive officer of Seller (“Separation”) shall survive such Separation.

 

Seller
hereby indemnities you and holds you harmless from any direct, indirect, or consequential damage or loss which you may sustain
as a result of the breach of any representation or warranty contained herein, (all of which are continuing and irrevocable for
so long as the Seller is indebted to you), or of your reliance (whether such reliance was reasonable) upon any misstatement (whether
or not intentional), fraud, deceit or criminal act on the part of Seller or any officer, employee, or agent of the Seller, or
any costs (including reasonable attorneys’ fees and expenses) incurred by you in the enforcement of any rights granted you
hereunder against Seller. All such sums will be paid by Seller to you on demand. The undersigned hereby individually indemnities
you and holds you harmless from any direct, indirect or consequential damage or loss which you may sustain as a result of any
fraudulent, deceitful or criminal action on the part of the undersigned, or any costs (including reasonable attorneys’ fees
and expenses) incurred by you in the prosecution of and enforcement of any judgment related to any such claim against the undersigned.

 

Seller
waives all rights and defenses arising out of an election of remedies by the Buyer, even though that election of remedies, such
as a nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed Seller’s rights of subrogation
and reimbursement against the principal by operation of Section 580d of the Code of Civil Procedure or otherwise.

 

Nothing
herein contained shall be in any way impaired or affected by any change in or amendment of any of the Agreements. This agreement
shall be binding upon the undersigned, and the undersigned’s personal representative, successors, and assigns.

 

Very
truly yours,

 

/s/
Alan S. Knitowski

 

Alan
S. Knitowski

Chief
Executive Officer

Phunware,
Inc.

 

Address:
7800 Shoal Creek Blvd. Suite 230 A.

City/State/Zip:
Austin, Texas 78757

Phone:
(512) 745-4080

Date
Signed: 6/15/2016

 

    

     

    

VALIDITY
INDEMNIFICATION

 

June
14, 2016

 

CSNK
Working Capital Finance Corp. d/b/a Bay View Funding

2933
Bunker Hill Road, Suite 210

Santa
Clara, CA 95054

Telephone
#(650) 294-6600 FAX #(650) 294-7252

 

		RE:	Phunware,
                                         Inc. (“Seller”) and CSNK Working Capital Finance Corp. d/b/a Bay View Funding
                                         and any other Co-Buyer or Participant as specified in the Agreements (“Buyer”)
                                         as described in the FACTORING AGREEMENT dated June 14, 2016 and any subsequent amendments.

 

Gentlemen:

 

The
undersigned is the Chief Financial Officer of the Seller. In order to induce you to extend financial accommodations to the Seller
pursuant to the Factoring Agreement and other various financing agreements (the “Agreements”) with the Seller, the
undersigned, in his capacity as Chief Financial Officer of the Seller, hereby warrants and represents for so long as the undersigned
is an executive officer of the Seller to you as follows:

 

		1.	All
                                         Seller’s accounts which have been or will be reported to you by or on behalf of
                                         the Seller and in which you have purchased or hold a security interest (“Accounts”),
                                         whether such reports are in the form of agings, Invoice Transmittals, borrowing base
                                         certificates, collateral reports or financial statements, are genuine and in all respects
                                         what they purport to be, represent bona fide, undisputed obligations of Seller’s
                                         customers arising out of the performance of a service or the sale and completed delivery
                                         of merchandise sold by the Seller (the “Sold Goods”) in the ordinary course
                                         of its business in accordance with and in full and complete performance of customer’s
                                         (each, a “Customer”) order therefore, and have not been and will not be previously
                                         sold, assigned, transferred or pledged, and are and will be free of any encumbrance or
                                         lien.

 

	2.	All
                                         original checks, drafts, notes, letters of credit, acceptances and other proceeds of
                                         the Accounts, received by the Seller, will be held in trust for you and will immediately
                                         be forwarded to you upon receipt, in kind, in accordance with the terms of the Agreements.
	 	 
	3.	Except
                                         as disclosed in writing to Buyer prior to sale of an Account to Buyer, none of the Accounts
                                         are or will be the subject of any offsets, defenses or counterclaims of any nature whatsoever,
                                         and Seller will not in any way impede or interfere with the normal collection and payment
                                         of the Accounts. No agreements have or will be made under which the account debtor for
                                         any of the Accounts may claim any deduction or discount, except as disclosed to you in
                                         writing.

 

		4.	Seller
                                         is presently solvent. The definition of solvent for the purpose of this Validity Indemnification
                                         shall mean Seller has not filed or has not had filed against it, any bankruptcy case,
                                         or has made assignment for the benefit of creditors.

 

		5.	The
                                         Sold Goods are and will be up to the point of sales, the sole and absolute property of
                                         the Seller, and the Accounts and Sold Goods will be free and clear of all liens and security
                                         interests, except your security interest.

 

		6.	The
                                         due dates of the Accounts will be as reported to you by or on behalf of the Seller.

 

		7.	Seller
                                         will promptly report to you all disputes, rejections, returns and resales of Sold Goods
                                         and all credits allowed by the Seller upon all Accounts.

 

		8.	All
                                         reports, which you receive from the Seller, including but not limited to those concerning
                                         its Accounts and its inventory, will be true and accurate except for minor inadvertent
                                         errors.

 

		9.	Seller
                                         will not sell its inventory except in the ordinary course of business.

 

    

     

    

  

Any
claims by Buyer with respect to any breach of the representations and warranties of the undersigned officer made by the undersigned
prior to the date the undersigned ceases to be an executive officer of Seller (“Separation”) shall survive such Separation.

 

Seller
hereby indemnifies you and holds you harmless from any direct, indirect, or consequential damage or loss which you may sustain
as a result of the breach of any representation or warranty contained herein, (all of which are continuing and irrevocable for
so long as the Seller is indebted to you), or of your reliance (whether such reliance was reasonable) upon any misstatement (whether
or not intentional), fraud, deceit or criminal act on the part of Seller or any officer, employee, or agent of the Seller, or
any costs (including reasonable attorneys’ fees and expenses) incurred by you in the enforcement of any rights granted you
hereunder against Seller. All such sums will be paid by Seller to you on demand. The undersigned hereby individually indemnifies
you and holds you harmless from any direct, indirect or consequential damage or loss which you may sustain as a result of any
fraudulent, deceitful or criminal action on the part of the undersigned, or any costs (including reasonable attorneys’ fees
and expenses) incurred by you in the prosecution of and enforcement of any judgment related to any such claim against the undersigned.

 

Seller
waives all rights and defenses arising out of an election of remedies by the Buyer, even though that election of remedies, such
as a nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed Seller’s rights of subrogation
and reimbursement against the principal by operation of Section 580d of the Code of Civil Procedure or otherwise.

 

Nothing
herein contained shall be in any way impaired or affected by any change in or amendment of any of the Agreements. This agreement
shall be binding upon the undersigned, and the undersigned’s personal representative, successors, and assigns.

 

Very
truly yours,

 

/s/
Matt Aune

 

Matt
Aune

Chief
Executive Officer

Phunware,
Inc.

 

Address:
11440 W. Bernardo Ct. Suite 170

City/State/Zip:
San Diego, CA 92127

Phone:
(858) 344-5669

Date
Signed: 6/15/2016

 

    

     

    

June
14, 2016

 

Re:
General assignment of your vendor PHUNWARE, INC

EIN#

 

Dear
Accounts Payable Manager:

 

We
have obtained the services of Bay View Funding as a source of capital funding. The availability of this service will enable us
to serve our customers in a more efficient manner. This letter will serve as written notice that Bay View Funding has been granted
and assigned a security interest in the accounts receivable of PHUNWARE, INC. Therefore payments for our invoices should be made
payable to and mailed directly to:

 

By
check to:

 

	Bay
    View Funding

    for the account of: PHUNWARE, INC.

    

    
	By
EFT to:

        Bank:

        ABA#

        Account
Name:

        Account#

        SWIFT
        Code:
	 

 

This
assignment has been duly recorded under the Uniform Commercial Code. Please make proper notations on your ledger and acknowledge
the receipt of this letter by signing below and returning it to Bay View Funding.

 

This
notice shall remain in full force and effect until you are notified by Bay View Funding to the contrary. Our goal is to make our
invoicing as efficient for you as possible. If there are any changes you would like to see or any questions concerning your billing
or this letter, please call Bay View Funding at (650) 294-6600.

 

Thank
you for allowing us to serve you better.

 

Sincerely,

 

	/s/
Alan Knitowski	 	 
	Alan Knitowski, CEO	 	BVF OFFICER: Andrew Acquino, Executive Vice President

 

Acknowledgment
Signature:

 

	 	Company name: 	 	 
	 	Acknowledged by: 	 	 
	 	Print name / title: 	 	 
	 	Date: 	 	 
	 	Phone #: 	 	 
	 	Fax # 	 	 
	 	A/P Email Address: 	 	 

 

    

     

    

 

CERTIFIED
COPY OF RESOLUTIONS

 

RESOLVED,
that the Factoring Agreement of the date specified below between this company and CSNK Working Capital Finance Corp. d/b/a Bay
View Funding (herein “Buyer’) and all other agreements and documents connected therewith be, and the same hereby arc,
approved on the terms and conditions as set forth therein;

 

RESOLVED,
that any officer of this company is authorized and directed to enter into said agreement and all other agreements and documents
connected therewith and to execute the same for and on behalf of this company on the terms and conditions set forth therein;

 

RESOLVED,
that any officer of this company is authorized and directed to negotiate, agree upon, execute and deliver, from time to time,
in the name o and on behalf of, this company, such agreements, amendments and supplements to said agreement or any other agreement
or document connected therewith, documents, instruments, certificates, notices, and further assurances, and to perform any and
all such acts and things as may be required by Buyer in connection with said agreement or any other agreement or document connected
therewith, or may to him scan necessary or proper to implement and effect complete consummation of said agreement or any other
agreement or document connected therewith in all respects and the purposes set forth in these resolutions;

 

RESOLVED,
that a Schedule of Accounts submitted and signed by any employee of the company will authorize the sale, transfer or assignment
of, for full face value or at a discount therefrom, accounts, nom, trade acceptances, drafts, contracts, leases or other instruments
owned or held by the company and guarantee payment thereof on the company’s behalf.

 

RESOLVED,
that these resolutions shall remain in full force and effect until written notice of their amendment or repeal shall be received
by Buyer and until all indebtedness and obligations arising out of said agreement and all other agreements and documents connected
therewith shall have been paid and satisfied in full.

 

The
undersigned, as the duly constituted Secretary of this company does hereby certify that the foregoing is a true and correct copy
of the resolutions duly adopted at a meeting of the Board of Directors of this company, duly called, noticed and held on the date
specified below, at which meeting there was at all times present and acting a quorum of the members of said Board; that said resolutions
arc in full force and effect; and that the following is 2 true and correct list of the present officers of this company:

 

Date
of Factoring Agreement: June 14, 2016

 

	CEO’s Name	Alan S. Knitowski	 
	Vice-President’s Name: 	 	 
	Corp. Secretary’s Name:	 	 
	C110/Treasurer’s Name:	Matt Aune	 

 

	 	Corporate Secretary’s Signature:	/s/ Alan S.
    Knitowski	 
	 	 	 	 
	 	Name of Company: PHUNWARE, INC.	 
	 	 	 
	 	(seal)	 

 

Date company’s Board of Directors

adopted above resolutions: June 14, 2016

 

    

     

    

 

BayViewFunding

 

SCHEDULE
OF ACCOUNTS

 

DATE: _______________ CLIENT: PHUNWARE, INC. SOA #: ______________ PACE: ______________

 

	INV. DATE	INV #	P. O. #	CUSTOMER NAME	CUSTOMER ADDRESS	AMOUNT $
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	For
valuable consideration, receipt of which is hereby acknowledged, the undersigned hereby assigns, sets over and transfers to CSNK
Working Capital Finance Corp. d/b/a Bay View Funding, its successors or assigns, all its right, title and interest in and to the
accounts above named, including all moneys due or to become due thereon, all in accordance with and pursuant to that certain Factoring
Agreement now existing conditions, representations, warranties, and agreements of which are made a part of this sale and assignments
and incorporated herein by reference. 	TOTAL:	 
	By our signature
    hereto, Seller expressly warrants the validity and accuracy of the invoice(s), and confirms that there are no special conditions,
    allowances, prior or current arrangements, offsets, disputes, liens or contra accounts that would in any way affect payment
    of this/these invoice(s). In the event that any such arrangements, liens, or, offsets, disputes or contra accounts are
    hereafter asserted by the customer, we agree immediately.	Gross Advance

Amount	 
	Check Number: ____________________ Check Date: _______	Chargeback	 
	Seller Name: PHUNWARE, INC.	Refund	 
	Signature:
    ___________________ Date: ____________________	Net Payment	 

 

    

     

    

 

BayViewFunding

 

SIGNATURE
AUTHORIZATION

 

This
document gives CSNK Working Capital Finance Corp. d/b/a Bay View Funding authority to accept the signature(s) which appear herein
below, on all Schedule(s) and Assignment(s) of Accounts, or in any other connection having to do with the Factoring Agreement
entered into between you and the undersigned, dated June 14. 2016.

 

Said authorized signatures are as follows:

 

	Name	 	Title	 	Sample Signature
	 	 	 	 	 
	1. Alan S. Knitowski	 	CEO	 	/s/ Alan S. Knitowski
	 	 	 	 	 
	2. Matt Aune	 	CFO	 	/s/ Matt Aune
	 	 	 	 	 
	3.____________________	 	_____________	 	_______________________

 

	 	Authorized by:
	 	 
	Effective Date: 6/15/2016	Seller: Phunware, Inc.
	 	 
	 	A Delaware corporation

 

	 	By:	 /s/ Alan S. Knitowski
	 	 	Alan S. Knitowski, CEO

 

    

     

    

 

BayViewFunding

 

FACTORING
PROCEDURES

(COPIES
PROGRAM)

 

FACTORING
COPIES PROGRAM

 

Bay
View Funding (hereafter referred to as “BVF”) has approved your company to factor under its copies program. BVF has
established a condensed list of factoring procedures for you to follow. Please review the following requirements carefully and
contact your BVF representative if you have any questions.

 

FAILURE
TO FOLLOW THE REQUIREMENTS OF THIS PROGRAM MAY RESULT IN BVF REQUIRING YOU TO SUBMIT ORIGINAL INVOICES AND ORIGINAL BACK-UP DOCUMENTATION
PRIOR TO FUNDING.

 

ELIGIBILITY
CRITERIA

 

		●	Invoices,
                                         with all supporting documentation required by your customer to pay the invoice, must
                                         be submitted directly to your customer in a timely manner.

 

		o	Invoices
                                         for customers which accept legible copies of invoices and backup must be submitted to
                                         your customer within one day of the invoice being generated.

 

		o	Invoices
                                         for customers requiring original invoices and original backup must be mailed to your
                                         customer within three days of the invoice being generated.

 

		●	BVF’s
assignment language must be on all invoices.

 

		●	Invoices
must be billed net of fees, discounts or other offsets.

 

		●	All
invoice documentation submitted to BVF must be completely legible.

 

		●	If
you receive a payment for a factored invoice it must be immediately forwarded to BVF in its original form.

 

INVOICE
FUNDING REQUIREMENTS

 

Only
legible images of invoices with BVF’s assignment language may be submitted for factoring. Assignment language, which must
be added to your invoice template, is below:

 

NOTICE
OF ASSIGNMENT

This
Account has been assigned

and
must be paid only to

 

BAY
VIEW FUNDING

P.O.
Box 204703

 

Dallas,
TX 75320-4703

 

Bay
View Funding must be

promptly
notified at (800) 229-9000

of
any claims or offsets against this invoice

 

Legible
invoice backup documentation (i.e. contracts, purchase orders, statements of work, proof of completion of service or delivery
of product.) must be provided along with all invoices submitted for factoring.

 

Invoices
submitted for factoring must be listed on an accompanying Schedule of Accounts (SOA). Each SOA must be signed by an authorized
representative of your company (only signatures recorded on the Signature Authorization are accepted). Invoices, backup documentation
and the accompanying SOA must be received by 1 p.m. PST to ensure funding the following business day.

 

    

     

    

 

BayViewFunding

 

ACCOUNT
DEBTOR CREDIT APPROVAL AND NOTIFICATION/VERIFICATION

 

All
account debtors (customers) must be credit approved by BVF before the invoices are submitted for funding. Failure to obtain customer
credit approvals may result in a delay in funding or invoices not being funded.

 

Credit
approved invoices submitted for factoring are verified with customers for accuracy before being purchased. A disputed invoice
will not be purchased until its resolution is acknowledged in writing by your customer.

 

NOTICE
OF ASSIGNMENT

 

Customers
must consent to a written acknowledgment of BVF as an assignee for invoice payment(s) before invoices submitted for factoring
can be purchased.

 

INVOICE
PAYMENTS

 

All
factored invoice payments are the property of BVF. DO NOT CASH FACTORED INVOICE PAYMENTS. Cashing factored invoice payments
(converting funds) is a breach of your Factoring Agreement. If you receive a payment for a factored invoice, please notify your
BVF representative and send it to our California office location at 2933 Bunker Hill Lane, Suite 210, Santa Clara, CA 95054.

 

By
signing below, the undersigned hereby acknowledges and agrees to the procedures and requirements listed above and failure to abide
by these procedures and may result in losing eligibility for the copies program.

 

PHUNWARE,
INC.

 

	By:	/s/ ALAN S. KNITOWSKI	 	Date:	6/15/2016
	 	ALAN S. KNITOWSKI, CEO	 	 	 
	 	 	 	 	 
	By:	/s/ MATT AUNE	 	Date:	6/15/2016
	 	MATT AUNE, CFOExhibit 10.1

 Exhibit 10.1 

***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. 
 CONFIDENTIAL 

Execution Copy 

COLLABORATION AND LICENSE AGREEMENT 

This COLLABORATION AND LICENSE AGREEMENT (this “Agreement”) is entered into as of June 27, 2010 (the
“Effective Date”) by and between XENCOR, INC., a Delaware corporation with its principal offices at 111 West Lemon Avenue, Monrovia, CA 91016 (“Xencor”), and MORPHOSYS AG, a German
corporation with its principal offices at Lena-Christ-Strasse 48, 82152 Martinsried/Planegg, Germany (“MorphoSys”). 

BACKGROUND 
 1.
            Xencor has developed a proprietary monoclonal antibody to CD19 that has high ADCC activity, XmAb5574, more particularly defined below; 

2.             MorphoSys has expertise in the research, development, and
partnering of antibody-based therapeutic products; 
 3.             MorphoSys
is interested in obtaining an exclusive license to further develop and commercialize Xencor’s XmAb5574 (and certain related antibodies and products, more particularly defined below) worldwide; and 

4.             Xencor is willing to grant such license to MorphoSys on the terms
and conditions set forth below. 
 NOW, THEREFORE, in consideration of the foregoing premises and the covenants and obligations set
forth in this Agreement, the Parties agree as follows: 
 AGREEMENT 

ARTICLE 1 

DEFINITIONS 
 The
initially capitalized terms below in this Article have the following meanings as used throughout this Agreement. Derivative forms of these defined terms shall be interpreted accordingly. “Includes,” “including” and
all other conjugations of “to include” shall be deemed followed by “without limitation” regardless of whether “without limitation” is actually written there (and drawing no implications from inconsistent usage as to
whether such phrase is or is not actually written). 

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

1.2              
“Affiliate” means, with respect to a Party, any entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such Party. For this purpose,
“control” means the ownership of fifty percent (50%) or more of the voting securities entitled to elect the directors 

  
 ***Confidential
Treatment Requested 

 
or management of the entity, or the actual power to elect or direct the management or policies of the entity, whether by law, contract or otherwise. 

1.3              
“Affinity Constant of Binding” means the affinity of an Antibody Fc to a Fcg receptor as determined using the protocol in Exhibit L. The Affinity Constant of Binding is increased, greater or higher if the KA value is nominally increased; as an example a KA of 107 1/M is
increased, greater or higher than 106 1/M. 

1.4              
“ALL” means acute lymphoblastic leukemia. 

1.5              
“Antibody” means any antibody, whether naturally occurring, artificially produced, raised in an artificial system, or created through modification of another antibody or otherwise; any fragment of any of the foregoing; and any
chemically modified versions of the foregoing antibodies (including versions that are conjugated with another chemical entity, such as a drug or toxin; pegylated versions (regardless of whether containing amino acid substitutions in order to achieve
pegylation); and other chemically modified versions). 

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

1.7              
“BLA” means a Biologic License Application (as defined in the U.S. Federal Food, Drug and Cosmetics Act and the regulations promulgated thereunder (21 C.F.R. §§ 600-680) in the
United States or a comparable filing in any other jurisdiction (i.e., a Marketing Authorization Application submitted to a Regulatory Authority that must be made prior to importing, marketing and selling a biological product). 

1.8              
“Budget” has the meaning set forth in Section 3.1. 

1.9              
“Candidate-Specific Patent License” has the meaning set forth in Section 4.1. 

1.10             “CDC”
means complement-dependent cytotoxicity. 

1.11             “CD19”
means CD19 (Cluster of Differentiation 19) protein, which includes human and other species homologues. 

1.12             “CDR”
means a complementarity determining region of an antibody. 

1.13             “Clinical
Regulatory Filings” means data, filings or materials relating to Licensed Antibody or Licensed Products submitted to the applicable Regulatory Authorities, including (a) data derived from
non-clinical studies and clinical trials, and (b) data, filings or materials relating to or contained in any CMC or DMF. 

1.14             “CLL” means chronic lymphocytic leukemia.

 1.15            
“CMC” means the Chemistry, Manufacturing and Controls (or equivalent) portion of any Licensed Product BLA in the United States, or equivalent or similar portion of a Marketing Authorization Application or Marketing Authorization
in another regulatory jurisdiction. 

1.16             “Collaboration
Confidential Information” has the meaning set forth in Section 1.22. 

1.17             “Collaboration
Term” means the time starting from the Effective Date until the earlier of (i) the Ongoing Phase 1 Trial is Completed (Reporting Purposes) and (ii) Xencor’s sponsorship of the Ongoing Phase 1 Trial has been transferred to
MorphoSys. 
 1.18            
“Commercially Reasonable Efforts” means the efforts required in order to carry out a task in a diligent and sustained manner without undue interruption, pause or delay; which level is at least commensurate with (i) the
level of efforts that MorphoSys, Xencor or a similarly situated biopharmaceutical company and (ii) regarding MorphoSys’s Sublicensee after the Pre-Sublicensing Term, the level of efforts
a company that is similarly situated as the respective Sublicensee, would devote to a product of similar 

  
 ***Confidential
Treatment Requested 

 
potential and having similar commercial and scientific advantages and disadvantages resulting from the company’s own research efforts (i.e. explicitly ignoring the royalty, milestone and all
other payments due to Xencor under this Agreement), taking into account the product’s safety and efficacy; the competitiveness of alternative products; the product’s proprietary position; pricing and reimbursement; market-specific factors;
technical, scientific and regulatory matters including estimated probabilities of success for future development stages; and all other relevant commercial factors. Commercially Reasonable Efforts requires (without limitation) that the Party
exerting such efforts (i) promptly assigns responsibility for its obligations to specific employee(s) who are held accountable for progress and monitor such progress, on an ongoing basis, (ii) set and continue to seek to achieve
specific and meaningful objectives for carrying out such obligations, and (iii) make and implement decisions and allocate resources designed to advance progress with respect to such objectives, in each case in a commercially reasonable manner.

 1.19             “Competing
Antibody” means any anti-CD19 Antibody that has [...***...] and “Competing Product” means any pharmaceutical composition that contains at least one Competing Antibody. 

1.20             “Completed (Reporting
Purposes)” means with respect to the Ongoing Phase 1 Trial the date of receipt of the final and signed clinical study report. 

1.21             “Completed
(Performance Metric)” means that the last patient in the Ongoing Phase 1 Trial has received such patient’s last dose of Licensed Product. 

1.22             “Confidential Information” means all
proprietary information, including scientific, technical and manufacturing information and plans, marketing and business plans, and financial and personnel matters relating to a Party or its present or future products, sales, suppliers, customers,
employees, investors or business, received by either Party from the other Party or disclosed by either Party to the other Party pursuant to this Agreement, or pursuant to or that is otherwise subject to the Prior CDA; in each case, which information
is disclosed under circumstances reasonably indicating that it is confidential. Notwithstanding the foregoing, Confidential Information shall not include information that, in each case as demonstrated by competent written documentation: 

                   (a)  
           is publicly disclosed and made generally available to the public by the disclosing Party, either before or after it becomes known to the receiving Party;

                   (b)  
           was known to the receiving Party, without obligation to keep it confidential, prior to the date of disclosure by the disclosing Party; 

                   (c)  
           is subsequently disclosed to the receiving Party by a Third Party lawfully in possession thereof without obligation to keep it confidential and without a
breach of such Third Party’s obligations of confidentiality; 

                   (d)  
           has been publicly disclosed or made generally available to the public other than through any act or omission of the receiving Party in breach of this
Agreement; or 

                   (e)  
           has been independently developed by the receiving Party without the aid, application or use of the disclosing Party’s Confidential Information (the
competent written proof of which must be contemporaneous with such independent development); 
 Notwithstanding all of the foregoing, all Know-how, data and results generated by or on behalf of either Party (or its Affiliates) under this Agreement during the Collaboration Term and related to Licensed Antibody and/or Licensed Product
(“Collaboration Confidential Information”) shall be regarded as Confidential Information of MorphoSys. All Know-how, data and results generated by or on behalf of Xencor (or its Affiliates)
prior to the Effective Date in any pre-clinical studies and related to Licensed Antibody and/or Licensed Product (“Xencor Pre-Clinical Confidential
Information”) shall be regarded as Xencor Confidential Information. 
 For clarity, any further definition and/or description of Confidential
Information stated in this Agreement shall also fall under this definition of Confidential Information. 

  
 ***Confidential
Treatment Requested 

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

1.24            
“Cover” means, with respect to a particular item and a particular Patent, that such Patent claims (as opposed to merely disclosing) directly or indirectly: (a) the composition of such item, any of its ingredients or
formulations or any product containing or that is made using such item (by virtue of such product containing or being made using such item); (b) a method of making or using any of the foregoing things referred to in (a); and/or (c) an item
used or present in the manufacture of any of the foregoing things referred to in (a) (for example, with respect to a biologic, any vector, plasmid or cell line used to manufacture such product or item or any ingredient in either of them). 

1.25             “Data Escrow
Agent” has the meaning set forth in Section 7.7. 

1.26            
“Distributor” means any non-Sublicensee Third Party (i.e., any Third Party that is not granted a Sublicense) that all of (a) has been granted the right to distribute or resell in the
MorphoSys Territory any quantities of Licensed Product, which quantities are provided by MorphoSys or its Affiliates or its Sublicensee(s); (b) pays MorphoSys or its Affiliate or its Sublicensee(s) a transfer price that is independent of
resale price; (c) does not pay MorphoSys or its Affiliate or its Sublicensee(s) a royalty calculated as a percentage of sales or net sales; and (d) does not pay MorphoSys or its Affiliate or its Sublicensee(s) any other
consideration in connection with Licensed Antibody or Licensed Product. 

1.27             “DMF”
means a Drug Master File in the United States or equivalent filing or filing serving a similar purpose in another regulatory jurisdiction. 

1.28             “EMA”
means the European Medicines Agency or any successor entity. 

1.29             “Escrow Agent”
has the meaning set forth in Section 4.3 (d)(i). 

1.30             “Excluded
Antibodies” means all Antibodies to CD19, other than Licensed Antibodies. Excluded Antibodies specifically include (a) XmAb5871 and (b) all XmAb5871 Program Antibodies. It is understood and agreed, and MorphoSys is fully
aware, that XmAb5574 and XmAb5871 [...***...]. 

1.31             “Fc”
shall mean the complete constant region of an antibody (meaning, e.g., IgG1 from residue Alanine 118 (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, GE, 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 both naturally occurring such
fragments, naturally occurring variants of such fragments, and non-naturally occurring variants of such fragments. 

1.32             “FDA”
means the United States Food and Drug Administration or any successor entity. 

1.33            
“Field” means all fields of use. 
 1.34            
“First Major Indication” means [...***...]. 

1.35             “FTE”
means the equivalent of one (1) person working full time for one (1) year (whether provided through the working time of one (1) individual or more individuals) which equates to a total of one thousand six hundred sixty four (1,664)
hours per year of work. 

  
 ***Confidential
Treatment Requested 

1.36             “FTE
Rate” means [...***...] dollars ($[...***...]) per FTE, adjusted annually for inflation by the percent change in the Manufacturers Price Index as reported by the U.S. Department of Labor, using 2010 as the reference year. 

1.37             “GAAP”
means then-current applicable Internationally Accepted Accounting Principles, consistently applied. 

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

1.39             “Joint Collaboration
Product Inventions” means any and all Product Inventions, for which Xencor (or its Affiliate) and MorphoSys (or its Affiliate) both have (meaning that Xencor (or its Affiliate) and MorphoSys (or its Affiliate) both employ or have engaged as
a consultant) at least one (1) person who would be a properly named inventor on the U.S. patent claiming such invention, that were invented in the course of MorphoSys’ (or its Affiliate’s) or Xencor’s (or its Affiliate’s)
anti-CD19 Antibody and/or product containing an anti-CD19 Antibody activities, other than any MorphoSys Core Improvement Inventions. (Inventorship for purposes of this definition shall be determined in accordance with United States patent law.) 

1.40             “Joint Collaboration
Product Invention Patents” means all Patents claiming Joint Collaboration Product Invention(s). 

1.41             “Joint
Development Committee” has the meaning given in Section 2.2(a) and “JDC” has the same meaning. 

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

1.43             “Licensed Antibody” means
(a) XmAb5574, and (b) any other Antibody that specifically binds CD19 and that contains a Xencor High-ADCC/CDC Fc. “Licensed Antibody” excludes XmAb5871 and all Antibodies in the XmAb5871 Program. 

1.44             “Licensed
Broader Anti-CD19 Patents” means all Patents that claim priority to a Licensed Patent in existence on the Effective Date and [...***...]. 

1.45             “Licensed
Candidate-Specific Patents” means all Patents that claim priority to a Licensed Patent in existence on the Effective Date and that Cover XmAb5574 and no other Antibody. To avoid doubt, “Licensed Candidate-Specific Patents”
exclude all Patents that Cover any Excluded Antibody(ies). 

1.46             “Licensed
Core/Fc Platform Patents” means those Licensed Patents and/or Post-Sublicensing Licensed Patents that contain claims that [...***...]. 

1.47             “Licensed Know-How” means all unpatented Know-How that (i) is owned or Controlled by Xencor or its Affiliate as of the Effective Date of this Agreement, or owned or
Controlled by Xencor or its Affiliate thereafter during the Collaboration Term, and (ii) is necessary or useful for Licensed Antibody, and/or Licensed Product development and/or commercialization (including
Know-How relating to any method of making, using (including methods of administration and dosing regimens) or testing of (or in the case of testing, of or for the presence of) or manufacturing of a Licensed
Antibody and/or Licensed Product) or any article necessary or useful to practice (including those present during the practice of any of such method) any of the foregoing; but specifically excluding computational protein design methods and drug
discovery (but not development) methods and Know-How of an acquiror and/or the acquiring corporate family existing prior to or on the date of a Xencor Change of Control or independently of Xencor thereafter
(for clarity, in the case where Xencor is merged into another entity, 

  
 ***Confidential
Treatment Requested 

 
the references here to “Xencor” and “independently of Xencor” mean to refer to “the merged entity” and “independently of the merged entity”). 

1.48             “Licensed
Patents” means (a) the Listed Xencor Patents, (b) all other Patents (including Xencor’s interest in any Joint Collaboration Invention Patents meeting the requirements of the rest of this clause (b)) Controlled by Xencor or
its Affiliate during the Term and claiming priority to a Patent in existence prior to the end of the Pre-Sublicensing Term that Cover Licensed Antibody and/or Licensed Product, and (c) all Post-Partnering
Patents claiming priority to a Patent first filed during the Pre-Sublicensing Term, but excluding after a Xencor Change of Control all Patents of the acquiror and/or the acquiring corporate family existing
prior to or on the date of such Xencor Change of Control, claiming priority to such a Patent existing prior or on such date, or owned or controlled by such acquirer and/or the acquiring corporate family independently of Xencor (for clarity, in the
case where Xencor is merged into another entity, the references here to “Xencor” and “independently of Xencor” mean to refer to “the merged entity” and “independently of the merged entity”). For the
avoidance of doubt, all Patents that qualified as Licensed Patents prior to the date of such Xencor Change of Control shall remain part of Licensed Patents during the Term. To avoid doubt, Licensed Patents exclude [...***...]. 

1.49             “Licensed
Products” means any and all pharmaceutical compositions that contain any Licensed Antibody.     Nothing in this Agreement shall be read to grant MorphoSys a license from Xencor to any Antibody that is not a Licensed
Antibody, nor to any product to the extent containing an Antibody that is not a Licensed Antibody (e.g., in the case of a product that combines a Licensed Antibody with some other antibody that itself does not qualify as a Licensed Antibody, if that
other antibody infringes any Patent of Xencor, no license is granted to MorphoSys with respect to such other antibody or with respect to the product to the extent Xencor’s coverage on it is a result of the inclusion of such other
antibody). For clarity, a license is granted by Xencor to MorphoSys to apply Xencor High-ADCC/CDC Fc(s) to Antibodies other than XmAb5574, only if such other Antibody by such application of such Xencor High-ADCC/CDC Fc(s) falls under
the definition of Licensed Antibody. Furthermore, to avoid doubt, no license to MorphoSys to incorporate [...***...]. 

1.50             “Licensed
Technology” means all Licensed Patents, Post-Sublicensing Licensed Patents and Licensed Know-How. 

1.51             “Listed Xencor
Patents” means (a) all patents and patent applications listed in Exhibit B; (b) all patent applications (including provisional and utility applications) claiming priority to or common priority with or based on any of the
foregoing, including all divisionals, continuations, continuations-in-part, patents of addition and substitutions of any of the foregoing; (c) all patents issuing
on any of the foregoing, and all reissues, reexaminations, renewals and extensions of any of the foregoing, (d) all counterparts to the foregoing in other countries; and (e) all supplementary protection certificates, restoration or
extension of patent term and other similar rights of Xencor and its Affiliates based on any of the foregoing. At the reasonable request of MorphoSys, but no more than once per year, Xencor shall provide MorphoSys with an updated list of Listed
Xencor Patents and correct any typographical errors. 

1.52             “Major
Countries” means United States, Great Britain, France, Germany, Italy, Spain, and Japan. 

1.53             “M&A Event”
has the meaning set forth in Section 13.9. 

1.54            
“Manufacturer” means Xencor’s Third-Party supplier of Licensed Antibody or Licensed Product, current or future. [...***...]. 

1.55             “Marketing
Authorization” means, with respect to a Licensed Product, all approvals (including supplements, amendments, pre- and post-approvals), licenses, registrations and authorizations of any national,
supra-national (e.g., the European Commission or the Council of the European Union), regional, state or local regulatory agency, department, bureau, commission, council or other governmental authority, necessary for the manufacture, distribution,
use and/or sale of such Licensed Product in a regulatory jurisdiction, to avoid doubt excluding in all cases pricing and reimbursement approvals (whether governmental or private payor). 

  
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1.56             “Marketing
Authorization Application” means a BLA or a comparable filing or filing serving to apply for Marketing Authorization in any other jurisdiction, in each case with respect to a Licensed Product. 

1.57             “Material
MorphoSys Change” shall mean any material change to the plan component of the MorphoSys Annual Development Report. Without limiting the generality of the foregoing the following kinds of changes are always considered
material: (1) any change to the dosage; (2) any stop of dose escalation in any Phase 1 Trial; (3) any change to trial design, trial endpoints and/or protocols (or selection of them in the first instance); (4) change of
Manufacturer; and (5) change to the Licensed Antibody and/or Licensed Product being pursued. 

1.58             “Material Xencor
Change” shall mean any material change to the Xencor Development Plan. Without limiting the generality of the foregoing the following kinds of changes are always considered material (and therefore always require JDC
approval): (1) any change to the dosage; (2) any stop of dose escalation in any Phase 1 Trial; (3) any change to trial design, trial endpoints and/or protocols (or selection of them in the first instance); (4) any change to
the manufacturing process of the Licensed Antibody and/or Licensed Product being pursued; (5) any change to product specifications communicated to Regulatory Authorities; (6) any change to release assays for Licensed Antibody and/or
Licensed Products; (7) any change to the formulation of the Licensed Antibody and/or Licensed Product being pursued; (8) inclusion or exclusion of clinical sites; (9) change of the clinical CRO and/or any changes to contracts with
CROs; (10) change of Manufacturer; and (11) change to the Licensed Antibody and/or Licensed Product being pursued. 

1.59             “Minor
Indication” means any disease or condition other than [...***...]. The Minor Indications include [...***...]. 

1.60             “MorphoSys
Annual Development Report” means, for each calendar year, the written report that describes MorphoSys’ clinical development plans for Licensed Product activities for the MorphoSys Territory for the Field for that year, and covers other
subject matter as called for in Section 2.2 (c)(ii). 

1.61             “MorphoSys
Change of Control” means (a) any acquisition, sale or merger of MorphoSys (or all or substantially all of its assets), regardless of the form of the transaction (specifically including stock sales, asset sales, and reverse
transactions), or (b) MorphoSys becoming Affiliated with any then-top-50 pharma based on pharmaceutical sales (as determined by reference to IMS Health data, or
similarly reputable and reliable source). 

1.62             “MorphoSys Core
Improvement Inventions” means any and all Product Inventions, for which MorphoSys (or its Affiliate) has (meaning that it employs or has engaged as a consultant) at least one (1) person who would be a properly named inventor on the
U.S. Patent claiming such invention, that were invented in the course of MorphoSys’ or its Affiliate’s Licensed Product activities during the Term, and (A) relate to enhancing the antibody-dependent cytotoxic activity of an Fc in
comparison to human wild type IgG1 antibodies, including, but not limited to, ADCC, CDC, and/or phagocytosis, and (B) are not claimed in patents all of the claims of which are limited by CD19, any other target, or by CDR or specificity
of the Antibody. (Inventorship for purposes of this definition shall be determined in accordance with United States patent law.) 

1.63             “MorphoSys Core
Improvement Invention Patents” means all Patents claiming MorphoSys Core Improvement Invention(s). 

1.64             “MorphoSys Development
Costs” has the meaning set forth in Section 10.7 (e). 

1.65             “MorphoSys Know-How” means all Know-How that MorphoSys or its Affiliate Controls during the Term that relates in any way to any Licensed Product, Licensed Antibody or a method
of making, using (including methods of administration and dosing regimens) or testing of (or in the case of testing, of or for the presence of) any of the foregoing (or any article necessary or useful to practice (including those present during the
practice of) any such method). The MorphoSys Know-How includes all clinical data generated in clinical trials of Licensed Product by or for MorphoSys or its Affiliates. 

1.66             “MorphoSys Pre-Sublicensing Patents” means all Patents Controlled during the Term by MorphoSys or its Affiliate and claiming priority to any Patent in existence prior to the end of the
Pre-Sublicensing 

  
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Term that Cover any MorphoSys Product Invention (including MorphoSys Product Invention Patents and MorphoSys’s interest in the Joint Collaboration Product Invention Patents), but
specifically excluding (a) the MorphoSys Core Improvement Invention Patents (which are assigned to Xencor by this Agreement, such that Xencor owns them), and (b) after a MorphoSys Change of Control all Patents of the acquiror and/or the
acquiring corporate family existing prior to or on the date of such MorphoSys Change of Control, claiming priority to such a Patent existing prior or on such date, or owned or controlled by such acquirer and/or the acquiring corporate family
independently of MorphoSys (for clarity, in the case where MorphoSys is merged into another entity, the references here to “MorphoSys” and “independently of MorphoSys” mean to refer to “the merged entity” and
“independently of the merged entity”). For the avoidance of doubt, all Patents that qualified as MorphoSys Pre-Sublicensing Patents prior to the date of such MorphoSys Change of Control shall
remain part of MorphoSys Pre-Sublicensing Patents during the Term. 

1.67             “MorphoSys
Product Inventions” means any and all Product Inventions, for which MorphoSys (or its Affiliate) has (meaning that it employs or has engaged as a consultant) at least one (1) person who would be a properly named inventor on the U.S.
Patent claiming such invention, that were invented in the course of MorphoSys’ or its Affiliate’s Licensed Antibody and/or Licensed Product activities during the Term, other than any Joint Collaboration Product Inventions and MorphoSys
Core Improvement Inventions. (Inventorship for purposes of this definition shall be determined in accordance with United States patent law.) 

1.68             “MorphoSys
Product Invention Patents” means all Patents claiming MorphoSys Product Invention(s). 

1.69             “MorphoSys
Territory” means worldwide. 
 1.70             “Net
Sales” means the gross amount invoiced by MorphoSys or its Affiliates or any Sublicensee(s) for the sale of Licensed Products in the MorphoSys Territory, less any of the following applicable deductions related to such sale and included
in the invoiced amounts: 

(a)             [...***...]; 

(b)             [...***...];

 (c)             [...***...];

 (d)             [...***...];
and 
 (e)            
[...***...]; 
 [...***...] 

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

Net Sales includes [...***...] 

Net Sales amounts shall be determined from the books and records of MorphoSys and its Affiliates maintained in accordance with GAAP
consistently applied, and such amounts shall be calculated using the same accounting principles used for other MorphoSys (or MorphoSys Affiliate) products for financial reporting purposes. 

1.71             “NHL”
means non-Hodgkin lymphoma. 

  
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1.72             “Ongoing Phase 1
Trial” means the clinical trial as described in the U.S. IND number [...***...] and all related activities identified in the Xencor Development Plan, which IND was submitted by Xencor to the FDA and filed by the FDA prior to the
Effective Date. 
 1.73            
“Other Licensee(s)” means any Third Party to whom Xencor or any of its Affiliates has granted a license or sublicense to research, develop, manufacture and/or commercialize any XmAb5871 Product. 

1.74             “Party”
means Xencor or MorphoSys and “Parties” means both of them. 

1.75            
“Patent” means any patent application or patent anywhere in the world, including all of the following kinds: provisional, utility, divisional, continuation,
continuation-in-part, and substitution applications; and utility, re-issue,
re-examination, renewal and extended patents, and patents of addition, and any supplementary protection certificates, restoration of patent terms and other similar rights. 

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

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

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

1.79             “Post-Partnering
Patents” means all issued Patents that both (X) claim inventions invented by Xencor and/or its Affiliate(s) and/or an Other Licensee (meaning that any of the foregoing employs or has engaged as a consultant at least one
(1) person who would be a properly named inventor on such Patent) claiming priority to a Patent first filed after the Pre-Partnering Term, and (Y) contain only claims that recite the sequence or make
reference to the sequence of the CDRs or variable regions, or portions thereof (whether or not also providing for homology to such sequences), of XmAb5574 [...***...] and/or any and all indications or applications thereof, but excluding
after a Xencor Change of Control all Patents of the acquiror and/or the acquiring corporate family existing prior to or on the date of such Xencor Change of Control, claiming priority to such a Patent existing prior or on such date, or owned or
controlled by such acquirer and/or the acquiring corporate family independently of Xencor (for clarity, in the case where Xencor is merged into another entity, the references here to “Xencor” and “independently of Xencor” mean to
refer to “the merged entity” and “independently of the merged entity”). For the avoidance of doubt, all Patents that qualified as Licensed Patents prior to the date of such Xencor Change of Control shall remain part of
Licensed Patents during the Term. 

1.80             “Post-Sublicensing
Licensed Patents” means (a) all Patents (including Xencor’s interest in any Joint Collaboration Product Invention Patents described by the rest of this clause (a)) Controlled by Xencor or its Affiliate during the Term and claiming
priority to a Patent first filed after the Pre-Sublicensing Term that Cover Product Inventions, and (b) all Post-Partnering Patents claiming priority to a Patent first filed after the Pre-Sublicensing Term, but excluding after a Xencor Change of Control all Patents of the acquiror and/or the acquiring corporate family existing prior to or on the date of such Xencor Change of Control, claiming
priority to such a Patent existing prior or on such date, or owned or controlled by such acquirer and/or the acquiring corporate family independently of Xencor (for clarity, in the case where Xencor is merged into another entity, the references here
to “Xencor” and “independently of Xencor” mean to refer to “the merged entity” and “independently of the merged entity”). For the avoidance of doubt, all Post-Sublicensing Licensed Patents that qualified
as Post-Sublicensing Licensed Patents prior to the date of such Xencor Change of Control shall remain part of Post-Sublicensing Licensed Patents during the Term. 

1.81            
“Post-Sublicensing Patents” means all issued Patents that both (1) claim inventions invented by MorphoSys and/or its Affiliate(s) and/or its Sublicensee(s) (meaning that any of the foregoing employs or has engaged
as a consultant at least one (1) person who would be a properly named inventor on such Patent (or its U.S. counterpart, if it is not a U.S. patent)) that claim priority to a Patent first filed after the
Pre-Sublicensing Term, and (2) contain only claims that recite the sequence or make reference to the sequence of the CDRs or variable regions, or portions thereof (whether or not also providing for
homology to such sequences), of XmAb5574 and/or 

  
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 XmAb5871 and/or any and all indications or applications thereof; but excluding after a MorphoSys Change of
Control all Patents of the acquiror and/or the acquiring corporate family existing prior to or on the date of such MorphoSys Change of Control, claiming priority to such a Patent existing prior or on such date, or owned or controlled by such
acquirer and/or the acquiring corporate family independently of MorphoSys (for clarity, in the case where MorphoSys is merged into another entity, the references here to “MorphoSys” and “independently of MorphoSys” mean to refer
to “the merged entity” and “independently of the merged entity”). For the avoidance of doubt, all Patents that qualified as Post-Sublicensing Patents prior to the date of such MorphoSys Change of Control shall remain part of
Post-Sublicensing Patents during the Term. 
 1.82
            “Pre-Partnering Term” means the time from [...***...]. 

1.83
            “Pre-Sublicensing Term” means the time from [...***...]. 

1.84             “Prior
CDA” means that certain Mutual Confidential Disclosure Agreement dated [...***...] and that certain confidentiality agreement between the Parties dated [...***...]. 

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

1.86             “Regulatory
Authority” means any national (e.g., but without limitation, the FDA), supra-national (e.g., but without limitation, the EMA), regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity
in any jurisdiction of the world involved in the granting of Marketing Authorization and/or authorizations for clinical trials for pharmaceutical products or medical devices (including regulated diagnostics). 

1.87             “Royalty
Term” has the meaning set forth in Section 5.4. 
 1.88
            “[...***...]” shall mean [...***...]. 

1.89             “Second Major
Indication” means [...***...]. 
 1.90
            “Sublicense” means a sublicense or other right (including any option for a sublicense) for any Licensed Antibody, specifically
excluding rights granted to Distributors. 
 1.91
            “Sublicensee” means a Third Party to whom MorphoSys (or its Affiliate) has granted a Sublicense, specifically excluding
Distributors. 
 1.92
            “Sublicensing Revenue” means all consideration received by MorphoSys or any of its Affiliates from Sublicensees in
connection with [...***...], excluding only: [...***...]. 
 For this purpose, “Sublicensees” means both
MorphoSys’ and its Affiliate’s direct Sublicensee, and all those entities obtaining rights directly or indirectly from such direct Sublicensee(s) (through one (1) or more layers). 

To avoid any doubt “consideration received by MorphoSys or any of its Affiliates from Sublicensees in connection with
[...***...]” extends to and includes [...***...]. 
 Also to avoid doubt, Sublicensing Revenue includes [...***...],
provided, however, that [...***...]. 
 Also to avoid doubt, if MorphoSys or its Affiliate receives consideration under an
option for a Sublicense, that consideration is taken into account in the calculation of Sublicensing Revenue, but the date of the granting of the option will not be taken into account for the purposes of determining the end of the Pre-Sublicensing Term. 

  
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1.93             
“Term” has the meaning set forth in Section 10.1. 

1.94             “Third
Party” means any person or entity other than a Party or an Affiliate of a Party. 

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

1.96             “Wild Type IgG
1” means the [...***...], which has [...***...] and a [...***...] and the [...***...] of which is set forth in Exhibit M. Protein, expression plasmid and production cell line are deposited at the Escrow Agent as
further set out in Section 4.3 (d). 

1.97             “Xencor
Change of Control” means (a) any acquisition, sale or merger of Xencor (or all or substantially all of its assets), regardless of the form of the transaction (specifically including stock sales, asset sales, and reverse transactions),
or (b) Xencor becoming Affiliated with any [...***...] based on pharmaceutical sales (as determined by reference to IMS Health data, or similarly reputable and reliable source). 

1.98             “Xencor
Development Plan” means the plan attached as Exhibit J, as it may be updated in accordance with Article 2. 

1.99             “Xencor Fc
Technology” means all variants listed in Exhibit C, D and F, and all Fc variants owned and Controlled by Xencor during the Term. 

1.100           “Xencor High-ADCC/CDC Fc” means an Fc that both of
(a) and (b): 

(a)             contains either of
(i) and (ii): 

                 (i)    
         solely any Fc variant(s) set forth in Exhibit D (as “variant” is defined in such Exhibit), provided, however, that the Antibody
containing such Fc is [...***...]; or 

                 (ii)    
        any Fc variant(s) that has been proven to [...***...], including, but not limited to, [...***...], and has an Affinity Constant of Binding
[...***...] that is [...***...] greater than [...***...] as measured by [...***...] (as set forth in Exhibit L), and does not have an Affinity Constant of Binding to [...***...] that is [...***...] greater
than [...***...]; and that contains [...***...]; and 

(b)             does not contain
any of the variants referred to in Exhibit F (as “variant” is defined in such Exhibit F). Notwithstanding the foregoing, the restriction of this subsection (b) shall not apply to any of the variants listed in Exhibit D
(as “variant” is defined in such Exhibit D). 
 1.101
          “Xencor Pre-Clinical Confidential Information” has the meaning set forth in Section 1.22. 

1.102           “Xencor
Pre-Sublicensing Product Inventions” means any and all Product Inventions, for which Xencor (or its Affiliate) has (meaning that Xencor (or its Affiliate) employs or has engaged as a consultant) at
least one (1) person who would be a properly named inventor on the U.S. patent claiming such invention, that were invented in the course of Xencor’s (or its Affiliate’s) Licensed Product and/or Licensed Antibody [...***...]
Program activities and for which a Patent was filed during the Pre-Sublicensing Term; other than any Joint Collaboration Product Inventions or MorphoSys Product Inventions. (Inventorship for purposes of this
definition shall be determined in accordance with United States patent law.) 
 1.103
          “Xencor Pre-Sublicensing Product Invention Patents” means all Patents claiming Xencor
Pre-Sublicensing Product Invention(s). 

  
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 1.104           “Xencor
Product Inventions” means any and all Product Inventions, for which Xencor (or its Affiliate) has (meaning that it employs or has engaged as a consultant) at least one (1) person who would be a properly named inventor on the U.S.
Patent claiming such invention, that were invented in the course of Xencor’s (or its Affiliate’s) Licensed Product and/or XmAb5871 Program activities during the Term; other than any Joint Collaboration Product Inventions, Xencor Pre-Sublicensing Product Inventions or MorphoSys Product Inventions. (Inventorship for purposes of this definition shall be determined in accordance with United States patent law.) 

1.105           “Xencor Product Invention Patents” means all Patents
claiming Xencor Product Invention(s). 
 1.106
          “XmAb5574” means the monoclonal anti-CD19 Antibody that Xencor refers to as XmAb5574 as of the Effective Date, the amino acid sequence of which is set forth in
Exhibit A. Protein, expression plasmid and production cell line are deposited at the Escrow Agent as set forth in Section 4.3 (d). 

1.107           “XmAb5871” means the monoclonal anti-CD19 Antibody
that Xencor refers to as XmAb5871 as of the Effective Date, the amino acid sequence of which is set forth in Exhibit E. Protein, expression plasmid and production cell line are deposited at the Escrow Agent as set forth in Section 4.3 (d). 

1.108           “XmAb5871 Product” means any pharmaceutical
composition containing any Antibody of the XmAb5871 Program. 
 1.109
          “XmAb5871 Program,” “XmAb5871 Program Antibodies,” and “XmAb5871 Antibodies” means all anti-CD19 Antibodies that do not contain any of the
Fc variants in Exhibit D (as “variant” is defined in Exhibit D) and that both (1) (meaning either of (a) or (b)), and (2): 

(1) either of: 

                   (a)  
          the Fc of such Antibody contains solely a variant listed in Exhibit C (as “variant” is defined in Exhibit C); provided, however,
that such Antibody is [...***...]; or 

                   (b)   
         [...***...] than [...***...] and [...***...] 

                       
            (i)            such Antibody [...***...] by [...***...] compared to
[...***...] compared to [...***...] ([...***...]) of [...***...], and [...***...] that is [...***...] than [...***...], and 

                       
            (ii)          such Antibody does not have [...***...] that is [...***...] of
[...***...], and does not have [...***...] that is [...***...] 
 AND 

(2) [...***...] 

ARTICLE 2 

COLLABORATION MANAGEMENT AND DEVELOPMENT REPORTING 

2.1
              Overview. Initially, Xencor shall initiate and shall, subject to Sec. 2.2, 2.4, 2.5 and 3.11 hereof, continue to sponsor the
Ongoing Phase 1 Trial, to the extent provided for in more detail below in Sections 3.1 through 3.3. Other than the Ongoing Phase 1 Trial, MorphoSys shall have sole responsibility for development and commercialization of the Licensed
Antibody(ies) and/or Licensed Products for the Field during the Term. Information sharing, plan sharing, collaboration, coordination and development reporting between the Parties shall be as described in this Article 2. Technology
transfer, regulatory transfer, and further development and commercialization obligations are as described in Article 3. 

  
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 2.2
              Joint Development Committee. 

               (a)
            Committee Formation. The Parties shall form the Joint Development Committee promptly after the Effective Date of this Agreement. Such Joint
Development Committee shall be composed of an equal number of representatives from each Party (but in any event no less than two (2) representatives from each Party). Each Party’s initial Joint Development Committee representatives
are as written in Exhibit G. Each Party may change its representatives by written notice to the other Party. An alternate member designated by a Party may serve temporarily in the absence of a permanent member of the Joint Development
Committee for such Party. Subject to Section 2.2 (b) below, the Joint Development Committee shall continue to exist until the [...***...]. 

               (b)     
        Meetings and Procedures. The Joint Development Committee shall convene its first meeting within thirty (30) days after the Effective Date. During the
Collaboration Term, Joint Development Committee meetings shall be held at least every [...***...], and may also meet more frequently as and to the extent agreed by the Parties or if reasonably required by MorphoSys. After expiration of
the Collaboration Term, meetings shall be held at least every [...***...] and may also be held more frequently as and to the extent agreed by the Parties. Joint Development Committee meetings may be held in person or by videoconference or
teleconference, as the Parties may agree, except that at least one (1) meeting per year shall be in person. In-person meetings shall alternate between the Parties’ respective facilities. In
addition to its Joint Development Committee representatives a Party may have other personnel attend Joint Development Committee meetings but not to exceed eight (8) participants per Party. During the Collaboration Term, the Joint
Development Committee shall be chaired by [...***...] and [...***...] of the Joint Development Committee, [...***...], and the chairperson and co-chairperson of the Joint Development
Committee shall be responsible for providing an agenda for each meeting and for preparing written minutes of each meeting for approval by each Party’s Joint Development Committee representatives. MorphoSys and Xencor shall each bear all
expenses, including travel expenses, of their respective JDC members related to their participation in the JDC. In the event Xencor (a) undergoes an M&A Event and the other party to the M&A Event, respectively, at that time
(i) develops an enhanced B-cell cytotoxic anti-CD19-antibody or (ii) files or has filed an IND in any oncology indication for any Antibody of the XmAb5871 Program, or (b) itself or its Other
Licensee files or has filed an IND in any oncology indication for any Antibody of the XmAb5871 Program, then the JDC shall be discontinued. In the event MorphoSys enters into a Sublicense agreement after expiration of the Collaboration Term, the
Joint Development Committee shall only continue to meet if the Sublicense provides for a committee between MorphoSys and its Sublicensee for discussion of development of Licensed Antibody(ies) and/or Licensed Products. The Joint Development
Committee shall then meet with the same frequency as set out in the Sublicense regarding the committee meetings between MorphoSys and Sublicensee. If allowed by the Sublicense, Xencor may participate in such committee meetings according to the terms
of the Sublicense. If Xencor’s participation in such committee meetings is not allowed by the Sublicense, the Joint Development Committee shall meet within [...***...] following each respective committee meeting between MorphoSys and its
Sublicensee. 

               (c)     
       Meeting Agendas and Reporting. 

                       
        (i)             By Xencor. Until the Ongoing Phase 1 Trial is Completed (Reporting Purposes), the
agenda shall include a report by Xencor including all activities performed in such trial, status of the development of Licensed Antibody and/or Licensed Products, progress in such trial, any results of development, material meetings, minutes and
correspondence with Regulatory Authorities relating to Licensed Antibody and/or Licensed Products, data reports, any inventions generated in such trial, upcoming milestones, and any planning matters relating to the ongoing conduct or transition of
such trial. Xencor shall treat such reported information confidential and shall not disclose any of this reported information to any Third Party at any time. In addition, Xencor shall provide to MorphoSys upon MorphoSys’s request its
annual report(s) to the FDA. 

                       
        (ii)            By MorphoSys. In each calendar year, but subject to
Section 2.3, MorphoSys shall provide to Xencor the MorphoSys Annual Development Report. The MorphoSys Annual Development Report shall include in reasonable detail: (1) a summary of MorphoSys’ activities in
[...***...] (including clinical trials relating to Licensed Antibody and/or Licensed Products (including dosage, trial design and trial endpoints, protocols, Licensed Product being tested); material meetings, minutes,

  
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correspondence with Regulatory Authorities relating to Licensed Antibody and/or Licensed Products; Marketing Authorization Applications relating to Licensed Antibody and/or Licensed Products
planned for filing; data reports; publications; conferences; all patent applications filed by MorphoSys or an Affiliate claiming MorphoSys Product Inventions from that year); and (2) to the extent available, a summary of MorphoSys’ plan
for Licensed Product development in the next [...***...]. MorphoSys or — to the extent permitted by the Sublicense — its Sublicensee, shall further report to Xencor any Material MorphoSys Change to the MorphoSys Annual
Development Report within [...***...] after its occurrence. Within [...***...] after each submission to FDA, MorphoSys shall also provide to Xencor its (or its Affiliate’s) annual report(s) to the FDA relating to Licensed
Antibody(ies) or Licensed Products. With respect to annual reports to the FDA relating to Licensed Antibody(ies) or Licensed Products submitted to the FDA by Sublicensee, MorphoSys shall use Commercially Reasonable Efforts to obtain such reports and
the right from Sublicensee to share such reports with Xencor. Xencor shall treat such MorphoSys Annual Development Reports and such other annual report(s) to the FDA from MorphoSys, its Affiliate or — if applicable — its Sublicensee
as MorphoSys’ Confidential Information and shall not distribute such report(s) to any Third Party without prior written consent by MorphoSys. In the event that Xencor or its Affiliate (a) is party to a M&A Event and the other
party to the M&A Event, respectively, at that time (i) develops or commercializes an enhanced B-cell cytotoxic anti-CD19-antibody or (ii) Xencor itself or an Other Licensee files or has filed an
IND in any oncology indication for any Antibody of the XmAb5871 Program, or (b) itself files or has filed an IND in any oncology indication for any Antibody of the XmAb5871 Program MorphoSys or its Sublicensee (as provided for in
Section 2.6 below) shall only be required to provide to Xencor a short summary of the respective development status and results within the MorphoSys Annual Development Report. Xencor shall notify MorphoSys of any event described in (a)(i),
(a)(ii) or (b) of the previous sentence. For the avoidance of doubt, in such cases (i.e., (a)(i), (a)(ii) or (b)) neither MorphoSys nor its Sublicensee(s) shall be obligated to report to Xencor any Material MorphoSys Changes, nor
to provide to Xencor its respective annual report(s) to the FDA relating to Licensed Antibody(ies) or Licensed Products. 

               (d)      
      Functions and Powers. The Joint Development Committee shall have no power to amend, modify or waive compliance with this Agreement. It shall have only such powers as are specifically set forth in this
Agreement for the Joint Development Committee to perform. The Joint Development Committee meeting minutes, regardless of whether approved by senior representatives of both Parties, shall not be deemed to amend, modify or waive compliance with
this Agreement. The Joint Development Committee’s responsibilities shall include: 

                       
        (i)            during the Collaboration Term, encourage and facilitate ongoing cooperation and information exchange between the
Parties concerning the Ongoing Phase I Trial; 

                       
        (ii)           discuss any coordination of activities that the Parties may desire concerning the Ongoing Phase 1 Trial; 

                       
        (iii)          approve any Material Xencor Changes to the Xencor Development Plan (truly immaterial changes do not require JDC approval,
however Xencor shall inform MorphoSys promptly of any such changes). 

                       
        (iv)          provide a forum for discussion of the MorphoSys Annual Development Report (without implying any decision-making rights with
respect to planned activities contained in such Report); 

                       
        (v)           subject to the other provisions of this Article 2, [...***...], 

                       
        (vi)          discuss any [...***...]. 

               (e)      
      JDC Decisionmaking. The JDC shall only have the power to make decisions related to the Ongoing Phase 1 Trial. The JDC shall make decisions by consensus, with each Party having one vote. If

  
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the JDC cannot reach consensus as to any decision, then MorphoSys shall have the final say. However, notwithstanding anything express or implied in the foregoing: 

                       
        (i)            MorphoSys shall exercise its final say solely in a manner consistent with MorphoSys’ obligations under this
Agreement and the final say to be clear does not diminish MorphoSys’s obligations under this Agreement; 

                       
        (ii)           Subject to Section 3.1, any addition of activities to the Xencor Development Plan that would increase Xencor’s
costs to conduct such plan shall require Xencor’s consent or MorphoSys’s legally binding commitment to reimburse Xencor for all costs necessary to complete such additional activities, but only the amount which exceeds the Budget (as set
forth in Section 3.1); and 

                       
        (iii)          Subject to Sec. 2.2 (e)(ii) above, MorphoSys’ final say shall always prevail unless such final say would require Xencor to
violate any of its legal obligations as a sponsor as contained in 21 C.F.R §312 or any other applicable regulatory or legal jurisdiction of the Ongoing Phase 1 Trial. Both Parties agree that these decisions (whether MorphoSys’s final say,
or Xencor’s rejection of a final say by MorphoSys due to causing Xencor to violate any such legal obligation (but to be clear not other circumstances where Xencor simply disagrees with MorphoSys’s decision)) will only be made after
thorough consideration of the other Party’s argumentation for its position and after providing to the other Party a detailed written description of the reasons why the Party believes the decision would or would not violate Xencor’s legal
obligations as a sponsor of the Ongoing Phase 1 Trial. In the event that a Party disagrees with the reasons provided by the other Party as to whether the final say will result in such a violation of such a legal obligation, then such first Party may
refer the matter for resolution under Article 12, unless the matter is related to an urgent safety issue in the Ongoing Phase 1 Trial, in which case Xencor shall be entitled to take the decision it deems appropriate under the then
prevailing circumstances. The foregoing shall not limit the remedies of either Party. 
 (f)
        This Section 2.2 does not provide and shall not be used by either Party or their counsel to imply decisionmaking authority of the JDC as to any contractual disputes that may arise in connection
with this Agreement. 
 2.3
              Affiliate/Sublicensee Activities and Plans. MorphoSys shall include MorphoSys’ Affiliates’ and, to the extent permitted by the Sublicense,
Sublicensees’ accomplishments and activities (past and planned) in MorphoSys Annual Development Report. Xencor recognizes that if and when MorphoSys grants a Sublicense, that thereafter MorphoSys shall not be required to provide Xencor
with the same level of detail as before for MorphoSys’ Annual Development Report, provided, however, that it shall always contain [...***...]. 

2.4               Xencor Initial Development
Plan. The Xencor Development Plan, for the initial clinical development of Licensed Antibody and/or Licensed Product through the Ongoing Phase 1 Trial, is attached as Exhibit J. Xencor is entitled to make truly
immaterial changes to the Xencor Development Plan without JDC or MorphoSys consent, but shall inform MorphoSys about such immaterial changes promptly after such change occurs. If Xencor and/or MorphoSys believe that a Material Xencor Change is
needed, then Xencor and/or MorphoSys shall call a JDC meeting and present the proposed Material Xencor Change and reasons for it. The JDC shall act promptly in its consideration of any such Material Xencor Change proposed by Xencor and/or
MorphoSys, and shall reasonably consider the comments of the respective other Party. MorphoSys acting through its JDC members shall not unreasonably withhold consent to any such Material Xencor Change proposed by Xencor. 

2.5               Project Team Interaction and Urgent
Matters. During the Collaboration Term, the Parties’ project teams for the XmAb5574 project (as set forth in Exhibit G) shall communicate with each other on a regular basis (at least monthly), including making
promptly available all documents, data and reports relating to Licensed Antibody(ies) and/or Licensed Products (including drafts of the foregoing) to the other Party by the 

  
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Party that created and/or received such documents and reports. Moreover, during the Collaboration Term, Xencor shall within [...***...] after reported to Xencor senior management, notify
MorphoSys about any serious adverse events reportable to the FDA and any finding suggesting significant risk for human safety. 

2.6               Sublicensee Participation. If
MorphoSys grants any Sublicense during the Collaboration Term, then the Sublicensee may also participate in the JDC meetings, and MorphoSys is entitled, at its sole discretion, to delegate its final say on the JDC to the Sublicensee;
provided, to avoid doubt, that such final say shall remain subject to all of the same limitations as set forth in Section 2.2. 

2.7               Termination of Committee Meeting
Obligations. After the Ongoing Phase 1 Trial is Completed (Reporting Purposes) or its sponsorship has been transferred to MorphoSys, Joint Development Committee interactions are intended primarily as a right of Xencor as a licensor, to allow for
a collaborative information exchange between the Parties and for discussion of MorphoSys Annual Development Report. After the Ongoing Phase 1 Trial is Completed (Reporting Purposes) or its sponsorship has been transferred to MorphoSys, Xencor shall
be entitled to terminate Joint Development Committee meeting obligations at any time by written notice to MorphoSys. If Xencor provides this notice, then each Party shall provide its reports and updates directly to the other Party, rather than to
the Joint Development Committee (including all information to be provided by MorphoSys to the Joint Development Committee under this Agreement). 

ARTICLE 3 

DEVELOPMENT, COMMERCIALIZATION, DILIGENCE AND KNOW-HOW AND MATERIAL TRANSFER 

3.1               Initial Phase 1 Clinical
Trial. Xencor shall be the sponsor of the Ongoing Phase 1 Trial. Xencor shall conduct such trial in accordance with [...***...] and the Xencor Development Plan as set forth in Exhibit J as it may be updated in
accordance with this Agreement. Xencor shall pay all costs necessary to complete all activities listed in the Xencor Development Plan. The estimated budget for such costs is the amount of [...***...] US Dollars ($[...***...]) (the
“Budget”). For clarity, if the costs necessary to complete all activities listed in the Xencor Development Plan exceed the Budget, such costs shall be borne by Xencor. Notwithstanding the foregoing, in the event MorphoSys
changes any material aspect of the listed activities or includes additional activities in the Xencor Development Plan in accordance with Section 2.2(e)(ii), [...***...]. Xencor shall also bear the costs for additional Licensed Product
manufacturing after the Effective Date to supply Xencor’s needs for the Ongoing Phase 1 Trial, to the extent such the Licensed Product from such additional manufacturing is used in the Ongoing Phase 1 Trial. For the costs of the remaining
Licensed Product from such additional manufacturing, [...***...], whereby MorphoSys shall use Commercially Reasonable Efforts to use such material. In the event that manufacturing material from the same batch shall be used by Xencor for the
Ongoing Phase 1 Trial and by MorphoSys for a clinical trial under its own sponsorship, the Parties shall closely communicate with each other and seek to find the most advantageous way to enable such split of material. In case safety, regulatory
or any other issues arise in the course of the Ongoing Phase 1 Trial in relation to which Xencor and/or MorphoSys reasonably conclude that Ongoing Phase 1 Trial should be stopped temporarily or entirely, decision making in such case shall be in
accordance with the provisions of Section 2.2(e) (iii). To the full extent permitted by law, Xencor will include MorphoSys in monitoring visits and audits of clinical trials sites (but solely if permitted by the sites), Manufacturer
and other Third Parties involved in the Ongoing Phase 1 Trial conduct. 
 3.2
              Regulatory. Subject to Section 3.3 below, Xencor shall retain sponsorship for the Ongoing Phase 1 Trial, until such trial has been Completed
(Reporting Purposes), is discontinued or sponsorship is transferred to MorphoSys. Promptly after the Effective Date, the JDC and the Parties’ project teams for Licensed Product shall communicate and seek to find the most advantageous way
to enable MorphoSys [...***...] as soon as is commercially reasonable under the circumstances (by granting MorphoSys in writing access to the data and information contained in the currently effective [...***...], by transfer of the electronic
files underlying Xencor’s prior IND submission, transfer of sponsorship of the existing IND at the appropriate time, or other means). 

  
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 3.3
              Diligence Obligations of Xencor and Transfer of Ongoing Phase 1 Trial. Xencor shall use Commercially Reasonable Efforts to carry out its
responsibilities under the Xencor Development Plan as it may be amended from time to time by the JDC, which shall include for the purposes of this Section, using the facilities and equipment in a good scientific manner and in compliance with
applicable scientific standards, laboratory practices and legal and regulatory requirements, adhering to the timelines according to Exhibit J, adhere to all applicable national and international regulations and guidelines, appointing and
retaining adequately trained personnel and engage, retain and control adequately qualified external personnel (e.g., CROs and consultants) and thereby collecting and retaining all relevant Know-How for the
development and commercialization of Licensed Antibody(ies) and/or Licensed Products, and at any time use the same diligence and efforts as a similar biotechnology company, but in no event less than such efforts Xencor would use for the clinical
trials of its own program(s) to complete all of the activities included in the Xencor Development Plan in Exhibit J, as it may be amended from time to time by the JDC, and shall use Commercially Reasonable Efforts to do so within the
timeframe for Completion (Reporting Purposes) suggested in the Xencor Development Plan. 

               (a)
            In the event that Xencor does not meet the Xencor Development Plan timeline for Completion (Performance Metric), by more than [...***...] due to a [...***...] then
the milestone payments for milestone events 1. and 2. for oncology indications according to Section 5.2 shall be reduced by [...***...] ([...***...]%). To avoid doubt, this reduction shall not be made to the extent the delay of
Completion (Performance Metric) relative to the timeline of the Xencor Development Plan results in whole or in part from any reason other than a [...***...]. 

               (b)
            Moreover, if Xencor does not meet the Xencor Development Plan timeline for Completion (Performance Metric), by more than [...***...], then: 

(i)             Regardless of whether the delay is a [...***...] or
not, upon MorphoSys’ request, Xencor shall arrange for transfer of the sponsorship for the Ongoing Phase 1 Trial to MorphoSys without undue delay and in agreement with MorphoSys, and MorphoSys, in its sole discretion (subject to its
diligence obligations under this Agreement), may assume responsibility for the Ongoing Phase 1 Trial. In the event that sponsorship for the Ongoing Phase 1 Trial is transferred to MorphoSys, Xencor shall use Commercially Reasonable Efforts to
provide MorphoSys with any information within the Licensed Know-How and/or assistance requested by MorphoSys, including assisting MorphoSys as requested in conducting the Ongoing Phase 1 Trial to a successful
completion in the shortest amount of time reasonably possible; and 
 (ii)             If the
delay resulted from a [...***...], then (x) the milestone payments for milestone events 1. and 2. for oncology indications according to Section 5.2 shall each be reduced by [...***...] ([...***...]%),
(y) no Sublicensing Revenue shall be paid by MorphoSys to Xencor in any case, and (z) any costs that MorphoSys has to bear to complete the Ongoing Phase 1 Trial will be credited against future payments due to Xencor by MorphoSys under this
Agreement, provided however, that the sum of such credited costs shall not exceed the difference between the Budget and all costs, which Xencor already spent for completion of such activities until the arrangement of transfer of
the sponsorship to MorphoSys. To avoid doubt, this Section 3.3(b) (ii) shall not apply to the extent the delay of Completion (Performance Metric) relative to the timeline of the Xencor Development Plan results in whole or in part from
any reason other than a [...***...]. 

               (c)
            Notwithstanding anything express or implied in this Agreement (including Article 10), the remedies set forth in Section 3.3(a) and (b)(ii) shall be the sole
and exclusive remedies for [...***...], and no other remedies shall be available to MorphoSys for [...***...], express or implied, under this Agreement, at law, or in equity. 

3.4               Disclosure Assistance to
MorphoSys. Within [...***...] after the Effective Date, unless MorphoSys extends such period at its sole discretion for certain Licensed Know-How, Xencor shall disclose and/or transfer to
MorphoSys (a) copies of all Licensed Know-How that were in the data room prior to the Effective Date (and to be clear this excludes all information with respect to XmAb5871), and (b) the tangible
materials and copies of the documents listed in Exhibit K. Xencor shall disclose and/or transfer to MorphoSys copies of all Licensed Know-How created during the Collaboration Term as soon as such
copies become available to Xencor, including clinical source data. Within [...***...] of the Effective Date, Xencor shall provide written permission 

  
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to permit its third party contractors [...***...] and any other Third Party that generates data as described above, to transfer copies of such data to MorphoSys to the extent such data are
Licensed Know-How. If there is raw data within the Licensed Know-How that was not in the data room (1) that MorphoSys reasonably believes is required for
communication with Regulatory Authorities or is actually requested by any Regulatory Authority, then MorphoSys may request this of Xencor and Xencor shall reasonably promptly provide it to MorphoSys; or (2) that does not fall within
(1) but is reasonably needed by MorphoSys then MorphoSys may request such raw data whether or not listed in Exhibit K once a year and Xencor shall reasonably promptly provide it reasonably promptly after such request. Xencor
shall have no obligation to translate documents provided pursuant to this Section into any language other than English. 
 3.5
              Active Contracts 

               (a)
            Active Contracts Transfer to MorphoSys. In addition, to assist MorphoSys in making a smooth transition to commence its Licensed Product development activities and/or its
Licensed Antibody development activities, the list of licenses and contracts set forth in Exhibit H is a list of all licenses and contracts between Xencor and Third Parties relating to the Licensed Antibody and Licensed Products that provide
for currently ongoing or future services with respect to such Licensed Antibody and Licensed Products or are otherwise relevant for Licensed Product development activities and/or Licensed Antibody development activities(“Active
Contracts”). To avoid any misunderstanding, Active Contracts exclude consulting agreements, confidentiality agreements and materials transfer agreements. To the extent Xencor becomes aware that any Active Contracts existing as of the
Effective Date have been omitted unintentionally from the list in Exhibit H but remain in effect or are otherwise relevant for Licensed Product development activities and/or Licensed Antibody development activities, Xencor will promptly notify
MorphoSys of the omitted license or contract. To the extent requested by MorpoSys, other than licenses or contracts that Xencor needs to retain in order to perform its responsibilities with respect to the Ongoing Phase 1 Trial or that are
master services agreements pertaining to other services for Xencor (identified in such Exhibit under the heading “Excluded Contracts” and referred to in this Agreement as “Excluded Contracts”), Xencor will seek
to assign (or, if Xencor obtains consent of the counterparty, novate over to MorphoSys) the Active Contracts existing as of the Effective Date that Xencor has the right to assign in these circumstances to MorphoSys, provided with respect to each
such license or contract that it is assignable to MorphoSys and MorphoSys agrees to assume financial responsibility and all other post-assignment performance obligations under each such license or contract; and provided, further, that assignment (or
novation) of the contract shall not be deemed to assign to MorphoSys any Patents (or any license to Patents) that may have been assigned (or licensed) or are required to be assigned (or licensed) to Xencor under the contract based on inventions
prior to the time the contract is assigned to MorphoSys (provided Patents assigned and/or licensed to Xencor shall be included in Licensed Patents and Post-Sublicensing Licensed Patents). 

If any Excluded Contracts (which are not assigned to MorphoSys under the foregoing paragraph) are master services contracts, the Parties will
cooperate and Xencor shall use Commercially Reasonable Efforts to seek to assign the appropriate work order(s) or otherwise transition the appropriate services in a reasonable way. To avoid doubt, Commercially Reasonable Efforts in this
context does not require Xencor to pay any consideration to the counterparty to the Excluded Contracts. 
 Xencor is not required under this
Section 3.5 to assign to MorphoSys any license or contract that Xencor does not have the right to assign in these circumstances, but will use Commercially Reasonable Efforts to seek in good faith, from Xencor’s counterparties whose consent
is required, consent to do so or if preferred by Xencor and acceptable to MorphoSys consent for a novation and to re-form the contract directly with MorphoSys. To avoid doubt, Commercially Reasonable
Efforts in this context does not require Xencor to pay any consideration to the counterparty to the Excluded Contracts. 

               (b)
            Additional Manufacturing. Within [...***...] of the Effective Date, Xencor shall request a manufacturing slot from its third party contractor
[...***...] for the next available [...***...] production slot by sending a change order notification. Xencor shall use Commercially Reasonable Efforts to schedule all activities for the foregoing production slot timely with all
Manufacturers for completion of manufacturing the respective drug substance and drug product, including fill and finish operations for such production run. 

  
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 3.6
              Allocation of Responsibility for Further Development and Commercialization. Other than Xencor’s responsibilities with respect to the Ongoing Phase 1
Trial, MorphoSys shall be responsible for all further development of Licensed Antibody(ies) and/or Licensed Products for, and commercialization (including marketing, promotion and sales) of Licensed Products in the MorphoSys Territory for the
Field. MorphoSys (and its Affiliates and Sublicensees) shall have the right to file in its own name, and to own, all new INDs, Marketing Authorization Applications and Marketing Authorizations for Licensed Products in the MorphoSys Territory
for the Field and may delegate and/or assign these rights to Affiliates and Sublicensees. As between the Parties, MorphoSys shall have the sole and exclusive right to select the product trademarks for the Licensed Products in the MorphoSys
Territory for the Field (and may delegate and/or assign this right to Affiliates and Sublicensees). Licensed Product labeling and promotional materials shall in any event (to the extent permitted by applicable law and except solely as provided in
the last sentence of this paragraph) state that the Licensed Product is under license from Xencor (or its successor) and include if requested by Xencor in writing (and MorphoSys shall query Xencor in writing at the time the label is being designed
in each country) — to the extent permitted by applicable law — the Xencor name and then-current Xencor logo in a size no smaller than one quarter the size of the logo of the marketing entity, and subject to Xencor’s then-current
quality control guidelines with respect to such trademarks, a copy of which Xencor shall provide in writing to MorphoSys upon MorphoSys’s written request. Notwithstanding the foregoing, if (a) Licensed Product is marketed by a
Sublicensee, and the applicable Sublicense provides that neither of MorphoSys nor Xencor shall be referenced on the labeling and promotional materials (meaning that the Sublicense also provides that MorphoSys not be referenced), or (b) there is
a legal requirement for MorphoSys to be on the label in any sublicensed country, then in these sole circumstances and solely within the scope of the applicable Sublicense’s territory (or in the case of (b) the country of the legal
requirement), the statement as to being under license from Xencor and the inclusion of Xencor’s name and logo shall not be required if the Sublicense does not permit it. 

3.7               Cost of Development and
Commercialization. Other than the costs of the Ongoing Phase 1 Trial, as between the Parties, MorphoSys is responsible for all costs relating to the development and commercialization of Licensed Products for the MorphoSys Territory for the
Field, including manufacturing, regulatory, clinical and registration costs. 
 3.8
              Diligence Obligations of MorphoSys. 

               (a)      
       MorphoSys shall use Commercially Reasonable Efforts to (i) achieve the milestone events as set out in Section 5.2, (ii) develop a human therapeutic or prophylactic Licensed Antibody and/or
Licensed Product in a way that supports its Market Authorization in Major Markets and (iii) [...***...]. The scope of such development and commercialization activities shall include clinical development, manufacturing, process
development and scale-up, seeking Marketing Authorization, providing for a reasonable commercial launch in those countries where Marketing Authorization is obtained and thereafter actively promoting to all
appropriate audience(s), to the extent Commercially Reasonable. In all of the foregoing activities, MorphoSys shall use Commercially Reasonable efforts to: use the facilities and equipment in a good scientific manner and in compliance with
applicable scientific standards, laboratory practices and legal and regulatory requirements, adhere to all applicable national and international regulations and guidelines, appoint and retain adequately trained personnel and engage and control
adequately qualified internal or external personnel and thereby collecting all relevant Know-How for the development and commercialization of Licensed Antibody(ies) and/or Licensed Products, and at any time
use the same diligence and efforts as a similar biotechnology company. 

               (b)      
       MorphoSys shall not be relieved of its diligence obligations under this Agreement by the mere granting of any Sublicense(s). With respect to Sublicensee’s diligence obligations, it shall, however,
be taken into account what would be deemed Commercially Reasonable Efforts by the respective Sublicensee(s). The activities and achievements of any Sublicensee(s) shall be counted towards MorphoSys’ performance under this Agreement. 

3.9               Records. MorphoSys shall maintain
complete and accurate records of all work (including research, development, clinical, manufacturing and commercialization) it conducts (itself or through its Affiliates or by Third Parties other than Sublicensee(s) if any activities are
subcontracted by MorphoSys and/or its 

  
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Affiliates) under this Agreement and all results, data and developments made pursuant to its efforts under this Agreement. Such records shall be complete and accurate and shall fully and
properly reflect all work done and results achieved in the performance of this Agreement in sufficient detail and in good scientific manner appropriate for Patent and regulatory purposes. 

3.10             Communications with Regulatory Authorities. During
the Collaboration Term, Xencor shall provide MorphoSys with reasonable advance notice of any meeting or substantive telephone conference with any Regulatory Authority relating to any Licensed Antibody and/or Licensed Product. MorphoSys shall
have the right to attend and observe (but not participate actively in) any material meeting or material conference call with any Regulatory Authority regarding any of MorphoSys (or its Affiliate’s or Sublicensee’s) Licensed Antibody and/or
Licensed Products. In addition, Xencor shall promptly furnish to MorphoSys copies of all correspondence that Xencor (or its Affiliate) receives from, or submits to, any Regulatory Authority (including contact reports concerning conversations or
substantive meetings) relating to any Licensed Antibody and/or Licensed Product. Xencor shall also provide to MorphoSys any meeting minutes that reflect material communications with any Regulatory Authority regarding a Licensed Antibody and/or
Licensed Product. Subject to the provisions of Section 2.2(c)(ii), MorphoSys shall provide in its MorphoSys Annual Development Reports to Xencor, and through JDC discussion, information regarding its (or its Affiliate’s or, to the extent
permitted by the Sublicense, Sublicensee’s) interactions with Regulatory Authorities with respect to all Licensed Antibodies and/or Licensed Products in its respective Territory. In addition, to the extent permitted by law and subject to
Section 3.6, Xencor may participate in communications and meetings with any Regulatory Authority to the extent the name and/or then-current Xencor logo is used on the drug product label and such labeling is being discussed in such communication
or meeting. Notwithstanding MorphoSys’ obligations under this Article 3, MorphoSys shall not be required to share with Xencor any information which MorphoSys is not permitted to share with Xencor under the applicable laws
or regulations of the Securities & Exchange Commission or other regulatory body of the US or elsewhere. 
 3.11
            Simultaneous Clinical Trials. 
 Prior to such time as the Parties are both
simultaneously sponsoring human clinical trials of Licensed Antibody and/or Licensed Products (if ever), the Parties shall, as soon as it becomes evident that both Parties will simultaneously sponsor human clinical trials of Licensed Antibody and/or
Licensed Products, mutually agree in writing as to a more detailed protocol regarding the exchange of all adverse event information and/or findings that could potentially affect the safety and/or well-being of patients, and/or materially change the
scientific value of such clinical trials on an ongoing basis, including a timeline. Such protocol must provide a timeline and scope for reporting between the Parties that is at least sufficient to allow both Parties to satisfy their reporting
obligations to Regulatory Authorities (current or future, worldwide). Such protocol and the data exchanged under it shall be provided in English language. Once the protocol is agreed in writing, each Party shall comply with it as an
obligation under this Agreement, and may propose updates to it from time to time. To be clear, while the language above describes establishing the protocol before simultaneous trials by both Parties are ongoing, the intention is for the Parties
to then follow the protocol during the time periods when they have simultaneous trials ongoing. 
 3.12
            Legal Compliance. In conducting any development and commercialization activities under this Agreement, each of MorphoSys and its Affiliates
and Sublicensee(s), and Xencor and its Affiliates, shall: (a) use Commercially Reasonable Efforts to ensure that its employees, agents, clinical institutions and clinical investigators as well as any further entities actively involved in the
conduct of development work (such as CROs, CMOs, laboratories, etc.) comply with all applicable statutory and regulatory requirements with respect to Licensed Antibodies and/or Licensed Products, including (as applicable): the Federal
Food, Drug and Cosmetic Act, as amended (FFDCA), the Public Health Service Act (PHSA), the rules governing medicinal products in the European Union and further national legislation, regulatory provisions regarding protection of human subjects,
financial disclosure by clinical investigators, Institutional Review Boards (IRB) and independent ethics committees, Good Clinical Practices, Good Laboratory Practices, Good Manufacturing Practices, IND regulations, and any conditions
imposed by a reviewing IRB or Regulatory Authority, and comparable statutes and regulatory requirements in other jurisdictions; and (b) not, to the best of its knowledge, utilize, in conducting 

  
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such studies, any person or entity that at such time is debarred by, or that, at such time, is under investigation by the FDA or other Regulatory Authority for debarment action pursuant to the
provisions of the Generic Drug Enforcement Act of 1992 (21 U.S.C. Section 335), and comparable statutes and regulatory requirements in other jurisdictions. Notwithstanding anything express or implied in the foregoing or in any exercise of
a final say by MorphoSys on the JDC, Xencor is only required to comply with U.S. standards in the conduct of the Ongoing Phase 1 Trial, unless (a) MorphoSys covers the incremental cost of compliance with any
ex-U.S. standards requested by MorphoSys, or (b) there is no incremental cost of additionally complying with ex-U.S. standards requested by MorphoSys. 

ARTICLE 4 
 LICENSING

 4.1               License
to MorphoSys. Subject to the terms and conditions of this Agreement, Xencor hereby grants to MorphoSys 

               (a)
            an exclusive, royalty-bearing (in accordance with Article 5) license under the Licensed Patents and Licensed Know-How to research, have researched, develop, have developed, make, have made, use, have used, sell, have sold, offer for sale, have offered for sale, import, have imported, export and have exported Licensed
Antibody(ies) and/or Licensed Product(s) for the Field in the MorphoSys Territory; the making, using, selling, offering for sale or importing of which would, but for the License granted hereunder, infringe Licensed Patents; 

               (b)
            an exclusive license to all necessary rights to make and use all Licensed Know-How solely in order
to practice the license of Section (a) (and specifically excluding all uses in support of activities outside the scope of the license in Section 4.1(a)); 

               (c)
            a non-exclusive, royalty-free license under the Post-Sublicensing Licensed Patents to research, have
researched, develop, have developed, make, have made, use, have used, sell, have sold, offer for sale, have offered for sale, import, have imported, export and have exported Licensed Antibody(ies) and/or Licensed Product(s) for the Field in the
MorphoSys Territory; the making, using, selling, offering for sale or importing of which would, but for the License granted hereunder, infringe Post-Sublicensing Licensed Patents for the purpose of sublicensing such rights to MorphoSys’
Sublicensee(s). To avoid doubt, to the extent MorphoSys enters into a bona fide co-development, co-marketing, or
co-promotion agreement with a Sublicensee, then MorphoSys shall as part of such relationship be entitled to itself practice the license of this Section 4.1(c); outside of such circumstance, MorphoSys
itself shall not have the right to practice the license of this Section 4.1(c), although this shall not be read to undermine MorphoSys’s ability to Sublicense the license of this Section 4.1(c). Also to avoid doubt, the
royalty-free nature of the license of this Section 4.1(c) shall not alter in any way the royalty-bearing nature of the license of Section 4.1(a) or of Section 4.1(d), even if applying to the same Licensed Product(s). 

               (d)     
       an exclusive, royalty-bearing license, with the right to sublicense, in the MorphoSys Territory for all activities for all fields and applications to the Licensed Candidate-Specific Patents
(“Candidate-Specific Patent License”); provided, however, that if for any reason any claim ever exists in a Licensed Candidate-Specific Patent that is broader than provided for in the definition thereof, the applicable Patent shall
be subject to the license of Section 4.1(a) not this Section 4.1(d) until and unless it again is narrowed to the scope provided for in the definition of Licensed Candidate-Specific Patent. To avoid doubt, when the license of
Section 4.1(a) and Section 4.1(d) both apply, then the royalties shall remain as written in Article 5 and there shall be no doubling of the royalties based on both such licenses applying. 

Xencor retains the right, notwithstanding the exclusivity of the licenses in Sections 4.1(a), 4.1(b) and 4.1(d), but subject to Article 2 and 3
above, to conduct the Ongoing Phase 1 Trial to completion. The licenses granted to MorphoSys in this Section 4.1 shall be sublicensable solely as provided in Section 4.2, but shall otherwise be
non-assignable and non-transferable (except as explicitly permitted by Article 10 or Section 13.9). 

  
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Treatment Requested 

 4.2
              Sublicensing by MorphoSys. MorphoSys shall be entitled to grant Sublicenses under its license of Section 4.1, subject to
all of the following and the rights of Xencor set forth in Section 4.11: 

               (a)    
        MorphoSys must promptly notify Xencor after granting a Sublicense and [...***...] within [...***...] for the sole purpose of [...***...]. Such
[...***...] may be [...***...] in the event that [...***...]. Xencor shall ensure that [...***...], except solely to the extent required by law or to assert Xencor’s rights under this Agreement [...***...]. 

               (b)
           Such Sublicensees cannot further sublicense except if all of the following conditions are satisfied: (1) the further Sublicenses must be on
terms consistent with this Agreement, including this Section 4.2; and (2) if [...***...], then the economic terms of the further Sublicenses must be such that the further sublicensing does not reduce the consideration that will be
paid to Xencor under this Agreement, relative to what it would have been had MorphoSys’ direct Sublicensee conducted the activities; and 

               (c)
            in the event that MorphoSys enters into a [...***...] and to the extent such Sublicence provides for consideration in form of any
“quids” (such as, by way of example but not limitation, rights for MorphoSys in any of the Sublicensee’s other product candidates or products or intellectual property unrelated to Licensed Products), then except as may be otherwise
agreed in writing by Xencor and MorphoSys, Xencor and MorphoSys shall mutually agree on and then consult an independent expert on the valuation of such quid before signature of the Sublicense agreement. Such expert shall render his valuation
decision within thirty (30) days after signature of the Sublicense agreement. Xencor and MorphoSys shall jointly bear the costs for such expert. Such independent expert’s opinion shall be final and binding upon both Parties. 

               (d)
            in the event MorphoSys’ Sublicensee — at the time of entering into the Sublicense — [...***...], the Sublicense shall
(i) [...***...] for the purpose of [...***...] for Licensed Antibody and/or Licensed Product and (ii) [...***...] that Sublicensee will perform the development of Licensed Antibody and/or Licensed Product
[...***...]; and (iii) [...***...]. 
 4.3
              Exclusivity and Related Covenants. 

               (a)
            By Xencor. Xencor hereby covenants that, during the Term, it and its Affiliates shall not (and Other Licensees specifically do not covenant,
and Xencor does not covenant that the Other Licensees shall not) (i) develop or commercialize any anti-CD19 Antibody that does not meet the definition of XmAb5871 Program; or (ii) license any Xencor Fc Technology to any Third Party in
any scope for any activity of any anti-CD19 Antibody except that Xencor may license any Xencor Fc Technology to Third Parties in connection with the XmAb5871 Program and solely with respect to XmAb5871 Program
Antibodies (to avoid doubt, this means that the Xencor Fc Technology shall be licensed solely with respect to anti-CD19 Antibodies that as modified by or incorporating Xencor Fc Technology meet the definition of “XmAb5871 Program
Antibodies”), but such license regarding Xencor Fc Technology shall specifically exclude the right to license Xencor High-ADCC/CDC Fcs. The foregoing covenants (1) shall not — at any time — apply to any Antibody in clinical
development or on the market as of or before the date of a Xencor Change of Control by or for any acquirer of Xencor, or of the acquiring corporate family not Covered by any Patent owned or controlled by Xencor immediately prior to such Xencor
Change of Control; and (2) shall not — at any time — apply to prohibit licensing of any Patent owned or controlled by the acquiror or its corporate family prior to or on the date of such Xencor Change of Control, claiming priority to
such a Patent existing prior or on such date, or owned or controlled by such acquirer and/or the acquiring corporate family independently of Xencor (for clarity, in the case where Xencor is merged into another entity, the references here to
“Xencor” and “independently of Xencor” mean to refer to “the merged entity” and “independently of the merged entity”). 

(b)             By MorphoSys. 

              (i)      
       Excluded Antibodies. Subject to (i) MorphoSys’ and/or its Affiliates’ existing (as of the Effective Date) HuCAL agreements, comprising any obligation for MorphoSys
and/or its 

  
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Affiliate(s) to generate or have generated antibodies to which MorphoSys’ and/or its Affiliates’ contract partners have any rights whatsoever, and (ii) any non-therapeutic, non-prophylactic activity of MorphoSys and/or its Affiliate(s), MorphoSys hereby covenants that, during the Term, it and its Affiliates shall not
preclinically develop, develop in any human clinical trial, seek Market Authorization for, or in any way commercialize in the MorphoSys Territory any Excluded Antibody. Sublicensees specifically do not make such covenant, and MorphoSys does not
make such covenant as to Sublicensees. 

              (ii)      
     Licensed Antibodies. Subject to (i) MorphoSys’ and/or its Affiliates’ existing (as of the Effective Date) HuCAL agreements, comprising any obligation for MorphoSys and/or its
Affiliate(s) to generate or have generated antibodies to which MorphoSys’ and/or its Affiliates’ contract partners have any rights whatsoever, and (ii) any non-therapeutic, non-prophylactic activity of MorphoSys and/or its Affiliate(s), MorphoSys hereby covenants that, during the Term, MorphoSys and its Affiliates shall not preclinically develop, develop in any human clinical
trial, seek Market Authorization for, or in any way commercialize in the MorphoSys Territory any Competing Product other than any Licensed Antibody and/or Licensed Products that are payment-bearing to Xencor under this Agreement (other than a
Licensed Product for which the Royalty Term has expired, after such expiration; this covenant does not apply at such times to such Licensed Product). Sublicensees specifically do not make such covenant, and MorphoSys does not make such covenant as
to Sublicensees. 

              (iii)      
    The covenants in this Section 4.3(b)(i) and (ii) shall not — at any time — apply to any Antibody in clinical development or on the market as of or before the date of a
MorphoSys Change of Control by or for any acquirer of MorphoSys, or of the acquiring corporate family not Covered by any Patent owned or controlled by MorphoSys immediately prior to such MorphoSys Change of Control, and and shall not
— at any time — apply to prohibit licensing of any Patent owned or controlled by the acquiror or its corporate family prior to or on the date of such MorphoSys Change of Control, claiming priority to such a Patent existing prior or on such
date, or owned or controlled by such acquirer and/or the acquiring corporate family independently of MorphoSys (for clarity, in the case where MorphoSys is merged into another entity, the references here to “MorphoSys” and
“independently of MorphoSys” mean to refer to “the merged entity” and “independently of the merged entity”). 

(c)             By both Parties 

The Parties agree [...***...]. The Parties, however, acknowledge that they or their respective Sublicensee or Other Licensee may have an
interest to leverage the full potential of their respective products by [...***...]. Hence, Xencor and MorphoSys shall be entitled to develop and commercialize more than [...***...] Antibody from [...***...] and more than
[...***...] Licensed Antibody, respectively, at any time; provided that [...***...]. A Commercializing Party may also consist of several companies (e.g. within a co-marketing or co-promotion agreement), including in the situation in which the component entities of such a Commercializing Party may opt out of the commercialization activities at any time. 

(d)             Storage of Reference
Material, Examination Rights, Data Update and Restriction on Material Transfer. [...***...]. In order to [...***...], the Parties agree to the following: 

              (i)        
     Storage 
 Reference material according to Exhibit A, Exhibit E and M [...***...] shall be
stored at an independent third party reasonably acceptable to MorphoSys and Xencor (the “Escrow Agent”) promptly after the Effective Date. The Parties and the Escrow Agent shall enter into a three-party storage agreement which shall be
negotiated in good faith and which shall contain provisions that the Escrow Agent shall release such reference material to either MorphoSys or Xencor solely to determine its Binding Constants of Affinity to [...***...], [...***...]
(including [...***...]), [...***...], [...***...] and/or [...***...] (including [...***...]), and may be requested by the other Party at any time with reasonable frequency. MorphoSys shall bear the costs associated with
the storage of such reference material at the Escrow Agent’s facilities, and each Party shall bear the costs of shipping to such Party by the Third Party in response to such Party’s request. All of the testing provided for in

  
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Treatment Requested 

 
this Section 4.3(d)(i) shall be using reference material produced in [...***...], using the cell lines that were deposited into the escrow. 

              (ii)        
    Additional Data. 
 Xencor shall promptly notify MorphoSys if Xencor discovers any XmAb5574 data or [...***...]
data generated by or on behalf of Xencor or its Affiliate(s) prior to the end of the Pre-Partnering Term with respect to the Affinity Constants of Binding relevant to the definition of [...***...]
Antibody or to antibody-dependent cytotoxicity relevant to the definition of [...***...] Antibody; and in each case which has not yet been disclosed to MorphoSys, Xencor shall disclose such data to MorphoSys. 

              (iii)        
   Restriction on Material Transfer 
 Xencor and its Affiliates shall not make available and/or transfer to Third
Parties, other than those reasonably required for performance of the Ongoing Phase 1 Study, any Licensed Antibody or Licensed Product during the term of this Agreement after the Effective Date. 

4.4               License from
MorphoSys. MorphoSys hereby grants to Xencor (i) [...***...] (other than any pass-through costs to MorphoSys’ un-Affiliated licensors) [...***...], (ii) [...***...], and
(iii) [...***...] (other than any pass-through costs to MorphoSys’ un-Affiliated licensors) [...***...] in each case to research, develop, make, have made, use, sell, offer for sale,
import and export XmAb5871 Program Antibodies worldwide for any and all fields and applications, subject, however, to Xencor’s covenant in Section 4.3(a) and 4.3(c). Such license shall be sublicenseable only in connection with
the XmAb5871 Program through one (1) or more tiers of sublicensees without the need to obtain prior consent from MorphoSys. Notwithstanding anything express or implied in the foregoing, Xencor shall not have the right to transfer any
documents received from MorphoSys (including reports and plans under this Agreement) or any copies thereof to its Other Licensees or use such documents in XmAb5871 Program Antibody activities. 

4.5               Discussion of
Possible Sublicensing. If Xencor has not partnered its [...***...], and MorphoSys’ actual Sublicensee, or possible Sublicensee in serious negotiations with MorphoSys, wishes to discuss being the partner of the [...***...],
MorphoSys shall notify Xencor in writing, and Xencor agrees to discuss this possibility with MorphoSys’ actual or possible Sublicensee. Nothing in this Agreement shall restrict Xencor from partnering its [...***...]. 

4.6               Reservation of Rights; No Implied
Licenses. No right, title or interest is granted by either Party whether expressly or by implication to or under any Patents or Know-How, other than those rights and licenses expressly granted in this
Agreement. Each Party reserves to itself all rights not expressly granted under this Agreement. Subject to the covenants agreed by the Parties hereunder, including the covenants according to Sec. 4.3, this Agreement shall not be deemed to
restrict a Party from exploiting any of its rights not expressly granted to the other Party under this Agreement. 

4.7               [Intentionally omitted.] 

4.8               Technology
Sublicensed from Third Parties. The licenses granted under this Article 4, to the extent they include (or come to include) sublicenses under Patents or Know-How of a Third Party, shall be subject
to the terms and conditions of the agreement with the Third Party governing the license under which the sublicense is granted; provided, however, that no such Third Party agreement shall conflict with the requirements of
Section 4.11. For clarity, Licensed Patents and Licensed Know-How as of the Effective Date are not in-licensed and instead are owned by Xencor and thus do not
carry any pass-through costs for MorphoSys. 

4.9               Use of Patents
and Know-How. Each Party hereby covenants that it (and its Affiliates and Sublicensees) shall not practice the Patents or Know-How (to avoid doubt, including
any and all research 

  
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materials provided under this Agreement) licensed to such Party under this Agreement outside the scope of the licenses to such Party under this Agreement. Notwithstanding the foregoing, if a
Party unintentionally uses non-tangible Know-How of the other Party learned under this Agreement, outside the scope of a license to such first Party set forth in this
Agreement, this shall not be considered a breach of this Agreement and such other Party agrees not to bring suit (including arbitration under Article 12) against such first Party. 

4.10             Change of
Control. A change of Control for either Party shall not be deemed to trigger any of the Sublicenses (for MorphoSys) and/or partnering provisions (for Xencor) of this Agreement. 

4.11             Coordination of Sublicenses
and Rights of Other Licensees with this Agreement. 

                 (a)    
         MorphoSys shall ensure that its agreements with Sublicensees are consistent with and impose obligations consistent with the applicable terms and conditions regarding
Sublicensees set forth in this Agreement, including Sections 2.2(c)(ii), 2.3, 2.6, 3.6, 3.8(b), 3.10, 3.12, 4.2, 4.3(c), 4.9, 4.11(a), 5.11, 5.13(d), 6.5(h), 6.9, 7.2(e), and 9.1 (the Sublicensee shall make an equivalent indemnification of the
Xencor Indemnitees), and 10.6(l). Subject to Section 4.4, MorphoSys shall in particular require its Sublicensees to [...***...]. Information provided by a Sublicensee (or of a Sublicensee provided by MorphoSys) to Xencor and, to the
extent permitted by this Agreement, its Other Licensees under this Section 4.11(a) shall be treated as Confidential Information of MorphoSys. 

                 (b)     
        Xencor shall ensure that its agreements with Other Licensees are consistent with and impose on its Other Licensees obligations consistent with the applicable terms and conditions set forth in this
Agreement, including Sections 4.1 (with respect to Post-Partnering Patents and providing the necessary license), 4.3 (c), 4.4, 4.9, 4.11(b), 4.12 (as regards the protection of Confidential Information by the Other Licensee), 6.5(h), and
7.2(e). Xencor shall in particular require its Other Licensees to provide to Xencor ownership of or an exclusive (with respect to activities permitted under this Agreement), sublicenseable (through one (1) or more tiers) license under all
Post-Partnering Patents, other than Post-Sublicensing Licensed Patents, for which it shall suffice for Xencor to obtain a non-exclusive license back which license as sublicensed to MorphoSys shall (in all of
the foregoing cases) be free of additional payments (including royalties). Information provided by an Other Licensee (or of an Other Licensee provided by Xencor) to MorphoSys and, to the extent permitted by this Agreement, its Sublicensees
under this Section 4.9(b) shall be treated as Confidential Information of Xencor. 

4.12             Inventions by Service
Providers. MorphoSys shall [...***...], as well as all underlying original data and documentation, for purposes of development and commercialization of Licensed Antibody(ies), and Licensed Product(s) in the Field after a
termination event under this Agreement that would lead to reversion to Xencor under Article 10, and (ii) [...***...]. To avoid doubt, this does not apply to Sublicensees and Other Licensees, which are dealt with in
Section 4.11. Information provided by a MorphoSys contractor (or of a MorphoSys contractor provided by MorphoSys) to Xencor and, to the extent permitted by this Agreement, its Other Licensees under this Section 4.12 shall be the
Confidential Information of MorphoSys. 
 ARTICLE 5 

COMPENSATION 

5.1               Up-Front Payment. In consideration of the license granted to MorphoSys under Sec. 4.1, MorphoSys shall pay Xencor a one-time upfront payment of thirteen
million dollars ($13,000,000), due upon 
 execution of this Agreement and payable [...***...] of the Effective Date. Such amount shall be non-refundable and shall not be creditable against any other amount due hereunder. 

5.2               Milestone Payments. Subject to
Section 3.3 and 5.2 (f) and (g), MorphoSys shall also pay the following milestone payments to Xencor, each due upon the first achievement of each milestone event indicated below (whether achieved by or on behalf of either Party or its
Affiliate, Sublicensee, or any other entity acting on behalf of any of them) with respect to the first Licensed Product comprising XmAb5574 or a different 

  
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Licensed Antibody, achieving such milestone event; provided, however, that such milestone payments for the events (i) “[...***...]” and
(ii) “[...***...]” are only applicable and the related payment shall only be due if such event occurs in a Major Country. MorphoSys shall notify Xencor upon achievement of any milestone event as set forth in this provision, and
shall pay the applicable milestone payment within [...***...] if such milestone event was achieved by MorphoSys and within [...***...] if such milestone event was achieved by Sublicensee. 

ONCOLOGY INDICATIONS 
  

			
	 Milestone Event
	  	Milestone Payment
	 1.   [...***...]
	  	[...***...] dollars
 ($ [...***...])

	 2.   [...***...]
	  	[...***...] dollars
 ($ [...***...])

	 3.   [...***...]
	  	[...***...] dollars
 ($[...***...])

	 4.   [...***...]
	  	[...***...] dollars
 ($[...***...])

	 5.   [...***...]
	  	[...***...] dollars
 ($ [...***...])

	 6.   [...***...]
	  	[...***...] dollars
 ($ [...***...])

	 7.   [...***...]
	  	[...***...] dollars
 ($ [...***...])

	 8.   [...***...]
	  	[...***...] dollars
 ($ [...***...])

	 9.   [...***...]
	  	[...***...] dollars
 ($ [...***...])

	 10. [...***...]
	  	[...***...] dollars
 ($ [...***...])

	 11. [...***...]
	  	[...***...] dollars
 ($ [...***...])

	 12. [...***...]
	  	[...***...] dollars
 ($ [...***...])

	 13. [...***...]
	  	[...***...] dollars
 ($ [...***...])

	 14. [...***...]
	  	[...***...] dollars
 ($ [...***...])

	 15. [...***...]
	  	[...***...] dollars
 ($ [...***...])

	 16. [...***...]
	  	[...***...] dollars
 ($ [...***...])

	 17. [...***...]
	  	[...***...] dollars
 ($ [...***...])

		  	  

	 TOTAL CUMULATIVE AVAILABLE ONCOLOGY MILESTONES
	  	One hundred and
fifty one million
dollars
($151,000,000)

		  	  

  
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 AUTOIMMUNE INDICATIONS 

 

					
	 Milestone Event
	  	Milestone Payment	 
	 1.   [...***...]
	  	 
 
	[...***...] dollars
 ($ [...***...])
	 
  

	 2.   [...***...]
	  	 
 
	[...***...] dollars
 ($ [...***...])
	 
  

	 3.   [...***...]
	  	 
 
	[...***...] dollars
 ($ [...***...])
	 
  

	 4.   [...***...]
	  	 
 
	[...***...] dollars
 ($ [...***...])
	 
  

	 5.   [...***...]
	  	 
 
	[...***...] dollars
 ($ [...***...])
	 
  

	 6.   [...***...]
	  	 
 
	[...***...] dollars
 ($ [...***...])
	 
  

	 7.   [...***...]
	  	 
 
	[...***...] dollars
 ($ [...***...])
	 
  

	 8.   [...***...]
	  	 
 
	[...***...] dollars
 ($ [...***...])
	 
  

	 9.   [...***...]
	  	 
 
	[...***...] dollars
 ($ [...***...])
	 
  

	 10. [...***...]
	  	 
 
	[...***...] dollars
 ($ [...***...])
	 
  

	 11. [...***...]
	  	 
 
	[...***...] dollars
 ($ [...***...])
	 
  

	 12. [...***...]
	  	 
 
	[...***...] dollars
 ($ [...***...])
	 
  

	 13. [...***...]
	  	 
 
	[...***...] dollars
 ($ [...***...])
	 
  

	 14. [...***...]
	  	 
 
	[...***...] dollars
 ($ [...***...])
	 
  

	 15. [...***...]
	  	 
 
	[...***...] dollars
 ($ [...***...])
	 
  

	 16. [...***...]
	  	 
 
	[...***...] dollars
 ($ [...***...])
	 
  

		  	  
	  
	 
	 TOTAL AVAILABLE AUTOIMMUNE MILESTONES
	  	 

 
	One hundred
and one million
dollars
 ($101,000,000)
	 
 
 
  

		  	  
	  
	 

 SALES MILESTONES 
  

			
	 Milestone Event
	  	Milestone Payment
	 1.   [...***...]
	  	[...***...] dollars
 ($ [...***...])

	 2.   [...***...]
	  	[...***...] dollars
 ($ [...***...])

		  	  

	 TOTAL AVAILABLE SALES MILESTONES
	  	Fifty million
dollars ($50,000,000)

		  	  

             (a)       
      For the sake of clarity, each milestone shall be paid only once, and only for the first Licensed Product to reach such milestone. 

  
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Treatment Requested 

             (b)       
      Each milestone payment shall be nonrefundable and noncreditable against any other payments due under this Agreement, except as provided in Section 3.3. 

               (c)     
        If a milestone is achieved without the earlier milestones in the same table having been paid that would normally be steps along the way to achieve the later milestone, then MorphoSys
shall pay the payment for the earlier milestone(s) along with the payment for such subsequent milestone (and the earlier milestone(s) shall be deemed achieved and payable). By way of
non-limiting example with respect to the oncology indications milestones, if milestone event 10 is achieved without the milestone payment for milestone event 5 having been paid, then MorphoSys shall pay the
payment for milestone event 5 along with the payment for milestone event 10. This same principle shall apply (and the earlier milestone shall be deemed achieved and payable), if for example milestone event 16 is achieved before any of milestone
events 6, and 11. 

               (d)       
     For all purposes under this Section, whether an [...***...](if applicable) for any given milestone event will be determined not based on [...***...] 

               (e)     
        MorphoSys or its Affiliate achieves the milestone event “[...***...]” by [...***...] and the respective milestone payment becomes due thereupon. In case of a
Sublicense, achievement of such milestone event is deemed to have occurred at the event provided for in the Sublicense, i.e. either by [...***...] or by [...***...]. 

               (f)    
         If more than one [...***...] is pursued in the same [...***...], then only one (1) [...***...] milestone event (and for clarity, in all cases the
highest applicable milestone event) shall be triggered by the commencement of such [...***...]; provided, however that if a [...***...] is achieved for more than one (1) such [...***...] pursued in the same
[...***...] (or if a [...***...] is obtained for more than one (1) [...***...] without the [...***...] milestone event having first been achieved for more than one (1) such oncology indication (i.e.
[...***...]), then a back milestone payment shall be due for each [...***...] milestone that was not previously due under this Agreement due to the foregoing in this sentence, on the same timing as the [...***...] milestone (or if
earlier [...***...]) becomes due for such subsequent oncology indication. (It is understood and agreed that the timing of [...***...] milestones (whether in relation to [...***...]) being due shall be determined in accordance
with Section 5.2(e).) 

               (g)     
        Limitations on Post-Sublicensing Milestones. With respect to all milestones under this Section 5.2 achieved after a Sublicense by MorphoSys becomes effective
(“Post-Sublicensing Milestones”), MorphoSys shall only be required to pay each Post-Sublicensing Milestones to the extent: 

(i)             aggregate
Post-Sublicensing Milestones through the time a given Post-Sublicensing Milestone becomes due do not exceed [...***...] ([...***...]%) of the number equal to aggregate [...***...] received by MorphoSys (or its Affiliate) through
such time minus [...***...] ($[...***...]); and 

(ii)            total Post-Sublicensing
Milestone payments payable in the MorphoSys fiscal year in which the individual Post-Sublicensing Milestone would otherwise be payable do not exceed the number equal to [...***...] received by MorphoSys (or its Affiliate) in such fiscal year
plus [...***...] dollars ($[...***...]). 
 The portion of any Post-Sublicensing Milestone that is not paid at the time it would otherwise be
due, because of the operation of the payment limitations set forth in subsections (i) and/or (ii) of this Section 5.2(g), shall remain as a credit to Xencor, and be paid to Xencor as soon as MorphoSys (or its Affiliate) has received
sufficient [...***...] that the applicable limitation(s), whether (i) and/or (ii), no longer apply(ies). This may occur in the same or in a subsequent MorphoSys fiscal year or years, depending when MorphoSys or its Affiliate receives
additional [...***...]. To avoid doubt, the payment limitations set forth in subsections (i) and/or (ii) of this Section 5.2(g) apply whether the Sublicense is worldwide or less than worldwide. For the avoidance
of doubt, in the case if the [...***...] ([...***...]%) limitation under this Section 5.2(g) is applied and if [...***...] would have been due on the same Sublicense under Section 5.3, then the [...***...]
([...***...]%) under this Section 5.2(g) and the [...***...] percent ([...***...]%) under Section 5.3 shall not add together, and instead only the [...***...] ([...***...]%) under this
Section 5.2(g) shall be due. 

  
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Treatment Requested 

5.3               Sublicensing
Revenue. In the event that MorphoSys enters into a Sublicense prior to [...***...] for a Licensed Product covered by the Sublicense, but subject to Section 3.3(b), MorphoSys shall pay to Xencor [...***...]
([...***...] %) of all Sublicensing Revenue. Notwithstanding the foregoing, in the event that MorphoSys enters into a Sublicense [...***...] or later after the Effective Date, an amount of [...***...] US Dollars
($ [...***...]) shall be deducted from [...***...] received by MorphoSys from Sublicensee before calculating Xencor’s share of Sublicensing Revenue due under this Section 5.3. For the purpose of this Section, a Sublicense
is deemed granted the date it is committed to in a legally binding way, including in the case of an option for a Sublicense, the date the legally binding document granting the option is signed or otherwise becomes effective. For amounts of
consideration for Sublicense paid to MorphoSys or its Affiliates by its Sublicensees, which amounts are received for achievement of the milestone events set forth in Section 5.2, to the extent that MorphoSys actually pays such amounts to
Xencor pursuant to Section 5.2, the Milestone Payments according to Sec. 5.2 hereof shall be deducted from [...***...] before calculating Xencor’s share of Sublicensing Revenue due under this Section. 

The percentage of Sublicensing Revenue is due to Xencor after MorphoSys or its Affiliate receives the underlying Sublicensing Revenue and. MorphoSys shall
inform Xencor about the receipt of any Sublicensing Revenue and shall make the respective payment to Xencor within [...***...] of such receipt. 

5.4               Royalty
Payments. 

               (a)     
        MorphoSys shall pay to Xencor royalties on Net Sales of Licensed Products at the applicable rate selected from the following table with respect to all Net Sales achieved in a
given calendar year and during the applicable Royalty Term of such Licensed Products (determined on a country-by-country basis). 

 

			
	
Worldwide Net Sales of Licensed Products in any Calendar Year
	  	Royalty Due to Xencor (as a
percentage of Net Sales)
	 Level 1: That portion of Net Sales in any given calendar year that is less than or
equal
to [...***...] dollars ($[...***...])
	  	[...***...]
 ([...***...]%)

	 Level 2: That portion of Net Sales in any given calendar year that is greater
than
$[...***...], but less than or equal to [...***...] dollars ($[...***...])
	  	[...***...]
 ([...***...]%)

	 Level 3: That portion of Net Sales in any given calendar year that is greater
than
[...***...] dollars ($[...***...]), but less than or equal to [...***...] dollars
($[...***...])
	  	[...***...]
 ([...***...]%)

	 Level 4: That portion of Net Sales in any given calendar year that
exceeds
[...***...] dollars ($[...***...])
	  	[...***...]
 ([...***...]%)

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

               (b)     
        Offset for Third-Party Composition Patents. If MorphoSys or its Affiliate(s) or Sublicensee(s) enter into any agreement with a Third Party for a license under an
issued Patent which Covers the specific composition of matter of: (i) XmAb5574 due to and because of the sequence of its Fv or of its Fc variants, or of (ii) the Xencor High-ADCC/CDC Fc variants of any other Licensed Antibody which is
under development or commercialization by MorphoSys or its Affiliate(s) or Sublicensee(s) due to and because of the sequence of such Xencor High-ADCC/CDC Fc variants (“Issued Specific Composition Patents;” to avoid doubt,
an issued Patent will “Cover the specific composition” via a use claim if the scope of the use claims is limited to uses of such specific composition of matter due to and because of the sequence (meaning the Fv or Fc variants in the case
of XmAb5574 and the Xencor High-ADCC/CDC Fc variants of such other Licensed Antibody) (and the foregoing specifically excluding Patents that apply due to any chemical modification thereto not present in the form thereof being tested in the Ongoing
Phase 1 Trial), then [...***...] ([...***...]%) of the net sales royalties actually paid to the Third Party under such license with respect to Net Sales in any given calendar quarter in any given country may be offset against the royalty
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to Xencor with respect to such Net Sales in such calendar quarter; provided, however, that the foregoing reduction shall not reduce the royalty owed to Xencor in any given calendar quarter
below [...***...] ([...***...]%) of Net Sales. 
 In the event MorphoSys enters into a Sublicense, and the Sublicense contains an
offset for Issued Specific Composition Patents, MorphoSys shall be able to pass through to Xencor the entire such offset agreed in the Sublicense if such offset is defined as [...***...] ([...***...]%) or less of the net sales royalties
actually paid to the Third Party by Sublicensee on Issued Specific Composition Patents. In case such offset is more than [...***...] ([...***...]%), MorphoSys shall only be able to pass through to Xencor an offset of [...***...]
([...***...]%) of such net sales royalties on Issued Specific Composition Patents. As an example, in case the Sublicensee has a royalty burden of [...***...] ([...***...]%) of Net Sales to a Third Party as described above, and
passes through to MorphoSys a [...***...] ([...***...]%) offset of [...***...] ([...***...]%) of Net Sales royalties, MorphoSys shall be able to pass through the full offset to Xencor. In case the Sublicensee passes through
to MorphoSys an offset of [...***...] ([...***...]%) of such [...***...]% royalty burden to a Third Party, i.e. [...***...] ([...***...]%) of Net Sales royalties, then MorphoSys shall be able to only pass through to
Xencor an offset of [...***...] ([...***...]%) of such [...***...]% royalty burden to a Third Party, i.e. [...***...] ([...***...]%) of Net Sales royalties, and has to carry the remaining [...***...]
([...***...]%) offset, i.e. [...***...] ([...***...]%) of Net Sales royalties itself. To avoid doubt, all of the foregoing examples relate solely to royalties on Issued Specific Composition Patents. 

To avoid doubt, the foregoing offset of the foregoing 2 paragraphs is not available for royalties to Third Parties on Know-How or on any of the following kinds of Patents: (1) Patents Covering production and manufacturing (including expression); (2) Patents Covering CD19; (3) Patents Covering formulations;
(4) Patents Covering delivery (including Patents on delivery devices and Patents on modes of administration); and (5) Patents whose use claims are general and do not apply based on the sequence as described in the first sentence of this
Section 5.4(b). 
 To further avoid doubt, if Xencor does not challenge MorphoSys’s application of this Section to any
particular Patent, this does not mean that Xencor believes, agrees or admits vis-à-vis Third Parties that the given Patent claims the composition of matter of
XmAb5574 or the Xencor High-ADCC/CDC Fc portion of any Licensed Antibody, or that it is valid or enforceable. Xencor may have many reasons other than believing, agreeing or admitting the foregoing, for not challenging any given application of
the offset of this Section by MorphoSys, including avoiding the costs of litigation, or not being in litigation with a licensee, or Xencor may judge that benefits of MorphoSys having in place a license that makes MorphoSys comfortable to
continue with commercialization may outweigh the costs of allowing MorphoSys to take the offset even though Xencor disagrees with MorphoSys on whether the license is needed or the Patent(s) Cover or are valid or enforceable. 

               (c)
            Royalty Term. “Royalty Term” means the time from the first post-Marketing Authorization sale of the first Licensed Product
in a given country, on a country by country basis, until the last to occur of (X) the expiration or invalidation of the last Valid Claim of Licensed Patents that would be infringed, but for the license of this Agreement or joint ownership of
the particular Valid Claim, in any of the ways described in the definition of “Cover,” by the making, using, selling, offering for sale, importing or exporting of the Licensed Product that is actually sold in such country in which such
Licensed Product is manufactured or sold, and (Y) eleven (11) years after the first post-Marketing Authorization sale of the first Licensed Product in such country. Clause (X) of Royalty Term is determined on a country-by-country and Licensed Product-by-Licensed Product basis, whereas clause (Y) of
Royalty Term is determined only on a country-by-country basis. The royalties payable with respect to Net Sales of Licensed Products shall be reduced to
[...***...] percent ([...***...]%) of the otherwise applicable rates, with respect to Net Sales of a Licensed Product in a country during any portion of the Royalty Term when there is not a Valid Claim of Licensed Patents that would be
infringed, but for the license of this Agreement or joint ownership of the particular Valid Claim, in any of the ways described in the definition of “Cover,” by the making, using, selling, offering for sale, importing or exporting of the
Licensed Product that is actually sold in the country of manufacture or sale. For the avoidance of doubt, the [...***...] percent ([...***...]%) reduction shall in this situation apply to every royalty rate otherwise applicable
except for the “floor” of [...***...] percent ([...***...]%) which shall be [...***...] percent ([...***...]%) in this case. 

  
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 5.5
              Quarterly Payment Timings. All royalties due under Section 5.4 shall be paid quarterly, on a country-by-country basis, due and payable with the relevant Royalty Payment Report referred to in Section 5.6 below. 

5.6               Royalty Payment
Reports. With respect to each calendar quarter for which royalties are due under this Agreement, within [...***...] after the end of the calendar quarter, MorphoSys shall provide to Xencor a written report stating the number of all
royalty-bearing sales of Licensed Products sold during the relevant calendar quarter; the gross sales associated therewith; and the calculation of Net Sales thereon, including the amount of any deduction provided for in the definition of Net Sales
in Article 1 (broken down by category as enumerated in such definition). The report shall provide all such information on a country-by-country basis. 

5.7               Payment
Method. 
                (a)
            Except as provided in Section 5.10 regarding blocked currency, all payments due under this Agreement to Xencor shall be made by bank wire
transfer in immediately available funds to an account designated by Xencor. All payments under this Agreement shall be made in the legal currency of the United States of America, and all references to “$” or
“dollars” shall refer to United States dollars (i.e., the legal currency of the United States). 

               (b)
            Without prejudice to MorphoSys’ payment obligations according to Section 5.1 through 5.4, Xencor shall use commercially reasonable
efforts to provide MorphoSys with an invoice following the receipt of such payments. 
 5.8
              No Credits or Refunds. All payments to Xencor hereunder shall be noncreditable, not subject to offset, and nonrefundable, except
as set forth in Section 3.3 and except to the extent that an audit conducted pursuant to Section 5.13 below confirms that MorphoSys had overpaid amounts to Xencor, in which case MorphoSys shall have a credit applicable against any and all
payments subsequently due under this Agreement and except for the offset according to Section 5.4 (b). 
 5.9
              Taxes. MorphoSys shall be responsible for the amount of any taxes required to be withheld by MorphoSys under applicable
law. Accordingly, if any such taxes are levied on such payments due hereunder (“Withholding Taxes”), MorphoSys shall (i) deduct the Withholding Taxes from the payment amount, (ii) pay all applicable Withholding Taxes
to the proper taxing authority, and (iii) send evidence of the obligation together with proof of tax payment to Xencor within [...***...] following that tax payment. Xencor is entitled to require that MorphoSys tender payment from a
U.S. or a German bank account. If MorphoSys is required to deduct Withholding Taxes from a payment to Xencor under this Agreement, MorphoSys agrees to use reasonable efforts to assist Xencor in claiming exemption from such deductions or withholdings
under any not-for-profit status, applicable double taxation or similar agreement or treaty. 

5.10             Blocked
Currency. In each country where the local currency is blocked and cannot be removed from the country, royalties accrued in that country shall be paid to Xencor in the country in local currency by deposit in a local bank designated by
Xencor, unless the Parties otherwise agree. 

5.11             Sublicenses. 
If MorphoSys grants any Sublicenses, MorphoSys shall include an obligation for the Sublicensee to (i) maintain records adequate to document and verify the proper Sublicensing Revenues to be paid to MorphoSys; (ii) provide reports with
each Sublicensing Revenue payment to MorphoSys sufficient to allow such verification; and (iii) allow MorphoSys to conduct or have conducted on MorphoSys’ behalf as requested by Xencor in accordance with Section 5.13(d) an audit
to verify the proper payment of Sublicensing Revenues, milestones, Net Sales, royalties, as applicable. 

5.12             Foreign
Exchange. If any currency conversion shall be required in connection with the calculation of amounts payable hereunder, such conversion shall be made using the average of the exchange rates for the purchase and sale of U.S. dollars, as
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calendar quarter to which such payment pertains. With any payment in relation to which a currency conversion is performed to calculate the amount of payment due, MorphoSys shall provide to
Xencor a true, accurate and complete copy of the Wall Street Journal (or a successor entity) exchange rates used in the calculation. 

5.13             Records;
Inspection. 
                (a)
            MorphoSys shall keep and ensure that its Affiliates keep complete and accurate records of its sales and other dispositions (including use in clinical
trials, or provision on a compassionate use basis or as marketing samples) of the Licensed Products, including all such records that may be necessary for the purposes of calculating all payments due under this Agreement. MorphoSys shall make
such records available for inspection by an accounting firm selected by Xencor under Section 5.13(c) at MorphoSys’ s premises in Germany on reasonable notice during regular business hours (in accordance with the remaining provisions
of this Section) no more than once in any calendar year. 

               (b)
           Upon timely request and at least [...***...] prior written notice from Xencor, MorphoSys shall permit such audit to be conducted during regular
business hours in such a manner as to not unnecessarily interfere with MorphoSys’s normal business activities. Such audit shall be limited to results in any period that has not previously been audited under this Section, not to exceed
[...***...] prior to the audit notification. 

               (c)
            At Xencor’s expense no more than once per calendar year, Xencor has the right to retain an independent certified public accountant from a
nationally recognized (in the U.S.) accounting firm (that is not an Affiliate of Xencor) to perform on behalf of Xencor an audit, conducted in accordance with GAAP, of such books and records of MorphoSys and its Affiliates as are deemed necessary by
the independent public accountant to report on Net Sales for the period or periods requested by Xencor and the correctness of any report or payments made under this Agreement (all subject to subsection (b)). 

               (d)
           MorphoSys shall ensure that its Sublicensees keep complete and accurate records of such Sublicensee’s sales and other dispositions (including use
in clinical trials, or provision on a compassionate use basis or as marketing samples) of the Licensed Products including all such records that may be necessary for the purposes of calculating all payments due under this Agreement. MorphoSys
shall require that such Sublicensee make such records available for inspection by MorphoSys or an independent auditor reasonably acceptable to Sublicensee, once during any calendar year in which the agreement between MorphoSys and any Sublicensee is
in effect and thereafter for a period of [...***...] after the calendar year to which the audit pertains. Upon the reasonable request of Xencor, with respect to any such Sublicensee, and no more than once in any calendar year, MorphoSys
shall exercise its audit rights with respect to such Sublicensee and shall report the results of such audit to Xencor in accordance with Section 5.13(f). The costs for such requested audit shall be paid by Xencor unless (i) an underpayment
of more than [...***...] ([...***...]%) is revealed as described in section 5.13 (g) or (ii) MorphoSys would also have performed an audit of its Sublicensee in that calendar year without Xencor’s request. 

               (e)
            All information, data, documents and abstracts referred to in this Section shall be used only for the purpose of verifying compliance with
this Agreement, shall be treated as MorphoSys’ Confidential Information subject to the obligations of this Agreement and need not be retained more than [...***...] from the end of the calendar year to which each shall pertain. 

               (f)
            Summary of audit results shall be shared by MorphoSys and Xencor to the extent reasonably necessary to enable Xencor to verify compliance with
payment obligations. The auditor shall be under written obligations to MorphoSys (and, where applicable, any Sublicensee) of confidentiality and non-use (other than uses required by this Section). 

  
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               (g)
            If the audit reveals an underpayment, MorphoSys shall promptly pay to Xencor the amount of such undisputed underpayment plus interest in
accordance with Section 5.14. If the audit reveals that the undisputed monies owed by MorphoSys to Xencor has been understated by more than [...***...] ([...***...]%) for the period audited, MorphoSys shall, in addition, pay the
reasonable costs of such audit. 

5.14             Interest. If
MorphoSys fails to make any payment due to Xencor under this Agreement, then interest shall accrue on a pro-rated basis from the date after the particular payment is due (if not paid by that date) until paid
at a rate equal to the Dollars prime or equivalent rate per annum quoted by The Wall Street Journal (or its successor, or, if neither then exists, a similarly reputable and authoritative source for such information) on the first
business day after such payment is due, plus [...***...] ([...***...]%). 
 ARTICLE 6 

PATENTS 
 6.1
              Ownership and Disclosure of Inventions. 

               (a)
            Ownership. Xencor shall solely own all right, title and interest in the Listed Xencor Patents, the Xencor
Pre-Sublicensing Product Invention Patents, the Xencor Product Invention Patents and the MorphoSys Core Improvement Invention Patents, and to be clear, the Licensed Core/Fc Platform Patents, the Licensed
Candidate-Specific Patents and the Licensed Broader Anti-CD19 Patents. As between the Parties, MorphoSys shall solely own all right, title and interest in the MorphoSys Product Invention Patents. Xencor and MorphoSys shall jointly own all right,
title and interest in the Joint Collaboration Product Invention Patents. As between the Parties, Xencor shall solely own all right, title and interest in (or be the Licensee of a Third Party for) the Post-Partnering Patents and the inventions that
they claim. As between the Parties, MorphoSys shall solely own all right, title and interest in (or be the licensee of a Third Party for) the Post-Sublicensing Patents. 

               (b)
            Implementation. Each Party hereby assigns to the other Party inventions and associated Patents and
Know-How solely as necessary to achieve ownership as provided in Section 6.1(a). Each Party hereby assigns to the other Party, and hereby grants to the other Party all consents, licenses and waivers, in
each case that are necessary to achieve such ownership worldwide. Each Party agrees to provide to the other Party and execute all documents and instruments evidencing or that may be required to record, perfect or enforce such assignments,
consents, licenses and waivers promptly upon the other Party’s request. Each Party hereby appoints the other Party as the appointing Party’s
attorney-in-fact to execute and deliver each of the foregoing documents and instruments if the appointed Party is unable, after making reasonable inquiry, to obtain the
appointing Party’s signature on any such documents and instruments. Each Party (and its Affiliates) shall perform its activities under this Agreement through personnel who have made a similar assignment and appointment to and of such Party
or its Affiliate. Each assigning Party shall make its relevant personnel (and their assignments and signatures on such documents and instruments) reasonably available to the other Party for assistance in accordance with this Article at no
charge. 
                (c)
            Invention Disclosure. Without modifying or limiting the ownership and rights as provided for in Section 6.1(a), each Party shall, prior
to any public disclosure or filing of a patent application, disclose to the other Party any Xencor Pre-Sublicensing Product Invention, Xencor Product Invention, MorphoSys Core Improvement Invention, MorphoSys
Product Invention, or Joint Collaboration Product Invention, as applicable, and allow reasonably sufficient time (at least [...***...] from the date of receipt by the other party) for comment and review by the other Party as to whether such
other Party would recommend for a Patent to be filed (but only by the Party or Parties who is or are entitled to do so in accordance with Section 6.2). Any public disclosure may be delayed by either Party’s written request for a
period not to exceed [...***...] if it contains disclosure on which the other party desires to file a patent. Without modifying or limiting the ownership and rights as provided for in Section 6.1(a), each Party and/or its respective
licensee shall disclose Post-Partnering Patents and Post-Sublicensing Patents to the other Party promptly after the filing of such patent application. 

  
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 6.2
              Prosecution of Patents. 

               (a)
            Licensed Core/Fc Platform Patents and MorphoSys Core Improvement Invention Patents. Xencor shall have the sole right in its sole discretion
to perform the filing, prosecution and maintenance of the Licensed Core/Fc Platform Patents and MorphoSys Core Improvement Invention Patents on a worldwide basis. With respect to the prosecution and maintenance costs for Licensed Core/Fc
Platform Patents and MorphoSys Core Improvement Patents, Xencor shall be responsible for [...***...] ([...***...]%) of such costs. 

               (b)
            Xencor Pre-Sublicensing Product Invention Patents and Xencor Product Invention Patents. Xencor shall
be responsible to perform the filing, prosecution and maintenance of Xencor Pre-Sublicensing Product Invention Patents and Xencor Product Invention Patents on a worldwide basis (meaning in those countries of
the world where it is consistent with the application of Commercially Reasonable Efforts (but not greater efforts) to file, prosecute and maintain them). Regarding Xencor Pre-Sublicensing Product
Invention Patents and Xencor Product Invention Patents, both which relate solely to Licensed Products, MorphoSys shall be responsible for all of the respective prosecution and maintenance costs. Xencor shall be responsible for all of the prosecution
and maintenance costs of any Xencor Pre-Sublicensing Product Invention Patents and Xencor Product Invention Patents that do not relate solely to Licensed Products. 

               (c)     
        Joint Collaboration Product Invention Patents. MorphoSys shall be responsible to perform the filing, prosecution and maintenance and be responsible for all of the
prosecution and maintenance costs of Joint Collaboration Product Invention Patents on a worldwide basis (meaning in those countries of the world where it is consistent with the application of Commercially Reasonable Efforts (but not greater efforts)
to file, prosecute and maintain them). 

               (d)     
        MorphoSys Product Invention Patents. MorphoSys shall be responsible to perform the filing, prosecution and maintenance and be responsible for all of
the prosecution and maintenance costs of MorphoSys Product Invention Patents (meaning in those countries of the world where it is consistent with the application of Commercially Reasonable Efforts (but not greater efforts) to file, prosecute and
maintain them). 

               (e)     
        Licensed Candidate-Specific Patents. As to Licensed Candidate-Specific Patents, where possible, Xencor shall file at least one (1) patent application for a Licensed
Candidate-Specific Patent with the patent offices of the U.S., Japan, and the EPO, and in further countries if desired by MorphoSys; within [...***...] of the Effective Date, in an effort to obtain an issued Patent that Covers Licensed
Antibody but does not Cover [...***...]. Upon such filing by Xencor and/or upon any further filing of a patent application for a Licensed Candidate-Specific Patent by Xencor, MorphoSys shall be solely responsible, in its own
discretion, to perform the prosecution and maintenance of Licensed Candidate-Specific Patents on a worldwide basis (meaning in those countries of the world where it is consistent with the application of Commercially Reasonable Efforts (but not
greater efforts) to file, prosecute and maintain them) and shall be responsible for all of the prosecution and maintenance costs. MorphoSys shall not knowingly take any position during prosecution that would limit the scope or validity of the
specific Licensed Broader Anti-CD19 Patent, which is the parent to the respective Licensed Candidate-Specific Patent, unless Xencor approves of such position or has already taken such position in prosecution. 

               (f)     
         Licensed Broader Anti-CD19 Patents. Xencor shall have the sole right in its sole discretion to perform the filing, prosecution and maintenance of
the Licensed Broader Anti-CD19 Patents worldwide. With respect to the prosecution and maintenance costs, the Parties [...***...]. MorphoSys shall have the right to opt out and no longer contribute towards the cost of prosecution and
maintenance of individual Broader Anti-CD19 Patents, in such case, the individual Patent will fall outside of the Licensed Patents, the Post-Sublicensing Licensed Patents, and the License provided for in Section 4.1, notwithstanding anything
else express or implied in this Agreement. In order to opt out under the foregoing sentence, MorphoSys will provide Xencor with written notice [...***...] prior to Xencor incurring a cost in the individual Patent. 

               (g)     
        Review and Comment. MorphoSys shall have the right to review and comment before each act of Xencor’s filing and/or prosecution of Licensed
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Anti-CD19 Patents and Xencor Pre-Sublicensing Product Invention Patents. Xencor shall have the right to review and comment before each act of
MorphoSys’s prosecution of Joint Collaboration Product Invention Patents and MorphoSys Product Invention Patents. For each of the foregoing, each Party shall provide the other Party with a copy of each substantive communication received
from any patent authority within a reasonable time (ideally, within [...***...] of the respective mailing date); and a copy of each proposed submission to a patent authority in the MorphoSys Territory regarding such Patent reasonably in
advance of making such filing (normally [...***...] in advance but sometimes less under exigent circumstances). Furthermore, with respect to the preparation, filing, prosecution and maintenance of each such Patents each Party agrees to
the following: (i) keep the other Party reasonably informed with respect to such activities; (ii) consult with the other Party regarding such matters, including the final abandonment of any such Patent claims; and (iii) reasonably
consider the other Party’s comments. 

               (h)     
        Abandonment. With regard to Licensed-Candidate Specific Patents and/or Joint Collaboration Product Invention Patents, if MorphoSys determines to
abandon or not maintain any such Patent then MorphoSys shall provide Xencor written notice of such determination at least [...***...] prior to the expiration of any deadline, which if not met would lead to abandonment of rights (or such other
period of time reasonably necessary to allow Xencor to assume such responsibilities). In that case, Xencor shall confer with MorphoSys and consider in good faith its reasons for abandoning any such patent. Xencor shall have the right, at
its option, to control the filing, prosecution and maintenance of any such Licensed-Candidate Specific Patents and/or Joint Collaboration Product Invention Patents at its own expense, without affecting any of the other financial terms set forth in
this Agreement. 
 With respect to Licensed Broader Anti-CD19 Patents and Xencor Pre-Sublicensing
Product Invention Patents, but specifically excluding any and all Licensed Core/Fc Platform Patents, if Xencor determines to abandon or not maintain any such Patent in the MorphoSys Territory, then Xencor shall provide MorphoSys written notice of
such determination at least [...***...] prior to the expiration of any deadline, which if not met would lead to abandonment of rights (or such other period of time reasonably necessary to allow MorphoSys to assume such
responsibilities). In that case, MorphoSys shall confer with Xencor and consider in good faith its reasons for abandoning any such patent. Subject to Xencor’s consent, MorphoSys shall have the right, at its option, to control the
filing, prosecution and maintenance of any such Licensed Candidate-Specific Patent, Licensed Broader Anti-CD19 Patent and/or Xencor Pre-Sublicensing Product Invention Patent at its own expense, without
affecting any of the other financial terms set forth in this Agreement. 
 (i)
             In-Licensed Patents. If there are at any time any Licensed Patents and/or Post-Sublicensing
Licensed Patents that are in-licensed by Xencor instead of owned by Xencor (or any Xencor Affiliate), then Section 6.2(a) (as applicable) shall apply to the prosecution of such Licensed Patents
and/or Post-Sublicensing Licensed Patents in the same way as if they were Licensed Patents and/or Post-Sublicensing Licensed Patents owned by Xencor, to the full extent Xencor has prosecution rights under the agreement by which Xencor (or the Xencor
Affiliate) received its license rights to such Patents, and to the full extent permitted by such agreement. 
 (j)
              Certain Proceedings. For the purposes of this Section 6.2, “prosecution” shall include communications with patent
offices, and defending the applicable Patents in proceedings such as oppositions, reexaminations, interferences, nullifications or other administrative actions in which a Third Party contests the inventorship, validity, title or enforceability of a
Patent. 
 6.3
              Patent Term Extensions. Licensed Core/Fc Platform Patents are not available for extension. Prior to Market Approval or its
equivalent, the Parties shall discuss and try to reach mutual agreement for which of the other Patents the Parties shall apply to extend the patent term with respect to Licensed Products, pursuant to patent term extension laws or regulations or
Supplemental Protection Certificate laws and regulations in the MorphoSys Territory. If the Parties are not able to reach mutual agreement, then MorphoSys shall be entitled to make the decision. 

6.4               Non-Patent Regulatory Exclusivity. As between the Parties, MorphoSys shall have the exclusive right to apply for regulatory exclusivity for Licensed Products in the MorphoSys Territory for the Field. 

  
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 6.5
              Infringement of Patents by Third Parties. 

(a)             Notification. Each
Party shall promptly notify the other Party in writing if the notifying Party reasonably believes that any Licensed Patent and/or Post-Sublicensing Licensed Patent is being or has been infringed or misappropriated in any Territory by a Third Party
by Licensed Product activities within the scope of the license to MorphoSys in Section 4.1 (such infringement includes any potential generic version of a Licensed Product, where the infringement arises under the Hatch-Waxman Act or
Biologics Price Competition and Innovation Act or foreign equivalent, “Competitive Infringement”). 
 (b)
            Competitive Infringement of Candidate-Specific Patents. 

(i)             First
Right. MorphoSys shall have the first right, but not the obligation, to enforce any Licensed Candidate-Specific Patent or Joint Collaboration Product Invention Patent with respect to all past, present and future during the Term activities
or conduct of a Third Party in the Field and the MorphoSys Territory that involve Licensed Products in the MorphoSys Territory within the scope of the license to MorphoSys of Section 4.1 (“Candidate-Specific Patent Competitive
Infringement”). The consent of Xencor is not required for MorphoSys to bring such an enforcement action. MorphoSys shall reasonably consider Xencor’s comments, if any, on any such enforcement activities, but for the avoidance
of doubt, MorphoSys shall control the litigation in all respects and shall make all decisions in its own discretion, subject only to the provisions regarding settlement provided below in Section 6.5(f). Except as provided in
Section 6.5(g), MorphoSys shall bear all costs and expenses for enforcement under this Section 6.5(b)(i) (including the costs of Xencor’s cooperation as required under subsection (e)). 

                       
        (ii)            Back-up Right for Candidate-Specific Patent Competitive
Infringement in the MorphoSys Territory. If MorphoSys does not bring action that it is permitted to bring under Section 6.5(b)(i) to prevent or abate Candidate-Specific Patent Competitive Infringement within [...***...] (or
initiate the exchange of patent lists within [...***...] of receiving notice of a Biosimilar application within the framework of the Biologics Price Competition and Innovation Act or any foreign equivalent) after notification thereof to or by
MorphoSys pursuant to Section 6.5(a), then Xencor shall have the right, but not the obligation, to bring, at its own expense, an appropriate action in the MorphoSys Territory against any person or entity engaged in such Candidate-Specific
Patent Competitive Infringement directly or contributorily; provided, however, Xencor shall not initiate legal action without first conferring with MorphoSys and considering in good faith MorphoSys’ reasons for not bringing
any such action. The consent of MorphoSys is not required for Xencor to bring such an enforcement action and Xencor shall control the litigation in all respects and shall make all decisions in its own discretion, subject only to the provisions
regarding settlement provided below in Section 6.5(f). 

               (c)     
       Competitive Infringement of Shared Patents. 

                       
        (i)             With respect to any Infringement of any Licensed Broader Anti-CD19 Patents, Xencor Pre-Sublicensing Product Invention Patents or Xencor Product Invention Patents by Licensed Product activities within the scope of the license to MorphoSys in Section 4.1 (“Shared Patent Competitive
Infringement”), Xencor shall have the first right, but not the obligation, to enforce the Licensed Broader Anti-CD19 Patents, Xencor Pre-Sublicensing Product Invention Patents or Xencor Product
Invention Patents anywhere in the world. Xencor shall bear all related expenses and all related recoveries shall be divided as provided in Section 6.5(h). Xencor shall keep MorphoSys reasonably informed of Xencor’s activities
related to prevention or abatement of Shared Patent Competitive Infringement and will consider MorphoSys’ comments on any such activities. If Xencor brings suit against a Third Party to enforce the Licensed Broader Anti-CD19 Patents,
Xencor Pre-Sublicensing Product Invention Patents or Xencor Product Invention Patents against Shared Patent Competitive Infringement, MorphoSys shall have the right, at Xencor’s consent, to join the
proceedings as a plaintiff and MorphoSys will share in the costs depending on the extent of MorphoSys’ participation. 

                       
        (ii)            If Xencor does not bring action to prevent or abate Shared Patent Competitive Infringement
within [...***...] (or initiate the exchange of patent lists within [...***...] days of 

  
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receiving notice of a Biosimilar application within the framework of the Biologics Price Competition and Innovation Act or any foreign equivalent), after notification thereof to or by Xencor
pursuant to Section 6.5(a), then MorphoSys shall have the right, but not the obligation, to bring, at its own expense, an appropriate action in the MorphoSys Territory against any person or entity engaged in such Shared Patent Competitive
Infringement directly or contributorily and retain all related recoveries; provided, however, MorphoSys shall not initiate legal action without first conferring with Xencor and considering in good faith Xencor’s reasons for not
bringing any such action. 

               (d)     
       Other Infringement. 

                       
        (i)             General. With respect to any infringement of any Licensed Core/Fc Platform
Patents, Xencor shall have the exclusive right (but not the obligation) to prevent or abate such Infringement, and as between the Parties shall bear all related expenses and retain all related recoveries. 

                       
        (ii)            Xencor Core Technology Patents. To avoid doubt and notwithstanding anything express or
implied in this Agreement, Xencor retains all enforcement rights with respect to Licensed Core/Fc Platform Patents, subject to the following. If MorphoSys becomes aware of any Competitive Infringement with respect to Licensed Core/Fc Platform
Patents, and Xencor has not yet initiated an infringement action to assert a Licensed Core/Fc Platform Patent against the other Party practicing Competitive Infringement, MorphoSys may request in writing to Xencor the right to enforce. Xencor shall
respond in writing within [...***...] which of the following Xencor elects in its sole discretion: (a) Xencor will initiate an action to enforce the Licensed Core/Fc Platform Patent within an additional [...***...]; (b) Xencor
will authorize MorphoSys to do so, or (c) Xencor grants MorphoSys a royalty accommodation in the country, in which the Licensed Core/Fc Platform is not being enforced against Competitive Infringement equal to [...***...] as set forth in
Section 5.4 if (i) the other Party practicing Competitive Infringement achieves [...***...] (based upon [...***...]); and (ii) no other Licensed Patent and/or Post-Sublicensing Licensed Patent could be enforced against the
other Party practicing Competitive Infringement. Xencor may elect between (a), (b) and (c) in its sole discretion, and Xencor’s election shall be binding on both Parties. If Xencor elects (b), then MorphoSys shall not
knowingly take any position in the suit that would make any admission as to the unenforceability or invalidity of any Licensed Core/Fc Patent, unless Xencor approves of such position or has already taken such position in litigation. In the event
that Xencor elects (a), then Xencor shall retain its own counsel at its own expense. 
 (iii)
             Infringement of MorphoSys Pre-Sublicensing and Post-Sublicensing Patents by Activities with respect to
[...***...] Program Antibodies by Third Parties. Xencor shall not have any right to enforce the Post-Sublicensing Patents. As to the MorphoSys Pre-Sublicensing
Patents, MorphoSys shall have the right to enforce them against Third Party research, development, manufacture, use, sale, offer for sale, importation or exportation of [...***...] Program Antibodies (retaining all recoveries); provided,
however, before doing so MorphoSys shall discuss with Xencor in good faith any concerns Xencor may have with respect to such enforcement for a period of not less than [...***...]. Xencor shall only have the right to enforce MorphoSys Pre-Sublicensing Patents against Third Party research, development, manufacture, use, sale, offer for sale, importation or exportation of [...***...] Program Antibodies (retaining all recoveries) if
MorphoSys grants its withholdable consent for Xencor to do so. Xencor may request such consent and will meet and confer with MorphoSys as to the proposed enforcement. If Xencor elects to enforce, and MorphoSys consents, then MorphoSys
shall cooperate by being joined in name as a party plaintiff (at Xencor’s expense on a pass-through basis) and Xencor shall not knowingly take any position in the suit that would make any admission as to the unenforceability or invalidity of
any MorphoSys Pre-Sublicensing Patent, unless MorphoSys approves of such position or has already taken such position in litigation. 

(e)             Participation of the Other
Party with Respect to Infringement Suits. If a Party brings an action against infringement under this Section 6.5, the Party bringing the action shall maintain control of the action and the other Party shall be entitled to separate
representation in such matter by counsel of its own choice and at its own expense, and such Party shall cooperate fully with the Party bringing such action including by being joined as a party plaintiff if necessary to obtain standing for such
action (all at the expense on a pass-through basis of the prosecuting Party, including payment or reimbursement of reasonable attorneys fees 

  
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of the Party being joined). Costs related to cooperation with the Party bringing the action will be reimbursed on an ongoing basis. Costs of the cooperating party that go beyond what is
needed to reasonably cooperate will be reimbursed out of any recovery. 
 (f)
             Settlement. 
 (i)
            Xencor shall not settle a claim brought under Section 6.5(b) or Section 6.5(c) involving Licensed Patents in a manner that
would reduce MorphoSys’s market share of Licensed Products for use in the Field in the MorphoSys Territory, or would grant a conflicting license inside the scope of any exclusive license to MorphoSys under a Patent that is exclusively licensed
to MorphoSys, in each case without the prior written consent of MorphoSys (which consent shall not be unreasonably withheld, conditioned or delayed). 

(ii)            Xencor shall not settle a
claim brought under Section 6.5(b) or Section 6.5(c) involving Post-Sublicensing Licensed Patents in a manner that would prevent MorphoSys from selling Licensed Products for use in the Field in the MorphoSys Territory, or would
grant a conflicting license under Post-Sublicensing Licensed Patents inside the scope of the non-exclusive license to MorphoSys (a conflicting license meaning a license that would be to the exclusion of
MorphoSys, its Affiliates and/or Sublicensees), in each case without the prior written consent of MorphoSys (which consent shall not be unreasonably withheld, conditioned or delayed). 

(iii)           MorphoSys shall not settle a claim
brought under this Section 6.5 involving Licensed Patents and/or Post-Sublicensing Licensed Patents that would limit, restrict or impair Xencor’s rights under this Agreement, in each case without the prior written consent of Xencor (which
consent shall not be unreasonably withheld, conditioned or delayed), or make any admission as to invalidity or unenforceability of any Licensed Patent and/or Post-Sublicensing Licensed Patent without the consent of Xencor. 

(g)             Allocation of
Proceeds. If monetary damages are recovered from any Third Party in an action brought by a Party under Section 6.5(b), (c), or (d), such recovery shall be allocated first to the reimbursement of any costs and expenses incurred by the
Party controlling such litigation (including, for this purpose, a reasonable allocation of expenses of internal counsel or other personnel acting in such capacity (i.e., coordination of litigation matters and the like)), not previously reimbursed,
and then the costs and expenses of the non-controlling Party (including, for this purpose, a reasonable allocation of expenses of internal counsel or other personnel acting in such capacity (i.e., coordination
of litigation matters and the like)), and any remaining amounts shall be split as follows: 

(i)              If the action was
brought solely under Section 6.5(b), then: 

(1)            the portion of any such
remaining amounts that represents recovery for Competitive Infringement (“Remaining Competitive Recovery”) on any action brought under Section 6.5(b)(i), (a) to the extent not representing treble or punitive damages shall
be allocated to Xencor in an amount equal to the royalty that would have been payable to Xencor under Article 5 if MorphoSys had made Net Sales equivalent to the actual sales that underlie the Remaining Competitive Recovery, with the remaining
portion of the Remaining Competitive Recovery under this subsection (1) that does not represent treble or punitive damages being allocated to MorphoSys; and (b) to the extent representing treble or punitive damages shall be allocated
[...***...] ([...***...]%) to Xencor and [...***...] ([...***...]%) to MorphoSys ; and 

(2)            the Remaining
Competitive Recovery on any action brought under Section 6.5(b)(ii), (a) to the extent not representing treble or punitive damages shall be allocated to Xencor in an amount equal to double the royalty that would have been payable to Xencor
under Article 5 if MorphoSys had made Net Sales equivalent to the actual sales that underlie the Remaining Competitive Recovery, with the remainder of the Remaining Competitive Recovery under this subsection (2) that does not represent
treble or punitive damages being solely allocated to MorphoSys; and (b) to the extent representing treble or punitive damages shall be allocated [...***...] ([...***...]%) to MorphoSys and [...***...] ([...***...]%) to
Xencor. 

  
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(ii)             If the action was
brought solely under Section 6.5(c) or (d) or jointly under Sections 6.5 (b) and (c) and/or (d), then any recovery on Infringement other than Competitive Infringement shall be deducted and the remainder (a) to the
extent not representing treble or punitive damages shall be allocated to Xencor in an amount equal to the royalty that would have been payable to Xencor under Article 5 if MorphoSys had made Net Sales equivalent to the actual sales that
underlie the Remaining Competitive Recovery, with the remaining portion of the Remaining Competitive Recovery under this subsection (ii) that does not represent treble or punitive damages being allocated to MorphoSys; and (b) to the extent
representing treble or punitive damages shall be allocated [...***...] ([...***...]%) to Xencor and [...***...] ([...***...]%) to MorphoSys. 

(h)             
Affiliates/Sublicensees/Other Licensees. MorphoSys may grant to its Affiliates or Sublicensees its rights to prosecute and/or enforce Licensed Patents and/or Post-Sublicensing Licensed Patents as set forth in this Section 6.5, and
Xencor may do the same for its Affiliates and Other Licensees. 

(i)              Non-exclusively Licensed Patents. For the Post-Sublicensing Licensed Patents, the license grants to MorphoSys with respect to which are non-exclusive,
notwithstanding anything express or implied in this Agreement, MorphoSys has no right to enforce the Post-Sublicensing Licensed Patents. 

6.6               Infringement of Third-Party
Rights. If any Licensed Product manufactured, used or sold by either Party, its Affiliates, Sublicensees or Other Licensees becomes the subject of a Third Party’s claim or assertion of infringement of a Patent relating to the
manufacture, use, sale, offer for sale or importation of Licensed Product, the Party first having notice of the claim or assertion shall promptly notify the other Party, and the Parties shall promptly confer to consider the claim or assertion and
the appropriate course of action. Unless the Parties otherwise agree in writing, each Party shall have the right to defend itself against a suit that names it as a defendant, subject to the indemnification provisions of
Article 9. Neither Party shall enter into any settlement of any claim described in this Section 6.6 that affects the other Party’s rights or interests without such other Party’s written consent, which consent shall not be
unreasonably withheld, conditioned or delayed. In any event, the Parties shall reasonably assist one another and cooperate in any such litigation at the other Party’s request and expense. 

6.7               Patent Oppositions and Other
Proceedings. If either Party desires to bring an opposition, action for declaratory judgment, nullity action, interference, reexamination or other attack upon the validity, title or enforceability of a Patent owned or controlled by a Third
Party that covers or may cover the manufacture, use for the Field or sale of any Licensed Product, such Party shall so notify the other Party. 

6.8               Patent Challenges. If MorphoSys or
its Affiliate or Sublicensee challenges in a court or before a patent office the validity, enforceability or scope of any Licensed Patents existent as of the Effective Date, and within [...***...] days after written notice from Xencor calling
MorphoSys’s attention to this the challenge is not irrevocable withdrawn, then [...***...], and Xencor may terminate this Agreement and any license granted hereunder immediately. Notwithstanding the foregoing, MorphoSys or its Affiliate
shall be permitted to take any action reasonably required in order to comply with any applicable law, regulation or court order in any proceeding that is not initiated directly or indirectly by MorphoSys or its Affiliate, whether or not such
proceeding relates to any challenge or dispute concerning the validity of the Licensed Patents in a patent office proceeding or court of law. 

6.9               Trademarks. As between the Parties,
the trademarks on Licensed Products sold by MorphoSys (and its Affiliates and Sublicensees) in the MorphoSys Territory shall be owned or controlled by MorphoSys (or its Affiliates or Sublicensees). Neither Party grants to the other any license under
trademarks owned or controlled by such Party except as expressly provided for in this Agreement. 

  
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 ARTICLE 7 

CONFIDENTIALITY 

7.1               Treatment of Confidential Information.
The Parties agree that during the Term, and for a period of [...***...] after the Term expires in the last country in which it expires or is terminated, a Party receiving Confidential Information of the other Party shall (a) maintain in
confidence such Confidential Information to the same extent such Party maintains its own confidential, proprietary information (but at a minimum each Party shall use Commercially Reasonable Efforts), (b) not disclose such Confidential
Information to any Third Party without prior written consent of the other Party, and (c) not use such Confidential Information for any purpose except those permitted by this Agreement. 

7.2               Authorized Disclosure. Notwithstanding
Section 7.1, a Party may disclose Confidential Information of the other Party to the extent such disclosure is reasonably necessary in the following instances: 

(a)             filing for, prosecuting or maintaining Patents
owned by such Party; 
 (b)             regulatory filings for
which such Party is responsible under this Agreement; 
 (c)
            complying with applicable governmental regulations and/or submitting information to tax or other governmental authorities, provided that if the receiving Party is
required by law to make any public disclosures of Confidential Information of the disclosing Party, to the extent it may legally do so, it will give reasonable advance notice to the disclosing Party of such disclosure and will use its reasonable
efforts to secure confidential treatment of Confidential Information prior to its disclosure (whether through protective orders or otherwise) and the public filing of this Agreement shall be handled as provided in Section 7.5; 

(d)             prosecuting or defending litigation of this
Agreement or defending any litigation, but subject to the same provisions as in (c); 
 (e)
            to (i) its Affiliates, to its legal and financial advisors, to its consultants, merger partners and acquirors (and their counsel in connection with diligence) and
— other than [...***...] Confidential Information — to prospective and actual Sublicensee(s) and (ii) others (but not Other Licensees) in order to (and solely to the extent required to) exercise such Party’s rights or
fulfill its obligations under this Agreement (including commercialization and/or granting a Sublicense to Licensed Patents and/or Post-Sublicensing Licensed Patents, Licensed Know-How or Licensed Products) on
a need to know basis, each of whom in (i) and (ii) prior to disclosure must be bound by similar obligations of confidentiality and non-use substantially equivalent in scope to those set forth in this
Article 7 and that are of reasonable duration in view of the circumstances of the disclosure. MorphoSys may request to Xencor and Xencor shall grant and perform disclosure of all Xencor Confidential Information relating to [...***...]
that was made available to MorphoSys before entering into this Agreement to any potential Sublicensee under appropriate CDA; and 

               (f)       
     to the extent mutually agreed to in writing by the Parties. 
 7.3
             Termination of Prior CDA. This Agreement supersedes the Prior CDA. All information exchanged between the Parties under or otherwise subject to the Prior CDA
shall be deemed Confidential Information (in accordance with and to the extent set forth in the definition of such term in Article 1), and shall be subject to the terms of this Article 7. For clarity, all Confidential Information exchanged
between the Parties as of the Effective Date of this Agreement shall be Confidential Information as defined in this Agreement. 
 7.4
              Publicity. The Parties have agreed to the joint press release set forth in Exhibit G (in English; MorphoSys shall additionally be entitled after the
English version is released or simultaneously a direct translation into German of such English version) for the initial public announcement of the execution of this 

  
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Agreement. Any other publication, news release or other public announcement regarding the execution or terms of this Agreement, shall first be reviewed and approved by both Parties, which
approval shall not be unreasonably withheld, conditioned or delayed. Both Parties agree that as part of their corporate communications policy and standard practice, Xencor and/or MorphoSys may need to announce the achievement of payment-bearing
milestones under this Agreement, and shall be permitted to do so, if the respective other Party agrees in advance, which approval shall not be unreasonably withheld, conditioned or delayed, and the Parties will work together as needed to find
— in good faith — acceptable wording as needed to the extent such announcement does not state the actual amount of any payment. In addition, and subject to the requirements of applicable securities and other laws governing such
disclosures, each Party shall use good faith efforts to notify the other Party in advance of any significant public announcement regarding Licensed Products’ performance and achievements under this Agreement. In case of any disclosure that
is required by law as reasonably advised by the disclosing Party’s counsel, such Party will provide the other Party with prompt notice of the required disclosure, such other Party shall not be entitled to withhold consent, but the Parties shall
work together in good faith to find a mutually acceptable manner in which to make the disclosure. Permission to repeat information that has already been publicly disclosed shall not be required. 

7.5               Terms of Agreement. The terms of
this Agreement shall be treated as Confidential Information of both Parties. Such terms may be disclosed by a Party to individuals or entities covered by Section 7.2(e)(i) (but not Section 7.2(e)(ii)) above, each of whom prior to
disclosure must be bound by similar obligations of confidentiality and non-use substantially equivalent in scope to those set forth in this Article 7. The terms of this Agreement other than the
financial terms and any attached development plans may be disclosed by Xencor to prospective Other Licensees, each of whom prior to disclosure must be bound by similar obligations of confidentiality and
non-use substantially equivalent in scope to those set forth in this Article 7. Disclosure of the terms of this Agreement (but not other Confidential Information received from the other Party) may
also be made to actual or potential bankers, lenders and investors of the disclosing Party, who are bound to obligations of confidentiality and non-use substantially equivalent in scope to those set forth in
this Article 7. In addition, if at any time a Party is legally required to file a copy of this Agreement with the Securities and Exchange Commission (or its counterpart in any country other than the U.S.) in connection with any public
offering of such Party’s securities or regular reporting obligations as a public company (if and when such Party becomes public), such Party shall attempt to obtain confidential treatment of economic and trade secret information for which such
treatment is reasonably available in accordance with applicable laws and regulations and SEC (or counterpart) practice. To that end, the filing Party shall, at least [...***...] in advance of any such filing, provide the other Party with
a draft set of redactions to the Agreement for which confidential treatment will be sought, and incorporate such other Party’s comments as to additional terms it would like to see redacted, and seek confidential treatment for such additional
terms (except only in the limited circumstances where confidential treatment is manifestly unavailable), to the extent such comments are provided at [...***...] in advance of the anticipated filing date. 

7.6               Publications. The Parties agree to
provide the other Party the opportunity to review any proposed abstracts, manuscripts or scientific presentations (including verbal presentations) which relate to (a) its activities performed pursuant to this Agreement and/or (b) any
Licensed Antibody and/or Licensed Product or either of their respective development, reasonably in advance to the publishing Party’s intended submission for publication or presentation and agrees, upon request, not to submit any such abstract
or manuscript for publication until the other Party is given a reasonable period of time to (i) secure patent protection for any material in such publication which the other Party believes to be patentable and/or (ii) to ascertain whether
its Confidential Information would be disclosed by the publication. Such other Party shall then provide its comments, if any, within [...***...] of receiving the manuscript or publication from the publishing Party. If patentable data and/or
information is disclosed in the manuscript or publication, the other Party shall promptly request to the publishing Party and the publishing Party shall grant the other Party to withhold such manuscript or publication for up to [...***...]
after receiving the manuscript or other publication to allow the other Party to file the respective Patent application. If Confidential Information is disclosed in the manuscript or publication, the publishing Party shall promptly remove such
Confidential Information and shall ensure that the manuscript or publication is published without such Confidential Information. For clarity, nothing contained in this Section 7.6 shall prohibit the inclusion of information necessary for a
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given a reasonable opportunity to review the information to be included prior to submission of such patent application and to request deletion of its Confidential Information (subject to
Section 7.2(a)). Notwithstanding the foregoing, Xencor shall not publish or first present in a public forum the scientific or technical results of any activities performed pursuant to this Agreement or any Confidential Information relating
to Licensed Antibody and/or Licensed Product, including Collaboration Confidential Information and Xencor Pre-Clinical Confidential Information, without the prior written approval by MorphoSys, whereby such
approval shall not be unreasonably withheld by MorphoSys with respect to Xencor Pre-Clinical Confidential Information. MorphoSys may publish and/or present Xencor
Pre-Clinical Confidential Information without Xencor’s prior approval, provided, however, that (A) Xencor shall be given the opportunity to secure patent protection according to this Section,
and (B) Xencor and/or the respective employees are appropriately acknowledged in such publication (including authorship of such employees in accordance with prevailing norms). 

7.7               Due Diligence Data. All data provided by
Xencor in the dataroom before the Effective Date for the purpose of MorphoSys performing due diligence (“Due Diligence Data”) shall be Xencor Confidential Information. Xencor shall store such data on a CD and send it to an independent
third party reasonably acceptable to MorphoSys and Xencor (the “Data Escrow Agent”) promptly after a three-way-storage agreement between the Parties and the
Data Escrow Agent has been executed. Such three-way-storage agreement shall be negotiated in good faith promptly after the Effective Date and shall contain provisions
describing the events whereupon the Data Escrow Agent shall release such reference material to either MorphoSys, Xencor or an independent Third Party (including for verifying compliance with the warranties under Article 8). MorphoSys shall bear
the costs associated with the storage of such reference material at the Data Escrow Agent’s facilities. Furthermore, Xencor shall provide to MorphoSys a CD containing all Due Diligence Data, excluding, however, any data solely relating
to [...***...] 
 ARTICLE 8 

REPRESENTATIONS AND WARRANTIES 

8.1               General Representations and
Warranties. Each Party represents, warrants and covenants to the other that: 

               (a)
            The representing and warranting Party is duly organized and validly existing under the laws of its state or country of incorporation, and has full corporate power and
authority to enter into this Agreement and to carry out the provisions hereof. 

               (b)
            The representing and warranting Party 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 and have been duly authorized to do so by all requisite corporate action. 

               (c)
            This Agreement is legally binding upon it and enforceable in accordance with the Agreement’s terms. The execution, delivery and performance of this Agreement by it
does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any material law or regulation of any court, governmental body or administrative or other agency
having jurisdiction over it. 

               (d)      
       The representing and warranting Party has not granted, and shall not grant during the Term of the Agreement, any right to any Third Party which would conflict with the rights granted to the other Party
hereunder. It has (or shall have at the time performance is due) maintained and shall maintain and keep in full force and effect all agreements necessary to perform its obligations hereunder. 

8.2               Xencor’s Warranties. Xencor
represents and warrants that: 

               (a)      
       As of the Effective Date, the Listed Xencor Patents and Licensed Know-How are owned solely and exclusively by Xencor, free and clear of any liens, charges, and
encumbrances or licenses in the Field, and following the Effective Date, it will take no action that results in any of the Listed Xencor Patents being (i) owned in whole or in part by any entity other than Xencor or its permitted successors and
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than in a manner that such Patents remain subject to the licenses and rights set forth in this Agreement, or (ii) encumbered by liens, charges, encumbrances or other licenses in each case
with respect to Licensed Antibodies and/or Licensed Products in the Field. 

               (b)      
       As of the Effective Date, the Listed Xencor Patents include all Patents owned or Controlled by Xencor anywhere in the world that may be extended into the MorphoSys Territory, that Cover Licensed Antibodies
and/or Licensed Products. 

               (c)      
       Neither Xencor nor its Affiliates has received from any Third Party any written notice stating any claim that any Patent or trade secret right owned or controlled by such Third Party would be infringed or
misappropriated by the manufacture, use, sale, offer for sale or importation of XmAb5574 or the Licensed Product that is the subject of the Ongoing Phase 1 Trial as contemplated by this Agreement. To the best of knowledge of the officers of
Xencor the disclosures that Xencor made to MorphoSys in the course of intellectual property due diligence were true and accurate in all material respects and to the best of knowledge of such officers Xencor did not neglect to make further
disclosures of information (including as to freedom to operate for XmAb5574 and the Licensed Product in development as of the Effective Date) within the knowledge of such officers necessary to make the disclosures by Xencor in intellectual property
due diligence not misleading. 

               (d)      
       As of the Effective Date, neither Xencor nor its Affiliates has received any formal written or oral notice of any offer to license any Patent purporting to Cover a Licensed Product, formal written notice of
(i) an interference in the United States Patent and Trademark Office involving a Licensed Patent, (ii) any claim of inventorship or co-inventorship of any Licensed Patent(s) by any individual
who is not currently listed as an inventor on such Licensed Patent(s), or (iii) any other adverse action by any Third Party in any patent office or court anywhere in the world relating to a Licensed Patent; 

               (e)      
       As of the Effective Date, neither Xencor nor its Affiliates has granted, expressly or otherwise, any assignment, license or other extension of right, covenant not to sue, or other similar interest or benefit,
exclusive or otherwise, to, under or in the Licensed Patents or the Licensed Know-How with respect to Licensed Antibody and/or Licensed Products in the Field, which license remains in effect. 

               (f)      
        After the Effective Date but prior to the expiration or termination of this Agreement, neither Xencor nor its Affiliates will grant, expressly or otherwise, any assignment, license or other extension of
right, covenant not to sue, or other similar interest or benefit, exclusive or otherwise, to, under or in the Licensed Patents and/or Post-Sublicensing Licensed Patents or the Licensed Know-How with respect to
Licensed Antibody and/or Licensed Products in the Field. 

               (g)      
       The data with respect to XmAb5574, and the data with respect to XmAb5871’s antibody-dependent cytotoxicity and B-cell-depleting properties (including any data of
Xencor’s with respect thereto in in vivo tumor models), that Xencor has disclosed to MorphoSys in writing prior to the Effective Date is to Xencor’s best knowledge true, accurate and complete in all material respects as of the
Effective Date and to the best of knowledge of Xencor’s officers there are no data generated by or for Xencor but not disclosed that would conflict with such data disclosed by Xencor to MorphoSys in writing. 

               (h)     
        As of the Effective Date, to the knowledge of its officers, Xencor and/or its Affiliates have not made available any Licensed Antibody and/or Licensed Product to any Third Party
other than those disclosed to MorphoSys in writing prior to the Effective Date (including disclosure via inclusion of an applicable agreement covering materials transfer in the data room to which MorphoSys was provided access for due diligence
purposes). 
 8.3              
MorphoSys Warranties. MorphoSys represents and warrants that: 

               (a)     
        As of the Effective Date, MorphoSys intends to conduct significant additional clinical development of Licensed Product prior to sublicensing. 

  
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               (b)       
      As of the Effective Date, MorphoSys intends to complete [...***...]. 

               (c)    
         As of the Effective Date, MorphoSys (i) has not initiated any discussion with any Third Party for [...***...] and (ii) intends to [...***...] not earlier
than [...***...] after the Effective Date. 

               (d)    
         MorphoSys and its Affiliates are not party to any contract as of the Effective Date that would automatically or by request of the counterparty result [...***...]
with respect to Licensed Antibody or Licensed Product. 

               (e)     
        As of the Effective Date and to the best of the knowledge of its officers, MorphoSys and its Affiliates do not own or Control any anti-CD19 Antibody identified and documented as
such, except as (i) under any existing (as of the Effective Date) HuCAL agreement between MorphoSys and/or its Affiliate(s) and a third party, and (ii) relating to any non-therapeutic, non-prophylactic activity of MorphoSys and/or its Affiliate(s). 

               (f)     
         As of the Effective Date, MorphoSys and its Affiliates [...***...], except as (i) under any existing (as of the Effective Date) HuCAL agreement between
MorphoSys and/or its Affiliate(s) and a third party, and (ii) relating to any non-therapeutic, non-prophylactic activity of MorphoSys and/or its Affiliate(s).

 8.4               Warranty
and Covenant of No Debarment. Each of MorphoSys and Xencor represents, warrants and covenants that in the course of the development of Licensed Products, the representing, warranting and covenanting Party, to the best of such Party’s
knowledge, has not prior to the Effective Date used, and shall not during the Term use, any employee or consultant who has been debarred by the FDA or Regulatory Authorities, or, to the best of such Party’s knowledge, who was or is the subject
of debarment proceedings by the FDA or Regulatory Authorities. 

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

ARTICLE 9 

INDEMNIFICATION 
 9.1
              Indemnification by MorphoSys. MorphoSys shall indemnify, hold harmless and defend Xencor, Xencor’s Affiliates, Xencor’s and its
Affiliates’ Other Licensees and all of the respective officers, directors, employees and agents of each of the foregoing entities (collectively the “Xencor Indemnitees”) from and against any and all losses, damages,
liabilities, judgments, fines, amounts paid in settlement, expenses and 

  
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costs of defense (including reasonable attorneys’ fees and witness fees) (collectively “Losses”) resulting from any demand, claim, action or proceeding brought or initiated
by a Third Party (each a “Third-Party Claim”) against any Xencor Indemnitees(s) to the extent that such Third-Party Claim arises out of (i) the breach of any representation, warranty or covenant by MorphoSys in
Article 8; (ii) the gross negligence or willful misconduct of any MorphoSys Indemnitee (defined in Section 9.2); or (iii) the research, development, manufacture, storage, handling, use, sale, offer for sale or importation of
Licensed Antibody or Licensed Products by or for the MorphoSys Indemnitees (as defined below) (including, to avoid doubt, any and all Patent infringement liability not arising from a breach of a Xencor representation and warranty in
Article 8); provided that (a) the Xencor Indemnitees comply with the procedure set forth in Section 9.3; and (b) such indemnity shall not apply to the extent Xencor has an indemnification obligation pursuant to
Section 9.2 for such Loss. MorphoSys shall require equivalent indemnification of the Xencor Indemnitees as in clause (iii) of the foregoing sentence from each Sublicensee as to such Sublicensee’s activities described in such
clause (iii). 
 9.2               Indemnification by
Xencor. Xencor shall indemnify, hold harmless and defend MorphoSys, MorphoSys’ Affiliates, MorphoSys’ and its Affiliates’ Sublicensee(s) and all of the respective officers, directors, employees and agents of each of the
foregoing entities (collectively the “MorphoSys Indemnitees”) from and against any and all Losses resulting from any Third-Party Claim against them to the extent that such Third-Party Claim arises out of (i) the breach of any
representation, warranty or covenant by Xencor in Article 8; or (ii) the gross negligence or willful misconduct of any Xencor Indemnitee; provided that (a) the MorphoSys Indemnitees comply with the procedure set forth in
Section 9.3; and (b) such indemnity shall not apply to the extent MorphoSys has an indemnification obligation pursuant to Section 9.1 for such Loss. 

9.3               Procedure. To be eligible for its
Xencor Indemnitees or MorphoSys Indemnitees (as applicable) to be indemnified hereunder, a Party shall provide the indemnifying Party with prompt notice of the Third-Party Claim giving rise to the indemnification obligation pursuant to this
Article 9 and the exclusive ability to defend (with the reasonable cooperation of the indemnified Party, at the defending Party’s expense on a pass-through basis) or settle any such Third-Party Claim; provided, however, that
the indemnifying Party shall not enter into any settlement for damages other than monetary damages without the indemnified Party’s written consent, such consent not to be unreasonably withheld, delayed or conditioned. The indemnified Party
shall have the right to participate, at its own expense and with counsel of its choice, in the defense of any Third-Party Claim or suit that has been assumed by the indemnifying Party. If the Parties cannot agree as to the application of
Sections 9.1 and 9.2 to any particular Third-Party Claim, the Parties may conduct separate defenses of such Third-Party Claim. Each Party reserves the right to claim indemnity from the other in accordance with Sections 9.1 and 9.2 above upon
resolution of the underlying claim, notwithstanding the provisions of this Section 9.3 requiring the indemnified Party to tender to the indemnifying Party the exclusive ability to defend such claim or suit. 

9.4               Insurance. Each Party shall procure
and maintain insurance or self-insurance, including product liability insurance, adequate to cover its obligations hereunder and which are consistent with normal business practices of prudent companies similarly situated, at all times during which
any Licensed Product is being clinically tested in human subjects or commercially distributed or sold by or on behalf of such Party. At a minimum, prior to the first Marketing Authorization in the MorphoSys Territory, MorphoSys shall be insured
for [...***...] U.S. dollars (US$[...***...]) to cover its obligations under this Agreement. After the first Marketing Authorization in the MorphoSys Territory, MorphoSys shall be insured for a minimum of [...***...] U.S.
dollars (US$[...***...]) to cover its obligations under this Agreement. It is understood that such insurance or self-insurance shall not be construed to create a limit of either Party’s liability with respect to its indemnification
obligations under this Article 9. Each Party shall provide the other with written evidence of such insurance or self-insurance upon request. Each Party shall provide the other with written notice at least [...***...] prior to
the cancellation, non renewal or material change in such insurance or self-insurance which materially adversely affects the rights of the other Party hereunder. 

9.5               Limitation of Liability. NEITHER
PARTY NOR ITS RESPECTIVE AFFILIATES AND LICENSEES (INCLUDING SUBLICENSEES AND OTHER LICENSEES) SHALL BE LIABLE FOR SPECIAL, INCIDENTAL, EXEMPLARY, CONSEQUENTIAL OR PUNITIVE DAMAGES, INCLUDING

  
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LOST PROFITS, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, WHETHER IN CONTRACT, WARRANTY, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE. Reimbursement of Losses paid to
Third Parties in accordance with the provisions of Section 9.1 or 9.2 shall not be read to be defeated by this Section 9.5. 

ARTICLE 10 
 TERM
AND TERMINATION 
 10.1             Term. This Agreement
shall become effective on the Effective Date and shall continue until the expiration of the last Royalty Term or Sublicensing Revenue sharing obligation as set forth in Article 5 or is earlier terminated pursuant to this Article 10 (the
“Term”). 
 10.2             Termination for Material
Breach. 
                (a)
            Notice. If either Party believes that the other is in material breach of this Agreement, then the non-breaching Party may
deliver written notice of such breach to the other Party. To be an effective notice under this Section 10.2(a), the written notice must (i) explicitly reference this Section 10.2, and (ii) explicitly state that if the breach
is not cured, the notifying Party will have the right to terminate this Agreement. The allegedly breaching Party shall have one hundred and twenty (120) days from receipt of such notice to cure such breach, or thirty (30) days in case
of non-payment breaches. Furthermore, the allegedly breaching Party shall, in all cases, be permitted to seek resolution of the underlying dispute in accordance with Article 12 of this Agreement and shall
inform the non-breaching Party promptly after receipt of the breach notice about its intent to seek dispute resolution. In such case, if determined under Article 12 by the arbitrator, the respective cure
period as described above shall be stayed until the dispute has been decided in accordance with Article 12, subject to interest and penalties accruing during the dispute resolution under Article 12. 

               (b)
            Failure to Cure. Subject to Section 10.2(a), if the Party receiving notice of breach fails to cure such breach within such one hundred and twenty (120) day
period after receipt of such notice (or thirty (30) days for non-payment breaches), the Party originally delivering the notice may terminate this Agreement effective immediately upon delivery of a
second written notice to the allegedly breaching Party 
 10.3
            Termination for Insolvency. Each Party shall have the right to terminate this Agreement upon written notice to the other Party with no second notice obligation or
opportunity to cure; if the other Party: (i) shall become insolvent; (ii) shall make assignment for the benefit of creditors; or (iii) shall have a petition in bankruptcy filed for or against it not dismissed within one hundred twenty
(120) days. Such termination shall be effective upon delivery of the first written notice to the other Party, unless such notice is in error. 

10.4             Elective Termination. MorphoSys shall have the
right, in its sole discretion, to terminate this Agreement in its entirety, by providing not less than ninety (90) days prior written notice of such termination to Xencor. 

10.5             Certain Effects of Expiration and Termination; Accrued
Rights. 
                (a)
            Upon expiration of this Agreement with respect to a particular Licensed Product in a particular country, the licenses to MorphoSys pursuant to Section 4.1, shall
automatically become, with respect to such Licensed Product in such country, freely sublicensable, perpetual, irrevocable, non-exclusive, royalty-free, and fully paid as to all then-future exercise of the
license. Unless this Agreement is earlier terminated as provided in this Article 10, the licenses granted to Xencor pursuant to Section 4.4 shall survive until the expiration of this Agreement with respect to XmAb5871 Program
Antibodies, at which time they shall automatically convert to become perpetual, irrevocable, non-exclusive, royalty-free, and fully paid (other than any pass-through costs to MorphoSys’ un-Affiliated licensors). For clarity, the Post-Sublicensing Patents shall remain royalty-free. 

  
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               (b)     
        Expiration and termination of this Agreement shall not relieve the Parties of any liability which accrued under this Agreement prior to the effective date of such termination
nor preclude either Party from pursuing all rights and remedies it may have hereunder or at law or in equity with respect to any breach of this Agreement nor prejudice either Party’s right to obtain performance of any obligation. 

               (c)       
      Notwithstanding Section 13.9, upon notice of termination of this Agreement, MorphoSys’ interest in any Sublicenses granted by MorphoSys under this Agreement shall become assignable by MorphoSys to Xencor and
MorphoSys’ interest in this Agreement shall become assignable by MorphoSys to any Sublicensee, provided that such Sublicensee is in good standing under the Sublicense; provided that under no circumstance shall Xencor’s obligations
be increased by operation of this Section 10.5(c). 

10.6             Xencor’s Rights
upon Certain Terminations. Upon termination of this Agreement by Xencor under Section 6.8 (Patent Challenge), 10.2 (Material Breach), or 10.3 (Insolvency), or by MorphoSys under Section 10.4
(At-Will), subject to Section 10.5(c) above: 

               (a)     
        License Termination. The licenses granted by Xencor to MorphoSys under Article 4 shall terminate. 

               (b)    
         Return of Licensed Know-How. Within ninety (90) days following such termination, MorphoSys shall return to Xencor all then
still existing Licensed Know-How received from Xencor. 

               (c)    
          Survival of Granted License. The licenses granted to Xencor pursuant to Section 4.4 shall survive and shall automatically convert to become perpetual, irrevocable,
royalty-free, and fully paid. However, any associated pass-through costs already provided for in this Agreement shall continue to be due. 

               (d)    
         License Grant; Patent and Know-How Assignment. Effective upon termination as provided in the first sentence of this
Section 10.6, MorphoSys hereby: 

  (i)             assigns to
Xencor any and all MorphoSys Pre-Sublicensing Patents (to the extent of MorphoSys’ or its Affiliate’s interest therein) that solely Cover any of the following and any combination of the following:
Licensed Antibody(ies), Licensed Product(s), XmAb5871, and/or any pharmaceutical composition containing XmAb5871; for the avoidance of doubt, “solely Cover” means the Patents Cover only antibodies, products and/or pharmaceutical
compositions falling within each of the defined terms, and no other antibody, product and/or pharmaceutical composition (for further avoidance of doubt, Xencor shall have the sole right to enforce the foregoing Patents to the extent assigned
hereunder); 

  (ii)            grants to
Xencor an exclusive, royalty-free (other than any pass-through costs to MorphoSys’ un-Affiliated licensors), irrevocable (except for uncured failure to pay pass-through costs), perpetual (except for
uncured failure to pay pass-through costs) license under [...***...] and [...***...] generated by MorphoSys or on MorphoSys’ behalf during the Pre-Sublicensing Term (and Patents
(i) [...***...] and (ii) [...***...]), in each of the foregoing cases that are not assigned to Xencor in accordance with Section 10.6(d)(i), to make, have made, use, sell, offer to sell and import Licensed Antibody(ies),
Licensed Product(s), XmAb5871 and/or any pharmaceutical composition containing the foregoing; but — with respect to the foregoing [...***...] that are not owned by but are instead licensed to MorphoSys — such license shall only be
granted to the extent permitted under MorphoSys’s agreement with the licensor of such [...***...] and Xencor shall adhere to the terms of such agreement between MorphoSys and licensor. MorphoSys shall have the sole right to enforce
such Patents outside the scope of the foregoing license to Xencor. MorphoSys shall have the first right to enforce the foregoing patents against activities within the scope of the foregoing license to Xencor. Prior to exercising such
right, MorphoSys shall discuss the matter with Xencor and reasonably consider any concerns Xencor may have. If MorphoSys does not exercise such right to enforce within [...***...] after a notice between the Parties of the infringement,
then Xencor shall have the back-up right to enforce limited exclusively to enforcement against activities within the scope of the foregoing license to Xencor, for which purposes MorphoSys shall agree to be
joined at Xencor’s cost on a pass-through basis if necessary for standing purposes. Prior to initiating any such suit Xencor shall discuss the matter with MorphoSys and reasonably consider any concerns MorphoSys may have.

  
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Recoveries on MorphoSys’s such enforcement shall go [...***...]% to MorphoSys and [...***...]% to Xencor; recoveries on Xencor’s such enforcement shall go [...***...]%
to Xencor and [...***...]% to MorphoSys. The foregoing license shall be freely sublicensable through one (1) or more tiers of sublicensees without the need to obtain consent. For the avoidance of doubt, [...***...]. 

  (iii)           grants to Xencor
a non-exclusive, royalty-free (other than any pass-through costs to MorphoSys’ un-Affiliated licensors), irrevocable (except for uncured failure to pay pass-through
costs), perpetual (except for uncured failure to pay pass-through costs) license under [...***...] generated by MorphoSys or on MorphoSys’ behalf during the Pre-Sublicensing Term (and Patents
(i) [...***...] and (ii) [...***...]), in each of the foregoing cases that are not assigned to Xencor in accordance with Section 10.6(d)(i), to make, have made, use, sell, offer to sell and import any and all anti-CD19
Antibodies and/or any pharmaceutical composition containing any of the foregoing; but — with respect to the foregoing [...***...] that are not owned by but are instead licensed to MorphoSys — such license shall only be granted to the
extent permitted under MorphoSys’s agreement with the licensor of such [...***...] and Xencor shall adhere to the terms of such agreement between MorphoSys and licensor. The foregoing license shall be freely sublicensable through one
(1) or more tiers of sublicensees without the need to obtain consent. 

               (e)     
        Reimbursement of development costs. In the case of all terminations covered by this Section 10.6, but excluding termination under Section 10.3 (Insolvency), Xencor
shall reimburse MorphoSys for its fully burdened, documented costs incurred between the Effective Date of this Agreement and the termination date for the development of Licensed Antibody(ies) and Licensed Products including, but not limited to
clinical trial costs and FTE-based compensation accounted for at the FTE rate (“MorphoSys Development Costs”), at the following rates and according to the following payment schedule: 

  (i)             Termination
prior to dosing the first patient in the first Phase 2 Trial for the Licensed Product: [...***...] reimbursement 

  (ii)           Termination after
dosing the first patient in the first Phase 2 Trial but prior to dosing the first patient in the first Phase 3 Trial for the Licensed Product: twenty [...***...] reimbursement 

  (iii)           Termination after
dosing the first patient in the first Phase 3 Trial for the Licensed Product: [...***...] reimbursement. 
 Xencor shall only be required to make
such reimbursement at the time when Xencor receives or generates revenue related to the development and/or commercialization of Licensed Antibody(ies) and/or Licensed Products. Xencor shall only be required to pay to MorphoSys a maximum of
[...***...] of each installment of such received or generated revenue at any time and/or in any period until the time at which the applicable percentage of MorphoSys Development Costs has been fully reimbursed. As an example, if MorphoSys
Development Costs are [...***...] dollars ($[...***...]) and the applicable percentage of reimbursement is [...***...] ([...***...]%), and Xencor receives a payment of [...***...] dollars ($[...***...]) from a
future licensee of Licensed Antibody(ies) and/or Licensed Products, then Xencor shall pay [...***...] ($[...***...]) to MorphoSys and such payment shall count against the required reimbursement of [...***...] dollars
($[...***...]). 

               (f)     
         Contract Transfer and/or Assignment. To the extent requested by Xencor in writing [...***...] following termination as provided in the first sentence of this
Section 10.6 (and no later than [...***...] following such a termination MorphoSys shall provide copies for review, but only to the extent permitted under such contracts, to enable Xencor to make such decision), and subject to cost
reimbursement according to Section 10.6(j)(i) below, MorphoSys shall transfer and/or assign to Xencor all licenses, manufacturing agreements and other contracts specific to Licensed Antibody(ies) and Licensed Products (including clinical
trial and manufacturing agreements with respect thereto), to the extent such licenses and other contracts are in effect as of the date of such termination and such transfer and/or assignment is permitted under the contract. 

               (g)     
        Trademarks. To the extent requested by Xencor in writing within [...***...] following termination as provided in the first sentence of this Section 10.6, to the extent
permitted by applicable law, MorphoSys shall license or otherwise transfer rights to Xencor to all trademarks Controlled by MorphoSys and 

  
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used solely in connection with the commercialization of Licensed Antibody(ies) and Licensed Products in the MorphoSys Territory. 

               (h)       
      Regulatory. 

  (i)            
Transfer. To the full extent permitted by law MorphoSys shall take all actions reasonably necessary to transfer to Xencor all essential documentation, data, protocols and filings (including all raw clinical data, SAS datasets, trial master
files, regulatory correspondence (including minutes of meetings with Regulatory Authorities), INDs, Marketing Authorization Applications, Marketing Authorizations, other regulatory filings related to any Licensed Antibody or Licensed Product
that MorphoSys holds as of the time of such termination, and any other documentation or data needed in accordance with International Conference of Harmonization E6 Good Clinical Practice: Consolidated Guidance), in each case of the foregoing to the
extent reasonably required to support continued clinical development. The foregoing transfer shall be subject to cost reimbursement according to Section 10.6(j)(i) below. 

  (ii)            Ongoing
Trials. If any Licensed Product clinical trial(s) are ongoing at the time of termination, which clinical trials are solely sponsored by MorphoSys, then Xencor shall notify MorphoSys in writing within [...***...] after the
effection date of the termination which of the following Xencor elects and MorphoSys shall comply with and carry out Xencor’s election: 

                    
(1)             MorphoSys shall continue such ongoing trial and/or transfer sponsorship of such ongoing Licensed Product clinical trial(s) to
Xencor on a reasonable timeline. Xencor shall be responsible for (i) the costs of the continued conduct of the trial by MorphoSys and/or transfer (as applicable), which shall include that Xencor shall reimburse MorphoSys at MorphoSys’ (or
its Affiliate’s) fully burdened cost, determined in accordance with GAAP , and (ii) for the costs of the trial as sponsored by Xencor (as applicable). 

-OR- 

                    
(2)             MorphoSys shall wind down the trial and shall be fully and solely responsible for all costs associated such wind-down, and shall
continue to comply with all remaining obligations and commitments made to Regulatory Authorities by MorphoSys (including if applicable, patient registries), to the extent the compliance with such obligations and commitments is required by law, at
MorphoSys’s sole cost. Such costs shall be subject to reimbursement by Xencor to MorphoSys in accordance with Section 10.6 (e). 

  (i)              No Further
Representations. MorphoSys shall discontinue making any representation regarding its status as a licensee of Xencor in the MorphoSys Territory for Licensed Antibody and Licensed Products and shall cease conducting all activities with
respect to the marketing, promotion, sale or distribution of all of the foregoing. 

  (j)              Transition
Assistance. 

                    (i) 
            Subject to Sections 10.6(d)-(h) above, to the extent reasonably permissible under the circumstances at the time, and to the extent requested by
Xencor in writing within [...***...] following termination as provided in the first sentence of this Section 10.6, MorphoSys shall also provide such assistance as may be reasonably necessary to transfer and/or transition over a reasonable
period of time to Xencor any MorphoSys Know-How, trademarks, regulatory filings, licenses and other contracts specific to Licensed Antibody(ies) and Licensed Products including clinical trial and manufacturing
agreements with respect thereto, and provided that Xencor agrees to assume financial responsibility and all other obligations under each such license or contract (other than the case where MorphoSys has failed to obtain royalty-free rights
under the the Post-Sublicensing Patents). Xencor shall be responsible for the reasonable costs and expenses of MorphoSys in providing such assistance, other than FTE-based compensation, but including the
expenses and costs of travel food and lodging. 

                    (ii) 
           In addition, to the extent that MorphoSys or a MorphoSys Affiliate is then manufacturing itself (respectively) Licensed Products in the MorphoSys Territory
and upon Xencor’s request, MorphoSys shall use Commercially Reasonable Efforts to (or cause its Affiliate to) continue to 

  
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manufacture Licensed Products for Xencor’s use in the MorphoSys Territory until the earlier of (i) two (2) years and if reasonably required by Xencor to fully accomplish the
technology and transfer without supply interruption then an additional year (for a total in that case of three (3) years) after the effective date of termination, and (ii) such time as Xencor has validated an alternative manufacturer, and
quantities of Licensed Product supplied by such manufacturer may legally be sold in the MorphoSys Territory. Any such Licensed Product shall be supplied to Xencor and Xencor shall reimburse MorphoSys at MorphoSys’ (or its Affiliate’s)
fully burdened manufacturing cost, determined in accordance with GAAP. 

               (k)     
        Remaining Inventories. Xencor shall have the right to purchase from MorphoSys (or its Affiliate) all of the inventory of Licensed Products held by MorphoSys (or its Affiliate)
as of the effective date of termination at a price equal to MorphoSys’ (or its Affiliate’s) fully burdened manufacturing cost, determined in accordance with GAAP. 

               (l)     
         Affiliates. MorphoSys shall cause its Affiliates to comply with Section 10.6(a)-(k) as if they were MorphoSys. 

               (m)     
       Sublicensees. MorphoSys shall use Commercially Reasonable Efforts to obtain from each Sublicensee obligations in the Sublicense for the Sublicensee to comply with Sections 10.6(b),
(d), (e), (h), (j) and (k) as if the Sublicensee were MorphoSys, on the same or better terms as provided for in Sections 10.6(b), (d), (e), (h), (j) and (k) (or to avoid doubt, obligations in the Sublicense for the Sublicensee to
provide MorphoSys to provide the rights of Sections 10.6(b), (d), (e), (h), (j) and (k) to MorphoSys in case the Sublicense terminates, and for these to be passed on by MorphoSys to Xencor in case this Agreement also terminates). In
any event, MorphoSys shall provide in each Sublicense that whatever rights (if any) and terms with respect to the subject matter of Sections 10.6(b), (d), (e), (h), (j) and (k) are granted to MorphoSys in case such Sublicense terminates
shall be passed on to Xencor if this Agreement also terminates (as non-limiting examples: if MorphoSys obtains cost-free exclusive access to or ownership of intellectual property and clinical data, then this
shall also be cost-free when passed on to Xencor if this Agreement terminates; if MorphoSys obtains a broader assignment back, then the assignment to Xencor shall be identically broadened if this Agreement terminates). Also in any event,
MorphoSys shall in each Sublicense obtain at a minimum the following: The license to Xencor under Post-Sublicensing Patents of Section 4.4, including to the extent granted under Post-Sublicensing Patents of the Sublicensee, shall survive
in case the Sublicense terminates. In case the Sublicense terminates, there shall be a non-exclusive, royalty-free, sublicensable (through one (1) or more tiers without consent) license back to
MorphoSys under the Post-Sublicensing Patents to make, have made, use, sell, offer to sell, and import Licensed Antibodies and/or Licensed Products; which license shall be passed on to Xencor if this Agreement also terminates. 

10.7             MorphoSys Rights upon
Certain Terminations. Upon effective termination of this Agreement by MorphoSys under Section 10.2 (Material Breach) or 10.3 (Insolvency): 

               (a)     
        Survival of Granted Licenses. The licenses granted by Xencor to MorphoSys under Section 4.1 shall survive and shall automatically convert to become freely sublicensable,
perpetual (except in case of MorphoSys’s failure to pay milestones and royalties due on the continued use of the license not cured within [...***...] after written notice from Xencor; provided, however, that the license is not lost
during good faith dispute of the amount of such payment(s) subject to resolution under Article 12), and irrevocable (except in case of MorphoSys’s failure to pay milestones and royalties due on the continued use of the license not
cured within [...***...] after written notice from Xencor; provided, however, that the license is not lost during in good faith dispute of the amount of such payments(s) subject to resolution under Article 12) and shall remain
exclusive as to all then-future exercise of the license and continue to be payment-bearing at the rates provided for in this Agreement. For clarity, the license under Post-Sublicensing Licensed Patents shall remain royalty free and this
Section 10.7(a) does not alter that. 

               (b)     
        Transfer of Required Know-How, Data and Materials. Within [...***...] following such termination, to the full
extent permitted by law Xencor shall transfer to MorphoSys all essential documentation, data, protocols, and filings (including all raw clinical data, SAS datasets, trial master files, 

  
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regulatory correspondence (including minutes of meetings with Regulatory Authorities), INDs, Marketing Authorization Applications, Marketing Authorizations, other regulatory filings related
to any Licensed Antibody or Licensed Product that Xencor holds as of the time of such termination, and any other documentation or data needed in accordance with International Conference of Harmonization E6 Good Clinical Practice: Consolidated
Guidance), in each case of the foregoing to the extent reasonably required to support continued clinical development. 

               (c)
            Pre-Sublicensing and Pre-Partnering Term. The
Pre-Sublicensing and Pre-Partnering Term shall be deemed to have ended effective immediately upon such termination. 

               (d)
            JDC. The JDC shall no longer meet unless requested by MorphoSys and all obligations of MorphoSys relating to the JDC according to Article 2 shall not be applicable any
longer. 
                (e)
            Initial Phase 1 Clinical Trial. If such termination occurs during the Collaboration Term, then, upon MorphoSys’ request, Xencor shall transfer the sponsorship for the
Ongoing Phase I Trial to MorphoSys without undue delay, and MorphoSys in its sole discretion may assume responsibility for the Ongoing Phase 1 Trial. In the event that sponsorship for the Ongoing Phase I Trial is transferred to MorphoSys,
Xencor shall use commercially reasonable diligence efforts to provide MorphoSys with any information and/or assistance requested by MorphoSys, including assisting MorphoSys as requested in conducting the Ongoing Phase 1 Trial to a successful
completion in the shortest amount of time reasonably possible. 

               (f)
             Diligence Obligations of MorphoSys. The diligence obligations of MorphoSys as set forth in Section 2.2 (c)(ii), 3.1, 3.8, 3.12, 6.2(c) and 6.2(d) shall
cease. 
                (g)
            Affiliates. Xencor shall cause its Affiliates to comply with this Section 10.7 as if they were Xencor. 

               (h)
            Other Rights and Obligations. All other rights and obligations of the Parties (including MorphoSys’s payment obligations to Xencor; Sections 5.5 through 5.14 shall
survive expiration or termination for such payment obligations) shall be unaffected. 
 10.8
            Other Remedies. The remedies in this Article 10 are not exclusive. Either Party may elect to seek other relief and remedies available under law through an
arbitration proceeding under Article 12. 
 ARTICLE 11 

SURVIVAL 
 11.1
            Survival. The following provisions shall survive any expiration or termination of this Agreement: 
  

					
	 Article or
Section
	 	 Title of Article or Section
	 	 Clarification (if any)

	 Article 1
	 	Definitions	 	
	 Article 7
	 	Confidentiality	 	Expiring later in accordance with its terms.
	 Article 8
	 	Representations and Warranties	 	
	 Article 9
	 	Indemnification	 	
	 Article 10.5-10.8
	 	Term and Termination	 	For clarity, “all other rights and obligations” of the Parties according to Section 10.7 (h) (under termination to which Section 10.7 applies) shall not exclude — for the purpose of this Section — the
provisions not listed in this table of Section 11 of surviving provisions, but subject to Sections 10.7 (a) through 10.7 (g).
	 Article 11
	 	Survival	 	
	 Article 12
	 	Dispute Resolution	 	

  
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	 Article or
Section
	 	 Title of Article or Section
	 	 Clarification (if any)

	 Article 13
	 	Miscellaneous	 	
	 Sections 5.5 - 5.14
	 	Quarterly Payment Timings	 	To the extent necessary to govern mechanics of any accrued during the Term payment obligations and related audits.
	 Sections 6.1(a) and
	 	Ownership of Inventions	 	With respect to Section 6.1(b), to the extent necessary to
	6.1(b)	 		 	assign inventions generated during the Term under this Agreement.
	Section 6.8	 	Patent Challenges	 	To the extent necessary to govern any accrued during the
Term payment obligations under Section 6.8.

 ARTICLE 12 

DISPUTE RESOLUTION 

12.1             Seeking Consensus. If any dispute, controversy
or claim arising out of or relating to the validity, construction, enforceability, performance or breach of this Agreement (except for any dispute regarding the validity, scope or enforceability of any Licensed Patent and/or Post-Sublicensing
Licensed Patent, and/or whether such Patent(s) is (are) infringed, which shall be submitted to a court of competent jurisdiction) arises between the Parties (“Dispute”), then upon the written request of either Party, the
Parties shall have senior executive officers with decision-making authority of each Party meet and discuss in good faith the matter over a period of at least [...***...]. If the Parties do not reach agreement through the discussions of
such senior executives within such [...***...], then the Parties’ CEOs shall discuss and attempt to reach agreement as to the matter within an additional [...***...]. If the Parties do not reach agreement as to the matter (the
Dispute) within such additional [...***...] by the CEO discussions, then either Party may by written notice demand dispute resolution under and in accordance with Section 12.2. The written request shall explain the nature of the
Dispute and refer to the relevant provisions of the Agreement upon which the Dispute is based. 
 12.2
            Arbitration, Rules and Place. Any Disputes not resolved after all procedures under Section 12.1 may be referred by either Party to final and
binding arbitration in accordance with the remainder of this Article 12 by written notice to the other Party, and final and binding arbitration under this Article will in any event be the sole and exclusive means of dispute resolution
under this Agreement (i.e., the Parties waive their rights to go to a court instead of arbitration (except either Party may seek a preliminary injunction or other equitable remedy pending arbitration or go to court to enforce the arbitral
award)). If a Party intends to begin an arbitration to resolve a Dispute, such Party shall provide written notice by certified or registered mail to the other Party informing such other Party of such intention and the issues to be
resolved. The complaining Party’s notice shall include a detailed description of the Dispute. The arbitration shall be conducted before three (3) arbitrators, one chosen by each Party from the list provided by the commercial
arbitration rules of the American Arbitration Association (“AAA Rules”), and the third appointed in accordance with the AAA Rules. The Parties shall employ procedures designed to resolve the conflict by arbitration within
[...***...] of the date of the written notice described above. Any situation not expressly covered by this Agreement shall be decided in accordance with the AAA’s most applicable rules. The arbitration shall take place in New
York City, New York State, U.S.A. The arbitration proceeding shall be conducted in English. 
 12.3
            Governing Law. This Agreement will be construed in accordance with, and governed in all respects by, the laws of the State of New York (without giving effect to
principles of conflicts of law). 
 12.4             Legal
Fees. Subject to any award the arbitrators may make, each Party shall bear its own legal fees, costs and expenses. 
 12.5
            Payment. Any monetary award shall be paid in U.S. dollars free of any tax, deduction or offset; and any costs or fees incident to enforcing the award shall, to the
maximum extent permitted by law, be charged against the Party resisting enforcement. 

  
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 12.6
            Enforcement by Court Action. Each Party agrees that any award and any other remedy rendered by any arbitral tribunal referred to herein may be entered in a court of
competent jurisdiction if necessary to its enforcement and as is permitted under the relevant laws, taking into account the provisions of Section 12.3. 

12.7             Confidentiality. The arbitrators shall issue
appropriate protective orders to safeguard each Party’s Confidential Information and to keep the proceeding confidential (except to the extent a Party has a legal disclosure obligation). 

12.8             Survival. Any duty
to arbitrate under this Agreement shall remain in effect and be enforceable after termination of this Agreement for any reason. 

12.9             Waiver. By
agreeing to binding arbitration, the Parties understand that they are waiving certain rights and protections which may otherwise be available if a Dispute were determined by a litigation in court, including the right to seek or obtain certain types
of damages precluded by the arbitration procedures set forth in this Article 12, the right to a trial by jury, and the right to invoke formal rules of procedure and evidence. 

ARTICLE 13 

MISCELLANEOUS 

13.1             Export
Control. This Agreement is made subject to any restrictions concerning the export of products or technical information from the United States of America or other countries which may be imposed upon or related to Xencor or MorphoSys from
time to time. Each Party agrees that it shall not export, directly or indirectly, any technical information acquired from the other Party under this Agreement or any products using such technical information to a location or in a manner that at
the time of export requires an export license or other governmental approval, without first obtaining the written consent to do so from the appropriate agency or other governmental entity. 

13.2             Entire Agreement;
Amendment. This Agreement (including the Exhibits hereto) sets forth the complete, final and exclusive agreement and all the covenants, promises, agreements, warranties, representations, conditions and understandings between the Parties
hereto and supersedes and terminates all prior agreements and understandings between the Parties (including the Prior CDA). There are no covenants, promises, agreements, warranties, representations, conditions or understandings, either oral or
written, between the Parties other than as are set forth herein and therein. No subsequent alteration, amendment, change or addition to this Agreement shall be binding upon the Parties unless reduced to writing and signed by an authorized
officer of each Party. 
 13.3            
Bankruptcy. All rights and licenses granted under or pursuant to this Agreement by either Party to the other are and shall be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of rights to
“intellectual property” as defined under Section 101(52) of the US. Bankruptcy Code. Each Party agrees that the other Party, as a licensee of such rights under this Agreement, shall retain and may fully exercise all of its rights
and elections under the U.S. Bankruptcy Code. Without limiting the foregoing, the Parties further agree that if a bankruptcy proceeding is commenced by or against one Party (the “Debtor”) then, in the event the Debtor rejects
this Agreement pursuant to Section 365 of the U.S. Bankruptcy Code or otherwise applicable law and the other Party elects to retain its rights hereunder pursuant to Section 365(n) of the U.S. Bankruptcy Code or otherwise applicable
law, the other Party shall be entitled to a complete duplicate of (or complete access to, as appropriate) any such intellectual property and all embodiments of such intellectual property. The Parties further agree, without limiting the
foregoing, that unless and until the Debtor rejects this Agreement pursuant to applicable law, the Debtor shall perform all of its obligations hereunder or immediately provide to the other Party a complete duplicate of (or complete access to, as
appropriate) any such intellectual property and all embodiments of such intellectual property, and the same, if not already in the other Party’s 

  
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possession; provided, however, that upon assumption of this Agreement by the Debtor pursuant to Section 365 of the U.S. Bankruptcy Code or otherwise applicable law, the other
Party shall promptly return all such tangible materials, intellectual property and embodiments thereof that have been provided to it solely as a result of this Section. 

13.4             Force
Majeure. Both Parties shall be excused from the performance of their obligations under this Agreement to the extent that such performance is prevented by a Force Majeure and the nonperforming Party promptly provides notice of the prevention
to the other Party. Such excuse shall be continued so long as the condition constituting Force Majeure continues and the nonperforming Party takes reasonable efforts to remove the condition. For purposes of this Agreement, “Force
Majeure” means conditions beyond a Party’s reasonable control or ability to plan for, including acts of God, war, terrorism, civil commotion, labor strike or lock-out, epidemic, failure or
default of public utilities or common carriers, and destruction of production facilities or materials by fire, earthquake, storm or like catastrophe. 

13.5             Notices. Any
notice required or permitted to be given under this Agreement shall be in writing, shall specifically refer to this Agreement and shall be deemed to have been sufficiently given for all purposes if mailed by express delivery service or personally
delivered. The date of the notice shall be the date of receipt by the notified Party, or three (3) business days after sending by express delivery service, whichever is earlier. Unless otherwise specified in writing, the mailing
addresses of the Parties shall be as described below. 
 If to Xencor: 

      Xencor, Inc. 

      111 West Lemon Avenue 

      Monrovia CA 91016 

      Attention: CEO 

      Facsimile: +1 (626) 305-0350 

with a required copy (which shall not constitute notice) to: 

      Morrison & Foerster LLP 

      425 Market Street 

      San Francisco, CA 94105

      Attention: Laura O. Spiegelman 

      Facsimile: +1 (415) 268-7522 

In the case of MorphoSys: 

      MorphoSys AG 

      Lena-Christ-Strasse 48 

      82152 Martinsried/Planegg 

      Germany 

      Attention: CEO 

      Facsimile: +49 (89) 899 27 222 

with a required copy (which shall not constitute notice) to: 

      Perkins Coie LLP 

      607 Fourteenth Street, NW 

      Washington, DC 20005 

      Attention: Colin G. Sandercock 

      Facsimile +1 (202) 654-9673 

  
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 13.6
            Maintenance of Records. Each Party shall keep and maintain all records required by law or regulation with respect to Licensed Products. 

13.7             Construction. This
Agreement has been prepared jointly and shall not be strictly construed against either Party. Any reference in this Agreement to an Article, Section, subsection, paragraph, clause, Schedule or Exhibit shall be deemed to be a reference to
any Article, Section, subsection, paragraph, clause, Schedule or Exhibit, of or to, as the case may be, this Agreement. Except where the context otherwise requires, (a) any definition of or reference to any agreement, instrument or other
document refers to such agreement, instrument other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or therein), (b) any
reference to any laws refers to such laws as from time to time enacted, repealed or amended, (c) the words “herein,” “hereof” and hereunder,” and words of similar import, refer to this Agreement in its entirety and not
to any particular provision hereof. 
 13.8
            Ambiguities. Ambiguities, if any, in this Agreement shall not be construed against any Party, regardless of which Party may be deemed to
have authored the ambiguous provision. 
 13.9
            Assignment. Neither this Agreement nor any right or obligation hereunder may, except for as set out in Sec. 10.5(c), be
assigned or otherwise transferred by any Party without the consent of the other Party; provided, however, that any Party may, without such consent, assign this Agreement in its entirety to such Party’s Affiliate (for so long as the
relationship of Affiliation endures) or if such Party merges with, or all or substantially all of its business or assets are acquired by, another entity (whether by merger, sale of assets, sale of stock or otherwise) (an “M&A
Event”), to the Party’s merger partner or the acquiror as part of that M&A Event; provided, however, that (i) in case Xencor is a party to an M&A Event, Xencor shall for any assignment being performed under an M&A
Event, which is contemplated during the Collaboration Term provide a written notice to MorphoSys, prior to or at closing the transaction of the respective M&A Event, with which Xencor and the future assignee guarantee performance under the
Agreement, specifically including all of Xencor’s obligations with respect to the Ongoing Phase 1 Trial, or (ii) in case MorphoSys is a party to an M&A Event and the other party at the time of the M&A Event has an enhanced B-cell depleting anti-CD19-program in development or on the market, the other party to the M&A Event shall (a) [...***...], and (b) [...***...], with which the assignee guarantees that it
will (aa) [...***...]; and (bb) [...***...]. Xencor may assign this Agreement in whole or in part without MorphoSys’s consent as may be necessary or useful in connection with the monetization, sale or other transfer of any of the
payments due to Xencor under this Agreement. Xencor shall assure that any of its assignees takes over all of Xencor’s obligations under this Agreement, or that Xencor or its Affiliate continues to be responsible for such obligations. Each Party
agrees that, notwithstanding any provisions of this Agreement to the contrary, if this Agreement is assigned by a Party in connection with an M&A Event, such assignment shall not provide the non-assigning
Party with rights or access to intellectual property or technology of the merger partner or acquiror of the assigning Party existing prior to such M&A Event. Any permitted assignment shall be binding on the successors of the assigning
Party. In addition, notwithstanding anything express or implied in this Agreement, if Xencor and/or MorphoSys becomes part of the corporate family of a larger pharmaceutical or biopharmaceutical company, then under no circumstances shall any
entities in that family other than Xencor and/or MorphoSys and its respective Affiliates prior to joining the corporate family, be deemed to be “Affiliates” of Xencor or MorphoSys for purposes of the intellectual property definitions in
this Agreement. Other than an assignment under Section 10.5(c), any assignment or attempted assignment by either Party in violation of the terms of this Section shall be null and void. 

13.10           Performance by
Affiliates. Each of the Parties acknowledge that obligations under this Agreement may be performed by Affiliates of Xencor and MorphoSys, and each of Xencor and MorphoSys guarantee performance of this Agreement by its respective
Affiliates. If any dispute arises out of the performance of this Agreement by an Affiliate, or the alleged failure of an Affiliate to comply with the conditions and obligations of this Agreement, the Party seeking to resolve such dispute shall
have the right to do so directly with the other Party, without any obligation to first pursue an action against, or recovery from, the Affiliate which is 

  
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alleged to have caused a breach of this Agreement. A Party is jointly and severally liable with its Affiliates for performance under this Agreement. 

13.11           Independent Contractors. It
is expressly agreed that Xencor and MorphoSys shall be independent contractors and that the relationship between them shall not constitute a partnership, joint venture or agency. Neither Xencor nor MorphoSys shall have the authority to make any
statements, representations or commitments of any kind, or to take any action, which shall be binding on the other Party, without the prior written consent of the other Party to do so. 

13.12           Counterparts. This Agreement
may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 

13.13           Severability. If any
provision of this Agreement is held to be invalid or unenforceable in the alternative dispute resolution proceedings specified in Article 12 from which no court appeal can be or is taken, the provision shall be considered severed from this
Agreement and shall not serve to invalidate any remaining provisions hereof. The Parties shall make a good faith effort to replace any invalid or unenforceable provision with a valid and enforceable one such that the objectives contemplated by
the Parties when entering this Agreement may be realized. 
 13.14
          Headings. The headings for each article and section in this Agreement have been inserted for convenience of reference only and are not intended to limit or expand on the meaning
of the language contained in the particular article or section. 
 13.15
          No Waiver. Any delay in enforcing a Party’s rights under this Agreement or any waiver as to a particular default or other matter shall not constitute a waiver of such
Party’s rights to the subsequent enforcement of its rights under this Agreement, excepting only as to an express written and signed waiver as to a particular matter for a particular period of time executed by an authorized officer of the
waiving Party. 
 13.16           Costs. Each Party shall bear its own
legal costs of and incidental to the preparation, negotiation and execution of this Agreement. 
 13.17
          Language. This Agreement has been prepared in the English language. No translation or version of this Agreement in another language shall be of any force or effect or be
used to interpret this Agreement. 
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 IN WITNESS WHEREOF, Xencor and MorphoSys execute this Agreement by the hands of their duly
authorized officers, effective as of the Effective Date: 
  

									
	Xencor, Inc.	 		 	MorphoSys AG
	 By:
	 	/s/ Bassil Dahiyat	 		 	By:	 	  
 /s/ S.E. Moroney

	 	  
	 		 	 	  

	 Name: Bassil Dahiyat
	 		 	Name: S.E. Moroney
	 Title: President and CEO
	 		 	Title: CEO
	 Date: 27 June 2010
	 		 	Date: 27 June 2010
		 		 		 	By:	 	  
 /s/ Marlies Sproll

		 		 		 	 	  

		 		 		 	Name: Marlies Sproll
		 		 		 	Title: CSO
		 		 		 	Date: 27 June 2010

  
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 LIST OF EXHIBITS 

 

			
		
	Exhibit A —	  	Amino Acid Sequence of XmAb5574
		
	Exhibit B —	  	Listed Xencor Patents
		
	Exhibit C —	  	Excluded Variants (I)
		
	Exhibit D —	  	High-ADCC Variants
		
	Exhibit E —	  	 Amino Acid Sequence of XmAb5871

		
	Exhibit F —	  	Excluded Variants (II)
		
	Exhibit G —	  	JDC and Team Composition
		
	Exhibit H —	  	Active Contracts
		
	Exhibit I —	  	Initial Public Announcement
		
	Exhibit J —	  	Xencor Development Plan
		
	Exhibit K —	  	Licensed Know-How
		
	Exhibit L —	  	Protocol for measurement of Affinity Constants of Binding
		
	Exhibit M —	  	[...***...]

  
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 EXHIBIT A 

Amino Acid Sequence of XmAb5574 

[...***...] 

  
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 EXHIBIT B 

Listed Xencor Patents 

  
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 EXHIBIT C 

Excluded Variants (I) 
 [...***...]

  
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 EXHIBIT D 

High-ADCC Variants 
 [...***...]

  
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 EXHIBIT E 

Amino Acid Sequence of XmAb5871 

[...***...] 

  
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 EXHIBIT F 

Excluded Variants (II) 
 [...***...]

  
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 EXHIBIT G 

JDC and Team Composition 

[...***...] 

  
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 EXHIBIT H 

Active Contracts 
 [...***...] 

  
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 EXHIBIT I 

INITIAL PUBLIC ANNOUNCEMENT 
  

			
	 

	  	

 Press Release 

Martinsried/Munich, Germany, and Monrovia, CA, USA, June xx, 2010 

MorphoSys and Xencor Sign License and Collaboration Agreement for Clinical Antibody Program 

MorphoSys Strengthens Clinical Portfolio with Innovative Antibody in Phase 1 Cancer Trial [Note: Foregoing subtitle may be omitted in Xencor’s
release.] 
 MorphoSys AG (FSE: MOR; Prime Standard Segment; TecDAX) and US-based biopharmaceutical company
Xencor, Inc., announced today the signing of a worldwide exclusive license and collaboration agreement for an antibody in Phase 1 clinical development. The agreement provides MorphoSys with an exclusive worldwide license to XmAb5574, a high potency
monoclonal antibody developed by Xencor for the treatment of B-cell malignancies. As part of the agreement, the companies will collaborate on the Phase 1 trial in patients with chronic lymphocytic leukemia
(CLL) in the U.S.A., for which Xencor will continue to carry the costs under its development plan. MorphoSys will be solely responsible for further clinical development. Xencor will receive an upfront payment of US$ 13 million (approx.
€ 10.6 million), and will be eligible to receive development-, regulatory- and commercialization-related milestone payments and tiered royalties based on product sales. Further financial terms were not disclosed. 

XmAb5574, which will be renamed MOR208, is a humanized anti-CD19 monoclonal antibody for the treatment of B-cell
malignancies. It has been engineered to possess significantly enhanced antibody-dependent cell-mediated cytotoxicity (ADCC), thus improving a key mechanism for tumor cell killing and offering potential for enhanced efficacy compared to traditional
antibodies for the treatment of cancer. In preclinical studies, XmAb5574 was well tolerated at various dose levels, elicited immediate and sustained B-cell depletion, and showed strong anti-tumor potency,
anti-proliferative and pro-apoptotic activity. B-cell malignancies, such as non-Hodgkin’s lymphoma, chronic lymphocytic
leukemia (CLL) and acute lymphoblastic leukemia afflict more than one hundred and fifty thousand patients in the seven major markets each year. The target is expressed more broadly and earlier in B-cell
development than CD20, the target of the marketed cancer drug Rituxan®, therefore potentially allowing for an even broader use of XmAb5574 as compared to Rituxan®. 
 “We are delighted to add this clinical program to our growing portfolio of innovative
development candidates,” commented Dr. Simon Moroney, Chief Executive Officer of MorphoSys AG. “Our first in-licensing deal of a clinical compound is a further step in the execution of our plan
to build a strong portfolio of proprietary therapeutic antibodies to complement those being developed by our partners. The strong cash-flow from our partnered discovery business gives us the means of supporting an attractive proprietary development
program, to which XmAb5574/MOR208 is an important addition.” 
 “Our interest in XmAb5574 is based on a comprehensive survey of antibodies in late
preclinical or early clinical development in the areas of cancer and inflammation,” commented Dr. Arndt Schottelius, Chief Development Officer of MorphoSys AG. “B-cell depletion is a
well-validated strategy to treat lymphomas and CLL, 

  
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exemplified by the success of Rituxan®. We are convinced by the sound scientific data Xencor has built around its anti-CD19 cancer program
and we believe it to be a valuable addition to our proprietary pipeline. By further developing the Xencor program, we will broaden our drug portfolio and also realize synergies with our cancer program MOR202, since both drugs target hematological
malignancies.” 
 “As we look ahead to the potential of XmAb5574 to treat B-cell cancers, a development
collaboration with a leading global antibody company like MorphoSys is an important step forward for us by allowing us to bring significant additional resources to the program,” said Dr. Bassil Dahiyat, Chief Executive Officer of Xencor.
“Progressing the development of XmAb5574 through this collaboration further underscores the success of our XmAb platform technology in creating a pipeline of innovative and potent next-generation antibody product candidates. We are excited by
the progress of both our internal and partnered programs.” 
 With Xencor carrying the cost for the phase 1 trial of XmAb5574/MOR208, MorphoSys
continues to anticipate total internal investment in proprietary R&D of € 26 – 29 million, as per the Company ́s original guidance in February 2010. [Note: Xencor may omit this from its release.] 

About MorphoSys: 
 MorphoSys is an independent
biotechnology company that develops novel antibodies for therapeutic, diagnostic and research applications. The Company’s HuCAL technology is one of the most powerful methods available for generating fully human antibodies. By successfully
applying this and other proprietary technologies, MorphoSys has become a leader in the field of therapeutic antibodies, one of the fastest-growing drug classes in human health-care. Through its alliances with some of the world’s leading
pharmaceutical companies, MorphoSys has created a pipeline of more than 60 drug candidates. The Company is expanding its drug pipeline by adding new partnered programs, and by building a portfolio of fully-owned therapeutic antibodies. For its
proprietary portfolio, the Company is focused on the areas of oncology and inflammation. Its most advanced program MOR103, a first-in-class, fully human antibody against
GM-CSF, is currently tested in a Phase Ib/IIa trial in rheumatoid arthritis patients. Via its business unit AbD Serotec, MorphoSys is expanding the reach of its technologies in the diagnostics and research
markets. MorphoSys is headquartered in Munich, Germany and listed on the Frankfurt Stock Exchange under the symbol “MOR”. For further information, visit http://www.morphosys.com/ 

HuCAL®, HuCAL GOLD®, HuCAL PLATINUM®, CysDisplay® and RapMAT® are registered trademarks of MorphoSys AG. 

About Xencor: 
 Xencor, Inc. engineers superior
biotherapeutics using its proprietary Protein Design Automation® technology platform, and is a leader in the field of antibody engineering to significantly improve antibody half-life,
immune-regulatory function and potency. The company is advancing multiple XmAb® antibody drug candidates into the clinic, including
XmAb®5871 targeting CD32b and CD19 for autoimmune diseases, an anti-CD30 candidate XmAb®2513 which recently completed a Phase 1
clinical trial for the treatment of Hodgkin’s lymphoma, and a portfolio of biosuperior antibodies that are versions of blockbuster antibody drugs engineered for superior half-life and dosing schedule. Xencor’s antibody engineering
technology has been licensed through multiple partnerships with industry leaders such as Pfizer, CSL Ltd., Boehringer Ingelheim, MedImmune, Centocor and Human Genome Sciences. In these partnerships Xencor is applying its suite of proprietary
antibody Fc domains to improve antibody drug candidates for traits such as sustained half-life and potency. For more information, please visit www.xencor.com. 

XmAb® is a registered trademark of Xencor 

This communication contains certain forward-looking statements concerning the MorphoSys group of companies. The forward-looking statements contained herein
represent the judgment of MorphoSys as of the date 

  
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of this release and involve risks and uncertainties. Should actual conditions differ from the Company’s assumptions, actual results and actions may differ from those anticipated. MorphoSys
does not intend to update any of these forward-looking statements as far as the wording of the relevant press release is concerned. 
 For more
information, please contact: 
 MorphoSys AG 

Dr. Claudia Gutjahr-Löser 

Head of Corporate Communications & IR 

Phone: +49 (0) 89 / 899 27-122 

Mario Brkulj 
 Senior Manager
Corporate Communications & IR 
 Phone: +49 (0) 89 / 899 27-454 

Jessica Kulpi 
 Specialist
Corporate Communications & IR 
 Phone: +49 (0) 89 / 899 27-332 

investors@morphosys.com 
 Xencor,
Inc. 
 Kim Richards 

Canale Communications for Xencor 

Phone: +1-619-849-5377

 kim@canalecomm.com 

  
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 EXHIBIT J 

Xencor Development Plan 

[...***...] 

  
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 EXHIBIT K 

Licensed Know-How 
 [...***...] 

  
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 EXHIBIT L 

Protocol for Measurement of Affinity Constants of Binding and CDC Activity 

[...***...] 

  
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 EXHIBIT M 

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

  
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