EXHIBIT 10.1

 

[*] Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

This Development and Commercialization Agreement (the “Agreement”), entered into
as of May 29, 2013 (the “Effective Date”), is made by and between Array
BioPharma Inc., a Delaware corporation, having offices at 3200 Walnut Street,
Boulder, Colorado 80301, and Oncothyreon Inc., a Delaware corporation, having
offices at with offices at 2601 Fourth Ave., Suite 500, Seattle WA 98121.

BACKGROUND

A. Array owns certain intellectual property rights and know-how with respect to
ARRY 380 (as defined below) and is developing ARRY 380 for the treatment of
cancer.

B. Oncothyreon and Array desire to collaborate on the development and
commercialization of certain products utilizing ARRY 380 for the treatment of
cancer, including breast cancer, all on the terms and conditions set forth
below. The goal of the collaboration, as more fully described below, is for
Oncothyreon and Array to share in the conduct of a coordinated clinical
development program for the Product for the United States and the EU, and to
share in the commercialization of the Product in the United States, all on the
terms and conditions set forth herein.

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

ARTICLE 1

DEFINITIONS

Unless the context otherwise requires, the terms in this Agreement with initial
letters capitalized, shall have the meanings set forth below, or the meaning as
designated in the indicated places throughout this Agreement.

1.1 “Affiliate” means any entity which controls, is controlled by or is under
common control with Oncothyreon or Array. For purposes of this definition,
“control” means beneficial ownership (direct or indirect) of at least fifty
percent (50%) of the shares of the subject entity entitled to vote in the
election of directors (or, in the case of an entity that is not a corporation,
for the election of the corresponding managing authority).

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1.2 “Alliance Manager” has the meaning set forth in Section 2.1.

1.3 “Allowable Expenses” has the meaning set forth in the Financial Exhibit.

1.4 “Array” means Array BioPharma Inc. and any of its Affiliates.

1.5 “Array Development Activities” means all research and pre-clinical and
clinical Development activities with respect to the Product that are
specifically designated as Array’s obligations in the Development Plan and
Budget, including, to the extent provided therein, chemistry, manufacturing and
control (CMC) activities, toxicology studies and the manufacturing of Product
for use in connection therewith.

1.6 “Array Indemnitees” has the meaning set forth in Section 16.1.

1.7 “Array Know-How” means any Know-How Controlled by Array as of the Effective
Date or thereafter during the term of this Agreement relating to the Product
that is reasonably necessary for the research, Development, manufacture, use or
Commercialization of the Product in the Field and to practice the licenses
granted hereunder.

1.8 “Array Patents” means any Patent Rights Controlled by Array as of the
Effective Date or thereafter during the term of this Agreement having claims
covering ARRY 380 and/or the Product, their use, composition, formulation,
preparation or manufacture or having claims that are reasonably necessary for
the research, Development, manufacture, use or Commercialization of the Product
in the Field and to practice the licenses granted hereunder. For the avoidance
of doubt, “Array Patents” shall include Array’s ownership interest in any Joint
Patents.

1.9 “Array Technology” means the Array Know-How and Array Patents.

1.10 “ARRY 380” means that certain synthetic chemical entity described in
Exhibit A hereto.

1.11 “Audited Party” has the meaning set forth in Section 12.4.

1.12 “Auditing Party” has the meaning set forth in Section 12.4.

1.13 “Business Day” means any day other than a Saturday, Sunday or any other day
on which commercial banks in Seattle, WA or Boulder, CO, are authorized or
required by law to remain closed.

1.14 “Calendar Quarter” means the respective periods of three (3) consecutive
calendar months ending on March 31, June 30, September 30 and December 31.

1.15 “Calendar Year” means a period of twelve (12) consecutive calendar months
ending on December 31. For purposes hereof, the period from the Effective Date
through December 31, 2013 shall be deemed the first (1st) Calendar Year.

 

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1.16 “Change of Control” means: (i) the acquisition, directly or indirectly, by
any person, entity or “group” (within meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) by means
of a transaction or series of related transactions, of (a) beneficial ownership
of fifty percent (50%) or more of the outstanding Voting Securities of a Party
(or the surviving entity, as applicable, whether by merger, consolidation,
reorganization, tender offer or other similar means), or (b) all, or
substantially all, of the assets of a Party and its Affiliates; or (ii) any
consolidation or merger of a Party with or into any Third Party, or any other
corporate reorganization involving a Third Party, in which those persons or
entities that are stockholders of the Party immediately prior to such
consolidation, merger or reorganization (or prior to any series of related
transactions leading up to such event) own fifty percent (50%) or less of the
surviving entity’s voting power immediately after such consolidation, merger or
reorganization.

1.17 “Claims” means all Third Party demands, claims, actions, proceedings and
liability (whether criminal or civil, in contract, tort or otherwise) for
losses, damages, reasonable legal costs and other reasonable expenses of any
nature whatsoever.

1.18 “Co-Promotion Agreement” has the meaning set forth in Section 8.2.2(a).

1.19 “Co-Promotion Notice” has the meaning set forth in Section 8.2.2.

1.20 “Co-Promotion Option” has the meaning set forth in Section 8.2.2.

1.21 “Co-Promoting Percentage” has the meaning set forth in Section 8.2.2(a).

1.22 “Co-Promotion Plan” has the meaning set forth in Section 8.2.2(c)(i).

1.23 “Commercialization Plan and Budget” has the meaning set forth in
Section 8.2.1.

1.24 “Commercialize” means to market, promote, distribute, import, export, offer
to sell and/or sell the Product and/or conduct other Commercialization
activities, and “Commercialization” means commercialization activities relating
to the Product, including without limitation, activities relating to marketing,
promoting, distributing, importing, exporting, offering for sale or selling
Product, and manufacturing activities related to commercial supplies of
Products. For clarity, Commercialization activities shall also include planning
and implementation relating to such commercialization activities, distribution,
booking of sales, and pricing and reimbursement activities.

1.25 “Commercially Reasonable Efforts” means the expenditure of those efforts
and resources used consistent with the usual practice of Oncothyreon or Array,
as the case may be, in actively and diligently pursuing development or
commercialization of its other similarly important innovative pharmaceutical
products with similarly significant market potential and at a similar stage in
development.

 

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1.26 “Competing Product” means any product, whether or not containing ARRY 380,
that includes, as an active pharmaceutical ingredient, a small molecule agent
that (i) directly binds to and inhibits the activity of [*] and (ii) selectively
inhibits [*] with at least [*] times the inhibitory activity that such small
molecule agent has against any other biological target. It is understood and
agreed that the compound known as [*], and any salt, hydrate, solvate,
clathrate, polymorph or isomer thereof, is not and shall not be deemed a
Competing Product.

1.27 “Competing Product Infringement” has the meaning set forth in
Section 13.3.2(a).

1.28 “Completion” shall be deemed to occur, with respect to a particular
clinical trial for the Product, after the end of the administration period for
the last subject to be treated in such trial and upon collection of Data to be
obtained from trial subject in connection with such clinical trial in accordance
with the applicable trial protocol. Discontinuation of a clinical trial prior to
completion of the administration period for at least the number of subjects
called for in the applicable study protocol and collection of corresponding Data
from such subjects does not constitute “Completion” for purposes of this
Agreement. For purposes of the foregoing, “administration period” means the
period during which doses of the Product are administered to the subject, in
accordance with the protocol for such trial.

1.29 “Confidential Information” has the meaning set forth in Section 15.1.

1.30 “Control” or “Controlled” means, with respect to any Know How, Patent
Rights, other intellectual property rights, or any proprietary or trade secret
information, the legal authority or right (whether by ownership, license or
otherwise) of a Party or its Affiliates to grant the licenses or sublicenses, of
the scope set forth herein, of or under such Know How, Patent Rights, or
intellectual property rights to another Person, or to otherwise disclose such
proprietary or trade secret information to another Person, without breaching the
terms of any agreement with a Third Party, or misappropriating the proprietary
or trade secret information of a Third Party.

1.31 “Co-Promotion” means promotion of the Product, including, without
limitation, Detailing, by Array and Oncothyreon (and/or their respective
Affiliates) under the same Marketing Approval and Product Marks in the U.S. When
used as a verb, “Co-Promote” means to engage in such activities.

1.32 “Core Dossier” means a compilation of clinical Data, preclinical Data and
other information necessary for filing an MAA in the United States and the Major
EU Countries.

1.33 “Data” means any and all research data, results, pharmacology data,
medicinal chemistry data, preclinical data, clinical data (including
investigator reports (both preliminary and final), statistical analysis, expert
opinions and reports, safety and other electronic databases), in any and all
forms, including files, reports, raw data, source data (including patient
medical records and original patient report forms, but excluding
patient-specific data to the extent required by applicable laws, rules or
regulations) and the like, in each case directed to, resulting from or used in
the Development, manufacture or Commercialization of ARRY 380 or the Product
hereunder.

* Confidential Treatment Requested

 

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1.34 “Decision Period” has the meaning set forth in Section 4.5.2.

1.35 “Detail” means an interactive face-to-face visit by a Sales Representative
with a medical professional who has prescribing authority or is able to
influence prescribing decisions, within the target audience during which
approved uses, safety, effectiveness, contraindications, side effects, warnings
or other relevant characteristics of a pharmaceutical product are discussed in
an effort to increase prescribing preferences of a pharmaceutical product for
its approved uses. When used as a verb, the terms “Detail” or “Detailing” means
to perform a Detail. Details include First Position Details, Second Position
Details and Other Details (as defined in the Financial Exhibit). For purposes of
determining US Profit/Loss hereunder, “Details” do not include (i) activities
conducted by medical support staff (such as medical science liaisons), or
(ii) e-details, activities conducted at conventions or similar gatherings and
activities performed by market development specialists, managed care account
directors and other personnel not performing face-to-face sales calls or not
specifically trained with respect to a pharmaceutical product. For clarity, the
foregoing sentence shall not be construed to restrict or limit either Party’s
ability to engage in the activities described in the preceding sub-clauses
(i) and (ii) as part of Co-Promotion in accordance with the terms of this
Agreement.

1.36 “Develop” or “Development” means drug development activities, including,
without limitation, non-clinical research, preclinical and clinical activities,
test method development and stability testing, assay development and audit
development, toxicology, formulation, process development and improvement,
process validation, manufacturing scale-up (including scale-up for commercial
manufacturing for the United States market), delivery system development,
manufacturing, storage, transportation and distribution of the Product for use
in clinical trials including placebos and comparators as the case may be,
development activities with respect to a diagnostic product, quality
assurance/quality control, statistical design and analysis, clinical studies
(including any clinical studies after Marketing Approval), packaging
development, regulatory affairs, and the preparation, filing and prosecution of
MAAs or other Regulatory Filings related to the Product.

1.37 “Development Costs” means all Out-of-Pocket Costs and FTE Costs incurred by
or on behalf of a Party or its Affiliates in connection with the research and
Development of the Product in accordance with the applicable approved
Development Plan and Budget, in accordance with the expense recognition
provisions of the GAAP, including, without limitation, the costs of preclinical
testing, toxicology, formulation, clinical trials, the preparation, collection
and/or validation of Data from such clinical trials and the preparation of
medical writing and publishing on the Data and results obtained from such
clinical trials, market research with respect to Development, in each case to
the extent that such activities, Out-of-Pocket Costs and FTE Costs are within
the scope of the Development Plan and Budget. For purposes of the preceding
sentence, costs shall be deemed to be incurred in accordance with an applicable
approved Development Plan and Budget if they were incurred in the performance of
the activities specified in the Development Plan and Budget and do not exceed by
more than ten percent (10%) the amount budgeted in the Development Plan and
Budget for such activities (unless such overage has been approved by the other
Party, which approval shall not be unreasonably withheld to the extent the
incurrence of such excess costs was not

 

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within the reasonable control of the Party who incurred such excess costs).
Development Costs shall not include any (i) costs incurred by Array prior to the
Effective Date, or (ii) Out-of-Pocket Costs committed to by Array prior to the
Effective Date; provided, however, that notwithstanding the foregoing, (a) the
amounts to be paid to Array as set forth in Section 9.1.2 representing 100% of
the Fully Burdened Manufacturing Cost for Existing Quantities of Product shall
be included within the POC Development Costs, and (b) Out-of-Pocket Payments for
the manufacture or supply of Products from and after the Effective Date, or for
the conduct of data analysis or sample analysis in connection with Development
activities conducted after the Effective Date, in each case that are otherwise
within the definition of Development Costs, shall be included within Development
Costs regardless of whether such Out-of-Pocket Payments are made pursuant to an
agreement in effect prior to the Effective Date. Payments to support
investigator-sponsored trials of the Product at the Dana Farber Cancer
Institute, and the costs of clinical supplies for such investigator-sponsored
trials, shall be excluded from Development Costs (and shall be borne by Array).
Without limiting the generality of the foregoing, Development Costs shall
include, to the extent included in the scope set forth above, the following:

(a) Out-of-Pocket Costs and/or FTE Costs for internal scientific, medical or
technical personnel engaged in Development efforts, which costs shall be
determined based on the FTE Rate and represented in the FTE Costs;

(b) the Fully Burdened Manufacturing Cost for clinical supplies;

(c) Out-of-Pocket Costs and/or FTE Costs for other manufacturing activities
related to the Product (but excluding any costs of manufacturing commercial
supplies of Products to the extent included under Allowable Expenses), including
without limitation (i) Out-of-Pocket Costs and/or FTE Costs incurred in
procuring clinical supplies, including reasonable Out-of-Pocket Costs and/or FTE
Costs incurred in connection with the development of the manufacturing process
for such clinical supplies, but excluding any capital expenditures or
qualification or validation expenses relating to any manufacturing facility,
(ii) Out-of-Pocket Costs and/or FTE Costs incurred to purchase and/or package
placebos and comparator drugs, (iii) Out-of-Pocket Costs and/or FTE Costs
incurred in disposal of clinical samples, (iv) Out-of-Pocket Costs and/or FTE
Costs for manufacturing process development and process validation,
manufacturing scale-up and improvements (including scale-up of commercial
manufacturing, but excluding, for clarity, any other commercial manufacturing or
supply costs included under Allowable Expenses), and (v) scrap, failed batches
and the like in connection with manufacturing activities associated with
Development of the Product;

(d) Out-of-Pocket Costs and/or FTE Costs for Regulatory Filings to the extent
such costs are to be considered Development Costs in accordance with the overall
Development Plan and Budget;

(e) Out-of-Pocket Costs and/or FTE Costs for identification, synthesis,
qualification, validation and/or stability testing of Product batches;

 

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(f) Out-of-Pocket Costs and FTE Costs identifiable to establishing, updating and
maintaining a global safety database for Products; and

(g) Out-of-Pocket Costs and FTE Costs associated with pre- and post-approval
commitments mandated by Regulatory Authorities (including any clinical studies
after Marketing Approval such as Phase IV studies), to the extent incurred with
respect to the Product.

It is understood that only those FTEs directly performing Development activities
under the Development Plan and Budget will be charged as Development Costs. For
clarity, the only costs to be included as Development Costs are FTE Costs,
Out-of-Pocket Costs, and (for clinical supplies) the Fully Burdened
Manufacturing Cost. The Parties acknowledge and agree that no amounts shall be
double-counted in the determination of Development Costs, even if such amounts
may potentially fall within the description of more than one category of
Development Costs.

1.38 “Development Data” means (i) all Data from clinical trials of the Product;
and (ii) all research Data, preclinical Data, manufacturing Data and other
information, together with all reports, analyses and summaries on or of such
Data, in each case that are generated by or under authority of a Party either
under the Development Program or by Array with respect to ARRY 380 or a Product
prior to the Effective Date. For such purposes, “Development Data” shall include
(1) raw Data, study protocols, study results, analytical methodologies,
manufacturing processes, materials lists, batch records, vendor information,
validation documentation, and the like, and (2) expert opinions, analyses,
reports and the like, relating to the Data, including in each case electronic
information and databases embodying such Data.

1.39 “Development Plan and Budget” means the plan and budget for the Parties’
research and Development of the Product, as amended from time to time by the JDC
pursuant to Section 3.2. The initial Development Plan and Budget has been
mutually agreed in writing by the Parties as of the date of signing this
Agreement, and shall be the operative Development Plan and Budget unless and
until amended, modified or updated as provided in this Agreement. Such plan and
budget shall also be referred to individually as “Development Plan” and
“Development Budget”, respectively.

1.40 “Development Program” means the Development activities provided for in the
Development Plan with respect to the Product, including the conduct of clinical
studies of the Product relating to the compilation of the Core Dossier,
obtaining and maintaining Marketing Approval in the United States and the Major
EU Countries, and Development activities after Marketing Approval (including
activities directed to new indications and formulations, Phase IV studies and
the like) in the United States and the Major EU Countries, and associated
manufacturing activities (including formulation, process development and
validation, and production or acquisition of clinical supplies). For avoidance
of doubt, the Development Program includes, but is not limited to, the
Development of the Product (e.g., planning and execution of clinical studies and
related documentary and medical writing) required for the compilation of the
Core Dossier.

1.41 “Distribution Costs” has the meaning set forth in the Financial Exhibit.

 

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1.42 “EAP Expenses” has the meaning set forth in the Financial Exhibit.

1.43 “Early Access Program” or “EAP” has the meaning set forth in the Financial
Exhibit.

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

1.45 “Employer Indemnitees” has the meaning set forth in Section 8.2.7.

1.46 “Enforcing Party” has the meaning set forth in Section 13.3.2(b)(ii).

1.47 “Existing Quantities of Product” has the meaning set forth in
Section 9.1.2.

1.48 “FDA” means the U.S. Food and Drug Administration or any successor entity
thereto.

1.49 “Field” means all human and animal therapeutic, diagnostic and prophylactic
uses.

1.50 “Financial Exhibit” means Exhibit B attached hereto, as the same may be
amended from time to time by the Parties.

1.51 “First Commercial Sale” means, with respect to a country, the first
commercial sale of the Product in the Field in such country. Sales for clinical
study purposes, Early Access Programs or similar uses shall not constitute a
First Commercial Sale. In addition, sales of a Product by and between a Party
and its Affiliates and Sublicensees, or between the Parties (or their respective
Affiliates or Sublicensees), shall not constitute a First Commercial Sale.

1.52 “FTE” means a full time equivalent person year (consisting of [*] hours per
year) of work performing Development or Commercialization of the Product
hereunder. For clarity, indirect personnel (including support functions such as
managerial, financial, legal or business development) shall not constitute FTEs.
Notwithstanding the foregoing, the time of a single individual shall not account
for more than one FTE for a given Calendar Year (or applicable pro-rata portion
of an FTE during any Calendar Quarter or other period of less than a Calendar
Year).

1.53 “FTE Costs” for a given period means the product of (a) the total FTEs
(proportionately, on a per-FTE basis) dedicated by personnel of a Party or its
Affiliates in the particular period to the direct performance of the activities
allocated to such Party under and in accordance with the applicable Development
Plan and Budget, as applicable, and (b) the FTE Rate.

1.54 “FTE Rate” means a rate per FTE equal to [*] per annum (which may be
prorated on a daily or hourly basis as necessary) with respect to Development or
Commercialization activities conducted pursuant to this Agreement. “FTE Rate”
shall be deemed to include all direct and indirect costs of each Party’s FTEs
(including personnel and travel expenses, and the costs of managerial,
financial, legal or business development personnel supporting the activities of
such FTEs).

* Confidential Treatment Requested

 

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1.55 “Fully Burdened Manufacturing Cost(s)” means:

(a) to the extent Licensed Compounds, Products or any direct materials used to
manufacture Products (collectively, “Product Materials”) are manufactured by
Third Party contract manufacturing organizations and similar contractors
(collectively, “CMOs”) the costs paid to such CMO(s) for the manufacture and
testing of such Product Materials, together with the internal costs of a Party
or its Affiliate associated with quality control, quality assurance and
validation with respect to Product Materials, and otherwise managing and
coordinating the activities of such CMOs (provided that, with respect to
commercial supply of Products, such costs of otherwise managing and coordinating
the activities of such CMO shall be capped, for purposes of determining Fully
Burdened Manufacturing Costs, at [*]% of the Out-of-Pocket amounts paid to the
CMO(s) for such commercial supply), and costs of transportation, clearance and
storage of such Product Materials (if necessary), customs, duty and transit
insurance on account of such Product Materials; or

(b) to the extent a Party or its Affiliate itself manufactures Product
Materials, the fully burdened cost of goods sold for such Product Materials,
calculated in accordance with GAAP (and, if either Party or its Affiliate so
manufactures Product Materials during a period when costs therefor would be
shared by the Parties as Developments Costs or Allowable Expenses under this
Agreement, the Parties shall negotiate in good faith to establish a more
detailed, mutually acceptable accounting methodology for calculation thereof);
or

(c) to the extent a Party or its Affiliate purchases Product Materials from the
other Party or its Affiliate, the transfer price paid, plus Out-of-Pocket Costs
for transportation, clearance, release of Product and storage of such Product
Materials (if necessary), customs, duty and transit insurance on account of such
Product Materials.

1.56 “GAAP” means U.S. generally accepted accounting principles.

1.57 “Good Clinical Practice” means the current standards for clinical trials
for pharmaceuticals, as set forth in the ICH guidelines and applicable
regulations promulgated thereunder, as amended from time to time, and such
standards of good clinical practice as are required by the EMA and other
organizations and governmental agencies in Major EU Countries to the extent such
standards are not less stringent than United States Good Clinical Practice.

* Confidential Treatment Requested

 

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1.58 “Good Laboratory Practice” means the current standards for laboratory
activities for pharmaceuticals, as set forth in the FDA’s Good Laboratory
Practice regulations or the Good Laboratory Practice principles of the
Organization for Economic Co-Operation and Development (“OECD”), as amended from
time to time, and such standards of good laboratory practice as are required by
the EMA and other organizations and governmental agencies in Major EU Countries,
to the extent such standards are not less stringent than United States Good
Laboratory Practice.

1.59 “Good Manufacturing Practice” means the part of quality assurance which
ensures that products are consistently produced and controlled in accordance
with the quality standards appropriate to their intended use as defined in 21
C.F.R. § 210 and 211, European Directive 2003/94/EC, Eudralex 4, Annex 16, and
applicable United States, European Union, and ICH Guidance and/or regulatory
requirements for a product.

1.60 “Health Care Reform Fees” has the meaning set forth in the Financial
Exhibit.

1.61 “Indemnification Claim Notice” has the meaning set forth in Section 16.3.2.

1.62 “Indemnified Party” has the meaning set forth in Section 16.3.2.

1.63 “Indemnifying Party” has the meaning set forth in Section 16.3.2.

1.64 “Initial Development Plan and Budget” has the meaning set forth in
Section 3.2.1.

1.65 “Insolvency Event” means, in relation to either Party, any one of the
following: (a) that Party is the subject of voluntary or involuntary bankruptcy
proceedings instituted on behalf of or against such Party (except for
involuntary bankruptcy proceedings which are dismissed within sixty (60) days);
(b) an administrative receiver, receiver and manager, interim receiver,
custodian, sequestrator or similar officer is appointed in respect of that Party
(collectively, the “Receiver”) and that Party has not caused the underlying
action or the Receiver to be dismissed within sixty (60) days after the
Receiver’s appointment; (c) the Board of Directors have passed a resolution to
wind up that Party (other than a resolution for the solvent reconstruction or
reorganization of that Party) or to make an application for an administration
order or to appoint an administrator; or (d) that Party makes a general
assignment, composition or arrangement with or for the benefit of all or the
majority of that Party’s creditors.

1.66 “Joint Commercialization Committee” (or “JCC”) means the committee
established under Section 2.3.

1.67 “Joint Development Committee” (or “JDC”) means the committee established
under Section 2.2.

1.68 “Joint Know-How” means any Know-How which is jointly owned, or jointly
Controlled, by Array and Oncothyreon at any time during the Term of this
Agreement.

1.69 “Joint Patents” means any Patent Rights which are jointly owned, or jointly
Controlled, by Array and Oncothyreon at any time during the Term of this
Agreement.

 

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1.70 “Joint Technology” means the Joint Know-How and Joint Patents.

1.71 “Know-How” means all technical information, know-how and Data, including
inventions (whether patentable or not), discoveries, trade secrets,
specifications, instructions, processes, formulae, materials, expertise and
other technology applicable to compounds, formulations, compositions, products
or to their manufacture, development, registration, use or commercialization or
methods of assaying or testing them or processes for their manufacture,
formulations containing them, compositions incorporating or comprising them and
including all biological, chemical, pharmacological, biochemical, toxicological,
pharmaceutical, physical and analytical, safety, quality control, manufacturing,
preclinical and clinical Data, instructions, processes, formulae, expertise and
information, regulatory filings and copies thereof, relevant to the development,
manufacture, use or commercialization of and/or which may be useful in studying,
testing, development, production or formulation of products, or intermediates
for the synthesis thereof.

1.72 “Large Company” means a company that, together with its Affiliates, had
aggregate worldwide revenues from sales of pharmaceuticals exceeding [*] in the
preceding Calendar Year.

1.73 “Major EU Country” means France, Germany, Italy, Spain and the United
Kingdom.

1.74 “Marketing Approval” means, with respect to each country, approval by the
FDA or the applicable health regulatory authority in or for such country that is
the counterpart of the FDA of the applicable MAA for the Product filed in or for
such country.

1.75 “Marketing Approval Application” or “MAA” means a New Drug Application, or
similar application for Marketing Approval, required under the United States
Federal Food, Drug and Cosmetics Act and the regulations promulgated thereunder,
or a comparable filing for Marketing Approval in or for a given country, in each
case with respect to the Product.

1.76 “Marketing Expenses” has the meaning set forth in the Financial Exhibit.

1.77 “Medical Affairs Expenses” has the meaning set forth in the Financial
Exhibit.

1.78 “Net Proceeds” means all cash payments and other consideration received by
a Party for a grant a Sublicense to a Sublicensee, including without limitation,
up-front payments, milestone payments, Premium on Equity, and running royalties,
less any applicable withholding taxes and any other amounts credited or deducted
against the amounts actually received by the Party, unless and until the Party
recoups such taxes or charges through a credit against taxes due or against
other cash payments that the Party otherwise would be required to make. The
Party negotiating the Sublicense agreement shall have the right to deduct from
the Net Proceeds received from such agreement the out-of-pocket costs incurred
by such Party in negotiating such license agreement. Net Proceeds shall not
include any amounts received by a Party (a) for the funding of research and
development

 

* Confidential Treatment Requested

 

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activities relating to a the Product at reasonable and customary rates
(including, for the avoidance of doubt, periodic reimbursements, in arrears, for
research and development activities undertaken after execution of the applicable
Sublicense), (b) for the supply of a the Product at a reasonable and customary
transfer price, (c) in the form of loans at reasonable and customary rates of
interest, and (d) as payment for equity, other than Premium on Equity. For the
avoidance of doubt, the performance of Development or Commercialization
activities, or associated manufacturing, by a Sublicensee or its Third Party
contractors shall not, by itself, constitute “other consideration” to be
included within the definition of Net Proceeds. Any dispute between the Parties
with respect to the determination of the value of any “other consideration” to
be included within the definition of Net Proceeds shall be determined pursuant
to Section 18.2.1.

(a) “Premium on Equity” means the amount by which cash amounts received by a
Party for a particular equity security exceed the Fair Market Value of such
security.

(b) “Fair Market Value” of an equity security means (i) if the equity security
is traded on a National Exchange, then Fair Market Value shall equal the average
closing sale price of a share of such equity security as reported on the
National Exchange for the five (5) trading days immediately preceding, and the
five (5) trading days including and following, the date payment is received for
such security from the Sublicensee; (ii) if the equity security is not traded on
a National Exchange, then Fair Market Value shall be determined on the basis of
the common stock equivalents of such equity security, and shall equal the
effective gross price per share of a common stock equivalent of the issuing
Party (subject to appropriate adjustments for stock splits, stock dividends,
recapitalizations, reorganizations and combinations) in the last sale of equity
securities by the issuing Party to Third Parties other than the Sublicensee (but
including sales to such other Third Parties made at the same time as the sale to
the Sublicensee) within the preceding six (6) months. If no shares have been
issued as provided in subsection (ii), the board of directors of the issuing
Party shall determine the Fair Market Value in good faith, provided that the
other Party shall have the right to request a determination by an independent
expert selected by mutual agreement of the Parties.

(c) “National Exchange” means the New York Stock Exchange, the American Stock
Exchange, any national market system (including without limitation the Nasdaq
National Market), or the European or Japanese equivalent of such an exchange or
market system.

(d) In the event that a Party grants a Sublicense to a Sublicensee and obtains
equity or other ownership interest in the Sublicensee in consideration of such
grant, then (i) to the extent that such equity is in the form of securities that
are then immediately publicly tradable without restriction (“Marketable
Securities”), such Party shall promptly distribute fifty percent (50%) thereof
to the other Party; and (ii) to the extent such equity is not in the form of
Marketable Securities, any cash payment received by such Party for or in respect
of such equity and other ownership interests (including by way of dividend or
distribution, or proceeds from sale of such equity or other ownership interest)
shall be included within Net Proceeds hereunder.

 

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1.79 “Net Sales” means the gross invoice price received by a Party or (subject
to the qualifications regarding sales by Sublicensees set forth below) by a
Sublicensee, as the case may be, for Products sold by such Party or Sublicensee
(“Selling Party”), under this Agreement in arm’s length sales to Third Parties
less deductions allowed to the Third Party customer by the Selling Party, to the
extent actually taken by the Third Party customer, on such sales for:

(a) trade, quantity, and cash discounts;

(b) credits, rebates and chargebacks (including those to managed-care entities
and government agencies), and allowances or credits to customers on account of
rejection or returns (including, but not limited to, wholesaler and retailer
returns) or on account of retroactive price reductions affecting such Product;

(c) freight, postage and duties, and transportation charges specifically
relating to Product, including handling and insurance thereto; and

(d) sales (such as VAT or its equivalent) and excise taxes, other consumption
taxes, customs duties and compulsory payments to governmental authorities and
any other governmental charges imposed upon the sale of the Product to Third
Parties.

Sales among the Selling Party and its Affiliates and Sublicensees shall be
excluded from the computation of Net Sales, and no royalties will be payable on
such sales except where such Affiliates are end users, and sales from one Party
or its Affiliate to the other Party or its Affiliate for use in Development
activities, in the further manufacture or Products, or for resale shall be
excluded from the computation of Net Sales; provided, however, in each case that
any subsequent resale to a Third Party shall be included within Net Sales; and
further provided, however, that notwithstanding the foregoing, sales of Products
by a Sublicensee pursuant to a Sublicense that is subject to the sharing
provisions set forth in Section 10.3.2 below, and sales of Product by a Party to
such a Sublicensee or its Affiliate, shall excluded from the computation of Net
Sales. In addition, the Selling Party may exclude from Net Sales a reasonable
provision for uncollectible accounts, to the extent such reserve is determined
in accordance with GAAP, consistently applied across all product lines of the
particular Party, until such amounts are actually collected. Net Sales shall not
include, and no royalty shall be due on, Products used in clinical trials or
other research and Development activities, or Products given as samples. With
respect to Products, if any, that are sold at a discount in “bundles” with other
products or services (i.e., sold together in a single sales transaction with
other products or services for which separate prices are charged in such
transaction), if the amount invoiced for the applicable Products represents a
discount greater than the average discount for all products and services in the
applicable “bundle,” then Net Sales for such “bundled” Product shall be
determined using a sales price based on the average discount for all products
and services in the applicable “bundle,” less applicable deductions as set forth
above. Any dispute between the Parties with respect to adjustments as described
in the preceding sentence for Products sold in “bundles” shall be determined
pursuant to Section 18.2.1.

1.80 “Non-Enforcing Party” has the meaning set forth in Section 13.3.2(b)(ii).

1.81 “Oncothyreon” means Oncothyreon Inc. and any of its Affiliates.

 

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1.82 “Oncothyreon Development Activities” means all research and pre-clinical
and clinical Development activities with respect to the Product that are
specifically designated as Oncothyreon’s obligations in the Development Plan,
including, to the extent provided therein, conduct of the POC Activities.

1.83 “Oncothyreon Indemnitees” has the meaning set forth in Section 16.1.

1.84 “Oncothyreon Know-How” means any Know-How Controlled by Oncothyreon as of
the Effective Date or thereafter during the term of this Agreement relating to
the Product that is reasonably necessary for the research, Development,
manufacture, use or Commercialization of the Product in the Field and to
practice the licenses granted hereunder.

1.85 “Oncothyreon Patents” means any Patent Rights Controlled by Oncothyreon as
of the Effective Date or thereafter during the term of this Agreement having
claims covering ARRY 380 and/or the Product, their use, composition,
formulation, preparation or manufacture or having claims that are reasonably
necessary for the research, Development, manufacture, use or Commercialization
of the Product in the Field and to practice the licenses granted hereunder. For
the avoidance of doubt, “Oncothyreon Patents” shall include Oncothyreon’s
ownership interest in any Joint Patents.

1.86 “Oncothyreon Technology” means the Oncothyreon Know-How and Array Patents.

1.87 “Ongoing Clinical Trials” has the meaning set forth in Section 5.3.2.

1.88 “Opt-Out Notice” has the meaning set forth in Section 5.2.

1.89 “Opt-Out Option” has the meaning set forth in Section 5.1.

1.90 “Opt-Out Party” has the meaning set forth in Section 5.2.

1.91 “Other Commercialization Costs” has the meaning set forth in the Financial
Exhibit.

1.92 “Out-of-Pocket Costs” means direct project expenses paid or payable to
Third Parties which are specifically identifiable and incurred for services or
materials provided by them directly in their performance of activities under the
applicable Development Plan and Budget or for use in performing the Development
Plan and Budget, in each case to Develop the Product in the Territory; such
expenses to have been recorded as income statement items in accordance with GAAP
and for the avoidance of doubt, not including pre-paid amounts (until expensed
in accordance with GAAP, in accordance with the Development Plan and Budget).
For clarity, Out-of-Pocket Costs do not include capital expenditures, payments
for internal salaries or benefits; facilities; utilities; general office or
laboratory supplies; information technology; and the like, or any expenses
incurred by FTEs (all of which shall be deemed included within the FTE Rate and
not otherwise reimbursable).

 

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1.93 “Party” or “Parties” means Array and Oncothyreon or Array or Oncothyreon,
as indicated by the context.

1.94 “Patent Rights” means all patents and patent applications, including all
divisionals, continuations, substitutions, continuations-in-part,
re-examinations, reissues, additions, renewals, extensions, registrations, and
supplemental protection certificates and the like of any of the foregoing.

1.95 “Payee” has the meaning set forth in Section 12.2.

1.96 “Payor” has the meaning set forth in Section 12.2.

1.97 “POC Activities” means certain activities in connection with the
Development of the Product as have been mutually agreed by the Parties, as of
the date of signing this Agreement, to be “POC Activities.”

1.98 “POC Development Costs” has the meaning set forth in Section 6.1.1.

1.99 “POC Reimbursement Amount” has the meaning set forth in Section 6.1.2.

1.100 “Post-Effective Date Acquiror” has the meaning set forth in
Section 4.5.2(a).

1.101 “Post-Effective Date Acquiror Group” has the meaning set forth in
Section 4.5.2(a).

1.102 “Prescriber” means a healthcare professional authorized to prescribe a
Product or issue hospital orders for a Product, in each case in a relevant
country of the Territory, or those other allied professionals that are part of
the treatment team and who are recognized for this purpose in the
Commercialization Plan, as applicable.

1.103 “Product” means a pharmaceutical preparation for human use incorporating
ARRY 380 as an active ingredient.

1.104 “Product Mark Costs” has the meaning set forth in Section 8.1.1.

1.105 “Product Marks” has the meaning set forth in Section 8.1.1.

1.106 “Prosecution and Maintenance” or “Prosecute and Maintain” has the meaning
set forth in Section 13.2.3(d).

1.107 “Recall Expenses” has the meaning set forth in the Financial Exhibit.

1.108 “Regulatory and Clinical Quality Agreement” has the meaning set forth in
Section 3.6.3.

 

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1.109 “Regulatory Authority” means any governmental agency or authority
responsible for granting clinical trial authorizations or Marketing Approvals
for the Product, including the FDA, EMA and any corresponding national or
regional regulatory authorities, excluding ethics committees (national and/or
local).

1.110 “Regulatory Filings” means, with respect to the Product, any submission to
a Regulatory Authority of any appropriate regulatory application together with
any related correspondence and documentation(including minutes of any meetings,
telephone conferences or discussions with any Regulatory Authority), and shall
include, without limitation, any submission to a regulatory advisory board,
marketing authorization application, and any supplement or amendment thereto.
For the avoidance of doubt, Regulatory Filings shall include any IND, MAA or the
corresponding application in any other country or group of countries.

1.111 “Regulatory Maintenance Costs” has the meaning set forth in the Financial
Exhibit.

1.112 “Remaining Party” has the meaning set forth in Section 5.2.

1.113 “Restricted Period” has the meaning set forth in Section 4.5.2.

1.114 “Restricted Product” has the meaning set forth in Section 4.5.2.

1.115 “ROW Development” has the meaning set forth in Section 3.1.2.

1.116 “Royalty Term” has the meaning set forth in Section 10.5.2.

1.117 “Safety Data Exchange Agreement” has the meaning set forth in
Section 3.7.1.

1.118 “Sales Force FTE Costs” has the meaning set forth in the Financial
Exhibit.

1.119 “Sales Force FTE Rate” has the meaning set forth in the Financial Exhibit.

1.120 “Sales Representative” means a professional pharmaceutical sales
representative engaged or employed by either Party to conduct sales activities
and other promotional efforts with respect to the Product in the United States.

1.121 “Selling Costs” has the meaning set forth in the Financial Exhibit.

1.122 “Selling Party” has the meaning set forth in the definition of Net Sales.

1.123 “Senior Officers” means, for Array, the Chief Executive Officer of Array
BioPharma Inc. or its designee, and for Oncothyreon, the Chief Executive Officer
of Oncothyreon Inc. or its designee, provided that in each case the designee
shall be an individual with sufficient seniority and authority to make decisions
for the matter at issue.

1.124 “Shared Product Liability Costs” has the meaning set forth in Section
16.4.

 

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1.125 “Sublicense” means the grant of a license, sublicense or other right to a
non-Affiliate Third Party to use and sell the Product, provided that such Third
Party (a) is responsible for some or all of the marketing and promotion of the
Product within the applicable territory or (b) pays to the applicable Party or
its Affiliates additional consideration attributable and allocable to the
license for the Product (such as upfront payments, royalties or commissions)
beyond the price for the purchase of the Product. For the avoidance of doubt,
licenses or sublicenses to Third Party distributors that do not have
responsibility for promotion of the Product within the applicable territory and
do not pay such additional consideration, or to Third Party contract
manufacturers for the purpose of manufacturing the Product for the applicable
Party or its Affiliates or Sublicensees, are not “Sublicenses.”

1.126 “Sublicense Notice” has the meaning set forth in Section 8.3.2(a).

1.127 “Sublicensing Party” has the meaning set forth in Section 8.3.2.

1.128 “Sublicensee” means a non-Affiliate Third Party to whom Oncothyreon or
Array has granted a Sublicense.

1.129 “Term” is defined in Article 17.1.

1.130 “Territory” means worldwide.

1.131 “Third Party” means any entity other than Array (including, for the
avoidance of doubts, its Affiliates) or Oncothyreon (including, for the
avoidance of doubts, its Affiliates).

1.132 “Third Party Agreement Payments” has the meaning set forth in Article 11.

1.133 “Third Party License(s)” has the meaning set forth in Section 10.6.1.

1.134 “United States” or “U.S.” means the United States of America and its
territories and possessions.

1.135 “US Losses” means US Profit/Loss that is negative for a given period such
as a Calendar Quarter (i.e., where Net Sales for the applicable period are less
than the Allowable Expenses for the applicable period).

1.136 “US Profits” means US Profit/Loss that is positive for a given period such
as a Calendar Quarter (i.e., where Net Sales for the applicable Period exceed
Allowable Expenses for the applicable Period).

1.137 “US Profit/Loss” has the meaning set forth in the Financial Exhibit.

1.138 Interpretation. In this agreement unless otherwise specified:

(a) “includes” and “including” means respectively includes and including without
limitation;

 

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(b) a statute or statutory instrument or any of their provisions is to be
construed as a reference to that statute or statutory instrument or such
provision as the same may have been or may from time to time hereafter be
amended or re-enacted;

(c) words denoting the singular shall include the plural and vice versa and
words denoting any gender shall include all genders;

(d) unless the context requires a different interpretation, the word “or” has
the inclusive meaning that is typically associated with the phrase “and/or”;

(e) the Exhibits and other attachments form part of the operative provision of
this Agreement and references to this Agreement shall, unless the context
otherwise requires, include references to the Exhibits and attachments;

(f) the headings in this Agreement are for information only and shall not be
considered in the interpretation of this Agreement; and

(g) the Parties agree that the terms and conditions of this Agreement are the
result of negotiations between the Parties and that this Agreement shall not be
construed in favor of or against any Party by reason of the extent to which any
Party participated in the preparation of this Agreement.

ARTICLE 2

GOVERNANCE

2.1 Alliance Managers. Within thirty (30) days following the Effective Date,
each Party will appoint (and notify the other Party of the identity of) a senior
representative having a general understanding of pharmaceutical Development and
Commercialization issues to act as its alliance manager under this Agreement
(“Alliance Manager”). The Alliance Managers will serve as the contact point
between the Parties for the purpose of providing the other Party with
information on the progress of Development and Commercialization of the
Product(s) and will be primarily responsible for facilitating the flow of
information and otherwise promoting communication, coordination and
collaboration between the Parties; providing single point communication for
seeking consensus both internally within the respective Party’s organization and
together regarding key global strategy and planning issues, as appropriate,
including facilitating review of external corporate communications; and raising
cross-Party and/or cross-functional disputes in a timely manner. Each Party may
replace its Alliance Manager by notice to the other Party.

2.2 Joint Development Committee. Oncothyreon and Array shall establish a joint
development committee (“Joint Development Committee” or “JDC”) to oversee,
review and coordinate the Development Program. The Joint Development Committee
shall (i) review, discuss and oversee the Parties’ Development activities with
respect to the Product; (ii) review and approve any amendments to the
Development Plan and Budget and any modifications thereto; (iii) make the final
decision regarding an early termination of a clinical study (other than in
accordance with the protocol), (iv) determine any matter within the JDC’s
responsibility delegated to any sub-committees established pursuant to
Section 2.2.3 with respect to which such sub-committees have been unable to
reach agreement; and (v) consider and act upon such other matters expressly
designated to be made by the Joint Development Committee pursuant to this
Agreement.

 

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2.2.1 Membership. The Joint Development Committee shall be composed of three
(3) senior executives of Array and three (3) senior executives of Oncothyreon,
one (1) of which will be the appointing Party’s Alliance Manager, one (1) of
which will have responsibility for Development activities within the appointing
Party’s organization, and one (1) of which will have responsibility for
Commercialization activities within the appointing Party’s organization. At
least one representative from each Party shall have sufficient seniority and
authority to make decisions on behalf of the appointing Party; provided,
however, it is understood and agreed that when each Party’s representatives to
the JDC are acting in their roles as members of the JDC, such representatives
may only bind the Party that they represent with respect to matters that are
within the authority of the JDC. Subject to the foregoing provisions of this
Section, Array and Oncothyreon may replace its Joint Development Committee
representatives at any time, with prior written notice to the other Party.

2.2.2 Joint Development Committee Meetings. During the term of this Agreement,
the Joint Development Committee shall meet quarterly, or as otherwise agreed by
the Joint Development Committee Members. Unless the Joint Development Committee
Members agree otherwise, at least one (1) meeting of the Joint Development
Committee per full Calendar Year will be held at each Party’s facilities in the
United States. With the consent of the Joint Development Committee members,
other representatives of Array or Oncothyreon may attend Joint Development
Committee or subcommittee meetings as nonvoting observers. Each party shall bear
its own personnel and travel costs and expenses relating to Joint Development
Committee meetings.

2.2.3 Delegate Committees. From time to time, the JDC may establish
subcommittees or project teams to oversee particular projects or activities, and
such subcommittees or project teams will be constituted as the JDC agrees (e.g.,
for oversight of certain day-to-day matters).

2.2.4 Decision Making. Except as set forth in this Section 2.2.4, decisions of
the JDC and lower level committees shall be made by consensus of all members
present; provided that at least one representative of each Party is present and
so approves. Non-attending members of the JDC may represent themselves by
proxies in any decision. In the event consensus for a decision cannot be reached
within 30 days, the matter shall be referred to the Senior Officers who shall
attempt in good faith to resolve such disagreement. If they cannot resolve such
issue within thirty (30) days of the matter being referred to them, then the
resolution and/or course of conduct shall be determined as follows: (i) for
matters relating to POC Activities that do not materially change the scope and
timing of or budget for such Activities, Oncothyreon will have the deciding
vote, provided that, in exercising such deciding vote, Oncothyreon will consider
Array’s position in good faith; and (ii) except as set forth in this
Section 2.2.4(i), the deciding vote on any other matter before the JDC,
including matters related to material changes to the POC Activities or to
jointly funded Development activities, shall be made by an arbitrator in
accordance with Section 18.2.1.

 

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2.3 Joint Commercialization Committee. At the appropriate time, but in no event
later than the date set forth in Section 2.3.2 below, Oncothyreon and Array
shall establish a joint commercialization committee (“Joint Commercialization
Committee” or “JCC”) to oversee the marketing and promotion of the Product in
the United States. The Joint Commercialization Committee shall (i) review,
discuss and oversee the Parties’ Commercialization activities (including
commercial manufacturing) in the United States with respect to the Product;
(ii) review and approve any amendments to the Commercialization Plans and
Budgets and any modifications thereto; (iii) subject to and within the
parameters of the Commercialization Plan, oversee the implementation of the
Commercialization Plans; (iv) determine any matter within the JCC’s
responsibility delegated to any sub-committees established pursuant to
Section 2.3.3 with respect to which such sub-committees have been unable to
reach agreement; and (v) consider and act upon such other matters expressly
designated to be made by the Joint Commercialization Committee pursuant to this
Agreement.

2.3.1 Membership. The Joint Commercialization Committee shall be composed of
three (3) senior executives of Array and three (3) senior executives of
Oncothyreon, one (1) of which will be the appointing Party’s Alliance Manager,
and one (1) of which will have responsibility for Commercialization activities
within the appointing Party’s organization. At least one representative from
each Party shall have sufficient seniority and authority to make decisions on
behalf of the appointing Party; provided, however, it is understood and agreed
that when each Party’s representatives to the JCC are acting in their role as
members of the JCC, such representatives may only bind the Party that they
represent with respect to matters that are within the authority of the JCC.
Subject to the foregoing provisions of this Section, Array and Oncothyreon may
replace its Joint Commercialization Committee representatives at any time, with
prior written notice to the other Party.

2.3.2 Joint Commercialization Committee Meetings. Beginning at least twelve
(12) months before the planned submission of an MAA to the FDA for the Product,
the Joint Commercialization Committee shall meet quarterly, or as otherwise
agreed by the Joint Commercialization Committee members. Unless the Joint
Commercialization Committee members agree otherwise, at least one (1) meeting of
the Joint Commercialization Committee per full Calendar Year will be held at
each Party’s facilities in the United States. With the consent of the Joint
Commercialization Committee Members, other representatives of Array or
Oncothyreon may attend Joint Commercialization Committee or subcommittee
meetings as nonvoting observers. Each party shall bear its own personnel and
travel costs and expenses relating to Joint Commercialization Committee
meetings.

2.3.3 Delegate Committees. The Joint Commercialization Committee may establish
specific sub-committees, or alternate committees, from time to time to oversee
and coordinate particular activities, such as a marketing committee to oversee
the marketing and promotion of the Product.

 

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2.3.4 Decision Making. Except as set forth in this Section 2.3.4, decisions of
the JCC and lower level committees shall be made by consensus of all members
present; provided that at least one representative of each Party is present and
so approves. Non-attending members of the JCC may represent themselves by
proxies in any decision. In the event that the JCC cannot reach consensus any
matter within the authority of the JCC, then the resolution and/or course of
conduct shall be determined by Array, in its sole discretion, provided that:
(i) if the JCC cannot reach consensus regarding a material modification of the
Commercialization Plan and Budget, such matter shall first be referred to the
Senior Officers, who shall attempt in good faith to resolve such disagreement
within thirty (30) days of such matter being referred to them (and if such
matter is not resolved within such 30-day period, Array may then exercise its
deciding vote with respect to such matter); (ii) in exercising such deciding
vote, Array will consider Oncothyreon’s position in good faith; and (iii) in no
event shall Array in exercising such final decision-making authority have the
right to (A) unilaterally impose an obligation on Oncothyreon to conduct
activities beyond those expressly provided in or contemplated by this Agreement,
(B) excuse Array from any of its obligations specifically enumerated under this
Agreement, or (C) reduce the rights of Oncothyreon specifically enumerated under
this Agreement. For the avoidance of doubt, subject to Section 10.2.3, Array’s
use of its final decision-making authority (i) to increase the budget in the
Commercialization Plan and Budget, or (ii) to establish a Commercialization Plan
and Budget containing activities related to Commercialization of the Product in
the United States (which activities the Parties acknowledge will in part be
conducted by Oncothyreon if Oncothyreon elects to Co-Promote the Product in the
United States), shall not be construed to “unilaterally impose an obligation on
Oncothyreon to conduct activities beyond those expressly provided in or
contemplated by this Agreement” as described in clause (A) of the preceding
sentence.

2.4 No Committee Amendments; Authority. Notwithstanding the creation of the
Joint Development Committee or the Joint Commercialization Committee, or any
subcommittee or alternate committee, each Party to this Agreement shall retain
the rights, powers, and discretion granted to it hereunder, and neither the
Joint Development Committee, Joint Commercialization Committee, nor any such
sub- or alternate committee shall be delegated or vested with any such rights,
powers, or discretion unless such delegation or vesting is expressly provided
for herein or the Parties expressly so agree in writing. Neither the Joint
Development Committee, Joint Commercialization Committee nor any such sub- or
alternate committee shall have the power to amend or modify this Agreement,
which may be amended or modified only as provided in Section 18.8
“Modification.” It is understood and agreed that issues to be formally decided
by the Joint Development Committee or the Joint Commercialization Committee are
only those specific issues that are expressly provided in this Agreement to be
so decided.

ARTICLE 3

PRODUCT DEVELOPMENT

3.1 Development Generally. The Parties’ respective responsibilities for the
research and Development of the Product are set forth in this Article 3 and in
the Development Plan. Each Party agrees that in performing its obligations under
this Agreement (a) it shall comply with all applicable current international
regulatory standards, including Good Laboratory Practice, Good Manufacturing
Practice and Good Clinical Practice and other rules, regulations and
requirements and (b) it will not employ or use any person that has been debarred
under Section 306(a) or 306(b) of the US Federal Food, Drug and Cosmetic Act (or
similar sanctions in other countries).

 

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3.1.1 Development Program. The Parties will use Commercially Reasonable Efforts
to conduct the Development Program, including the POC Activities. All
Development Program activities will be conducted pursuant to the applicable
Development Plan and Budget and shall be subject to oversight by the JDC. Other
than with respect to the POC Activities (which shall be conducted by
Oncothyreon), the JDC will endeavor in good faith to provide both Parties with a
meaningful role in the Development of the Product under the Development Program.
Each Party shall provide the other Party such timely assistance as reasonably
requested by the other Party to enable such Party to perform its obligations and
accomplish the activities allocated to such Party under the Development Plan and
Budget.

(a) Oncothyreon Development Activities. Oncothyreon shall use Commercially
Reasonable Efforts to timely and diligently conduct all Oncothyreon Development
Activities. Nothing in this Section 3.1.1 shall limit Array’s right to
concurrently undertake the Array Development Activities as are assigned to it
under the Development Plan and Budget. All Oncothyreon Development Activities
shall be conducted by Oncothyreon in accordance with the Development Plan and
Budget and such reasonable directions as may be issued by the JDC from time to
time. Subject to the provisions of this Agreement, Oncothyreon shall make all
decisions relating to the day-to-day Oncothyreon Development Activities,
provided such decisions are consistent with the then-current approved
Development Plan and Budget and any decisions and instructions of the JDC.
Oncothyreon shall promptly inform Array in writing about any unforeseen and/or
material results, problems, difficulties or issues in connection with the
Oncothyreon Development Activities.

(b) Array Development Activities. Array shall use Commercially Reasonable
Efforts to timely and diligently conduct all Array Development Activities.
Nothing in this Section 3.1.1 shall limit Oncothyreon’s right to concurrently
undertake the Oncothyreon Development Activities as are assigned to it under the
Development Plan and Budget. All Array Development Activities shall be conducted
by Array in accordance with the Development Plan and Budget and such reasonable
directions as may be issued by the JDC from time to time. Subject to the
provisions of this Agreement, Array shall make all decisions relating to the
day-to-day Array Development Activities, provided such decisions are consistent
with the then-current approved Development Plan and Budget and any decisions and
instructions of the JDC. Array shall promptly inform Oncothyreon in writing
about any unforeseen and/or material results, problems, difficulties or issues
in connection with the Array Development Activities.

3.1.2 ROW Development.

(a) General. Alone or with a partner, subject to the terms of this Agreement,
Array will have the sole right to obtain Marketing Approval for the Product for
use outside the United States (and, for the avoidance of doubt, to Commercialize
the Product outside the United States); provided, however, that following
Marketing Approval of the Product in the United

 

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States, Array shall use Commercially Reasonable Efforts to obtain Marketing
Approval for the Product in each of the Major EU Countries. Array agrees not to
conduct Development Activities with respect to the Product outside of the
Development Program in countries outside the United States and the Major EU
Countries (the “ROW Territory”) that could reasonably be expected to have an
adverse effect on the safety, marketability or pricing of the Product in the
U.S. and the Major EU Countries. Array will have the right to use Development
Data, CMC information, intellectual property and other results generated under
the Development Program for such purposes. Any such Development for the
generation of information necessary for filing an MAA in countries outside the
United States and the Major EU Countries (“ROW Development”) shall not be deemed
part of the Development Program.

(b) Sublicenses outside the United States. If Array grants a Sublicense to
Develop and Commercialize the Product outside of the United States to any Third
Party, Array shall remain responsible to Oncothyreon hereunder with respect to
activities of such Sublicensee under such Sublicense, including payments due to
Oncothyreon hereunder with respect to activities of (or payments from) such
Sublicensee. Array agrees to keep Oncothyreon reasonably informed of Array’s
negotiations with respect to such Sublicenses (including, to the extent
reasonably practicable, by providing to Oncothyreon drafts of the proposed
arrangement, subject to Array’s ability to redact such drafts in accordance with
the following sentence), and will reasonably consider comments Oncothyreon may
provide with respect to any such proposed arrangement in good faith. In
addition, following execution, Array shall provide to Oncothyreon copy of each
executed Sublicense, which Sublicense may be redacted to protect confidential
information of the Sublicensee or to redact information related to any product
other than the Product (but shall be sufficient, after such redactions, for
Oncothyreon to determine the scope of the licenses and sublicenses granted to
such Sublicensee with respect to the Product and for Oncothyreon to determine
all payments to be made to Array with respect to the Product under such
Sublicense).

3.2 Development Plans and Budgets.

3.2.1 Initial Development Plan and Budget. The initial plan and budget for the
Development of the Product has been mutually agreed by the Parties as of the
Effective Date (collectively, “Initial Development Plan and Budget”). Promptly
after the Effective Date the Joint Development Committee shall meet to discuss
modifications, if any, to the Initial Development Plan and Budget, and the
Initial Development Plan and Budget shall be modified only as approved by the
Joint Development Committee as set forth in Section 3.2.4.

3.2.2 Development Plan. Each Development Plan will include a reasonably detailed
plan for the then-current Calendar Year and the successive two (2) Calendar
Years, and a general overview of activities required to obtain Marketing
Approval of the Product in the United States and the Major EU Countries, and
shall establish a development timeline including projected time durations for
the particular stages of the Development Program. Each Development Plan will
contain go/no-go criteria for continuing the development of the Product from one
clinical trial to the next. Each Development Plan shall be comprehensive and
shall fully describe at least (i) the proposed activities related to ongoing
preclinical studies, clinical studies, manufacturing of Product

 

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related to Development activities in the Development Program, and regulatory
plans, and (ii) clinical goals and objectives as well as criteria for successful
Completion of clinical trials and other development activities. All activities
in the Development Plan and Budget shall be designed to a standard acceptable by
the FDA and the EMA.

3.2.3 Development Budget. Each Development Budget shall forth the budgeted
amounts for Development Costs with respect to activities allocated to the
Parties under the Development Plan during the then-current calendar Year and the
successive two (2) Calendar Years, on a rolling three (3)-year basis, and shall
include for each Party a budget for Development Costs for the Development
activities allocated to such Party, broken down by Calendar Quarter with respect
to the then-current Calendar Year, as well as a good faith forecast of the
annual development budgets (i) through receipt of Marketing Approval for the
Product in the United States and the Major EU Countries, and (ii) for any
Development activities following such Marketing Approval, including Phase IV
studies and the like, that are known to or anticipated by the Parties at the
time such budget is prepared. The Parties acknowledge that the initial
Development Plan and Budget agreed to by the Parties at the time of signing this
Agreement does not address all of the matters described in the preceding
sentence, and agree that that JDC shall establish a comprehensive Development
Plan and Budget addressing all of the matters described in the preceding
sentence following (and in any event within one hundred and eighty (180) days
after) the Effective Date.

3.2.4 Periodic Review. The JDC shall review the Development Plan and Development
Budget on an ongoing basis (at least annually) and shall adjust and make
appropriate changes to the Development Program, including the development
timeline, based on the results and progress to date. At such time as it deems
appropriate, the JDC shall include in the Development Plan and Budget mutually
agreed activities relating to new indications and formulations, Phase IV studies
and the like. In the event that the JDC does not approve the updated Development
Plan and Development Budget prior to the start of the next Calendar Year, either
Party may initiate procedures to resolve the issue pursuant to Section 2.2.4,
and the then-current Development Plan and Development Budget shall continue to
apply until such resolution.

3.3 Technology Transfer.

3.3.1 Initial Transfer. Promptly following the Effective Date, Array shall
transfer to Oncothyreon at its cost such Array Technology, including preclinical
and clinical test Data, as are in Array’s possession and Control and are
reasonably necessary for Oncothyreon to conduct the Oncothyreon Development
Activities.

3.4 Information and Reports. Each Party shall keep the Joint Development
Committee fully informed as to the progress and results of such Party’s
Development Activities, including inventions and such results and information
are reasonably necessary or directly useful for the other Party to conduct its
Development Activities or as otherwise determined by the JDC. In addition, each
Party shall make available to the other (i) information about such Party’s
Development Activities so as to keep the other Party reasonably updated as to
the status of such Development Activities, and (ii) any Data generated by such
Party during the conduct of such Party’s

 

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Development Activities, in each case as may be reasonably requested by the other
Party from time to time. Without limiting the foregoing, Array shall keep
Oncothyreon reasonably apprised as to the status and conduct of the
investigator-sponsored trials of the Product at the Dana Farber Cancer
Institute, and shall provide to Oncothyreon the Data (if any) resulting from
such investigator-sponsored trials when and as such Data become available to
Array.

3.5 Records; Site Inspections. Array and Oncothyreon shall maintain complete and
accurate records of the Development Program (or cause such records to be
maintained), including results, Data and inventions. Such records shall be made
and maintained in accordance with good scientific practices within the
biopharmaceutical industry and as appropriate for regulatory (including all Data
in the form required under any applicable governmental regulations necessary for
obtaining Marketing Approvals) and patent purposes. Each Party shall allow the
other to have reasonable access to all records, materials and Data generated by
or on behalf of such Party with respect to the Product at reasonable times and
in a reasonable manner. In addition, and without limiting the foregoing, each
Party shall have the right, at its expense and upon reasonable advance written
notice, to inspect during normal business hours any facilities of the other
Party (including, for the avoidance of doubt, facilities of the other Party’s
Affiliates) at which the other Party conducts Development or manufacturing
activities under this Agreement, and any records relating thereto, once per
year, or more often with cause, to verify the other Party’s compliance with the
terms of this Agreement. Such inspection shall be subject to the confidentiality
provisions set forth in Article 15. To the extent permitted by the applicable
Third Party contractor(s), each Party shall have a right to periodically conduct
reasonable inspections of the facilities and records of the other Party’s Third
Party contractors conducting Development activities under the Development
Program or manufacturing activities related to the Development Program, and,
without limiting the foregoing, each Party shall keep the other Party reasonably
informed regarding the timing and material findings of inspections conducted by
such Party with respect to its own Third Party contractors conducting such
activities.

3.6 Regulatory Matters.

3.6.1 Regulatory Filings. Array or its Sublicensee will (i) own, and have the
sole right to submit, all Regulatory Filings throughout the Territory, including
MAAs, periodic safety update reports/ development safety update reports and MAA
and clinical trial authorization documentation (e.g. the investigator brochure
and the Investigational Medicinal Product Dossier) with respect to the Product,
(ii) be responsible for obtaining and maintaining all Marketing Approvals
throughout the Territory in the name of Array or its Sublicensees, and (iii) be
solely responsible for conducting, and have the right to control, all meetings
and communications with Regulatory Authorities in connection with the
Development of the Product. Notwithstanding the foregoing, Oncothyreon will be
allowed to file, own and control an IND (the “Oncothyreon IND”) with respect to
the Product for the conduct of the POC Activities and other Oncothyreon
Development Activities, and Array will reasonably cooperate to provide
Oncothyreon a right of reference to Array’s IND for the Product for purposes of
filing and maintaining the Oncothyreon IND; provided, however, that
(i) Oncothyreon agrees that it shall not, and shall not authorize any Third
Party to, conduct any Development Activities under the Oncothyreon IND other
than the POC

 

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Activities and Oncothyreon Activities as set forth in the Development Plan, nor
use the Oncothyreon IND for any purpose other than conducting such POC
Activities or Oncothyreon Development Activities, without the express prior
written consent of Array; and (ii) except to the extent that maintaining the
Oncothyreon IND is reasonably necessary for Oncothyreon to conduct subsequent
Oncothyreon Development Activities reasonably anticipated by the Parties at the
time, Oncothyreon shall close the Oncothyreon IND, or transfer it to Array,
within a reasonable time after Marketing Approval of the Product in the United
States. All such activities in or for the United States will be done in
accordance with the Development Plan and Budget, in full consultation with the
Joint Development Committee.

3.6.2 Regulatory Cooperation.

(a) Subject to applicable laws, rules and regulations, each Party will have the
right to attend all material meetings, conferences and discussions by the other
Party with Regulatory Authorities in the United States pertaining to Development
of the Product, and with Regulatory Authorities outside the United States to the
extent such meetings, conferences and discussions are directed to Development
Activities within the Development Program that are conducted outside the United
States, if any, (collectively, “Development Program Regulatory Interactions”),
and with respect to such Development Program Regulatory Interactions:
(i) Oncothyreon shall control the messaging and be the lead Party interacting
with such Regulatory Authorities in connection with Development Program
Regulatory Interactions directed to Development Activities under the Oncothyreon
IND, and (ii) Array shall control the messaging and be the lead Party
interacting with such Regulatory Authorities in connection with other
Development Program Regulatory Interactions. Each Party shall use reasonable
efforts (A) to provide the other Party with reasonable advance notice of all
Development Program Regulatory Interactions directed to such Party’s Regulatory
Filings, and to provide advance copies of material documents and information
relating to such Development Program Regulatory Interactions, and (b) to provide
the JDC with advance drafts of any material documents and material
correspondence to be submitted to Regulatory Authorities pertaining to
Development Activities in the Development Program or Marketing Authorization for
the Product in the United States or the Major EU Countries, in each case to the
extent practicable under the circumstances. The submitting Party shall consider
in good faith any comments of the JDC regarding such material documents and
material correspondence that are provided by the JDC prior to their submission.

(b) Without limiting the provisions above regarding Development Program
Regulatory Interactions, Array also agrees to use reasonable efforts (1) to
provide advance copies of material documents and information relating to
material meetings, conferences and discussions with Regulatory Authorities
outside the United States pertaining to Development of the Product, and (2) to
provide the JDC with advance drafts of any material documents and material
correspondence to be submitted to Regulatory Authorities pertaining to
Development of the Product or Marketing Authorization for the Product, in each
case to the extent practicable under the circumstances. Array shall consider in
good faith any comments of the JDC regarding such material documents and
material correspondence that are provided by the JDC prior to their submission.
Oncothyreon agrees to fully cooperate with and provide assistance to Array in
connection with

 

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Marketing Approvals or other filings to any Regulatory Authority anywhere in the
Territory relating to the Product, including by executing any required
documents, providing access to personnel and providing Array with copies of all
reasonably required documentation, and shall fully cooperate as Array may from
time to time request in connection with preparing for meetings or communications
with Regulatory Authorities in connection with the Product or Oncothyreon’s
activities in the Development of the Product.

(c) To facilitate the coordination of the Parties with respect to timely
preparation and submission of Regulatory Filings, the Parties shall, within a
reasonable amount of time, not to exceed six (6) months from the Effective Date,
agree upon and implement a procedure for the mutual exchange of regulatory
information associated with the Product (the “Regulatory and Clinical Quality
Agreement”).

3.6.3 Regulatory Audits. Each Party shall allow foreign and local Regulatory
Authorities to inspect its regulatory, quality and clinical operations (and the
operations of this Affiliates and subcontractors) as required to support and
maintain Marketing Approval in the United States and the Major EU Countries. A
representative from the other Party may participate in such inspections and
shall receive advance notice as soon as reasonably possible of any such
inspections. A Party that is so inspected by a Regulatory Authority in or for
the United States or a Major EU Country (“Regulatory Audited Party”) shall
communicate urgent or critical issues affecting the Development of the Product
for the United States or the Major EU Countries within five (5) Business Days of
receipt of documented findings cited by a Regulatory Authority in such an
inspection, and (i) the other Party shall have a reasonable opportunity to
review and comment on the Regulatory Audited Party’s responses prior to
submission to the Regulatory Authority; (ii) the Regulatory Audited Party shall
consider such comments in good faith; and (iii) if corrective actions are
determined in response to such documented findings, the Regulatory Audited Party
will provide the other Party a summary of such corrective actions.

3.6.4 Protocols. All protocols for clinical trials to be conducted for the
Product in under the Development Program shall be subject to the approval of the
Joint Development Committee.

3.7 Drug Safety.

3.7.1 Within a reasonable amount of time, not to exceed six (6) months from the
Effective Date, the Parties shall agree upon and implement a procedure for the
mutual exchange of safety information associated with the Product. The details
of the operating procedures relating to the exchange shall be the subject of a
mutually-agreed upon written safety data exchange agreement (the “Safety Data
Exchange Agreement”). Such Safety Data Exchange Agreement shall govern the
exchange of safety data related to the Product between the Parties in connection
with this Agreement and contain reasonable and customary terms sufficient to
enable each to comply with its respective obligations under applicable laws,
regulations and guidelines with regard to adverse event data collection,
analysis and reporting. The Parties will endeavor to negotiate and enter into
the Safety Data Exchange Agreement prior to dosing of the first patient in
connection with POC Activities.

 

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3.7.2 The Parties shall promptly inform each other (via their respective
appointed pharmacovigilance representatives) of any new safety information,
including without limitation, suspected serious adverse reactions (whether
unexpected or not), clinical trial reports and/or interim analyses results and
the timely notification of trial Completion in accordance with all applicable
law and regulations governing safety reporting, including relevant timelines.
For clarity, in the event the Parties have executed a Safety Data Exchange
Agreement, all relevant safety findings (both clinical and pre-clinical) should
be included in periodic reports per the detailed Safety Data Exchange Agreement
and regulatory requirements.

3.7.3 The Parties shall promptly inform each other (via their respective
appointed drug safety representatives) of any safety issues and/or actions
planned or taken for reasons of patient safety, including documentation such as
Dear Doctor Letters and any changes to the safety profile of the Product, as
documented in the current product label or investigator brochure in accordance
with applicable law and regulations governing safety reporting, including
relevant timelines, as may be further detailed in a separate safety data
exchange agreement.

3.7.4 The Parties agree Array will hold the global safety database and be
primarily responsible for authoring of the Periodic Safety Update
Report/Development Safety Update Report and be responsible for the Core Data
Sheet and Investigator Brochure; provided, however, that Oncothyreon will hold
the global safety database and have the primary responsibilities described above
in connection with the POC Activities.

3.7.5 Each Party agrees that its drug safety systems/operations or contracted
drug safety activities will be audited at reasonable intervals to ensure
elements set forth in the Safety Data Exchange Agreement are being fulfilled for
the appropriate product. Both Parties will discuss and agree in good faith on
how such an audit will be conducted (audit plan, duration of audit, audit report
and corrective actions). Each Party’s routine audit will be scheduled no more
frequently than once every two (2) years, with a minimum of ninety (90) days
notice. Audits must be reasonable in scope and in relationship to the Product
and must take place during normal business hours. Parties will correct audit
observations in a timely manner and communicate those actions to the other
Party.

3.7.6 Each Party shall provide the other with a notice in the event of a serious
suspected breach of compliance with the Safety Data Exchange Agreement. Within
thirty (30) days following receipt of notice of such notice by a Party hereto, a
directed audit will be performed by the other party or an independent Third
Party.

3.7.7 The Parties shall allow foreign and local health authorities to inspect
their drug safety operations as it is necessary for either Party to maintain
registration in the countries where the Product is marketed. A representative
from the other Party may participate in such inspections. The Parties shall
communicate urgent or critical issues affecting the other Party’s drug safety
activities within fourteen (14) Business Days of receipt of documented findings
cited during a health authority inspection. Once corrective actions are
determined, the inspected Party will provide a summary of the relevant
inspection findings with associated corrective actions where the other Party is
impacted.

 

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3.8 Data Sharing. Without limiting Section 3.7, each Party shall provide to the
other Party on an on-going basis all Data and Know-How, including Development
Data, generated by or on behalf of such Party in connection with the Development
Program and/or manufacturing of Product for Commercialization in the United
States, to the extent such Data and/or Know-How are reasonably useful to Develop
and/or manufacture Product. In addition, Array shall provide to Oncothyreon on
an on-going basis all Data and Know-How generated by or on behalf of Array in
connection with the ROW Development and/or manufacturing of Product outside of
the United States by or on behalf of Array and, to the extent Array or its
Affiliates have access to such Data and Know-How, by its Sublicensees, it being
understood that Array shall use Commercially Reasonable Efforts to obtain such
access from its Sublicensees.

ARTICLE 4

LICENSES; EXCLUSIVITY

4.1 Licenses to Oncothyreon.

4.1.1 Primary License. Subject to the terms and conditions of this Agreement,
Array agrees to grant and hereby grants to Oncothyreon a license, under the
Array Technology and Array’s interest in Joint Technology, to (i) carry out the
Oncothyreon Development Activities in the Territory, and (ii) in the event that
Oncothyreon exercises its right to Co-Promote pursuant to Section 8.2.2 below,
to promote and market (but not to sell, or otherwise offer to sell) the Product
in the United States in accordance with the Co-Promotion Agreement and this
Agreement. The license granted in clause (i) of the preceding sentence shall be
exclusive, it being agreed, however, that Array retains the right under the
Array Technology and Array’s interest in Joint Technology to assist Oncothyreon
in accordance with this Agreement to carry out the Oncothyreon Development
Activities, and the license granted in clause (ii) of the preceding sentence
shall be co-exclusive with Array, which means that Oncothyreon hereby agrees not
to exercise such rights or allow the exercise of such rights by others in
violation of this Agreement and that Array shall have the right to exercise such
rights or allow the exercise of such rights by others only as permitted under
this Agreement.

4.1.2 Additional License with Restrictions.

(a) Subject to the terms and conditions of this Agreement, including
Sections 4.1.2(b), (c) and (d), below, Array agrees to grant and hereby grants
to Oncothyreon a license in the Territory, under the Array Technology and
Array’s interest in Joint Technology, to make, use, import, offer for sale, sell
and otherwise Develop or Commercialize (or have any of the foregoing done on its
behalf) the Product in the Field. Oncothyreon hereby agrees that Oncothyreon
shall have the right to exercise such license or allow the exercise of such
license by others only as permitted under this Agreement.

 

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(b) Oncothyreon hereby covenants and warrants to Array (on behalf of itself and,
for the avoidance doubt, on behalf of all its Affiliates) that (i) Oncothyreon
shall not exercise in any respect the license granted under Section 4.1.2(a)
unless and until such time (if any) as Array has elected to exercise the Opt-Out
Option and such Opt-Out by Array has become effective (the date, if any, where
such Opt-Out by Array becomes effective referred to herein as the “Array Opt-Out
Date”), and (ii) Oncothyreon shall not grant any sublicenses under the license
set forth in Section 4.1.2, nor enter into any agreement to convey such a
sublicense, prior to the Array Opt-Out Date (if any). For the avoidance of
doubt, this Section 4.1.2(b) does not restrict Oncothyreon’s exercise (in
accordance with, and to the extent permitted by, the terms and conditions of
this Agreement) of the license granted to Oncothyreon pursuant to Section 4.1.1
prior to the Array Opt-Out Date (if any).

(c) The license granted in Section 4.1.2 (a) shall be exclusive; provided,
however, that:

(i) unless and until the occurrence (if any) of the Array Opt-Out Date, Array
retains the exclusive right to make, use, import, offer for sale, sell and
otherwise Develop or Commercialize (or have any of the foregoing done on its
behalf) the Product in the Field, subject to the terms and conditions of this
Agreement (including the license to Oncothyreon set forth in Section 4.1.1), and
Oncothyreon acknowledges and agrees that the license to Oncothyreon set forth in
Section 4.1.2(a) is and shall remain subordinate to such retained rights of
Array until the occurrence (if any) of the Array Opt-Out Date; and

(ii) unless and until the occurrence (if any) of the Array Opt-Out Date, Array
shall have the right to grant licenses under the Array Technology and Array’s
interest in Joint Technology, and sublicenses under the license to Array
pursuant to Section 4.2, in each case subject to the other terms and conditions
of this Agreement, including without limitation Section 8.3 below, and
Oncothyreon acknowledges and agrees that such licenses or sublicenses granted by
Array shall survive in accordance with their terms notwithstanding an Opt-Out
(if any) by Array, and the license to Oncothyreon set forth in Section 4.1.2(a)
is subject to, and shall be limited by, any such licenses or sublicenses granted
by Array prior to the occurrence (if any) of the Array Opt-Out Date.

(d) The license set forth in Section 4.1.2 shall include the right to grant
sublicenses after the occurrence (if any) of the Array Opt-Out Date, subject to
the other terms and conditions of this Agreement. For the avoidance of doubt,
all such sublicenses shall be subject and subordinate to the limitations and
restrictions on the license to Oncothyreon that are set forth in
Sections 4.1.2(b) and (c) above.

(e) The license to Oncothyreon set forth in Section 4.1.2(a) shall automatically
terminate upon delivery of an Opt-Out Notice by Oncothyreon to Array, or upon
any earlier (i) termination of this Agreement by Array pursuant to Section 17.2,
or (iii) termination of this Agreement pursuant to Section 17.3. In addition,
Oncothyreon may in its discretion terminate the license set forth in
Section 4.1.2(a) upon written notice to Array.

 

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4.2 Licenses to Array. Subject to the terms and conditions of this Agreement,
Oncothyreon agrees to grant and hereby grants to Array a license in the
Territory, under the Oncothyreon Technology and Oncothyreon’s interest in Joint
Technology, to (i) carry out the Array Development Activities, (ii) perform ROW
Development, and (iii) make, use, import, offer for sale, sell and otherwise
Commercialize (or have any of the foregoing done on its behalf) the Product in
the Field. The license granted in clause (i) of the preceding sentence shall be
exclusive, it being agreed, however, that Oncothyreon retains the right under
the Oncothyreon Technology and Oncothyreon’s interest in Joint Technology to
assist Array in accordance with this Agreement to carry out the Array
Development Activities; the license granted in clause (ii) of the preceding
shall be exclusive, and shall include the right to grant sublicenses, subject to
the other terms and conditions of this Agreement, including without limitation
Section 8.3 below; and the license granted in clause (iii) of the preceding
sentence shall be co-exclusive with Oncothyreon, which means that Array hereby
agrees not to exercise such rights or allow the exercise of such rights by
others in violation of this Agreement and that Oncothyreon shall have the right
to exercise such rights or allow the exercise of such rights by others only as
permitted under this Agreement.

4.3 No Implied Licenses. Each Party acknowledges that the licenses granted under
this Article 4 are limited to the scope expressly granted, and all other rights
to a Party’s Technology are expressly reserved to the Party owning such
Technology. Without limiting the foregoing, it is understood that where an
exclusive or co-exclusive license under a Party’s Technology is granted to the
other Party under this Article 4 for a particular purpose, the Party granting
such license retains all of its rights to such Party’s Technology for all
purposes not expressly licensed.

4.4 Section 365(n) of the Bankruptcy Code. All rights and licenses granted under
or pursuant to any section of this Agreement are, and shall otherwise 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(35A) of the U.S.
Bankruptcy Code to the extent permitted thereunder. The Parties shall retain and
may fully exercise all of their respective rights and elections under the U.S.
Bankruptcy Code. Upon the bankruptcy of any Party, the non-bankrupt Parties
shall further be entitled to a complete duplicate of (or complete access to, as
appropriate) any such intellectual property, and such, if not already in its
possession, shall be promptly delivered to the non-bankrupt Parties, unless the
bankrupt Party elects to continue, and continues, to perform all of its
obligations under this Agreement.

4.5 Exclusivity of Efforts.

4.5.1 Subject to Section 4.5.4 below, during the Term, neither Party nor its
Affiliates will conduct, directly or indirectly, either alone or with a Third
Party or by assisting any Third Party, (i) research or development with respect
to, or manufacture or commercialize a pharmaceutical product that is known by
such Party or its Affiliate to be a Competing Product, or (ii) conduct a drug
discovery or other research Program the goal of which is to identify Competing
Products, in each case other than activities conducted pursuant to and in
accordance with this Agreement.

 

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4.5.2 If a Party signs a definitive agreement whereby it would acquire, be
acquired by, or merge with a Third Party in a transaction or series of
transactions which do not constitute a Change of Control of the applicable
Party, and such Third Party (or any Affiliate of such Third Party that would
become part of, or an Affiliate of, the applicable Party as a result of such
transaction or series of transactions) is then conducting on-going clinical
development of or commercializing any product that is known to be a Competing
Product, in each case in a manner that would result in a violation of
Section 4.5.1 (each such known Competing Product that would lead to such a
violation, a “Restricted Product”), then such Party or its Affiliate shall
promptly notify the other Party in writing and shall elect as promptly as
reasonably possible but in no event later than three (3) months after the
closing date of the definitive agreement for the applicable transaction or
series of transactions (such period, the “Decision Period”), to do one of the
following prior to the first anniversary of the expiry of the Decision Period
(such period, the “Restricted Period”): (A) divest itself of such Restricted
Product and notify the other Party in writing of such divesture, (B) exercise
its Opt-Out Option pursuant to Article 5, or (C) discontinue all research and
development activities with respect to the applicable Restricted Product, and
provide written certification to the other Party from the applicable Third Party
or its Affiliate that such activities have been discontinued; provided, however,
that the election described in the foregoing clause (C) shall not be available
for any Restricted Product for which, prior to such election, human clinical
trials have been conducted or an IND or equivalent Regulatory Filing has been
submitted to any Regulatory Authority. Divestiture of a Restricted Product may
include an outright sale or an exclusive license under which the licensor does
not retain any rights to conduct or alter clinical development or
commercialization activities with respect to the Restricted Product. For
clarity, the development or commercialization of such Restricted Product during
the Restricted Period shall not constitute a violation of this Section 4.5.

4.5.3 In the event that during the Term of this Agreement a Party enters into a
transaction or series of transactions with a Third Party that constitutes a
Change of Control of such Party (such a Third Party referred to as a
“Post-Effective Date Acquiror,” and such Party referred to as the “Acquired
Party”),

(a) The Post-Effective Date Acquiror and its Affiliates other than the Acquired
Party (the “Post-Effective Date Acquiror Group”) will not be deemed to be
Affiliates of the Acquired Party for purposes of Section 4.5 and the definitions
of the Acquired Party’s Patents or the Acquired Party’s Know–How, provided that,
and only so long as (A) no Acquired Party’s Patent Rights or confidential
Acquired Party’s Know-How are used by, or disclosed in any material manner to,
such Post-Effective Date Acquiror, for use with a product that is known to be a
Competing Product, (B) the Post-Effective Date Acquiror Group segregates the
Acquired Party’s personnel and activities with respect to the Product from all
programs of the Post-Effective Date Acquiror Group directed to the development
and/or commercialization of all products that are known to be Competing
Products, and (C) to the extent such Post-Effective Date Acquiror Group Controls
Dominating Patent Rights, the non-Acquired Party is hereby granted a worldwide,
non-exclusive, sublicensable (subject to applicable limitations on sublicensing
set forth in Sections 4.1, 4.2 and 4.3 above) license under such Dominating
Patent Rights to research, Develop, make, use, import, offer for sale, sell and
otherwise Commercialize (or to have any of the foregoing done on its behalf) the
Product. For purposes of this Section 4.5.3, “Dominating Patent Rights” shall
mean Patent Rights that would be necessarily infringed by the manufacture, use
or sale of the Product in the applicable country.

 

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(b) The licenses to Dominating Patent Rights granted under Section 4.5.3(a):
(A) shall be fully paid and royalty free except to the extent such Dominating
Patent Rights have been in-licensed or otherwise acquired by the entity granting
the license hereunder from a Third Party, in which case the non-Acquired Party
shall have the option to (1) accept the grant of such license and reimburse such
entity for any payments owing to such Third Party by reason of non-Acquired
Party’s exercise of rights granted under this Section with respect to such
Dominating Patent Rights or (2) reject the grant of such license and have no
payment obligation to such entity and (B) shall continue in effect until the
termination of the license granted to non-Acquired Party under Section 4.1 or
4.2, as applicable.

4.5.4 In the event that either Party exercises its Opt-Out Option pursuant to
Article 5 below, the obligations of both Parties under Sections 4.5.1 and 4.5.2
above shall terminate and no longer apply, and clauses (A) and (B) of the
proviso in Section 4.5.3(a) above shall no longer apply, in each case from and
after the date on which such exercise of the Opt-Out Option becomes effective.

ARTICLE 5

OPT-OUT RIGHT

5.1 Generally. Either party will have the right, exercisable after the
Completion of the POC Activities and each Party’s receipt of Data therefrom, to
opt-out of further co-Development and co-Commercialization of the Product (the
“Opt-Out Option”).

5.2 Exercise. A Party seeking to exercise its Opt-Out Option (the “Opt-Out
Party”) shall provide the other Party (the “Remaining Party”) at least [*] days’
prior written notice (the “Opt-Out Notice”) before the Opt-Out Option is
exercised and becomes effective.

5.3 Effect of Opt-Out Option Exercise. Upon a Party’s exercise of its Opt-Out
Option, the following shall apply:

5.3.1 Governance. The JDC and the JCC shall cease to have any rights,
obligations or decision-making capabilities with respect to the Product, and all
decisions that were made by such committees under this Agreement prior to the
Opt-Out’s effective date shall thereafter be made solely by the Non-Opt-Out
Party. The provisions of Article 2 shall terminate; provided, however, that the
JDC and JCC may continue to function, solely as forums for communications and
information exchange in connection with winding down of Development and
Commercialization activities of the Opt-Out Party and, if applicable, transition
of such activities to the Remaining Party, in each case as provided herein, for
a reasonable time after the effective date of such Opt-Out, and shall thereafter
disband. The Remaining Party shall not have the authority to (A) unilaterally
impose an obligation on the Opt-Out Party beyond those expressly provided in or
contemplated by this Agreement, (B) excuse itself or any of its Affiliates from
obligations specifically enumerated under this Agreement, or (C) reduce the
rights of the Opt-Out Party specifically enumerated under this Agreement.

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5.3.2 Ongoing Clinical Trials; Development Costs. With respect to any clinical
trials of the Product under the Development Plan and Budget that are ongoing on
the date an Opt-Out Notice has been issued in which at least one patient has
been dosed (“Ongoing Clinical Trials”), at the Remaining Party’s request, the
Opt-Out Party agrees to continue in the normal course (and in accordance with
the most recent Development Plan and Budget, unless otherwise agreed in advance
by the Remaining Party) any such Ongoing Clinical Trials being conducted by the
Opt-Out Party or its Affiliates until the effective date of the opt-out, or, to
the extent so requested by the Remaining Party, to promptly transition to the
Remaining Party or its designee such clinical trials or portions thereof. The
obligations of the Opt-Out Party pursuant to Sections 3.4, 3.5, 3.6, 3.7 and 3.8
shall survive to the extent applicable to Development Activities conducted by
the Opt-Out Party under this Agreement (including, for the avoidance of doubt,
activities with respect to Ongoing Clinical Trials as described in this
Section 5.3.2), and Article 3 shall otherwise terminate. Article 6 shall
terminate; provided, however, that the Opt-Out Party will be responsible for its
share of the Development Costs incurred in connection with the Development Plan
and Budget until Completion or discontinuation of all such Ongoing Clinical
Trials as set forth in Section 6.1.3, and after payment of its share of
Development Costs as set forth in the composite report prepared pursuant to
Section 6.1.3 during the Calendar Quarter following such Completion or
discontinuation, the Opt-Out Party will have no right or obligation thereafter
to co-fund the Development of the Product, and Section 6.1.3 shall terminate.

5.3.3 Sharing of US Profit/Loss. In the event that a Party provides an Opt-Out
Notice, the following shall apply with respect to sharing of US Profit/Loss:

(a) if the applicable Opt-Out Notice was provided on or before the date 120 days
prior to First Commercial Sale of the Product in the United States, then (i) the
Opt-Out Party shall remain responsible for its share of US Profit/Loss through
the effective date of such Opt-Out, at which time Section 10.2 shall terminate;
and (ii) the Opt-Out Party shall not be responsible to bear, nor entitled to
receive, a share of US Profit/Loss from and after the effective date of such
opt-out (but shall be entitled to receive royalties as set forth in
Section 10.4, except to the extent otherwise provided in Section 17.4.3);

(b) if Oncothyreon is the Opt-Out Party and the applicable Opt-Out Notice was
provided after the date [*] days prior to First Commercial Sale of the Product
in the United States, then (i) Oncothyreon shall remain responsible for its
share of US Profit/Loss through the effective date of such opt-out, (ii) Array
shall have the right in its discretion to elect upon written notice to
Oncothyreon at any time within one (1) year following the applicable Opt-Out
Notice whether to pay Oncothyreon the royalties provided in Section 10.4 in lieu
of sharing US Profit/Loss (in which event, Oncothyreon shall not be responsible
to bear, nor entitled to receive, a share of US Profit/Loss from and after the
effective date of such notice from Array and Section 10.2 shall then terminate);
and (iii) until such time (if any) as Array provides the written notice
described in the foregoing clause (ii), Section 10.2 shall not terminate and
Oncothyreon shall remain responsible to bear, and entitled to receive, a share
of US Profit/Loss following the effective date of such opt-out;

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(c) if Array is the Opt-Out Party and the applicable Opt-Out Notice was provided
after the date [*] days prior to First Commercial Sale of the Product in the
United States, then (i) Array shall remain responsible for its share of US
Profit/Loss through the effective date of such opt-out, at which time
Section 10.2 shall terminate; and (ii) Array shall not be responsible to bear,
not entitled to receive, a share of US Profit/Loss from and after the effective
date of such opt-out (but shall be entitled to receive royalties as set forth in
Section 10.4); and

(d) for the avoidance of doubt, no royalties shall be due pursuant to
Section 10.4 with respect to Net Sales of Product for which the Parties share US
Profit/Loss as set forth in this Section 5.3.3.

5.3.4 Co-Promotion; Transition Assistance. In the event that Oncothyreon is the
Opt-Out Party, Oncothyreon’s right to Co-Promote the Product in the United
States described in Section 8.2.2 shall terminate (i) effective as of the date
that the Opt-Out Notice is delivered, if the Opt-Out Notice is delivered before
Oncothyreon has delivered notice pursuant to Section 8.2.2 exercising its right
to Co-Promote the Product, or (ii) if Oncothyreon delivered the Opt-Out Notice
after Oncothyreon has delivered notice pursuant to Section 8.2.2 exercising its
right to Co-Promote the Product, Oncothyreon’s right to Co-Promote shall
terminate effective as of the effective date of the opt-out. Notwithstanding the
above, if and as requested by the Remaining Party, the Opt-Out Party shall
continue to perform its Co-Promoting responsibilities under the Co-Promotion
Agreement, at the Opt-Out Party’s expense, for a period of up to nine (9) months
following the date of delivery of the applicable Opt-Out Notice in order to
permit a smooth and orderly transition of all Detailing activities for the
Product to the Remaining Party. Except as otherwise provided in this
Section 5.3.4, the obligations of both Parties pursuant to Section 8.2 shall
terminate effective as of the effective date of Opt-Out by either Party.

5.3.5 Assignment of Regulatory Filings and Marketing Approvals. At Remaining
Party’s request, and to the extent permitted under applicable law, the Opt-Out
Party shall assign or cause to be assigned to the Remaining Party or its
designee (or to the extent not so assignable, the Opt-Out Party shall take all
reasonable actions to make available to the Remaining Party or its designee the
benefits of) all Regulatory Filings for the Product in the Territory. In each
case, unless otherwise required by any applicable law, the foregoing assignment
(or availability) shall be made as soon as reasonably practicable after the date
an opt-out notice is issued and in any event no later than thirty (30) days
after the effective date of such opt-out, or if such assignment cannot legally
be made within such thirty-day period, as soon thereafter as such assignment can
legally be made.

5.3.6 Supply. If applicable (i.e., if the Opt-Out Party was manufacturing the
Product or obtaining supply of the Product from a contract manufacturer(s) at
the time of the exercise of the Opt-Out Option), the Opt-Out Party shall use
Commercially Reasonable Efforts to transition supply agreements (to the extent
practicable and permissible under the applicable agreement) and to reasonably
transfer manufacturing technology Controlled by the Opt-Out Party that is
necessary for, or was used prior to the Opt-Out in, the manufacture of Products,
at the

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Remaining Party’s cost, and the Remaining Party shall use Commercially
Reasonable Efforts to be prepared to expeditiously receive such transition
and/or transfer. In the event that the Product was manufactured by the Opt-Out
Party immediately prior to the Opt-Out, then, upon request by the Remaining
Party, the Opt-Out Party shall continue to provide the Remaining Party with such
materials at a price equal to the Opt-Out Party’s Fully Burdened Manufacturing
Cost for such materials for not longer than [*] after the effective date of such
termination; provided that the Remaining Party shall use Commercially Reasonable
Efforts to obtain an alternative source as soon as practicable. In addition, the
Opt-Out Party shall promptly provide to the Remaining Party a copy of all Data
pertaining to the manufacture of the Product to the extent not previously
provided to the Remaining Party, and the Remaining Party shall have the right to
use (and authorize the use of) and to disclose all such Data following
termination of this Agreement for purposes of manufacturing the Product, subject
to reasonable procedures to maintain the confidentiality thereof.

5.3.7 Transition. The Opt-Out Party shall use Commercially Reasonable Efforts to
cooperate with the Remaining Party and/or its designee to effect, and the
Remaining Party shall use Commercially Reasonable Efforts to effectuate, a
smooth and orderly transition in the development, sale and ongoing marketing,
promotion and Commercialization of the Product in the Territory following the
exercise of an Opt-Out Option.

5.3.8 License of Technology; Transfer of Data and Know-How. Effective as of the
date of delivery of the applicable Opt-Out Notice, to the extent requested by
the Remaining Party, the Remaining Party shall have and is hereby granted by
Opt-Out Party an exclusive, world-wide license, with the right to sublicense,
under any Patent Rights and Know-How Controlled by Opt-Out Party or its
Affiliates which are reasonably necessary in order to continue, or were actually
used to manufacture, Develop and/or Commercialize the Product to Develop, make,
use, import, offer for sale, sell and otherwise Commercialize (or have any of
the foregoing done on its behalf) the Product. In addition, effective as of the
date of delivery of the applicable Opt-Out Notice, the Opt-Out Party shall, if
applicable, assign and hereby assigns to the Remaining Party all Product Marks
then being used in connection with the manufacture, Development or
Commercialization of the Product that are Controlled by the Opt-Out Party or its
Affiliate.

5.3.9 Diligence Requirements Post Opt-Out.

(a) In the event that Array is the Opt-Out Party, Oncothyreon shall, during the
period from the Array Opt-Out Date until the termination pursuant to
Section 4.1.2(e) of the license to Oncothyreon set forth in Section 4.1.2(a),
use Commercially Reasonable Efforts (i) to obtain Marketing Approval for the
Product in the United States and to Commercialize the Product in the United
States after receipt of such Marketing Approval, and (ii) following Marketing
Approval of the Product in the United States, to obtain Marketing Approval for
the Product in the Major EU Countries and to Commercialize the Product in the
Major EU Countries after receipt of such Marketing Approval.

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(b) In the event that Oncothyreon is the Opt-Out Party, Array may at any time
decide in its discretion to discontinue the Development and Commercialization of
the Product in the Territory upon written notice to Oncothyreon, in which case
the Parties shall discuss in good faith the terms under which Oncothyreon may
resume, if at all, such Development and Commercialization.

5.3.10 Other Rights and Obligations.

(a) Opt-Out by Either Party. Upon Opt-Out by either Party,

(i) the Remaining Party will thereafter have the sole right, directly or through
Third Parties, to make, use, import market, sell, offer for sale, and distribute
the Product throughout the Territory; and

(ii) (A) the following provisions shall terminate effective as of the effective
date of such Opt-Out: Article 9; Sections 8.1.1(b), 8.3, 10.3.1 and 18.2.1, and
the first sentence of Section 8.1; and (B) Section 10.3.2 shall survive with
respect to Sublicenses entered into by Array prior to the date that is one
(1) year after the delivery by Oncothyreon of the notice of exercise of its
Opt-Out Option, and shall otherwise terminate.

(b) Opt-Out by Array. Without limiting Section 5.3.10(a) above, if Array is the
Opt-Out Party, the following provisions shall terminate effective as of the
effective date of such Opt-Out: Sections 4.2 and 8.1.1(a); and the second
sentence of Section 8.1.

(c) Opt-Out by Oncothyreon. Without limiting Section 5.3.10(a) above, if
Oncothyreon is the Opt-Out Party, the following provisions shall terminate
effective as of the effective date of such Opt-Out: Sections 4.1.1 and 4.1.2.

(d) For the avoidance of doubt, termination of a provision of this Agreement or
of an obligation of a Party under this Agreement upon (or as a result of)
Opt-Out by either Party as set forth in this Section 5.3 or elsewhere in this
Agreement shall not be construed to waive or release claims for breaches prior
to such termination.

ARTICLE 6

DEVELOPMENT PROGRAM FUNDING

6.1 Development Costs. The Parties shall fund the Development Costs to be
incurred in accordance with the Development Plan and Budget as follows:

6.1.1 POC Development Costs. Oncothyreon shall be responsible for all
Development Costs incurred by or on behalf of either Party with respect to the
POC Activities, in accordance with the Development Plan and Budget (“POC
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6.1.2 Other Development Costs. In addition to the provisions of Section 6.1.1
(i.e., for activities other than the POC Activities), Oncothyreon will be
responsible for [*] of the Development Costs of the Product incurred in
accordance with the Development Plan and Budget, and Array will be responsible
for [*]of such Development Costs; provided that, following Completion of the POC
Activities, Array’s share of such Development Costs will be increased to [*]
(and Oncothyreon’s share will be decreased to [*]) until the aggregate amounts
of the increased Development Costs (i.e., the amounts greater than [*]) so paid
by Array, together with all amounts paid pursuant to Section 6.1.5, if any,
equal one-half of the POC Development Costs that exceed [*] (such one-half of
amounts over [*] referred to herein as the “POC Reimbursement Amount”), it being
understood that if the POC Reimbursement Amount exceeds the increased
Development Costs (i.e., the amounts greater than [*]) paid under this
Section 6.1.2 (together with the amounts paid pursuant to Section 6.1.5), then
such excess amount (“POC Unreimbursed Amount”) shall be paid to Oncothyreon
pursuant to Section 10.2.2. Within twenty-one (21) days following completion of
the POC Activities, Oncothyreon shall provide a written statement of the total
POC Reimbursement Amount (if any) to Array.

6.1.3 Sharing of Development Costs. Development Costs shall initially be borne
by the Party incurring the cost or expense, subject to reimbursement as provided
herein. Each Party shall prepare and deliver to the other Party preliminary
quarterly written reports in a form approved by the JDC setting forth all
Development Costs (i.e., all FTE Costs and all Out-of-Pocket Costs) incurred in
the performance of all Development activities, as set forth in the Development
Plan in the applicable Calendar Quarter by such Party on an activity-by-activity
basis. Such preliminary quarterly reports shall be submitted within twenty-one
(21) days after the end of the relevant Calendar Quarter. Each Party shall then
have the opportunity to inquire to the other Party with respected to any items
included in the preliminary quarterly report so provided and to request
additional information related to Development Costs contained in the other
Party’s preliminary quarterly report. For the avoidance of doubt, each Party
shall provide such reports to the other Party with respect to the applicable POC
Activities and associated POC Development Costs. With respect to any Calendar
Quarter in which Development Costs other than POC Development Costs are incurred
by either Party, the following shall apply: within forty-five (45) days after
the end of the relevant Calendar Quarter, Array will prepare and provide to
Oncothyreon a composite report setting forth the Development Costs incurred by
each Party for such quarterly period, and the amount of Development Costs for
which each Party is responsible in accordance with this Section 6.1. The
composite report will compute a net amount of Development Costs due to either
Array or to Oncothyreon, as the case may be. By way of example, if the aggregate
amount of Development Costs between the Parties, over a given quarterly period
during which Array and Oncothyreon are both responsible for [*]of Development
Costs, is $[*] with Array incurring $[*] of the aggregate Development Costs and
Oncothyreon incurring $600,000 of the aggregate Development Costs, Array would
be responsible for $[*] payable to Oncothyreon [*]. The composite report
described above for calculating reconciling payments of Development Costs may be
combined with other applicable financial reports hereunder (if any), including,
for example, reports calculating US Profit/Loss and detailing applicable
payments therefor between the Parties.

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6.1.4 Special Rules for Development Cost-Sharing if one Party is a Large
Company.

(a) The mechanism for Advanced Amounts with respect to certain Development Costs
as described in this Section 6.1.4 shall only be available in the event that, at
any time during which the Parties are sharing Development Costs under this
Agreement, all of the following circumstances apply:

(i) one Party is a Large Company (the “Larger Party”), and the other Party is
not a Large Company (such Party referred herein to as the “Smaller Party”);

(ii) the Larger Party has proposed an amendment or modification to the
Development Plan and Budget that increased the budgeted Development Costs (as
defined below) for the then-current or any subsequent Calendar Year to more than
[*] of the Baseline Development Costs (as defined below) for such Calendar Year;
and

(iii) the Development Plan and Budget containing such increased Development
Costs that was proposed by the Larger Party has been imposed and given effect
either through the Larger Party’s exercise of its deciding vote (if applicable)
or as a result of arbitration pursuant to Section 18.2.1.

(b) As used herein, “Baseline Development Costs” means the aggregate Development
Costs budgeted for such Calendar Year in the initial Development Plan and Budget
attached hereto, or (B) if higher, in the most recent Development Plan and
Budget agreed to by the Smaller Party or proposed by the Smaller Party and
selected by the arbitrator in accordance to Section 18.2.1.

(c) In the event that all circumstances described in Section 6.1.4(a) above
apply, and subject to Section 6.1.4(e) below, Excess Development Costs (as
defined below) incurred for the applicable Calendar Year shall initially be
borne [*] by the Larger Party, it being understood and agreed that (1) the
balance of the Development Costs will be borne as set forth in Sections
6.1.1-6.1.3, and (2) the Larger Party shall be entitled to recoup that portion
of such Excess Development Costs that would otherwise have been borne by the
Smaller Party pursuant to Sections 6.1.1-6.1.3 (the “Advanced Amounts”) as set
forth in Section 10.7 below; provided, however, that if any such Excess
Development Costs are incurred with respect to a given Calendar Quarter for
which the Larger Party would be obligated to make payments to the Smaller Party
either for royalties pursuant to Section 10.3 or 10.4, or for a share of US
Profits (i.e., US Profit/Loss that is positive for the applicable Calendar
Quarter), then the Larger Party may offset such payments against all or part of
that portion of such Excess Development Costs that would otherwise have been
borne by the Smaller Party pursuant to Sections 6.1.1-6.1.3 (and, for the
avoidance of doubt, any amounts so offset will be excluded from Advanced
Amounts).

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(d) As used herein, “Excess Development Costs” shall mean that portion of the
aggregate Development Costs actually incurred in a given Calendar Year that
exceeds the Baseline Development Costs for the applicable Calendar Year;
provided, however, that if all or part of the Development Costs within the
Baseline Development Costs for a given Calendar Year are delayed or otherwise
incurred in a Calendar Year after the Calendar Year for which such Baseline
Development Costs were budgeted (under the applicable Development Plan and
Budget from which such Baseline Development Costs were determined), such amounts
that were delayed or otherwise incurred in a subsequent Calendar Year shall not
be “Excess Development Costs,” and shall be shared by the Parties as set forth
in Sections 6.1.1-6.1.3.

(e) Neither Party shall be obligated to carry or provide aggregate unrecouped
Advanced Amounts pursuant to this Section 6.1.4 (and, if applicable, pursuant to
Section 10.2.3) totaling more than the Advanced Amount Cap (as defined below),
and if the aggregate unrecouped Advanced Amounts carried or provided by one
Party under this Section 6.1.4 (together with aggregate unrecouped Advanced
Amounts under Section 10.2.3, if applicable) would exceed the Advanced Amounts
Cap in the event that the Larger Party were initially to bear all Excess
Development Costs as set forth in Section 6.1.4(c), the Smaller Party shall bear
its full share of that portion of the Excess Development Amounts that would
cause aggregate unrecouped Advanced Amounts under this Section 6.1.4 (and, if
applicable, under Section 10.2.3) to exceed the Advanced Amounts Cap. As used
herein, the “Advanced Amount Cap” means (1) one US Dollar (1$) less than the
amount that would cause the Party carrying such Advanced Amounts (i.e., the
Party that is entitled to recoup the Advanced Amounts pursuant to Section 10.7)
to be required to consolidate the financials of the other Party with its own
financials in determining and preparing its financial statements (under
applicable accounting principles applied by its outside accountants preparing
its financial statements, or under applicable law, rules or regulations), or
(2) if less, $[*].

(f) For the avoidance of doubt, if one or more of the circumstances described in
Section 6.1.4(a) above do not apply, or cease to apply, then the mechanism for
Advanced Amounts as described in this Section 6.1.4 shall not be available, and
each Party shall be responsible for paying its share of Development Costs in
accordance with the other provisions of this Agreement. The mechanism for
Advanced Amounts as described in this Section 6.1.4 shall only apply with
respect to Excess Development Costs, if any, incurred after the occurrence of
all of the circumstances described in Section 6.1.4(a), and shall not be
available with respect to Development Costs incurred prior to such time or
during periods when not all of the circumstances described in Section 6.1.4(a)
apply.

(g) In the event that the Smaller Party becomes a Large Company at any time when
the mechanism for Advanced Amounts set forth in this Section 6.1.4 is available,
Advanced Amounts shall no longer be available under this Section 6.1.4 with
respect to all Development Costs incurred from and after the date on which the
Smaller Party becomes a Large Company, and each Party shall be responsible for
paying its share of Development Costs in accordance with the other provisions of
this Agreement from and after such date.

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6.1.5 Repayment of POC Reimbursement Amounts. Array shall have no obligation to
repay the POC Reimbursement Amount, or any portion thereof, to Oncothyreon,
except as, and to the extent, set forth in Section 6.1.2 or Section 10.2.2.
Without limiting the foregoing, Array may, in its discretion, repay all or any
portion of the then-outstanding unreimbursed POC Reimbursement Amounts.

6.2 Payment of Development Costs. Payment of any amount due pursuant to
Section 6.1 (other than payments, if any, under Section 6.1.5) shall be made
within forty-five (45) days following delivery by Array of the composite report
for the applicable Calendar Quarter.

ARTICLE 7

DEVELOPMENT DATA; PUBLICATION

7.1 Development Data.

7.1.1 Ownership. Each Party will own Development Data generated by or on behalf
of such Party under this Agreement.

7.1.2 Use. Either party may use internally the Development Data for any purpose,
subject to Section 7.1.3 below.

7.1.3 Disclosure. Each Party may only provide Development Data to Third Parties
as is reasonably necessary or useful to obtain Marketing Approvals for the
Product or as may be necessary in performing its obligations and exercising its
rights under this Agreement, i.e. marketing activities, medical education
activities, professional services activities and public relations activities;
for purposes of obtaining consultation services in the normal course of business
(such as business consultants, advertising agencies, law firms, accounting
firms, etc.) in each case solely to the extent necessary for Development or
Commercialization of the Product (including incorporation into Regulatory
Filings or other submissions to Regulatory Authorities, submission on connection
with pricing approvals, and other interactions with governmental agencies); and
provided that any such disclosure of such Development Data to a non-governmental
Third Party is made under reasonable and customary confidentiality restrictions,
or as may otherwise be agreed by Array and Oncothyreon.

7.2 Regulatory Requirements. In all agreements with Third Parties involving the
generation of Development Data, Oncothyreon and Array, respectively, shall
require that such Third Parties provide the other Party access to all such
Development Data, to the extent that such Development Data is required for
filing with the FDA, the EMA or any other regulatory authority.

7.3 Review of Publications. As soon as is practicable prior to the oral public
disclosure, and prior to the submission to any outside person for publication of
written material (a manuscript, poster or other publication) describing any
scientific Data generated under the Development Program, in each case to the
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been previously disclosed pursuant to this Section 7.3 before such proposed
disclosure, Array or Oncothyreon, as the case may be, shall disclose to the
other Party a copy of the written material, or a written summary of any oral
disclosure, to be made or submitted, and shall allow the other Party at least
thirty (30) days to determine whether such disclosure or written material
contains subject matter for which patent protection should be sought prior to
publication or which either Party believes should be modified to avoid
disclosure of Confidential Information or regulatory or other problems. With
respect to publications by investigators or other Third Parties, such
publications shall be subject to review by the other Party under this
Section 7.3 only to the extent that Array or Oncothyreon (as the case may be)
has the right to do so; provided that each Party shall use reasonable efforts to
secure the right to require and permit such review.

7.3.1 Publication Rights. After the expiration of thirty (30) days from the date
of receipt of such disclosure or written material, unless Array or Oncothyreon
has received the written notice specified below, the authoring Party shall be
free to submit such written material for publication or to orally disclose or
publish the disclosed research results in any manner consistent with academic
standards; provided that, in any publication permitted under this Section 7.3,
each Party shall acknowledge its collaboration with the other Party under this
Agreement unless the other Party requests that such acknowledgement not be made.

7.3.2 Delay of Publication. Prior to the expiration of the thirty (30)
day-period described above, the other Party may notify in writing the submitting
Party of its determination that such oral presentation or written material
contains Confidential Information of such other Party or objectionable material
or material that consists of patentable subject matter for which patent
protection should be sought. The notified Party shall withhold its proposed
public disclosure and confer with the other Party to determine the best course
of action to take in order to modify the disclosure (including removing
Confidential Information of the other Party) or to obtain patent protection.
After resolution of the confidentiality, regulatory or other issues, or the
filing of a patent application or due consideration as to whether a patent
application can reasonably be filed, but in no event more than ninety (90) days
after notification of the submitting Party as provided above, the submitting
Party shall be free to submit the written material and/or make its public oral
disclosure in a manner consistent with academic standards.

ARTICLE 8

COMMERCIALIZATION

8.1 Generally. Subject to Oncothyreon’s right to Co-Promote the Product in the
United States as set forth in Section 8.2.2, Array shall use Commercially
Reasonable Efforts (i) following Marketing Approval of the Product in the United
States, to Commercialize the Product in the United States, and (ii) following
Marketing Approval of the Product in the Major EU Countries, to Commercialize
the Product in the Major EU Countries, in each case in accordance with the terms
of this Agreement. Subject to the terms of this Agreement, Array will solely
control and conduct various activities for the Commercialization of the Product
throughout the Territory, including planning and implementation, distribution,
booking of sales, pricing and reimbursement.

 

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8.1.1 Trademarks.

(a) Except as set forth in this Section 8.1.1 (a) and (b), Array shall have the
right to brand the Products using Array related trademarks and any other
trademarks and trade names it determines appropriate for the Products, which may
vary by country or within a country (such trademarks and trade names as are
specific to the Product, and excluding more general trademarks and corporate
names and logos, referred to herein as “Product Marks”). Product Marks for use
in the United States will be selected in consultation with the Joint
Commercialization Committee; provided that, recognizing that the Product will be
Commercialized on a global basis, the Joint Commercialization Committee will
seek to design trademarks, trade names and other marketing materials in a manner
to allow maximize global Commercialization harmonization. Array shall own all
rights in the Product Marks and register and maintain the Product Marks in the
countries and regions it determines reasonably necessary, and shall own rights
to any Internet domain names incorporating a Product Mark or any variation or
part of a Product Mark as its URL address or any part of such address. All costs
of establishing, maintaining, defending or enforcing rights in and to the
Product Marks or such Internet domain names (the “Product Mark Costs”) in or for
the United States shall be Allowable Expenses and shall be taken into account
when determining US Profit/Loss hereunder as, and to the extent, provided in the
Financial Exhibit.

(b) Array shall, to the extent permitted by applicable law, rules or
regulations, include on all marketing (including advertising) and promotional
materials for Products in the United States the then-current Oncothyreon
corporate logo as designated by Oncothyreon from time to time (the “Oncothyreon
Mark”), which shall in no event be deemed a Product Mark. In all cases the
Oncothyreon Mark shall be legible, conspicuous and have a size of no smaller
than such corporate logos of Array or its Affiliate, as applicable on such
marketing and promotional materials, and shall be consistent with reasonable
written guidelines provided from time to time by Oncothyreon. Accordingly,
Oncothyreon hereby grants to Array a non-exclusive, royalty-free license to use
the Oncothyreon Mark solely in connection with the marketing and promotion of
Products in the United States in accordance with this Section 8.1.1(b).
Notwithstanding anything herein to the contrary, upon Oncothyreon’s written
request (which may be made on a country-by-country basis), Array and its
Affiliates agree to cease (or caused to be ceased) such use of the Oncothyreon
Mark with respect to any specified marketing or promotional materials for
Product in the United States; provided that Array and its Affiliates may
continue to use any marketing and promotional materials in existence as of the
receipt of such notice.

8.2 United States Commercialization. Commercialization activities in the United
States will be conducted pursuant to the applicable Commercialization Plan and
Budget and shall be subject to oversight by the JCC. Subject to the provisions
of this Agreement, and subject to compliance with the Commercialization Plans
and Budgets, Array shall have full control and authority of the day-to-day
commercialization of the Product in the United States and implementation of the
Commercialization Plan in United States.

 

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8.2.1 Commercialization Plans and Budgets.

(a) Initial Commercialization Plan and Budget. At such time as it deems
appropriate, the Joint Commercialization Committee shall establish a plan and
budget (the “Commercialization Plan and Budget”) to govern pre-launch, launch
and post-launch marketing activities in the United States. Each
Commercialization Plan shall be comprehensive and shall set out in reasonable
detail the overall strategies with respect to Commercialization of the Product
in the United States.

(b) Periodic Review. The JCC shall review the Joint Commercialization
Development Plan and Budget on an ongoing basis and shall adjust and make
appropriate changes thereto, including timelines, based on the results and
progress to date.

8.2.2 Co-Promotion. Oncothyreon shall have an option to Co-Promote the Products
in the United States in the Field in accordance with the terms and conditions
set forth in this Section 8.2.2 (the “Co-Promotion Option”), subject to
Section 5.3.4. Oncothyreon may exercise the Co-Promotion Option by providing
written notice to Array (the “Co-Promotion Notice”) no later than six (6) months
prior to the anticipated First Commercial Sale in the United States. In the
event Oncothyreon timely exercises the Co-Promotion Option with respect to the
Product, the provisions set forth below in this Section 8.2.2 shall apply.

(a) Co-Detailing. If Oncothyreon exercises its Co-Promotion Option, Oncothyreon
shall have the right to perform or have performed annually fifty percent
(50%) of the total details in connection with the promotion of the Product in
the United States.

(b) Separate Agreement. If Oncothyreon so exercises its Co-Promotion Option,
Array (or its Affiliates) and Oncothyreon (or its Affiliates) shall enter into
good faith negotiations to conclude a definitive agreement, within sixty
(60) days of Array’s receipt of Oncothyreon’s Co-Promotion Notice, which will
outline in more detail the overall framework for the Co-Promoting activities of
the Parties with respect thereto, including roles and responsibilities of each
Party, consistent with the provisions of this Section 8.2.2 (the “Co-Promotion
Agreement”). Such agreement shall provide that the Parties shall have equal role
in the Co-Promotion of the Product and shall address among other things:
(i) number of sales representatives and medical affairs personnel to be made
available by Oncothyreon to Co-Promote the Product, including assignment of
detailing responsibilities by market segment within the United States (including
number and position of such details) consistent with the Co-Detailing
Percentage; (ii) nature of Co-Promoting activities and call plans;
(iii) development and implementation of training programs and training materials
for sales representatives and medical affairs personnel engaged in Co-Promoting
of the Product; (iv) potential coordination of administrative services and
resources used in Co-Promoting activities; (v) alignment of territories for
conducting Details, including a fair and reasonable allocation of territories
and Prescribers between the Sales Representatives of the respective Parties;
(vi) reporting and auditing of Details, (vii) sharing of market data,
(viii) activities conducted at conventions or similar gatherings, and (ix) joint
sales meetings.

 

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(c) Co-Promotion Plan; Certain Other Obligations. In addition, upon
Oncothyreon’s exercise of the Co-Promotion Option:

(i) The Parties shall cooperate to coordinate the Co-Promoting activities under
this Section 8.2.2, and shall promptly agree upon a sales and marketing plan for
Co-Promoting of the Product in the United States (the “Co-Promotion Plan”),
which shall include reasonably detailed plans and budgets for Co-Promoting the
Product in specific assigned sales territories, with the Parties having an equal
role in the Co-Promotion of the Product. In all events, each Party’s
Co-Promoting activities shall be conducted in accordance with the Co-Promotion
Plan. In the event that the Parties are unable to mutually agree upon the
Co-Promotion Plan, Array shall prepare a Co-Promotion Plan that is consistent
with the terms and conditions of this Agreement, after reasonably considering
suggestions from Oncothyreon, and such Co- Promotion Plan prepared by Array
shall control.

(ii) Each Party shall be obligated to provide the Co-Detailing Percentage of the
aggregate Details provided in the Co-Promotion Plan for promoting the Product in
the United States.

(iii) Each Party shall be responsible for the hiring of its sales personnel
performing Co-Promoting activities for the Product hereunder, provided that such
Party shall remain ultimately responsible for the performance thereof. Each
Party shall be responsible for and bear all start-up costs associated with
recruitment, hiring or relocation of its sales representatives in preparation
for such Party’s conduct of its obligations under the Co-Promotion Plan,
including the costs of any signing bonuses or the like, and such costs shall not
be taken into account as Allowable Expenses in the determination of US
Profit/Loss.

(iv) Each Party shall initially bear all costs and expenses associated with its
(or its contractors’) Sales Representatives’ performance of Co-Promoting
Activities. Such costs and expenses will be taken into account in calculating US
Profit/Loss to be shared by the Parties to the extent they are Selling Costs as
provided in the Financial Exhibit, and shall not otherwise be reimbursed to such
Party or included in determining US Profit/Loss.

(v) As between the Parties, Array shall retain the right and responsibility to
control the training of all sales representatives in connection with the
promotion of Products in the United States, and the development of materials for
such training.

8.2.3 Co-Promoting Coordination. Array will be responsible for coordinating the
Co-Promoting activities under Section 8.2.2 with respect to the Product. Array
will develop the strategies and programs to carry out the Co-Promoting
activities, including the assignment of Details in accordance with the
Co-Promotion Plan and Co-Promotion Agreement, and to carry out other activities
for the promotion of the Product in the United States consistent with this
Agreement.

 

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8.2.4 Sales Representatives.

(a) Qualifications. Each Party shall use all reasonable efforts consistent with
its normal business practices and legal requirements to deploy a professional
and trained sales force to Co-Promote the Product in the United States, and such
Sales Representatives shall meet standards of competence and professionalism as
is common in the pharmaceutical industry. Each Party shall ensure that its Sales
Representatives perform in compliance with all applicable laws, rules and
regulations.

(b) Training; Promotional Materials. Array shall provide to both Parties’ Sales
Representatives such Product-specific training and promotional materials as are
reasonably necessary to effectively promote the Product consistent with the
Commercialization Plan, subject to good faith consultation with Oncothyreon.
Each Party’s Sales Representatives will utilize only the promotional,
advertising, educational and communication materials so provided to them by
Array, and will not utilize any other promotional, advertising, educational or
communication materials or other materials relating to or referring to the
Product. Each Party’s Sales Representatives will conduct only those promotional
and other activities relating to the Product that have been approved in advance
in accordance with the Commercialization Plan. Neither Party’s sales
representatives shall modify, change or alter the promotional, advertising,
educational and communication materials provided by Array in any way whatsoever.
Each Party’s Sales Representatives shall use such materials solely for the
purpose of performing their obligations under this Agreement.

(c) Each Party’s sales personnel (including permitted subcontractors) shall be
trained on Array’s compliance policies at least annually (or as frequently as
Array’s own sales personnel are so trained, if less than annually) and shall
comply with such policies (including providing an annual certification as to
having been trained on such policies). Furthermore, nothing in this Agreement
shall be deemed to require Array to act in a manner not in accordance with its
own internal regulatory compliance guidelines. Array shall have overall
authority to coordinate all Detailing and any other sales and promotional
activities for the Product consistent with the Co-Promotion Agreement and the
Co-Promotion Plan.

(d) Timing. Array and Oncothyreon shall cooperate to have their respective Sales
Representatives hired and trained thirty (30) days prior to the anticipated date
of First Commercial Sale in the United States.

8.2.5 Oncothyreon is not a Distributor. It is recognized by the Parties that
Oncothyreon, in connection with its activities in Co-Promoting the Product, may
receive orders from Third Parties for Products. Oncothyreon shall promptly
transmit said orders to Array, and Array shall book any sales resulting from
such orders. For the avoidance of doubt, Oncothyreon shall not be a distributor
of the Product, unless and until such time (if any) as the Parties expressly
agree otherwise in writing.

 

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8.2.6 Co-Promoting Does Not Affect Certain Responsibilities. Except as expressly
otherwise provided in this Agreement, Array shall have the sole right and
responsibility, and shall bear all costs related thereto (except to the extent
such amounts may properly be included as Allowable Expenses in the determination
of US Profit/Loss in accordance with the Financial Exhibit), to take such
actions with respect to the Product, in accordance with the terms of this
Agreement, as would normally be taken in accord with accepted business practices
and legal requirements to manufacture or arrange for the manufacture of the
Product, obtain and maintain the authorization and/or ability to market and
commercialize the Product in the United States including, without limitation,
the following:

(a) Any activity relating to the manufacture of the Product, including, without
limitation, determination of the content of labeling and the style, design and
type of packaging;

(b) Responding to medical complaints and inquiries relating to the Product;

(c) Handling all returns of the Product;

(d) Communicating and dealing with any governmental agencies and satisfying
their requirements regarding the authorization and/or continued authorization to
market the Product in commercial quantities; provided, however, that Oncothyreon
shall be able to communicate with such agencies regarding the Product if, (i) in
the reasonable opinion of Oncothyreon’s counsel, such communication is necessary
to comply with the requirements of any applicable law, order or governmental
regulation, and (ii) Oncothyreon, if practical, made a request of such agency to
communicate with Array instead, and such agency refused such request; but in any
such event, unless in the reasonable opinion of Oncothyreon’s counsel there is a
legal prohibition against doing so, Array shall be immediately notified of such
agency’s request and or Oncothyreon’s intention to make such communication and
Array shall be permitted to accompany Oncothyreon to any meeting with such
agency, take part in any such communications and receive copies of all such
communications.

8.2.7 Indemnification for Employee Claims. Each Party will indemnify, defend,
and hold harmless the other and its Affiliates, and its and their directors,
employees and agents (collectively, the “Employer Indemnitees”) from and against
any damages, liability, loss and costs that may be paid or payable by any such
Employer Indemnitee resulting from or in connection with any claim or other
cause of action asserted by any Sales Representative employed by the
indemnifying Party (or by any federal, state or local governmental authorities
on behalf of such an employee) arising out of the actions of the indemnifying
Party with respect to disciplining or termination of such employee;
reclassification of such employee, or other actions with respect to such
employee in the execution or performance of Co-Promoting activities contemplated
under this Agreement. The procedures of Section 16.3 shall apply to the
foregoing indemnity.

8.3 Third Party Marketing Partner.

8.3.1 Notwithstanding the provisions of Section 8.2, if Oncothyreon and Array
mutually agree that the Product would best be marketed in the United States with
or through another partner, marketing and/or co-promotion rights may be granted
to such other partner on terms mutually agreed by the partner, Array and
Oncothyreon.

 

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8.3.2 In any case, however, either Oncothyreon or Array shall have the right to
sublicense, or otherwise grant, to a Third Party its entire right (i.e., to a
single Third Party) with respect to the marketing of the Product in the United
States only with the consent of the other Party; provided, however, that if
Array or Oncothyreon (the “Sublicensing Party”) seeks to so sublicense or grant
such rights the following shall apply:

(a) Notice. If the Sublicensing Party decides to sublicense or otherwise grant
to a non-Affiliate Third Party its rights to market, sell or distribute the
Product in the United States, it shall give the Other Party written notice
thereof (such notice a “Sublicense Notice”) and will, for a period of [*] days
following the sending of such Sublicense Notice, negotiate in good faith with
the Other Party the principal terms and conditions (at the level of detail
customary for a term sheet) for an arrangement under which the Sublicensing
Party would grant to the Other Party the rights expected to be so granted with
respect to the Product.

(i) Conditions of Negotiation Right. Subject to the obligation to negotiate in
good faith, it is understood and agreed that neither the Other Party nor the
Sublicensing Party shall be obligated to accept or agree to terms and conditions
of such an arrangement. If the Other Party and the Sublicensing Party do not
enter into an agreement for such an arrangement within the [*] day negotiation
period, the Sublicensing Party shall be free to enter into an alternative
arrangement with one or more Third Parties approved by the Other Party, such
approval not to be unreasonably withheld, without any further obligation to the
Other Party under this Section 8.3; provided, however, in the event the Other
Party does not accept the terms offered by the Sublicensing Party but responds
to the Sublicensing Party with an outline of terms and conditions for an
arrangement on which the Other Party would agree, then the Sublicensing Party
will not grant to a Third Party a right or license to market, sell or distribute
such Product on terms that, when viewed on the whole, are materially less
favorable to the Sublicensing Party than those offered by the Other Party.

(ii) Requirements of Notice. It is understood that, because the Sublicensing
Party may be providing the Sublicense Notice to the Other Party prior to the
commencement of material and substantial negotiations with a Third Party, the
Sublicensing Party may not be able to define the entire or exact scope of the
rights to be granted, and accordingly, so long as the Sublicense Notice
substantially describes the rights granted to the applicable Third Party, then
the Sublicensing Party shall be deemed to have satisfied its obligations under
this Section 8.3. The only obligations of the Other Party and the Sublicensing
Party under this Section 8.3 are as expressly stated therein, and there are no
further implied obligations relating to the matters contemplated therein.
Without limiting the foregoing, it is further understood and agreed that the
Sublicensing Party is not obligated under this Section 8.3 to provide to the
Other Party any particular information, nor is there a restriction on the timing
of such grant of rights.

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(b) Other. It is understood that this Section 8.3 shall not be deemed to apply
to wholesaling arrangements, or other arrangements for the distribution of the
Product, where the Third Party does not have the right to market and promote the
Product; nor shall this Section be deemed to apply to a grant of rights to a
Third Party assignee of this Agreement, where such assignment is permitted under
Section 18.7 below.

ARTICLE 9

MANUFACTURE AND SUPPLY

9.1 Supply of Clinical Requirements.

9.1.1 Except for Existing Quantities of Product (as defined below) and subject
to the terms of this Agreement, Array will be solely responsible for the
manufacture and supply of the Product as is required by both Parties for their
Development activities hereunder, and will use Commercially Reasonable Efforts
to supply to Oncothyreon quantities of the Product as are reasonably necessary
for Oncothyreon to perform the Oncothyreon Development Activities.

9.1.2 Existing Stock. As of the Effective Date, Array has on hand the quantities
of Product specified on Exhibit C (the “Existing Quantities of Product”).

(a) In order to help facilitate Oncothyreon’s initial efforts in the Development
Program, Array agrees to transfer to Oncothyreon a mutually agreed amount of
ARRY 380 from Array’s Existing Quantities of Product, in drug product form,
solely for use in conducting activities under the Development Plan, in the time
frames reasonably requested by Oncothyreon in writing (which shall be within a
reasonable time after the Effective Date and, in no event, later than one
(1) year). Prior to the first shipment of Existing Quantities of Product to
Oncothyreon, Array will provide to Oncothyreon the applicable specifications
used by Array for such Existing Quantities of Product. Oncothyreon may, within
twenty (20) days after receipt of Existing Quantities of Products shipped to
Oncothyreon, reject any such quantities received by Oncothyreon that fail to
meet such specifications, and otherwise shall accept such Existing Quantities of
Products. If Oncothyreon has not rejected any portion of the Existing Quantities
of Product within twenty (20) days after receipt thereof, Oncothyreon shall be
deemed to have accepted such portion of the Existing Quantities of Product.
Within twenty (20) days of acceptance of Product, Oncothyreon shall reimburse
Array [*] of Array’s Fully Burdened Manufacture Cost for such Existing
Quantities of Product. Array shall deliver API to Oncothyreon, or to a
destination designated by Oncothyreon in writing (FCA (Free Carrier), airport of
departure, Incoterms 2000) by transporting the API to the air carrier at the
airport of departure specified by Oncothyreon in writing. The Parties shall
confer prior to any such delivery of the API regarding the container and
shipping details and other related data and information.

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(b) Array shall provide to Oncothyreon the most recent certificate of analysis
and a certificate of compliance for each shipment of Existing Quantities of
Product.

(c) Prior to transfer of any Existing Quantities of Product to Oncothyreon, the
Parties shall in good faith negotiate and enter into a Supply and Quality
Agreement including the terms set forth in this Section 9.1 and other mutually
acceptable terms.

9.1.3 Additional Clinical Quantities. Array will have the right at any time to
enter into agreements with a Third Party manufacturer(s) to supply such
additional quantities of clinical material. Array shall ensure that all such
Third Party manufacturer(s) complies with the applicable Good Manufacturing
Practices and that such facilities are approved by FDA (if such approval is
required by law). The out-of-pocket costs of such additional quantities of
clinical materials will be charged to the Development Program, and shared as
part of the Development Costs. If Array elects to manufacture the Product
internally, the Parties will agree upon a reasonable cost figure to be charged
to the Development Program.

9.2 Commercial Supply. As between the Parties, and except as otherwise specified
in or determined under this Agreement, Array shall have the exclusive right to
manufacture or have manufactured Product (including, for the avoidance of doubt,
for Commercialization in the United States) pursuant to the Commercialization
Plan and otherwise in accordance with this Agreement.

9.3 Third Party Manufacturing Agreements. If Array proposes to enter into one or
more new manufacturing agreements for Product for use in the United States,
including without limitation any agreement with a Back-Up Manufacturer as
contemplated under Section 9.4, or proposes to materially amend, renegotiate or
renew any then-existing Third Party manufacturing agreements for Product for use
in the United States, Array shall so notify Oncothyreon and the JCC prior to
doing so, along with a detailed description of the proposed terms and
circumstances. In addition, if Array proposes to enter into one or more new
agreements for the supply of Product for use in the United States, Array shall
provide to the JCC evidence of bids for such supply received from at least two
(2) other suppliers. To the extent permitted by the potential Third Party
manufacturer, Oncothyreon shall have the right to accompany Array on any and all
audits and inspections of such Third Party’s facilities conducted in the course
of manufacturer selection.

9.4 Back-Up Manufacturer. The Parties shall discuss in good faith from time to
time the desirability of qualifying one or more additional manufacturers of
Product (each a “Back-Up Manufacturer”). Without limiting the foregoing, if the
Parties agree to qualify a Back-Up Manufacturer, or if Oncothyreon requests the
qualification of a Back-Up Manufacturer and Product sales in the United States
are projected to exceed [*] units/Calendar Year within [*] years after such
request, then Array shall exert Commercially Reasonable Efforts to effect the
due qualification of a Back-Up Manufacturer, including without limitation by
performing a Manufacturing Technology Transfer (as defined below) to the Back-Up
Manufacturer as shall be more fully described in the agreement with the Back-Up
Manufacturer.

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9.5 Supply Scarcity. Without limiting the preceding subsections of this Article
9, in the event of supply scarcity, the Parties shall discuss in good faith a
proportional allocation of supply in the Territory (based on market size,
projections, or other reasonable criteria).

ARTICLE 10

FINANCIAL PROVISIONS

10.1 Upfront Payment. In consideration of the licenses and rights granted to
Oncothyreon hereunder, Oncothyreon shall pay to Array a one-time, upfront
payment of ten million USD (US $10,000,000) within twenty (20) days after the
Effective Date.

10.2 Sharing of US Profit/Loss.

10.2.1 General Rule for Sharing. Except as otherwise set forth in Sections 5.3.3
and 6.1.4 above, and except to the limited extent otherwise provided in
Sections 10.2.2 and 10.2.3 below, Array and Oncothyreon shall bear, or be
entitled to, 50% of the US Profit/Loss from Commercializing the Product in the
United States, calculated as set forth in the Financial Exhibit.

10.2.2 POC Reimbursement. Notwithstanding the foregoing, provided that the
Parties are then sharing US Profit/Loss pursuant to this Section 10.2, then for
Calendar Quarters in which there are US Profits (i.e., US Profit/Loss that is
positive for the applicable Calendar Quarter), Oncothyreon’s share of such US
Profits (i.e., Oncothyreon’s share if the US Profit/Loss in a given Calendar
Quarter is positive) will be temporarily increased to [*] (and Array’s share of
such US Profits will be decreased to [*]) until the aggregate amounts of all
such increased share of US Profits (i.e., the amounts of US Profits greater than
[*]) so received by or credited to Oncothyreon, together with all amounts paid
pursuant to Section 6.1.5, if any, equals the POC Reimbursement Amount plus, if
any, the POC Unreimbursed Amount.

10.2.3 Special Rules for Disagreements on Commercialization Budget.

(a) The mechanism for Advanced Amounts with respect to certain US Losses as
described in this Section 10.2.3 shall only be available in the event that, at
any time during which the Parties are sharing US Profit/Loss, all of the
following circumstances apply:

(i) Oncothyreon is not a Large Company;

(ii) Array has proposed an amendment or modification to the Commercialization
Plan and Budget that increased the budgeted Allowable Expenses for the
then-current or any subsequent Calendar Year to more than the Baseline
Commercialization Costs (as defined below) for such Calendar Year;

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(iii) Oncothyreon did not agree to the Commercialization Plan; and Budget
containing such increase in the Allowable Expenses; and

(iv) Array has used its deciding vote pursuant to Section 2.3.4 to impose the
Commercialization Plan and Budget containing such increased Allowable Expenses.

As used herein, “Baseline Commercialization Costs” means the aggregate Allowable
Expenses budgeted for such Calendar Year in excess of [*].

(b) In the event that all circumstances described in Section 10.2.3(a) above
apply, and subject to Section 10.2.3(d) below, then (1) US Losses (if any) of up
to the first [*] for the applicable Calendar Year shall continue to be shared by
the Parties as set forth in Sections 10.2.1, and (2) Array shall initially bear
[*] of any Excess US Losses (as defined below) incurred for the then-current and
any subsequent Calendar Year, it being understood and agreed that Array shall be
entitled to recoup that portion of such Excess US Losses that would otherwise
have been borne by Oncothyreon pursuant to Sections 10.2.1 (the “Advanced
Amounts”) as set forth in Section 10.7 below; provided, however, that if any
such Excess US Losses are incurred with respect to a given Calendar Quarter for
which Array would be obligated to make payments to Oncothyreon for royalties
pursuant to Section 10.3 or 10.4, then Array may offset such payments against
all or part of that portion of such Excess US Losses that would otherwise have
been borne by Oncothyreon pursuant to Section 10.2.1 (and, for the avoidance of
doubt, any amounts so offset will be excluded from Advanced Amounts). This
Section 10.2.3(b) shall not apply with respect to any Calendar Quarter for which
there are US Profits (i.e., US Profit/Loss that is positive for the applicable
Calendar Quarter), and the Parties shall share all Allowable Expenses for any
such Calendar Quarter as part of sharing US Profit/Loss pursuant to
Sections 10.2.1-10.2.2.

(c) As used herein, “Excess US Losses” shall mean that portion of the aggregate
US Losses actually incurred in a given Calendar Year that exceeds [*].

(d) Array shall not be obligated to carry or provide aggregate unrecouped
Advanced Amounts pursuant to this Section 10.2.3 (and, if applicable, pursuant
to Section 6.1.4) totaling more than the Advanced Amount Cap (as defined in
Section 6.1.4), and if the aggregate unrecouped Advanced Amounts carried or
provided by Array under this Section 10.2.3 (together with aggregate unrecouped
Advanced Amounts carried by Array pursuant to Section 6.1.4, if applicable)
would exceed the Advanced Amounts Cap in the event that Array were initially to
bear Excess US Losses as set forth in Section 10.2.3(b), then Oncothyreon shall
bear its full share of that portion of the Excess US Losses that would cause
aggregate unrecouped Advanced Amounts carried by Array under this Section 10.2.3
(and, if applicable, under Section 6.1.4) to exceed the Advanced Amounts Cap.

(e) For the avoidance of doubt, if one or more of the circumstances described in
Section 10.2.3(a) above do not apply, or cease to apply, then the mechanism for
Advanced Amounts as described in this Section 10.2.3 shall not be available, and
each Party shall be

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responsible for paying its share of US Losses in accordance with the other
provisions of this Agreement. The mechanism for Advanced Amounts as described in
this Section 10.2.3 shall only apply with respect to Excess US Losses, if any,
incurred after the occurrence of all of the circumstances described in
Section 10.2.3(a), and shall not be available with respect to Development Costs
incurred prior to such time or during periods when not all of the circumstances
described in Section 10.2.3 apply.

(f) In the event that Oncothyreon becomes a Large Company at any time when the
mechanism for Advanced Amounts set forth in this Section 10.2.3 is available,
Advanced Amounts shall no longer be available under this Section 10.2.3 with
respect to US Losses incurred from and after the date on which Oncothyreon
becomes a Large Company, and each Party shall be responsible for bearing its
share of any US Losses in accordance with the other provisions of this Agreement
from and after such date.

10.2.4 Profit/Loss Sharing for U.S. Only; Sharing of Development Costs. The
Parties acknowledge that the provisions for sharing of US Profit/Loss apply only
with respect to Products Commercialized in the United States. With respect to
Products for Commercialization outside the United States, the applicable royalty
provisions set forth herein apply. The Parties acknowledge that Development
Costs are not included in the calculation of US Profit/Loss, and accordingly
acknowledge that applicable obligations under this Agreement to share
Development Costs are separate from and in addition to a Party’s obligation to
bear, or entitlement to receive, a share of US Profit/Loss pursuant to this
Section 10.2.

10.2.5 Reconciliation. Allowable Expenses shall initially be borne by the Party
incurring the cost or expense, subject to reimbursement and/or reconciliation of
US Profit/Loss as provided herein. With respect to each Calendar Quarter for
which the Parties are sharing US Profits/Losses and in which Allowable Expenses
are incurred by either Party or Net Sales of the Product in the United States
occur, each Party shall prepare and deliver to the other Party preliminary
quarterly written reports in a form approved by the JCC setting forth in
reasonable detail (i) all Allowable Expenses incurred in the performance of all
Commercialization activities in the applicable Calendar Quarter by such Party,
and (ii) Net Sales of Product in the United States. Such preliminary quarterly
reports shall be submitted within [*] days after the end of the relevant
Calendar Quarter. Each Party shall then have the opportunity to inquire to the
other Party with respected to any items included in the preliminary quarterly
report so provided and to request additional information related to Allowable
Expenses contained in the other Party’s preliminary quarterly report. With
respect to any Calendar Quarter in which Allowable Expenses are incurred by
either Party or Net Sales of the Product in the United States occur, the
following shall apply: within [*] days after the end of the relevant Calendar
Quarter, Array will prepare and provide to Oncothyreon a composite report
setting forth the Net Sales or Products in the United States and the Allowable
Expenses incurred by each Party for such quarterly period, and the amount of US
Profit/Loss for which each Party is responsible, or to which each Party is
entitled, in accordance with this Section 10.2. The composite report will
compute a net amount to be paid to either Array or to

 

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Oncothyreon, as the case may be, to reconcile for the applicable US Profits or
US Losses. The composite report described above for calculating reconciling
payments for US Profit/Loss may be combined with other applicable financial
reports hereunder (if any), including, for example, reports described in
Section 6.1.3 for reconciling the sharing of Development Costs and detailing
applicable payments therefor between the Parties.

10.3 ROW.

10.3.1 Commercialization by Array. Subject to the provisions of Section 10.6
below, Array will pay to Oncothyreon a royalty equal to [*]of Net Sales of the
Product by Array and its Affiliates in each country of the Territory outside the
United States. In any country of the Territory outside the United States and the
Major EU Countries, Array shall be entitled to credit [*] of the cost of
additional Development performed for such country against the royalty payable to
Oncothyreon under this Section 10.3.1 for Net Sales made in such country.

10.3.2 Sublicensees. Array and Oncothyreon will share equally the Net Proceeds
received by Array in consideration of the grant of a Sublicense in any country
of the Territory outside the United States. For the avoidance of doubt,
royalties shall not be due pursuant to Section 10.3.1 above with respect to
Products sold outside the United States by or under authority of Array’s
Sublicensees.

10.4 Opt-Out Royalty.

10.4.1 If, pursuant to Article 5, a Party exercises its Opt-Out Option then,
subject to the other provisions of this Section 10.4, (i) the provisions of
Sections 10.3 shall not apply with respect to sales of Products after the
effective date of such opt-out, (ii) except to the extent otherwise provided in
Section 5.3.3, the provisions of Section 10.2 shall not apply with respect to
sales of Products in the United States after the effective date of such opt-out,
and (iii) with respect to sales of Products after the effective date of such
opt-out that are no longer subject to royalties under Section 10.3 or sharing of
US Profit/Loss under Section 10.2, the Remaining Party shall (except to the
extent otherwise provided in Section 17.4.3), in lieu of such payments, pay the
Opt-Out Party the applicable royalty rate for incremental Net Sales of Product
during the Royalty Term by a Party and its Sublicensees as follows:

 

Net Sales in a

Given Calendar Year

  

Royalty Rate

[*]

   [*]

[*]

   [*]

[*]

   [*]

 

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10.4.2 Notwithstanding the foregoing, the royalty rate set forth in
Section 10.4.1 will be temporarily increased to [*] until the Opt-Out Party has
recouped, from the increased royalty, the Development Costs incurred prior to
the exercise of the Opt-Out Option, excluding, in the event Oncothyreon is the
Opt-Out Party, the extent of the POC Reimbursement Amount already paid by Array
prior to Oncothyreon’s exercise of its Opt-out Option.

10.4.3 For purposes of determining the royalty rate(s) pursuant to this
Section 10.4 that is or are applicable hereunder on the Net Sales during the
Royalty Term, all Net Sales of Product in countries during the effective period
of an applicable Royalty Term shall be aggregated on a Calendar Year basis.

10.5 Term For Royalty Payment. Royalties payable under Section 10.3.1 or 10.4
shall be paid on a country-by-country basis with respect to Net Sales made
during the “Royalty Term” for that country, which is defined as the period from
the date of the First Commercial Sale of the Product until the later of:

10.5.1 the expiration of the last to expire Patent Rights within the Array
Technology, the Oncothyreon Technology or Joint Patents claiming the
manufacture, use or sale of the Product in the country where it was sold; or

10.5.2 [*] following the date of the First Commercial Sale of the Product in the
country where the Product was sold.

10.6 Certain Adjustments to Royalty Payments.

10.6.1 Right of Offset; Amount. If the Selling Party believes that it is
reasonably necessary to obtain a license or similar rights to intellectual
property rights of a Third Party or Third Parties for the Selling Party to
research, develop, make, have made, use, offer for sale, sell, have sold, import
or otherwise exploit the Product (“Third Party License(s)”), then the Selling
Party shall have the right to credit [*] of any compensation (including up-front
payments, milestones and royalties) actually paid by the Selling Party or its
designee with respect to the Product under any such Third Party License(s)
against royalties otherwise payable hereunder. Such credit against royalties
payable hereunder shall be allocated as follows: (a) [*] of royalties payable
under a Third Party License with respect the Product shall be creditable against
royalties payable hereunder; and (b) [*] of the portion of any up-front
payments, milestones or other amounts payable under a Third Party License that
is reasonably allocable to the exploitation the Product (as opposed to the
exploitation of non-Products or other use of intellectual property that is the
subject of the applicable Third Party License in a manner unrelated to the
Product) shall be creditable against royalties payable hereunder, provided,
however, that in neither case (i.e., under the previous sub-clauses (a) or (b))
the royalties payable under Section 10.4 shall fall below [*] of the rates set
forth in Section 10.4.1 and/or 10.4.2. It is understood and agreed that this
Section 10.6.1 shall not apply to licenses acquired pursuant to Article 11
below. For the avoidance of doubt, any portion of such amounts that have been
shared by the Parties as Development Costs or, in the event that the Parties are
sharing US Profit/Loss pursuant to Section 10.2 above, that have been included
as applicable Third Party Agreement Payments and used in calculating US
Profit/Loss shared by the Parties, shall not also be offset against royalties
hereunder pursuant to this Section 10.6.1.

 

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10.6.2 Generic Product Reduction. This Section 10.6.2 will apply solely to
royalties payable under Section 10.4. Notwithstanding the foregoing provisions
of Section 10.4 (as applicable), if, in a particular Calendar Year, one or more
Third Parties is or are selling a Generic Product in the Field in a country in
the Territory other than the United States and the sales of all such Generic
Products in the Field in such country represent at least [*] of the total units
of a Product and related Generic Products sold in the Field during the Royalty
Term in such Calendar Year in such country, then in such case the royalty rates
attributable to the Net Sales of such Product in the Field in such country
during the Royalty Term shall thereafter be reduced by [*] of the amount
otherwise payable under Section 10.4, as applicable. For purposes of the
foregoing, “Generic Product” means any Product that is not developed, the
subject of regulatory approval obtained, manufactured, offered for sale, sold or
used, by or under the authority of the Selling Party.

10.7 Recouping Advanced Amounts. In the event that either Party has borne Excess
Development Costs pursuant to Section 6.1.4, or Array has borne Excess US Losses
pursuant to Section 10.2.3, the Party that initially bore the Excess Development
Costs or Excess US Losses that otherwise would have been borne by the other
Party shall be entitled to recoup [*] of all Advanced Amounts resulting
therefrom through adjustments to royalty payments and adjustments to payments
for US Profits as set forth below in this Section 10.7.

(a) Recovery through Recoupment; Prepayment. A Party carrying Advanced Amounts
(i.e., a Party that initially bore Excess Development Costs pursuant to
Section 6.1.4, or Excess US Losses pursuant to Section 10.2.3, that otherwise
would have been borne by the other Party) shall only be entitled to recoup the
resulting Advanced Amounts as set forth in this Section 10.7, and the other
Party shall not be obligated to repay Advanced Amounts except through
adjustments to royalty payments and adjustments to payments for US Profits as
set forth below in this Section 10.7.

(b) Adjustments to Sharing of US Profits. With respect to periods during which
the Parties are sharing US Profits/Losses pursuant to Section 10.2, then:

(i) if Oncothyreon is the Party entitled to recoup Advanced Amounts, then for
Calendar Quarters in which there are US Profits (i.e., US Profit/Loss that is
positive for the applicable Calendar Quarter), Oncothyreon’s share of such US
Profits (i.e., Oncothyreon’s share if the US Profit/Loss in a given Calendar
Quarter is positive) will be temporarily increased to [*] (and Array’s share of
such US Profits will be decreased to [*]) until Oncothyreon has recouped [*] of
all Advanced Amounts carried by Oncothyreon, in aggregate, though such increased
share of US Profits (i.e., the amounts of US Profits greater than [*]) so
received by or credited to Oncothyreon, together with all other adjustments
received by or credited to Oncothyreon pursuant to Sections 10.7(c) or
(d) below;

 

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(ii) if Array is the Party entitled to recoup Advanced Amounts, then for
Calendar Quarters in which there are US Profits (i.e., US Profit/Loss that is
positive for the applicable Calendar Quarter), Oncothyreon’s share of such US
Profits (i.e., Oncothyreon’s share if the US Profit/Loss in a given Calendar
Quarter is positive) will be temporarily decreased to [*](and Array’s share of
such US Profits will be increased to [*]) until Array has recouped [*] of all
Advanced Amounts carried by Array, in aggregate, though such increased share of
US Profits (i.e., the amounts of US Profits greater than [*]) so received by or
credited to Array together with all other adjustments received by or credited to
Array pursuant to Section 10.7(c) or (d) below;

(iii) for the avoidance of doubt, during any Calendar Quarter with respect to
which there are US Losses, no adjustment will be made pursuant to this
Section 10.7(b) for recoupment of Advanced Amounts, and each Party shall bear
the US Losses for such Calendar Quarter as set forth in Section 10.2.1; and

(iv) notwithstanding the foregoing, no adjustments will be made to the sharing
of US Profits under this Section 10.7(b) with respect to any Calendar Quarter
for which adjustments are made to the sharing of US Profits pursuant to
Section 10.2.2 to reimburse Oncothyreon for applicable POC Reimbursement Costs
and POC Unreimbursed Amounts, if any.

(c) Adjustments to Section 10.3 Royalties and Net Proceeds. In the event that
Array is obligated to pay royalties or a share of Net Proceeds to Oncothyreon
pursuant to Section 10.3, then:

(i) if Oncothyreon is the Party entitled to recoup Advanced Amounts, (A) the
royalties due to Oncothyreon under Section 10.3.1 will be temporarily increased
by [*]of Net Sales (i.e., to [*] of Net Sales), and (B) Oncothyreon’s share of
Net Proceeds pursuant to section 10.3.2 will be temporarily increased to [*]
(and Array’s share of such Net Proceeds will be decreased to [*]), in each case
until Oncothyreon has recouped [*] of all Advanced Amounts carried by
Oncothyreon, in aggregate, though such increased royalties or increased share of
Net Proceeds, together with all other adjustments received by or credited to
Oncothyreon pursuant to Section 10.7(b) or (d); and

(ii) if Array is the Party entitled to recoup Advanced Amounts, (A) royalties
due to Oncothyreon under Section 10.3.1 will be temporarily decreased by [*] of
Net Sales (i.e., to [*] of Net Sales), and (B) Oncothyreon’s share of Net
Proceeds pursuant to section 10.3.2 will be temporarily decreased to [*] (and
Array’s share of such Net Proceeds will be increased to [*]), in each case until
Array has recouped [*] of all Advanced Amounts carried by Array, in aggregate,
though such decreased royalties, together with all other adjustments received by
or credited to Array pursuant to Sections 10.7(b).

 

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(d) Adjustments to Section 10.4 Royalties. In the event that either Party is
obligated to pay royalties to the other Party pursuant to Section 10.4, no
adjustment to the royalties due pursuant to Section 10.4 will be made under this
Section 10.7(d) to recoup Advanced Amounts until such time as the Opt-Out Party
has recouped applicable Development Costs that it is entitled to recoup pursuant
to Section 10.4.2 through the royalty adjustment set forth therein, and
thereafter:

(i) if the Party entitled to receive royalties pursuant to Section 10.4 is the
Party entitled to recoup Advanced Amounts, the royalties due to under
Section 10.4 will be temporarily increased to [*] of Net Sales until the Party
receiving such royalties has recouped [*] of all Advanced Amounts that were
carried by such Party, in aggregate, though such increased royalties, together
with all other adjustments received by or credited to such Party pursuant to
Section 10.7(b) or (c); and

(ii) if the Party obligated to pay royalties pursuant to Section 10.4 is the
Party entitled to recoup Advanced Amounts, the royalties due to under
Section 10.4 will be temporarily decreased by [*] of Net Sales (i.e., the
royalty rates specified in the table in Section 10.4.1 shall be reduced from
[*], to [*], respectively) until the Party paying such royalties has recouped
[*] of all Advanced Amounts that were carried by such Party, in aggregate,
though such decreased royalties, together with all other adjustments received by
or credited to such Party pursuant to Section 10.7(b) or (c).

(e) Reduction as Recouped; Adjustments Temporary; Voluntary Payment. The
adjustments set forth in Sections 10.7(b), (c) and (d) above shall each be
applied (in each case to the extent provided therein) until such time, if any,
as the Party carrying Advanced Amounts has recouped, in aggregate through all
such adjustments in its favor, [*] of all outstanding Advanced Amounts. When and
as Advanced Amounts are recouped through any adjustments set forth in
Sections 10.7(b), (c) or (d) in favor of the Party that carried such Advanced
Amounts, the amounts of outstanding Advanced Amounts shall be reduced (including
for purposes of determining whether additional Advanced Amounts may be available
pursuant to Section 6.1.4 or Section 10.2.3 without exceeding the Advanced
Amounts Cap) at a rate of [*] of Advanced Amounts for every [*] so recouped
through adjustments pursuant to Sections 10.7(b), (c) or (d) in favor of the
Party carrying such Advanced Amounts. For the avoidance of doubt, at such time
as [*] of all Advanced Amounts have been so recouped through the adjustments set
forth in Sections 10.7(b), (c) or (d) and no outstanding Advanced Amounts
remain, the adjustments set forth in Sections 10.7(b), (c) or (d) shall cease
(unless and until such time, if any, as a Party carries additional Advanced
Amounts pursuant to Section 6.1.4 or 10.2.3). In the event that one Party is
carrying any outstanding Advanced Amounts (i.e., such Party initially bore
Excess Development Costs pursuant to Section 6.1.4, or Excess US Losses pursuant
to Section 10.2.3, that otherwise would have been borne by the other Party, and
such amounts have not yet been recouped at a rate of [*] as set forth herein)
the other Party may in its discretion elect to pay all or any portion of such
outstanding Advanced Amounts carried by the other Party at a rate of [*], and
the amount of outstanding Advanced Amounts shall be accordingly reduced at a
rate of [*]of Advanced Amounts for every [*] so repaid.

 

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ARTICLE 11

CERTAIN PAYMENTS TO THIRD PARTIES

If at any time during which the Parties are co-Developing and/or Co-Promoting
Product under this Agreement, the Parties agree to utilize, in connection with
the Development of Product in accordance with the Development Program,
manufacture of Product for the U.S. market, and/or Commercialization of Product
in the U.S. market, then the terms of any such in-license shall be mutually
agreed by the Parties. Any payments due under the applicable in-license
(including royalties, milestone payments and/or license fees) (i) shall be
Development Costs shared by the Parties, to the extent they are attributable and
allocable to the Product in connection with Development activities undertaken by
the Parties in accordance with this Agreement, and (ii) with respect to periods
during which the Parties are sharing US Profit/Loss pursuant to Section 10.2,
shall be included as Allowable Expenses in determining US Profit/Loss in
accordance the Financial Exhibit, to the extent they are attributable and
allocable to the Commercialization of the Product in the United States (“Third
Party Agreement Payments”). If a Party exercises its Opt-Out Notice or is deemed
to have exercised the Opt-Out Notice, any payments arising under any such
in-license attributable and allocable to the Product in connection with
activities undertaken by the Remaining Party under this Agreement shall be made
by the Remaining Party; such payments shall be creditable against royalties in
accordance with Section 10.6(i).

ARTICLE 12

PAYMENTS; BOOKS AND RECORDS

12.1 Foreign Exchange; Manner and Place of Payment. All dollar amounts in this
Agreement are stated in, and all payments under this Agreement shall be made in,
United States Dollars. With respect to amounts invoiced or incurred in a
currency other than United States Dollars, the amounts shall be expressed in the
currency in which such sale was originally made, or in which such cost was
incurred, together with the United States Dollar equivalent using a rate of
exchange as published in The Wall Street Journal (U.S. Eastern Edition) on last
day of the quarter in which such sale was made or cost incurred. Payment of all
sums due hereunder shall be made by check, wire transfer, or electronic funds
transfer (EFT), at the payor’s choice, using account information provided by the
payee, which the payee may update in writing from time to time.

12.2 Taxes. In the event that applicable law requires the either Party to
withhold taxes with respect to any payment to be made by such Party to the other
Party pursuant to this Agreement, the Party making the payment (the “Payor”)
shall withhold such taxes from the amount due and furnish the other Party (the
“Payee”) with proof of payment of such taxes within thirty (30) days of such
payment, and except to the extent such withholding is required under applicable
law, all payments from one Party to the other Party under this Agreement shall
be made without deduction or withholding of taxes. Any such tax required to be
withheld will be an expense of and borne by Payee. The Payor shall provide
reasonable assistance to the Payee in Payee’s efforts to claim an exemption from
withholding of such taxes, obtain a refund of any such taxes withheld, or obtain
a credit with respect to such taxes withheld. In order for the Payee to secure
an exemption from, or a reduction in, any withholding of taxes, the Payee shall
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reasonably required for each type of payment to be made pursuant to the
Agreement for which an exemption from, or a reduction in, any withholding of
taxes is sought, and in the event that a required form previously furnished by
the Payee expires, is incorrect, or is inapplicable to the type of payment to be
made, due to a change in circumstances or otherwise, the Parties acknowledge
that Payee may need to furnish new forms to the Payor in order to secure an
exemption from, or a reduction in, any withholding of taxes with respect to such
payment. All payments due pursuant to this Agreement shall be paid exclusive of
any applicable value-added tax (“VAT”) (which, if applicable, shall be payable
by the Payor upon receipt of a valid VAT invoice). If the Payee is required to
report any such tax, the Payor shall promptly provide the Payee with applicable
receipts and other documentation necessary or appropriate for such report. In
the event that the governing tax authority retroactively determines that a
payment made by the Payor pursuant to this Agreement should have been subject to
withholding (or to additional withholding) for taxes, and the Payor remits such
withholding tax to the tax authority, the Payor will have the right to offset
such amount (but not interest and penalties that may be imposed thereon) against
future payment obligations of the Payor under this Agreement; provided, however,
that if no further payments or insufficient further payments are available
against which offset may be pursued, the Payor may pursue reimbursement by any
remedy (at law or in equity) available to it.

12.3 Royalty Payments and Reports. Royalty payments under this Agreement with
respect to Net Sales of Product in a given calendar quarter shall be made to the
non-Selling Party or its designee quarterly within [*] days following the
applicable calendar quarter. Each royalty payment shall be accompanied by a
report detailing, on a country-by-country basis for all Net Sales of Product by
or under authority of the Selling Party during the relevant three (3) month
period: (i) units of Product sold, (ii) gross sales of the Product,
(iii) calculation of the Net Sales (and deductions utilized in determining Net
Sales), and (iv) all other calculations made in determining the applicable
royalties payable on such Net Sales. With respect to periods during which the
Parties are sharing Development Costs or US Profit/Loss with respect to the
applicable Calendar Quarter, (a) Array may combine such royalty report with one
or more of the composite reports to be provided pursuant to Section 6.1.3 or
10.2.5, and (b) royalties that are due with respect to a given Calendar Quarter
may be combined with (or offset against) payments that may be due under this
Agreement with respect to sharing of Development Costs or sharing of US
Profit/Loss to provide a single payment from one Party to the other to reconcile
such amounts.

12.4 Books and Records; Accounting and Audits. Each Party shall maintain
complete and accurate books and records, in accordance with GAAP, which are
relevant to, as applicable, costs or expenses to be reimbursed by the other
Party, or payments to made to the other Party, under this Agreement, which books
and records shall be sufficient in detail to verify all payment amounts due to a
Party hereunder. Each Party (the “Auditing Party”) shall have the right, at its
own expense and not more than once in any Calendar Year during the Term of this
Agreement, to have an independent, certified public accountant, selected by the
Auditing Party, and under an obligation of confidence, audit the books and
records of the other Party (the “Audited Party”) in the location(s) where such
books and records are maintained upon reasonable notice (which shall be no less
than

 

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fifteen (15) business days prior written notice) and during regular business
hours, and for the sole purpose of verifying the basis and accuracy of payments
required and made under this Agreement. The report and communication of such
accountant with respect to such an audit shall be limited to a certificate
stating whether any, as applicable, report made or reimbursement or other
payment submitted during such period is accurate or inaccurate and, if a
discrepancy is identified, shall also indicate the amount and if applicable,
with respect to any report, the nature, of any discrepancy, and the correct
information (with respect to the applicable period). Such accountant shall
provide Array and Oncothyreon with a copy of each such report simultaneously.
Should the audit lead to the discovery of a discrepancy: (i) to the Auditing
Party’s detriment, the Audited Party shall pay to the Auditing Party the amount
of the discrepancy within thirty (30) days of the Audited Party’s receipt of the
report; or (ii) to the Audited Party’s detriment, the Audited Party may, as
applicable, credit the amount of the discrepancy against future payments payable
to the Auditing Party under this Agreement, and if there are no such payments
payable, then the Auditing Party shall pay to the Audited Party the amount of
the discrepancy within thirty (30) days of the Auditing Party’s receipt of the
report. Additionally, in the event that the discrepancy is to the Auditing
Party’s detriment and is greater than ten percent (10%) of the amount due for
such audited period, then the Audited Party shall pay or reimburse the
reasonable cost charged by such accountant for such audit. Once the Auditing
Party has conducted an audit permitted by this Section 12.4 in respect of any
period, it may not re-inspect the Audited Party’s books and records in respect
of such period, unless a subsequent audit of a separate reporting period
uncovers fraud on the part of the Audited Party that is reasonably expected to
have been occurring during the prior audited period. For clarity, however, if a
discrepancy is identified by the accountant during the course of an audit and
the Parties do not agree upon a resolution of such discrepancy, then the
Auditing Party’s accountant may re-inspect the books and records to the extent
reasonably relevant to resolving such discrepancy. Notwithstanding anything
herein to the contrary, upon the expiration of three (3) years following the end
of any Calendar Year, the right to audit, the books and records for such
Calendar Year shall expire and such Party shall be released from any liability
or accountability with respect to payments or FTE work performed as reflected in
such books of such Party for such Calendar Year (including, for clarity, with
respect to the calculation of royalties payable with respect to each such
Calendar Year). The Parties shall no longer be required to retain such books and
records for any Calendar Year after the expiration of the third (3rd) Calendar
Year following such Calendar Year.

12.5 Blocked Currency. If at any time legal restrictions in the Territory
prevent the prompt remittance of any payments with respect to sales therein, the
Selling Party shall have the right and option to make such payments by
depositing the amount thereof in local currency to the non-Selling Party account
in a bank or depository in the Territory.

12.6 Confidentiality. Each Party shall treat all financial information of the
other Party (and its Affiliates and Sublicensees) that is subject to review
under this Article 12 of this Agreement (including all royalty reports) as such
other Party’s Confidential Information.

12.7 Cooperation for Financial Reporting. The Parties acknowledge that certain
financial information required to be provided hereunder by one Party (including
information to be reported by a Party pursuant to Sections 6.1.3, 10.2.5 and
12.3) may include or relate to financial information

 

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that the other Party may be required to report or take into account in
connection with preparing such other Party’s publicly reported financial
statements, and recognize that the financial reporting of both Parties may be
facilitated by the use of actual numbers, rather than estimated numbers, in
connection therewith. Accordingly, from time to time upon request of either
Party during the Term of this Agreement, the Parties will discuss the
possibility of providing such financial information hereunder more quickly than
is required under this Agreement for the purpose of assisting either Party, or
both Parties, in using actual results rather than estimated results in
connection with preparing their financial statements required to be reported
publicly, and will reasonably cooperate to facilitate reporting of financial
information hereunder in such event, to the extent reasonable and practicable
under the circumstances.

ARTICLE 13

INTELLECTUAL PROPERTY; EXCLUSIVITY

13.1 Ownership. All inventions arising from the Parties’ activities under this
Agreement, including any patent applications and patents covering such
inventions, shall be owned as follows:

13.1.1 All inventions and other Know-How arising from the Parties’ activities
under this Agreement, including any patent applications and patents covering
such inventions and other Know-How, made solely by employees or consultants of a
Party shall be owned by such Party.

13.1.2 All such inventions and other Know-How made or developed jointly by
employees or consultants of both Parties shall be owned jointly by the Parties.
Determination of inventorship shall be made in accordance with US patent laws
and any Patent Rights with a named inventor that is an employee or consultant of
each Party will be jointly owned.

13.1.3 Each Party may use, or license to any Third Party, any jointly owned
Know-How and Patent Rights for any other purpose not inconsistent with the
license grants (and any applicable covenants) in Sections 4.1 and 4.2 or such
Party’s obligations under Section 4.5 without accounting to or obtaining the
approval of the other Party.

13.2 Patent Prosecution.

13.2.1 Joint Patents. The Prosecution and Maintenance of jointly Joint Patents
shall be only as mutually agreed by Oncothyreon and Array, and the costs
associated with the Prosecution and Maintenance of such Joint Patents shall be
shared equally between the Parties. In such connection, the Parties agree to
cooperate and to prepare and prosecute Joint Patents directed to such claims in
a manner that ensures reasonable scope of protection for such subject matter.

13.2.2 Solely Owned Patents. Oncothyreon or Array, as the case may be, shall
control the Prosecution and Maintenance of Patent Rights within the Oncothyreon
Patents and the Array Patents, respectively, in each case at its own cost and
using counsel of its choice and in such countries as such Party determines is
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13.2.3 Other Matters Pertaining to Prosecution of Patents.

(a) Each Party shall promptly disclose to the other any inventions made in
connection with this Agreement. Each Party (“Prosecuting Party”) shall keep the
other (“Non-Prosecuting Party”) informed as to material developments with
respect to the Prosecution and Maintenance of Patent Rights within such Party’s
Patents, including without limitation, by providing the Non-Prosecuting Party
with copies of any material correspondence with the applicable patent office,
including applications, office actions, and notice of all interferences,
reissues, re-examinations, oppositions or requests for patent term extensions.
The Non-Prosecuting Party may provide comments and suggestions as to any
material actions to be taken by the Prosecuting Party, and the Prosecuting Party
shall take such comments into good faith consideration. In addition the
Prosecuting Party shall provide the Non-Prosecuting Party the opportunity to
have reasonable input into the strategic aspects of such Prosecution and
Maintenance.

(b) The Prosecuting Party will notify the other Party in the event it desires to
abandon its efforts to Prosecute Patent Rights that fall within the Prosecuting
Party’s responsibility hereunder, which notification will be given within a
reasonable period (i.e., with sufficient time for such other Party to take
whatever action may be necessary) prior to the date on which such Patent Rights
will lapse, go abandoned (other than to file a continuation application for the
same subject matter) or otherwise diminish. Such non-abandoning Party will then
have the right, exercisable upon written notification to such abandoning Party,
to assume full responsibility, at its discretion and its sole cost and expense,
to Prosecute and Maintain such Patent Rights in such country or countries.
Should the non-abandoning Party exercise such right, the abandoning Party shall
execute such documents and perform such acts as may be reasonably necessary for
the non-abandoning Party to Prosecute and Maintain such Patent Rights.

(c) The other Party shall reasonably cooperate with and assist the Prosecuting
Party, at the Prosecuting Party’s request and expense, in connection with the
Prosecution and Maintenance of Patent Rights under this Section 13.2, including
without limitation by making scientists and scientific records reasonably
available to the Prosecuting Party.

(d) “Prosecution and Maintenance” or “Prosecute and Maintain” with regard to a
Patent Right shall mean the preparing, filing, prosecuting and maintenance of
such Patent, as well as re-examinations, reissues, requests for patent term
extensions and the like with respect to such Patent, together with the conduct
of interferences, the defense of oppositions and other similar proceedings with
respect to the particular Patent.

13.3 Patent Infringement.

13.3.1 Defense and Settlement of Third Party Claims. Subject to the
indemnification obligations of each Party under Article 16 of this Agreement,
each Party shall have the right, but not the obligation, at its own cost and
expense, to defend against Third Party claims brought against it; provided that,
if a Third Party asserts against Array or against Array and Oncothyreon that a
Patent Right or other right owned by it is infringed by the manufacture, use,
marketing, sale or importation of any Product, Array shall have the first right,
but not the obligation, to defend against such assertions at its cost and
expense (so long as Array has the right to sell such Product hereunder), subject
to the indemnification obligations of each Party under Article 16 of this
Agreement.

 

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13.3.2 Infringement by Third Parties.

(a) Each Party will notify the other of any infringement by a Third Party of any
of the Array Patents, the Oncothyreon Patents or Joint Patents through the
development or commercialization of any Competing Product or any Product in the
Territory of which such Party becomes aware, including any “patent
certification” filed in the United States under 21 U.S.C. §355(b)(2) or
21 U.S.C. §355(j)(2) or similar provisions in other jurisdictions and of any
declaratory judgment, opposition, or similar action alleging the invalidity,
unenforceability or non-infringement of any of the Array Patents or Joint
Patents (collectively “Competing Product Infringement”).

(b) Competing Product Infringement.

(i) Subject to subsection (ii) below, Array will have the first right to bring
and control any legal action to enforce the Array Patents, the Oncothyreon
Patents or the Joint Patents in connection with a Competing Product Infringement
at its own expense as it reasonably determines appropriate, and Oncothyreon
shall have the right, at its own expense, to be represented in any such action
by counsel of its own choice. Additionally, Array agrees to keep Oncothyreon
fully apprised with respect to such enforcement action. In the event Array
elects not to initiate an action to enforce the Array Patents, the Oncothyreon
Patents or the Joint Patents in connection with a Competing Product Infringement
within ninety (90) days of a request by Oncothyreon to do so, (or within such
shorter period which may be required to preserve the Parties’ legal rights under
the laws of the relevant government), Oncothyreon may initiate such action at
its expense, and Array shall have the right, at its own expense, to be
represented in any such action by counsel of its own choice. Oncothyreon agrees
to keep Array apprised with respect to such enforcement action.

(ii) In the event Array exercises its Opt-Out Option, following such exercise,
Oncothyreon will have the first right to bring and control any legal action to
enforce the Array Patents, the Oncothyreon Patents or the Joint Patents in
connection with a Competing Product Infringement at its own expense as it
reasonably determines appropriate, and Array shall have the right, at its own
expense, to be represented in any such action by counsel of its own choice.
Additionally, Oncothyreon agrees to keep Array fully apprised with respect to
such enforcement action. In the event Oncothyreon elects not to initiate an
action to enforce the Array Patents, the Oncothyreon Patents or the Joint
Patents in connection with a Competing Product Infringement within ninety
(90) days of a request by Array to do so, (or within such shorter period which
may be required to preserve the Parties’ legal rights under the laws of the
relevant government), Array may initiate such action at its expense, and
Oncothyreon shall have the right, at its own expense, to be represented in any
such action by counsel of its own choice. Array agrees to keep Oncothyreon
apprised with respect to such enforcement action.

 

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(iii) At the request of the Party enforcing the Array Patents, the Oncothyreon
Patents or the Joint Patents (the “Enforcing Party”), the other Party (the
“Non-Enforcing Party”) shall provide reasonable assistance in connection with
such enforcement action, including by executing reasonably appropriate
documents, cooperating in discovery and filing the action or joining as a party
to the action if required.

(iv) In connection with any such proceeding, the Enforcing Party shall not enter
into any settlement admitting the invalidity of, or otherwise impairing the
Non-Enforcing Party’s rights in, the Array Patents, the Oncothyreon Patents or
the Joint Patents without the prior written consent of the Non-Enforcing Party,
which will not be unreasonably withheld or delayed.

(v) Any recoveries resulting from such an action relating to a claim of
Competing Product Infringement of the Array Patents, the Oncothyreon Patents or
the Joint Patents shall be first applied against repayment of each Party’s
actual out-of-pocket costs and expenses, or proportionate percentages thereof,
in connection therewith. Any remainder will be shared as follows: Oncothyreon
shall be paid an amount equal to (i) with respect to Competing Product
Infringement in the United States, [*] of the remainder, (ii) with respect to
Competing Product Infringement countries of the Territory where Array has
granted a Sublicense, [*] of the amounts received by Array from such remainder,
and (iii) with respect to all other Competing Product Infringement, the
royalties that would have been due upon sales of the infringing product as if
such infringing sales had been Net Sales of a Product sold by Array, and, in
each case the remaining portion of such recovery shall be paid to Array;
provided, however, that if Oncothyreon has exercised its Opt-Out Right, the
remainder shall be paid in accordance with subsection (iii) above.

13.4 Patent Term Extensions. The Parties will reasonably discuss for which
Patents related to a Product to pursue patent term extension. Oncothyreon (or
Array if the Parties decide to extend a Patent within the Oncothyreon Patents)
will provide reasonable assistance to Array (or Oncothyreon, if the Parties
decide to extend a Patent within the Oncothyreon Patents) in connection with
obtaining supplemental protection certificates for Patents within the Licensed
Technology. To the extent reasonably and legally required to obtain any such
supplemental protection certificates in a particular country, Oncothyreon (or
Array if the Parties decide to extend a Patent within the Oncothyreon Patents)
will make available to Array (or Oncothyreon, if the Parties decide to extend a
Patent within the Oncothyreon Patents) copies of all necessary documentation to
enable Array to use the same for the purpose of obtaining the supplemental
protection certificates in such country. The selection of Patent(s) for which to
pursue patent term extension shall be made: (i) by mutual agreement in the
United States, and (ii) by Array in countries of the Territory outside the
United States; provided, however, that if a Party has exercised its Opt-Out
Option, then the Remaining Party shall have the right to select Patent(s) for
which to pursue patent term extension throughout the Territory. Notwithstanding
the foregoing, in no event shall a Party in exercising such selection authority
have the right, without the other Party’s written consent, to select for
pursuing extension a Patent of the other Party that claims a compound for which
such other Party has commenced clinical development.

 

* Confidential Treatment Requested

 

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13.5 Termination for Challenge. Each Party shall have the right to terminate
this Agreement in its entirety by written notice if the other Party challenges
the validity, scope or enforceability of or otherwise opposes, the Joint Patents
or any Patent Rights licensed to such other Party under the Agreement; and any
such termination by the terminating Party shall become effective ninety (90)
days after the date of such notice of termination from the terminating Party,
unless the other Party has withdrawn such challenge to or opposition of, such
patents. Termination of this Agreement under this Section 13.5 shall be deemed a
termination pursuant to Section 17.2 below.

13.6 Patent Marking. Each Party agrees to mark and have its Sublicensees mark
all patented Products they sell or distribute pursuant to this Agreement in
accordance with the applicable patent statutes or regulations in the country or
countries of manufacture and sale thereof.

ARTICLE 14

REPRESENTATIONS AND WARRANTIES

14.1 General Warranties.

14.1.1 Array Warranties. Array warrants and represents to Oncothyreon that:

(a) as of the Effective Date, it is the lawful and sole owner of the Array
Technology and has the full right and authority to enter into this Agreement and
grant the rights and licenses granted herein, and, without limiting the
foregoing, no Array Technology is subject to any Third-Party in-license
agreement;

(b) it has not previously granted and will not grant any rights in conflict with
the rights and licenses granted herein, other than those specified in Exhibit D;

(c) as of the date of the Agreement Array has not received from a Third Party
notice that the manufacture, sale or use of the Product would infringe any
intellectual property rights of such Third Party and to its knowledge and
belief, no action, suit or claim has been initiated or threatened against Array
with respect to the Array Technology or Array’s right to enter into and perform
its obligations under this Agreement;

(d) it has not previously granted, and will not grant during the term of this
Agreement, any right, license or interest in or to the Array Technology, or any
portion thereof, to manufacture, sell or use the Product that is in conflict
with the rights or licenses granted under this Agreement;

(e) as of the Effective Date, it is not aware of any prior act or any fact which
causes it to conclude that any Array Patent is invalid or unenforceable;

(f) (i) Array has obtained all right, title and interest in and to the Array
Technology and (ii) the Array Technology is free and clear of any liens,
encumbrances or rights to repurchase, and is subject only to obligations of
Array under the agreements specified in Exhibit D;

 

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(g) during the term hereof, Array will not grant a lien or other encumbrances on
any of the subject matter of this Agreement or on any of Array’s rights,
benefits, or obligations hereunder or on the Array Technology, which would
conflict with the rights of Oncothyreon hereunder;

(h) it has provided to Oncothyreon all material Development Data and other
information in its possession or of which Array is aware as of the Effective
Date, concerning efficacy, side effects, injury, toxicity, or sensitivity,
reaction and incidents or severity thereof, associated with any preclinical use,
clinical use, studies, investigations, or tests with the Product (humans or
animals). Such disclosure includes information contained in publicly available
filings with the U.S. Securities and Exchange Commission;

(i) it has conducted or has caused its contractors or consultants to conduct,
and will in the future conduct, the preclinical and clinical studies of the
Product and those activities which it is responsible for under the Development
Program, in accordance with applicable United States law, known or published
standards of the FDA and with respect to future conduct, standards of the EMA
specifically agreed upon by the Joint Development Committee, as applicable, and
the scientific standards applicable to the conduct of such studies and
activities in the United States;

(j) it has employed and will in the future employ individuals of appropriate
education, knowledge, and experience to conduct or oversee the conduct of
Array’s clinical and preclinical studies of the Product, the Array Development
Activities and ROW Development;

(k) it has not employed (and, to the best of its knowledge, has not used a
contractor or consultant that has employed) and in the future will not employ
(or, to the best of its knowledge, use any contractor or consultant that
employs) any individual or entity debarred by the FDA (or subject to a similar
sanction of EMA), or, to the best knowledge of Array, any individual who or
entity which is the subject of an FDA debarment investigation or proceeding (or
similar proceeding of EMA), in the conduct of the preclinical or clinical
studies of the Product, the Array Development Activities and ROW Development;
and

(l) in the course of Developing the Product, it has not conducted, and during
the course of this Agreement it will not conduct, any Development activities in
violation of applicable Good Clinical Practices, Good Laboratory Practices or
Good Manufacturing Practices.

14.1.2 Oncothyreon Warranties. Oncothyreon warrants and represents to Array
that:

(a) As of the Effective Date it is the lawful and sole owner of the Oncothyreon
Technology and has the full right and authority to enter into this Agreement and
grant the rights and licenses granted herein and, without limiting the
foregoing, no Oncothyreon Technology is subject to any Third-Party in-license
agreement;

 

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(b) it has not previously granted and will not grant any rights in conflict with
the rights and licenses granted herein;

(c) to the best of its knowledge as of the Effective Date, Oncothyreon is not
engaged in contract negotiations with respect to in-licensing or acquiring any
Competing Product;

(d) it has not previously granted, and will not grant during the term of this
Agreement, any right, license or interest in or to the Oncothyreon Technology,
or any portion thereof, to manufacture, sell or use the Product that is in
conflict with the rights or licenses granted under this Agreement;

(e) as of the Effective Date, it is not aware of any prior act or any fact which
causes it to conclude that any Oncothyreon Patent is invalid or unenforceable;

(f)  (i) Oncothyreon has obtained all right, title and interest in and to the
Oncothyreon Technology, and (ii) the Oncothyreon Technology is free and clear of
any liens, encumbrances or rights to repurchase, and is subject only to
obligations of Oncothyreon under the agreements specified in Exhibit E;

(g) during the term hereof, Oncothyreon will not grant a lien or other
encumbrances on any of the subject matter of this Agreement or on any of
Oncothyreon’s rights, benefits, or obligations hereunder or on the Array
Technology, which would conflict with the rights of Array hereunder;

(h) it has conducted or has caused its contractors or consultants to conduct,
and will in the future conduct, the preclinical and clinical studies of the
Product and those activities which it is responsible for under the Development
Program, in accordance with applicable United States law, known or published
standards of the FDA and with respect to future conduct, standards of the EMA
specifically agreed upon by the Joint Development Committee, as applicable, and
the scientific standards applicable to the conduct of such studies and
activities in the United States;

(i) it will employ individuals of appropriate education, knowledge, and
experience to conduct or oversee the conduct of the Oncothyreon Development
Activities;

(j) it does not employ and in the future will not employ (or, to the best of its
knowledge, use any contractor or consultant that employs) any individual or
entity debarred by the FDA (or subject to a similar sanction of EMA), or, to the
best knowledge of Oncothyreon, any individual who or entity which is the subject
of an FDA debarment investigation or proceeding (or similar proceeding of EMA),
in the conduct of the Oncothyreon Development Activities; and

(k) it will not conduct, any Development activities in violation of applicable
Good Clinical Practices, Good Laboratory Practices or Good Manufacturing
Practices.

 

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14.1.3 Mutual Warranty. Each Party warrants and represents to the other that the
Agreement is a legal and valid obligation binding upon such Party and
enforceable in accordance with its terms. The execution, delivery and
performance of the Agreement by such Party does not conflict with any agreement,
instrument or understanding, oral or written, to which it is a Party or by which
it is bound, nor to such Party’s knowledge, violate any law or regulation of any
court, governmental body or administrative or other agency having jurisdiction
over it.

14.2 EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY
MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTIES OF ANY KIND EITHER EXPRESS OR
IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, NONINFRINGEMENT, OR VALIDITY OF ANY PATENTS ISSUED OR
PENDING.

ARTICLE 15

CONFIDENTIALITY

15.1 Confidential Information. Except as expressly provided herein, the Parties
agree that the receiving Party shall not publish or otherwise disclose and shall
not use for any purpose any information furnished to it by the other Party
hereto pursuant to this Agreement which if disclosed in tangible form is marked
“Confidential” or with other similar designation to indicate its confidential or
proprietary nature or if disclosed orally is indicated orally to be confidential
or proprietary by the Party disclosing such information at the time of such
disclosure and is confirmed in writing as confidential or proprietary by the
disclosing Party within a reasonable time after such disclosure (collectively,
“Confidential Information”). Notwithstanding the foregoing, Confidential
Information shall not include information that, in each case as demonstrated by
written documentation:

15.1.1 was already known to the receiving Party, other than under an obligation
of confidentiality, at the time of disclosure or, as shown by
written documentation, was developed by the receiving Party outside the
Development Program and independent of disclosure by the disclosing Party;

15.1.2 was generally available to the public or otherwise part of the public
domain at the time of its disclosure to the receiving Party;

15.1.3 became generally available to the public or otherwise part of the public
domain after its disclosure and other than through any act or omission of the
receiving Party in breach of this Agreement; or

15.1.4 was subsequently lawfully disclosed to the receiving Party by a person
other than a Party or developed by the receiving Party without reference to any
information or materials disclosed by the disclosing Party.

 

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15.2 Permitted Disclosures. Notwithstanding the provisions of Section 15.1
above, each Party hereto may disclose the other Party’s Confidential Information
to the extent such disclosure is reasonably necessary to exercise the rights
granted to it, or reserved by it (including without limitation in the case of
Oncothyreon use Array Know-How to support marketing and sales activities, public
relations activities, professional services activities, and medical education
activities for the Product in North America), under this Agreement (including
the right to grant sublicenses, as applicable), prosecuting or defending
litigation, complying with applicable governmental regulations, submitting
information to tax or other governmental authorities, or conducting clinical
trials hereunder with respect to the Product, provided that if a Party is
required to make any such disclosure of the other Party’s Confidential
Information, to the extent it may legally do so, it will give reasonable advance
notice to the latter Party of such disclosure and, save to the extent
inappropriate in the case of patent applications or otherwise, will use its
reasonable efforts to secure confidential treatment of such information prior to
its disclosure (whether through protective orders or otherwise). If the Party
whose Confidential Information is to be disclosed has not filed a patent
application with respect to such Confidential Information, it may require the
other Party to delay the proposed disclosure (to the extent the disclosing Party
may legally do so), for up to ninety (90) days, to allow for the filing of such
an application. This Article 15 shall not limit either Party’s right under
Article 7 to use and disclose Data.

15.3 Terms of Agreement. Subject to Section 18.11, neither Party may disclose
the terms of this Agreement without the prior written consent of the other
Party; provided, however, that either Party may make such a disclosure (a) to
the extent required by law or by the requirements of any nationally recognized
securities exchange, quotation system or over-the-counter market on which such
Party has its securities listed or traded, or (b) to its legal and financial
advisors, and to any actual or prospective acquirers, investors, collaborators
and lenders (as well as and to their respective legal and financial advisors)
who are obligated to keep such information confidential. If such disclosure is
required under sub-clause (a), the disclosing Party shall make reasonable
efforts to provide the other Party with notice beforehand and to coordinate with
the other Party with respect to the wording and timing of any such disclosure.

ARTICLE 16

INDEMNIFICATION

16.1 Indemnification by Oncothyreon. Oncothyreon shall indemnify and hold Array,
and their respective officers, directors and employees (“Array Indemnitees”)
harmless from and against any Claims against them to the extent arising or
resulting from:

16.1.1 the negligence or willful misconduct of Oncothyreon or any of
Sublicensees or subcontractors;

16.1.2 the breach of any of the covenants, warranties or representations made by
Oncothyreon to Array under this Agreement; or

16.1.3 any manufacture, use or sale of the Product, or any other activities, in
each case conducted by or under authority of Oncothyreon or any of its
Sublicensees in the exercise of any rights licensed to Oncothyreon pursuant to
Section 4.1.2;

 

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provided, however, that Oncothyreon shall not be obliged to so indemnify, defend
and hold harmless the Array Indemnitees for any Claims under Sections 16.2.1 or
16.2.2 below.

16.2 Indemnification by Array. Array shall indemnify and hold Oncothyreon, and
their respective officers, directors and employees (“Oncothyreon Indemnitees”)
harmless from and against any Claims against them to the extent arising or
resulting from:

16.2.1 the negligence or willful misconduct of Array or any of its Sublicensees
or subcontractors; or

16.2.2 the breach of any of the covenants, warranties or representations made by
Array to Oncothyreon under this Agreement;

provided, however, that Array shall not be obliged to so indemnify, defend and
hold harmless the Oncothyreon Indemnitees for any Claims under Sections 16.1.1
or 16.2.2 above.

16.3 Indemnification Procedure.

16.3.1 For the avoidance of doubt, all indemnification claims in respect of an
Oncothyreon Indemnitee or Array Indemnitee shall be made solely by Oncothyreon
or Array, respectively.

16.3.2 A Party seeking indemnification hereunder (“Indemnified Party”) shall
notify the other Party (“Indemnifying Party”) in writing reasonably promptly
after the assertion against the Indemnified Party of any Claim or fact in
respect of which the Indemnified Party intends to base a claim for
indemnification hereunder (“Indemnification Claim Notice”), but the failure or
delay to so notify the Indemnifying Party shall not relieve the Indemnifying
Party of any obligation or liability that it may have to the Indemnified Party,
except to the extent that the Indemnifying Party demonstrates that its ability
to defend or resolve such Claim is adversely affected thereby. The
Indemnification Claim Notice shall contain a description of the claim and the
nature and amount of the Claim (to the extent that the nature and amount of such
Claim is known at such time). Upon the request of the Indemnifying Party, the
Indemnified Party shall furnish promptly to the Indemnifying Party copies of all
correspondence, communications and official documents (including court
documents) received or sent in respect of such Claim.

16.3.3 Subject to the provisions of Sections 16.3.4 and 16.3.5, the Indemnifying
Party shall have the right, upon written notice given to the Indemnified Party
within thirty (30) days after receipt of the Indemnification Claim Notice to
assume the defense and handling of such Claim, at the Indemnifying Party’s sole
expense, in which case the provisions of Section 16.3.4 below shall govern. The
assumption of the defense of a Claim by the Indemnifying Party shall not be
construed as acknowledgement that the Indemnifying Party is liable to indemnify
any indemnitee in respect of the Claim, nor shall it constitute a waiver by the
Indemnifying Party of any defenses it may assert against any Indemnified Party’s
claim for indemnification. In the event that it is ultimately decided that the
Indemnifying Party is not obligated to indemnify or hold an Indemnitee harmless
from and against the Claim, the Indemnified Party shall reimburse the
Indemnifying Party for any and all costs

 

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and expenses (including attorneys’ fees and costs of suit) and any losses
incurred by the Indemnifying Party in its defense of the Claim. If the
Indemnifying Party does not give written notice to the Indemnified Party, within
thirty (30) days after receipt of the Indemnification Claim Notice, of the
Indemnifying Party’s election to assume the defense and handling of such Claim,
the provisions of Section 16.3.5 below shall govern.

16.3.4 Upon assumption of the defense of a Claim by the Indemnifying Party:
(i) the Indemnifying Party shall have the right to and shall assume sole control
and responsibility for dealing with the Claim; (ii) the Indemnifying Party may,
at its own cost, appoint as counsel in connection with conducting the defense
and handling of such Claim any law firm or counsel reasonably selected by the
Indemnifying Party; (iii) the Indemnifying Party shall keep the Indemnified
Party informed of the status of such Claim; and (iv) the Indemnifying Party
shall have the right to settle the Claim on any terms the Indemnifying Party
chooses; provided, however, that it shall not, without the prior written consent
of the Indemnified Party, agree to a settlement of any Claim which could lead to
liability or create any financial or other obligation on the part of the
Indemnified Party for which the Indemnified Party is not entitled to
indemnification hereunder or which admits any wrongdoing or responsibility for
the claim on behalf of the Indemnified Party. The Indemnified Party shall
cooperate with the Indemnifying Party and shall be entitled to participate in,
but not control, the defense of such Claim with its own counsel and at its own
expense. In particular, the Indemnified Party shall furnish such records,
information and testimony, provide witnesses and attend such conferences,
discovery proceedings, hearings, trials and appeals as may be reasonably
requested in connection therewith. Such cooperation shall include access during
normal business hours by the Indemnifying Party to, and reasonable retention by
the Indemnified Party of, records and information that are reasonably relevant
to such Claim, and making the Indemnified Party, the indemnitees and its and
their employees and agents available on a mutually convenient basis to provide
additional information and explanation of any records or information provided.

16.3.5 If the Indemnifying Party does not give written notice to the Indemnified
Party as set forth in Section 16.3.3 above or fails to conduct the defense and
handling of any Claim in good faith after having assumed such, the Indemnified
Party may, at the Indemnifying Party’s expense, select counsel reasonably
acceptable to the Indemnifying Party in connection with conducting the defense
and handling of such Claim and defend or handle such Claim in such manner as it
may deem appropriate. In such event, the Indemnified Party shall keep the
Indemnifying Party timely apprised of the status of such Claim and shall not
settle such Claim without the prior written consent of the Indemnifying Party,
which consent shall not be unreasonably withheld. If the Indemnified Party
defends or handles such Claim, the Indemnifying Party shall cooperate with the
Indemnified Party, at the Indemnified Party’s request but at no expense to the
Indemnified Party, and shall be entitled to participate in the defense and
handling of such Claim with its own counsel and at its own expense.

 

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16.4 Third Party Claims Arising from Development. Except with respect to that
portion (if any) of Out-of-Pocket Costs as are attributable and allocable to
Claims that are entitled to indemnification under Section 16.1 or 16.2, or
Claims that are attributable and allocable to the breach of this Agreement by
one Party or its Affiliates, (i) in the event that either Party or its
respective officers, directors and employees are subject to a Claim arising or
resulting from the Development of the Product under the Development Program
(anywhere in the world) and such Claim is not otherwise subject to
indemnification by one of the Parties under Section 16.1 or 16.2 above, then the
Out-of-Pocket Costs incurred with respect to such Claim shall be deemed
Development Costs, and (ii) in the event that either Party or its respective
officers, directors and employees are subject to a Claim arising or resulting
from the Commercialization of the Product in or for the United States (but not
to the extent attributable to the Development of the Product) and such Claim is
not otherwise subject to indemnification by one of the Parties under
Section 16.1 or 16.2 above, then the Out-of-Pocket Costs incurred with respect
to such Claim (the “Shared Product Liability Costs”) shall be taken into account
in determining US Profit/Loss as, and to the extent, provided in the Financial
Exhibit.

16.5 Special, Indirect and Other Losses. NEITHER PARTY NOR ANY OF ITS AFFILIATES
SHALL BE LIABLE IN CONTRACT, TORT, NEGLIGENCE, BREACH OF STATUTORY DUTY OR
OTHERWISE FOR ANY SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL
DAMAGES OR FOR LOSS OF PROFITS SUFFERED BY THE OTHER PARTY, EXCEPT (A) FOR
BREACH OF THE CONFIDENTIALITY OBLIGATIONS UNDER ARTICLE 15, OR (B) TO THE EXTENT
ANY SUCH DAMAGES ARE REQUIRED TO BE PAID TO A THIRD PARTY AS PART OF A CLAIM FOR
WHICH A PARTY PROVIDES INDEMNIFICATION UNDER THIS ARTICLE 16.

16.6 No Exclusion. Neither Party excludes any liability for death or personal
injury caused by its negligence or that of its employees, agents or
subcontractors.

ARTICLE 17

TERM AND TERMINATION

17.1 Term. This Agreement shall become effective as of the Effective Date and,
unless earlier terminated pursuant to the other provisions of this Article 17,
shall expire as follows:

17.1.1 United States. For so long as the Parties are sharing US Profit/Losses
pursuant to Section 10.2 or Section 5.3.3, this Agreement shall remain in effect
(unless earlier terminated pursuant to the other provisions of this Article 17)
for so long as Array Commercializes the Product in the United States in
accordance with Article 8. In the event that the Parties cease sharing US
Profit/Losses pursuant to Section 10.2 or Section 5.3.3, or if at any time Array
no longer Commercializes the Product in the United States in accordance with
Article 8, this Agreement shall expire with respect to the United States at the
end of the Royalty Term in the United States, pursuant to Section 10.4 (it being
understood, however, that certain provisions of this Agreement shall survive
with respect to the United States, as expressly set forth in Section 17.6
below).

17.1.2 Other Countries. With respect to countries in the Territory other than
the United States, this Agreement shall expire on a country-by-country basis
upon expiration of the respective Royalty Term in such country (it being
understood, however, that certain provisions of this Agreement shall survive
with respect to such country, as expressly set forth in Section 17.6 below).

 

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17.1.3 Entire Agreement. This Agreement shall expire in its entirety upon the
expiration of this Agreement with respect to the Product in all countries in the
Territory (it being understood, however, that certain provisions of this
Agreement shall survive, as expressly set forth in Section 17.6 below).

17.2 Termination for Cause.

17.2.1 Breach. Either Party to this Agreement may terminate this Agreement in
the event the other Party shall have materially breached or defaulted in the
performance of any of its material obligations hereunder, and such default shall
have continued for ninety (90) days after written notice thereof was provided to
the breaching Party by the non-breaching Party; provided, however, that, where
the Party alleged to be in breach or default disputes in good faith that the
claimed breach or default exists and such claimed breach or default is not
solely for failure to make any undisputed payment due hereunder, such 90-day
cure period will not start to run until such dispute either (i) has been
resolved by agreement of the Parties or pursuant to Section 18.2 or (ii) can no
longer be maintained in good faith. Any termination shall become effective at
the end of such ninety (90) day cure period unless the breaching Party (or any
other Party on its behalf) has cured any such breach or default prior to the
expiration of the ninety (90) day period. Notwithstanding the foregoing, in the
event of a non-monetary breach or default, if the default is not reasonably
capable of being cured within the ninety (90) day cure period by the breaching
Party and such breaching Party is making a good faith effort to cure such breach
or default, the notifying Party may not terminate this Agreement, provided,
however, that the notifying Party may terminate this Agreement if such breach or
default is not cured within one hundred eighty (180) days of the start of the
90-day cure period, as described above. The right of either Party to terminate
this Agreement as herein above provided shall not be affected in any way by its
waiver of, or failure to take action with respect to, any previous default.

17.2.2 Termination for Insolvency. Either Array or Oncothyreon may terminate
this Agreement without notice if an Insolvency Event occurs in relation to the
other Party. In any event when a Party first becomes aware of the likely
occurrence of any Insolvency Event in regard to that Party, it shall promptly so
notify the other Party in sufficient time to give the other Party sufficient
notice to protect its interests under this Agreement.

17.2.3 Other. Each Party agrees (to the extent it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim to
take the benefit or advantage of, any stay or extension law or any other law
wherever enacted, now or at any time hereafter in force, which would prohibit
the termination of this Agreement or in any way modify the effects thereof as
provided herein; and each Party (to the extent it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the other Party, but will suffer and permit the execution of every power as
though no such law had been enacted.

 

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17.3 Termination on Notice.

17.3.1 Failure to Initiate Committed Trial Within [*] of Effective Date. In the
event Oncothyreon does not initiate any of the clinical trials within the POC
Activities (each a “Committed Trial”) within the Ramp-Up Period, as defined
below, then Array may, in its discretion, terminate this Agreement, upon [*]
days written notice to Oncothyreon and the remainder of this Section 17 shall
apply; provided that such termination shall be ineffective if Oncothyreon both
(i) initiates a clinical trial within the POC Activities on or before the date
[*] days after such notice from Array (or on or before such later date as the
Parties may mutually agree in writing); and (ii) certifies such initiation of a
clinical trial within the POC Activities in writing to Array prior to the
expiration of such [*] day period (or on or before such later date as the
Parties may have mutually agreed in writing). The “Ramp-Up Period” means the [*]
period beginning on the Effective Date, provided, however, that the running of
such [*] shall be tolled (i.e., and the Ramp-Up Period thereby extended) either
(A) to reflect and compensate for any failure or delay by Array in its
compliance with all its obligations under this Agreement affecting the POC
Activities and/or any inaction or delay in response by a Regulatory Authority
that could not have been avoided through reasonable efforts and/or (B) to the
extent extended under Section 17.3.3.

17.3.2 Notification of Missed Timeline. In the event Oncothyreon does not
initiate and complete (i.e., conduct through to Completion) any of the Committed
Trials within the timeframe set forth for such Committed Trial as set forth in
the applicable Development Plan, Oncothyreon shall notify Array, and on request
of Array the Parties will discuss the matter, the reasons therefor, and its
potential effects on timing of the overall Development Program.

17.3.3 Extensions and Notices. The Development Plan and Budget shall be extended
to reflect and compensate for any failure or delay by Array in its compliance
with its obligations under this Agreement affecting the POC Activities and/or
any inaction or delay in response by a Regulatory Authority that could not have
been avoided through reasonable efforts. In the event that Oncothyreon believes
that, despite using its Commercially Reasonable Efforts, it will not be able to
either (i) initiate a Committed Trial within the Ramp-Up Period or (ii) complete
the POC Activities as a whole within the applicable timeframe set forth in the
applicable Development Plan and Budget, it may request that Array consider a
potential extension of the timeframe to initiate the Committed Trials or
complete the POC Activities, as applicable. It is understood and agreed,
however, that Array may refuse to agree to any such extension for initiation of
the Committed Trials or Completion of the POC Activities, if Oncothyreon has
failed to use at all times active and Commercially Reasonable Efforts, or if
Array believes in good faith and on reasonable objective grounds that initiation
of the Committed Trials or Completion of the POC Activities would nonetheless
have been achievable within the applicable timeframe, notwithstanding any
reasons claimed to be beyond Oncothyreon’s control.

 

* Confidential Treatment Requested

 

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17.3.4 In the event that Array believes that Oncothyreon is not using its
Commercially Reasonable Efforts to complete the POC Activities or any of the
Committed Trials, or that its current plans will result in such a failure in the
near future, Array shall so notify Oncothyreon, along with a statement of the
steps Array believes would be required in order that Oncothyreon would continue
to use, or return to using, Oncothyreon’s Commercially Reasonable Efforts in the
matter involved.

17.3.5 Termination Upon Notice from Array. If Oncothyreon does not complete the
POC Activities within the timeframe set forth in the applicable Development
Plan, taking into account any extensions thereof either agreed to in writing by
Array or otherwise made pursuant to Section 17.3.3, then Array may, in its
discretion, terminate this Agreement, upon [*] days written notice to
Oncothyreon, provided that such termination shall be ineffective if Oncothyreon
both (i) conducts the applicable clinical trials through to Completion on or
before the date [*] days after such notice from Array (or on or before such
later date as the Parties may mutually agree in writing or otherwise determined
as described in such 17.3.3) and (ii) certifies such Completion in writing to
Array prior to the expiration of such [*] day period (or on or before such later
date).

17.4 Effect of Certain Terminations.

17.4.1 Accrued Obligations. Termination of this Agreement for any reason shall
not release any Party hereto from any liability which, at the time of such
termination, has already accrued to the other Party or which is attributable to
a period prior to 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.

17.4.2 Early Termination by either Party pursuant to Section 17.2. Subject to
Section 17.4.3 below, upon termination of this Agreement by either Party
pursuant to Section 17.2 (but not by Array pursuant to Section 17.3), the
non-terminating Party shall be deemed to have exercised its Opt-Out Option,
effective as of the effective date of such termination, and the various effects
and consequences of such Party’s Opt-Out as set forth in Section 5.3 and
elsewhere in this Agreement shall apply; provided, however, that notwithstanding
the foregoing or Section 4.5.4, the obligations of the non-terminating Party
under Section 4.5 shall survive for the balance of what would have been the
Term, had this Agreement not been so terminated.

17.4.3 Early Termination by Array pursuant to Section 17.3. Upon termination of
this Agreement by Array pursuant to Section 17.3 or pursuant to Section 17.2
prior to Completion of the POC Activities, Oncothyreon shall be deemed to have
exercised its Opt-Out Option, and Sections 10.2 through 10.8 shall terminate.

17.5 Termination Press Releases. In the event of termination of this Agreement
for any reason, the Parties shall cooperate in good faith to coordinate public
disclosure of such termination and the reasons therefor. To the extent
reasonably possible under the situation, the terminating Party shall provide the
non-terminating Party with a draft of any such public disclosure it intends to
issue at least five (5) Business Days in advance. The non terminating Party may
provide comments on such draft, in which case the Parties shall work in good
faith to agree on the text of any such proposed disclosure in an expeditious
manner, and subject to compliance with applicable laws, rules and regulations.

 

* Confidential Treatment Requested

 

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17.6 Survival. Articles 1, 12, 15, 16, 17, and 18, and Sections 4.3, 4.4, 7.1.1,
7.1.2, 7.1.3 (but only as to a Party’s obligations with respect to Development
Data that is owned by the other Party), 8.2.7, 13.1 and 14.2 of this Agreement
shall survive expiration or termination of this Agreement for any reason. In the
event of any termination of this Agreement which, pursuant to Section 17.4.2, is
deemed to be an exercise of the Opt-Out Option by one Party, the provisions of
Section 5.3 shall apply (including those provisions within Section 5.3 that
provide for certain provisions of this Agreement to terminate), and except as
otherwise provided in Section 5.3, the terms of this Agreement shall survive.
With respect to any other termination of this Agreement, or any expiration of
this Agreement, all rights and obligations of the Parties under this Agreement
shall terminate upon such expiration or termination, except to the extent
otherwise provided in this Article 17.No expiration or any termination of this
Agreement shall release a Party from the obligations to make any payments that
were due or had accrued as to the effective date of such termination.

ARTICLE 18

MISCELLANEOUS

18.1 Governing Law. This Agreement and any dispute arising from the performance
or breach hereof shall be governed by and construed and enforced in accordance
with, the laws of the State of New York, U.S.A., without reference to conflicts
of laws principles. The U.N. Convention on the Sale of Goods shall not apply to
this Agreement.

18.2 Particular Disputes.

18.2.1 Binding Arbitration in Certain Specified Matters. This Section 18.2.1
shall only apply to the matters expressly identified in this Agreement as
subject to resolution pursuant to this Section 18.2.1. Such matters shall be
referred to binding arbitration by one (1) arbitrator. In such arbitration, the
arbitrator shall be an independent expert (including in the area of the dispute)
in the pharmaceutical or biotechnology industry mutually acceptable to the
Parties. The Parties shall use their best efforts to mutually agree upon one
(1) arbitrator; provided, however, that if the Parties have not done so within
ten (10) days after initiation of arbitration hereunder, or such longer period
of time as the Parties have agreed to in writing, then such arbitrator shall be
an independent expert as described in the preceding sentence selected by the San
Francisco office of the American Arbitration Association. Such arbitration shall
be limited to casting the deciding vote (i.e., a single vote) with respect to
all matters subject to this Section 18.2.1 then in dispute, and in connection
therewith, each Party shall submit to the arbitrator in writing its position on
and desired resolution of each such matter. Such submission shall be made within
ten (10) days of the selection or appointment of the arbitrator, and the
arbitrator shall rule on all such matters and cast the deciding vote (i.e., a
single vote) within ten (10) days of receipt of the written submissions by both
Parties. Except as provided in the preceding sentence, such arbitration shall be
conducted in accordance with the then-current Commercial Arbitration Rules of
the American Arbitration Association. The arbitrator’s vote shall be final and
binding upon the Parties.

 

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18.2.2 Other Matters. In disputed matters other than those covered by
Section 18.2.1 above, the matter may be referred at the election of either Party
to the Senior Officers who shall attempt in good faith to resolve such
disagreement. If the Senior Officers cannot resolve such issue within thirty
(30) days of the matter being referred to them, then either Party may initiate
legal proceedings to resolve the matter.

18.2.3 Costs and Timing. The costs of any arbitration conducted pursuant to this
Section 18.2 shall be borne equally by the Parties. The Parties shall use
diligent efforts to cause the completion of any such arbitration within sixty
(60) days following a request by any Party for such arbitration.

18.3 Force Majeure. Nonperformance of any Party shall be excused to the extent
that performance is rendered impossible by strike, fire, earthquake, flood,
governmental acts or orders or restrictions, failure of suppliers, or any other
reason where failure to perform is beyond the reasonable control of the
nonperforming Party.

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

18.5 Independent Contractors. Nothing contained in this Agreement is intended
implicitly, or is to be construed, to constitute Array or Oncothyreon as
partners in the legal sense. No Party hereto shall have any express or implied
right or authority to assume or create any obligations on behalf of or in the
name of any other Party or to bind any other Party to any contract, agreement or
undertaking with any Third Party. This agreement does not create a partnership
for USA federal income tax purposes (as defined in Section 761 of the USA
Internal Revenue Code), for any USA state or local jurisdiction, or in any
country other than the USA. Therefore there is no requirement to file Form 1065,
USA Partnership Return of Income, any similar USA state or local income tax
return, or any similar document with tax authorities in any country other than
the USA.

18.6 Subcontractors. Except as otherwise set forth in this Agreement, each Party
may engage subcontractors to perform, under its direction, specific functions
that are assigned to it hereunder or that it carries out in the exercise of its
rights hereunder, in each case in accordance with this Section 18.6. Each Party
shall be fully responsible under this Agreement for the performance hereof by
its permitted subcontractors as if such Party so performed this Agreement
itself.

 

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18.7 Notices. All notices, requests and other communications hereunder shall be
in writing and shall be personally delivered or sent by registered or certified
mail, return receipt requested, postage prepaid, in each case to the respective
address specified below, or such other address as may be specified in writing to
the other Parties hereto:

 

Oncothyreon:   

Oncothyreon Inc.

2601 Fourth Ave

Suite 500

Seattle WA 98121

Attn: Robert Kirkman, MD, CEO

Fax: (206) 801-2101

With a copy to:   

Fenwick and West, LLP

1191 Second Avenue

10th Floor

Seattle, WA 98101

Attn: Effie Toshav

Fax: (206) 389-4511

Array:   

Array BioPharma Inc.

3200 Walnut Street.

Boulder, CO 80301

Attn: Chief Operating Officer

Fax: (303) 381-6697

with a copy to:   

Array BioPharma Inc.

3200 Walnut Street

Boulder, CO 80301

Attn: General Counsel

Fax: (303) 386-1290

18.8 Assignment. This Agreement shall not be assignable by either Party to any
Third Party hereto without the written consent of the other Party hereto; either
Party may assign this Agreement without the other Party’s consent to an entity
that acquires, directly or indirectly, control of such Acquired Party.

18.9 Modification. No amendment or modification of any provision of this
Agreement, or of the definition of POC Activities, shall be effective unless in
writing signed by all Parties hereto. The Development Plan and Budget may only
be amended or modified as permitted under this Agreement. No provision of this
Agreement shall be varied, contradicted or explained by any oral agreement,
course of dealing or performance or any other matter not set forth in an
agreement in writing and signed by all Parties.

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

 

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such provision is invalid, illegal or otherwise unenforceable, the other Party
shall have the right to terminate this Agreement upon sixty (60) days’ prior
written notice to the asserting Party, unless such assertion is eliminated and
the effect of such assertion cured within such sixty (60)-day period. Any
termination in accordance with the foregoing sentence shall be deemed a
termination pursuant to Section 17.2.1 and the Party who made such assertion
shall be deemed the breaching Party for purposes of applying Section 17.4.

18.11 Publicity Review. Neither Party shall originate any written publicity,
news release or other announcement or statement relating to the announcement or
terms of this Agreement (collectively, a “Written Disclosure”), without the
prompt prior review and written approval of the other Party, which approval
shall not be unreasonably withheld or delayed. Notwithstanding the foregoing,
either Party may make any public Written Disclosure it believes in good faith
based upon the advice of counsel is required by applicable law, rule or
regulation or any listing or trading agreement concerning its or its Affiliates’
publicly traded securities; provided, however, that such Written Disclosure
shall minimize to the extent possible the financial information disclosed, and
that prior to making such Written Disclosure, the disclosing Party shall provide
to the other Party a copy of the materials proposed to be disclosed and provide
the receiving Party with an opportunity to promptly review the Written
Disclosure. Notwithstanding the foregoing, the Parties shall agree upon a press
release to announce the execution of this Agreement, together with a
corresponding Question & Answer outline for use in responding to inquiries about
the Agreement substantially in the form attached as Exhibit F; thereafter,
Oncothyreon and Array may each disclose to Third Parties the information
contained in such press release and Question & Answer outline without the need
for further approval by the other.

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

18.13 Headings. Headings used herein are for convenience only and shall not in
any way affect the construction of or be taken into consideration in
interpreting this Agreement.

18.14 Export Laws. Notwithstanding anything to the contrary contained herein,
all obligations of Array and Oncothyreon are subject to prior compliance with
United States and foreign export regulations and such other United States and
foreign laws and regulations as may be applicable, and to obtaining all
necessary approvals required by the applicable agencies of the governments of
the United States and foreign jurisdictions. Array and Oncothyreon shall
cooperate with each other and shall provide assistance to the other as
reasonably necessary to obtain any required approvals.

18.15 Entire Agreement. This Agreement together with the Exhibits hereto,
constitute the entire agreement, both written or oral, with respect to the
subject matter hereof, and supersede all prior or contemporaneous understandings
or agreements, whether written or oral, between Array and Oncothyreon with
respect to such subject matter, including that certain Confidentiality Agreement
executed by the Parties effective on January 25, 2013, it being understood that
all information exchanged between the Parties under such Confidentiality
Agreement shall be deemed Confidential Information of the disclosing Party under
Article 15.

[Remainder of this page intentionally blank. Signature page follows.]

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly
executed and delivered in duplicate originals as of the date first above
written.

 

ARRAY BIOPHARMA INC.     ONCOTHYREON INC. By:   /s/ Ron Squarer     By:   /s/
Robert L. Kirkman Name:   Ron Squarer     Name:   Robert L. Kirkman Title:   CEO
    Title:   President & CEO

[Signature Page for Development and Commercialization Agreement]

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EXHIBIT A

ARRY 380

 

LOGO [g575871p125.jpg]

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EXHIBIT B

FINANCIAL EXHIBIT

Calculation of US Profit/Loss

US Profit/Loss shall be calculated in accordance with this Exhibit B (and the
term “US Profit/Loss,” as used in this Agreement, means the amount so
calculated). US Profit/Loss shall be calculated for each Calendar Quarter by
determining the Net Sales of Products in the United States, and subtracting the
sum of the Allowable Expenses incurred with regard to the United States during
such Calendar Quarter.

All calculations to be made pursuant to this Financial Exhibit shall be made in
accordance with (i) the applicable definitions and terms set forth in this
Financial Exhibit and in the Agreement in a manner consistent with the
methodologies used for the applicable Budgets (first priority), and (ii) GAAP
(second priority). All undefined terms shall be construed in accordance with
GAAP, but only to the extent consistent with the other express terms and
definitions in this Financial Exhibit and the Agreement. The Parties acknowledge
and agree that amounts included within the various components of Development
Costs and US Profit/Loss shall not be double-counted; accordingly, (i) US
Profit/Loss shall exclude all Development Costs, and amounts that are included
in determining Development Costs shall not be double counted as components of US
Profit/Loss, (ii) in determining US Profit/Loss, amounts that are included under
one category of Allowable Expense or are deducted in determining Net Sales of
Products in the United States shall not be double-counted under another category
of Allowable Expense or for deduction in determining Net Sales of Products in
the United States, and (iii) in determining Development Costs, amounts that are
included in one category of Development Costs shall not be double-counted in
another category of Development Costs. For the avoidance of doubt, income and
withholding taxes imposed on either of the Parties or their Affiliates hereunder
will not be included in the calculation of US Profit/Loss.

Additional Definitions Related to Calculation of US Profit/Loss

The following definitions shall apply for purposes of calculating US Profit/Loss
in accordance this Exhibit B.

(1) “Allowable Expenses” means the sum of the following internal and external
costs incurred during the Term by the Parties, their Affiliates, to the extent
attributable and allocable to the Commercialization of the Product in the United
States, in each case determined in accordance with GAAP, except to the extent
otherwise provided herein:

 

  a. Distribution Costs;

 

  b. EAP Expenses;

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  c. Fully Burdened Manufacturing Cost;

 

  d. Health Care Reform Fees;

 

  e. Marketing Expenses;

 

  f. Medical Affairs Expenses;

 

  g. Other Commercialization Costs;

 

  h. Product Mark Costs;

 

  i. Recall Expenses;

 

  j. Regulatory Maintenance Costs;

 

  k. Selling Costs;

 

  l. Shared Product Liability Costs; and

 

  m. applicable Third Party Agreement Payments; and

 

  n. certain US Losses From Claims, as detailed below.

To the extent that any activity is conducted or a cost is incurred in support of
both the Product and other products, services or efforts of a Party, then such
costs or expenses shall be included in Allowable Expenses to the extent
attributable and allocable to the Product, in or for the United States, in
accordance with GAAP (except the in the case of Sales Force FTE Costs for Sales
Representatives promoting both Products and other products, which shall be
determined as specified below).

(2) “Distribution Costs” means costs identifiable to the distribution of
Products, including customer and wholesaler services, collection of data about
sales to hospitals and other customers, order entry, billing, shipping,
logistics, warehousing, product insurance, freight not paid by customers, credit
and collection and other like activities the costs of which are includable in
“distribution costs” in accordance with GAAP. For clarity, “Distribution Costs”
shall not include costs of activities included within Marketing Expenses,
Medical Affairs Expenses, or Selling Expenses.

(3) “Early Access Program” or “EAP” means any program to provide patients in the
United States with a Product prior to Marketing Approval and First Commercial
Sale in the United States. Early Access Programs include treatment INDs /
protocols, named patient programs and compassionate use programs, as applicable.
For clarity, an EAP with respect to a Product may continue to be performed
following Marketing Approval of the Product and costs may continue to be
incurred in accordance with the performance of such EAP after Marketing
Approval.

 

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(4) “EAP Expenses” means costs to conduct Early Access Programs for the Product.

(5) “Health Care Reform Fees” means costs for fees paid to the U.S. government
as defined in the Patient Protection and Affordable Care Act and similar taxes
and governmental fees in the United States, in each case to the extent directly
attributable to the Product.

(6) “Marketing Expenses” means costs identifiable to the advertising, promotion
and marketing of the Product in the United States, and related professional
education, in each case to the extent incurred specifically with respect to the
Product (and to the extent not performed by Sales Representatives), including:

 

  a. Advertising, which includes costs associated with media costs, direct
mails, production expenses, agency fees, and medical congresses and meetings;

 

  b. Promotion, which includes costs associated with professional samples,
reimbursement of patient assistance programs, public relations and
communications expenses, development of information and data for national
accounts, managed care organizations and group purchasing organizations;

 

  c. Market Research, which includes costs associated with market information,
focus groups, and market research professional staff and related out-of-pocket
costs such as travel, business meals, and training;

 

  d. Marketing Management, which includes the costs of Product management
activities;

 

  e. Reimbursement/Access Services, which includes costs incurred to manage
marketing programs, marketing costs (educational material) as well as coupon or
co-pay programs directly attributable to the Product; and

 

  f. Health Policy/Advocacy, which includes costs reasonably necessary and
identifiable to the Product, such as Advocacy sponsorships for the Product’s
specific disease state as well as any specific policy lobbying and trade and
government relations related expenses, in each case to the extent attributable
to and specifically conducted with respect to the Product.

(7) “Medical Affairs Expenses” includes costs reasonably necessary and
identifiable to the Product incurred with respect to: medical affairs and other
activities associated with clinical studies conducted after Marketing Approval
in the United States (to the extent not otherwise included within Development
Costs); medical and scientific information and response to external inquiries or
complaints; pharmacovigilance, investigator initiated research if not covered in
the Development Plan, medical education, Health Economics and Outcomes Research
(HECOR, HEMAR), speaker programs, advisory boards, educational grants and
fellowships, drug safety, government affairs; and field based medical science
liaisons, medical affairs clinical trial mgmt, MD’s in field (separate from
medical science liaisons’), publications, medical communications and field
medical education.

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(8) “Other Commercialization Costs” means any other costs attributable or
allocable to Commercialization of the Product in the United States in accordance
with GAAP, to the extent not included in one of the other categories or
definitions of costs under this Financial Exhibit; provided, however, that costs
associated with Sales Representatives and their Detailing activities that are
expressly excluded from the definition of Selling Costs shall not be included as
“Other Commercialization Costs.” It is understood that Other Commercialization
Costs shall not include costs associated with Development activities.

(9) “Recall Expenses” means costs associated with notification, retrieval and
return of the Product, destruction of such returned Product, replacement Product
and distribution of the replacement Product, in each case that are incurred with
respect to a recall of the Product.

(10) “Regulatory Maintenance Costs” means costs for maintenance fees relating to
Marketing Approvals for the Products in the Field, personnel engaged in the
filing and maintenance of Marketing Approvals and incurred to establish,
maintain and enforce the Product Marks.

(11) “Sales Force FTE Costs” means the number of Sales Representative FTEs
dedicated to the Product, multiplied by the applicable Sales Force FTE Rate. As
used herein, references to a “Sales Representative” mean a Sales Representative
utilized to perform Details (as defined below) with respect to a Product and
excludes field and corporate sales management (e.g., sales managers, district
managers).

(12) “Sales Force FTE Rate” means [*] of the gross salaries (including (x) any
cash bonus or other performance-based cash incentive payments, to the extent
based directly on sales or promotion of the Products (and not other products),
and (y) any non-equity bonus tied to the overall performance of an individual
Sales Representative FTE, but not based on sales or promotion of the Products or
any other products, but excluding for clarity any non-cash based performance
incentive payments) of Sales Representative FTEs who are Detailing the Product
under and in accordance with the Co-Promotion Plan. It is understood that the
Sales Force FTE Rate shall be deemed to include any automobile allowance, meal
expenses, travel/housing for meetings and other incidental expenses incurred by
such personnel in the ordinary course of employment (i.e., such amounts shall
not be considered “salary” and shall not otherwise be included as out-of-pocket
expenses, but shall be deemed reimbursed by means of the Total Sales
Representative Costs determined by multiplying the Sales Force FTE Rate by the
applicable percentage(s) set forth in the definition of Total Sales Force Costs,
below.

(13) “Selling Costs” means Total Sales Representative Costs, as described in
clause (a) below, and the costs as described in clause (b) below. Selling Costs
shall include only include costs to the extent included in the foregoing.
Internal costs of a Party and its Affiliates for the performance of Details, or
for the hiring and maintenance of a sales force, shall be reimbursed only to the
extent reflected in Total Sales Representative Costs.

 

* Confidential Treatment Requested

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  a. “Total Sales Representative Costs” shall be calculated as the following
percentages of Sales Force FTE Costs of Sales Representatives Detailing Product:
(i) [*], to the extent such Sales Representatives Detail [*]; (ii) [*], to the
extent such Sales Representatives Detail [*] with a Product as the First
Position Detail; (iii) [*], to the extent such Sales Representatives Detail [*]
with a Product as the First Position Detail; (iv) [*], to the extent such Sales
Representatives Detail [*] with a Product as the Second Position Detail,
(v) [*], to the extent such Sales Representatives Detail [*], and (vi) [*], to
the extent such Sales Representatives Detail [*] with a Product as the Other
Detail. For the avoidance of doubt, if a Sales Representative Details a Product
in different positions in different Details (e.g., First Position Detail in a
portion of the Details and Second Position Details in other Details), then a pro
rata share of the foregoing percentages, to be calculated based on the time
spent by such sales representative on Detailing such Product in each such
position, will be included in Selling Expenses. For periods in which Sales
Representatives are performing activities in support of Products but are not
Detailing Products (e.g., during launch preparation or training), the Sales For
FTE Costs for such Sales Representatives will be allocated to Selling Expenses
based on the percentage of time such Sales Representatives are devoted to such
activities in support of the Products. For such purposes:

 

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

 

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

 

  iii. “Other Detail” means any Detail other than a First Position Detail or a
Second Position Detail.

 

  b. Out-of-pocket costs and internal costs (other than costs for Sales
Representatives or the performance of Details) directly attributable to selling
Products, including first line sales managers, exhibits at shows or conventions
including samples, charges for space, sales aids and brochures, sales meetings,
specialty sales forces, consultants, call reporting and other Third Party
monitoring/tracking services, and the like.

 

* Confidential Treatment Requested

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US Losses From Claims; Exclusion of Losses Due to Breach or Subject to
Indemnification

The Parties agree that all costs and expenses incurred by the Parties and their
Affiliates in connection with any Third Party claim, action, cause of action or
suit (whether in contract or tort or otherwise), litigation (whether at law or
in equity, whether civil or criminal), controversy, assessment, arbitration,
investigation, hearing, charge, complaint, demand, notice or proceeding of, to,
from, by or before any Governmental Authority, and related damages, losses,
liabilities, costs (including costs of investigation, defense), fines,
penalties, government orders, expenses or amounts paid in settlement (in each
case, including reasonable attorneys’ and experts fees and expenses), that arise
out of the performance, in good faith, of the Commercialization (including
related manufacture) or other exploitation of Products in the United States (“US
Losses From Claims”) will be charged to the US Profit/Loss; provided, however,
that US Profit/Loss will not include any such costs or expenses incurred by a
Party or its Affiliate to the extent: (i) caused by a breach of this Agreement
by such Party or Affiliate; or (ii) subject to indemnification by such Party
pursuant to Section 16.1 or 16.2 (and for clarity, if a Third Party makes a
Third Party Claim directly against a Party or any of its Affiliates that would
otherwise be indemnified by such Party if such Third Party Claim had been made
against the other Party (or any of its Affiliates), then such costs or expenses
incurred by the indemnified Party will not be included in the calculation of US
Profit/Loss, but will be governed by Section 16.1 or 16.2, as applicable).

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EXHIBIT C

EXISTING QUANTITIES OF PRODUCT

[*]

 

* Confidential Treatment Requested

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EXHIBIT D

ARRAY DISCLOSURES

[*]

 

* Confidential Treatment Requested

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EXHIBIT E

ONCOTHYREON DISCLOSURES

[*]

 

* Confidential Treatment Requested

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EXHIBIT F

PRESS RELEASE

[The press release follows this page.]

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LOGO [g575871p136.jpg]

ONCOTHYREON AND ARRAY ANNOUNCE COLLABORATION TO DEVELOP AND

COMMERCIALIZE ANTI-HER2 COMPOUND ARRY-380

-Array to Hold Conference Call to Discuss Collaboration on May 30 at 10 a.m.
E.T.-

Seattle, Wash., and Boulder, Colo., (May 30, 2013) - Oncothyreon Inc. (NASDAQ:
ONTY) and Array BioPharma Inc.

(NASDAQ: ARRY) today announced that they will collaborate to develop and
commercialize ARRY-380, an orally active, reversible and selective
small-molecule HER2 inhibitor. HER2, also known as ErbB2, is a receptor tyrosine
kinase that is over-expressed in breast cancer and other cancers such as gastric
and ovarian cancer. Array previously completed a Phase 1 clinical trial of
ARRY-380 in patients with heavily pre-treated metastatic breast cancer which
demonstrated that the compound was well tolerated and had anti-tumor activity.

Oncothyreon has agreed to pay Array an upfront fee of $10 million upon
initiation of the collaboration. Under the agreement Oncothyreon will fund and
conduct the clinical development of ARRY-380 through a defined set of
combination proof-of-concept trials in patients with metastatic breast cancer,
including patients with brain metastases. ARRY-380 has demonstrated superior
activity, based on overall survival, compared to Tykerb® (lapatinib) and to the
investigational drug, neratinib, in an intracranial HER2+ breast cancer
xenograft model. This provides a strong rationale to explore whether ARRY-380
can provide benefit to patients with brain metastases, which occur in
approximately one-third of women with metastatic HER2+ breast cancer.

Oncothyreon and Array intend to jointly conduct Phase 3 development supported by
the proof-of-concept studies, with each party retaining the right to opt out of
further development and commercialization in exchange for a significant royalty.
Array is responsible for worldwide commercialization of the product. Oncothyreon
has a co-promotion right in the U.S., and the two companies will share the cost
of U.S. commercialization, including any profit, equally. Outside of the U.S.,
Oncothyreon will receive a double-digit royalty on net sales intended to
approximate a fifty percent profit share, and the two companies will share
equally the proceeds from any sublicense of marketing rights.

“We are pleased to expand our pipeline of oncology products in development
through this collaboration with Array,” said Robert L. Kirkman, M.D., President
and Chief Executive Officer of Oncothyreon. “As the only selective
small-molecule inhibitor of HER2 in clinical development, we believe ARRY-380
has the potential to significantly enhance the care of women with metastatic
breast cancer.”

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“We believe ARRY-380 has the potential to be a very important long-term
treatment option for patients living with breast cancer,” said Ron Squarer,
Chief Executive Officer, Array BioPharma. “We are pleased to have a partner in
Oncothyreon to advance the drug through these important proof-of-concept studies
and beyond.”

CONFERENCE CALL INFORMATION

Array will hold a conference call on Thursday, May 30, 2013, at 10:00 a.m.
eastern time to discuss these results.

Conference Call Information

 

Date:    Thursday, May 30, 2013    Time:    10:00 a.m. eastern time   
Toll-Free:    (800) 303-0442    Toll:    (847) 413-3733    Pass Code:   
34997447    Webcast & Conference Call Slides:   
http://investor.arraybiopharma.com/phoenix.zhtml?c=123810&p=irol-irhome

About ARRY-380

ARRY-380 is an orally active, reversible and selective HER2 inhibitor. In
multiple preclinical tumor models, ARRY-380 was well tolerated and demonstrated
significant dose-related tumor growth inhibition that was superior to Herceptin®
(trastuzumab) and Tykerb. Additionally, in these models, ARRY-380 demonstrated
synergistic or additive tumor growth inhibition when dosed in combination with
the standard-of-care therapeutics Herceptin or Taxotere® (docetaxel).

A Phase 1 trial of ARRY-380, with both dose-escalation and expansion components,
has been completed in 50 patients, 43 of whom had HER2+ metastatic breast
cancer. All HER2+ breast cancer patients had progressed on a
trastuzumab-containing regimen. In addition, over 80% had been treated with
lapatinib, with many having progressed on therapy. In this study, ARRY-380
demonstrated an acceptable safety profile; treatment-related adverse events were
primarily Grade 1. Because ARRY-380 is selective for HER2 and does not inhibit
EGFR, there was a low incidence and severity of treatment-related diarrhea, rash
and fatigue. Additionally, there were no treatment-related cardiac events or
Grade 4 treatment-related adverse events reported. The maximum tolerated dose of
ARRY-380 established in this Phase 1 trial was 600 mg twice daily (BID).
Twenty-two HER2+ breast cancer patients with measurable disease were treated
with ARRY-380 at doses > 600 mg BID. In this heavily pretreated patient
population, there was a clinical benefit rate (partial response [n = 3] plus
stable disease for at least 6 months [n = 3]) of 27%. Notably, two of the
patients with partial responses during treatment with ARRY-380 had confirmed
progressions while on prior lapatinib- and trastuzumab-containing regimens.

About Oncothyreon

Oncothyreon is a biotechnology company specializing in the development of
innovative therapeutic products for the treatment of cancer. Oncothyreon’s goal
is to develop and commercialize novel synthetic vaccines and targeted small
molecules mat have the potential to improve the lives and outcomes of cancer
patients. For more information, visit www.oncothyreon.com.

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About Array BioPharma

Array BioPharma Inc. is a biopharmaceutical company focused on the discovery,
development and commercialization of targeted small-molecule drugs to treat
patients afflicted with cancer. Array is evolving into a late-stage development
company and currently expects significant progress toward generating data to
support our upcoming Phase 3 / pivotal trial decisions. Novartis expects to
begin Phase 3 trials evaluating Array-invented MEK162 in NRAS- and BRAF-mutant
melanoma in 2013. In addition, Array expects to begin a Phase 3 trial evaluating
MEK162 in low-grade serous ovarian cancer under the license agreement with
Novartis in 2013. AstraZeneca expects to begin Phase 3 or pivotal registration
trials with selumetinib (an Array-invented drug) in non-small cell lung cancer
and thyroid cancer during the second half of 2013. Three other Array-invented
drugs are also approaching Phase 3 or pivotal trial decisions which are expected
by the end of 2013. These include Array’s wholly-owned drugs, ARRY-520 and
ARRY-614, and one partnered program, danoprevir (with InterMune/Roche). For more
information on Array, please go to www.arraybiopharma.com.

Oncothyreon Forward-Looking Statements

In order to provide Oncothyreon’s investors with an understanding of its current
results and future prospects, this release contains statements that are
forward-looking. Any statements contained in this press release that are not
statements of historical fact may be deemed to be forward-looking statements.
Words such as “believes,” “anticipates,” “plans,” “expects,” “will,” “intends,”
“potential,” “possible” and similar expressions are intended to identify
forward-looking statements. These forward-looking statements include
Oncothyreon’s expectations regarding potential royalties, profits and other
payments, that may be received or paid by Oncothyreon in the future, anticipated
clinical and other product development and marketing activities related to
ARRY-380 and the costs and responsibilities of those activities, expected
benefits and market potential for ARRY-380 and success of activities to obtain
market approval and sales.

Forward-looking statements involve risks and uncertainties related to
Oncothyreon’s business and the general economic environment, many of which are
beyond its control. These risks, uncertainties and other factors could cause
Oncothyreon’s actual results to differ materiallly from those projected in
forward-looking statements, including those predicting the timing, duration and
results of clinical trials, the timing and results of regulatory reviews, the
safety and efficacy of our product candidates, and the indications for which our
product candidates might be developed. There can be no guarantee that the
results of preclinical studies or clinical trials will be predictive of either
safety or efficacy in future clinical trials. Although Oncothyreon believes that
the forward-looking statements contained herein are reasonable, it can give no
assurance that its expectations are correct. All forward-looking statements are
expressly qualified in their entirety by this cautionary statement. For a
detailed description of Oncothyreon’s risks and uncertainties, you are
encouraged to review the documents filed with the securities regulators in the
United States on EDGAR and in Canada on SEDAR. Oncothyreon does not undertake
any obligation to publicty update its forward-looking statements based on events
or circumstances after the date hereof.

--------------------------------------------------------------------------------

Array BioPharma Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, including statements about
potential royalties, profits and other payments that may be received or paid by
Array in the future, the potential for the results of ongoing clinical trials to
support further development, regulatory approval or the marketing success of
ARRY-380, anticipated clinical and other product development and marketing
activities related to ARRY-380 and the costs and responsibilities of those
activities, expected benefits and market potential for ARRY-380, and the success
of activities to obtain market approval and sales. These statements involve
significant risks and uncertainties, including those discussed in the most
recent annual report filed on Form 10-K, quarterly reports filed on Form 10-Q,
and other reports filed by Array with the Securities and Exchange Commission.
Because these statements reflect current expectations concerning future events,
actual results could differ materially from those anticipated in these
forward-looking statements as a result of many factors. These factors include,
but are not limited to, the ability of Array and Oncothyreon to continue to fund
and successfully progress research and development efforts with respect to
ARRY-380; risks associated with dependence on collaborators for the clinical
development and commercialization of out-licensed drug candidates, including
ARRY-380; the ability to effectively and timely conduct clinical trials in light
of increasing costs and difficulties in locating appropriate trial sites and in
enrolling patients who meet the criteria for certain clinical trials; and risks
associated with dependence on third-party service providers to successfully
conduct clinical trials within and outside the United States. Array is providing
this information as of May 30, 2013 and undertakes no duty to update any
forward-looking statements to reflect the occurrence of events or circumstances
after the date of such statements or of anticipated or unanticipated events that
alter any assumptions underlying such statements.

Additional Information

Additional information relating to Oncothyreon can be found on EDGAR at
www.sec.gov and on SEDAR at www.sedar.com.

Additional information relating to Array BioPharma can be found on EDGAR, at
www.sec.gov.

Investor and Media Relations Contact:

Julie Rathbun

Rathbun Communications

206-769-9219

in@oncothyreon.com

Array BioPharma Investor and Media Relations Contact:

Tricia Haugeto

(303)386-1193

thaugeto@arraybiopharma.com