Exhibit 10.29

 

[ * ] = 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.

 

Execution Copy

 

DRUG DISCOVERY COLLABORATION AGREEMENT

 

This DRUG DISCOVERY COLLABORATION AGREEMENT (the “Agreement”), effective as of
September 13, 2002 (the “Effective Date”), is made by and between Array
BioPharma Inc., a Delaware corporation, having a principal place of business at
3200 Walnut Street, Boulder, Colorado 80301 (“Array”), and InterMune, Inc., a
Delaware corporation, having a principal place of business at 3280 Bayshore
Boulevard, Brisbane, California 94005 (“InterMune”).

 

BACKGROUND

 

A.                                   InterMune has experience and expertise in
the biological components of drug discovery, development and commercialization
of therapeutics.

 

B.                                     Array has developed novel and proprietary
methods for the generation of compound libraries, and has skills, expertise and
experience in lead generation and optimization to produce clinical candidates
from drug discovery programs.

 

C.                                     InterMune and Array desire to collaborate
to identify orally active small molecule-based therapeutics for modulating the
Target (as defined below), with the goal of developing compounds with desired
activity and selectivity.

 

D.                                    InterMune wishes to acquire an exclusive
license to develop and commercialize Products (as defined below), and Array
wishes to grant to InterMune such license, on the terms and conditions herein.

 

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

 

ARTICLE 1
DEFINITIONS

 

As used herein, the following terms will have the meanings set forth below:

 

1.1                                 “Affiliate” shall mean any corporation or
other entity, whether de jure or de facto, which is directly or indirectly
controlling, controlled by or under common control of a Party hereto for so long
as such control exists.  For the purposes of this Section 1.2, “control” shall
mean the direct or indirect ownership of at least fifty percent (50%) of the
outstanding shares or other voting rights of the subject entity having the power
to vote on or direct the affairs of the

 

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entity, or if not meeting the preceding, the maximum voting right that may be
held by the particular Party under the laws of the country where such entity
exists.

 

1.2                                 “Agreement Term” shall mean the term of this
Agreement, as determined in accordance with Article 12.

 

1.3                                 “Collaboration Technology” shall mean all
Collaboration Patents and Collaboration Know-How.

 

1.4                                 “Collaboration Patents” shall mean all
patents and patent applications anywhere in the world claiming an invention
first conceived and/or reduced to practice solely or jointly by Array and/or
InterMune personnel in the course of performing the Research Collaboration,
including without limitation any such invention comprising a Hit Compound, Lead
Compound or Product, or method of use or process for the synthesis thereof or
composition-of-matter containing such Hit Compound, Lead Compound or Product. 
The Collaboration Patents may include the following types of patent applications
and patents:  divisionals, continuations, continuations-in-part, reissues,
reexaminations, renewals or extensions, substitutions, confirmations,
registrations and revalidations.

 

1.5                                 “Collaboration Know-How” shall mean all
Know-How made or developed solely or jointly by Array and/or InterMune in the
course of performing the Research Collaboration, in each case, which is
necessary or useful for the development, manufacture, use, sale or other
commercialization of any Hit Compound, Lead Compound or Product.  Collaboration
Know-How does not include patentable inventions claimed in the Collaboration
Patents.

 

1.6                                 “Consumer Price Index” or “CPI” means the
Consumer Price Index, All Urban Consumers, as published by the U.S. Bureau of
Labor Statistics.

 

1.7                                 “Control” shall mean, with respect to any
patent application, patent or Know-How, the ownership of, or possession of a
license under, such patent application, patent or Know-How, together with the
right to grant a license to the other Party thereunder as provided in this
Agreement.

 

1.8                                 “Field” shall mean the discovery,
development and commercialization of chemical entities for the therapeutic or
prophylactic treatment of diseases and conditions in humans, a mechanism of
action of which chemical entities is to modulate the activity of a Target.

 

1.9                                 “FTE” shall mean a full-time person
dedicated to the Research Collaboration, or in the case of less than a
full-time, dedicated person, a full-time equivalent person year, based upon a
total of one thousand eight hundred eighty (1,880) hours per year of work in
connection with the Research Collaboration.

 

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1.10                           “JRC” or “Joint Research Committee” shall have
the meaning set forth in Section 3.1.

 

1.11                           “Hit Compound” shall mean any chemical entity
that meets the Hit Compound Criteria.

 

1.12                           “Hit Compound Criteria” shall mean (i) those
criteria set forth in the Research Plan to be “Hit Compound Criteria,” and/or
(ii) such other criteria as are approved by the JRC and agreed in writing by the
Parties. If the Parties agree to any such other criteria, then their writing
shall clearly set forth whether such criteria are in addition to, or alternative
to, such criteria set forth in the Research Plan as of the Effective Date.

 

1.13                           “Know-How” shall mean ideas, inventions, data,
instructions, processes, formulas, expert opinions and other information
(including, without limitation, biological, chemical, pharmacological,
toxicological, pharmaceutical, physical, analytical, clinical, safety,
manufacturing and quality control data and information).

 

1.14                           “Lead Compound” shall mean any chemical entity
that meets the Lead Compound Criteria.

 

1.15                           “Lead Compound Criteria” shall mean (i) those
criteria set forth in the Research Plan to be “Lead Compound Criteria,” and/or
(ii) such other criteria as are approved by the JRC and agreed in writing by the
parties.  If the Parties agree to any such other criteria, then their writing
shall clearly set forth whether such criteria are in addition to, or alternative
to, such criteria set forth in the Research Plan as of the Effective Date.

 

1.16                           “NDA” shall mean a New Drug Application, as
defined in the U.S. Food, Drug and Cosmetic Act and the regulations promulgated
thereunder, or any corresponding foreign application, registration or
certification.

 

1.17                           “Net Sales” shall mean [ * ].

 

1.18                           “Party” or “Parties” shall mean, respectively,
Array or InterMune individually, or Array and InterMune collectively.

 

1.19                           “Phase II” shall mean the phase of human clinical
trials for which the primary endpoints include a determination of dose ranges
and/or a preliminary determination of efficacy in patients in the United States
or a country other than the United States.  Phase II specifically excludes that
phase of human clinical trials commonly referred to as “Phase I” clinical
trials, which are solely intended to determine safety but not definitive dosing
and efficacy of a pharmaceutical.

 

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1.20                           “Phase III” shall mean the phase of human
clinical trials the principal purpose of which are to establish safety and
efficacy of one or more particular doses in patients being studied, and which
will (or are intended to) satisfy the requirements of a pivotal trial for
purposes of obtaining approval of a product in a country by the health
regulatory authority in such country to market such product.

 

1.21                           “Preparatory Know-How” shall mean all Know-How
made or developed by Array [ * ] that relates to the subject matter of the
Research Collaboration and/or to any Hit Compound, Lead Compound or Product, to
the extent Controlled by Array.

 

1.22                           “Preparatory Patents” shall mean all patent
applications and patents anywhere in the world claiming any invention conceived
and/or reduced to practice by Array [ * ] that relates to the subject matter of
the Research Collaboration and/or to any Hit Compound, Lead Compound or Product,
in each case to the extent Controlled by Array.

 

1.23                           “Product” shall mean any diagnostic, therapeutic
or prophylactic product incorporating as an active ingredient a Hit Compound or
a Lead Compound.

 

1.24                           “Research Collaboration” shall mean the research
activities undertaken by the Parties during the Research Term pursuant to
Sections 2.1 to 2.3 below.

 

1.25                           “Research Plan” shall mean the written research
plan that the Parties have agreed to on or before the Effective Date.  The
Research Plan may be amended from time to time by mutual agreement of the
Parties, and shall be updated as set forth in Section 2.2.2.

 

1.26                           “Research Term” shall mean the term of the
Research Collaboration, as provided in Section 2.3 below.

 

1.27                           “Reserved Target” shall mean those targets
identified in Exhibit A as “Reserved Targets.”

 

1.28                           “Sublicensee” shall mean, with respect to a
particular Product, a Third Party to whom InterMune has granted a license or
sublicense under the Collaboration Technology to make and sell such Product.  As
used in this Agreement, “Sublicensee” shall specifically exclude a Third Party
to whom InterMune has granted the right to distribute such Product, provided
that the economics of the distribution relationship involve payment of a
transfer price by the distributor, but not a royalty to InterMune calculated as
a percentage of net sales of the Product by the distributor.

 

1.29                           “Target(s)” shall mean (i) the target identified
in Exhibit A as the “Target,” and (ii) any Reserved Target selected in
accordance with Section 2.2.1 below for use in the Research Collaboration.

 

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1.30                           “Third Party” shall mean any person or entity
other than Array and InterMune, and their respective Affiliates.

 

1.31                           “Valid Claim” shall mean [ * ].

 

ARTICLE 2
RESEARCH COLLABORATION

 

2.1                                 Goals.  The goal of the Research
Collaboration is the discovery and optimization of patentable compositions that
are orally active small molecule inhibitors in the Field pursuant to the
Research Plan.

 

2.2                                 Conduct of the Research Collaboration. 
Subject to the terms and conditions set forth herein, the Parties agree to
conduct research under the Research Collaboration, which shall be funded as set
forth in Article 5 below.  During the Research Term, Array and InterMune shall
collaborate and each use their commercially reasonable efforts to conduct their
respective responsibilities under the Research Collaboration in accordance with
the Research Plan, within the time frames contemplated therein.  In particular,
Array shall devote the numbers of FTEs set forth for it to devote in the
Research Plan to carrying out the tasks assigned to Array at the times set forth
therein.

 

2.2.1                        Target Selection.  The initial subject of the
Research Collaboration shall be the Target identified in the Research Plan as of
the Effective Date.  During the Research Term, either Party may propose in
writing that the Research Collaboration be expanded to include research
involving one of more Reserved Target(s).  Upon written consent of the other
Party, each Reserved Target so proposed shall cease to be a Reserved Target for
purposes of this Agreement and shall thereafter be deemed a Target.

 

2.2.2                        Research Plan.  The Research Collaboration shall be
carried out in accordance with the Research Plan.  The Research Plan as it
exists as of the Effective Date establishes specific research objectives and the
general research tasks to be performed and resources to be provided by each
Party.  Promptly after the Effective Date, the Parties shall meet and agree on
the more specific tasks to be undertaken to achieve such research objectives and
general tasks, the specific anticipated timelines for such specific tasks, and
an FTE schedule setting forth how many FTEs Array will devote to the performance
of the tasks assigned to it in each quarter of the Research Term.  Within thirty
(30) days after the Effective Date, the JRC shall meet to discuss and approve
such an update to the Research Plan to cover such subject matter.  Thereafter,
the Research Plan shall be reviewed on an ongoing basis and may be amended by
the Joint Research Committee in accordance with Article 3, or by the Parties in
accordance with Section 4.4.

 

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2.3                                 Term and Termination of Research
Collaboration.   The Research Collaboration shall commence on the Effective Date
and shall end upon the first to occur of (i) two (2) years after the Effective
Date, (ii) the termination of this Agreement, or (iii) ninety (90) days after
written notice from InterMune that InterMune elects (in its sole discretion) to
early terminate the Research Collaboration, such notice to be given no earlier
than nine (9) months after the Effective Date (such period beginning on the
Effective Date and ending upon the earliest of (i), (ii) and (iii), the
“Research Term”).  InterMune shall have the right to extend the Research Term
for up to an additional two (2) years.  To exercise such right, InterMune shall
provide written notice to Array on or before the date ninety (90) days before
the second anniversary of the Effective Date.

 

2.4                                 Selection of Candidates for Further
Development.  From time to time, either Party may suggest that the JRC consider
a particular Hit Compound or Lead Compound to be recommended to InterMune for
selection for further development.  The JRC’s recommendation is not binding on
InterMune.  The purpose of having the JRC make any such recommendation is to
foster collaboration and scientific exchange between the Parties during the
Research Term.  InterMune agrees to inform Array of any Hit Compounds and Lead
Compounds researched hereunder for which InterMune is undertaking any GLP
toxicology studies in the next report under Section 7.2 after such studies
commence.

 

2.5                                 Records; Inspection.

 

(a)                                  Records.  Array and InterMune shall
maintain records of the Research Collaboration (or cause such records to be
maintained) in sufficient detail and in good scientific manner as will properly
reflect all work done and results achieved in the performance of the Research
Collaboration (including all data in the form required under any applicable
governmental regulations and as directed by the JRC).

 

(b)                                 Reports and Information Exchange.  Each
Party shall keep the other Party, including the Joint Research Committee,
informed as to its progress under the Research Plan.  During the Research Term,
Array and InterMune shall each provide the other, at least once quarterly, a
reasonably detailed written summary of research activities and results in
connection with the Research Collaboration.  In addition, if requested in
writing by InterMune, Array shall provide InterMune with copies of its records
required to be kept pursuant to Section 2.5(a), including without limitation the
relevant portions of laboratory notebooks of Array personnel participating in
the Research Collaboration.

 

2.6                                 Post Research Collaboration Activities.  For
each Hit Compound, Lead Compound and Product, as between the Parties, InterMune
shall be responsible, at its sole expense, for conducting all clinical
development of such Lead Compound or Product following the termination of the
Research Term, and all commercialization of such Hit Compound, Lead Compound or
Product.

 

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2.7                                 Exclusivity.

 

2.7.1                        General.  Except in performing pursuant to the
Research Collaboration, Array and its Affiliates shall not knowingly [ * ],
alone or with a Third Party, [ * ] specifically directed to (i) [ * ], during
the Research Term and for a period of [ * ] thereafter, (ii) or [ * ], during
the Research Term.  It is understood and agreed that [ * ] shall not be deemed a
violation of this Section 2.7.

 

2.7.2                        Option.  During the Research Term, prior to Array
or any of its Affiliates entering into material or substantial negotiations with
a third party in connection with [ * ], other than a Target or a Reserved
Target, or using [ * ], Array will notify InterMune in writing of such intent. 
Within thirty (30) days after receipt of such notice, InterMune will notify
Array in writing whether InterMune is interested in pursuing such activities in
collaboration with Array, under terms equivalent to those contained in the
Agreement.  If so, InterMune and Array will negotiate in good faith an agreement
under which Array and InterMune would collaborate on such compound discovery
research.  If the parties have not agreed upon terms and conditions of such an
agreement within ninety (90) days after receipt of InterMune’s notice, or if
InterMune does not indicate its interest within such thirty (30) day period,
then Array and its Affiliates shall be free to pursue [ * ] that was the subject
of Array’s notice to InterMune, alone or with a Third Party, without further
obligation to InterMune, [ * ].

 

2.7.3                        Change of Control.  Notwithstanding the provision
of Sections 2.7.1 and 2.7.2, in the event of a Change of Control (as defined
below) of Array, the provisions of such Sections shall not apply to any research
or development program that a portion of the surviving entity that was not Array
(prior to the Change of Control) had ongoing as of immediately prior to the date
of such Change of Control.  For purposes of this Section 2.7, a “Change of
Control” shall mean the merger, consolidation, sale of substantially all of its
assets or similar transaction or series of transactions, as a result of which
Array’s shareholders before such transaction or series of transactions own less
than fifty percent (50%) of the total number of voting securities of the
surviving entity immediately after such transaction or series of transactions. 
For clarity, if as a result of any such Change of Control, Array exists as a
wholly owned subsidiary of a parent, then the provisions of this Section 2.7
shall continue to apply to Array, but not to such parent.

 

2.8                                 Existing Library Compounds.  As of the
Effective Date, the Parties will focus upon new compound libraries created
pursuant to the Research Collaboration, and the Parties will not engage in high
throughput screening against pre-existing or separate compound libraries of
Array pursuant to the Research Collaboration.

 

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ARTICLE 3
MANAGEMENT

 

3.1                                 Joint Research Committee.  Promptly after
the Effective Date, InterMune and Array will establish a committee (the “Joint
Research Committee” or “JRC”) to oversee, review and recommend direction of the
Research Collaboration, and provide advice regarding prosecution of
jointly-owned patent applications directed to inventions within the
Collaboration Technology.  The responsibilities of the Joint Research Committee
shall include, among other things: (i) setting priorities and modifying the
Research Plan; (ii) recommending the number of FTEs to be provided for in the
Research Plan; (iii) monitoring and reporting research progress and ensuring
open and frequent exchange between the Parties regarding Research Collaboration
activities; and (iv) recommending Hit Compounds and Lead Compounds for selection
by InterMune as candidates for further development.  The JRC (and any of its
subcommittees) shall have no authority to amend or waive compliance with this
Agreement.  The JRC’s decision-making shall be as set forth in Section 3.4.

 

3.2                                 Membership.  The JRC shall include two
(2) representatives of each of InterMune and Array.  Each Party’s members shall
be selected by that Party.  Array and InterMune may each replace its JRC
representatives at any time, upon written notice to the other Party.  From time
to time, the JRC may establish subcommittees, to oversee particular projects or
activities, and such subcommittees will be constituted as the JRC agrees.

 

3.3                                 Meetings.  During the Research Term, the JRC
shall meet at least quarterly, or as agreed by the Parties, at such locations as
the Parties agree, and will otherwise communicate regularly by telephone,
electronic mail, facsimile and/or video conference.  With the consent of the
Parties, other representatives of Array or InterMune may attend JRC meetings as
nonvoting observers.  Each Party shall be responsible for all of its own
expenses associated with attendance of such meetings.  The first meeting of the
JRC shall occur within forty-five (45) days after the Effective Date.

 

3.4                                 Decision Making.  Decisions of the JRC shall
be made by unanimous agreement.  In the event that unanimity is not achieved
within the JRC, then, other than with respect to setting criteria for Hit
Compounds and Lead Compounds, InterMune shall have the deciding vote; provided,
however, that notwithstanding the foregoing, Array shall not be obligated, as a
result of such a deciding vote by InterMune, to violate any obligation or
agreement it may have to or with any Third Party; provided that the obligation
to or agreement with the Third Party is not in conflict with this Agreement as
originally executed or the activities that would be required or contemplated of
Array under the Research Plan as it exists as of the Effective Date.  Disputes
among the JRC or the Parties as to whether to change or add to the Hit Compound
Criteria and/or the Lead Compound Criteria shall be non-justiciable, and the Hit
Compound Criteria and the Lead Compound Criteria shall remain as they exist as
of the Effective Date unless the Parties otherwise agree in writing.

 

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ARTICLE 4
LICENSES

 

4.1                                 Research Licenses.

 

4.1.1                        Grant from InterMune.  InterMune hereby grants
Array a worldwide, non-exclusive, non-transferable, non-sublicensable,
royalty-free, right and license, under InterMune’s interest in the Collaboration
Technology, solely to conduct the Research Collaboration during the Research
Term.

 

4.1.2                        Grant from Array.  Array hereby grants InterMune a
worldwide, non-exclusive, non-transferable, non-sublicensable, royalty-free,
right and license, under Array’s interest in the Collaboration Technology and
under the Preparatory Patents and the Preparatory Know-How, solely to conduct
the Research Collaboration during the Research Term.

 

4.2                                 Commercial License.

 

4.2.1                        License to Lead Compounds, Development Candidates
and Corresponding Products.  Subject to the terms and conditions of this
Agreement, Array hereby grants to InterMune a worldwide, exclusive,
royalty-bearing right and license under Array’s interest in the Collaboration
Technology and under the Preparatory Patents, to research, develop, make, have
made, use, import, offer for sale and sell Hit Compounds, Lead Compounds and
Products worldwide.

 

4.2.2                        Preparatory Know-How.  Subject to the terms and
conditions of this Agreement, Array hereby grants to InterMune a worldwide,
non-exclusive, royalty-bearing right and license under the Preparatory Know-How
to research, develop, make, have made, use, import, offer for sale and sell Hit
Compounds, Lead Compounds and Products worldwide.

 

4.2.3                        Sublicenses.  Subject to the terms and conditions
of this Agreement, InterMune shall have the right to sublicense the rights
granted in Section 4.2.1 above through one (1) or more tiers of sublicensees. 
Each sublicense granted by InterMune shall be consistent with all the terms and
conditions of this Agreement, and shall automatically terminate with respect to
the patents and know-how licensed hereunder when this Agreement terminates.  
InterMune shall remain responsible to Array for the compliance of each such
Sublicensee with this Agreement as applicable to such Sublicensee, and the
payment of any amounts due hereunder as a result of the activities of
Sublicensees.

 

4.2.4                        Marketing Rights.  InterMune shall have the
exclusive right to market, sell and distribute Products.  In exercising such
rights, InterMune may select trademarks for such Products, and InterMune shall
own all right, title or interest in such trademarks (subject to any pre-existing
rights of Array or Third Parties).

 

4.3                                 License to Array.  InterMune hereby grants
to Array a worldwide, non-exclusive, transferable, royalty-free right and
license, with the right to grant and authorize sublicenses,

 

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under InterMune’s interest in the Collaboration Technology, to exploit the same
outside the scope of Array’s exclusive license to InterMune pursuant to
Section 4.2.

 

4.4                                 Third-Party Licenses.  In the event that the
Parties agree to acquire additional technologies from a Third Party specifically
for use in the conduct of the Research Collaboration in the Field, InterMune
will be responsible for the payment of any amounts due to Third Parties for the
license of intellectual property which directly applies to any Target, and the
costs of negotiating, preparing and executing any such license, unless the
Parties otherwise mutually agree in writing.  InterMune shall use its reasonable
efforts to negotiate in good faith and obtain all Third Party licenses that it
agrees to seek because they are necessary or useful for the conduct of the
Research Collaboration.  If, during the Research Term, InterMune is unable,
despite such efforts, to obtain any license necessary for the conduct of the
Research Collaboration, and the Parties are unable to agree to amend the
Research Plan such that such license is no longer necessary to the conduct of
the Research Collaboration, then InterMune shall have the right to terminate
this Agreement upon thirty (30) days notice.

 

4.5                                 No Implied Licenses.  Only the licenses
granted pursuant to the express terms of this Agreement shall be of any legal
force or effect.  No other license or rights shall be created by implication,
estoppel or otherwise.

 

4.6                                 No Products Other than Products.  Except as
otherwise agreed in writing or specifically provided in the terms of this
Agreement, neither InterMune nor its Affiliates nor Sublicensees shall, directly
or indirectly, commercialize any Hit Compound or Lead Compound itself or the
method of manufacture or use of which is claimed by the Collaboration Patents or
uses the Collaboration Know-How, other than as a Product in accordance with this
Agreement (i.e., any Products sold by InterMune, its Affiliates and Sublicensees
in exercise of the license granted InterMune in Section 4.2.1 shall be milestone
and royalty-bearing to the extent set forth in this Agreement).

 

ARTICLE 5
PAYMENTS

 

5.1                                 Research Collaboration Funding.

 

5.1.1                        Research Phase Payment Schedule.  InterMune agrees
to pay Array research funding for the conduct of the Research Collaboration
quarterly, in advance, in an amount equal to one quarter (1/4) of [ * ] FTEs
(or, if lesser, the number of Array FTEs scheduled in the Research Plan to be
provided by Array in the upcoming quarter), multiplied by the applicable Array
FTE Rate (as defined below in Section 5.1.2).  The initial quarterly payment
shall be made on or before the date Array FTEs are first deployed in accordance
with the Research Plan, and subsequent payments shall be made on or before the
first day of each calendar quarter thereafter.  Such payments are non-creditable
and non-refundable, subject to the

 

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remainder of this Section 5.1.1.  Within thirty (30) days after the end of each
calendar quarter during which InterMune is funding Array FTEs devoted to the
Research Collaboration, Array shall notify InterMune in writing of the number of
FTEs Array actually devoted to the Research Collaboration during such calendar
quarter.  If such actual FTEs are less than the number of FTEs for which
InterMune paid, then InterMune may credit the overpayment against the next
payment due Array under this Agreement.  If no payment will be due Array within
the next three (3) months after Array was required to notify InterMune of such
actual FTEs, Array shall promptly refund the overpayment to InterMune.  In
addition, InterMune may audit Array’s FTE records relating to the Research
Collaboration, in the same manner and subject to the same restrictions as those
set forth for Array’s audits pursuant to Section 6.4, and any discrepancies
shall be trued-up as provided in the foregoing two (2) sentences.  In no event
shall InterMune be required to fund a greater number of Array FTEs in any
calendar quarter than one quarter (1/4) of [ * ] FTEs, or, if lesser, those
provided in the Research Plan for Array to provide in such quarter.

 

5.1.2                        FTE Rate.  The “Array FTE Rate” shall be equal to
[ * ] per FTE per year.  Effective after the first anniversary of the Effective
Date, the FTE Rate shall increase no more than once annually by the percentage
increase, if any, in the Consumer Price Index for all Urban Consumers, as
published by the U.S. Department of Labor, Bureau of Statistics, since the
Effective Date or the last adjustment hereunder, whichever is later.

 

5.1.3                        Non-FTE Costs.  Non-FTE costs and research
requirements associated with performance of the Research Collaboration at Array
shall be borne by Array, except that Array shall not be required to incur any
extraordinary [ * ] costs without Array’s prior written consent.  Extraordinary
[ * ] costs means material costs in excess of [ * ].

 

5.1.4                        PK Outsourcing.  In the event that the Parties
agree, in the course of the Research Collaboration, to enter into one or more
agreements with a Third Party(ies) for the performance of [ * ] with respect to
a particular Hit Compound(s) and/or Lead Compound(s), the Parties shall be
responsible for the payment of the aggregate amounts due such Third Party(ies)
under such agreements as follows:  (i) Array shall be responsible for payment of
[ * ] due during each of (1) the period commencing on the Effective Date and
ending on the first anniversary thereof, and (2) the following twelve (12)
months (unless the Research Term is earlier terminated); and (ii) InterMune
shall responsible for the payment of all additional amounts that are approved in
advance by InterMune.  The Parties anticipate that they will contract with Third
Parties for [ * ] in each year of the Research Term.  The Parties will mutually
agree the specific studies to be conducted, and the specific Third Parties that
will conduct the studies.  Array shall not unreasonably withhold its agreement
to particular such studies, or withhold its consent to the Parties contracting
for any such studies on the grounds of the cost of the studies.

 

5.2                                 Development Funding.  In addition to the
funding obligations set forth in Section 5.1, InterMune shall be responsible for
all costs and expenses for otherwise developing and

 

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commercializing the Products, including without limitation, preclinical
development, clinical development, premarketing and commercial activities.  For
clarity, this means that as between the Parties, InterMune is responsible for
the costs of activities in exercise of the license granted it in Section 4.2.1.

 

5.3                                 Milestones.  InterMune shall pay to Array
the following amounts [ * ] following the first achievement by Array or by
InterMune or its Affiliates, Sublicensees or other designees, as the case may
be, of each of the following milestones with respect any [ * ] or Product that
itself, or the manufacture, use or sale of which is claimed by a Valid Claim or
that incorporates as its active ingredient a Hit Compound that was identified as
such pursuant to the Research Collaboration (a “Milestone Product”).

 

Milestones

 

Payment Amount

 

 

 

 

 

1.[ * ]

 

$

[ * ]

 

 

 

 

 

2.[ * ]

 

$

[ * ]

 

 

 

 

 

3.[ * ]

 

$

[ * ]

 

 

 

 

 

4.[ * ]

 

$

[ * ]

 

 

 

 

 

5.[ * ]

 

$

[ * ]

 

 

5.3.1                        Milestone payments [ * ] set forth above shall each
be payable [ * ] upon the achievement of the corresponding milestone event with
a Milestone Product [ * ], and [ * ] upon the achievement of the corresponding
milestone event with a Milestone Product [ * ].  Milestone payment [ * ] set
forth above shall be due [ * ], and milestone payments [ * ] set forth above
shall be due [ * ], regardless of the number of additional times the
corresponding milestone events are achieved with one (1) or multiple [ * ] or
Milestone Products.

 

5.3.2                        In the event that one or more milestone payments
described above becomes due (a “Later Milestone”) in relation to the achievement
of a corresponding milestone event with a Milestone Product [ * ], and one or
more of the earlier-stage milestone payments has not been paid to Array in
relation to the achievement of a corresponding milestone event with a Milestone
Product [ * ], then all earlier-stage milestone payments in relation to the
achievement of a corresponding milestone event with a Milestone Product [ * ]
that have not been paid shall be paid together with the Later Milestone
payment.  Similarly, if a Later Milestone becomes due in relation to the
achievement of the corresponding milestone event with a Milestone Product [ * ],
then all earlier stage milestone payments in relation to the achievement of the
corresponding milestone events with a Milestone Product [ * ] shall be paid
together with such Later Milestone. For clarity, nothing in this Section 5.3.2
shall be deemed to contradict the limits

 

12

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set forth in Section 5.3.1 as to the number of times each milestone payment is
available under this Agreement.

 

5.3.3                        For purposes of this Section 5.3, a clinical trial
shall be deemed initiated upon the first dosing of the first patient in such
trial.

 

5.4                                 Royalties.

 

5.4.1                        Products.  InterMune shall pay Array a running
royalty of [ * ] of Net Sales of each Product during the time periods and in
countries in which its manufacture, use or sale of such Product is claimed by a
Valid Claim.  Such rate shall not be increased if multiple Valid Claims claim
the manufacture, use or sale of such Product.  Notwithstanding the foregoing, if
and when the only Valid Claim claiming such manufacture, use or sale is a claim
directed to a method of use or manufacture solely invented by InterMune (an
“InterMune Sole Non-composition Claim”), then no such running royalty shall be
due.  No running royalties shall be due hereunder on the basis of the use of the
Collaboration Know-How.

 

5.4.2                        Royalty Term.  InterMune’s obligation to pay
royalties to Array under this Section 5.4 shall continue for each Product that
itself or the method of manufacture or use of which is claimed by a Valid Claim,
on a country-by-country basis, until such time as there are no Valid Claims
(other than InterMune Sole Non-composition Claims) which but for the licenses
granted herein would be infringed by the manufacture, use or sale of such
Product in such country.  Upon the expiration of such term of royalties in any
country with respect to any Product, InterMune’s license under Section 4.2 with
respect to such Product in such country shall automatically become fully paid,
nonexclusive and perpetual.

 

5.4.3                        Third Party Royalties.  In the event that (i) it
becomes necessary or useful for InterMune to obtain a license under a valid,
issued patent of a Third Party, where such patent covers the composition,
methods of therapeutic use, or all practical methods of synthesis of a Product,
and such patent would be infringed, but for the existence of the Third-Party
license, by the discovery, research, development or sale of such Product, and
(ii) InterMune must pay such Third Party for such license a royalty on Net Sales
of such Product in a particular country, then InterMune may deduct [ * ] of the
royalties reasonably so paid to such Third Party against royalties due Array on
Net Sales of such Product; provided that the royalties otherwise due to Array in
any quarter will not be lower than [ * ] (the “Floor”) by operation of an offset
provided for in this Section 5.4.3.  Amounts that InterMune is unable to deduct
in a particular calendar quarter due to the Floor may be carried forward and
deducted in future calendar quarters, subject always to the Floor in the future
calendar quarters.

 

5.4.4                        Combination Products. If InterMune sells any
Product in the form of a combination product containing one or more active
ingredients in addition to the active ingredient that is a Lead Compound (which
may be either combined in a single formulation or

 

13

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packaged as separate formulations sold as a single package), Net Sales for such
combination product will be calculated by multiplying actual Net Sales of such
combination product by the fraction A/(A+B) where A is the invoice price of the
Lead Compound portion of the combination product if sold separately, and B is
the total invoice price of the other active ingredient or ingredients in the
combination, if sold separately.  If, on a country-by-country basis, the other
active ingredient or ingredients in the combination are not sold separately in
said country, Net Sales for the purpose of determining royalties due hereunder
on the combination product shall be calculated by multiplying actual Net Sales
of such combination product by the fraction A/C where A is the invoice price of
the Lead Compound portion of the combination product if sold separately, and C
is the invoice price of the combination product.  If, on a country-by-country
basis, the Licensed Product is not sold separately in said country, Net Sales
for the purposes of determining royalties of the combination product shall be
determined by the Parties in good faith on the basis of the fair market values
of the different active ingredients of the combination Product.

 

5.4.5                        Compulsory License.  If either Party learns that a
Third Party other than an InterMune Affiliate or Sublicensee has obtained a
compulsory license in any country under the Collaboration Patents, or Identified
Patents or Preparatory Patents exclusively licensed to InterMune hereunder, to
sell a Competitive Product (as defined below), then such Party shall promptly
notify the other Party of such occurrence.  If the royalty rate payable to Array
under such compulsory license is less than the royalty rate otherwise applicable
in such country hereunder, then, in each calendar year in which the Competitive
Product is being sold in such country, and units of the Competitive Product
equal at least [ * ] of the total combined units of such Competitive Product and
the Product in the particular country, sold in such calendar year, then the
royalty rate set forth in Section 5.4.1 shall be reduced, with respect to Net
Sales in such country, to the lower royalty rates applicable in such country
pursuant to such compulsory license.  Any reduction in the royalty due Array as
a result of sales of such Competitive Product shall be available to InterMune
only with respect to Net Sales in those calendar years and in those countries
described by the foregoing sentence.  For the purposes of this Section 5.4.5, a
“Competitive Product” shall mean any product the manufacture, use or sale of
which is claimed by any of the foregoing patents, and which competes with any
Product in the relevant country.  If such compulsory license is required to be
granted by InterMune, then the amounts received by InterMune pursuant to such
compulsory license shall be deemed to be Net Sales hereunder (in lieu of the
sales pursuant to the compulsory license being included in Net Sales).

 

5.4.6                        Later Claims.  If (a) InterMune was not required to
pay royalties on Net Sales of any Product during a time period when and in a
country where a pending claim that would have qualified as a Valid Claim but for
claiming a first priority to more than five (5) years from the date pendency was
determined (that was “Temporarily Disqualified”, with derivative forms being
interpreted accordingly), and that covers such Product itself or the method of
manufacture or use thereof in such country, and (b) such claim later issues as
an issued Valid Claim covering such Product itself or the method of manufacture
or use thereof in such country,

 

14

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then (c) with the next royalty report due pursuant to Section 6.1 after such
issuance (but no sooner than thirty (30) days after such issuance), InterMune
shall report and pay to Array the royalties that would have been due pursuant to
Section 5.4.1 on Net Sales of such Product in such country but for the Temporary
Disqualification of such claim.

 

ARTICLE 6
PAYMENTS; BOOKS AND RECORDS

 

6.1                                 Royalty Reports and Payments.  After the
first sale of a Product on which royalties are payable by InterMune or its
Affiliates or Sublicensees hereunder, InterMune shall make quarterly written
reports to Array within [ * ] after the end of each calendar quarter, stating in
each such report, separately for InterMune and each Affiliate and Sublicensee,
the aggregate Net Sales, by country, of each Product sold during the calendar
quarter upon which a royalty is payable under Section 5.4 above.  InterMune
shall pay to Array royalties due at the rates specified in Section 5.4.

 

6.2                                 Payment Method.  All payments due under this
Agreement shall be made from a bank located in the United States by bank wire
transfer in immediately available funds to a bank account designated by Array. 
All payments hereunder shall be made in U.S. dollars.  In the event that the due
date of any payment subject to Article 5 hereof is a Saturday, Sunday or
national holiday, such payment may be paid on the following business day.  Any
payments that are not paid on the date such payments are due under this
Agreement shall bear interest to the extent permitted by applicable law at the
prime rate as reported by the Chase Manhattan Bank, New York, New York, on the
date such payment is due, plus an additional [ * ], calculated on the number of
days such payment is delinquent.

 

6.3                                 Place of Royalty Payment; Currency
Conversion.  If any currency conversion shall be required in connection with the
calculation of royalties hereunder, such conversion shall be made using the
selling exchange rate for conversion of the foreign currency into U.S. Dollars,
quoted for current transactions reported in The Wall Street Journal (U.S.,
Western Edition), averaged over all business days of the calendar quarter to
which such payment pertains.

 

6.4                                 Records; Inspection.  InterMune and its
Affiliates and Sublicensees shall keep complete, true and accurate books of
account and records for the purpose of determining the royalty amounts payable
under this Agreement.  Such books and records shall be kept by such party for at
least [ * ] following the end of the calendar quarter to which they pertain. 
Such records will be open for inspection during such [ * ] period by a public
accounting firm to whom InterMune has no reasonable objection, solely for the
purpose of verifying royalty statements hereunder.  Such public accounting firm
shall be under written obligations of confidentiality and non-use no less
stringent than those set forth in Article 9.  Such inspections may be made no
more than once each calendar year, at reasonable times and on reasonable
notice.  Inspections conducted under this Section 6.4 shall be at the expense of
Array, unless a variation or error

 

15

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producing an increase exceeding [ * ] of the amount stated for the period
covered by the inspection is established in the course of any such inspection,
whereupon all reasonable costs relating to the inspection for such period and
any unpaid amounts that are discovered will be paid promptly by InterMune to
Array together with interest thereon from the date such payments were due at the
lesser of the prime rate as reported by the Chase Manhattan Bank, New York, New
York, plus an additional [ * ] or the maximum rate permitted by law.

 

6.5                                 Taxes.  Each Party shall bear and, except as
otherwise expressly provided in this Section 6.5, pay any and all taxes, duties,
levies, and other similar charges (and any related interest and penalties),
however designated, imposed on that party as a result of the existence or
operation of this Agreement.  If laws or regulations require that taxes be
withheld, the paying Party will (i) deduct those taxes from the remittable
payment, (ii) timely pay the taxes to the proper taxing authority, and
(iii) send proof of payment to the other Party within sixty (60) days following
that payment.

 

ARTICLE 7
DUE DILIGENCE

 

7.1                                 Due Diligence.  InterMune shall use
commercially reasonable efforts to develop and commercialize at least one
(1) Product, and to obtain the optimum commercial return for it in the major
markets of the world for it, consistent with high professional standards for the
research, development, commercialization, and marketing of pharmaceutical
products of similar commercial value potential and patent coverage; provided,
however, that, and only if, at least one (1) Lead Compound is identified
pursuant to the Research Collaboration.  Such diligence obligation shall be the
sole diligence obligation of InterMune with respect to such development and
commercialization, express or implied, under this Agreement or available in
relation hereto at law or in equity.  For the avoidance of doubt, the overriding
goal of the Research Collaboration is to identify Lead Compounds, one of the
criteria for which compounds is that the composition of matter of each (as
distinct from their methods of use and manufacture) be patentable.  If no such
Lead Compound is identified in the Research Collaboration, then the Research
Collaboration shall not have been successful in the way that the Parties had
anticipated when the Parties entered into this Agreement and InterMune agreed to
fund the Research Collaboration to the extent provided for hereunder.  It is
therefore the Parties’ intent that in such event, in recognition of InterMune’s
sponsorship of the Research Collaboration to the extent provided for hereunder: 
(a) InterMune shall be entitled to retain its license pursuant to Section 4.2,
and (b) InterMune shall have no diligence obligation with respect to the subject
matter of such license.

 

7.2                                 Reports.  Until first commercial
introduction of each royalty-bearing Product by or on behalf of InterMune
hereunder, InterMune shall keep Array apprised of the status of the
pre-clinical, clinical and commercial development of such Product by annually
providing Array with a written report summarizing such activities with respect
to the applicable Product (and the

 

16

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Lead Compound from which such Product is being developed) during the Agreement
Term. The reports described in this Section 7.2 shall contain sufficient
information to allow Array to monitor InterMune’s compliance with this
Agreement, including without limitation, InterMune’s obligations with respect to
the payment of the milestones set forth in Section 5.3. All reports and
information provided under this Section 7.2 shall be deemed Confidential
Information of InterMune.  InterMune’s obligations pursuant to this Section 7.2
are subject to Section 13.4 regarding successors in interest to and Affiliates
of Array.

 

ARTICLE 8
INTELLECTUAL PROPERTY

 

8.1                                 Disclosure and Ownership of Inventions.

 

8.1.1                        Each Party shall promptly disclose to the other any
patentable inventions conceived or first reduced to practice pursuant to the
Research Collaboration by or on behalf of such Party promptly after such
conception or reduction to practice.  In addition, each Party shall disclose to
the other any Collaboration Know-How promptly after it is made or developed.

 

8.1.2                        Inventorship of inventions that would be claimed by
a Collaboration Patent shall be determined in accordance with U.S. laws of
inventorship.  Solely invented such inventions, together with the Collaboration
Patents claiming such sole inventions, shall be solely owned by the Party whose
personnel made the invention.  The Parties joint inventions that would be
claimed by Collaboration Patents, together with the Collaboration Patents
claiming them, shall be jointly owned by the Parties.  Such joint ownership
shall be in accordance with the default rights enjoyed by co-inventors under
U.S. patent law in the absence of a written agreement to the contrary
(throughout the world to the maximum extent permitted by law), such that,
without limitation and except as restricted by the licenses granted in
Sections 4.1 and 4.2, financial commitments set forth in Article 5 and
prosecution and enforcement provisions set forth in this Article 8, each Party
may practice the subject matter of the jointly owned Collaboration Patents
without a duty of accounting to the Party.

 

8.1.3                        Ownership of Collaboration Know-How shall be
determined in accordance with the laws of the state of New York.

 

8.2                                 Patent Prosecution.

 

8.2.1                        Collaboration Technology.  InterMune shall have the
right, [ * ], to (i) prepare, file, prosecute and maintain Collaboration Patents
directed to Hit Compounds, Lead Compounds and/or Products; pharmaceutical
compositions containing a Hit Compound, Lead Compound, and/or a Product; and
methods of making or using any of the foregoing; and (ii) conduct any
interferences, re-examinations, reissues and oppositions relating thereto. 
InterMune shall keep Array fully informed as to the status of such patent
matters, including without

 

17

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limitation, by providing Array the opportunity, as far in advance of filing
dates as possible, to fully review and comment on any documents which will be
filed in any patent office; reasonably considering Array’s comments thereon; and
providing Array copies of any substantive documents relating to the
Collaboration Patents that InterMune receives from patent offices promptly after
receipt, including notice of all interferences, reissues, re-examinations,
oppositions or requests for patent term extensions.  InterMune may elect, upon
thirty (30) days prior notice, to discontinue prosecution of any such patent
applications and/or not to file or conduct any further activities with respect
to such patent applications or patents.  In the event InterMune declines to file
or, having filed, fails to further prosecute or maintain any such patent
applications or patents, or conduct any proceedings including, but not limited
to, interferences, re-examinations, reissues, oppositions relating thereto, then
Array shall have the right to prepare, file, prosecute and maintain such patent
applications and patents in such countries as it deems appropriate, and conduct
such proceedings, at its sole expense.  In such case, InterMune shall promptly
execute all necessary documents that may be required in order to enable Array to
file, prosecute and maintain such patent applications and to conduct any such
proceedings.

 

8.2.2                        Preparatory Patents.  Section 8.2.1 shall apply
mutatis mutandis to the preparation, filing, prosecution and maintenance of
solely those Preparatory Patents that are directed primarily to Hit Compound(s)
and/or Product(s) themselves, or the method of manufacture or use of any of them
(“Primary Preparatory Patents”), as it does to that of Collaboration Patents,
except to the extent that Array cannot grant InterMune preparation, filing,
prosecution and/or maintenance rights due to rights granted to a Third Party by
Array with regard to any Primary Preparatory Patent prior to the Effective
Date.  Array will keep InterMune reasonably informed of the preparation filing,
prosecution and maintenance of the other Preparatory Patents to the extent
relevant to any Hit Compound, Lead Compound or Product.  It is understood and
agreed that InterMune’s rights under this Section 8.2.2 shall accrue with
respect to a particular patent or patent application at the time Array
identifies such patent or patent application as being a Preparatory Patent;
provided that Array will make reasonable efforts to timely identify the
Preparatory Patents.

 

8.2.3                        Other Technology.  This Agreement does not alter
the Parties’ responsibilities with respect to patent applications and patents
that are not Collaboration Patents or Preparatory Patents.  Accordingly, each
Party shall be responsible, at its own expense and in its sole discretion, for
preparing, filing, prosecuting and maintaining, in such countries as it deems
appropriate, any and all patent applications and patents (other than
Collaboration Patents and Preparatory Patents) directed to inventions owned or
controlled by such Party and conducting any interferences, re-examinations,
reissues and oppositions relating to such patent applications and patents.

 

8.2.4                        Cooperation.  InterMune and Array shall each
reasonably cooperate with and assist the other at its own expense in connection
with the activities described in

 

18

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Section 8.2.1, at the other Party’s reasonable request, including without
limitation by making scientists and scientific records reasonably available to
the prosecuting Party.

 

8.2.5                        Certain Circumstances.  This Section 8.2 is subject
to the provisions of Section 13.4 regarding successors in interest to and
Affiliates of Array.

 

8.3                                 Enforcement and Defense.

 

8.3.1                        Notice.  Each Party shall promptly notify the other
of any knowledge it acquires of any potential infringement of the Collaboration
Patents and Preparatory Patents by a Third Party.

 

8.3.2                        InterMune.  In the event that a Party believes a
Third Party is infringing any Collaboration Patent, InterMune shall have the
first right, but not the obligation, to take reasonable legal action to enforce
such Collaboration Patent and defend any declaratory judgment action relating to
such infringement, at its sole cost and expense.  If, within six (6) months
following receipt of notice from Array of such infringement, InterMune fails to
take such action to halt a commercially significant infringement of a patent
filed pursuant to Section 8.2.1, Array shall, in its sole discretion, have the
right, at its sole expense, to take such action; provided that if such
Collaboration Patent is solely owned by InterMune, Array’s action shall be
limited to the prevention of infringing activities with products that are
competitive with Products then being commercialized by InterMune (the “Back-Up
Right”).  Prior to the Back-Up Right becoming effective for a given
Collaboration Patent, Array shall not notify any Third Party of their alleged
infringement of that Collaboration Patent without InterMune’s advance written
consent.  The foregoing in this Section 8.3.2 shall apply mutatis mutandis to
the enforcement of Primary Preparatory Patents (as defined in Section 8.2.2),
except to the extent that Array cannot grant InterMune preparation, filing,
prosecution and/or maintenance rights due to rights granted to a Third Party by
Array with regard to any Primary Preparatory Patent prior to the Effective
Date.  In addition, the foregoing regarding the Back-Up Right shall apply
mutatis mutandis to permit InterMune to enforce Preparatory Patents that are not
Primary Preparatory Patents in the same manner and subject to the same
limitations as Array’s Back-Up Right with respect to Collaboration Patents,
including without limitation the requirement not to notify infringers until the
Back-Up Right becomes effective.

 

8.3.3                        Cooperation; Costs and Recoveries.  Each Party
agrees to render such reasonable assistance as the enforcing Party may request,
at the enforcing Party’s expense.  Amounts recovered from enforcing a
Collaboration Patent or Preparatory Patent, whether as payment in settlement or
otherwise, shall first be used to reimburse the Parties for their expenses in
enforcing the patent (including attorneys’ and experts’ fees), with the
remainder, if any, to be divided as follows:

 

19

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(a)                                  if InterMune prosecuted the action, then
(i) Array shall be paid an amount equal to (x) the proportion that the royalties
that would have been due upon sales of the infringing product if the infringing
sales had been Net Sales of a Product sold by InterMune bear to the total
recovery multiplied by (y) such remaining recovery, and (ii) the remaining
portion of such remaining recovery shall be paid to InterMune; and

 

(b)                                 if Array prosecuted the action, then Array
shall be paid twice the amount it would have received under (a) had InterMune
prosecuted the action, and InterMune shall be paid the remaining portion of such
remaining recovery.

 

Notwithstanding the foregoing, if the patent that was enforced was a Preparatory
Patent other than a Primary Preparatory Patent (as defined in Section 8.2.2),
the action was prosecuted by Array, and the enforcement action extended to
infringing activities competitive with Array’s or Array’s other licensees’
products, then the recovery shall be split between (i) an amount to be shared
between Array and its other licensees as they may agree amongst themselves, and
(ii) an amount to be shared between Array and InterMune in accordance with
8.3.3(b).  The division between (i) and (ii) shall be made based on the extent
to which the infringement was competitive with Array’s and its other licensees’
products, relative to the extent to which it was competitive with Products.

 

ARTICLE 9
CONFIDENTIALITY

 

9.1                                 Confidential Information.  Except as
otherwise expressly provided herein, the Parties agree that, for [ * ], the
receiving Party shall not, except as expressly provided in this Article 9,
disclose to any Third Party or use for any purpose any Confidential Information
furnished to it by the disclosing Party hereto pursuant to this Agreement, or
any results of the Research Collaboration (“Results”).  For purposes of this
Article 9, “Confidential Information” shall mean any information, 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 at the time of
such disclosure and is confirmed in writing as confidential or proprietary
within forty-five (45) days after such disclosure.  The Results to the extent
relating to Hit Compounds and/or Lead Compounds shall be deemed to be the
Confidential Information of InterMune.  Notwithstanding the foregoing,
Confidential Information shall not include any information that can be
established by the receiving Party by competent proof that such information:

 

(a)                                  was already known to the receiving Party at
the time of disclosure;

 

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

 

20

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(c)                                  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;

 

(d)                                 was independently developed by the receiving
Party as demonstrated by documented written evidence prepared contemporaneously
with such independent development; or

 

(e)                                  was disclosed to the receiving Party, other
than under an obligation of confidentiality, by a Third Party who had no
obligation to the disclosing Party not to disclose such information to others.

 

9.2                                 Permitted Use and Disclosures.  Each Party
hereto may use or disclose Confidential Information disclosed to it by the other
Party or Results to the extent such use or disclosure is reasonably necessary
and permitted in the exercise of the rights granted hereunder in filing or
prosecuting patent applications, prosecuting or defending litigation, complying
with applicable governmental laws, regulations or court order or otherwise
submitting information to tax or other governmental authorities, conducting
clinical trials, or making a permitted sublicense or otherwise exercising
license rights expressly granted by the other Party to it pursuant to the terms
of this Agreement; provided that if a Party is required to make any such
disclosure, other than pursuant to a confidentiality agreement, it will give
reasonable advance notice to the other Party of such disclosure and, save to the
extent inappropriate in the case of patent applications, will use its reasonable
efforts to secure confidential treatment of such information in consultation
with the other Party prior to its disclosure (whether through protective orders
or otherwise) and disclose only the minimum necessary to comply with such
requirements.

 

9.3                                 Termination of Prior Agreement.  This
Agreement supersedes the Confidentiality Agreement between the Parties dated
June 6, 2002.  All information exchanged between the Parties under that the
Confidentiality Agreement shall be deemed Confidential Information hereunder and
shall be subject to the terms of this Article 9.

 

9.4                                 Nondisclosure of Terms.  Each of the Parties
hereto agrees that it and its Affiliates shall not to disclose the material
terms of this Agreement to any Third Party without the prior written consent of
the other Party hereto, which consent shall not be unreasonably withheld, except
to such Party’s attorneys, advisors, investors and others on a need to know
basis under circumstances that reasonably ensure the confidentiality thereof, or
to the extent required by law.  Notwithstanding the foregoing, the Parties shall
agree upon a press release and timing to announce the execution of this
Agreement, together with a corresponding Q&A outline for use in responding to
inquiries about the Agreement.  Thereafter, Array and InterMune may each
disclose to Third Parties the information contained in such press release and
Q&A without the need for further approval by the other.  In addition, InterMune
and Array may make public statements regarding the progress of the Research
Collaboration and the achievement of

 

21

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milestones and fees with respect thereto, following consultation and mutual
agreement, the consent of neither Party to be unreasonably withheld, subject to
Section 9.5 as regards the results of the Research Collaboration.  Advance
review and consultation shall not be required to repeat information contained in
a press release that had itself been the subject of such procedures.  Either
Party may disclose the terms of this Agreement to potential investors (other
than investors through the public markets) who are bound in writing by
obligations of non-disclosure and non-use of the terms of this Agreement at
least as stringent as those contained in this Article 9.  The Parties
acknowledge that either or both of the Parties may be obligated to file a copy
of this Agreement with the U.S. Securities and Exchange Commission (the “SEC”),
and each Party shall be entitled to make such a required filing, provided that
it requests confidential treatment of the more sensitive terms hereof to the
extent such confidential treatment is reasonably available to the filing Party
under the circumstances then prevailing.  In the event of any such filing, the
filing Party will provide the non-filing Party with an advance copy of the
Agreement marked to show provisions for which the filing Party intends to seek
confidential treatment and shall obtain such other Party’s written consent to
the set of provisions for which the filing Party will initially seek
confidential treatment, such consent not to be unreasonably withheld.

 

9.5                                 Publication.  Reasonably in advance of any
oral or written presentation, or written submission for publication of any
manuscript, that would disclose any patentable invention conceived or reduced to
practice by Array (solely or jointly with InterMune) pursuant to the Research
Collaboration for which invention a patent application has not been filed in any
of the United States, Japan, with the European Patent Office or pursuant to the
Patent Cooperation Treaty, the Party wishing to make such a publication shall
notify the other Party and the Parties will discuss filing patent applications
claiming such intention.  In addition, during the Agreement Term, Array shall
not make any oral or written presentation, or written submission for
publication, of any data or information produced pursuant to the Research
Collaboration or otherwise relating to Collaboration Products developed or
commercialized by InterMune, its Affiliates or Sublicensees without InterMune’s
advance written consent, which InterMune shall be entitled to withhold in
InterMune’s sole discretion.  Any publication of the results of the Research
Collaboration shall include an acknowledgment of the contributions of each
Party, to the extent consistent with customary scientific norms.

 

ARTICLE 10
REPRESENTATIONS AND WARRANTIES

 

10.1                           InterMune.  InterMune represents, warrants and
covenants (as applicable) on its own behalf and on behalf of its Affiliates
that:  (i) it has the legal power, authority and right to enter into this
Agreement and to perform all of its obligations hereunder; (ii) this Agreement
is a legal and valid obligation binding upon it and enforceable in accordance
with its terms; (iii) it has the full right to enter into this Agreement, and to
fully perform its obligations hereunder; and (iv) it has not previously granted,
and during the term of this Agreement will not knowingly

 

22

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make any commitment or grant any rights which are in conflict in any way with
the rights and licenses granted herein.

 

10.2                           Array.  Array represents, warrants and covenants
(as applicable) on its own behalf and on behalf of its Affiliates that: (i) it
has the legal right and power to extend the rights granted in this Agreement;
(ii) this Agreement is a legal and valid obligation binding upon it and
enforceable in accordance with its terms; (iii) it has the full right to enter
into this Agreement, and to fully perform its obligations hereunder; (iv) it has
not previously granted, and during the term of this Agreement will not knowingly
make any commitment or grant any rights which are in conflict in any way with
the rights and licenses granted herein and (v) other than as included in the
Preparatory Patents and Preparatory Know-How, as of the Effective Date, Array
and its Affiliates do not own or control any patent applications, patents or
inventions claiming or constituting any Target, Reserved Target, or a method of
manufacture or use of any of the foregoing, or specifically claiming a chemical
entity identified by screening against a Target or Reserved Target, where
identification by such screening is a limitation of the patent claim.  Array
makes no representation or warranty with respect to patents or other
intellectual property rights of Third Parties covering any Target or Reserved
Target.

 

10.3                           Disclaimer.  InterMune and Array specifically
disclaim any guarantee that the Research Collaboration will be successful, in
whole or in part.  The failure of the Parties to successfully develop Hit
Compounds, Lead Compounds and/or Products will not constitute a breach of any
representation or warranty or other obligation under this Agreement.  EXCEPT AS
OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, ARRAY AND INTERMUNE MAKE NO
REPRESENTATIONS AND EXTEND NO WARRANTIES OR CONDITIONS OF ANY KIND, EITHER
EXPRESS OR IMPLIED, WITH RESPECT TO THE COLLABORATION TECHNOLOGY, HIT COMPOUNDS,
LEAD COMPOUNDS, INFORMATION DISCLOSED HEREUNDER OR PRODUCTS INCLUDING, BUT NOT
LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
VALIDITY OF ANY COLLABORATION TECHNOLOGY, PATENTED OR UNPATENTED, OR
NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.

 

ARTICLE 11
INDEMNIFICATION

 

11.1                           InterMune.  InterMune agrees to indemnify, defend
and hold Array and its Affiliates and their respective directors, officers,
employees, agents and their respective successors, heirs and assigns (the “Array
Indemnitees”) harmless from and against any losses, costs, damages, liabilities
or expense (including reasonable attorneys’ and professional fees and other
expenses of litigation) (collectively, “Liabilities”) arising, directly or
indirectly out of or in connection with Third-Party claims, suits, actions,
demands or judgments, relating to (i) the development manufacture, use, sale or
other distribution by or on behalf of InterMune, its

 

23

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Affiliates or Sublicensees or other designees of any Hit Compounds, Lead
Compounds and Products (including, without limitation, product liability and
patent infringement claims), (ii) InterMune’s conduct of the Research
Collaboration; and/or (iii) any breach by InterMune of the representations,
warranties and covenants made in Article 10 of this Agreement, except, in each
case, to the extent such Liabilities result from the gross negligence or
intentional misconduct of Array or are subject to indemnification by Array under
Section 11.2.

 

11.2                           Array.  Array agrees to indemnify, defend and
hold InterMune and its Affiliates and their respective directors, officers,
employees, agents and their respective heirs and assigns (the “InterMune
Indemnitees”) harmless from and against any Liabilities arising, directly or
indirectly out of or in connection with Third Party claims, suits, actions,
demands or judgments, relating to (i) Array’s conduct of the Research
Collaboration, and/or (ii) any breach by Array of its representations,
warranties and covenants made in Article 10 of this Agreement, except, in each
case, to the extent such Liabilities result from the negligence or intentional
misconduct of InterMune or are subject to indemnification by InterMune under
Section 11.1.

 

11.3                           Indemnification Procedure.  A Party that intends
to claim indemnification (the “Indemnitee”) under this Article 11 shall promptly
notify the other Party (the “Indemnitor”) in writing of any claim, complaint,
suit, proceeding or cause of action with respect to which the Indemnitee intends
to claim such indemnification (for purposes of this Section 11.3, each a
“Claim”), and the Indemnitor shall have sole control of the defense and/or
settlement thereof; provided that the Indemnitee shall have the right to
participate, at its own expense, with counsel of its own choosing in the defense
and/or settlement of such Claim.  The indemnification obligations of the Parties
under this Article 11 shall not apply to amounts paid in settlement of any Claim
if such settlement is effected without the consent of the Indemnitor, which
consent shall not be withheld or delayed unreasonably.  The failure to deliver
written notice to the Indemnitor within a reasonable time after the commencement
of any such Claim, if prejudicial to its ability to defend such action, shall
relieve such Indemnitor of any liability to the Indemnitee under this
Article 11, but the omission so to deliver written notice to the Indemnitor
shall not relieve the Indemnitor of any liability to any Indemnitee otherwise
than under this Article 11.  The Indemnitee under this Article 11, and its
employees, at the Indemnitor’s request and expense, shall provide full
information and reasonable assistance to Indemnitor and its legal
representatives with respect to such Claims covered by this indemnification.  It
is understood that only InterMune may claim indemnity under this Article 11 (on
its own behalf or on behalf of a InterMune Indemnitee), and other InterMune
Indemnitees may not directly claim indemnity hereunder.  Likewise, it is
understood that only Array may claim indemnity under this Article 11 (on its own
behalf or on behalf of an Array Indemnitee), and other Array Indemnitees may not
directly claim indemnity hereunder.  If the Parties cannot agree as to the
application of Sections 11.1 and 11.2 to any particular Claim, then each Party
may conduct its own defense against same, and each reserves the right to claim
indemnity hereunder from the other Party upon resolution of the underlying
Claim.

 

24

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ARTICLE 12
TERM AND TERMINATION

 

12.1                           Term.  The term of this Agreement shall commence
on the Effective Date, and shall continue in full force and effect on a
country-by-country and Product-by-Product basis until InterMune and its
Sublicensees have no remaining royalty payment obligations in a country, unless
terminated earlier as provided in Section 4.4 or this Article 12.  In accordance
with Section 5.4.2, upon expiration of this Agreement with respect to a
particular Product in a particular country, InterMune shall have a fully paid,
non-exclusive and perpetual license under the Collaboration Technology in such
country for such Product.

 

12.2                           Termination for Breach.  Either Party to this
Agreement may terminate the Research Collaboration and this Agreement in the
event the other Party hereto shall have materially breached this Agreement, and
such breach shall have continued for sixty (60) days after written notice
thereof was provided to the breaching Party by the non-breaching Party.  Any
termination shall become effective at the end of such sixty (60) day 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 sixty (60) day period (or, in
the case of a breach incapable of cure within such period, provided a written
plan to cure such breach as soon as reasonably practicable, together with an
undertaking to carry out such plan); provided, however, in the case of a failure
to pay any amount due hereunder, such default may be the basis of termination
thirty (30) days following the date that notice of such default was provided to
the breaching Party; provided that the unpaid amount is not in dispute.  If one
Party alleges material breach and the other Party disputes whether such a breach
has occurred, then this Agreement shall not terminate pursuant to this
Section 12.2 until and unless such dispute is resolved and a material breach is
determined to have occurred.

 

12.3                           Termination for Insolvency.  If voluntary or
involuntary proceedings by or against a Party are instituted in bankruptcy under
any insolvency law, or a receiver or custodian is appointed for such Party, or
proceedings are instituted by or against such Party for corporate
reorganization, dissolution, liquidation or winding-up of such Party, which
proceedings, if involuntary, shall not have been dismissed within sixty (60)
days after the date of filing, or if such Party makes an assignment for the
benefit of creditors, or substantially all of the assets of such Party are
seized or attached and not released within sixty (60) days thereafter, the other
Party may immediately terminate the Research Collaboration and/or this
Agreement, effective upon notice of such termination.

 

12.4                           Permissive Termination.  After the first
anniversary of the Effective Date, InterMune shall have the right to terminate
this Agreement upon [ * ] written notice to Array.

 

25

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12.5                           Effect of Breach or Termination.

 

12.5.1                  Accrued Rights and Obligations.  Termination of this
Agreement for any reason shall not release either 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 any rights and remedies it may have
hereunder or at law or in equity with respect to any breach of this Agreement.

 

12.5.2                  Return of Materials.  Upon any termination of this
Agreement, InterMune and Array shall promptly return to the other all
Confidential Information (including, without limitation, all Know-How that is
Confidential Information) received from the other Party, except one copy of
which may be retained for archival purposes.

 

12.5.3                  Survival Sections.  [ * ] of this Agreement shall
survive the expiration or termination of this Agreement for any reason.  In the
event of termination by InterMune under Section 12.2 or 12.3, [ * ] shall
survive such termination in addition to the above-referenced [ * ]; InterMune
shall have [ * ] to enforce the Collaboration Patents and Primary Preparatory
Patents (as defined in 8.2.2) licensed to InterMune hereunder against infringing
products that would be competitive with Products; and [ * ] shall survive until
[ * ].

 

ARTICLE 13
MISCELLANEOUS

 

13.1                           Governing Laws.  This Agreement and any dispute
arising from the construction, performance or breach hereof shall be governed by
and construed, and enforced in accordance with, the laws of the state of New
York, without reference to conflicts of laws principles.  Any such dispute, if
not resolved informally between the Parties, shall be resolved by submission to
a court of competent subject matter jurisdiction located within the federal
district division in which the Party that is the defendant in the suit as
initially filed is located (for InterMune, the San Francisco division of the
Northern District of the State of California, and for Array, the Boulder
division of the District for the State of Colorado) Each Party hereby consents
to the jurisdiction and venue of all courts located within the appropriate
district in accordance with the foregoing sentence and waives all defenses such
Party may have to the jurisdiction and venue of such courts, including without
limitation the defense of forum non conveniens or that such a court may not
assert personal jurisdiction over such Party.

 

13.2                           Waiver.  It is agreed that no waiver by either
Party hereto of any breach or default of any of the covenants or agreements
herein set forth shall be deemed a waiver as to any subsequent and/or similar
breach or default.

 

13.3                           Assignment.  This Agreement shall not be
assignable by either Party to any Third Party hereto without the written consent
of the other Party hereto.  Notwithstanding the

 

26

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foregoing, either Party may assign this Agreement, without such consent, to an
entity that acquires all or substantially all of the business or assets of such
Party to which this Agreement pertains, whether by merger, reorganization,
acquisition, sale, or otherwise; provided, however, that within thirty (30) days
of such an assignment, the assignee shall agree in writing to be bound by the
terms and conditions of this Agreement.  This Agreement shall be binding upon
and accrue to the benefit any permitted assignee, and any such assignee shall
agree to perform the obligations of the assignor.

 

13.4                           Certain Companies.  If any entity having any
research or development program relating to [ * ] (“Competing Program”) succeeds
in interest hereunder to Array (the “Competitor”), then (a) InterMune shall
thereafter not be required to make the reports that would otherwise be required
pursuant to Section 7.2; (b) the entity that was Array immediately prior to such
succession in interest (“Original Array”) shall not disclose any patent-related
information (including without limitation draft filings) received from InterMune
pursuant to Section 8.2 to the Competitor, including without limitation by
involvement of Original Array personnel with any Competing Program; (c) the
rights to review and provide comments regarding patent prosecution, to have such
comments considered by InterMune, and the back-up prosecution rights provided
for in Section 8.2.1 may be exercised only by personnel of Original Array not
involved in any way with any Competing Program, and shall not otherwise inure to
the Competitor; (d) Original Array shall maintain sufficient capacity and
resources to fulfill its obligations under the Research Collaboration for the
remainder of the Research Term, if any; (e) Original Array shall not disclose
non-public Collaboration Technology to the Competitor for use in research,
development or commercialization activities directed to a Target or chemical
entities active against such Target (or during the Research Term, directed to a
Reserved Target or chemical entities active against such Reserved Target),
including without limitation by allowing personnel having had access to any
Collaboration Technology to have any involvement in any Competing Program; and
(f) Preparatory Patents and Preparatory Know-How shall not include any
intellectual property or subject matter that, prior to the succession in
interest, was held or controlled by the Assignee.  The foregoing in this
Section 13.4, except for clause (a), shall apply mutatis mutandis to any
situation in which a Competitor becomes an Affiliate of Array, as it does to a
Competitor’s succession in interest hereunder to Array.  This Section 13.4 shall
not be deemed to limit Article 9.

 

13.5                           Independent Contractors.  The relationship of the
Parties hereto is that of independent contractors.  The Parties hereto are not
deemed to be agents, partners or joint venturers of the others for any purpose
as a result of this Agreement or the transactions contemplated thereby.

 

13.6                           Compliance with Laws.  In exercising their rights
under this license, the Parties shall fully comply in all material respects with
the requirements of any and all applicable laws, regulations, rules and orders
of any governmental body having jurisdiction over the exercise of

 

27

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rights under this license including, without limitation, those applicable to the
discovery, development, manufacture, distribution, import and export and sale of
Products pursuant to this Agreement.

 

13.7                           Patent Marking.  InterMune agrees to mark and
have its Affiliates and Sublicensees mark all Products sold pursuant to this
Agreement in accordance with the applicable statute or regulations relating to
patent marking in the country or countries of manufacture and sale thereof, to
the extent commercially reasonable for it to do so.

 

13.8                           Notices.  All notices, requests and other
communications hereunder shall be in writing and shall be personally delivered
or 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 and shall be deemed to
have been given upon receipt:

 

If to InterMune:

 

InterMune, Inc.

 

 

3280 Bayshore Boulevard

 

 

Brisbane, California 94005

 

 

Attention: General Counsel

 

 

Facsimile: (408) 508-0006

 

 

 

If to Array:

 

Array BioPharma Corporation

 

 

3200 Walnut Street

 

 

Boulder, CO 80301

 

 

Attention: Chief Operating Officer

 

 

Facsimile: (303) 381-6697

 

 

 

With a copy to:

 

Array BioPharma Corporation

 

 

3200 Walnut Street

 

 

Boulder, CO 80301

 

 

Attention: General Counsel

 

 

Facsimile: (303) 381-6639

 

13.9                           Severability.  Each Party hereby agrees that it
does not intend to violate any public policy, statutory or common laws, rules,
regulations, treaty or decision of any government agency or executive body
thereof of any country or community or association of countries.  Should one or
more provisions of this Agreement be or become invalid, the Parties hereto shall
substitute, by mutual consent, valid provisions for such invalid provisions
which valid provisions in their economic effect are sufficiently similar to the
invalid provisions that it can be reasonably assumed that the Parties would have
entered into this Agreement with such valid provisions.  In case such valid
provisions cannot be agreed upon, the invalidity of one or several provisions of
its Agreement shall not affect the validity of this Agreement as a whole, unless
the invalid

 

28

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provisions are of such essential importance to this Agreement that it is to be
reasonably assumed that the Parties would not have entered into this Agreement
without the invalid provisions.

 

13.10                     Advice of Counsel.  Array and InterMune have each
consulted counsel of their choice regarding this Agreement, and each
acknowledges and agrees that this Agreement shall not be deemed to have been
drafted by one Party or another and will be construed accordingly.

 

13.11                     Performance Warranty.  Each Party hereby warrants and
guarantees the performance of any and all rights and obligations of this
Agreement by its Affiliates and Sublicensees.

 

13.12                     Force Majeure.  Neither Party shall lose any rights
hereunder or be liable to the other Party for damages or losses (except for
payment obligations) on account of failure of performance by the defaulting
Party if the failure is occasioned by war, strike, fire, Act of God, act of
terrorism, earthquake, flood, lockout, embargo, governmental acts or orders or
restrictions, failure of suppliers, or any other reason where failure to perform
is beyond the reasonable control and not caused by the negligence, intentional
conduct or misconduct of the non-performing Party and such Party has exerted all
reasonable efforts to avoid or remedy such force majeure; provided, however,
that in no event shall a Party be required to settle any labor dispute or
disturbance.

 

13.13                     Complete Agreement.  This Agreement with its Exhibits,
constitutes the entire agreement, both written and oral, between the Parties
with respect to the subject matter hereof, and all prior agreements respecting
the subject matter hereof, either written or oral, express or implied, shall be
abrogated, canceled, and are null and void and of no effect.  No amendment or
change hereof or addition hereto shall be effective or binding on either of the
Parties hereto unless reduced to writing and executed by the respective duly
authorized representatives of Array and InterMune.

 

13.14                     Consultation.  If an unresolved dispute arises out of
or relates to this Agreement, or the breach thereof, either Party may refer such
dispute to the Chief Executive Officer of InterMune and the Chief Executive
Officer of Array, who shall meet in person or by telephone within forty-five
(45) days after such referral to attempt in good faith to resolve such dispute.

 

13.15                     Headings.  The captions to the several Sections hereof
are not a part of this Agreement, but are included merely for convenience of
reference and shall not affect its meaning or interpretation.

 

13.16                     Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same agreement.

 

29

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

 

INTERMUNE, INC.

 

ARRAY BIOPHARMA, INC.

 

 

 

By:

 

 

By:

 

 

 

 

Name:

 

 

Name:

 

 

 

 

Title:

 

 

Title:

 

 

30

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EXHIBIT A

 

TARGETS

 

Reserved Targets

 

1.                                         [ * ]

 

2.                                         [ * ]

 

3.                                         [ * ]

 

4.                                         [ * ]

 

Target

 

1.                                       [ * ]

 

31

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[ * ] = 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.

 

CONFIDENTIAL

 

VIA FAX AND FEDERAL EXPRESS

 

May 8, 2003

 

Patrice Lee

Array BioPharma, Inc.

3200 Walnut Street

Boulder, CO 80301

 

RE: Amendment No. 1 to the Drug Discovery Collaboration Agreement

 

Dear Ms. Lee:

 

As you know, InterMune, Inc. (“InterMune”) and Array BioPharma, Inc. (“Array”)
are parties to that certain Drug Discovery Collaboration Agreement dated
September 13, 2002 (the “Agreement”).   Because InterMune now wishes to transfer
to Array, and Array wishes to accept, the materials described on Exhibit A
hereto (the “Materials”), the parties hereby agree to add a new Section 9.6 to
the Agreement as follows:

 

“9.6         Transfer of Materials.

 

(a)           Array shall use the Materials solely to perform its obligations
under the Agreement.  Array will not sell, transfer, disclose or otherwise
provide access to the Materials, or any method or process relating thereto or
any material that could not have been made but for access to the foregoing, to
any person or entity without the prior express written consent of InterMune. 
Ownership of the Materials will remain solely and exclusively with InterMune,
and Array will not acquire any right, title or interest in or to the Materials.

 

(b)           Array acknowledges that the Materials may have biological and/or
chemical properties that are unpredictable and unknown at the time of transfer,
that they are to be used with caution and prudence and that they are not to be
used for testing in or treatment of humans.

 

(c)           Array will, at InterMune’s written directions, return or dispose
of any unused portions of the Material.  Any such disposal will conform to
prescribed federal, state and local guidelines.

 

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

 

(d)           THE MATERIALS ARE SUPPLIED WITH NO WARRANTIES OF ANY KIND, EXPRESS
OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OR THAT THEY ARE FREE FROM THE RIGHTFUL CLAIM
OF ANY THIRD PARTY BY WAY OF INFRINGEMENT OR THE LIKE.  INTERMUNE MAKES NO
REPRESENTATIONS THAT THE USE OF THE MATERIALS WILL NOT INFRINGE ANY PATENT OR
OTHER PROPRIETARY RIGHTS OF ANY THIRD PARTIES.

 

(e)           This Section 9.6 will survive any expiration or termination of the
Agreement.

 

Except as set forth above, all terms and conditions of the Agreement will remain
in full force and effect.  Any capitalized term used herein and not otherwise
defined will have the same meaning as set forth in the Agreement.

 

Please acknowledge your agreement to the above by having an authorized Array
representative countersigning both enclosed copies of this letter where
indicated below, and returning one original to the attention of Corina Hughes,
Manager, Legal Affairs, at InterMune.  We would be happy to proceed based on
receipt of a facsimile copy while awaiting the original.

 

Sincerely,

 

 

Stephen N. Rosenfield

Executive Vice President of Legal Affairs

 

Acknowledged and Agreed:

 

ARRAY BIOPHARMA, INC.

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

 

Date:

 

 

 

General Counsel, Array BioPharma

 

Chief Operating Officer,  Array BioPharma

 

2

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EXHIBIT A

 

[ * ].

 

3

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

 

[ * ] = 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.

 

CONFIDENTIAL

 

[g161581ka03i001.jpg]

 

VIA FAX AND FEDERAL EXPRESS

 

January 7, 2004

 

David L. Snitman, Ph.D.

Chief Operating Officer

Array BioPharma, Inc.

3200 Walnut Street

Boulder, CO 80301

 

RE:                            Amendment No. 2 to the Drug Discovery
Collaboration Agreement (“Amendment No. 2”)

 

Dear Dr. Snitman:

 

As you know, InterMune, Inc. (“InterMune”) and Array BioPharma, Inc. (“Array”)
are parties to that certain Drug Discovery Collaboration Agreement dated
September 13, 2002, as amended May 8, 2003 (the “Agreement”).   The parties
agree that the Agreement is hereby amended as follows, effective as of the date
of this Amendment No. 2 (“Amendment Effective Date”):

 

1.                                       The [ * ] is hereby removed as a [ * ]
of the Agreement solely for the purpose of Array entering into an [ * ]
arrangement with a third party (the “Third Party”) for [ * ], and subject to the
terms of this Amendment No. 2.  Accordingly:

 

(a)                                  InterMune hereby waives its option to [ * ]
under Section 2.7.2 of the Agreement solely with respect to such arrangement
with the Third Party.

 

(b)                                 If such arrangement with the Third Party has
not been concluded within three (3) months from the Amendment Effective Date as
evidenced by an executed written agreement, then [ * ] automatically will be
reinstated as a [ * ] of the Agreement, and all of InterMune’s rights and
Array’s obligations under the Agreement with respect to [ * ] will be reinstated
in full.  InterMune agrees that Array does not need to provide InterMune

 

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with a copy of such written agreement, so long as InterMune receives by three
(3) months from the Amendment Effective Date a written certification, in the
form attached as Exhibit A hereto, from an authorized officer of Array that a
written agreement for such [ * ] arrangement has been executed.  Any material
misrepresentation set forth in such certification will be deemed a material
breach of this Amendment No. 2.

 

(c)                                  If such arrangement is concluded with the
Third Party, but the [ * ] thereafter revert to Array for any reason, then [ * ]
automatically will be reinstated as a [ * ] of the Agreement, and all of
InterMune’s rights and Array’s obligations under the Agreement with respect to
[ * ] will be reinstated in full.   Array will give InterMune prompt written
notice of any such reversion.

 

(d)                                 Nothing in this Amendment No. 2 will be
deemed to:

 

(i)            grant to Array any further right, title or interest in or to any
intellectual property (including, without limitation, any patent rights)
Controlled by InterMune other than as expressly stated in Sections 4.1.1 and 4.3
of the Agreement;

 

(ii)           permit Array to use any Hit Compound, Lead Compound or Product
for any purpose other than the Research Collaboration conducted in accordance
with the Agreement; nor

 

(iii)          permit Array to grant to any third party any right, title or
interest in or to any Hit Compound, Lead Compound or Product.

 

2.                                       In consideration for InterMune’s
agreement as set forth in Section 1 above, and irrespective of the outcome of
the negotiations or arrangement between Array and the Third Party:

 

(a)                                  (i)            During the Research Term,
Array shall provide, at its sole cost and expense, [ * ] additional FTEs to
conduct the Research Collaboration.  Such additional FTEs will bring the present
number of FTEs conducting the Research Collaboration from [ * ] to [ * ].  Each
such individual shall have the appropriate skills, training, experience and
ability to perform his or her responsibilities under the Research Plan.

 

(ii)           If Array fails to provide such additional FTEs as described in
subsection (a)(i) above, then in addition to any other remedies available to
InterMune at law or equity, InterMune shall be entitled to offset the costs of
such additional FTEs (based on the Array FTE Rate, as defined in Section 5.1.2
of the Agreement) against any amounts due to Array

 

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under the Agreement, including, without limitation, any milestone and/or royalty
payments.

 

(b)                                 Except for purposes of the Research
Collaboration conducted in accordance with the Agreement, Array shall not
develop (either pre-clinically or clinically), use, import, make, have made,
sell or offer for sale any Hit Compound, Lead Compound or Product, including,
without limitation, in conjunction with any other compound or product.

 

(c)                                  Array shall not enable (including without
limitation through the grant of a license or covenant) any Array Affiliate or
Third Party to develop (either pre-clinically or clinically), use, import, make,
have made, sell or offer for sale any Hit Compound, Lead Compound or Product,
including, without limitation, in conjunction with any other compound or
product.

 

3.                                       If Array materially breaches this
Amendment Number 2, then InterMune will be entitled to seek any and all remedies
available at law and or equity.  Without limiting the generality of the
foregoing, in the event of any such material breach:  (i) [ * ] automatically
will be reinstated as a [ * ] of the Agreement; and (ii) all of InterMune’s
rights and Array’s obligations under the Agreement with respect to [ * ] will be
reinstated in full.

 

Except as set forth above, all terms and conditions of the Agreement will remain
in full force and effect.  Any capitalized term used herein and not otherwise
defined will have the same meaning as set forth in the Agreement.

 

Please acknowledge your agreement to the above by having an authorized Array
representative countersign both enclosed copies of this Amendment No. 2 where
indicated below, and returning one original to the attention of Gloria Lopez,
Contracts Administrator, at InterMune.  We would be happy to proceed based on
receipt of a facsimile copy while awaiting the original.

 

Sincerely,

 

 

Larry Blatt

Vice President of Biopharmacology Research

 

 

Acknowledged and Agreed:

 

ARRAY BIOPHARMA, INC.

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

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

 

cc:

 

Paul Resnick, InterMune

 

 

General Counsel, Array BioPharma

 

EXHIBIT A

 

ARRAY BIOPHARMA, INC.

 

OFFICER’S CERTIFICATE

 

The undersigned,                 , hereby certifies that {he/she} is the duly
elected or appointed {Title} of ARRAY BIOPHARMA, INC., a Delaware corporation
(the “Company”), and acting in such capacity hereby certifies that:

 

(a)           As of {Date}, the Company entered into a written agreement with a
third party (the “Third Party Agreement”) setting forth the terms of an [ * ]
arrangement regarding the [ * ], which agreement is effective and binding on the
Company.

 

(b)           The Third Party Agreement does not conflict with any obligation of
the Company under the Drug Discovery Collaboration Agreement between the Company
and InterMune, Inc. (“InterMune”) dated September 13, 2002, as amended (the
“Agreement”).

 

(c)           The Company will promptly notify InterMune in writing upon any
termination of the Third Party Agreement or of any reversion of [ * ] to the
Company.

 

(d)           Any material misrepresentation set forth in this Certificate will
be deemed a material breach of the Agreement, and InterMune will be entitled to
seek any and all remedies available at law and or equity.

 

All capitalized terms used and not otherwise defined in this Certificate shall
have the same meanings as in the Agreement.

 

IN WITNESS WHEREOF, I have hereunto set my hand as of the    day of           ,
2004.

 

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

 

[ * ] = 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.

 

CONFIDENTIAL

 

 

[g161581ka03i001.jpg]

 

VIA FAX AND FEDERAL EXPRESS

 

September 10, 2004

 

David L. Snitman, Ph.D.

Chief Operating Officer

Array BioPharma, Inc.

3200 Walnut Street

Boulder, CO 80301

 

RE:                            Amendment No. 3 to the Drug Discovery
Collaboration Agreement (“Amendment No. 3”)

 

Dear Dr. Snitman:

 

As you know, InterMune, Inc. (“InterMune”) and Array BioPharma, Inc. (“Array”)
are parties to that certain Drug Discovery Collaboration Agreement dated
September 13, 2002, as amended May 8, 2003 and January 7, 2004 (the
“Agreement”).

 

The parties to the Agreement hereby agree, effective as of the date of this
Amendment No. 3 (“Amendment Effective Date”), that:

 

1.                                       Section 2.3 of the Agreement is amended
in its entirety to read as follows:

 

“2.3         Term and Termination of Research Collaboration.  The Research
Collaboration shall commence on the Effective Date and shall end upon the first
to occur of (i) June 30, 2005, (ii) the termination of this Agreement, or
(iii) [ * ] after written notice from InterMune that InterMune elects (in its
sole discretion) to early terminate the Research Collaboration (such period
beginning on the Effective Date and ending upon the earliest of (i), (ii) and
(iii), the “Research Term”).  InterMune shall have the right to extend the
Research Term for additional six-month periods after June 30, 2005 on the same
terms and conditions as previously conducted.  To exercise such right, InterMune
shall

 

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

 

provide written notice to Array on or before the date ninety (90) days before
the end of any such six-month period.”

 

2.                                       The Joint Research Committee shall work
together to produce a new Exhibit A Research Plan pursuant to Article 3 of the
Agreement as soon as practicable after the execution of this Amendment No. 3.

 

Except as set forth above, all terms and conditions of the Agreement will remain
in full force and effect.  Any capitalized term used herein and not otherwise
defined will have the same meaning as set forth in the Agreement.

 

Please acknowledge your agreement to the above by having an authorized Array
representative countersign both enclosed copies of this Amendment No. 3 where
indicated below, and returning one original to the attention of Gloria Lopez,
Senior Contracts Administrator, at InterMune.  We would be happy to proceed
based on receipt of a facsimile copy while awaiting the original.

 

Sincerely,

 

 

Tom Kassberg

Senior Vice President, Business Development

 

 

Acknowledged and Agreed:

 

ARRAY BIOPHARMA, INC.

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

 

Date:

 

 

 

2

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

 

Exhibit A

 

[ * ]

 

3

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

 

[ * ] = 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.

 

VIA FAX AND FEDERAL EXPRESS

 

December 7, 2004

 

David L. Snitman, Ph.D.

Chief Operating Officer

Array BioPharma, Inc.

3200 Walnut Street

Boulder, CO 80301

 

RE: Amendment No. 4 to the Drug Discovery Collaboration Agreement

 

Dear Dr. Snitman:

 

As you know, InterMune, Inc. (“InterMune”) and Array BioPharma Inc. (“Array”)
are parties to that certain Drug Discovery Collaboration Agreement dated
September 13, 2002, as amended May 8, 2003, January 7, 2004 and September 10,
2004 (collectively, the “Agreement”).   The parties agree that the Agreement is
hereby amended as follows, effective as of the date of this letter (“Amendment
Effective Date”):

 

1.                                       The first sentence of Section 5.1.1 of
the Agreement is hereby amended in its entirety to read as follows:

 

“InterMune agrees to pay Array research funding for the conduct of the Research
Collaboration quarterly, in advance, in an amount equal to one quarter (1/4) of
[ * ] (or, if lesser, the number of Array FTEs scheduled in the Research Plan to
be provided by Array in the upcoming quarter), multiplied by the applicable
Array FTE Rate (as defined below in Section 5.1.2).”

 

2.                                       The last sentence of Section 5.1.1 of
the Agreement is hereby amended in its entirety to read as follows:

 

“In no event shall InterMune be required to fund a greater number of Array FTEs
in any calendar quarter than one quarter (1/4) of [ * ], or, if lesser, those
provided in the Research Plan for Array to provide in such quarter.”

 

3.                                       Array hereby acknowledges that (a) it
devoted [ * ] to the conduct of the Research Collaboration during November 2004,
and (b) it will devote [ * ] to the conduct of the Research Collaboration during
December 2004.  The Joint

 

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

 

Research Committee shall amend the Research Plan to reflect such number of
FTEs.  Upon execution of this Amendment No. 4, InterMune shall pay to Array an
amount equal to [ * ] of the current FTE rate to fund such FTEs during such
period.

 

4.                                       The Agreement is hereby amended to
insert a new Section 4.2.1, and, as a result, the old sections 4.2.1, 4.2.2,
4.2.3 and 4.2.4 are hereby renumbered to be new Sections 4.2.2, 4.2.3, 4.2.4 and
4.2.5:

 

“4.2.1 Immediately upon receipt by Array of a cash payment of [ * ] with respect
to a particular Lead Compound, Array shall [ * ].  It is understood and agreed
that the provisions of this Section 4.2.1 shall not apply to any [ * ], nor
shall such provisions affect InterMune’s license under Section 4.2.2.  Array
hereby acknowledges the prior payment of a cash payment of [ * ] with respect to
[ * ], and shall immediately following the Amendment Effective Date [ * ].”

 

5.                                       Section 4.3 of the Agreement is hereby
amended in its entirety to read as follows:

 

“Subject to the terms and conditions of this Agreement, including, without
limitation, the limitation on Array’s rights hereunder set forth in the last
sentence of this Section 4.3, InterMune hereby grants to Array a worldwide,
non-exclusive, transferable, royalty-free right and license, with the right to
grant and authorize sublicenses, under InterMune’s interest in the Collaboration
Technology, to exploit the same other than in the research, development, making,
having made, using, importing, offering for sale or selling Hit Compounds, Lead
Compounds or Products worldwide.  To the extent that any Collaboration
Technology included in the license granted to Array under this Section 4.3
comprises a claim of a patent or patent application, the subject matter of which
was invented solely by Array personnel, Array’s license under such patent
claim(s) to exploit the same other than in the research, development, making,
having made, using, importing, offering for sale or selling Hit Compounds, Lead
Compounds or Products worldwide shall be exclusive.  Notwithstanding the
foregoing, Array’s license under this Section 4.3 shall not include any right to
make, have made, use or sell any chemical entity, the composition of matter of
which is claimed in a Collaboration Patent assigned by Array to InterMune
pursuant to Section 4.2.1 above.”

 

6.                                       Section 4.6 of the Agreement is hereby
amended by adding, in the parenthetical, following the words “in exercise of
the” the following phrase:  “intellectual property rights assigned or” and
replacing “4.2.1” with “4.2.”

 

2

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

 

7.                                       Section 5.2 of the Agreement is hereby
amended by replacing the last sentence with the following:

 

“For clarity, this means that as between the Parties, InterMune is responsible
for the costs of activities in exercise of its rights under Section 4.2.”

 

8.                                       Section 5.4.3 of the Agreement is
hereby amended by adding the following as the last sentence:

 

“[ * ]”

 

9.                                       Section 8.1.2 of the Agreement is
hereby amended by replacing the last sentence with the following:

 

“Such joint ownership shall be in accordance with the default rights enjoyed by
co-inventors under U.S. patent law in the absence of a written agreement to the
contrary (throughout the world to the maximum extent permitted by law), such
that, without limitation and except as restricted by the assignment provisions
of Section 4.2, licenses granted in Sections 4.1 and 4.2, financial commitments
set forth in Article 5 and prosecution and enforcement provisions set forth in
this Article 8, each Party may practice the subject matter of the jointly owned
Collaboration Patents without a duty of accounting to the Party.”

 

10.                                 The Agreement is amended by including a new
Section 8.1.4 of the Agreement:

 

“8.1.4. Array shall, and shall cause its employees and agents to, promptly
execute all papers and instruments as are necessary (i) to fully effect the
assignment of ownership of Collaboration Patents provided for in Section 4.1.2,
and (ii)  to enable InterMune to record any such assignment in any country.”

 

11.                                 Section 8.2.1 of the Agreement is hereby
amended by adding the following sentence at the end thereof:

 

“InterMune shall use reasonable efforts to prosecute the Collaboration Patents
so that there will be claims specifically directed to the making, having made,
use and sale of compositions of matter, including, without limitation, Hit
Compounds, Lead Compounds and Products, and (as appropriate based on the
disclosure) other claims in separate Collaboration Patents specifically directed
to areas included within Array’s license set forth in Section 4.3, such as, for
example, by the filing of divisional patent applications.”

 

12.                                 Section 8.2.1 of the Agreement is hereby
amended by adding the following sentence as the third sentence of such Section:

 

3

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

 

“Notwithstanding the foregoing, following assignment of a Collaboration Patent
pursuant to Section 4.2.1, InterMune shall only be required to keep Array fully
informed as to patent matters relating to claims contained in any such
Collaboration Patent as to which Array has license rights under Section 4.3.”

 

13.                                 The Agreement is hereby amended to include
the following Section 8.3.3:

 

“8.3.3  Array.  In the event that a Party believes a Third Party is infringing
any Collaboration Patent right included within the license granted Array
pursuant to Section 4.3 above, Array shall have the right, but not the
obligation, to take reasonable legal action to enforce such Collaboration Patent
and defend any declaratory judgment action relating to such infringement, at its
sole cost and expense.  Array shall keep InterMune reasonably informed of the
progress of any such enforcement action as it relates to such Collaboration
Patent, and Array shall not enter into any settlement or other agreement or make
any other admission that relates to the validity or enforceability of any such
Collaboration Patent owned or Controlled by InterMune without the prior written
consent of InterMune, which consent shall not be unreasonably withheld.  Any
amount recovered by Array in an action brought pursuant to this Section 8.3.3
shall be retained by Array.  To the extent that InterMune has to be joined in
any legal action pursuant to this Section 8.3.3, InterMune shall be entitled to
employ counsel of its choosing and to reimbursement by Array for reasonable
attorneys’ fees and expenses incurred in connection with such activities.”

 

14.                                 Section 8.3.3 of the Agreement is hereby
renumbered to be new Section 8.3.4, and is hereby amended by adding, at the end
of the third line thereof, after the phrase “Collaboration Patent or Preparatory
Patent”, the following phrase:  “pursuant to Section 8.3.2”.

 

15.                                 Section 12.2 of the Agreement is hereby
amended by adding the following sentence at the end thereof:

 

Any such dispute related to payment obligations or alleged breaches thereof
shall be resolved by binding arbitration in accordance with Section 13.12.

 

16.                                 Section 12.4 of the Agreement is hereby
deleted in its entirety.

 

17.                                 Section 12.5.3 of the Agreement is hereby
amended in its entirety to read as follows:

 

“12.5.3  Survival Sections.  [ * ] of this Agreement shall survive the
expiration or termination of this Agreement for any reason.  In the event of
termination by InterMune under Section 12.2 or 12.3, [ * ] shall survive such
termination in addition to the above-referenced [ * ]; InterMune shall have the
[ * ] right to

 

4

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

 

enforce the Collaboration Patents and Primary Preparatory Patents (as defined in
Section 8.2.2) assigned or licensed to InterMune hereunder against infringing
products that would be competitive with Products; and [ * ] shall survive until
[ * ]. In the event of termination by Array under Section 12.2 or 12.3, [ * ]
shall survive such termination in addition to the above-referenced Articles and
Sections; and InterMune shall immediately grant to Array a worldwide,
non-exclusive, fully paid-up license under InterMune’s interest in the
Collaboration Patents previously assigned to InterMune pursuant to Section 4.1.2
to research, develop, make, have made, use, import, offer for sale and sell Hit
Compounds, Lead Compounds and Products; provided that, to the extent that any
such assigned Collaboration Patent was invented solely by Array personnel,
Array’s license under such Collaboration Patent shall be exclusive.  InterMune
shall ensure that any licenses of Collaboration Patents granted by InterMune or
its Affiliates to third parties are made subject to Array’s license grant-back
rights set forth in this Section 12.5.3.”

 

18.                                 The Agreement is hereby amended to include
the following Section 13.12 and, as a result, the old sections 13.12, 13.13,
13.14, 13.15 and 13.16 are hereby renumbered to be new Sections 13.13, 13.14,
13.15, 13.16 and 13.17:

 

“13.12  Short-Form Arbitration.  If the Parties do not agree upon a payment
dispute under Section 12.2, then such matters in issue shall be determined by
binding arbitration conducted pursuant to this Section 13.12 by
one (1) arbitrator.  In such arbitration, the arbitrator shall be a mutually
acceptable, independent, conflict-free individual not affiliated with either
Party, with scientific, technical and regulatory experience with respect to
development of pharmaceutical products.  If the Parties are unable to agree on
an arbitrator, the arbitrator shall be an independent expert meeting the
criteria set forth in the immediately preceding sentence selected by the
American Arbitration Association within seven (7) days of being approached by a
Party.  Within fifteen (15) days of designation of the expert hereunder, each
Party shall prepare and submit to the expert and to the other Party a written
statement setting forth its position with respect to the substance of the
dispute.  Each Party shall have an additional ten (10) days from receipt of the
other Party’s submission to submit a written response thereto.  The expert shall
have the right to meet with the Parties, either alone or together, as necessary
to make a determination.  The arbitration shall take place in the county in
which the executive offices of the Party which is alleged to be in breach are
situated.  The expert shall select one of the Party’s positions as his decision,
and shall not have authority to render any substantive decision other than to so
select the position of either InterMune or Array.  The costs of such arbitration
(including without limitation, the costs of the expert) shall be shared equally
by the Parties, and each Party shall bear its own expenses in connection with
such arbitration.  Any such arbitration shall to the greatest extent possible,
be concluded within sixty (60) days after designation of the expert hereunder.”

 

5

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

 

19.                                 Section 13.15 of the Agreement is hereby
amended by adding the following phrase at the beginning thereof:

 

“Except as set forth in Sections 12.2 and 13.12 of this Agreement,”

 

Except as set forth above, all terms and conditions of the Agreement will remain
in full force and effect.  Any capitalized term used herein and not otherwise
defined will have the same meaning as set forth in the Agreement.

 

In consideration of the current [ * ] of Collaboration Patents described in
Section 4 above, and the amendment to the rights of InterMune set forth in this
Amendment No. 4, InterMune shall pay to Array a [ * ] within [ * ] of the
Amendment Effective Date.  In addition, InterMune agrees to pay to Array [ * ]
as a cash payment pursuant to Section 4.2.1 of the Agreement with respect to
[ * ].  Following receipt of such payment, Array shall immediately effectuate
[ * ].  Array acknowledges its continuing obligation to [ * ] Collaboration
Patents as set forth in Section 4.2.1 of the Agreement.

 

Please acknowledge your agreement to the above by having an authorized Array
representative countersign both enclosed copies of this Amendment No. 4 where
indicated below, and returning one original to the attention of Gloria Lopez.
Contracts Administrator, at InterMune.  We would be happy to proceed based on
receipt of a facsimile copy while awaiting the original.

 

Sincerely,

 

 

Larry Blatt

Vice President of Biopharmacology Research

 

 

Acknowledged and Agreed:

 

ARRAY BIOPHARMA, INC.

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

 

Date:

 

 

 

6

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

 

cc:

 

Paul Resnick, InterMune

 

 

General Counsel, Array BioPharma

 

7

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

 

[ * ] = 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.

 

CONFIDENTIAL

 

VIA FAX AND FEDERAL EXPRESS

 

March 10, 2005

 

David L. Snitman, Ph.D.

Chief Operating Officer

Array BioPharma, Inc.

3200 Walnut Street

Boulder, CO 80301

 

RE:   Drug Discovery Collaboration Agreement

 

Dear Dave

 

As you know, InterMune, Inc. (“InterMune”) and Array BioPharma Inc. (“Array”)
are parties to that certain Drug Discovery Collaboration Agreement dated
September 13, 2002, as amended May 8, 2003, January 7, 2004, September 10, 2004
and December 7, 2004 (collectively, the “Agreement”).  Any capitalized term used
herein and not otherwise defined will have the same meaning as set forth in the
Agreement.

 

Pursuant to Section 4.2.1 of the Agreement, InterMune has the right to make a
cash payment to Array of [ * ] with respect to a Lead Compound in return for
Array’s [ * ] to InterMune of any Collaboration Patent which contains a Valid
Claim covering the composition of matter of such Lead Compound (and any Product
containing such Lead Compound).  As of the date hereof, in return for the
appropriate payments made by InterMune to Array, Array has already [ * ] to
InterMune certain Collaboration Patents with respect to Lead Compounds [ * ] and
[ * ] pursuant to the Agreement.

 

InterMune desires to obtain the [ * ], notwithstanding the fact that [ * ].

 

Accordingly, InterMune and Array hereby agree as follows:

 

1.                                       InterMune shall pay to Array [ * ] in
cash; and

 

2.                                       Following Array’s receipt of such cash
payment and in the spirit of Section 4.2.1 of the Agreement, Array shall
immediately (i) effectuate the [ * ] to InterMune of [ * ] which claims the
composition of matter of

 

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

 

chemical compounds, one of which shall be [ * ] in accordance with the Agreement
within [ * ] after the date of this Agreement, and (ii) have the continuing
obligation to [ * ] to InterMune any Collaboration Patent containing a Valid
Claim covering the composition of matter of such Lead Compound (and any Product
containing such Lead Compound) in accordance with the Agreement.  In the event
InterMune [ * ], InterMune shall, at Array’s request, [ * ] to Array [ * ] to
InterMune under this letter agreement.

 

Except as set forth above, all terms and conditions of the Agreement will remain
in full force and effect.

 

Please acknowledge your agreement to the above by having an authorized Array
representative countersign both enclosed copies of this letter agreement where
indicated below, and returning one original to the attention of Gloria Lopez.
Contracts Administrator, at InterMune.  We would be happy to proceed based on
receipt of a facsimile copy while awaiting the original.

 

Sincerely,

 

 

Larry Blatt

Vice President of Biopharmacology Research

 

 

Acknowledged and Agreed:

 

ARRAY BIOPHARMA INC.

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

 

Date:

 

 

 

2

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

 

cc:           General Counsel, Array BioPharma

 

3

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

 

[ * ] = 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.

 

June 30, 2005

 

VIA FAX AND FEDERAL EXPRESS

 

David L. Snitman, Ph.D.

Chief Operating Officer

Array BioPharma, Inc.

3200 Walnut Street

Boulder, CO 80301

 

RE:   Amendment No. 5 to the Drug Discovery Collaboration Agreement

 

Dear Dr. Snitman:

 

As you know, InterMune, Inc. (“InterMune”) and Array BioPharma Inc. (“Array”)
are parties to that certain Drug Discovery Collaboration Agreement dated
September 13, 2002, as amended May 8, 2003, January 7, 2004, September 10, 2004
and December 7, 2004 (collectively, and as further amended pursuant to this
letter, the “Agreement”).  The parties agree that the Agreement is hereby
amended as follows, effective as of the date of this letter (“Amendment
Effective Date”):

 

1.                                       Section 1.24 of the Agreement is hereby
amended in its entirety to read as follows:

 

“1.24       Research Collaboration shall mean the research (including
pre-clinical toxicology), manufacturing process and scale-up activities as well
as manufacture of GLP/GMP lots of designated Lead Compounds undertaken by the
Parties during the Research Term pursuant to Sections 2.1 to 2.3 below.”

 

2.                                       Section 2.3 of the Agreement is hereby
amended in its entirety to read as follows:

 

“2.3         Term and Termination of Research Collaboration.  The Research
Collaboration shall commence on the Effective Date and shall end upon the first
to occur of (i) June 30, 2006, (ii) the termination of this Agreement, or
(iii) [ * ] after written notice from InterMune that InterMune elects (in its
sole discretion) to early terminate the Research Collaboration (such period
beginning on the Effective Date and ending

 

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

 

upon the earliest of (i), (ii) and (iii), the “Research Term”).  InterMune shall
have the right to extend the Research Term for up to an additional twelve
(12)-month period after June 30, 2006 on the same terms and conditions as
previously conducted (except as otherwise set forth in this Agreement).  To
exercise such right, InterMune shall provide written notice to Array on or
before March 31, 2006.”

 

3.                                       A new last sentence is hereby added to
Section 2.5(b) of the Agreement as follows:

 

“Finally, at least once quarterly, and within sixty (60) days of the end of the
Research Term, Array shall provide to InterMune a reasonably detailed written
summary of manufacture process and scale-up activities performed by and
information generated by Array under the Research Collaboration, including,
without limitation, those reports or other information specifically identified
in the Research Plan.”

 

4.                                       The first sentence of Section 5.1.1 of
the Agreement is hereby amended in its entirety to read as follows:

 

“InterMune agrees to pay Array funding for the conduct of the Research
Collaboration quarterly, in advance, in an amount equal to one quarter (1/4) of
the Allocated Array FTEs (or, if less, the number of Array FTEs described in
this Section 5.1.1 or otherwise scheduled in the Research Plan to be provided by
Array in the upcoming quarter), multiplied by the applicable Array FTE Rate (as
defined below in Section 5.1.2).  The Allocated Array FTEs shall be as follows: 
(a) [ * ] Array FTEs devoted to [ * ] for the period of time set forth below in
this Section 5.1.1 (or such other number scheduled in the Research Plan) (the
“Discovery FTEs”); (b) [ * ] Array FTEs devoted to [ * ] for the period of time
set forth below in this Section 5.1.1 (or such other number scheduled in the
Research Plan) (the “Manufacture FTEs”); and (c) [ * ] Array FTEs devoted to
[ * ] for the period of time set forth below in this Section 5.1.1 (or such
other number scheduled in the Research Plan) (the “Research FTEs”).”

 

5.                                       The last sentence of Section 5.1.1 of
the Agreement is hereby amended in its entirety to read as follows:

 

2

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

 

“In no event shall InterMune be required to fund a greater number of Array FTEs
in any calendar quarter than one quarter (1/4) of the Allocated Array FTEs for
such calendar quarter, or, if lesser, those provided in the Research Plan for
Array to provide in such calendar quarter.”

 

6.                                       A new last sentence is hereby added to
Section 5.1.1 of the Agreement as follows:

 

“The Discovery FTEs shall be funded by InterMune beginning July 1, 2005 through
June 30, 2006, with an option exercisable by InterMune to extend such funding by
extending the Research Term as set forth in Section 2.3 of this Agreement.  The
Manufacture FTEs shall be funded by InterMune beginning July 1, 2005 until
delivery of the GLP/GMP lots of Lead Compounds, including the second GMP
campaign contemplated for formulation and bridging pharmacokinetic studies.  The
Research FTEs shall be funded by InterMune beginning July 1, 2005 through
December 31, 2005, with an option exercisable by InterMune to extend such
funding for an additional six (6)-month period.”

 

7.                                       Section 5.1.2 of the Agreement is
hereby amended in its entirety to read as follows:

 

“5.1.2      FTE Rate.  The “Array FTE Rate” shall be equal to [ * ] per FTE per
year.  Effective after the first anniversary of the Amendment Effective Date,
the FTE Rate shall increase no more than once annually by the percentage
increase, if any, in the Consumer Price Index for all Urban Consumers, as
published by the U.S. Department of Labor, Bureau of Statistics, since the
Effective Date or the last adjustment hereunder, whichever is later.”

 

8.                                       Section 5.1.3 of the Agreement is
hereby amended in its entirety to read as follows:

 

“5.1.3      Non-FTE Costs.  Non-FTE costs and research requirements associated
with performance of the Research Collaboration at Array shall be borne by Array,
except that (a) Array shall not be required to incur any extraordinary [ * ]
costs without Array’s prior written consent, (b) Array may bill InterMune for
materials used in the course of manufacture and

 

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analytic activities and of process research at a rate of [ * ] and (c) Array may
bill InterMune no more frequently than once per calendar quarter for reasonable
costs incurred by Array in connection with the permitted outsourcing of
activities by Array as provided in the Research Plan at a rate of [ * ]. 
Extraordinary chemical or screening costs means material costs in excess of
[ * ].  InterMune shall pay any invoices received pursuant to
Section 5.1.3(b) within [ * ] of receipt.”

 

9.                                       A new Section 5.1.5 is hereby added to
the Agreement as follows:

 

“[ * ]”

 

Except as set forth above, all terms and conditions of the Agreement will remain
in full force and effect.  Any capitalized term used herein and not otherwise
defined will have the same meaning as set forth in the Agreement.

 

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Please acknowledge your agreement to the above by having an authorized Array
representative countersign both enclosed copies of this Amendment No. 5 where
indicated below, and returning one original to the attention of Robin Steele,
General Counsel, at InterMune.  We would be happy to proceed based on receipt of
a facsimile copy while awaiting for the original.

 

 

Sincerely,

 

 

 

 

 

Lawrence M. Blatt

 

Senior Vice President—Preclinical and

 

Applied Research

 

cc:           Robin Steele, Esq., InterMune, Inc.

General Counsel, Array BioPharm, Inc.

 

*     *     *     *     *     *     *     *

 

AGREED TO AND ACCEPTED:

 

 

ARRAY BIOPHARMA, INC.

 

 

By:

 

 

 

 

 

Print Name:

 

 

 

 

 

Print Title:

 

 

 

 

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