Document:

EXHIBIT 10.2

 

[ * ] = 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.

 

DRUG DISCOVERY COLLABORATION AGREEMENT

 

 

BETWEEN

 

GENENTECH, INC.

 

AND

 

ARRAY BIOPHARMA INC.

 

 

[*] = 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 of 1934, as amended.

 

Table of Contents

 

	
   

  	
   

  	
  Page

  
	
  Article 1
  Definitions

  	
   

  	
  2

  
	
   

  	
   

  	
   

  
	
  Article 2
  Research Program

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Research Program Overview

  	
   

  	
  9

  
	
   

  	
  2.2

  	
  Joint Research Committee

  	
   

  	
  9

  
	
   

  	
  2.3

  	
  Responsibilities Under the Research Plan

  	
   

  	
  10

  
	
   

  	
  2.4

  	
  Information and Reports

  	
   

  	
  11

  
	
   

  	
  2.5

  	
  Materials and Confidential Information Transferred

  	
   

  	
  11

  
	
   

  	
  2.6

  	
  Collaboration
  Targets

  	
   

  	
  12

  
	
   

  	
  2.7

  	
  [ * ];
  Costs

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 3
  Development and Commercialization of Licensed Products

  	
   

  	
  13

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Genentech Responsibilities

  	
   

  	
  13

  
	
   

  	
  3.2

  	
  [ * ]

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 4
  Exclusivity

  	
   

  	
  13

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  During the Research Term

  	
   

  	
  13

  
	
   

  	
  4.2

  	
  After the Research Term

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 5
  Licenses

  	
   

  	
  14

  
	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  Research Licenses

  	
   

  	
  14

  
	
   

  	
  5.2

  	
  Commercial License

  	
   

  	
  14

  
	
   

  	
  5.3

  	
  No Implied Licenses

  	
   

  	
  14

  
	
   

  	
  5.4

  	
  Exercise of License Rights by Third Party

  	
   

  	
  15

  
	
   

  	
  5.5

  	
  Third Party Agreements

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 6
  License Fees; [ * ] and Milestone Payments

  	
   

  	
  15

  
	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  License
  Fee

  	
   

  	
  15

  
	
   

  	
  6.2

  	
  [ * ];
  Outsourcing

  	
   

  	
  15

  
	
   

  	
  6.3

  	
  Development Milestones

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 7
  Royalties

  	
   

  	
  16

  
	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Royalty
  Rate

  	
   

  	
  16

  
	
   

  	
  7.2

  	
  Single
  Royalty

  	
   

  	
  17

  
	
   

  	
  7.3

  	
  Royalty Term; Fully Paid Licenses

  	
   

  	
  17

  
	
   

  	
  7.4

  	
  Royalty
  Offsets

  	
   

  	
  17

  
	
   

  	
  7.5

  	
  Payments, Reports and Audits

  	
   

  	
  18

  

 

i

 

	
  Article 8
  Materials; Intellectual Property

  	
   

  	
  19

  
	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Materials

  	
   

  	
  19

  
	
   

  	
  8.2

  	
  Ownership of Technology

  	
   

  	
  20

  
	
   

  	
  8.3

  	
  [ * ]

  	
   

  	
  20

  
	
   

  	
  8.4

  	
  Inventorship

  	
   

  	
  21

  
	
   

  	
  8.5

  	
  Assignment; Cooperation

  	
   

  	
  21

  
	
   

  	
  8.6

  	
  Patent Prosecution

  	
   

  	
  21

  
	
   

  	
  8.7

  	
  Patent Interferences

  	
   

  	
  23

  
	
   

  	
  8.8

  	
  Third Party Claims

  	
   

  	
  23

  
	
   

  	
  8.9

  	
  Infringement by Third Parties

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 9
  Confidentiality

  	
   

  	
  24

  
	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Confidentiality

  	
   

  	
  24

  
	
   

  	
  9.2

  	
  Authorized Disclosures

  	
   

  	
  24

  
	
   

  	
  9.3

  	
  Patent Applications

  	
   

  	
  26

  
	
   

  	
  9.4

  	
  Continuing Obligation

  	
   

  	
  26

  
	
   

  	
  9.5

  	
  Termination of Prior Agreements

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 10
  Term; Termination

  	
   

  	
  26

  
	
   

  	
   

  	
   

  
	
   

  	
  10.1

  	
  Term

  	
   

  	
  26

  
	
   

  	
  10.2

  	
  Termination by Genentech

  	
   

  	
  26

  
	
   

  	
  10.3

  	
  Material
  Breach

  	
   

  	
  27

  
	
   

  	
  10.4

  	
  Insolvency or Bankruptcy

  	
   

  	
  27

  
	
   

  	
  10.5

  	
  Effects of Termination; Survival

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 11
  Representations and Warranties

  	
   

  	
  30

  
	
   

  	
   

  	
   

  
	
   

  	
  11.1

  	
  Mutual Representations and Warranties

  	
   

  	
  30

  
	
   

  	
  11.2

  	
  Array Representations and Warranties

  	
   

  	
  30

  
	
   

  	
  11.3

  	
  Disclaimers

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 12
  Indemnification; Limitation on Liability

  	
   

  	
  31

  
	
   

  	
   

  	
   

  
	
   

  	
  12.1

  	
  Losses
  Defined

  	
   

  	
  31

  
	
   

  	
  12.2

  	
  Indemnification by Genentech

  	
   

  	
  31

  
	
   

  	
  12.3

  	
  Indemnification by Array

  	
   

  	
  31

  
	
   

  	
  12.4

  	
  Limitation on Liability

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 13
  Insurance

  	
   

  	
  32

  
	
   

  	
   

  	
   

  
	
   

  	
  13.1

  	
  Coverages

  	
   

  	
  32

  
	
   

  	
  13.2

  	
  Additional Requirements

  	
   

  	
  33

  

 

ii

 

	
  Article 14
  Dispute Resolution

  	
   

  	
  33

  
	
   

  	
   

  	
   

  
	
   

  	
  14.1

  	
  Internal Resolution

  	
   

  	
  33

  
	
   

  	
  14.2

  	
  Arbitration

  	
   

  	
  33

  
	
   

  	
  14.3

  	
  Patent
  Validity

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 15
  Miscellaneous

  	
   

  	
  34

  
	
   

  	
   

  	
   

  
	
   

  	
  15.1

  	
  Assignment

  	
   

  	
  34

  
	
   

  	
  15.2

  	
  Publicity and Disclosure Relating to this
  Agreement

  	
   

  	
  34

  
	
   

  	
  15.3

  	
  No Right to Use Names

  	
   

  	
  35

  
	
   

  	
  15.4

  	
  Notices

  	
   

  	
  35

  
	
   

  	
  15.5

  	
  Relationship of the Parties

  	
   

  	
  36

  
	
   

  	
  15.6

  	
  Entire
  Agreement

  	
   

  	
  36

  
	
   

  	
  15.7

  	
  Amendment;
  Waiver

  	
   

  	
  36

  
	
   

  	
  15.8

  	
  Governing
  Law

  	
   

  	
  36

  
	
   

  	
  15.9

  	
  Construction

  	
   

  	
  36

  
	
   

  	
  15.10

  	
  Captions

  	
   

  	
  37

  
	
   

  	
  15.11

  	
  Legal Compliance; Severability

  	
   

  	
  37

  
	
   

  	
  15.12

  	
  Force
  Majeure

  	
   

  	
  37

  
	
   

  	
  15.13

  	
  Counterparts; Facsimiles

  	
   

  	
  37

  

 

Exhibits

 

	
   

  	
  Exhibit A

  	
  Materials, Data and Information that Will
  be Transferred to Genentech

  	
   

  	
   

  
	
   

  	
  Exhibit B

  	
  Materials, Data and Information that Will NOT be Transferred to Genentech

  	
   

  	
   

  
	
   

  	
  Exhibit C

  	
  [ * ]

  	
   

  	
   

  

 

iii

 

DRUG DISCOVERY COLLABORATION AGREEMENT

 

This Drug Discovery Collaboration Agreement
(“Agreement”) is made and entered into, effective as of
December 22, 2003 (“Effective Date”), by and between Genentech, Inc.,
a Delaware corporation, having a principal place of business at
1 DNA Way, South San Francisco, California 94080 (“Genentech”)
and Array BioPharma Inc., a Delaware corporation, having a principal place of
business at 3200 Walnut Street, Boulder, Colorado 80301 (“Array”),
(collectively, the “Parties” or individually, a “Party”).

 

RECITALS

 

A.            Array
has skills, expertise and proprietary technology for the discovery, generation,
optimization and preclinical testing of small molecule clinical candidates from
drug discovery programs.  Genentech
possesses pharmaceutical research, development and commercialization
capabilities.

 

B.            Array
and Genentech have each identified multiple protein targets that have the
potential to be used as the basis for drug discovery programs.  As of the Effective Date, Array has
developed assays, lead compounds and other proprietary technology directed to
certain of such targets.

 

C.            Genentech
and Array desire to enter a collaboration wherein Array will perform certain
research on several of such protein targets with assistance from Genentech,
with the goal of developing small molecule inhibitors of such targets for
clinical and commercial development by Genentech.

 

AGREEMENT

 

Now,
therefore, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Genentech and Array
agree as follows:

 

1

 

Article 1

Definitions

 

Capitalized terms used in this Agreement, whether used in the singular
or plural, shall have the meanings set forth below, unless otherwise
specifically indicated herein.  [* Certain definitions have been deleted from Article
1.]

 

“Affiliate” means, with respect to a Party, any entity, that controls,
is controlled by, or is under common control with, such Party.  For purposes of this definition, “control”
shall refer to:  (a) the
possession, directly or indirectly, of the power to direct the management or
policies of an entity, whether through ownership of voting securities, by
contract or otherwise; or (b) the ownership, directly or indirectly, of at
least fifty percent (50%) of the voting securities or other ownership interest
of an entity.  Notwithstanding the
foregoing, unless expressly specified otherwise, for the purposes of this
Agreement, F. Hoffman-La Roche Ltd and all entities controlled
by, controlling, or under common control with F. Hoffman-La Roche Ltd,
except for any entity controlled by Genentech, shall not be considered an
Affiliate of Genentech.

 

“Approved by the JRC” or “Approval by the JRC,” “JRC Approval,” or the like,
means, that the Joint Research Committee has made a particular decision (in the
context of the reference), and that such decision is reflected in minutes of a
JRC meeting that have been formally approved by both Array and Genentech.

 

“Array Collaboration Technology” is defined in Section 8.2.

 

 “Array Contributed Technology”
means Array Existing Technology and Array Future Technology.

 

“Array Existing Technology” means Array’s inventions (whether
patentable or not), Patents and Know-How existing as of the Effective Date, in
each case, that is Controlled by Array or Controlled by an Array Affiliate that
is controlled by Array (where “control” is as defined in the definition of
Affiliate in this Agreement).

 

“Array Future Technology” means Array’s inventions (whether patentable
or not), Patents and Know-How, other than
Collaboration Technology and Array Existing Technology, in each case,
(a) that is Controlled by Array or Controlled by an Array Affiliate that
is controlled by Array (where “control” is as defined in the definition of
Affiliate in this Agreement); and (b) is/are necessary to make, use, sell,
offer for sale or import Compounds in the Field in the Territory.

 

2

 

 “Array IP Rights” means
Array’s intellectual property rights in the Array Contributed Technology, the
Array Collaboration Technology and Array’s interest in the Joint Collaboration
Technology.

 

 “Array Patents” means Patents
covering Array Contributed Technology or Array Collaboration Technology.

 

“Collaboration Target” means a [ * ], for which Array shall develop small
molecule inhibitors under the Research Program, in accordance with the
provisions of this Agreement; provided, however, inclusion of [ * ] shall be subject to
the consent of both Parties, which consent shall not be unreasonably
withheld.  The specific Collaboration
Targets that are included in the Research Plan at any given time may be changed
in accordance with Section 2.6(a), but once a Collaboration Target has
been included in the Research Plan, it shall continue to be a Collaboration
Target, even if no further research with respect to such Collaboration Target
is performed under the Research Plan; provided, however, if a Collaboration
Target is abandoned in accordance with Section 2.6(b), it shall thereafter
cease to be a Collaboration Target.

 

“Collaboration Technology” means inventions (whether patentable or
not), Patent Rights and Know-How that are discovered, conceived or reduced to
practice in the course of the activities performed by (or on behalf of) either
or both Parties in connection with the Research Program.  Collaboration Technology means Genentech
Collaboration Technology and/or Array Collaboration Technology, as determined
by the context of the reference.

 

“Combination Product” means a Licensed Product that is a pharmaceutical
preparation that incorporates a Compound and one or more therapeutically active
ingredients other than a Compound as its main active ingredients.  Notwithstanding the foregoing, drug delivery
vehicles, adjuvants, and excipients shall not be deemed to be “therapeutically
active ingredients,” and their presence shall not be deemed to create a
Combination Product.

 

“Commercial License” means the license granted to Genentech in
Section 5.2.

 

“Commercially Reasonable Efforts” means, with respect to development
and commercialization of a product, a Party’s use of those efforts and
resources, consistent with the exercise of prudent scientific and business
judgment, as are applied by such Party to other pharmaceutical products of
comparable commercial potential, stage of medical/scientific development,
technical and regulatory profile, and patent protection, in a particular
geographic locale.

 

“Compound” means a small molecule [ * ] of a Collaboration Target, [ * ], or as otherwise agreed with the consent of both
Parties, which consent shall not be unreasonably withheld.

 

3

 

“Compound Criteria” means, on a Collaboration Target-by-Collaboration
Target basis, the desired characteristics of Compounds that modulate such
Collaboration Target for the purposes of the research, development and
commercialization of such Compound under this Agreement.

 

“Confidential Information” means a Party’s nonpublic information and
materials, whether or not patentable, that are disclosed or provided by such
Party to the other Party in connection with this Agreement, to the extent that
such information and materials do not fall within the exceptions set forth in
Section 9.1.  “Confidential
Information” includes, without limitation, information regarding such Party’s
research, technology, products, business information or objectives and other
information of the type that is customarily considered to be confidential
information by parties engaged in activities that are substantially similar to
the activities being engaged in by the Parties pursuant to this Agreement.  Notwithstanding the foregoing, whether or
not disclosed by Genentech to Array, Genentech’s Confidential Information shall
include, without limitation, the identities of all Collaboration Targets
(whether or not subsequently dropped from the Research Program by Genentech)
and chemical entities known by Array to be Compounds, and any information
specifically related to the Collaboration Targets and such Compounds.

 

“Contributed Technology” means Genentech Contributed Technology and/or
Array Contributed Technology, as determined by the context of the reference.

 

“Controlled by” means the rightful possession by a party, as of the
Effective Date or throughout the term of this Agreement, of the ability to
grant a license, sublicense or other right to exploit, as provided herein,
without violating the terms of any agreement with any third party.

 

“Covers” or “Covered by,”
or the like, means that the manufacture, use, sale, offer for sale or
importation of a Licensed Product would infringe a Valid Claim of a patent
licensed to Genentech under this Agreement in the absence of a grant of rights
under such patent, as determined on a country-by-country basis.

 

“Development
Milestone Payment” is defined in Section 6.3(a).

 

“Disclosing
Party” is defined in Section 9.1.

 

“Distributor”
means a Third Party that is employed by or otherwise under written contract
with Genentech or its Sublicensees to sell, promote, distribute, market,
import, and/or export Licensed Products on behalf of or in partnership with
Genentech or its Sublicensees.

 

“Executive”
means, in the case of Array, the Chief Executive Officer of Array and, in the
case of Genentech, a Senior or Executive Vice President of Research.

 

4

 

“FDA” means
the United States Food and Drug Administration, or any successor entity thereto
performing similar functions.

 

“Field” means
any use.

 

“First
Commercial Sale” means, with respect to a particular Licensed Product in a
given country, the first bona fide commercial sale of such Licensed Product
following Marketing Approval in such country by or under authority of Genentech
or its Sublicensees.

 

“GAAP” means
United States generally accepted accounting principles, consistently applied by
a Party.

 

“Genentech
Collaboration Technology” is defined in Section 8.2.

 

“Genentech
Contributed Technology” means Genentech’s inventions (whether patentable or
not), Patents and Know-How, other than
Collaboration Technology, in each case, that is Controlled by Genentech.

 

“Genentech
IP Rights” means Genentech’s intellectual property rights in the Genentech
Contributed Technology, the Genentech Collaboration Technology and Genentech’s
interest in the Joint Collaboration Technology.

 

“Genentech
Patents” means Patents covering Genentech Contributed Technology or Genentech
Collaboration Technology.

 

“GLP” means
the then current FDA regulations and guidelines for “Good Laboratory Practice,”
as promulgated by the FDA under 21 CFR Part 58, as amended from
time to time, or any foreign equivalents thereto in the country in which such
studies or clinical trials are conducted.

 

“IND” means an
investigational new drug application filed with the FDA pursuant to
21 CFR Part 312 before the commencement of clinical trials of a
product, or any comparable filing with any relevant regulatory authority in any
other jurisdiction.

 

“IP Rights”
means Genentech IP Rights and/or Array IP Rights, as determined by
the context of the reference.

 

“Joint
Collaboration Technology” is defined in Section 8.2(a).

 

“Joint
Research Committee” or “JRC” is defined in Section 2.2.

 

5

 

“Know-How”
means information or materials including, without limitation, data, assays,
protocols, methods, processes, techniques, models, designs, libraries and trade
secrets.

 

“Licensed
Product” means any product incorporating a Compound as an active ingredient.

 

“Losses” is
defined in Section 12.1.

 

“Marketing
Approval” means all approvals, licenses, registrations or authorizations of any
federal, state or local regulatory agency, department, bureau or other
governmental entity, necessary for the manufacturing, use, storage, import,
transport and sale of Licensed Products in a regulatory jurisdiction.  For countries where governmental approval is
required for pricing or reimbursement for the Licensed Product to be reimbursed
by national health insurance, “Marketing Approval” shall not be deemed to occur
until such pricing or reimbursement approval is obtained.

 

“Marketing
Approval Application” or “MAA” means a new drug application (as
defined in 21 C.F.R. § 314.50 et. seq.), or a comparable filing for
Marketing Approval (not including pricing or reimbursement approval) in a
country, in each case with respect to a Licensed Product in the Territory.

 

“Net Sales”
means, with respect to a particular time period, the gross amount invoiced by
Genentech and its Sublicensees (or Distributors on behalf of the foregoing
parties) for sales of Licensed Products (such Licensed Products being in final
form intended for use by the end user) in arms length transactions with Third
Parties during such time period, less the following estimated and/or incurred
charges or expenses, to the extent each is actually incurred and included in
the invoiced gross sales price:

(a)           trade,
cash and quantity discounts or rebates actually allowed or taken;

 

(b)           credits
or allowances given or made for rejection or return of, and for uncollectible
amounts on, previously sold Licensed Products or for retroactive price
reductions (including rebates similar to Medicare and/or Medicaid);

 

(c)           taxes,
duties or other governmental charges levied on or measured by the billing
amount, as adjusted for rebates or refunds, that are borne by the seller thereof
and that are not refundable and to the extent non-creditable;

 

(d)           charges
for freight and insurance directly related to the distribution of the Licensed
Products (to the extent not paid by the Third Party customer); and

 

(e)           credits
or allowances given or made for wastage replacement, indigent patient and
similar programs.

 

6

 

The specific deductions taken under, and the
general provisions of, (a) through (e) above shall be adjusted periodically as
necessary to reflect amounts actually incurred.  Sales between Genentech and its Sublicensees (or Distributors of
the foregoing parties) shall be disregarded for purposes of calculating Net
Sales.  Notwithstanding anything herein
to the contrary, in all cases Net Sales shall be determined in accordance with
GAAP.

 

In the event a Licensed Product is sold in
the form of a Combination Product containing one or more active ingredients,
devices or components in addition to the Licensed Product, Net Sales for such
Combination Product will be adjusted by multiplying actual Net Sales of such
Combination Product by the fraction A/(A + B), where A is the
weighted (by sale volume) average invoice price of the Licensed Product, if
sold separately, and B is the weighted (by sale volume) average invoice price
of any other active ingredient, device or component in the combination, if sold
separately.  If, on a country-by-country
basis, the other active ingredient, device or component in the combination is
not sold separately, Net Sales shall be calculated by multiplying actual Net
Sales of such Combination Product in such country by the fraction A/C, where A
is the invoice price of the Licensed Product, if sold separately, in such
country and C is the invoice price of the Combination Product in such
country.  If, on a country-by-country
basis, neither the Licensed Product nor the other active ingredient, device or
component of the Combination Product is sold separately, Net Sales shall be
determined by the Parties in good faith.

 

“Patent
Disclosure Data” is defined in Section 9.3.

 

“Patents”
means all U.S. and foreign patents and patent applications and any patents
issuing therefrom, and any reissues, extensions, registrations, continuations,
divisions, continuations-in-part, reexaminations, substitutions or renewals
thereof, and supplementary protection certificates based thereon.

 

“Phase I”
means human clinical trials, the principal purpose of which is preliminary
determination of safety in healthy individuals or patients as described in
21 C.F.R. §312.21, or similar clinical study in a country other than the
United States.

 

“Phase II”
means human clinical trials, for which the primary endpoints include a
determination of dose ranges and/or a preliminary determination of efficacy in
patients being studied as described in 21 C.F.R. §312.21, or similar
clinical study in a country other than the United States.

 

“Phase III”
means human clinical trials, that are prospectively designed to demonstrate
statistically whether a product is safe and effective for use in humans in a
manner sufficient to obtain regulatory approval to market such product in
patients having the disease or condition

 

7

 

being studied as described in 21 C.F.R. §312.21, or similar
clinical study in a country other than the United States.

 

“Receiving
Party” is defined in Section 9.1.

 

“Research
Plan” means a written research plan for the Research Program covering the
Research Term, as may be amended from time to time by the Joint Research
Committee.  The initial Research Plan,
which shall be agreed upon by the JRC as soon as practicable after the
Effective Date, shall cover the period through December 31, 2004 in
detail, and shall include general plans for the remainder of the Research Term.

 

“Research
Program” is defined in Section 2.1.

 

“Research
Term” means the [ * ] period commencing on the date that the Research
Plan is Approved by the JRC and ending on the first to occur of
(a) termination of this Agreement by either Party under Article 10;
or (b) if the Research Term is extended by the written agreement of both
Parties, for an additional [ * ] period (or such other additional
period agreed to by both Parties), the end of such extension period.

 

“Royalty
Offsets” is defined in Section 7.4(a).

 

“Royalty
Payment” is defined in Section 7.1.

 

“Sublicensee”
means, with respect to a particular Licensed Product, a Third Party to whom
Genentech has granted a sublicense,
under the Commercial License, of the right to make, use, sell, offer for sale
and/or import such Licensed Product.

 

“Territory”
means worldwide.

 

“Third Party”
means any entity other than Array or Genentech.

 

“United
States” or “U.S.” means the United
States of America, its territories and possessions as of the Effective Date,
and the Commonwealth of Puerto Rico.

 

“Valid Claim”
means a claim of an issued and unexpired patent (a) that is within the
Array IP Rights; and (b) that is [ * ]; and (c) that has not been found
to be unpatentable, invalid or unenforceable by a decision of a court or other
authority in the country of the patent, from which decision no appeal is taken
or can be taken.

 

8

 

Article 2

Research
Program

 

2.1 Research
Program Overview.  The Parties agree, pursuant and subject to
the terms and conditions of this Agreement, to establish a research program
under which Array shall perform certain research on Collaboration Targets, with
assistance from Genentech, with the goal of developing Compounds that meet the
Compound Criteria for each Collaboration Target, in accordance with the
Research Plan (“Research Program”). 
Each Party shall use diligent efforts to perform its respective
responsibilities under the Research Plan, and shall cooperate with and provide
reasonable support to the other Party in such other Party’s performance of its
responsibilities thereunder.  Other than
as specified in this Agreement, or as agreed in writing by the Parties, any
subsequent research, development and/or commercialization related to such
Compounds, and Licensed Products incorporating such Compounds, shall be solely
Genentech’s responsibility, in accordance with the terms and conditions of this
Agreement.

 

2.2 Joint Research Committee.

 

(a)  The JRC.  Promptly after the Effective Date, the
Parties shall establish a Joint Research Committee (“Joint Research Committee”
or “JRC”), which shall be responsible for monitoring the Research Program and
planning and coordinating activities under the Research Plan.  The JRC shall be composed of three (3)
representatives designated by each Party (or such other number as the Parties
may agree).  One representative from
each Party shall be designated as that Party’s “Team Leader” to act as the primary
JRC contact for that Party.  Either
Party may replace any or all of its representatives at any time upon prior
written notice to the other Party; provided, however, if a Party’s
representative is unable to attend a meeting, such Party may designate an
alternate to attend such meeting and perform the functions of such
representative.  From time to time, the
JRC may establish subcommittees to oversee particular projects or activities,
and such subcommittees will be constituted as the JRC approves.

 

(b)  Responsibilities of JRC.  The Joint Research Committee shall perform
the following functions:

 

(i)          draft,
review and amend the Research Plan in writing, as needed, taking into account
the activities for which each Party is responsible as set forth in
Section 2.3;

 

(ii)         define
Compound Criteria for each Collaboration Target;

 

(iii)        review
and approve the allocation of resources and efforts for the Research Program;

 

(iv)         evaluate
the progress of the Research Program, as compared to the objectives set forth
in this Agreement and the Research Plan;

 

9

 

(v)          subject
to Section 2.5, coordinate, and be the primary conduit for, the transfer
of materials and Confidential Information between the Parties; and

 

(vi)         perform
such other functions referred to in the Research Plan, and as appropriate to
further the purposes of the Research Program, or as otherwise specified in this
Agreement or agreed to by the Parties.

 

(c)  Decision Making Authority.  With respect to the responsibilities of the
Joint Research Committee, each Party shall have collectively one (1) vote in
all decisions, and the Parties shall attempt to make decisions by
consensus.  If the JRC cannot reach
consensus, then the dispute shall be referred to the Executives for resolution
in accordance with Section 14.1. 
If the Executives cannot resolve the dispute, then, notwithstanding the
arbitration provisions of Section 14.2, Genentech shall have final
decision making authority; provided, however, Array shall not be obligated, as
a result of a deciding vote by Genentech, to violate any obligation or
agreement it may have with any Third Party, or to incur any extraordinary
costs.

 

(d)  Meetings; Minutes.  The Joint Research Committee shall meet
quarterly, or as more or less often as otherwise agreed by the Parties, at such
locations as the Parties agree.  The JRC
may meet in person, by teleconference, videoconference or as otherwise
agreed.  Minutes of the JRC meetings
shall be taken, and shall, at a minimum, record all decisions made.  Such minutes shall be approved by both
Parties.  A Party may, with the prior
consent of the other Party, invite a reasonable number of non-voting employees,
consultants or scientific advisors to attend the meetings of the JRC, provided
that such invitees are bound by appropriate confidentiality obligations.

 

(e)  Other Communications.  In addition
to formal meetings, the Joint Research Committee representatives shall
communicate as necessary to ensure the appropriate direction of the Research
Program.  Genentech shall have
reasonable access to Array’s facilities and personnel to achieve this goal,
including visits by Genentech personnel (e.g., up
to two (2) business days a month), upon reasonable notice, and regular phone or
electronic mail communications (e.g., up
to several times a week when needed). 
Array shall use reasonable efforts to accommodate such requests.

 

(f)  Term of JRC Operations.  The Joint Research Committee shall meet
during the Research Term.  Thereafter,
the JRC shall cease operations and have no further functions hereunder.

 

2.3 Responsibilities Under the Research
Plan.

 

(a)  Array.  During the Research Term, Array shall be
primarily responsible for the following activities, among others, as specified
in the Research Plan:

 

(i)    [ * ];

 

10

 

(ii)   [ * ];

 

(iii) [ * ];

 

(iv)  [ * ];

 

(v)    [ * ];
and

 

(vi)  [ * ].

 

(b)  Array and/or Genentech.  During the Research Term, Array and/or
Genentech shall be responsible for the following activities, among others, as
specified in the Research Plan:

 

(i)    [ * ];

 

(ii)   [ * ];

 

(iii) [ * ];

 

(iv)  [ * ]; and

 

(v)    [ * ].

 

2.4 Information
and Reports. Subject to the second sentence
of Section 2.5, during the Research Term, (a) at least once
quarterly, each Party shall provide to the other a written summary of the
research carried out by such Party under the Research Plan and the results of
such research including, without limitation, Compounds synthesized or
discovered, and results of in vitro
and in vivo studies, with
significant discoveries or advances being communicated promptly after such
results are obtained or their significance is appreciated; and (b) each
Party shall also promptly provide the other with raw data for work carried out
by such Party under the Research Plan, to the extent reasonably requested by
the other Party.  Subject to the second
sentence of Section 2.5, during the term of the Agreement, Array shall
also transfer to Genentech all data Controlled by Array related to
Collaboration Targets or chemical entities known by Array to be Compounds, in
each case that Array knows or has reason to know would assist Genentech in the
development or commercialization of Compounds.

 

2.5 Materials and Confidential
Information Transferred. 
Array agrees to transfer to Genentech, [ * ], the materials
and Confidential Information set forth in Exhibit A, to the extent such
materials and Confidential Information exist; Array shall transfer
[ * ] to Genentech on or before December 31, 2003.  Array agrees that it shall not transfer to Genentech any of the
materials and Confidential Information set forth in Exhibit B, unless
requested by Genentech in writing, subject to Array’s consent, which consent is
in its sole discretion.  Array further
agrees that, unless requested by Genentech in accordance with the following
sentence, it shall not transfer any other materials or Confidential Information
of Array to Genentech without Genentech’s prior written consent, and any such
other materials or Confidential Information of Array transferred without such
consent shall not be subject to any limitations on use, transfer or

 

11

 

disclosure by Genentech, notwithstanding
anything to the contrary herein. 
Genentech may request in writing that Array transfer to Genentech such
other materials or Confidential Information of Array, subject to Array’s
consent, which consent is in its sole discretion.  Any materials and Confidential Information that a Party receives
from the other Party hereunder may only be used and/or further transferred or
disclosed to a Third Party in accordance with the applicable provisions of this
Agreement including, without limitation, Section 8.1(b) and
Article 9.

 

2.6 Collaboration
Targets.

 

(a)  In the Research Plan.  As of the Effective Date, [ * ]
and [ * ] have been selected by the Parties as Collaboration
Targets.  At any time after
[ * ] following the Effective Date, the Joint Research Committee may
choose to include additional Collaboration Targets in, or remove Collaboration Targets
from, the Research Plan; provided, however, any such change shall not
(i) violate any agreement that Array has with a Third Party; (ii) add
a Collaboration Target that is the target of Array’s own research or drugs in
Array’s clinical development pipeline or marketed product portfolio; or
(iii) result in less than [ * ] or more than [ * ]
Collaboration Targets being included in the Research Plan at any given time.

 

(b)  Abandonment.  With respect to a particular Collaboration
Target, in the event that (i) the Joint Research Committee determines that
the Research Program has not yielded sufficient progress and that work on such
Collaboration Target should be discontinued; or (ii) Genentech, in its
sole discretion, elects that all work on such Collaboration Target be
discontinued (i.e., under the Research Program and by Genentech
internally), regardless of the progress made on such Collaboration Target; in
either event, such Collaboration Target shall be deemed abandoned and shall
cease to be a Collaboration Target under this Agreement.

 

2.7 [ * ]; Costs.  During the Research Term, for each Collaboration Target, Array
shall have [ * ] skilled in small molecule drug discovery and/or
preclinical development, and possessing a bachelor’s degree or higher in a
relevant scientific discipline, devoted exclusively to performing activities
under the Research Plan for such Collaboration Target.  At Genentech’s request, Array shall provide
resumes or curriculum vitae for
such [ * ].  Except as
otherwise expressly provided herein (including, without limitation, for
[ * ] support under Section 6.2), or agreed to by the Parties,
each Party shall be responsible for [ * ] in performing its
obligations related to the Research Program, or otherwise under this Agreement,
including, without limitation, [ * ].

 

12

 

Article 3

Development
and Commercialization of Licensed Products

 

3.1 Genentech
Responsibilities.

 

(a)  Development.  Genentech shall be responsible, at its
expense, for undertaking a development program to obtain regulatory approval
for Licensed Products for Collaboration Targets in the Field in the
Territory.  Such program shall include
all preclinical, clinical, manufacturing and other activities, beyond those to
be undertaken pursuant to the Research Program, or as otherwise expressly
specified or agreed, as are necessary or appropriate to bring such Licensed
Products to market.

 

(b)  Commercialization.  Genentech shall be responsible for
establishing, controlling and implementing strategies, plans and budgets for
the marketing and promotion of Licensed Products in the Field in the Territory.

 

(c)  Diligence.  Genentech shall use Commercially Reasonable
Efforts to develop and commercialize [ * ] in the Field in the Territory.

 

3.2  [ * ].  If Genentech decides to use a Third Party
to (a) [ * ]; and/or (b) [ * ], Genentech shall
notify Array in writing of Genentech’s requirements and Array may, in its
discretion, elect to submit a written bid for such work.  If Genentech receives such bid from Array
within [ * ] of Array receiving Genentech’s notice, the Parties shall
negotiate in good faith for [ * ]. 
If after such [ * ] period the Parties have not reached
agreement on the terms under which Array will perform such work, or if after
[ * ] the Parties have not executed a definitive agreement for such
work, Genentech shall be free to initiate such work with a Third Party.  Other than as set forth in this
Section 3.2, Genentech has no other obligations to Array with respect to
[ * ].

 

Article 4

Exclusivity

 

4.1 During the
Research Term. 
During the Research Term, with respect to each Collaboration Target,
Array shall not conduct, participate in, or fund, directly or indirectly,
either alone or with a Third Party, research or development with respect to, or
commercialize a product comprising a chemical entity, a mechanism of action of
which is to modulate the activity of such Collaboration Target, other than in
accordance with this Agreement.

 

4.2 After the
Research Term.  After the Research Term, with respect to
each Collaboration Target, for as long as Genentech (or a Sublicensee or other
Third Party on Genentech’s behalf) (a) has an active research and/or
development program for such Collaboration Target, where such program could
result in Array accruing Development

 

13

 

Milestones and Royalties; or (b) is
commercializing a Licensed Product for such Collaboration Target; or
(c) is providing [ * ] support to Array with respect to such
Collaboration Target (if at all); then, in each case, Array shall not conduct,
participate in, or fund, directly or indirectly, either alone or with a Third
Party, research or development with respect to, or commercialize a product
comprising a chemical entity, a mechanism of action of which is to modulate the
activity of such Collaboration Target, other than in accordance with this
Agreement.

 

Article 5

Licenses

 

5.1 Research
Licenses.

 

(a)  To Genentech.  Array hereby grants to Genentech, during the
Research Term, a royalty-free, non-exclusive, non-sublicensable license under
the Array IP Rights solely for the purpose of performing Genentech’s
responsibilities under the Research Program.

 

(b)  To Array.  Genentech hereby grants to Array, during the
Research Term, a royalty-free, non-exclusive, non-sublicensable license under
the Genentech IP Rights solely for the purpose of performing Array’s
responsibilities under the Research Program.

 

5.2 Commercial
License.

 

(a)  Commercial License Grant.  Subject to the terms and conditions of this
Agreement, Array hereby grants to Genentech a royalty-bearing, exclusive,
sublicensable license (in accordance with Section 5.2(b)) under
(i) the Array Existing Technology, Array Collaboration Technology and
Array’s interest in Joint Collaboration Technology, to make, use, offer for
sale, sell and import Compounds and Licensed Products in the Field in the
Territory; and (ii) the Array Future Technology to make, use, offer for
sale, sell and import Compounds in the Field in the Territory.

 

(b)  Sublicenses.  Genentech may sublicense the rights granted
under the Commercial License for a particular Compound and/or Licensed Product,
and such sublicense may be further sublicensed by a Sublicensee to multiple
tiers of sublicensees.

 

5.3 No Implied
Licenses.  Each Party acknowledges that the licenses
granted under this Article 5 are limited to the scope expressly granted,
and all other rights under a Party’s IP Rights are expressly reserved to
the granting Party.  Without limiting
the foregoing, it is understood that where a license under a Party’s
IP Rights is granted to the other Party under this Article 5 for a
particular purpose, the granting Party retains all of its rights under its
IP Rights for all purposes not expressly licensed under this Agreement.

 

14

 

5.4 Exercise of License Rights by Third
Party.  Unless otherwise expressly provided in this
Agreement, the rights granted to a Party under the licenses granted hereunder
may be exercised by a Third Party on such Party’s behalf (e.g., on Genentech’s behalf as set forth
in Section 8.1(b) or to have Licensed Products made by a contract
manufacturer), whether or not such license is non-sublicensable, including,
without limitation, by a Third Party performing work under a material transfer
agreement on behalf of such Party.

 

5.5 Third
Party Agreements.  If any IP Rights of one Party
that are licensed to the other Party hereunder are Controlled by the licensing
Party by virtue of an agreement with a Third Party, such licensing Party shall
not intentionally commit any acts or omissions that could cause a material
breach of any agreement pursuant to which such licensing Party has rights that
it has sublicensed to such other Party hereunder, such that its Third Party
licensor would be entitled to terminate such agreement or amend it in any way
that would adversely affect a license or other rights granted to such other
Party under this Agreement.  In
addition, without the prior written consent of such other Party, such licensing
Party shall not exercise any rights it may have with respect to any such
agreement or amend, or waive any of its rights under, such agreement in any way
that would adversely affect a license or other rights granted to such other
Party under this Agreement.

 

Article 6

License
Fees; [ * ] and
Milestone Payments

 

6.1 License Fee. 
In consideration [ * ], Genentech shall pay to Array
[ * ] after the Effective Date, which amount shall be non-refundable
and non-creditable against any other amounts due Array under this Agreement.

 

6.2 [ * ]; Outsourcing.  [ * ].

 

6.3 Development
Milestones.

 

(a)  Milestone Schedule.  Within [ * ] following the first occurrence of each milestone event
(set forth in this Section 6.3(a)) with respect to a particular Collaboration Target, Genentech
shall pay to Array the following milestone payments (each payment, a
“Development Milestone Payment”), regardless of whether the development or
commercialization of such Licensed Product is discontinued at any time after
the occurrence of such milestone event. 
By way of example only, if a particular milestone event is achieved by
more than one Licensed Product for the [ * ] Collaboration Target,
the corresponding Development Milestone Payment shall only be due for the first
such Licensed Product for [ * ].

 

15

 

	
  Milestone Event

  	
   

  	
  Milestone
  Payment

  
	
  (with respect to each
  Collaboration Target)

  	
   

  	
  (in U.S.
  dollars)

  
	
  (1)

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
  (2)

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
  (3)

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
  (4)

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
  (5)

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
  (6)

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
  (7)

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
  (8)

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
  (9)

  	
  [ * ]

  	
   

  	
  [ * ]

  
	
  (10)

  	
  [ * ]

  	
   

  	
  [ * ]

  

 

(b)  Definitions.  The following definitions shall be used
for the purposes of the Development Milestone Payments due under this
Section 6.3:

 

(i)    “Acceptance” of an
MAA shall mean the date of receipt by Genentech or its Sublicensees of written
notice of acceptance from the FDA (or the equivalent regulatory authority in a
country outside the U.S.) of an MAA for a Licensed Product for substantive
review.

 

(ii)   “[ * ]” is
defined in Section 0.

 

(iii) “[ * ]” is
defined in Section 0.

 

(iv)  “Major European
Country” means France, Germany, Italy, Spain or the United Kingdom.

 

Article 7

Royalties

 

7.1 Royalty Rate. 
Genentech shall pay, or cause to be paid, to Array a royalty of
[ * ] of Net Sales of each Licensed Product (“Royalty Payment”),
subject to Royalty Offsets and other provisions of this Article 7
including, without limitation, Section 7.3(a).

 

16

 

7.2 Single Royalty.  In
no event shall more than one Royalty Payment be due to Array hereunder with
respect to the sale of a particular Licensed Product, even if such Licensed
Product contains more than one Compound, or such Licensed Product or its
manufacture or use is Covered by more than one Valid Claim.

 

7.3 Royalty
Term; Fully Paid Licenses.

 

(a)  Royalty Term.  Genentech’s obligation to make Royalty
Payments shall pertain only to a Licensed Product that is Covered by a Valid
Claim in the country of sale on the date of sale by Genentech or its
Sublicensees to Third Parties.  Such
Royalty Payment obligation shall expire on a Licensed Product-by-Licensed
Product and country-by-country basis upon the expiration of the last-to-expire
Valid Claim that Covers such Licensed Product in such country.  For purposes of this Section 7.3(a),
the date of sale of a Licensed Product shall be deemed to occur on the later of
(i) the date such Licensed Product is shipped; or (ii) the date of
the invoice to the purchaser of such Licensed Product.

 

(b)  Fully Paid Licenses.  Upon expiration of the Royalty Payment
obligation for a particular Licensed Product in a given country, the Commercial
License granted to Genentech under this Agreement with respect to such Licensed
Product in such country shall become fully paid and irrevocable.

 

7.4 Royalty
Offsets.

 

(a)  Royalty Offsets.  Reductions of Royalty Payments made
under this Section 7.4(a) shall be referred to collectively as “Royalty
Offsets.”  In the event that (i) it becomes necessary for Genentech, or its
Sublicensee, to [ * ]
of a Third Party, where such [ * ], and such [ * ]
would be [ * ] by [ * ] of such Licensed Product [ * ] in a given country; then (ii) the
amount of the Royalty Payments due for such Licensed Product in such country
shall be [ * ] of the amount of the royalties [ * ] to such
Third Party for such
license.  Notwithstanding the preceding
sentence, in no event shall the applicable royalty rate be [ * ],
other than as expressly provided in this Agreement including, without
limitation, in accordance with Section 10.5(a)(ii).

 

(b)  Complementary Technologies.  Without limiting
Royalty Offsets under Section 7.4(a), it is understood that on a
case-by-case basis, Genentech and Array may agree that it would be in their
mutual best interests to in-license a complementary technology for use with a
Licensed Product, and in such case may similarly agree that it would be in
their mutual best interests to agree upon an offset for royalties paid with
respect to such in-license; provided, however, neither Party shall be obligated
to agree to any such in-license or offset, and no such offset shall be made
unless so agreed.

 

17

 

7.5 Payments, Reports
and Audits. The following terms and
conditions shall apply to Royalty Payments under this Agreement:

 

(a)  Payments and Reports.  Genentech shall make Royalty Payments to
Array or its designee [ * ] in which Royalty Payments are due.  Each Royalty Payment shall be accompanied by
a written report, setting forth all the information necessary for the
calculation of such payment.  Unless
otherwise requested, or consented to in writing, by Array, all Royalty Payments
and reports related to Net Sales by Genentech’s Sublicensees shall be made to
Array by Genentech together with (or as a part of) Genentech’s payments and
reports.

 

(b)  Records.  Genentech shall keep full, true and accurate
books of account containing all particulars that may be necessary for the purpose
of showing Net Sales and demonstrating the calculation of Royalty
Payments.  Such books of account and the
supporting data and other records shall be kept at the principal place of
business of Genentech.  Genentech’s
books and records shall be open at all reasonable times, for [ * ]
following the end of the [ * ] to which they pertain, for examination
in accordance with the provisions of Section 7.5(c); provided, however,
any given set of books and records may only be examined once.

 

(c)  Audits.  At the request and expense of Array,
Genentech shall permit a nationally recognized independent certified public
accountant, selected by Array and reasonably acceptable to Genentech, to
examine, not more than once [ * ] during the period in which
Genentech has an obligation to pay Royalty Payments under this Agreement, such
books of account and records under Section 7.5(b) as may be necessary to
determine the correctness of any report or payment related to Royalty Payments
under this Agreement.  Such examination
shall be made during regular business hours and upon [ * ] prior
written notice.  After review of the
accountant’s examination report, Genentech shall promptly pay any uncontested,
understated Royalty Payments.  Any
overpayment of Royalty Payments shall be promptly refunded or fully creditable
against amounts payable in subsequent payment periods, at Genentech’s
election.  Genentech shall pay
contested, understated Royalty Payments, if any, that are due promptly after
the dispute is resolved, in accordance with the provisions of
Article 14.  If such accountant
reasonably determines that Royalty Payments payable under this Agreement have
been, for any [ * ], understated by [ * ], Genentech shall
pay the reasonable costs of the examination. 
The Parties agree that all information subject to review under this
Section 7.5(c) is Confidential Information of Genentech and may only be
used for purposes germane to this Section 7.5(c), and that Array shall
retain and cause its accountant to retain all such information in confidence.

 

(d)  Mode of Payment; Foreign Exchange.  All payments due under this Agreement shall
be made in United States dollars via wire transfer of immediately available
funds, or by check if requested by Array, and shall be made where directed by
Array from time to time.  For the
purpose of computing Net Sales in a currency other than United States Dollars,

 

18

 

such currency shall be converted into United
States Dollars using the ending conversion rate for the relevant period as
reported by Reuters Ltd.

 

(e)  Taxes.  Each Party shall comply with applicable
United States Internal Revenue Service guidelines regarding filing and
reporting for income tax purposes. 
Neither Party shall treat their relationship under this Agreement as a
partnership or as a pass through entity for tax purposes.

 

(f)  Blocked Currency.  In each country where the local currency is
blocked and cannot be removed from such country, Royalty Payments related to
Net Sales of Licensed Products sold in such country shall continue to be
accrued without interest in such country, and shall continue to be reported,
but such Royalty Payments will not be paid until they may be removed from such
country.  At such time as Genentech or
its Sublicensee, as the case may be, is able to remove currency from such
country, it shall also remove and pay such accrued Royalty Payments.

 

Article 8

Materials;
Intellectual Property

 

8.1 Materials.

 

(a)  Ownership.  Each Party may transfer certain materials to
the other Party pursuant to the Research Plan, Approval by the Joint Research
Committee or other provisions of this Agreement.  Except as otherwise expressly provided herein, as between the
Parties, all right, title and interest in and to all such transferred materials
(and any IP Rights relating thereto) shall remain in the Party
transferring such materials to the other Party.

 

(b)  Use; Transfer.  Each Party agrees that, except as otherwise
expressly provided herein, it shall use the other Party’s materials only in
connection with activities contemplated by this Agreement or in order to
further the purposes of this Agreement, and shall not transfer such materials
of the other Party to any Third Party without such other Party’s prior written
consent.  Array hereby consents that
Genentech may transfer any or all of the Compounds to Third Parties that
perform activities on behalf of Genentech for the purposes of this Agreement;
provided, however, such Third Parties shall be contractually bound to Genentech
(including, without limitation, being bound by confidentiality obligations at
least as restrictive as those set forth in Article 9, and agreeing to use
such transferred Compounds only for the purposes of this Agreement and to not
further transfer such Compounds without Array’s prior written consent).

 

19

 

8.2 Ownership
of Technology.

 

(a)  General.  As between the Parties, each Party shall
solely own its Contributed Technology. 
Except as otherwise expressly provided in this Agreement (including,
without limitation, Section 8.3), as between the Parties,
(i) Collaboration Technology that is discovered, conceived or reduced to
practice by employees of Array solely (or jointly with a Third Party collaborator/agent
of Array) (“Array Collaboration Technology”) shall be solely owned by Array;
(ii) Collaboration Technology that is discovered, conceived or reduced to
practice by employees of Genentech solely (or jointly with a Third Party
collaborator/agent of Genentech) (“Genentech Collaboration Technology”) shall
be solely owned by Genentech; and (iii) Collaboration Technology that is
discovered, conceived or reduced to practice by an employee of Genentech (or a
Third Party collaborator/agent of Genentech) and an employee of Array (or a
Third Party collaborator/agent of Array) jointly (“Joint Collaboration
Technology”) shall be jointly owned by Genentech and Array.

 

(b)  Restrictions on Joint Collaboration
Technology. 
During the term of the Agreement, with respect to any Collaboration
Target that is included in the scope of the Commercial License, Array shall
not, in the Territory, license (except by Array to Genentech pursuant to the
licenses granted hereunder), assign, dispose of, encumber or otherwise impair
any portion of its interest in the Joint Collaboration Technology that relates
to any such Collaboration Target or Compounds thereto, without the prior
written consent of Genentech.  Except as
provided in Article 6, and subject to the licenses granted hereunder,
neither Party shall have an obligation to account to the other, or obtain the
consent of the other, with respect to the exploitation (directly or through
licensees or Third Parties) of any Joint Collaboration Technology, and each
Party hereby waives any right it may have under the laws of any jurisdiction to
require such an accounting or consent.

 

8.3 [ * ].

 

(a)  [ * ] Patentability.  Solely to the extent [ * ], as reasonably determined by
Genentech and Array, inventions within Genentech Collaboration Technology or
Joint Collaboration Technology shall be subject to an [ * ].  Provided further, whether or not Genentech
has requested [ * ], Array shall promptly [ * ]
(i) [ * ], upon termination of the Agreement;
(ii) [ * ], upon abandonment of such Collaboration Target
pursuant to Section 2.6(b); and (iii) [ * ], upon such
exclusion.

 

(b)  [ * ] Patent Term Extensions.  With respect to any Compound for which
Genentech has filed an IND, at the time of such filing, or at any time
thereafter, Genentech may request that Array [ * ], to Genentech such
[ * ], so as to provide Genentech [ * ], and Array shall
undertake [ * ] that are reasonably necessary to facilitate Genentech
procuring a patent term extension with respect to such Compound.

 

20

 

8.4 Inventorship. 
The determination of inventorship for Collaboration Technology shall be
made in accordance with applicable laws relating to inventorship set forth in
the patent laws of the United States. 
All such determinations shall be documented to ensure that any
divisional or continuation patent applications reflect appropriate inventorship
and that inventions and patent rights are assigned to the appropriate
Party.  If either Party identifies Joint
Collaboration Technology, the Parties’ patent counsel shall determine
inventorship and, in the event of a disagreement, the Parties shall refer such
determination to mutually acceptable outside counsel.

 

8.5 Assignment;
Cooperation. 
Each Party shall require all of its employees and any Third Parties
working pursuant to this Agreement on its behalf, to assign to such Party any
Collaboration Technology discovered, conceived or reduced to practice by such
employee or Third Party, and to cooperate with such Party in connection with
obtaining patent protection therefor. 
The Parties agree to reasonably cooperate with each other to effectuate
ownership of Collaboration Technology as set forth herein, including, but not
limited to, by executing and recording documents.

 

8.6 Patent Prosecution.

 

(a)  Definitions.  The following definitions shall be used only
for the purposes of this Section 8.6 (or as otherwise expressly referenced
in this Agreement):

 

(i)    “Prosecuting Party”
is defined in Section 8.6(d)(ii).

 

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

 

(b)  Disclosure of Technology.  During the Research Term, each Party shall
promptly disclose to the other any Collaboration Technology discovered,
conceived or reduced to practice by such Party.  During the term of the Agreement, Array shall promptly disclose
to Genentech all Array Contributed Technology (including, without limitation,
any Array Contributed Technology of which it acquires Control after the
Effective Date) that Array knows or has reason to know is within the scope of
the licenses granted to Genentech hereunder.

 

(c)  Contributed Technology.  Each Party, in its
sole discretion and expense, may Prosecute and Maintain Patents covering its
Contributed Technology.  Array shall use
diligent efforts to obtain Valid Claims that Cover Licensed Products.

 

21

 

(d)  Collaboration Technology.

 

(i)          Sole Control.  Genentech, in its sole discretion and
expense, may Prosecute and Maintain Patents covering Genentech Collaboration
Technology.

 

(ii)         Joint Control.  The Parties shall jointly decide on a
strategy for the Prosecution and Maintenance of Patents covering Joint Collaboration
Technology, which strategy may include retention of mutually acceptable outside
counsel to conduct such Maintenance and Prosecution, and the Parties shall
equally share the expenses therefor, regardless of which Party is responsible
for such Prosecution and Maintenance. 
The Parties shall jointly decide on a strategy for, and shall
collaborate and cooperate with each other in the Prosecution and Maintenance of
Patents covering Array Collaboration Technology, which strategy may include
retention of mutually acceptable outside counsel to conduct such Maintenance
and Prosecution, and Array shall be responsible for such Prosecution and
Maintenance, at its expense.  The Party
that is responsible for the Prosecution and Maintenance of a Patent under this Section 8.6(d)(ii)
shall be referred to as the “Prosecuting Party.”  The Prosecuting Party shall use diligent efforts to obtain a
reasonable scope of protection for such Collaboration Technology inventions,
and will consider in good faith reasonable comments provided by the other
Party.

 

(iii)        Cooperation.  Each Party shall, at its own expense,
reasonably cooperate with and assist the other Party, at such other Party’s
request, in connection with the Prosecution and Maintenance Patents covering
any Collaboration Technology, including without limitation by making scientists
and scientific records reasonably available to such other Party.

 

(e)  Disclosure of Developments.  Each Party shall keep the other informed as
to material developments with respect to the Prosecution and Maintenance of
Patents covering any Collaboration Technology (other than Genentech
Collaboration Technology) or of Patents covering Array Contributed Technology
that pertain to chemical entities that Array knows or has reason to know are Compounds
or Licensed Products including, without limitation, by promptly providing to
the other Party, upon request, copies of any substantive documents that such
Party receives from any patent office (including notice of interferences,
reissues, re-examinations, oppositions or requests for patent term extensions),
and by providing such other Party the opportunity to have reasonable input into
the strategic aspects of such Prosecution and Maintenance.

 

(f)  Transfer of Prosecution and Maintenance.  If a Prosecuting Party elects not to
Prosecute and Maintain Patents covering Collaboration Technology in a country
in which the Parties had agreed to Prosecute and Maintain such Patents, such
Prosecuting Party shall provide at least sixty (60) days written notice to the
other Party.  Thereafter, such other
Party shall have the right, but not the obligation, to pursue, at its sole
expense and in its sole discretion, the Prosecution and Maintenance of such
Patents in such country.  The ownership
of such Patents

 

22

 

shall not be affected, notwithstanding any
transfer of Prosecution and Maintenance of such Patents to such other Party in
accordance with this Section 8.6(f).

 

8.7 Patent
Interferences. 
In the event that an interference is declared by the U.S. Patent and
Trademark Office (a) between (i) a claim in one or more patents or
patent applications within the Array Patents and (ii) a claim in one or
more patents or patent applications within the Genentech Patents, where at
least one of such claims would be infringed by the making, using, offering for
sale, selling or importing of Licensed Products but for the licenses granted
hereunder; or (b) between either of (i) or (ii) above and a claim in one
or more patents or patent applications within the Joint Collaboration
Technology, where at least one of such claims would be infringed by the making,
using, offering for sale, selling or importing of Licensed Products, but for
the licenses granted hereunder; then the Parties shall in good faith establish
within thirty (30) days of the declaration of such interference, or such other
time as agreed upon, a mutually agreeable process to resolve such interference
in a reasonable manner (including, without limitation, control and cost
sharing), in conformance with all applicable legal standards.

 

8.8 Third Party
Claims.  If
a claim of infringement is brought by a Third Party against Genentech on
account of the manufacture, use, offer for sale, sale or import of any Licensed
Product, Genentech shall be solely responsible for defending such Third Party
claim, at its sole discretion and sole expense.  At Genentech’s request and expense, Array shall cooperate
reasonably with Genentech in connection with any such defense.

 

8.9 Infringement by Third Parties.

 

(a)  Actions.  If any Patent within the Array Contributed
Technology or the Collaboration Technology is infringed by a Third Party in any
country in connection with the manufacture, use, offer for sale, sale or import
of a product substantially similar to a Licensed Product in the Field in such
country, Genentech (and its Sublicensees) shall have the primary right, but not
the obligation to institute, prosecute, and control any action or proceeding
with respect to such infringement of such Patent, by counsel of its own choice,
and Array shall have the right, at its own expense, to be represented in that
action by counsel of its own choice.

 

(b)  Assistance, Costs and Recoveries.  If Genentech (and/or its Sublicensees)
brings any such action or proceeding in accordance with this Section 8.9,
Array agrees, at Genentech’s request and expense, to be joined as a party
plaintiff and to give Genentech (and/or its Sublicensees) reasonable assistance
and authority to file and prosecute the suit. 
The costs and expenses of Genentech (and/or its Sublicensees) under this
Section 8.9 shall be borne by Genentech (and/or its Sublicensees), and any
damages, amounts received in settlement or other monetary awards recovered
shall be shared as follows: [ * ]. 
A settlement, consent judgment or other voluntary final disposition of a
suit under this Section 8.9 may be entered into without the consent of
Array, provided that such settlement, consent judgment or other disposition
does not admit the invalidity or unenforceability of any Patent within the
Array Contributed Technology

 

23

 

or the Collaboration Technology (other than
Genentech Collaboration Technology) and provided further, that any rights to
continue the infringing activity in such settlement, consent judgment or other
disposition shall be limited to those rights Genentech (and/or its
Sublicensees) otherwise has the right to grant.

 

Article 9

Confidentiality

 

9.1 Confidentiality.  Except to the extent expressly authorized by
this Agreement, or otherwise agreed in writing, each Party (as a “Receiving
Party”) in possession of the Confidential Information of the other Party (as a
“Disclosing Party”) agrees: (a) to hold the Disclosing Party’s Confidential
Information in confidence; and (b) to only use such Disclosing Party’s
Confidential Information in connection with activities contemplated by this
Agreement or in order to further the purposes of this Agreement.  The foregoing confidentiality and use
restrictions shall not apply to a Disclosing Party’s Confidential Information
to the extent that the Receiving Party establishes by written evidence that
such Confidential Information:

 

(i)          was
already known to the Receiving Party, other than under an obligation of
confidentiality, at the time of disclosure by the Disclosing Party;

 

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

 

(iii)        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;

 

(iv)         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; or

 

(v)          was
subsequently developed by or on behalf of the Receiving Party without use of
the Disclosing Party’s Confidential Information.

 

9.2 Authorized Disclosures.

 

(a)  Legal Compliance.  A Party may disclose the other Party’s
Confidential Information only to the extent such disclosure is reasonably
necessary to comply with the order of a court, applicable laws or governmental
regulations; provided, however, that, except for disclosures otherwise
permitted under this Section 9.2, or as otherwise required or necessitated
by law, such Party shall provide prompt notice of such disclosure requirement
to such other Party and provide reasonable assistance to enable such other
Party to seek a protective order or otherwise prevent such disclosure.

 

24

 

(b)  Regulatory Authorities.  A Party may disclose the other Party’s
Confidential Information to the extent such disclosure is required to comply
with applicable governmental regulations or to conduct pre-clinical or clinical
trials related to Licensed Products.

 

(c)  Patent Prosecution.  A Party may disclose the other Party’s
Confidential Information to the extent such disclosure occurs in the filing or
publication of any patent application or patent on inventions, subject to the
provisions of Section 8.6.  Array
agrees that the provisions of Section 9.3 shall apply to disclosures by
Array of Array Confidential Information in patent applications.

 

(d)  Publications.
 Except as otherwise expressly
provided, Array shall not disclose by any means (including electronically) any
information related to Compounds discovered under the Research Plan or
Collaboration Targets, or the identity or properties of other chemical entities
known by Array to be Compounds, without Genentech’s prior written consent,
which consent is in its sole discretion. 
Subject to the preceding sentence, in the event a Party wishes to
publish or orally present information relating to or arising from the Research
Program, such Party shall submit to the other Party all materials related to
the proposed publication or presentation (including, without limitation,
posters, abstracts, manuscripts and written descriptions of oral presentations)
at least thirty (30) days prior to the date of submission for publication or
the date of presentation, whichever is earlier, of any of such submitted
materials.  The other Party shall review
such submitted materials and respond to the submitting Party as soon as
reasonably possible, but in any case within thirty (30) days of receipt
thereof.  At the request of the
reviewing Party, the submitting Party shall modify or delete from such proposed
publication or presentation any Confidential Information of the reviewing
Party.  In the event the reviewing Party
does not respond within the period specified above, the submitting Party will
be free to make such proposed publication or presentation.

 

(e)  Other Permitted Disclosure.  A Receiving Party may disclose and grant use
of particular Confidential Information of the Disclosing Party to such
Receiving Party’s permitted sublicensees, agents, consultants, clinical
investigators, collaborators or contractors as such Receiving Party reasonably
determines is necessary to receive the benefits of or fulfill its obligations
pursuant to this Agreement; provided, however, any such permitted sublicensees,
agents, consultants, clinical investigators, collaborators or contractors must
be obligated to substantially the same extent as set forth in Section 9.1
to hold in confidence and not make use of such Confidential Information for any
purpose other than those permitted by this Agreement.  Nothing in this Article 9 shall restrict either Party from
using or disclosing any of its own Confidential Information for any purpose
whatsoever.  Further, a Receiving Party
may disclose Confidential Information received under this Agreement to existing
or potential investors, acquirers, merger partners, collaborators or licensees,
or to professional advisors (e.g., 
attorneys, accountants and prospective investment bankers) involved in such
activities, for the limited purpose of evaluating such investment, transaction,
or license and under appropriate conditions

 

25

 

of confidentiality, only to the extent
necessary and with the agreement by these permitted individuals to maintain
such Confidential Information in strict confidence.

 

9.3 Patent
Applications. 
Array agrees that, prior to filing a patent application that discloses
any data or information that was generated or obtained by Array under the
Research Program including, without limitation, Array Confidential Information,
(“Patent Disclosure Data”), Array shall provide to Genentech, prior to filing
and with sufficient time to allow Genentech to comment thereon, a copy of any
such patent application that Array proposes to file with any patent office in
the Territory.  The Parties acknowledge
that Array may file such patent applications to protect Collaboration
Technology in accordance with Section 8.6(d), and that it is in the
interests of both Genentech and Array to disclose only Patent Disclosure Data
that are necessary for successful prosecution of such filed patent applications
in countries of interest.  In
particular, the Parties will discuss in good faith Array’s proposed inclusion
of any of the following types of data and information in the Patent Disclosure
Data: [ * ].  Array agrees to
fully and reasonably consider any of Genentech’s suggestions or proposed
deletions prior to filing such Array patent applications, and further agrees to
consider postponing publication of such patent applications containing Patent
Disclosure Data as long as feasible, in Array’s sole discretion (for example,
by filing provisional applications or by foregoing international filings, if
Array deems such action appropriate).

 

9.4 Continuing
Obligation. 
This Article 9 shall survive the termination or expiration of this
Agreement for a period of [ * ].

 

9.5 Termination
of Prior Agreements.  As of the Effective Date, this Agreement supersedes the Mutual
Confidentiality Agreement between the Parties effective as of
July 9, 2003, but only insofar as it relates to the subject matter of
this Agreement.  All “Information” (as
defined in such confidentiality agreement) exchanged between the Parties
thereunder relating to the subject matter of this Agreement shall be deemed
Confidential Information hereunder and shall be subject to the provisions of
this Article 9.

 

Article 10

Term;
Termination

 

10.1        Term. 
This Agreement shall be effective as of the Effective Date.  Unless sooner terminated as provided in this
Article 10, this Agreement shall remain in effect until Array is no longer
entitled (in fact or potentially) to receive Royalty Payments from Genentech,
other than Royalties Payments pursuant to Section 10.5(c).

 

10.2        Termination by Genentech.  Genentech shall have the right to terminate
this Agreement in its entirety, in its sole discretion, upon [ * ]
written notice to Array.

 

26

 

10.3        Material Breach.

 

(a)  Generally.  Subject to Section 10.3(b), either
Party may terminate this Agreement, by written notice to the other Party, for
any material breach of this Agreement by the other Party, if such breach is not
cured within [ * ] after the breaching Party receives written notice
of such breach from the non-breaching Party; provided, however, if such breach
is not capable of being cured within such [ * ] period, the cure
period shall be extended for such amount of time that the Parties agree to in
writing is reasonably necessary to cure such breach, so long as the breaching
Party is making diligent efforts to do so. 
Such termination shall be effective upon expiration of the cure
period.  Any dispute as to whether a
notice of termination pursuant to this Section 10.3(a) is proper, or
whether a breach is material or has been cured, shall be resolved as provided
pursuant to Article 14.

 

(b)  Related to a Licensed Product or
Collaboration Target.  If Array has the right to terminate this Agreement due to a
material breach by Genentech, and (i) if such breach relates solely to a
particular Collaboration Target, then Array may only exclude Compounds and
Licensed Products for such Collaboration Target from the scope of the
Commercial License; or (ii) if such breach relates solely to a particular
Licensed Product, then Array may only exclude such Licensed Product from the
scope of the Commercial License; and in either event, Array may not terminate
the entire Agreement.

 

10.4        Insolvency or Bankruptcy.

 

(a)  Right to Terminate.  In the event that a Party becomes insolvent,
files a petition in bankruptcy, has such a petition filed against it, determines
to file a petition in bankruptcy, or receives notice of a Third Party’s
intention to file an involuntary petition in bankruptcy, such Party shall
immediately notify the other Party in writing. 
In addition to any other remedies available to such other Party by law
or in equity, such other Party shall have the right to immediately terminate
this Agreement, in whole or in part as the terminating Party may determine,
upon learning of any of the foregoing events.

 

(b)  Retention of Rights.  In the event Array seeks or is involuntarily
placed under the protection of the “Bankruptcy Code” (i.e., Title 11,
U.S. Code), and the trustee in bankruptcy, or Array as a
debtor-in-possession, rejects this Agreement, Genentech hereby elects, pursuant
to Section 365(n) of such Bankruptcy Code, to retain all licenses of
rights to “intellectual property” (as defined under such Bankruptcy Code)
granted to it under this Agreement to the extent permitted by law.

 

(c)  Embodiments of IP.  The Parties agree that, in the event of the
commencement of a bankruptcy proceeding by or against Array under such
Bankruptcy Code, Genentech shall be entitled to a complete duplicate of all
embodiments of such intellectual property, and such embodiments, if not already
in its possession, shall be promptly delivered to

 

27

 

Genentech (i) upon any such commencement
of a bankruptcy proceeding, unless Array elects to continue to perform all of
its obligations under this Agreement, or (ii) if not delivered under (i),
immediately upon the rejection of this Agreement by or on behalf of Array.

 

(d)  Patent Prosecution.  Genentech acknowledges that certain Array
Patents may contain subject matter that is licensed to Third Parties or may
also include subject matter that is outside the scope of the Commercial
License.  The Parties agree that, in the
event of the commencement of a bankruptcy proceeding by or against Array under
such Bankruptcy Code, to the extent consistent with the Bankruptcy Code and
Array’s existing obligations to Third Parties, and to the extent permitted by
Array’s trustee, Genentech shall have the right to Prosecute and Maintain (as
defined in Section 8.6(a)) Array Patents, to the extent included within
the scope of the Commercial License, at its expense.

 

10.5        Effects of Termination; Survival.

 

(a)  Termination by Genentech.

 

(i)    In the event that
Genentech terminates this Agreement pursuant to Section 10.2, and subject
to Sections 10.5(c) and (d), all rights and licenses granted by Array hereunder
with respect to Compounds and Licensed Products shall immediately terminate.

 

(ii)   In the event that
Genentech terminates this Agreement pursuant to Section 10.3(a), after the
effective date of such termination, the Commercial License granted to Genentech
hereunder shall become irrevocable and Genentech shall pay [ * ];
provided, however, that if such termination is due to a breach by Array of
Article 4, the Commercial License shall [ * ].

 

(b)  Termination by Array.  In the event that Array terminates this
Agreement pursuant to Section 10.3(a), and subject to
Sections 10.5(c) and (d), all rights and licenses granted by Array
hereunder with respect to Compounds and Licensed Products shall immediately
terminate.

 

(c)  Inventory at Termination.  In the event this Agreement is terminated by
a Party for any reason (or a Licensed Product is excluded from the scope of the
Commercial License), Genentech shall have the right to sell or otherwise
dispose of Licensed Products then in stock, subject to Royalty Payments and any
other applicable provisions of this Agreement, and Array covenants not to sue
Genentech for infringement under any Array IP Rights with respect to such
activities conducted by Genentech pursuant to this Section 10.5(c).

 

(d)  Continuation of Sublicenses.  Upon termination of this Agreement (or if a
Licensed Product is excluded from the scope of the Commercial License), an
existing sublicense granted by Genentech under its Commercial License, if any,
shall continue in full force and effect, provided that the Sublicensee agrees
to be bound by all the terms and conditions of this

 

28

 

Agreement that are applicable to such
Sublicensee including, without limitation, rendering directly to Array all payments
and other obligations due to Array related to such sublicense (including,
without limitation, all Development Milestone Payments and Royalty Payments).

 

(e)  Return of Confidential Information.  Upon termination of this Agreement by
Genentech pursuant to Section 10.2 or Array pursuant to Section 10.3,
Genentech shall return to Array (or destroy at Array’s written request) all
Confidential Information of Array directly related to this Agreement in the
possession of Genentech as of the effective date of termination (with the
exception of one copy of such Confidential Information, which may be retained
by Genentech’s legal department to confirm compliance with the non-use and
non-disclosure provisions of this Agreement). 
Upon any termination of this Agreement by either Party, Array shall
return to Genentech (or destroy at Genentech’s written request) all
Confidential Information of Genentech directly related to this Agreement in the
possession of Array as of the effective date of termination (with the exception
of one copy of such Confidential Information, which may be retained by
Genentech’s legal department to confirm compliance with the non-use and
non-disclosure provisions of this Agreement).

 

(f)  Other.  Except as otherwise expressly provided herein,
termination of this Agreement shall not affect the rights and obligations of
the Parties that accrued prior to the effective date of such termination.  Any right that a Party has to terminate this
Agreement, and any rights that such Party has under this Section 10.5,
shall be in addition to and not in lieu of all other rights or remedies that
such Party may have at law or in equity or otherwise, including without
limitation rights under the United States Bankruptcy Code.

 

(g)  Survival.  Except as otherwise expressly provided
herein, the provisions of Sections 5.4, 5.5 and 7.5 and Article 9,
Article 10, Article 11, Article 12, Article 13,
Article 14 and Article 15 (as applicable) shall survive any
termination or expiration of this Agreement in perpetuity.  In addition, except as otherwise expressly
provided herein, the provisions of Section 7.3(b) shall survive
expiration, early termination by Genentech pursuant to Section 10.3(a) or
early termination pursuant to Section 10.4, of this Agreement.  Further, Article 8 shall survive any
termination or expiration of this Agreement in perpetuity except as
follows:  Sections 8.3(b), 8.6(b)
and 8.9 only survive early termination by Genentech pursuant to Section 10.3(a);
Sections 8.6(e) and 8.6(f) only survive with respect to Joint
Collaboration Technology; and Section 8.7 does not survive any termination
or expiration of this Agreement.

 

29

 

Article 11

Representations
and Warranties

 

11.1        Mutual Representations and Warranties.  Each of the Parties hereby represents,
warrants and covenants as follows:

 

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

 

(b)  Each
Party has not, and during the term of the Agreement will not, grant or
otherwise dispose of any right to any Third Party relating to its respective
technology in the Field that conflicts with, or adversely affects, the rights
granted to the other Party hereunder.

 

(c)  Each
Party Controls all of the rights, title and interest in and to its inventions
(whether patentable or not), Patents and Know-How within its respective
Contributed Technology, in each case, that exist as of the Effective Date.

 

(d)  After
the Effective Date, each Party shall disclose to the other Party any Third
Party intellectual property of which it becomes aware that would be infringed
by the discovery, development and/or commercialization of Compounds pursuant to
this Agreement.  Genentech’s obligations
under this Section 11.1(d) shall terminate at the end of the Research
Term, and Array’s obligations under this Section 11.1(d) shall continue
for the term of this Agreement.

 

11.2        Array Representations
and Warranties.  Array hereby further represents, warrants
and covenants to Genentech that:

 

(a)  As
of the Effective Date, there are no material adverse proceedings, claims or
actions pending, or to the best of Array’s knowledge, threatened, relating to
the Array Contributed Technology that would materially interfere with Array’s
performance of its obligations, or Genentech’s exercise of its rights, under
this Agreement; after the Effective Date, Array shall disclose to Genentech any
such material adverse proceedings, claims or actions that arise.

 

(b)  As
of the Effective Date, to the best of Array’s knowledge, [ * ].

 

11.3        Disclaimers.  EXCEPT AS OTHERWISE EXPRESSLY STATED IN THIS
AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY OF ANY KIND WITH
RESPECT TO MATERIALS OR INFORMATION SUPPLIED BY IT TO THE OTHER PARTY
HEREUNDER, AND EXPRESSLY DISCLAIMS ALL WARRANTIES,

 

30

 

EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED
TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NON-INFRINGEMENT.

 

Article 12

Indemnification;
Limitation on Liability

 

12.1        Losses Defined.  Solely for purposes of this Article 12,
the term “Losses” means any and all third party suits, claims, actions, demands,
losses, damages, liabilities, settlements, penalties, fines, costs and expenses
(including, without limitation, reasonable attorneys’ fees and expenses).

 

12.2        Indemnification by Genentech.

 

(a)  Indemnification Scope.  Genentech hereby agrees to indemnify, defend
and hold Array and its officers, directors, employees and agents harmless from
and against Losses resulting directly from the discovery, development,
manufacture, use, handling, storage, sale or other disposition of Compounds or
Licensed Products by Genentech, its agents or Sublicensees, except to the
extent that such Losses are attributable to (i) Array’s breach of its
representations, warranties and/or covenants under Article 11;
(ii) Array’s material breach of its obligations under this Agreement;
and/or (iii) the negligence or willful misconduct of the indemnified
Party(ies) in the course of performing activities under this Agreement.

 

(b)  Indemnification Procedures.  In the event that Array seeks
indemnification under this Section 12.2, it shall (i) notify
Genentech of any Losses for which it claims such indemnification within fifteen
(15) business days after it receives notice of the claim; (ii) permit
Genentech to assume the sole control of the defense thereof including, without
limitation, the right to settle or conclude such defense; (iii) cooperate
as reasonably requested (at the expense of Genentech) in the defense of the
claim; and (iv) not settle the claim without the express, prior written
consent of Genentech.  The indemnity
agreement under this Section 12.2 shall not apply to amounts paid in
settlement of any Losses if such settlement is effected without the consent of
Genentech.

 

12.3        Indemnification by Array.

 

(a)  Indemnification Scope.  Array hereby agrees to indemnify, defend (if
requested by Genentech) and hold Genentech and its officers, directors,
employees and agents harmless from and against Losses to the extent that such
Losses are attributable to (i) Array’s breach of its representations,
warranties and/or covenants under Article 11; (ii) Array’s material
breach of its obligations under this Agreement; and/or (iii) the
negligence or willful misconduct of Array and its officers, directors,
employees and agents in the course of performing activities

 

31

 

under this Agreement, except to the extent
that such Losses are attributable to (i) Genentech’s breach of its
representations, warranties and/or covenants under Article 11;
(ii) Genentech’s material breach of its obligations under this Agreement;
and/or (iii) the negligence or willful misconduct of the indemnified
Party(ies) in the course of performing activities under this Agreement.

 

(b)  Indemnification Procedures.  In the event that Genentech seeks
indemnification under this Section 12.3, it shall (i) notify Array of
any Losses for which it claims such indemnification within fifteen (15)
business days after it receives notice of the claim; and (ii) if requested
by Genentech, assume control of the defense thereof, with counsel mutually
satisfactory to the Parties.  In the
event Genentech requests that Array assume such control, Genentech shall
(i) cooperate as reasonably requested (at the expense of Array) in the
defense of the claim; and (ii) Array shall not settle the claim without
the express, prior written consent of Genentech.

 

12.4        Limitation
on Liability.  IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY
CONSEQUENTIAL, INDIRECT, INCIDENTAL OR PUNITIVE DAMAGES, HOWEVER CAUSED.  NOTHING IN THIS SECTION IS INTENDED TO LIMIT
OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY.

 

Article 13

Insurance

 

13.1        Coverages.

 

(a)  General.  Each Party shall maintain, at its own cost,
and provide evidence of the insurance coverages as set forth in this
Article 13.  All insurance
coverages shall be primary insurance with respect to each Party’s own
participation under this Agreement, and shall be maintained with an insurance
company or companies having an A.M. Best’s rating (or its equivalent) of A-XII
or better, in the case of Genentech, and A-VII or better, in the case of Array.

 

(b)  Commercial General Liability.  For as long as a Party is performing
obligations under the Agreement, and thereafter for the period of time required
under this Section 13.1(b), each Party shall obtain and maintain,
Commercial General Liability (CGL) insurance, including contractual liability,
in the minimum amount of [ * ]. 
The CGL insurance policies shall be an occurrence form, but if only a
claims-made form is available to a Party, then in such a case, such Party shall
maintain the insurance coverage for at least [ * ] following such

 

32

 

Party’s completing performance of its
obligations under this Agreement.  Each
Party’s aggregate deductibles under its CGL insurance policies shall be
satisfactory to the other Party.

 

13.2        Additional Requirements.

 

(a)  Additional Insured.  With respect to the insurance coverages set
forth in Section 13.1, each Party shall name the other Party as an
additional insured by endorsement under its Commercial General Liability
insurance policy.

 

(b)  Certificates of Insurance.  Promptly following the Effective Date, each
Party shall provide to the other Party its respective certificates of insurance
evidencing the insurance coverages set forth in Section 13.1.  Each Party shall provide to the other Party
at least [ * ] prior written notice of any cancellation, nonrenewal
or material change in any of the insurance coverages.  Each Party shall continue to provide renewal certificates to the
other Party for as long as such Party is required to maintain insurance
coverages hereunder.

 

Article 14

Dispute
Resolution

 

14.1        Internal Resolution.  Except as otherwise expressly provided
herein, in the event of any controversy, claim or other dispute arising out of
or relating to any provision of this Agreement or the interpretation,
enforceability, performance, breach, termination or validity hereof, such
dispute shall be first referred to the Executives of each Party for resolution,
prior to proceeding under the following provisions of this
Article 14.  A dispute shall be
referred to the Executives upon one Party providing the other Party with
written notice that such dispute exists, and the Executives shall attempt to
resolve such dispute through good faith discussions.  In the event that the Executives cannot resolve such dispute
within thirty (30) days of such other Party’s receipt of such written notice,
except as otherwise provided in Section 2.2(c), either Party may initiate
the dispute resolution procedures set forth in Section 14.2.

 

14.2        Arbitration.  Except as otherwise expressly provided in
this Agreement, the Parties agree that any dispute not resolved internally by
the Parties pursuant to Section 14.1, shall be resolved through binding
arbitration in accordance with the then prevailing Commercial Arbitration Rules
of the American Arbitration Association, except as modified in this Agreement,
applying the substantive law specified in Section 15.8.  A Party may initiate an arbitration by
written notice to the other Party of its intention to arbitrate, and such
demand notice shall specify in reasonable detail the nature of the
dispute.  Each Party shall select one
(1) arbitrator, and the two (2) arbitrators so selected shall choose a third
arbitrator, and all three (3) shall serve as neutrals.  If a Party fails to nominate its arbitrator,
or if the Parties’ arbitrators cannot agree on the third arbitrator, the
necessary appointments shall be made in accordance with

 

33

 

the then prevailing Commercial Arbitration
Rules.  Within three (3) months of the
conclusion of an arbitration proceeding, the arbitration decision shall be
rendered in writing and shall specify the basis on which the decision was
made.  The award of the arbitration
tribunal shall be final and judgment upon such an award may be entered in any
competent court or application may be made to any competent court for judicial
acceptance of such an award and order of enforcement.  Unless otherwise mutually agreed upon by the Parties, the
arbitration proceedings shall be conducted in San Francisco, California, in the
event that Array requests arbitration, and in Denver, Colorado, in the event
Genentech requests arbitration.  The
Parties agree that they shall share equally the cost of the arbitration filing
and hearing fees, and the cost of the arbitrator.  Each Party shall bear its own attorneys’ fees and associated
costs and expenses.

 

14.3        Patent Validity.  Notwithstanding the other provisions of this
Article 14, any dispute that involves the validity, infringement or claim
interpretation of a patent (i) that is issued in the United States shall
be subject to actions before the United States Patent and Trademark Office and/or
submitted exclusively to the federal court located in the jurisdiction of the
district where any of the defendants resides; and (ii) that is issued in
any other country shall be brought before an appropriate regulatory or
administrative body or court in that country, and the Parties hereby consent to
the jurisdiction and venue of such courts and bodies.  For the sake of clarity, such patent disputes shall not be
subject to the provisions of Section 14.2.

 

Article 15

Miscellaneous

 

15.1        Assignment.  Neither Party may assign,
in whole or in part, this Agreement without the prior written consent of the
non-assigning Party, such approval not to be unreasonably withheld.  Notwithstanding the foregoing, either Party
may assign this Agreement to any purchaser of all or substantially all of the
assets of such Party, or of all of its capital stock, or to any successor
corporation or entity resulting from any merger or consolidation of such Party
with or into such corporation or entity, provided that the party to which this
Agreement is assigned expressly agrees in writing to assume and be bound by all
obligations of the assigning Party under this Agreement.  A copy of such written agreement by such
assignee shall be provided to the non-assigning Party within ten (10) days of
execution of such written agreement. 
Subject to the foregoing, this Agreement will benefit and bind the
Parties’ successors and assigns.

 

15.2        Publicity and
Disclosure Relating to this Agreement.  Neither Party shall issue
press releases nor make any public announcements relating to this Agreement for
any purpose whatsoever without the other Party’s prior written approval.  Except as otherwise set forth in
Article 9, neither Party shall disclose the activities being performed by
the Parties hereunder or the terms and conditions of this Agreement (including,
without limitation, the financial terms) to

 

34

 

any Third
Party without the other Party’s prior written consent; provided, however, such
approval shall not be unreasonably withheld if required pursuant to the
disclosure requirements of the U.S. Securities and Exchange Commission or
the national securities exchange or other stock market on which such Party’s
securities are traded.

 

15.3        No Right to Use Names.  Except as expressly
provided herein, no right, express or implied, is granted by the Agreement to
use in any manner the name “Array,” “Genentech” or any other trade name or
trademark of the other Party in connection with the performance of this
Agreement.

 

15.4        Notices.  Any notice required
or permitted to be given by either Party under this Agreement shall be in
writing and shall be personally delivered or sent by a nationally-recognized
private express courier, or by first class mail (registered or certified), or
by facsimile (confirmed by first class mail (registered or certified) or by
express courier), to the respective Parties as set forth below.  Notices will be deemed effective
(a) the next day if sent by express courier; (b) three (3) business
days after deposit, postage prepaid, if mailed; or (c) the same day if
sent by facsimile and confirmed as set forth above.  Either Party may change its address for purposes hereof by
written notice to the other in accordance with the provisions of this
Section 15.4.

 

If to Array:

Array BioPharma Inc.

3200 Walnut Street

Boulder, Colorado 80301

Attn: 
Chief Operating Officer

Telephone: 
(303) 381-6699

Facsimile: 
(303) 381-6697

 

with a required copy to:

 

Array BioPharma Inc.

3200 Walnut Street

Boulder, Colorado 80301

Attn: 
General Counsel

Telephone: 
(303) 381-6679

Facsimile: 
(303) 386-1290

 

35

 

If
to Genentech:

 

Genentech, Inc.

1 DNA Way,

South San Francisco, CA 94080

Attn: 
Corporate Secretary

Telephone: 
(650) 225-1000

Facsimile: 
(650) 952-9881

 

with a required copy to:

 

Genentech, Inc.

1 DNA Way,

South San Francisco, CA 94080

Attn: 
Vice President, Business Development

Telephone: 
(650) 225-1000

Facsimile: 
(650) 225-3009

 

15.5        Relationship of the Parties.  The Parties hereto are independent
contractors and nothing contained in this Agreement shall be deemed or
construed to create a partnership, joint venture, employment, franchise, agency
or fiduciary relationship between the Parties.

 

15.6        Entire Agreement.  This Agreement, including all Exhibits
attached hereto, which are hereby incorporated by reference, contains the
entire understanding between the Parties hereto with respect to the subject
matter hereof and supersedes and terminates all prior agreements,
understandings and arrangements between the Parties, whether written or oral,
subject to Section 9.5 with respect to prior confidentiality agreements.

 

15.7        Amendment; Waiver.  Except as otherwise expressly provided
herein, no alteration of or modification to this Agreement shall be effective
unless made in writing and executed by an authorized representative of both
Parties.  No course of dealing or
failing of either Party to strictly enforce any term, right or condition of
this Agreement in any instance shall be construed as a general waiver or
relinquishment of such term, right or condition.  The observance of any provision of this Agreement may be waived
(either generally or any given instance and either retroactively or
prospectively) only with the written consent of the Party granting such waiver.

 

15.8        Governing Law.  This Agreement shall be governed by and
construed under the laws of the State of New York, without regard to the
conflict of laws provisions thereof.

 

15.9        Construction.  The Parties mutually acknowledge that they and their attorneys
have participated in the negotiation and preparation of this Agreement.  Ambiguities, if any, in

 

36

 

this Agreement shall not be construed against
any Party, irrespective of which Party may be deemed to have drafted the
Agreement or authorized the ambiguous provision.

 

15.10      Captions.  Titles, headings and
other captions are for convenience only and are not to be used for interpreting
this Agreement.

 

15.11      Legal Compliance; Severability.  Both Parties hereby expressly state that it
is the intention of neither Party to violate any rule, law and regulation.  If any of the provisions of this Agreement
are held to be void or unenforceable, then such void or unenforceable
provisions shall be replaced by valid and enforceable provisions that will
achieve as far as possible the economic business intentions of the Parties.

 

15.12      Force Majeure.  Neither Party shall be held liable or
responsible to the other Party or be deemed to have breached or defaulted under
this Agreement for failure or delay in performing its obligations hereunder to
the extent, and as long as, such failure or delay is caused by or results from
causes beyond the reasonable control of the affected Party, such causes
including, without limitation, earthquakes, fires, floods, embargoes, wars,
acts of terrorism, insurrections, riots, civil commotions, acts of God,
omissions or delays in action by any governmental authority, acts of a government
or agency thereof and judicial orders or decrees.  In the event of occurrence of a force majeure event, each Party
shall use commercially reasonable efforts to mitigate the adverse consequence
thereof.

 

15.13      Counterparts; Facsimiles.  This Agreement may be executed in two (2) or
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.  For purposes hereof, a facsimile copy of this Agreement,
including the signature pages hereto will be deemed to be an original.  Notwithstanding the foregoing, the Parties
shall deliver original execution copies of this Agreement to one another as
soon as practicable following execution thereof.

 

[Signature page
follows]

 

37

 

In witness
whereof, the Parties have caused this Agreement to be
executed by their respective duly authorized representatives as set forth
below.

 

	
  Genentech,
  Inc.

  	
  Array
  BioPharma Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  

 

[ * ]
= 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.

 

38

 

EXHIBIT A

 

MATERIALS, DATA AND INFORMATION THAT WILL BE TRANSFERRED TO GENENTECH

 

1.                                       [ * ].

 

2.                                       [ * ].

 

3.                                       [ * ].

 

4.                                       [ * ].

 

5.                                       [ * ].

 

6.                                       [ * ].

 

7.                                       [ * ].

 

A – 1

 

EXHIBIT
B

 

MATERIALS, DATA AND INFORMATION THAT WILL NOT BE TRANSFERRED TO GENENTECH

 

1.                                       [ * ].

 

2.                                       [ * ].

 

B – 1

 

EXHIBIT
C

 

[ * ]

 

For
[ * ]:

 

                [ * ]

 

For
[ * ]:

 

                [ * ]

 

 

C – 1Exhibit 4.1

                           CERTIFICATE OF DESIGNATION
                                       OF
                      Series C convertible PREFERRED STOCK
                                       OF
                                 AMPLIDYNE, INC.

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

       Pursuant to Section 151(g) of the Delaware General Corporation Law

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

      The undersigned,  a duly authorized officer of Amplidyne, Inc., a Delaware
corporation (the  "Corporation"),  HEREBY CERTIFIES that,  pursuant to authority
conferred  upon  the  Board of  Directors  of the  Corporation  (the  "Board  of
Directors")  by  the  Certificate  of  Incorporation  of  the  Corporation  (the
"Certificate  of  Incorporation"),  the  Board  of  Directors  has  adopted  the
following resolutions effective January 28, 2004:

            "RESOLVED that,  pursuant to Article  FOURTH,  of the Certificate of
      Incorporation,  there be and hereby is authorized  and created a series of
      Preferred Stock consisting of 282,700 shares having a par value of $0.0001
      per  share,  which  series  shall  be  designated  "Series  C  Convertible
      Preferred  Stock."  Capitalized  terms not defined  herein  shall have the
      definitions ascribed to such terms in the Certificate of Incorporation.

      The designations,  preferences and relative,  participating,  optional and
      other special rights, and the qualifications, limitations and restrictions
      of the Series C Redeemable  Convertible  Preferred  Stock shall be made as
      follows:

      1.  Designation  and  Amount.  This  series of  Preferred  Stock  shall be
designated  and known as "Series C Convertible  Preferred  Stock" (the "Series C
Preferred  Stock") and shall consist of 282,700  shares.  The Series C Preferred
Stock shall have a par value of $0.0001 per share (one tenth of one mill).

      2. Rank.  The Series C Preferred  Stock  shall,  with  respect to dividend
rights and rights on liquidation,  winding-up and dissolution, rank prior to all
other classes or series of capital stock of the Corporation,  including, but not
limited to, the common  stock of the  Corporation,  par value  $0.0001 per share
(the  "Common  Stock"),  any Series A or Series B Preferred  Stock,  and to such
other  series of preferred  stock as the Board of  Directors of the  Corporation
hereinafter  expressly designates as junior to the Series C Preferred Stock. All
equity securities of the Corporation to which the Series C Preferred Stock ranks
prior  (whether  with  respect to dividends  or upon  liquidation,  dissolution,
winding-up or otherwise),  including the Common Stock,  herein, in such context,
as "Junior  Securities."  Nothing contained herein shall be construed to prevent
the Board of Directors,  after obtaining appropriate consents and approvals,  if
necessary,  from  authorizing  the creation or designation of, or to prevent the
Corporation from issuing shares of, one or more series of Preferred Stock senior

<Page>

to, junior to, or on a parity with the Series C Preferred  Stock as to dividend,
liquidation, redemption rights or otherwise.

      3. Dividend Provisions.  The holders of shares of Series C Preferred Stock
shall be  entitled to receive  dividends,  out of any assets  legally  available
therefor,  prior and in preference to any declaration or payment of any dividend
(payable other than in Common Stock or other  securities and rights  convertible
into or  entitling  the  holder  thereof to  receive,  directly  or  indirectly,
additional shares of Common Stock) on the Common Stock of this  Corporation,  at
the rate of $0.053  per share per annum  (subject  to  adjustment  of such fixed
dollar   amount   for  any  stock   splits,   stock   dividends,   combinations,
recapitalizations  or the like, after the date of the filing of this Certificate
of  Designation  with the Secretary of State of the State of Delaware),  payable
annually on  February 1, 2005 and each  February 1  thereafter.  Such  dividends
shall be cumulative.  If in any year the assets legally available for payment of
such dividends are not  sufficient to pay this  dividend,  either in whole or in
part,  then any unpaid  portion of the dividend will become a charge against the
net  profits of the  Corporation,  and will be paid in full out of the assets of
the  Corporation  legally  available  therefor in  subsequent  years  before any
dividends are declared or paid on the Common Stock in such years. The holders of
the  outstanding  shares of  Series C  Preferred  Stock  may waive any  dividend
preference  that such holders  shall be entitled to receive under this Section 1
upon the  affirmative  vote or  written  consent  of the  holders  of at least a
majority  of  Series  C  Preferred  Stock  (voting  together  as a  class)  then
outstanding.

      4. Liquidation Preference.

            (a) In the event of any  liquidation,  dissolution  or winding up of
this  Corporation,  either  voluntary  or  involuntary,  the holders of Series C
Preferred  Stock shall be entitled to receive,  prior and in  preference  to any
distribution  of any of the assets of this  Corporation to the holders of Common
Stock by reason of their ownership thereof, an amount per share equal to the sum
of $0.3538 for each outstanding share of Series C Preferred Stock (the "Original
Series C Issue Price"),  plus  accumulated  but unpaid  dividends on such shares
(subject to adjustment  of such fixed dollar amount for any stock splits,  stock
dividends,  combinations,  recapitalizations  or the like, after the date of the
filing of this  Certificate  of  Designation  with the Secretary of State of the
State of Delaware).  If upon the occurrence of such event,  the assets and funds
thus  distributed  among  the  holders  of  Series C  Preferred  Stock  shall be
insufficient  to  permit  the  payment  to such  holders  of the full  aforesaid
preferential  amounts,  then the  entire  assets  and funds of this  Corporation
legally  available  for  distribution  shall be  distributed  ratably  among the
holders  of  Series  C  Preferred  Stock in  proportion  to the  amount  of such
preferential amounts due on the shares of Series C Preferred Stock owned by each
such holder.

            (b) Upon completion of the  distribution  required by subsection (a)
of this Section 4, all of the remaining assets of this Corporation available for
distribution to stockholders  shall be distributed among the holders of Series C
Preferred  Stock  and  Common  Stock pro rata  based on the  number of shares of
Common Stock held by each (assuming full  conversion of all such Preferred Stock
into Common Stock, even if not currently convertible).

                                       2
<Page>

            (c) For purposes of this Section 4, a  liquidation,  dissolution  or
winding up of this Corporation shall be deemed to include (A) the acquisition of
this  Corporation  by another  entity by means of any  transaction  or series of
related  transactions  if,  following  such  transaction,  the  holders  of  the
outstanding  voting power of the Corporation  prior to the transaction  cease to
hold,  directly or indirectly,  at least Fifty Percent (50%) of the  outstanding
voting power of the Corporation; (B) the reorganization, merger or consolidation
of the Corporation with an unaffiliated  entity such that the Corporation is not
the surviving  entity;  (C) a sale of all or substantially  all of the assets of
this  Corporation  to a  third  party;  or  (D) a  liquidation,  dissolution  or
winding-up of the Corporation.

            (d) The  liquidation  preferences  in this Section 4 shall not apply
upon the conversion of Series C Preferred Stock into Common Stock.

      5.  Conversion.  The  holders  of  Series C  Preferred  Stock  shall  have
conversion rights as follows (the "Conversion Rights"):

            (a) Right to Convert.  Each share of Series C Preferred  Stock shall
be convertible,  at the option of the holder thereof, at any time after the date
of issuance of such share,  at the office of this  Corporation  or any  transfer
agent for such stock, into such number of fully paid and nonassessable shares of
Common Stock as is determined  by dividing the Original  Series C Issue Price by
the  Conversion  Price  (as  defined  below)  applicable  to  each  such  share,
determined as  hereinafter  provided,  in effect on the date the  certificate is
surrendered  for  conversion.  The initial  Conversion  Price per share for each
share of Series C Preferred Stock shall be $0.001769 per share (the  "Conversion
Price"); provided, however, that the Conversion Price for each share of Series C
Preferred Stock shall be subject to adjustment as set forth in subsection 5(c).

            (b) Mechanics of Conversion. Before any holder of Series C Preferred
Stock shall be entitled to convert the same into shares of Common Stock pursuant
to Section  5(a),  he or she shall  surrender the  certificate  or  certificates
therefor,  duly endorsed,  at the office of this  Corporation or of any transfer
agent for such Series C Preferred  Stock,  and shall give written notice to this
Corporation  at its  principal  corporate  office of the election to convert the
same and  shall  state  therein  the name or names in which the  certificate  or
certificates  for  shares of Common  Stock are to be  issued.  This  Corporation
shall,  as soon as practicable  thereafter,  issue and deliver at such office to
such holder of Series C Preferred  Stock,  or to the nominee or nominees of such
holder,  a certificate or certificates  for the number of shares of Common Stock
to which such holder shall be entitled as aforesaid.  Such  conversion  shall be
deemed to have been made immediately  prior to the close of business on the date
of such surrender of the shares of Series C Preferred Stock to be converted, and
the person or persons  entitled to receive the shares of Common  Stock  issuable
upon such  conversion  shall be treated for all purposes as the record holder or
holders of such shares of Common Stock as of such date.

            (c) Conversion  Price  Adjustments  of Series C Preferred  Stock for
Certain Dilutive Issuances, Splits and Combinations. The Conversion Price of the

                                       3
<Page>

shares of Series C Preferred  Stock shall be subject to adjustment  from time to
time as follows:

                  (i) If this  Corporation  shall issue any Additional Stock (as
defined below), without consideration or for a consideration per share less than
the  Conversion  Price  for the  shares of  Series C  Preferred  Stock in effect
immediately prior to the issuance of such Additional Stock, the Conversion Price
for the shares of Series C Preferred Stock in effect  immediately  prior to each
such issuance shall forthwith (except as otherwise  provided in this clause (i))
be adjusted to a price  determined by  multiplying  such  Conversion  Price by a
fraction,  the  numerator of which shall be the number of shares of Common Stock
outstanding  immediately  prior to such  issuance  plus the  number of shares of
Common Stock which would be issued upon the conversion of all outstanding shares
of Series C Preferred  Stock and the denominator of which shall be the number of
shares of Common Stock  outstanding  immediately prior to such issuance plus the
number of shares of Common  Stock which would be issued upon the  conversion  of
all outstanding  shares of Series C Preferred Stock plus the number of shares of
such Additional Stock.

                  (ii) No adjustment of the  Conversion  Price for the shares of
Series C  Preferred  Stock  shall be made in an  amount  less  than one cent per
share.  No  adjustment  of such  Conversion  Price  shall  have  the  effect  of
increasing the Conversion Price above the Conversion Price in effect immediately
prior to such adjustment, except as provided in subsection 5(c)(vi)(D) below.

                  (iii) In the case of the  issuance  of Common  Stock for cash,
the consideration  shall be deemed to be the amount of cash paid therefor before
deducting any reasonable discounts,  commissions or other expenses allowed, paid
or incurred by this  Corporation for any underwriting or otherwise in connection
with the issuance and sale thereof.

                  (iv) In the case of the  issuance  of the  Common  Stock for a
consideration in whole or in part other than cash, the consideration  other than
cash shall be deemed to be the fair value thereof as determined in good faith by
the  Board  of  Directors  for  this  purpose,  irrespective  of any  accounting
treatment.

                  (v) In the  case  of the  issuance  of  Common  Stock  without
consideration, the consideration shall be deemed to be $.01 per share.

                  (vi) "Additional  Stock" shall mean any shares of Common Stock
issued by this  Corporation.  In the case of the issuance of options to purchase
or rights to subscribe for Common Stock,  securities by their terms  convertible
into or  exchangeable  for  Common  Stock or options  to  purchase  or rights to
subscribe  for  such  convertible  or  exchangeable  securities,  the  following
provisions shall apply :

                  (A) The  aggregate  maximum  number of shares of Common  Stock
deliverable  upon  exercise  (assuming  the  satisfaction  of any  conditions to
exercisability,  including without limitation,  the passage of time, but without
taking into  account  potential  antidilution  adjustments)  of such  options to

                                       4
<Page>

purchase or rights to  subscribe  for Common  Stock shall be deemed to have been
issued at the time such  options or rights were  issued and for a  consideration
equal  to the  consideration  if any,  received  by this  Corporation  upon  the
issuance of such options or rights plus the minimum  exercise  price provided in
such  options or rights  (without  taking into  account  potential  antidilution
adjustments) for the Common Stock covered thereby.

                  (B) The  aggregate  maximum  number of shares of Common  Stock
deliverable  upon  conversion  of, or in exchange for, any such  convertible  or
exchangeable securities or upon the exercise of options to purchase or rights to
subscribe  for  such  convertible  or  exchangeable  securities  and  subsequent
conversion  or exchange  thereof shall be deemed to have been issued at the time
such  securities  were  issued or such  options or rights  were issued and for a
consideration  equal to the consideration,  if any, received by this Corporation
for any such  securities  and  related  options  or rights  (excluding  any cash
received on account of accrued interest or accrued dividends),  plus the minimum
additional  consideration,  if any, to be received by this Corporation  (without
taking into account potential  antidilution  adjustments) upon the conversion or
exchange of such securities or the exercise of any related options or rights.

                  (C) In the  event of any  change  in the  number  of shares of
Common Stock  deliverable or in the  consideration  payable to this  Corporation
upon exercise of such options or rights or upon conversion of or in exchange for
such convertible or exchangeable  securities,  including,  but not limited to, a
change resulting from the antidilution  provisions thereof, the Conversion Price
of the shares of Series C Preferred  Stock, to the extent in any way affected by
or computed  using such options,  rights or  securities,  shall be recomputed to
reflect  such  change,  but no further  adjustment  shall be made for the actual
issuance of Common Stock or any payment of such  consideration upon the exercise
of any such options or rights or the conversion or exchange of such securities.

                  (D) Upon the  expiration  of any such  options or rights,  the
termination  of any such rights to convert or exchange or the  expiration of any
options or rights related to such  convertible or exchangeable  securities,  the
applicable  Conversion  Price of the shares of Series C Preferred  Stock, to the
extent  in any way  affected  by or  computed  using  such  options,  rights  or
securities or options or rights related to such securities,  shall be recomputed
to  reflect  the  issuance  of only the  number of shares of Common  Stock  (and
convertible or exchangeable  securities  that remain in effect)  actually issued
upon the exercise of such options or rights,  upon the conversion or exchange of
such  securities  or upon the exercise of the options or rights  related to such
securities.

                  (E) The Conversion  Price will not be adjusted because of: (x)
conversion  of the Series C Preferred  Stock;  or (y) the  issuance  and sale of
shares of Common  Stock to  employees,  officers or  directors  as the result of
exercise of options  authorized but not currently granted as of the date hereof;
or (z) subject to the prior approval of the Compensation  Committee of the Board
of Directors with respect to the terms and conditions thereof,  the issuance and

                                       5
<Page>

sale of, or the grant of options to purchase, shares of Common Stock pursuant to
the Corporation's stock purchase or option plans in effect on the date hereof or
otherwise  approved  by the Board of  Directors,  provided,  however,  that such
number of shares may be increased if  determined  by a vote of a majority of the
members of the Compensation  Committee,  which vote must include the affirmative
vote of the Series C Preferred Stock Designee.

                  (F) In the event  this  Corporation  shall at any time or from
time to time fix a record date for the effectuation of a split or subdivision of
the outstanding shares of Common Stock or the determination of holders of Common
Stock entitled to receive a dividend or other distribution payable in additional
shares of  Common  Stock or other  securities  or rights  convertible  into,  or
entitling  all holders  thereof to receive  directly or  indirectly,  additional
shares of Common Stock (hereinafter  referred to as "Common Stock  Equivalents")
without payment of any  consideration by such holders for the additional  shares
of Common Stock or the Common Stock Equivalents (including the additional shares
of Common Stock issuable upon conversion or exercise thereof),  then, as of such
record date (or the date of such dividend distribution,  split or subdivision if
no record  date is  fixed),  the  applicable  Conversion  Price of the shares of
Series C of Preferred Stock shall be appropriately  decreased so that the number
of shares of Common Stock  issuable on  conversion  of each share of such series
shall be increased in  proportion to such increase of the aggregate of shares of
Common Stock  outstanding  and those  issuable with respect to such Common Stock
Equivalents.

                  (G) If the number of shares of Common Stock outstanding at any
time is decreased by a combination  of the  outstanding  shares of Common Stock,
then,  following the record date (or the date of such  combination  if no record
date is fixed)  of such  combination,  the  applicable  Conversion  Price of the
Series C Preferred Stock shall be appropriately  increased so that the number of
shares of Common Stock issuable on conversion of each share of such series shall
be decreased in proportion to such decrease in outstanding shares.

            (d) Other Distributions. In the event this Corporation shall declare
a distribution payable in securities of other persons, evidences of indebtedness
issued by this Corporation or other persons,  assets  (excluding cash dividends)
or options or rights not referred to in subsection 5. c. (vi) then, in each such
case for the purpose of this  subsection 5. d. the holders of Series C Preferred
Stock shall be entitled to a  proportionate  share of any such  distribution  as
though  they were the  holders of the  number of shares of Common  Stock of this
Corporation  into which their shares of Series C Preferred Stock are convertible
as of the record date fixed for the determination of the holders of Common Stock
of this  Corporation  entitled to receive such  distribution or the date of such
distribution if no record date is fixed.

            (e)  Recapitalizations.  If at any time or from  time to time  there
shall be a  recapitalization  of the Common  Stock  (other  than a  subdivision,
combination  or merger or sale of assets  transaction  provided for elsewhere in
this  Section  5),  provision  shall be made so that  the  holders  of  Series C
Preferred  Stock shall  thereafter  be entitled to receive  upon  conversion  of
Series C Preferred  Stock the number of shares of stock or other  securities  or

                                       6
<Page>

property of the  Corporation  or  otherwise,  to which a holder of Common  Stock
deliverable  upon  conversion  of such Series C Preferred  Stock would have been
entitled  on such  recapitalization.  In any such case,  appropriate  adjustment
shall  be made in the  application  of the  provisions  of this  Section  5 with
respect  to the  rights of the  holders of Series C  Preferred  Stock  after the
recapitalization  to the end that the  provisions  of this  Section 3 (including
adjustment  of the  Conversion  Price  then in effect  and the  number of shares
purchasable  upon  conversion  of Series C Preferred  Stock) shall be applicable
after that event as nearly equivalent as may be practicable.

            (f)  Adjustment  for  Merger  or  Reorganization.  In  case  of  any
consolidation or merger of the Corporation  with or into another  corporation or
the sale of all or substantially all of the assets of the Corporation to another
corporation  (other than a consolidation,  merger,  or sale that is treated as a
liquidation  under  Section 4) above),  each share of Series C  Preferred  Stock
shall  thereafter  be  convertible  into the  number of shares of stock or other
securities or property to which a holder of the number of shares of Common Stock
of the  Corporation  deliverable  upon  conversion of such Preferred Stock would
have been entitled upon such consolidation, merger or conveyance.

            (g) No Impairment.  This  Corporation  will not, by amendment of its
Certificate of  Incorporation or through any  reorganization,  recapitalization,
transfer  of  assets,  consolidation,  merger,  dissolution,  issue  or  sale of
securities or any other voluntary action,  avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by this
Corporation,  but will at all times in good faith  assist in the carrying out of
all the provisions of this Section 5 and in the taking of all such action as may
be necessary or  appropriate  in order to protect the  conversion  rights of the
holders of Series C Preferred Stock against impairment.

            (h) No  Fractional  Shares and  Certificate  as to  Adjustments.  No
fractional  shares shall be issued upon the conversion of any share or shares of
Series C Preferred  Stock, and the number of shares of Common Stock to be issued
shall be rounded up to the nearest  whole share,  determined on the basis of the
total  number of shares of Series C  Preferred  Stock the  holder is at the time
converting  into Common Stock and the number of shares of Common Stock  issuable
upon such  aggregate  conversion.  Upon the  occurrence  of each  adjustment  or
readjustment  of the  applicable  Conversion  Price for each  series of Series C
Preferred  Stock pursuant to this Section 5, this  Corporation,  at its expense,
shall promptly  compute such  adjustment or  readjustment in accordance with the
terms hereof and prepare and furnish to each holder of Series C Preferred  Stock
a certificate  setting  forth such  adjustment  or  readjustment  and showing in
detail the facts  upon which such  adjustment  or  readjustment  is based.  This
Corporation  shall, upon the written request at any time of any holder of Series
C  Preferred  Stock,  furnish  or cause to be  furnished  to such  holder a like
certificate  setting forth such  adjustment  and  readjustment,  the  applicable
Conversion  Price for such Series C Preferred Stock at such time in effect,  and
the number of shares of Common Stock and the amount,  if any, of other  property
that at such time would be received  upon the  conversion of a share of Series C
Preferred Stock.

            (i)  Notices  of Record  Date.  In the  event of any  taking by this
Corporation  of a record  of the  holders  of any  class of  securities  for the

                                       7
<Page>

purpose of  determining  the  holders  thereof  who are  entitled to receive any
dividend  (other  than a cash  dividend)  or other  distribution,  any  right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any  other  securities  or  property,  or  to  receive  any  other  right,  this
Corporation  shall mail to each holder of Series C Preferred Stock, at least ten
(10) days prior to the date specified  therein,  a notice specifying the date on
which  any  such  record  is to be  taken  for the  purpose  of  such  dividend,
distribution  or  right,   and  the  amount  and  character  of  such  dividend,
distribution or right.

            (j) Reservation of Stock Issuable Upon Conversion.  This Corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock,  solely for the purpose of effecting  the  conversion of
the  shares of Series C  Preferred  Stock,  such  number of its shares of Common
Stock as shall from time to time be sufficient  to effect the  conversion of all
outstanding shares of Series C Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then  outstanding  shares of Series C Preferred  Stock, in
addition  to such other  remedies  as shall be  available  to the holder of such
Series C Preferred  Stock,  this  Corporation will take such corporate action as
may, in the opinion of its counsel,  be necessary to increase its authorized but
unissued  shares of Common Stock to such number of shares as shall be sufficient
for such purposes,  including,  without limitation,  engaging in best efforts to
obtain the requisite  stockholder  approval of any  necessary  amendment to this
Certificate of Designation.

            (k) Notices. Any notice required by the provisions of this Section 3
to be given to the holders of shares of Series C Preferred Stock shall be deemed
given if deposited in the United States mail, postage prepaid,  and addressed to
each holder of record at his address appearing on the books of this Corporation.

      6. Voting Rights.

            (a) Except as otherwise provided herein, the holder of each share of
Series C  Preferred  Stock  shall  have the right to one vote for each  share of
Common Stock into which such Series C Preferred  Stock could then be  converted,
and with  respect to such vote,  such holder of Series C  Preferred  Stock shall
have full voting  rights and powers equal to the voting rights and powers of the
holders of Common Stock,  and shall be entitled,  notwithstanding  any provision
hereof, to notice of any stockholders'  meeting in accordance with the Bylaws of
this Corporation, and shall be entitled to vote, together with holders of Common
Stock,  with respect to any question upon which holders of Common Stock have the
right to vote.

            (b) In addition to the rights  specified in Section 4(a) hereof,  so
long as any of the  shares of Series C  Preferred  Stock  are  outstanding,  the
holders of Series C  Preferred  Stock have the special  and  exclusive  right to
elect three (3)  directors out five (5) directors of the  Corporation  (each,  a
"Preferred  Stock  Designee").  In any election  pursuant to this paragraph (b),
each holder of shares of Series C Preferred  Stock shall be entitled to one vote
for each  share of  Series C  Preferred  Stock  held and no  holder  of Series C
Preferred  Stock shall be entitled to cumulate his votes by giving one candidate

                                       8
<Page>

more than one vote per  share.  The  Corporation  shall use its best  efforts to
effectuate  the terms of this paragraph  6(b). The special and exclusive  voting
right of the holders of Series C Preferred Stock,  voting separately as a class,
contained in this paragraph 6(b) may be exercised either at a special meeting of
the  holders of Series C Preferred  Stock  called as  provided  below,  or at an
annual meeting of the stockholders of the Corporation,  or by written consent of
such holders in lieu of a meeting.  The  director(s)  to be elected  pursuant to
this  paragraph  (b)  shall  serve for  terms  extending  from the date of their
election and qualification  until the time of the next succeeding annual meeting
of  stockholders or until their  successors have been elected and qualified,  or
their earlier  resignation  or removal,  whichever is sooner.  At any time,  the
holders of a majority of the shares of Series C  Preferred  Stock can remove any
director elected pursuant to this Section 6(b).

            (c) If at any time any  directorship  to be filled by the holders of
Series C Preferred  Stock  pursuant to Section 6(b) hereof has been vacant for a
period of ten (10) or more days, the Secretary of the  Corporation  shall,  upon
written  request  of the  holders  of record of shares  representing  at least a
majority of the voting power of the Series C Preferred  Stock then  outstanding,
call a  special  meeting  of the  holders  of Series C  Preferred  Stock for the
purpose of electing a director or directors  to fill such vacancy or  vacancies.
Such meeting shall be held at the earliest  practicable date at such place as is
specified in or determined in accordance with the By-laws of the Corporation.

            (d) At any meeting  held for the purpose of  electing  directors  as
provided in Section 6(b) hereof,  the  presence,  in person or by proxy,  of the
holders of record of shares representing at least a majority of the voting power
of the Series C Preferred Stock then  outstanding  shall  constitute a quorum of
the  Series C  Preferred  Stock for such  election.  At any such  meeting  or an
adjournment  thereof,  the absence of a quorum of the Series C  Preferred  Stock
shall not prevent the election of directors other than the director or directors
to be elected by the  holders of Series C  Preferred  Stock  pursuant to Section
6(b)  hereof,  and the  absence  of a  quorum  for the  election  of such  other
directors  shall not prevent the  election of the  director or  directors  to be
elected by the holders of Series C  Preferred  Stock  pursuant  to Section  6(b)
hereof,  and in the  absence of either or both of such  quorums,  the holders of
record of shares representing at least a majority of the voting power present in
person or by proxy of the class of stock which lacks  quorum shall have power to
adjourn the meeting for the  election of  directors  which they are  entitled to
elect from time to time without notice other than announcement at the meeting. A
vacancy in the  directorship  to be elected by the holders of Series C Preferred
Stock  pursuant  to Section  6(b)  hereof may be filled  only by vote or written
consent in lieu of a meeting of the  holders of shares  representing  at least a
majority of the voting power of the Series C Preferred Stock.

            (e) The board of directors will  establish a compensation  committee
and so long as any of the shares of Series C  Preferred  Stock are  outstanding,
such  Compensation  Committee  shall  be  comprised  of  one  employee  director
(initially   Devendar  S.  Bains),  one  outside  director   (initially  Venkata

                                       9
<Page>

Maddineni),  and one of the Preferred Stock Designees (initially Ramesh Akella).
Such Committee shall remain established for not less than one year from the date
hereof.

      7. Protective Provisions. In addition to any other rights provided by law,
so long as any of the shares of Series C Preferred Stock are  outstanding,  this
Corporation shall not, nor shall it allow any of its subsidiaries, without first
obtaining the approval (by vote or written  consent,  as provided by law) of the
holders  of at least a  majority  of the then  outstanding  shares  of  Series C
Preferred Stock (voting as a separate class):

            (a) amend or repeal any  provision  of, or add any provision to, the
Corporation's Certificate of Incorporation or Bylaws to change the rights of the
Series C Preferred  Stock,  or increase  or  decrease  the number of  authorized
shares of Series C Preferred Stock;

            (b) create any new series or class of shares  having a preference or
priority as to dividends  or assets  superior to or on a parity with that of the
Series C Preferred Stock;

            (c) create any bonds,  notes or other obligations  convertible into,
exchangeable  for or having option  rights to purchase  shares of stock with any
preference or priority as to dividends or assets superior to or on a parity with
that of the Series C Preferred Stock;

            (d)  reclassify  any class or series of the Common Stock into shares
with a  preference  or priority as to  dividends  or assets  superior to or on a
parity with that of the Series C Preferred Stock;

            (e) apply any of its assets to the  redemption or acquisition of any
shares  of  Common  Stock   (except  for   non-director   employees,   advisors,
non-director  officers or consultants and service providers of the Corporation),
without the approval of the Board,  which approval must include the  affirmative
vote of the Series C Preferred Stock Designees;

            (f) agree to sell all or  substantially  all of the assets or equity
of the  Corporation  which would result in a per share payment to each holder of
Series  C  Preferred  Stock of an  amount  which  is less  than the  Liquidation
Preference; or

            (g) agree to a merger, sale or consolidation of the Corporation with
another  entity or the  effectuation  of any  transaction  or series of  related
transactions  in which more than 50% of the voting power of the  Corporation  is
disposed  which would  result in a per share  payment to each Series C Preferred
Stock Holder of an amount which is less than Liquidation Preference.

      8.  Preemptive  Rights.  In the event that the  Corporation  offers equity
securities  (other than shares issued upon  conversion of shares of  outstanding
Series C  Preferred  Stock or upon  exercise  of warrants or options on the date
hereof,  or in connection  with an  acquisition or in a public  offering),  each
holder of Series C Preferred Stock shall have the opportunity to participate, on
a pro rata basis, in any such offering.

                                       10
<Page>

      9.  Status  of  Converted  Stock.  In the  event  any  shares  of Series C
Preferred Stock shall be converted  pursuant to Section 5 hereof,  the shares so
converted shall be canceled and shall not be issuable by this Corporation.

      10. Headings.  The headings of the various sections and paragraphs  hereof
are for convenience of reference only and shall not affect the interpretation of
any of the provisions hereof.

            FURTHER RESOLVED,  that the appropriate officers of this Corporation
      be and each of them  hereby is  authorized  to execute and  acknowledge  a
      certificate  setting forth these  resolutions  (referred to above as "this
      Certificate of Designation") and to cause such certificate to be filed and
      recorded,  in accordance with the  requirements of Sections 151 and 103 of
      the General Corporation Law of the State of Delaware."

      IN WITNESS  WHEREOF,  the  undersigned  has  signed  this  Certificate  of
Designation on this 28th day of January, 2004.

                                            AMPLIDYNE, INC.

                                            By: /s/ Devendar S. Bains
                                                --------------------------------
                                                Name: Devendar S. Bains
                                                Title:   President

                                       11

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