Document:

EXHIBIT
10.1

 

[ * ] = Confidential treatment of
certain confidential information contained in this document, marked by
brackets, is being sought pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.

 

COLLABORATION
AND LICENSE AGREEMENT

 

THIS COLLABORATION AND LICENSE AGREEMENT (the “Agreement”) is
made effective as of the 13th day of December, 2009 (“Effective
Date”) by and between Array BioPharma Inc., a Delaware
corporation, and Amgen Inc., a Delaware corporation.  Each of Array BioPharma Inc. and Amgen Inc.
is sometimes referred to herein as a “Party” or,
collectively, as the “Parties.”

 

RECITALS

 

A.                                 Array owns certain intellectual property
rights and know-how with respect to that certain chemical compound designated
as ARRY-403 and similar compounds, and believes that ARRY-403 has the potential
to become a diabetes therapeutic with significant worldwide annual sales.

 

B.                                  The Parties are interested in collaborating
to identify, develop and commercialize ARRY-403 and similar compounds for the
treatment of diabetes and other diseases.

 

Now,
therefore, in consideration of the premises and mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto agree as
follows:

 

ARTICLE I - DEFINITIONS

 

The
following terms shall have the following meanings as used in this Agreement:

 

1.1                            “403 Bioequivalence Trial”
shall have the meaning described in Section 3.2.1.

 

1.2                            “403 MAD” shall
have the meaning described in Section 3.2.1.

 

1.3                            “403 SAD” shall
have the meaning described in Section 3.2.1.

 

1.4                            “Abandoned Product”
shall have the meaning described in Section 11.5.5.

 

1.5                            “Acquirer IP”
shall have the meaning described in Section 5.4.

 

1.6                            “Affiliate” shall
mean any corporation or other entity which is directly or indirectly
controlling, controlled by or under common control with a Party hereto for so
long as such control exists.  For the
purposes of this Section 1.2, “control” shall mean the direct or indirect
ownership of more than fifty percent (50%) of the outstanding shares or
other voting rights of the subject entity having the power to vote on or direct
affairs of the entity, or if not meeting the preceding, the maximum voting
right that may be held by the particular Party under the Law of the country
where such entity exists.

 

1.7                            “Affiliating Party”
shall have the meaning described in Section 5.4.

 

 

1.8                            “Amgen” shall
mean Amgen Inc. and any of its Affiliates.

 

1.9                            “Amgen Abandoned Product
Technology”  shall mean,
subject to Section 5.4.1 or 5.4.3, as applicable, all Information and
Patents that meet the criteria of each of the following clauses: (i) are
Controlled by Amgen as of the effective date of termination of this Agreement
by Array pursuant to Section 11.2 for Amgen’s material breach, by Amgen
pursuant to Section 11.3 or by Array pursuant to Section 11.4, [***]. 
Notwithstanding anything herein to the contrary, Amgen Abandoned Product
Technology excludes Excluded Technology.

 

1.10                    “Amgen Indemnitees”
shall have the meaning described in Section 10.4.2.

 

1.11                    “Amgen Know-How”
shall mean, subject to Section 5.4.1 or 5.4.3, as applicable, (i) all
Information Controlled by Amgen as of the Effective Date that is reasonably
necessary or useful for the Parties to conduct their respective activities
under the Discovery Program and Global Development Plan, (ii) Amgen’s
interest in Information within the Collaboration Technology, and (iii) any
other Information Controlled by Amgen during the term of this Agreement that is
reasonably necessary or directly useful for the conduct of the Discovery
Program; provided, however,
that with respect to Information licensed by Amgen from Third Parties that is
within the foregoing clause (iii), and not clause (i) or (ii), such
Information shall not be included within the Amgen Know-How for purposes of the
licenses to Array hereunder, except with respect to performance of activities
under the license set forth in Section 5.2 using technology provided by
Amgen, unless and until Array agrees with Amgen in writing to assume such
payment obligations as they relate to Compounds and Products.  Amgen agrees to provide information regarding
such payments (if any) to Third Parties upon Array’s request.  Notwithstanding anything herein to the
contrary, Amgen Know-How excludes published Amgen Patents.

 

1.12                    “Amgen Patents”
shall mean, subject to Section 5.4.1 or 5.4.3, as applicable, (i) all
Patents Controlled by Amgen as of the Effective Date that are reasonably
necessary or useful for the Parties to conduct their respective activities
under the Discovery Program and Global Development Plan, (ii) Amgen’s
interest in Patents claiming Collaboration Technology, and (iii) any other
Patents Controlled by Amgen during the term of this Agreement that are
reasonably necessary or directly useful for the conduct of the Discovery
Program; provided, however,
that with respect to Patents licensed by Amgen from Third Parties that are
within the foregoing clause (iii), and not clause (i) or (ii), such
Patents shall not be included within the Amgen Patents for purposes of the
licenses to Array hereunder unless and until Array agrees with Amgen in writing
to assume such payment obligations as they relate to Compounds and Products.  Amgen agrees to provide information regarding
such payments (if any) to Third Parties upon Array’s request.

 

1.13                    “Amgen Retained Compounds”
shall mean (i) all compounds Controlled or possessed by Amgen as of the
Effective Date, (ii) all compounds[***], and (iii) all
compounds [***].

 

 

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[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

1.14                    “Amgen Retained Compound
Derivative” shall mean any compound that is not an Amgen Retained
Compound but is a [***].

 

1.15                    “Amgen Technology”
shall mean Amgen Patents and Amgen Know-How, subject to Section 5.4.1 or
5.4.3, as applicable, but shall exclude Excluded Technology.

 

1.16                    “API” shall have
the meaning described in Section 2.4.2 hereof.

 

1.17                    “Array” shall
mean Array BioPharma Inc. and any of its Affiliates.

 

1.18                    “Array Indemnitees”
shall have the meaning described in Section 10.4.1 hereof.

 

1.19                    “Array Know-How”
shall mean, subject to Section 5.4.1 or 5.4.3, as applicable, (i) all
Information Controlled by Array as of the Effective Date that is reasonably
necessary or useful for the Parties to conduct their respective activities
under the Discovery Program and Global Development Plan and for Amgen to
discover, research, develop, make, have made, use, import, offer to sell, sell
and otherwise exploit Compounds or Products, (ii) Array’s interest in
Information within the Collaboration Technology, and (iii) any other
Information Controlled by Array during the term of this Agreement that is (A) reasonably
necessary or directly useful for the discovery, research, development,
manufacture, use or sale of Compounds or Products, including the ARRY-403
Product as manufactured and formulated by Array as of the Effective Date, or (B) that
is reasonably necessary or directly useful for the conduct of the Discovery
Program; provided, however,
that with respect to Information licensed by Array from Third Parties that is
within the foregoing clause (iii), and not clause (i) or (ii), such
Information shall not be included within the Array Know-How for purposes of the
licenses to Amgen hereunder unless and until Amgen agrees with Array in writing
to assume such payment obligations as they relate to Compounds and
Products.  Array agrees to provide
information regarding such payments (if any) to Third Parties upon Amgen’s
request.  Notwithstanding anything herein
to the contrary, Array Know-How excludes published Array Patents.

 

1.20                    “Array Patents” shall mean, subject to Section 5.4.1
or 5.4.3, as applicable, (i) all Patents Controlled by Array as of the
Effective Date that are reasonably necessary or useful for the Parties to
conduct their respective activities under the Discovery Program and Global
Development Plan and for Amgen to discover, research, develop, make, have made,
use, import, offer to sell, sell and otherwise exploit Compounds or Products, (ii) Array’s
interest in Patents claiming Collaboration Technology, and (iii) any other
Patents Controlled by Array during the term of this Agreement that are (A) reasonably
necessary or directly useful for the discovery, research, development,
manufacture, use or sale of Compounds or Products, including the ARRY-403
Product as manufactured and formulated by Array as of the Effective Date (and
in any event shall include Patents that claim the composition of matter or use
of a Compound), or (B) that are reasonably necessary or directly useful
for the conduct of the Discovery Program; provided, however, that with respect to Patents licensed by Array from
Third Parties that are within the foregoing clause (iii), and 

 

 

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[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

not clause (i) or (ii), such Patents shall not be included within
the Array Patents for purposes of the licenses to Amgen hereunder unless and
until Amgen agrees with Array in writing to assume such payment obligations as
they relate to Compounds and Products. 
Array agrees to provide information regarding such payments (if any) to
Third Parties upon Amgen’s request.

 

1.21                    “Array Technology”
shall mean Array Patents and Array Know-How, subject to Section 5.4.1 or
5.4.3, as applicable, but shall exclude Excluded Technology.

 

1.22                    “ARRY-403” shall
mean Array’s proprietary small molecule compound known as ARRY-403.

 

1.23                    “ARRY-403 Inventory”
shall have the meaning described in Section 2.4.2 hereof.

 

1.24                    “ARRY-403 Inventory Letter”
shall have the meaning described in Section 10.2(f) hereof.

 

1.25                    “ARRY 403 Tablets”
shall have the meaning described in Section 2.4.2 hereof.

 

1.26                    “Business Day”
shall mean, whether capitalized or not capitalized in this Agreement, a
calendar day on which both Parties are generally open for business (i.e.,
weekdays other than national or state holidays or formal company-specific
holidays, including Amgen’s voluntary shut downs).

 

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

 

1.28                    “Clinical Candidate”
shall mean a Compound selected for clinical development in accordance with Section 2.6
below.

 

1.29                    “Clinical Candidate
Criteria” shall mean (i) the initial criteria to be established
as described in Section 2.6, below, or (ii) such other written
criteria as are approved by the JRC.

 

 

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[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

1.30                    “Collaboration Technology”
shall mean all Information invented, discovered or created solely or jointly by
employees, agents or
consultants of Amgen
and/or Array in the course of performing their respective activities after the
Effective Date in the Discovery Program.

 

1.31                    “Combination Product”
shall mean a Product that is a pharmaceutical preparation incorporating two or
more therapeutically active ingredients, including at least one that is not 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.

 

1.32                    “Commercially Reasonable
Efforts” shall mean, with respect to activities of a Party related
to the Program, the active and diligent efforts and resources typically used by
that Party (or, if a Party does not engage in that activity for other products
or compounds, by biotechnology and/or pharmaceutical companies that are similar
in size and financial resources to such Party) in the conduct of such
activities with respect to products of comparable market potential, taking into
account all relevant factors including, as applicable, stage of development,
efficacy and safety relative to competitive products in the marketplace, actual
or anticipated governmental approved labeling, the nature and extent of market
exclusivity (including patent coverage and regulatory exclusivity), cost and
likelihood of obtaining Marketing Approval, and actual or projected
profitability.  For purposes of clarity,
Commercially Reasonable Efforts will be determined on a market-by-market basis
within the Territory, and it is anticipated that the level of effort may be
different for different markets and may change over time, reflecting changes in
the status of Product and the market(s) involved.

 

1.33                    “Composition Patents”
shall mean Array Patents that claim composition of matter of any Compounds,
including the Patents set forth on Exhibit 10.2(a).

 

1.34                    “Compound” shall
mean (i) ARRY-403, (ii) all small molecules tested for
glucokinase activation by Array prior to the Effective Date, or made and tested
by Array in the course of the Discovery Program, which show or showed some
activity as activators of glucokinase in such testing (but, for clarity,
excluding intermediates of such compounds that were not themselves tested and
molecules that were tested but did not show activity as activators of
glucokinase), (iii) any other small molecule that binds to and activates
glucokinase and [***],[***], or (iv) any other small
molecule that, as its primary and intended mechanism of action for therapeutic
effect (intended by the Party, its Affiliate or Third Party researching,
developing or commercializing such small molecule), binds to and activates
glucokinase.  For clarity, clause (iv) of this Section shall
not include small molecules generated or identified in programs outside the
Program where the intended mechanism of action for molecules that are the
subject of such program is modulation of a target other than binding to and
activation of glucokinase.  The Parties
acknowledge that it is in neither Party’s interest to have the criteria in
clause (iii) of this Section set too low and agree, upon request
of either Party after Amgen has had a reasonable time to become familiar with
the assay referenced 

 

 

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[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

therein, to discuss in good
faith whether it would be appropriate to increase the activity specified in
clause (iii), and if they mutually agree to a change, to amend this Section accordingly.

 

1.35                    “Contractors”
shall mean Third Party contractors or service providers that perform work on
behalf of a Party or its Affiliate (e.g., contract research organizations,
laboratory service providers).

 

1.36                    “Control,”  “Controls,”  “Controlled”  or  “Controlling” shall mean possession of the ability to grant
the licenses or sublicenses or to transfer Materials as provided herein without
violating the terms of any agreement or other arrangements with any Third
Party.  If the granting of a license or
sublicense or the transfer of Materials would violate the terms of any
agreement or other arrangements with any Third Party, the Party (or Party’s
Affiliate) making such grant or transfer shall make such grant or transfer to
the extent permissible.

 

1.37                    “Co-Promoted Product”
shall have the meaning described in Section 7.2 hereof.

 

1.38                    “Co-Promotion Costs”
shall have the meaning described in Section 7.2.7 hereof.

 

1.39                    “Co-Promotion Option”
shall have the meaning described in Section 7.2 hereof.

 

1.40                    “Co-Promotion Percentage”
shall have the meaning described in Section 7.2.1 hereof.

 

1.41                    “Co-Promotion Plan”
shall have the meaning described in Section 7.2.3 hereof.

 

1.42                    “Creditable Percentage”
shall have the meaning described in Section 6.11.1 hereof.

 

1.43                    “Disclosure Party”
shall have the meaning described in Section 12.1 hereof.

 

1.44                    “Discovery Plan”
shall have the meaning described in Section 2.3 hereof.

 

1.45                    “Discovery Program”
shall mean the research, discovery, characterization, optimization and
pre-clinical development of small molecule pharmaceutical products, the
mechanism of action of which is the binding and activation of glucokinase,
during the Discovery Program Term in accordance with the Discovery Plan.

 

1.46                    “Discovery Program Term”
shall have the meaning described in Section 2.8 below.

 

1.47                    “Distracted Party”
shall mean the Party involved in a Distracting Transaction.

 

1.48                    “Distracting Product”
shall mean (i) a product [***] or (ii) a
compound or product which [***].

 

 

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[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

1.49                    “Distracting Program”
shall mean the research, development, manufacture or commercialization of any
Distracting Product.

 

1.50                    “Distracting Transaction”
shall mean any transaction entered into by a Party or its Affiliates after the
Effective Date whereby a Third Party that is engaged in a Distracting Program becomes an
Affiliate of such Party.

 

1.51                    “Divest” shall
mean, with respect to any Distracting Program, the transfer of substantially
all of the right, title and interest in and to such Distracting Program,
including technology, intellectual property and other assets materially
relating thereto, to an independent Third Party, whether by sale, assignment,
exclusive license or a combination thereof, without the retention or
reservation of any rights or interest (other than solely an economic interest
and/or customary residual interest as owner of licensed intellectual property)
in such Distracting Program by the applicable Party Divesting such Distracting
Program or its Affiliates.

 

1.52                    “Effective Date”
shall mean the date first written above.

 

1.53                    “Excluded Technology”
shall mean Information or Materials, other than Compounds, acquired or created
by a Party or its Affiliates after the Discovery Program Term that [***].

 

1.54                    “FDA” shall
mean, with respect to the United States, the U.S. Food and Drug Administration,
any successor entity thereto, or any equivalent foreign regulatory
authority(ies) in the particular country of the Territory.

 

1.55                    “Field” shall
mean all uses, including therapeutic, diagnostic, prophylactic and palliative
purposes.

 

1.56                    “First Commercial Sale”
shall have the meaning described in Section 6.3.3(e) hereof.

 

1.57                    “First Right Patents”
shall have the meaning described in Section 8.2.1 hereof.

 

1.58                    “FTE” shall mean
a full-time person dedicated to the Discovery Program, or in the case of less
than a full-time dedicated person, a full-time, equivalent person year, [***] in connection with the Discovery Program.

 

1.59                    “Generic Product”
shall have the meaning described in Section 6.11.2 hereof.

 

1.60                    “Global  Development Plan” shall mean the workplan with respect to
the development of a Product as set forth in Section 3.3.

 

 

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[ * ] = Confidential treatment of certain confidential
information contained in this document, marked by brackets, is being sought
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

 

1.61                    “Global  Development Program” shall have the meaning described in Section 3.2
hereof.

 

1.62                    “IND” shall mean
an investigational new drug application filed with the FDA as more fully
defined in 21 C.F.R. § 312.3 or its equivalent in any country.

 

1.63                    “Initial IND”
shall have the meaning described in Section 3.2.1 hereof.

 

1.64                    “Indemnified Party”
shall have the meaning described in Section 10.4.3 hereof.

 

1.65                    “Indemnifying Party”
shall have the meaning described in Section 10.4.3 hereof.

 

1.66                    “Industry Buyer”
shall have the meaning described in Section 11.7.

 

1.67                    “Information”
shall mean techniques, information, technology, practices, trade secrets,
inventions (whether patentable or not), methods, processes, knowledge,
know-how, conclusions, skill, experience, test data and results (including
pharmacological, toxicological, manufacturing, and clinical test data and
results), analytical and quality control data, results or descriptions,
software and algorithms, including works of authorship and copyrights, screens,
models, marketing, pricing, distribution, costs, and sales data, manufacturing
information, and patent and legal data or descriptions (to the extent that
disclosure thereof would not result in loss or waiver of privilege or similar
protection).  As used herein, “clinical
test data” shall be deemed to include all information related to the clinical
or preclinical testing of a Compound or Product, including patient report
forms, investigators’ reports, biostatistical, pharmaco-economic and other
related analyses, and the like. 
Information shall not include Materials.

 

1.68                    “Joint Commercialization
Committee”  (or  “JCC”) shall
mean the committee established under Section 7.2.2(a).

 

1.69                    “Joint Development
Committee”  (or  “JDC”) shall
mean the committee established under Section 3.1.1.

 

1.70                    “Joint Know-How”
shall mean Information invented, discovered or created within the Discovery
Program or within the collaboration jointly by Array or its agents, on the one
hand, and Amgen or its agents, on the other hand.

 

1.71                    “Joint Patents”
shall mean Patents that claim inventions within Joint Know-How that are
invented jointly by Array or its agents, on the one hand, and Amgen or its
agents, on the other hand.

 

1.72                    “Joint Research Committee”  (or  “JRC”) shall mean the committee established under Section 2.2.

 

 

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[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

1.73                    “Joint Steering Committee”  (or  “JSC”) shall mean the committee established under Section 12.2.

 

1.74                    “Joint Technology”
shall mean Joint Patents and Joint Know-How.

 

1.75                    “Law” shall mean, individually and collectively,
any federal, state, local, national and supra-national laws, treaties,
statutes, ordinances, rules and regulations, including any rules,
regulations, guidance, guidelines or requirements having the binding effect of
law of national securities exchanges or securities listing organizations,
governmental authorities, courts, tribunals, agencies other than governmental
authorities, legislative bodies and commissions that are in effect from time to
time during the Term and applicable to a particular activity hereunder.

 

1.76                    “Licensed Technology”
shall mean Array Technology, Amgen Technology and Collaboration Technology.

 

1.77                    “Losses” shall
have the meaning described in Section 10.4.1 hereof.

 

1.78                    “Major European Country”
shall mean France, Germany, Italy, Spain or the United Kingdom.

 

1.79                    “Marketing Approval”
shall mean 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 Products in a regulatory jurisdiction.  For countries outside the United States where
governmental approval is required for pricing or reimbursement for the Product
to be reimbursed by national health insurance, “Marketing Approval” shall not
be deemed to occur until such pricing or reimbursement approval is obtained
unless such approval for pricing or reimbursement is not required prior to
making commercial sale of the Product in such country and Amgen otherwise
obtains Marketing Approval and initiates commercial sale of the Product in such
country prior to receipt of such pricing or reimbursement approval.

 

1.80                    “Marketing Approval
Application” or “MAA” shall
mean 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 Product in the Territory.

 

1.81                    “Materials”
shall mean tangible materials, including biological
compounds, chemical compounds, intermediates, assays, screens, animal models,
and reagents.

 

1.82                    “Milestone”
shall mean a milestone described in Section 6.3.

 

1.83                    “Net Sales”
shall mean the gross invoice price by Amgen or its Sublicensees, as the case
may be, for all Products sold by Amgen or its Sublicensees (“Selling Party”), under this 

 

 

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[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

Agreement in arm’s length
sales to Third Parties less the following deductions determined in accordance
with U.S. generally accepted accounting principles, consistently applied:

 

(a)       trade,
prompt payment, quantity, and cash discounts;

 

(b)      credits,
rebates, allowances and chargebacks (including those to managed-care entities
and government agencies), and allowances and credits to customers on account of
rejection, returns (including wholesaler and retailer returns), and retroactive
price reductions affecting such Product;

 

(c)       an
amount equal [***] (which amount is in lieu of
any deduction of actual amounts attributable to bad debt, freight or other
transportation charges, insurance charges, and additional special packaging);

 

(d)      fees paid
to distributors, selling agents (excluding any sales representatives of a Party
or any of its Affiliates), group purchasing organizations and managed care
entities; and

 

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

 

Sales
among Amgen Inc., its Affiliates and/or Sublicensees shall be excluded from the
computation of Net Sales, and no royalties will be payable on such sales except
where such Affiliates or Sublicensees are commercial end users.  For the avoidance of doubt, if a Product sold
among Amgen Inc., its Affiliates and/or Sublicensees is subsequently sold to a
Third Party, the sale of such Product to the Third Party shall be taken into
account for purposes of Net Sales, and not the sale among Amgen Inc., its
Affiliates and/or Sublicensees.

 

In
the event a Product is sold which is a Combination Product (as defined in Section 1.31),
for purposes of determining payments due Array under Section 6.5, Net
Sales with respect to such Combination Product shall be calculated by
multiplying the Net Sales (as described above) of the applicable Combination
Product by the fraction A over A+B, in which A is the Gross Selling Price of a
Product containing as therapeutically active ingredients only the applicable
Compound(s) contained in such Combination Product (in the same doses and
dosage form) when such Product is sold in substantial quantities during the
applicable accounting period, and B is the Gross Selling Price of a product
that does not contain any Compound and which contains as therapeutically active
ingredients all of the other therapeutically active ingredients (other than
Compounds) that are contained in such Combination Product (in the same doses
and dosage form) when such product is sold separately in substantial quantities
during the applicable accounting period. 
All Gross Selling Prices of the applicable Product and other product
used in determining A and B above shall be calculated as the average Gross
Selling Price of such Product and other product during the applicable
accounting period for which the Net Sales are being calculated.  In the event that substantial 

 

 

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[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

quantities
of the applicable Product used to determine A or the other product used to
determine B for a given Combination Product are not made during the applicable
accounting period, or if the Gross Selling Price for such Product used to
determine A or other product used to determine B cannot be determined for a
given accounting period, Net Sales with respect to such Combination Product
shall be determined using values of A and B where A is equal to the relative
value, to the end-user, of all Compounds contained in the applicable
Combination Product, and B is equal to the relative value, to the end-user, of
all the other therapeutically active ingredients included in the applicable
Combination Product without the applicable Compound(s).  For purposes of this Section, “Gross Selling Price” shall mean the gross price at which an
active ingredient is sold to a Third Party, before discounts, deductions,
credits, taxes or allowances.

 

1.84                    “Non-Program Products”
shall have the meaning described in Section 4.5.

 

1.85                    “Patent” shall
mean an issued patent or pending patent application (including certificates of
invention, applications for certificates of invention and priority rights) in
any country or region, including all provisional applications, refilings,
substitutions, continuations, continuations-in-part, divisionals, renewals, all
letters patent granted thereon, and all reissues, re-examinations and patent
term extensions thereof, and all international or foreign counterparts of any
of the foregoing (including supplemental protection certificates, patents of
addition and the like).

 

1.86                    “Phase I,” “Phase II,” “Phase IIb” and “Phase III” shall have the following meanings:

 

1.86.1        “Phase I” shall mean human clinical
trials, the principal purpose of which is preliminary determination of safety
in healthy individuals or patients as required in 21 C.F.R. §312(a), or
similar clinical study in a country other than the United States.

 

1.86.2        “Phase II” shall mean 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 required in 21 C.F.R. §312(b), or similar clinical study in a
country other than the United States.

 

1.86.3        “Phase IIb” shall mean a
Phase II clinical trial, designed for the principal purpose of determining
safety and sufficient potential efficacy to enable selection of dose to
progress the applicable product to a Phase III trial.

 

1.86.4        “Phase III” shall mean human
clinical trials, the principal purpose of which is to establish safety and
efficacy of one or more particular doses in patients being studied as required
in 21 C.F.R. §312(c), or similar clinical study in a country other than
the United States.

 

1.87                    “Post-Effective Date
Affiliate” shall have the meaning described in Section 5.4.

 

 

 - 11 - 

 

[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

1.88                    “Post-Term Sales Period”
shall have the meaning described in Section 11.5.5 hereof.

 

1.89                    “Previously Licensed IP”
shall have the meaning described in Section 5.4.

 

1.90                    “Product” shall
mean a pharmaceutical preparation incorporating a Compound as an active
ingredient.

 

1.91                    “Program” shall
mean the research, development, manufacture and commercialization of Compounds
and Products in accordance with this Agreement, including the Discovery Plan
and Global Development Plan.

 

1.92                    “Program Products”
shall have the meaning described in Section 4.5.

 

1.93                    “Returned Compounds”
shall have the meaning described in Section 5.3.

 

1.94                    “Royalty Term”
shall mean, with respect to a Product, the term for payment of royalties as set
forth in Section 6.6.

 

1.95                    “Segregate”
shall mean, with respect to two (2) programs: (i) to restrict and
prevent all program-related contacts and communications of any kind between
personnel (whether employees, consultants, Third Party contractors or
otherwise) working on or involved with the research, development, manufacturing
or commercialization of the first program and personnel (whether employees,
consultants, Third Party contractors or otherwise) working on or involved with
the research, development, manufacturing or commercialization of the second
program; (ii) to ensure that personnel (whether employees, consultants,
Third Party contractors or otherwise) that are working on the first program
will not during the same time period work on the second program, and vice versa
(and, although long-term switching of personnel between programs is permitted,
the Party conducting such programs shall use reasonable efforts to avoid
frequent or routine switching of personnel between projects); (iii) to
ensure that confidential information relating to the first program is not
shared with or accessible to personnel (whether employees, consultants, Third
Party contractors or otherwise) that are working on the second program and vice
versa; and (iv) from time-to-time, upon the reasonable request of the
other Party, to provide information requested relating to the foregoing items (i) through
(iii), and to cooperate to enable the other Party to verify that such
restrictions are in place and sufficient to achieve the foregoing.  For clarity, the foregoing restrictions will
not prevent senior vice presidents or above of the applicable Party from
reviewing such information regarding the two programs as is required for
compliance with Law, provided that such Party shall ensure that such employees
understand and comply with their obligations of confidentiality and non-use as
set forth herein.

 

1.96                    “Specifications”
shall have the meaning described in Section 2.4.2 hereof.

 

1.97                    “Subject Transaction”
shall have the meaning described in Section 12.4.2 hereof.

 

 

 - 12 - 

 

[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

1.98                    “Sublicensee”
shall mean a Third Party to whom Amgen or its Sublicensee has granted a
sublicense in accordance with Section 5.5.

 

1.99                    “Target Audience”
shall have the meaning described in Section 7.2 hereof.

 

1.100            “Term” shall
mean the period of time commencing on the Effective Date and, unless sooner
terminated in accordance with Article XI, ending on the expiration of the last remaining
Royalty Term.

 

1.101            “Territory”
shall mean the entire world.

 

1.102            “Third Party”
shall mean any entity other than a Party or any of its Affiliates.

 

1.103            “Valid Claim “
shall mean a claim of an issued and unexpired Patent (including the term of any
patent term extension, supplemental protection certificate, renewal or other
extension) which has not been held unpatentable, invalid or unenforceable in a
final decision of a court or other government agency of competent jurisdiction from
which no appeal may be or has been taken, and which has not been admitted to be
invalid or unenforceable through reissue, re-examination, disclaimer or
otherwise.

 

1.104            “Voting Securities”
shall mean securities entitled to be voted generally or in the election of
directors of an entity.

 

ARTICLE
II - RESEARCH PROGRAM

 

2.1                            Discovery Program. 
Array and Amgen agree to conduct a research program on a collaborative
basis with the principal goal of identifying and characterizing additional
Products within the Field, and of conducting preclinical testing and process
technology research of Products to ready them for pre-clinical development, all
as set forth below.

 

2.2                            The JRC.  Promptly after the Effective
Date, the Parties shall establish a Joint Research Committee (“JRC”).  The JRC shall
have responsibility to (i) oversee, review and coordinate the Discovery
Program and to expedite the progress of work being done under the Discovery
Plan, and (ii) to make such other decisions as are expressly allocated to the
JRC under this Agreement.

 

(a)       Membership.  The
JRC shall be comprised of an equal number of representatives from each of Amgen
and Array.  The exact number of such
representatives shall be two (2) for each of Amgen and Array, or such
other number as the Parties may agree. 
Either Party may replace its respective JRC representatives at any time,
with prior written notice to the other Party. 
From time to time, the JRC may establish subcommittees to oversee
particular projects or activities, and such subcommittees will be constituted
as the JRC approves.  As appropriate,
other 

 

 

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[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

employee representatives of the Parties or their Affiliates may attend
JRC meetings as nonvoting participants, but no Third Party personnel may attend
unless otherwise agreed by the Parties.

 

(b)      Meetings.  The
JRC shall meet quarterly, or as more or less often as otherwise agreed by the
Parties, at such locations as the Parties agree.  It is understood that such meetings shall be
held at least twice per year in person, otherwise by teleconference.  All JRC meetings must have at least one (1) member
appointed by each Party in attendance.

 

(c)       Decision
Making.  Decisions of the JRC shall be made by
consensus, with each Party having one vote. 
In the event the Parties can not agree on a decision, then either Party
may, by written notice to the other, have such issue referred to the Chief
Executive Officer of Array and the Executive Director, Research (metabolic
disorders) of Amgen, or their designees who have equivalent authority or have
been expressly given authority to resolve such dispute, for attempted
resolution by good faith negotiations within fifteen (15) days after such
notice is received; provided that, for decisions which by their nature need to
be made quickly, the Amgen representatives will have the right to make the
interim decision pending resolution by such Amgen and Array personnel.  If such senior managers of Array and Amgen or
their designees can not reach consensus after good faith discussion, then Amgen
will have the right to make the final decision; provided, however, that Amgen shall not have
the right, without agreement of Array, to: 
(i) alter or amend the Discovery Plan to provide for less than the
minimum number of Array FTEs as provided in this Agreement, or to require Array
to utilize personnel in excess of the FTEs funded by Amgen under the Discovery
Plan and this Agreement; (ii) require Array to be responsible for tasks or
activities of a materially different nature or scope than agreed by Array in
the initial Discovery Plan (or amended Discovery Plan agreed to by Array); (iii) require
Array to bear extraordinary chemical costs unless reimbursed by Amgen; or (iv) cause
Array to breach any obligation Array has under an agreement with any Third
Party already executed by Array as of the Effective Date (and Array hereby
represents, warrants and covenants that there is no agreement as of the
Effective Date to which it is a party with a Third Party that would reasonably
be expected to conflict with performing activities under the Discovery Plan as
of the Effective Date, and Array will not enter into any such agreement that
conflicts with the then-current Discovery Plan during the Discovery Program
Term).  For clarity, the JRC shall have
no right to amend or revise this Agreement, nor shall Amgen’s final
decision-making authority as described in this Section 2.2(c) be
construed to permit Amgen to amend or revise this Agreement without the mutual
agreement of Array.  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.

 

2.3                            Discovery Plan.

 

2.3.1                Responsibilities.  The
Discovery Program shall be carried out in accordance with a written workplan
and budget (the “Discovery Plan”) approved by the
JRC.  Each Party will be responsible for
conducting those activities within the Discovery Program as are allocated to
such Party under the Discovery Plan.

 

 

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[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

2.3.2                Establishment of Discovery Plan.  The
initial Discovery Plan, which covers the period from Effective Date through[***] in detail, and includes general plans for [***], has been mutually agreed by the Parties as of the
Effective Date.  The JRC shall review the
Discovery Plan on an ongoing basis and may make changes thereto as the JRC
approves.

 

2.4                            Technology Transfer.

 

2.4.1                Initial Transfer. 
Promptly following the Effective Date, Array shall transfer to Amgen
such Array Technology, including preclinical and clinical test data, and
related Materials as are in Array’s possession and Control and are reasonably
necessary or directly useful for Amgen to conduct its activities under the
Discovery Plan and Global Development Plan.

 

2.4.2                Manufacturing; Inventory Transfer. 
Array shall transfer to Amgen or its designee the quantities of ARRY-403
set forth in the Inventory Letter (as defined in Section 10.2(f) below)
(the “ARRY-403 Inventory”) in the time frames
reasonably requested by Amgen in writing (which shall be within a reasonable
time after the Effective Date and, in no event, later than [***]);
provided, however, that Array shall retain such quantities of ARRY-403 as are
reasonably necessary for Array to conduct its activities under the Discovery
Plan and Global Development Plan, including clinical trial supplies of ARRY-403
that are reasonably necessary for the conduct of the 403 MAD or the 403
Bioequivalence Trial.  Array warrants to
Amgen that the portion of the ARRY-403 Inventory identified in Section B
of the Inventory Letter, at the time of delivery to Amgen, will meet the
specifications for ARRY-403 in effect as of the Effective Date (the “Specifications”); provided, however, that with respect to
tablets of ARRY-403 for which Array has not completed testing as of the
Effective Date (“ARRY-403 Tablets”), such warranty
is made only to the knowledge of Array. 
In the event that portions of the ARRY-403 Tablets do not meet the
Specifications, then Array shall, at Array’s expense, provide technical
assistance to Amgen to determine the cause of such failure to meet Specifications,
and reasonably cooperate with Amgen, as Amgen may request, to exercise Array’s
rights under its contract with the manufacturer of such ARRY-403 Tablets, to
seek remedies for such failure of the ARRY-403 Tablets to meet Specifications
including, if applicable, seeking to have such manufacturer manufacture
replacement quantities ARRY-403 Tablets that meet the Specifications.  At the time of delivery of ARRY-403
Inventory, Array shall deliver all certificates of analysis related to such
ARRY-403 Inventory.  Array shall provide
to Amgen or its designee such other manufacturing information related to
ARRY-403 or other Compounds manufactured by Array prior to the Effective Date
that Amgen reasonably requests, including information evidencing whether the
current analytical methods are suitable under FDA regulations to support
release testing for Phase II clinical trials, and shall cooperate with Amgen to
obtain any such requested information and/or documentation from Array’s
Contractors.  If the current analytical
methods are [***], then upon request from
Amgen [***], Array will conduct agreed upon
work with the goal of making such analytical methods [***],
at Amgen’s expense.  Unless otherwise
requested by Amgen, Array shall (i) conduct [***]
for the ARRY-403 Inventory, and (ii) conduct [***]
for the ARRY-403 Tablets and bulk ARRY-403 to obtain, [***]
data to [***]. 
In connection with the transfer of the ARRY-403 Inventory, Array shall
provide Amgen with analytical methods associated therewith.  

 

 

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[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

Additionally,
upon Amgen’s request, Array shall promptly provide Amgen with any retained
samples and reference standards of ARRY-403. 
Promptly after the Effective Date, Array will also provide to Amgen
research quantities of the active pharmaceutical ingredient of ARRY-403 and
intermediates for the synthesis of ARRY-403. 
If requested by Amgen in writing [***], Array
shall transfer to Amgen or its designee all quantities of intermediates and
starting materials for the manufacture of bulk ARRY-403 that are owned by Array
as of the Effective Date (“Intermediates”),
and in such event [***].  If Amgen does not notify Array in writing
that Amgen wishes Array to transfer the Intermediates, then Array shall have no
obligation to provide the Intermediates to Amgen and may dispose of the
Intermediates in its discretion.  If,
after the transfer of manufacturing technology to Amgen as provided herein,
Amgen is unsuccessful in manufacturing a batch of the ARRY-403 active pharmaceutical
ingredient (“API”), Array agrees, upon written
request of Amgen prior to Initiation of the first Phase II clinical trial of
ARRY-403, to manufacture (or have manufactured) for Amgen up to 1.5 kilograms
of API, at Amgen’s expense.

 

2.4.3                Additional Transfers. 
During the Discovery Program Term and [***],
upon request of Amgen or as determined by the JRC, Array will transfer to Amgen
such additional Array Technology and reasonable quantities of related Materials
as are in Array’s possession and Control and are reasonably necessary or directly
useful for Amgen to discover, research, develop, manufacture, have
manufactured, use, sell and otherwise commercialize Compounds and Products, and
thereafter Array will reasonably cooperate as Amgen may from time to time
request to transfer such additional Array Technology (i.e., that was in Array’s
possession and Control during the Discovery Program Term or [***]).

 

2.4.4                Information.  For transfers of Information
under this Section 2.4, (i) such Information within the Array
Technology will be provided in sufficient form and detail to permit Amgen to
use and/or practice such technology, to the extent that Array has such
Information (or can easily generate such Information) in such form and detail,
and (ii) Array will make persons who are knowledgeable about the Array
Technology and related Materials reasonably available to Amgen to provide to
Amgen context or other useful information relating thereto for Amgen’s use in
connection with the use and/or practice of such technology, as reasonably
requested by Amgen.

 

2.4.5                Collaboration Transfers. 
During the Discovery Program Term, the Parties will cooperate in the
transfer of Collaboration Technology and related Materials as are reasonably
necessary or directly useful for each Party to conduct its activities under the
Discovery Plan or as otherwise determined by the JRC.

 

2.4.6                Non-Transferred Technology. 
Array has two [***] referred
to by Array as (i) [***] and (ii) [***].  Array agrees
to use such [***] for the benefit of the
Program in the performance of its activities under the Discovery Plan, if so
contemplated in the Discovery Plan, but Array shall not have any obligation to
transfer to Amgen either of such [***] hereunder
and Amgen receives no license to such [***] under
this Agreement.

 

 

 - 16 - 

 

[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

2.4.7                Orderly Transition.  The
Parties contemplate an orderly transition of Program matters under this Section 2.4.  From the Effective Date until the transfer of
the Program matters in this Section 2.4, Array will continue to conduct
such matters in the ordinary course.

 

2.5                            Information and Reports. 
Amgen and Array will reasonably cooperate to keep the other Party
informed as to the progress and results of performance of its responsibilities
under the Discovery Plan, including all inventions within Collaboration
Technology that may be patentable and all material Collaboration Technology,
with significant discoveries or advances being communicated promptly after such
Information is obtained or its significance is appreciated; provided, however,
that with respect to Materials, the Parties shall exchange Materials as
determined by the JRC.  The Parties will
exchange, for the Discovery Program Term, at least once quarterly, a written
summary of such research and results. 
Each Party will provide the other with such other Collaboration
Technology, and inform the other Party of its Technology (Array Technology or
Amgen Technology, as the case may be) used in the Discovery Program, in each
case as is reasonably requested by the other Party.  Each Party will maintain complete and
accurate records of all of its work conducted in the Discovery Program,
including results, data and inventions. 
Such records shall be made and maintained in accordance with good
scientific practices within the biopharmaceutical industry and as appropriate
for regulatory and patent purposes.

 

2.6                            Selection of Clinical Candidates.  The
JRC shall establish the initial Clinical Candidate Criteria promptly following
the Effective Date, for guidance with respect to the goals of the Discovery
Program and use in the designation of Compounds as Clinical Candidates.  Based upon the guidelines and the results of
the Discovery Program, the JRC shall designate from time to time Compounds for
selection by Amgen as Clinical Candidates, and upon approval by Amgen, the
Compounds so designated by the JRC shall be deemed Clinical Candidates.  Amgen may approve, or withhold its approval
of, the designation of any Compound as a Clinical Candidate in Amgen’s sole
discretion, whether or not such Compound meets the guidelines, and a Compound
shall not be deemed a Clinical Candidate unless so approved by Amgen. For
clarity, ARRY-403 is deemed a Clinical Candidate.

 

2.7                            FTE Requirements; Funding. Amgen agrees to fund the Array FTEs
included in the Discovery Plan in accordance with Section 6.2 below.  Unless otherwise agreed by the Parties, the
Discovery Plan shall provide for [***] in [***].

 

2.8                            Discovery Program Term.  The
Discovery Program shall commence on the Effective Date and end on the first to
occur of (i) termination of this Agreement by either Party under Article 11
below; or (ii) close of business on [***], or if
extended under this Section 2.8 below, the end of such extension period
(the “Discovery Program Term”).  Upon agreement of the Parties, the Discovery
Program Term may be extended for one or more [***] periods.

 

 

 - 17 - 

 

[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

 

ARTICLE
III - PRODUCT DEVELOPMENT

 

3.1            Development Committee.

 

3.1.1    Establishment.  Promptly after the Effective Date, Array and
Amgen shall establish a Joint Development Committee (“JDC”).  The JDC shall have as its sole purpose the
sharing of information with respect to the development of each Clinical
Candidate, the coordination of any development activities assigned to Array
(subject to Section 3.2.1(b)) under a Global Development Plan, and
provision of a forum for Array to discuss with Amgen comments or suggestions
that Array may have with respect to the development of Compounds and
Products.  The JDC shall not be a
decision making body.

 

3.1.2    Meetings; Information.  The JDC shall meet at least two times per
year.  Amgen shall notify Array at least
two weeks in advance of the date of each JDC meeting, and Array shall have the
opportunity to send up to two Array employees to each such meeting, who shall
be designated as members of the JDC. 
Either Party may replace its respective JDC representative(s) at
any time with prior written notice to the other Party.  In addition to information provided in
connection with JDC meetings, Amgen shall keep Array reasonably informed,
through Array’s member on the JDC as may be reasonably requested by Array from
time to time, regarding the plans for, and status of, development of Products
by Amgen and its Sublicensees, and the activities conducted and results
obtained in the development of Products under this Agreement

 

3.2            Global Development Program.  Following the selection of a Clinical
Candidate in accordance with Section 2.6 above, Amgen shall develop a
global development program (“Global Development Program”)
to carry out the development of such Product in accordance with the Global
Development Plan.  The Global Development
Program shall include clinical, manufacturing and other activities necessary to
bring the applicable Product to market. 
Amgen shall notify Array regarding material changes to the Global
Development Plan.

 

3.2.1    Array
Development Activities.

 

(a)  ARRY-403.  It is understood that, prior to the Effective
Date, Array has been proceeding with development activities with respect to
ARRY-403, including the filing of an IND (the “Initial IND”),
the completion of a Phase I single-rising dose clinical trial (the “403 SAD”), the initiation of a Phase I multiple-rising-dose
clinical trial (the “403 MAD”) and
the initiation of a bioequivalence trial (the “403
Bioequivalence Trial”).  Array
shall use Commercially Reasonable Efforts to complete, and be responsible, at
its own cost, for completion of, the 403 MAD and the 403 Bioequivalence Trial
in compliance with the Global Development Plan, Law and common standards of
pharmaceutical practice.  Array shall
comply with each of the following:

 

(i)   during each of the 403 MAD and the 403
Bioequivalence Trial, Array shall provide Amgen with all safety data arising
from such trial as soon as reasonably 

 

 

 - 18 -  

 

[ * ] = Confidential treatment of
certain confidential information contained in this document, marked by
brackets, is being sought pursuant to Rule 24b-2 of the Securities Exchange Act
of 1934, as amended.

 

 

practicable (but in no event
later than 24 hours for reportable safety data and 3 business days for other
safety data, in each case after first becoming aware of such safety data); and

 

(ii)  during each of the 403 MAD and the 403
Bioequivalence Trial, Array shall provide Amgen with all pharmacokinetic and
pharmacodynamic data, and any other data requested by Amgen, arising from or
related to such trial as soon as reasonably practicable (but in no event later
than 5 business days after first receiving such data, or after receiving such
request, as applicable).

 

(b)  Other.  Other than the 403 MAD and 403 Bioequivalence
Trial, the Parties do not anticipate that Array will conduct other activities
under the Global Development Plan.  In
the event that the Parties wish for Array to conduct additional activities
under the Global Development Plan, the Parties shall enter into a further
written agreement regarding such activities on mutually agreed terms and
conditions, which (unless otherwise mutually agreed by the Parties) shall
provide for [***], shall specify [***], and shall address [***].

 

(c)  Oversight.  With respect to the 403 MAD and 403
Bioequivalence Trial, Array will conduct such studies and activities in
accordance with the Global Development Plan. 
For the 403 MAD, Array will continue to conduct such trial in accordance
with the current protocol.  For trials
not yet initiated, the Parties shall discuss such trials, including design,
protocols and the like, prior to initiation. 
Array will promptly notify Amgen of any data, event or matter with
respect to the 403 MAD, 403 Bioequivalence Trial and any other development
activities assigned to Array in accordance with this Agreement, that could be
considered material, significant or otherwise impactful to the trial or the
Product, within a time period appropriate to the potential materiality of such
data, event or matter, so that the Parties can promptly discuss the potential
impact.  Amgen will designate contact
persons for Array to report any such data, event or matter.  In the event the Parties disagree regarding
the handling of such data, event or matter, Amgen shall have final
decision-making authority and Array will comply with such decision by
Amgen.  In particular, (i) with
respect to the 403 MAD, the Parties will discuss the selection of an
appropriate dosage amount for the final cohort and, if the Parties can not
agree Array will comply with Amgen’s decision on the dosage amount, and (ii) with
respect to the 403 Bioequivalence Trial, the Parties shall discuss the design
of such clinical trial, including the Investigator Brochure, protocols, patient
consent forms, or other substantive documentation related thereto, and if the
Parties can not agree on any such matters, Array will comply with Amgen’s
decisions on such matters, provided such decision does not materially increase
Array’s costs (unless Amgen agrees to pay such additional costs).  Following the Effective Date, except as
required by Law, Array will not make or initiate any filing, submission or
correspondence with the FDA or other governmental authority with respect to the
Program, including the 403 MAD and 403 Bioequivalence Trial, without Amgen’s
prior review and consent.

 

(d)  Regulatory
Communications.  Additionally, with
respect to adverse events or serious adverse events in connection with the 403
MAD and the 403 Bioequivalence 

 

 

 - 19 -  

 

[ * ] = Confidential treatment of
certain confidential information contained in this document, marked by
brackets, is being sought pursuant to Rule 24b-2 of the Securities Exchange Act
of 1934, as amended.

 

 

Trial, Array shall, prior to any communication with the FDA, provide
Amgen with an opportunity to review such suspected events and determine whether
any such suspected events are in fact an adverse or serious adverse event.  Subject to Array’s compliance with Law, Array
will handle any such adverse events and serious adverse events as directed by
Amgen.  Array will promptly notify an
Amgen designated contact person of any planned filing, submission or
correspondence to the FDA with respect to the Program or Array’s glucokinase
activator program conducted prior to the Effective Date.  Amgen will have the right to participate in
any discussions between Array and the FDA relating to the Program (or Array’s
glucokinase activator program conducted prior to the Effective Date) at Amgen’s
own expense, and Array will give Amgen ten business (10) days prior
written notice thereof (or prompt written notice, if ten (10) business
days notice is impractical); provided, that the foregoing will not apply to
unscheduled meetings or teleconferences that are initiated by the FDA and Array
can not practically include Amgen in such discussion, and in such case, Array
will thereafter provide Amgen prompt written notice of such communication with
a summary of the discussion.  Nothing
herein shall be construed to prohibit Array from making such filings,
submissions or correspondence as Array is required to make under Law.

 

(e)  Safety
and Requirement of Law. 
Notwithstanding the obligations set forth in this Section 3.2 for
Array to provide notice and review certain matters with Amgen, or to follow
Amgen’s direction as to certain matters, in the event that Array reasonably
believes that immediate actions are required to be taken (in a time frame that
does not permit the full period of notice and review contemplated in this Section 3.2)
for exigent safety concerns related to patients or for compliance with Law,
Array may take such action and, in such event, shall promptly notify Amgen;
provided, however, that Array will first use reasonable efforts to immediately
notify Amgen’s designated contact person with respect to any such matter,
including safety-related matters, to discuss such matter.

 

3.3       Global Development
Plans.

 

3.3.1    General.  For each Product, [***],
Amgen shall prepare and present to the JDC a reasonably detailed, written
global development plan (a “Global Development Plan”)
pursuant to which the Global Development Program for such Product will be
performed.  The initial Global
Development Plan for ARRY-403 has been mutually agreed by the Parties as of the
date of signing this Agreement.  Each
Global Development Plan will include a reasonably detailed plan for [***] and a general overview of development activities for [***], including as applicable a description of proposed preclinical
activities, clinical studies and regulatory plans.  Amgen will also share with Array summary
information with respect to planned clinical studies, including synopses of
protocols.  In addition, the JDC will
discuss the general progress of the Global Development Program.

 

3.3.2    Periodic Review.  The JDC shall review the Global Development
Plan on an ongoing basis, including progress to date.  If the Parties agree that Array will conduct
any development activities under the Global Development Program, then any
change to the Global 

 

 

 - 20 -  

 

[ * ] = Confidential treatment of
certain confidential information contained in this document, marked by
brackets, is being sought pursuant to Rule 24b-2 of the Securities Exchange Act
of 1934, as amended.

 

 

Development
Plan that materially alters the nature, scope or timing of activities to be
conducted by Array, or which otherwise materially modifies or changes the
obligations of Array under the Global Development Plan, shall require the prior
agreement of Array.

 

3.4       Manufacturing.  Amgen shall have the right and responsibility
to arrange for manufacturing of the Products, including both clinical materials
and commercial product.

 

3.5       Regulatory Matters.  Except as set forth in Section 3.5.1
below or as reasonably necessary for Array’s activities to complete the
clinical development activities described in Section 3.2.1, Amgen shall
file and be the owner for all regulatory filings for Compounds and/or Products
developed pursuant to this Agreement, including all MAAs and Marketing
Approvals.

 

3.5.1    Existing IND.  Array shall retain ownership, and remain the
sponsor, of the Initial IND until the last patient visit in the 403 MAD and the
403 Bioequivalence Trial.  Array shall
notify Amgen within fifteen (15) days  after the  occurrence of the last patient visit in the 403 MAD and the
403 Bioequivalence Trial.  Upon the
request of Amgen following such event, Array shall transfer the Initial IND to
Amgen or, if directed by Amgen, close or inactivate the Initial IND as soon as
reasonably practicable.  Array shall
complete all relevant clinical trial and Initial IND administrative activities
for the 403 MAD and the 403 Bioequivalence Trials and shall promptly, on a
regular basis and as requested by Amgen, share all clinical trial data with
Amgen.  Amgen shall be responsible for
the preparation and filing of all subsequent IND(s) or other regulatory
filings with respect to any clinical development for ARRY-403 other than the 403
SAD, 403 MAD and 403 Bioequivalence Trial.

 

3.6       Diligence.  Amgen shall use Commercially Reasonable
Efforts to develop, obtain Marketing Approval for and commercialize at least
one Product in the United States or the Major European Countries.  Each Party shall use Commercially Reasonable
Efforts to perform the research and development activities allocated to it
under the Discovery Program or Global Development Program in accordance with
this Agreement.

 

3.7       Decision-Making.  Amgen shall have the right to make all
decisions relating to the development, marketing and commercialization
activities with respect to any Compound or Product, including whether to
continue with the development program with respect to any Compound or Product
or to seek Marketing Approval of or to launch a Product, or whether to continue
marketing a Product, in a particular country in the Territory.  For the 403 MAD and 403 Bioequivalence Trial,
Array shall have the right to make day-to-day decisions regarding the conduct
of such activities, provided such conduct is in accordance with the Global
Development Plan and subject to Section 3.2.1 and Amgen’s overall guidance
and decisions regarding the development program with respect to Compounds and
Products.  In the event of any disagreement
between the Parties with respect to the protocols or conduct of such studies
and activities, Amgen shall have final decision-making authority and Array will
comply with such decision by Amgen, including making any amendments to
protocols that Amgen believes are appropriate; provided, however, that with
respect 

 

 

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[ * ] = Confidential treatment of
certain confidential information contained in this document, marked by
brackets, is being sought pursuant to Rule 24b-2 of the Securities Exchange Act
of 1934, as amended.

 

 

to the 403 MAD and 403
Bioequivalence Trial Amgen shall not have the right, without agreement of
Array, to materially change the nature, scope, timing or cost of such trial,
and further provided, however, that Array shall not be obligated  to take any action (or fail to take any
action) if Array reasonably believes that such act (or failure to act) is
inconsistent with its reasonable safety obligations or would not comply with
Law, but in such event Array will first
use reasonable efforts to immediately notify Amgen’s designated contact person
with respect to any such matter, including safety-related matters, to discuss
such matter.

 

ARTICLE IV - EXCLUSIVITY

 

4.1       Exclusivity.  For [***], each Party will not, and
each shall cause its Affiliates not to, conduct, directly or indirectly, either
alone or with a Third Party, [***] with
respect to [***] a product [***] a compound or product that [***] except
in each case as Products under this Agreement.

 

4.2       Post-Effective Date Affiliates.  In the event that a Party or its Affiliate
enters into a Distracting Transaction, then it will provide notice to the other
Party, within [***] of the closing of the
Distracting Transaction, describing in reasonable detail, to the extent
permitted by Law and without disclosing any proprietary information, the
Distracting Program.  During the pendency
of any termination or divestiture of a potential Distracting Transaction
pursuant to the provisions of Section 4.3.1 or 4.3.2, the Distracted Party
will Segregate the Distracting Program from the Program.

 

4.3       Termination, Divestiture or Inclusion.  If Array is the Distracted Party and such
Distracting Transaction is a Change of Control of Array, then in the notice of
a Distracting Transaction required to be provided pursuant to Section 4.2
(Post-Effective Date Affiliates) Array shall include a notification as to
whether Array (or its successor) intends to Divest, terminate or include in the
collaboration the Distracting Program in accordance with this Section 4.3
(Termination, Divestiture or Inclusion), or whether it elects to [***] in accordance with Section 4.4 (in which event
Amgen shall have the right to terminate certain provisions as set forth in Section 4.4)  If the Distracted Party is Amgen, or if Array
is the Distracted Party and such Distracting Transaction is not a Change of
Control of Array, then the Distracted Party (or the successor to Amgen, if
applicable) shall have [***] from the
closing of the Distracting Transaction to notify the other Party whether it
will Divest, terminate or include in the collaboration the Distracting Program
or (in the case where Amgen is the Distracted Party) to terminate this
Agreement pursuant to Section 11.3. 
If Amgen elects to terminate this Agreement pursuant to Section 11.3,
then Amgen will Segregate the Distracting Program and the Program prior to
termination of this Agreement and notwithstanding anything contained in this
Agreement to the contrary, the Distracting Program (including all Patents,
Information and Materials therein) would be retained by Amgen independent of
any obligations of Amgen and rights of Array hereunder, and Amgen would not
have any payment or other obligation hereunder to Array with respect thereto.  For the avoidance of doubt, the Distracted
Party shall Segregate the Distracting Program from the Program during the
period prior to giving the other Party the notice described above in this Section 4.3.

 

 

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[ * ] = Confidential treatment of
certain confidential information contained in this document, marked by
brackets, is being sought pursuant to Rule 24b-2 of the Securities Exchange Act
of 1934, as amended.

 

 

4.3.1    Divestiture.  If the Distracted Party elects to
Divest the Distracting Program, then the Distracted Party will Segregate such
Distracting Program from the Program and Divest such Distracting Program within
[***] after delivery of the notice
specified in Section 4.3 above.  During
the period while such divestment of the Distracting Program is pending, the
Distracted Party and its
Affiliates (including the Affiliate with the Distracting Program) will not
directly or indirectly assert any intellectual property or proprietary right in
the Distracting Program and under the control of the Distracted Party or its
Affiliates as a result of the Distracting Transaction, against or with respect
to any Compound or Product or otherwise obstruct the Parties’ (or their
Affiliates, sublicensees’, contractors’ or agents’) efforts with respect to
Compounds or Products under this Agreement. 
If the Distracted Party elects to Divest, and fails to complete such
divestiture within[***] of the
closing of the Distracting Transaction, then the Distracted Party will be
deemed to have chosen to terminate the Distracting Program, effective as of
such [***], and will promptly comply with
the requirements of Section 4.3.2 (Termination); provided, that if at the
expiration of such [***] period,
the Distracted Party has agreed to written terms with a Third Party to Divest
the Distracting Program then such [***] period
will be extended as required for the Distracted Party and such Third Party to
consummate the transaction, but in no event will such extension exceed an additional
ninety (90) days.

 

4.3.2    Termination.  If the Distracted Party elects to
terminate such Distracting Program, the Distracted Party will terminate all
activities of such Distracting Program within [***]
after delivery of the notice specified in Section 4.3 above, during which
period the Distracted Party will Segregate such Distracting Program from the
Program, personnel and activities.  If a
Distracted Party has elected to terminate the Distracting Program, then in no
event shall the Distracted Party partially Divest a Distracting Program except
if and to the extent mutually agreed in writing with the other Party.

 

4.3.3    Inclusion.  If the Distracted Party elects to
include the Distracting Program in the collaboration, then the Distracting
Program will be included under the terms of this Agreement and the technology,
intellectual property and Materials of such Distracting Program will be
considered within the technology (Array Technology, Amgen Technology or Amgen
Abandoned Product Technology, as the case may be) of the Distracted Party.

 

4.4       Change of Control.  In the event of a Distracting Transaction
that involves a Change of Control of Array and Array (or the successor to
Array) elects to [***], then Array shall Segregate
the Distracting Program from the Program (including all Licensed Technology and
Confidential Information related to the Program) and Amgen shall have the right
to [***] upon written notice to Array,
except for [***].

 

4.5       Effects of [***].  In the event of a Distracting Transaction that
involves a Change of Control of Array and Array [***] as
set forth in Section 4.4, then Sections 4.1, 4.2 and 4.3 shall terminate
and Section 4.4 (with respect to subsequent Distracting Transactions)
shall terminate, and on and after the date of the Distracting Transaction that
involves a Change of Control of Array only 

 

 

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[ * ] = Confidential treatment of
certain confidential information contained in this document, marked by
brackets, is being sought pursuant to Rule 24b-2 of the Securities Exchange Act
of 1934, as amended.

 

 

(i) Collaboration
Technology and Compounds and Products within the Program as of the effective
date of the Distracting Transaction (including ARRY-403), and (ii) if the
Discovery Program continues after such effective date of the Distracting
Transaction, any Collaboration Technology and Compounds and Products invented,
discovered or created within the Discovery Program after the effective date of
the Distracting Transaction, shall be Collaboration Technology hereunder for
all purposes and shall be Compounds and Products hereunder for purposes of Article VI
of this Agreement (such Compounds and Products, the “Program
Products”), respectively. 
Amgen’s payment and other obligations hereunder with respect to Program
Products shall continue unchanged (except as specified in Section 4.4).  For products, other than Program Products,
that satisfy the criteria in clause (iii) or (iv) of the definition
of “Compound” in Section 1.34 (“Non-Program Products”),
Amgen shall not have any obligations hereunder except that, (x) if the
sale of a Non-Program Product would, but for the licenses granted hereunder to
Amgen, infringe a Valid Claim within the Array Patents (other than Joint
Patents) that is a composition of matter claim, then Amgen shall pay to Array
royalties on Net Sales of such Non-Program Product pursuant to Section 6.5.1(b) (as
if such Non-Program Product was a Product that does not contain ARRY-403)
subject to the provisions of Section 6.5.2 and Sections 6.7 through 6.15
(as if the Non-Program Product was a Product), which royalties shall be payable
on a country-by-country basis until the expiration of the last to expire Valid
Claim within such Array Patents that is a composition of matter claim that
would be infringed by the sale of such Non-Program Product in the country in
which the applicable Non-Program Product is sold (which period shall be the
Royalty Term for such Non-Program Product in such country), (y) if the
manufacture, use or sale of a Non-Program Product would, but for the licenses
granted hereunder to Amgen, infringe a Valid Claim within the Array Patents
(other than Joint Patents) that is not a composition of matter claim, then
Amgen shall pay to Array royalties on Net Sales of such Non-Program Product at [***] of the royalty rates set forth in Section 6.5.1(b) subject
to the provisions of Section 6.5.2 and Sections 6.7 through 6.15 (as if
the Non-Program Product was a Product, except as noted in Section 6.11.3),
which royalties shall be payable on a country-by-country basis until the
expiration of the last to expire Valid Claim within such Array Patents that
would be infringed by the manufacture, use or sale of such Non-Program Product
in the country where the applicable Non-Program Product was sold (which period
shall be the Royalty Term for such Non-Program Product in such country), and (z) if
the sale of  a Non-Program Product would,
but for the licenses granted hereunder to Amgen, infringe a Valid Claim within
the Joint Patents that is a composition of matter claim, then Amgen shall pay
to Array royalties on Net Sales of such Non-Program Product at [***] of the royalty rates set forth in Section 6.5.1(b) subject
to the provisions of Section 6.5.2 and Sections 6.7 through 6.15 (as if
the Non-Program Product was a Product, except as noted in Section 6.11.3),
which royalties shall be payable on a country-by-country basis until the
expiration of the last to expire Valid Claim within such Joint Patents that is
a composition of matter claim that would be infringed by the sale of such
Non-Program Product in the country where the applicable Product was sold (which
period shall be the Royalty Term for such Non-Program Product).  For the sake of clarity, if more than one of
clauses (x), (y) and (z) of this Section 4.5 is applicable to a
Non-Program Product in a particular country, only one royalty shall be payable
with respect to such Non-Program Product in such country (whichever applicable
royalty is the highest).  In no event shall
Amgen be obligated to pay more than one royalty hereunder with 

 

 

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[ * ] = Confidential treatment of
certain confidential information contained in this document, marked by
brackets, is being sought pursuant to Rule 24b-2 of the Securities Exchange Act
of 1934, as amended.

 

 

respect to the same sale of
a Non-Program Product.  Non-Program
Products shall not be deemed Returned Compounds or Abandoned Products, and
Amgen shall retain Non-Program Products upon any termination of this Agreement.

 

ARTICLE V - LICENSE GRANTS

 

5.1       Licenses to Amgen.  Subject to the terms and conditions of this
Agreement, Array agrees to grant and hereby grants to Amgen an exclusive
license, under Array Technology and Array’s interest in Joint Technology, to
make, have made, use, sell, offer for sale, import and otherwise exploit
Compounds and Products in
the Field in the Territory, and to conduct all activities assigned to it under
the Discovery Plan during the Discovery Program Term and under the Global
Development Plan.

 

5.2       Licenses to Array.  Subject to the terms and conditions of this
Agreement, Amgen agrees to grant and hereby grants to Array a non-exclusive
license, under Amgen Technology, Array Technology and Amgen’s interest in Joint
Technology solely to conduct the activities assigned to it under the Discovery
Plan during the Discovery Program Term and under the Global Development Plan
(including the activities described in Section 3.2.1).  Array will not have the right to sublicense
under the foregoing license except with Amgen’s prior written consent;
provided, however, that Array may grant such sublicenses, provided use of the
Third Party for such activities has been agreed to by the JRC in the Discovery
Plan or by Amgen in the Global Development Plan, at any time (i) to Array
Contractors in connection with the Contractors’ performance of subcontracted
activities, and (ii) with respect to manufacturing of Compounds and
Products reasonably necessary for activities assigned to Array.  In addition, subject to the terms and
conditions of this Agreement, Amgen agrees to grant and hereby grants to Array
a non-exclusive license, under Amgen Technology, Array Technology and Amgen’s
interest in Joint Technology solely to conduct the co-promotion
responsibilities assigned to it under the Co-Promotion Plan; provided that,
this license shall only become effective if Array exercises its Co-Promotion
Option and only for so long as it is conducting co-promotion activities
pursuant to a Co-Promotion Plan.

 

5.3       Abandoned Products.  Subject to the provisions set forth below in
this Section 5.3, Amgen agrees to grant and hereby grants to Array (i) an
exclusive, royalty-free license, under Amgen’s interest in the Collaboration
Technology (and, for clarity, Patents claiming Collaboration Technology), to
make, have made, use, sell, offer for sale, import and otherwise exploit in the
Field in the Territory the [***] (“Returned Compounds”), (ii) a non-exclusive, royalty-free license under Amgen’s
interest in the Collaboration Technology (and, for clarity, Patents claiming
Collaboration Technology), to make, have made, use, sell, offer for sale,
import and otherwise exploit Compounds in the Field in the Territory, other
than Returned Compounds and Amgen Retained Compounds, and (iii) an
exclusive, royalty-free license under Amgen Abandoned Product Technology to
make, have made, use, sell, offer for sale, import and otherwise exploit
Abandoned Products in the Field in the Territory; provided in each case that,
such license (x) shall only become effective at such time, if ever, that
this Agreement is terminated by Array pursuant to Section 11.2 for Amgen’s
material 

 

 

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[ * ] = Confidential treatment of
certain confidential information contained in this document, marked by
brackets, is being sought pursuant to Rule 24b-2 of the Securities Exchange Act
of 1934, as amended.

 

 

breach, by Amgen pursuant to
Section 11.3 or by Array pursuant to Section 11.4, (y) shall,
for the avoidance of doubt, exclude Excluded Technology, and (z) with
respect to Abandoned Products that are [***] shall not
include any license under any Amgen Abandoned Product Technology.  Amgen may terminate the license set forth in
this Section 5.3 pursuant to Section 11.4, or pursuant to Section 11.2
(including, for clarity, after termination of this Agreement) in the event that
Array has materially breached in the performance of any of its materials
obligations hereunder as of the effective date of termination of this
Agreement, or materially breaches in the performance of any of its material
obligations that survive such termination of this Agreement, if Array does not
cure such breach within the time period set forth in Section 11.2.  For any rights under the Amgen Abandoned
Product Technology that entails payment obligations from Amgen or any of its
Affiliates to Third Parties, Array will not have a license to such rights
unless and until Array agrees with Amgen in writing to assume such payment
obligations as they relate to Abandoned Products.  Amgen agrees to provide information regarding
such payments (if any) upon Array’s request promptly following any termination
of this Agreement pursuant to Section 11.2 for Amgen’s material breach, by
Amgen pursuant to Section 11.3 or by Array pursuant to Section 11.4.  Array shall have the right to grant to Third
Parties sublicenses under the license granted to Array in this Section 5.3.  Each sublicense shall be subject and
subordinate to the surviving terms and conditions of this Agreement.

 

5.4       Intellectual Property of
Post-Effective Date Affiliates.  In
the event that during the Term of this Agreement any Third Party becomes an
Affiliate of a Party or enters into a transaction or series of transactions
that constitutes a Change of Control of a Party (such a Third Party referred to
as a “Post-Effective Date Affiliate,” and
such Party referred to as the “Affiliating Party”),
then the provisions of Sections 5.4.1, 5.4.2 and 5.4.3, below, shall
apply.

 

5.4.1    IP of Acquirers.  In the event that the Post-Effective Date
Affiliate becomes an Affiliate of the Affiliating Party through a transaction
or series of transactions that constitutes a Change of Control of the
Affiliating Party, then with respect to Patents and Information Controlled by
the Post-Effective Date Affiliate as of the date it becomes an Affiliate of the
Affiliating Party which would (if they were Controlled by the Affiliating Party
prior to such date) fall within the definition of Amgen Abandoned Product
Technology or Amgen Technology (where Amgen is the Affiliating Party) or the
Array Technology (where Array is the Affiliating Party) (“Acquirer IP”),
the following shall apply:  (i) Patents
within the Acquirer IP claiming the composition of matter of any Compounds or
Products, the use of any Compounds or Products, methods of manufacturing being
used in the Program as of the effective date of the Change of Control
transaction, or any reasonable method of manufacturing any Compounds or Products
(other than Excluded Technology) shall be included within the Amgen Abandoned
Product Technology or Amgen Technology (where Amgen is the Affiliating Party)
or the Array Technology (where Array is the Affiliating Party), (ii) Acquirer
IP that the Affiliating Party made available and were used in the Program prior
to the date such Post-Effective Date Affiliate became an Affiliate, or which
are used, or expressly made available for use, in the Program after such date,
shall be included within the Amgen Abandoned Product Technology or Amgen
Technology (where Amgen is the Affiliating Party) or the Array Technology
(where Array is the Affiliating Party), and (iii) except as provided in
this Section 5.4.1, 

 

 

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[ * ] = Confidential treatment of
certain confidential information contained in this document, marked by
brackets, is being sought pursuant to Rule 24b-2 of the Securities Exchange Act
of 1934, as amended.

 

 

Acquirer
IP shall not be included within the Amgen Abandoned Product Technology or Amgen
Technology (where Amgen is the Affiliating Party) or the Array Technology
(where Array is the Affiliating Party) unless otherwise mutually agreed in
writing by the Parties.  Notwithstanding
the foregoing in this Section 5.4.1, Acquirer IP shall not be included
within Licensed Technology or Amgen Abandoned Product Technology if it is part
of a Distracting Program that is Divested pursuant to Section 4.3.1 or
part of a Distracting Program [***] under Section 4.4
(except that Patents that are part of a Distracting Program [***] under Section 4.4 that [***]
shall be [***]). 
Patents or Information invented, discovered or created or obtained by a
Post-Effective Date Affiliate after the date on which it becomes an Affiliate
of the Affiliating Party which fall within the definition of Amgen Abandoned
Product Technology or Amgen Technology (where Amgen is the Affiliating Party)
or the Array Technology (where Array is the Affiliating Party) shall be
included within the Amgen Abandoned Product Technology or Amgen Technology
(where Amgen is the Affiliating Party) or the Array Technology (where Array is
the Affiliating Party), unless otherwise mutually agreed in writing by the
Parties; provided, however, that Patents and Information that are part of a
Distracting Program [***] under Section 4.4
shall [***] (except that Patents that are
part of a Distracting Program [***] under Section 4.4
that [***]).

 

5.4.2    IP of other Post-Effective Date
Affiliates.  In the event that the
Post-Effective Date Affiliate becomes an Affiliate of the Affiliating Party
without Change of Control of the Affiliating Party, then with respect to
Patents and Information Controlled by the Post-Effective Date Affiliate as of
or after the date on which it becomes an Affiliate of the Affiliating Party
which fall within the definition of Amgen Abandoned Product Technology or Amgen
Technology (where Amgen is the Affiliating Party) or the Array Technology
(where Array is the Affiliating Party) shall be included within the Amgen
Abandoned Product Technology or Amgen Technology (where Amgen is the
Affiliating Party) or the Array Technology (where Array is the Affiliating
Party), unless otherwise mutually agreed in writing by the Parties or unless
part of a Distracting Program that is Divested pursuant to Section 4.3.1.

 

5.4.3    Existing IP Licenses.  Notwithstanding Sections 5.4.1 and
5.4.2, above, Patents and Information that are licensed by a Post-Effective
Date Affiliate to the other Party or its Affiliate prior to the date on which
such Post-Effective Date Affiliate becomes an Affiliate of the Affiliating
Party (“Previously Licensed IP”) shall remain
subject to the applicable licensing agreement between the Post-Effective Date
Affiliate and the other Party or its Affiliate in accordance with its terms,
such Previously Licensed IP shall not be included within the Amgen Abandoned
Product Technology or Amgen Technology (where Amgen is the Affiliating Party)
or the Array Technology (where Array is the Affiliating Party), unless
otherwise mutually agreed in writing by the Parties.

 

5.5       Sublicensing.  Amgen shall have the right to grant to Third
Parties sublicenses under the license granted to Amgen in Section 5.1;
provided however, that prior to obtaining Marketing Approval of the first
Product in the U.S. or Europe, Amgen will not sublicense under such license for
the U.S. or Europe to a Third Party without retaining a meaningful
participatory role in the 

 

 

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[ * ] = Confidential treatment of
certain confidential information contained in this document, marked by
brackets, is being sought pursuant to Rule 24b-2 of the Securities Exchange Act
of 1934, as amended.

 

 

development and
commercialization of Products in and for the sublicensed territory and a
meaningful financial interest in the Program without Array’s prior written
consent, which will not be unreasonably withheld, conditioned or delayed.  Notwithstanding the foregoing, Amgen will not
sublicense under the license granted to Amgen in Section 5.1 prior to the
second anniversary of the Effective Date without Array’s prior written consent,
except that Amgen may grant such sublicenses at any time (i) to Amgen
Contractors in connection with the Contractors’ performance of subcontracted
activities, and (ii) with respect to manufacturing and sales of Compounds
and Products.  Each sublicense shall be
subject and subordinate to the terms and conditions of this Agreement.

 

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

 

5.7       Section 365(n) of the
Bankruptcy Code.  All rights and licenses granted under or pursuant to
any section of this Agreement are, and shall otherwise be deemed to be, for
purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of
rights to “intellectual property” as defined under Section 101(35A) of the
U.S. Bankruptcy Code to the extent permitted thereunder. The Parties shall
retain and may fully exercise all of their respective rights and elections
under the U.S. Bankruptcy Code. Upon the bankruptcy of any Party, the
non-bankrupt Parties shall further be entitled to a complete duplicate of (or complete
access to, as appropriate) any such intellectual property, and such, if not
already in its possession, shall be promptly delivered to the non-bankrupt
Parties, unless the bankrupt Party elects to continue, and continues, to
perform all of its obligations under this Agreement.

 

ARTICLE VI - PAYMENTS

 

6.1       Initial Payment.  In partial consideration of the rights
granted to Amgen hereunder, Array’s development efforts prior to the Effective
Date and the performance of its obligations during the Discovery Program, Amgen
shall pay to Array an initial fee of Sixty Million U.S. Dollars (U.S.
$60,000,000) on or before January 7, 2010, which amount shall be
non-refundable and non-creditable against any other amounts due Array under
this Agreement.

 

6.2       Research Payments - Funding.  Subject to the limitations set forth below,
and the other terms and conditions of this Agreement, during the Discovery
Program Term Amgen shall reimburse costs incurred by Array in performing the
Discovery Program in accordance with the 

 

 

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[ * ] = Confidential treatment of
certain confidential information contained in this document, marked by
brackets, is being sought pursuant to Rule 24b-2 of the Securities Exchange Act
of 1934, as amended.

 

 

Discovery Plan.  Amgen shall fund FTEs performing under the
Discovery Plan beginning as of January 1, 2010.

 

6.2.1    FTEs. 
An FTE rate [***] per FTE
shall be used for purposes of determining the costs incurred by Array with
respect to Array personnel performing work on the Discovery Program.  The FTE rate includes all salary, employee
benefits, incidental materials and other expenses including support staff and
overhead for or associated with an FTE.

 

6.2.2    Advance Payment of FTE Funding and
Budgeted Amounts; FTE Reports.  Array
shall invoice Amgen not earlier than [***] before
the beginning of each calendar quarter during the Discovery Program Term for
one fourth of the amount to be incurred for Array FTEs under the Discovery Plan
for such calendar year.  Payment of each
invoice shall be due [***] days
following Amgen’s receipt of an invoice indicating the appropriate amount.  However, for the timing to submit and pay
such an invoice for the first calendar quarter during the Discovery Program
Term, Array shall submit such invoice promptly after the Effective Date and
Amgen will use reasonable efforts to pay such invoice promptly, and in no event
later than [***] following receipt of such
invoice.  Unless agreed to by Amgen in
writing such invoice shall not exceed one fourth of the amount budgeted to be
incurred for Array FTEs under the Discovery Plan for such calendar year, and in
no event shall the annual amount for the corresponding calendar year increase
beyond amount budgeted for Array FTEs allocated for such year pursuant to the
Discovery Plan.  Amgen shall only be
required to reimburse Array for the lesser of (i) one fourth of the amount
budgeted to be incurred for Array FTEs under the Discovery Plan for such
calendar year, and (ii) the amount corresponding to the number of FTEs
that Array actually dedicates to the performance of the Discovery Program in
accordance with the Discovery Plan in such calendar quarter; provided that, if
the number of Array FTEs actually dedicated to performance of the Discovery
Program in accordance with the Discovery Plan is less than the FTEs budgeted to
be used by Array under the Discovery Plan, then Array may carry forward a
credit for such unused budgeted FTE(s) (but such credit may only be
applied during the remaining calendar quarters of such calendar year) except
that in no event shall the annual amount for such calendar year increase beyond
the number of Array FTEs allocated for such year pursuant to the Discovery
Plan.  Array shall deliver written reports
(certified by an authorized representative of Array) to Amgen on a quarterly
basis (within [***] after the end of each
calendar quarter) and annually (within [***] after the
end of the corresponding calendar year) setting forth [***].  In the event that Amgen has overpaid Array,
in the aggregate, for FTEs during a calendar year, then Array shall refund the
amount of such overpayment to Amgen within [***] of the
end of such calendar year (or at its option, Amgen may deduct the amount of
such overpayment from any payments due or payable by Amgen to Array).  [***].

 

6.2.3    Reimbursement of External Costs.  Amgen shall not be obligated to reimburse
Array for any external (i.e., non-FTE) costs unless the JRC specifically
requests, as confirmed by Amgen in writing or as expressly stated in the
written Discovery Plan approved by the JRC. 
If Amgen does so agree to reimburse Array for certain external costs,
then Amgen shall promptly (but in no event later than [***]
after receipt of an invoice from Array) reimburse Array for such 

 

 

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[ * ] = Confidential treatment of
certain confidential information contained in this document, marked by
brackets, is being sought pursuant to Rule 24b-2 of the Securities Exchange Act
of 1934, as amended.

 

 

reasonable out-of-pocket
external costs incurred in conducting such activities authorized hereunder
within the established budget for such activities.

 

6.3       Milestones.

 

6.3.1    Milestones.  Except as otherwise provided in, and subject
to, the provisions set forth in this Section 6.3, during the Term Amgen
shall pay to Array the amounts set forth in the tables below upon achievement,
by or under the authority of Amgen or any Sublicensee, of each of the
corresponding events set forth below (each, a “Milestone”),
regardless of
whether the  development,
promotion, or marketing of the applicable Product is discontinued at any time
after the  achievement
of such Milestone:

 

 

 - 30 -  

 

[ * ] = Confidential treatment of
certain confidential information contained in this document, marked by
brackets, is being sought pursuant to Rule 24b-2 of the Securities Exchange Act
of 1934, as amended.

 

 

(a)        The Milestones set forth in the table
below are hereinafter referred to as the “Development Milestones”:

 

	
  

  Development Milestones

  	
  

  Development Milestone Payments 

  (cash payment in U.S. dollars)

  
	
  1.  [***]

   

  	
  US$ [***]

  
	
  2.  [***]

   

  	
  US$ [***]

  
	
  3.  [***]

   

  	
  US$ [***]

  
	
  4.  [***]

   

  	
  US$ [***]

  
	
  5.  [***]

   

  	
  US$ [***]

  
	
  6.  [***]

   

  	
  US$ [***]

  
	
  7.  [***]

   

  	
  US$ [***]

  

 

(b)        The Milestones set forth in the table
below are hereinafter referred to as the “Commercial Milestones”:

 

	
  

  Commercial Milestones

   

  	
  

  Commercial Milestone Payments

  (cash payment in U.S. dollars)

  
	
  Achieving [***] for a
  Product during the Royalty Term

  	
  US$ [***]

  
	
  Achieving [***] for a
  Product during the Royalty Term

  	
  US$ [***]

  
	
  Achieving [***] for a
  Product during the Royalty Term

   

  	
  US$ [***]

  

 

6.3.2    Products Not Containing ARRY-403.  With respect to a Product that does not
contain ARRY-403, the foregoing Development Milestone payments (other than the
Development 

 

 

 - 31 - 

 

[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

Milestone payment [***]) and Commercial Milestone payments shall be [***] of the amount set forth in the applicable table set
out above in Section 6.3.1(a) or 6.3.1(b)).

 

6.3.3    Certain Terms.  For purposes of the Milestones due under this
Section 6.3 (and, as applicable for purposes of Section 6.5):

 

(a)  No
Milestone payment set forth in the tables set out above in Section 6.3.1
shall be due more than once for a given Product.  Except with respect to Commercial Milestones
which shall be payable for each Product (but only one-time for each such
Product upon the first occurrence of each of the Commercial Milestones), no
more than [***] shall be due hereunder for
achievement of a given Milestone, regardless of whether such Milestone is
achieved with respect to more than [***], except
that, with respect to the Development Milestone payment for the [***], no Milestone payment shall be due with respect to [***] and such Milestone payment shall be payable not more
than [***] in the aggregate.

 

(b)  All dosage
forms, and all formulations, containing the same active ingredient shall be
deemed a single Product; and Products having one or more different active
ingredients shall be deemed separate Products.

 

(c)  As used in
this Section 6.3, “[***]” of a [***] shall mean [***].

 

(d)  Subject to
Section 6.3.3(a) and Section 6.3.4, if a subsequent Milestone is
achieved with respect to a particular Product before a prior Milestone with
respect to such same Product (“prior” referring to a lower number in the
milestone table above, e.g., Milestone 2 being “prior” to
Milestone 3), then all such prior Milestones shall be deemed achieved upon
achievement of the subsequent Milestone; provided, however, that achievement of
Milestone 6 or 7 shall not result in Milestone 5 or 6, as applicable, becoming
payable by reason of this Section 6.3.3(d).  Each of Milestone 5, 6 and 7 shall require
its own actual achievement to cause such corresponding Milestone payment to
become payable.

 

(e)  “First Commercial Sale” shall
mean, with respect to a Product in a particular country, the first bona fide
commercial sale of such Product following Marketing Approval in such country by
or under authority of Amgen or its Sublicensees.  It is understood
that the [***] shall be [***]
upon the First Commercial Sale of a Product in any country that is a [***] either (i) as of the Effective Date, or (ii) as
of the date of the First Commercial Sale in such country.

 

6.3.4    Credits.  Should all development of a particular
Product discontinue prior to First Commercial Sale of such Product in the first
country, for any reason, and be replaced by an alternative Product, then, for
the next Product to achieve a Milestone for which a corresponding Milestone
payment was made for the discontinued Product, no Milestone payment shall be
due with respect to such alternative Product with respect to such Milestone(s).

 

 

 - 32 -  

 

[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

6.4       Milestone Payment Timing.  Within [***] of the
occurrence of a Milestone event listed above for which Amgen is required to
make a payment hereunder, Amgen shall notify Array of such occurrence (or, in
the event that a Milestone is achieved by Array in the course of activities
assigned to Array under this Agreement or the Global Discovery Plan or by the
written agreement of the Parties, Array shall promptly notify Amgen of such
occurrence), and Array will invoice Amgen for the related Milestone
payment.  Such Milestone payment shall be
due and payable by Amgen within [***] after
receipt of the applicable invoice from Array. 
Notwithstanding anything herein to the contrary, Amgen shall only be
obligated to make each of the foregoing Milestone payments [***]
for a Product that contains ARRY-403 (except for the Commercial Milestones) and
[***] with respect to all Products
(including ARRY-403), for the first [***] (except
to the extent otherwise provided in Section 6.3.4 with respect to an alternative
Product, if applicable) of the applicable Milestone with respect to the
Products, regardless of how many times the applicable Milestone event may be
subsequently achieved by Products (except for the Development Milestone payment
for the [***], which shall only be [***]).

 

6.5       Earned Royalties For Products.  During the Term, Amgen shall pay to Array, on
a quarterly basis, a royalty on the Net Sales of each Product by Amgen, its
Affiliates or Sublicensees made during the Royalty Term.  Such royalty shall be paid quarterly, at the
applicable rates set forth in Section 6.5.1 below, based on the total
annual Net Sales made during the Royalty Term for each calendar year,  on a Product-by-Product basis, subject to Section 6.5.2(a).

 

6.5.1    General.  Subject to the other provisions of this Section 6.5
and to Section 6.11, the applicable royalty rate for incremental Net Sales
of a particular Product shall be as follows:

 

(a)  For a
Product that incorporates ARRY-403:

 

	
  ARRY-403 Royalty Rate Table

  
	
   

  Net Sales in a 

  Given Calendar Year

  	
   

  ARRY-403

  Royalty Rate

  
	
  Less than US$[***]  ]

  	
  [***]%

  
	
  From US$[***] to US$[***]

  	
  [***]%

  
	
  More than US$[***]

  	
  [***]%

  

 

(b)  For a
Product that incorporates a Compound but does not incorporate ARRY-403:  [***] of the
applicable royalty rate in the ARRY-403 Royalty Rate Table (or as such royalty
rate may be reduced pursuant to Section 6.5.1(c)).

 

 

 - 33 -  

 

[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

(c)  Notwithstanding
anything contained herein, the royalty rates set forth in the ARRY-403 Royalty
Table shall be [***] for Net Sales of a Product
during the Royalty Term in countries of the Territory where there is no Valid
Claim within the Array Patents or Patents within the Collaboration Technology
claiming the manufacture, use or sale of such Product in such country where
such Product was sold.

 

6.5.2    Other.

 

(a)  For
purposes of determining the royalty rate(s) pursuant to Section 6.5
that is or are applicable hereunder on the Net Sales of a Product during the
Royalty Term and for [***], all Net
Sales of such Product in countries during the effective period of an applicable
Royalty Term shall be aggregated on a calendar year basis and the applicable
royalty rate shall be determined separately for each separate Product.

 

(b)  Amgen
shall not attempt to reduce compensation rightly due to Array hereunder by
shifting compensation otherwise payable to Amgen from a Third Party with
respect to a Product to another product or service for which no royalties are
payable by it hereunder.

 

(c)  Any
disposal of a Product at no charge for, or use of a Product without charge in,
clinical or preclinical trials, given as free samples, or distributed at no
charge to patients unable to purchase the same shall not be included in Net
Sales.

 

6.6       Term For Royalty Payment.  Royalties payable under Section 6.5
shall be paid on a country-by-country and Product-by-Product basis from the
date of the First Commercial Sale of the applicable Product until the later of:

 

(i)   the expiration of the last to expire Valid
Claim within the Array Patents and Collaboration Technology  claiming
the manufacture, use or sale of such Product in the country where the
applicable Product was sold; or

 

(ii)  [***] following
the date of the First Commercial Sale of such Product in such country (the “Royalty Term”).

 

6.7       Foreign Exchange; Manner and Place of
Payment.  With
respect to Net Sales invoiced in United States dollars, the Net Sales hereunder
shall be reported in United States dollars. 
With respect to Net Sales invoiced in a currency other than United
States dollars, the Net Sales invoiced shall be converted and reported into the
United States dollar equivalent using a rate of exchange which corresponds to
the rate used by Amgen (or its Sublicensees, as applicable), for the respective
reporting period consistently with its other products, to record such Net Sales
in its books and records that are maintained in accordance with U.S. generally
accepted accounting principles.  All
payments hereunder will be paid in United States dollars, except as set forth
in Section 6.13.  Payment of all sums
due by Amgen hereunder shall be made by check, wire transfer, or electronic 

 

 

 - 34 -  

 

[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is being
sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

funds transfer (EFT), at
Amgen’s choice, using account information provided by Array, which Array may
update in writing from time to time. 
Array shall supply Amgen with a completed EFT form and a completed
supplier form within ten (10) days of the Effective Date.

 

6.8       Taxes.  In
the event that Law requires Amgen to withhold taxes with respect to any payment
to be made by Amgen pursuant to this Agreement, Amgen shall withhold such taxes
from the amount due and furnish Array with proof of payment of such taxes [***] of such payment. 
Amgen shall provide reasonable assistance to Array in its efforts to
claim an exemption of such taxes, obtain a refund of such taxes withheld, or
obtain a credit with respect to such taxes paid.  In order for Array to secure an exemption
from, or a reduction in, any withholding of taxes, Array shall provide to Amgen
such forms as are reasonably required for each type of payment to be made pursuant
to the Agreement for which an exemption from, or a reduction in, any
withholding of taxes is sought.  In the
event that a required form previously furnished to Amgen expires, is incorrect,
or is inapplicable to the type of payment to be made, due to a change in
circumstances or otherwise, Array shall furnish new forms to Amgen as
reasonably required in order to secure an exemption from, or a reduction in,
any withholding of taxes with respect to such payment.  All payments due to Array from Amgen pursuant
to this Agreement shall be paid exclusive of any applicable value-added tax (“VAT”) (which, if applicable, shall be payable by Amgen upon
receipt of a valid VAT invoice).  If
Array is required to report any such tax, Amgen shall promptly provide Array
with applicable receipts and other documentation necessary or appropriate for
such report.  In the event that the
governing tax authority retroactively determines that a payment made by Amgen
to Array pursuant to this Agreement should have been subject to withholding (or
to additional withholding) for taxes, and Amgen remits such withholding tax to
the tax authority, Amgen will have the right to offset such amount (but not
interest and penalties that may be imposed thereon) against future payment
obligations of Amgen under this Agreement; provided however, that if no further
payments or insufficient further payments are available against which offset
may be pursued, Amgen may pursue reimbursement by any remedy (at law or in
equity) available to it.

 

6.9       Royalty Payments and Reports.  Royalty payments under this Agreement with
respect to Net Sales of all Products in a given calendar quarter shall be made
to Array or its designee quarterly within [***] following
the applicable calendar quarter.  Each
royalty payment shall be accompanied by a report detailing, on a
Product-by-Product and country-by-country basis, for all Net Sales of Products
within the applicable Royalty Term by or under authority of Amgen its
Sublicenses during the relevant three (3) month period, including: [***].

 

6.10     Books and Records; Accounting and Audits.  Each Party shall maintain complete and
accurate books and records, in accordance with U.S. generally accepted
accounting practices, which are relevant to, as applicable, costs or expenses
to be reimbursed by the other Party, or payments to made to the other Party,
under this Agreement, which books and records shall be sufficient in detail to
verify all payment amounts due to a Party hereunder (including, with respect to
Array, books and records of the number of hours worked in the Discovery Program
by Array).  Each Party (the “Auditing Party”) shall have the right, at its own expense
and not more than once in any calendar 

 

 

 - 35 -  

 

[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

year during the Term of this
Agreement, to have an independent, certified public accountant, selected by the
Auditing Party, and under an obligation of confidence, audit the books and
records of the other Party (the “Audited Party”)
in the location(s) where such books and records are maintained upon
reasonable notice (which shall be no less than fifteen (15) business days prior
written notice) and during regular business hours, and for the sole purpose of
verifying the basis and accuracy of payments required and made under this
Agreement.  The report and communication
of such accountant with respect to such an audit shall be limited to a
certificate stating whether any, as applicable, report made or reimbursement or
other payment submitted during such period is accurate or inaccurate and, if a
discrepancy is identified, shall also indicate the amount and if applicable,
with respect to any report, the nature, of any discrepancy, and the correct
information (with respect to the applicable period).  Such accountant shall provide Array and Amgen
with a copy of each such report simultaneously. 
Should the audit lead to the discovery of a discrepancy: (i) to the
Auditing Party’s detriment, the Audited Party shall pay to the Auditing Party
the amount of the discrepancy within thirty (30) days of the Audited Party’s receipt
of the report; or (ii) to the Audited Party’s detriment, the Audited Party
may, as applicable, credit the amount of the discrepancy against future
payments payable to the Auditing Party under this Agreement, and if there are
no such payments payable, then the Auditing Party shall pay to the Audited
Party the amount of the discrepancy within thirty (30) days of the Auditing
Party’s receipt of the report. 
Additionally, in the event that the discrepancy is to the Auditing Party’s
detriment and is [***] of the amount due for such
audited period, then the Audited Party shall pay or reimburse the reasonable
cost charged by such accountant for such audit. 
Once the Auditing Party has conducted an audit permitted by this Section 6.10
in respect of any period, it may not re-inspect the Audited Party’s books and
records in respect of such period, [***].  For clarity, however, if a discrepancy is
identified by the accountant during the course of an audit and the Parties do
not agree upon a resolution of such discrepancy, then [***]
to the extent reasonably relevant to resolving such discrepancy.  Notwithstanding anything herein to the
contrary, upon the expiration of [***] following
the end of any calendar year, the right to audit, the books and records for
such calendar year shall expire and such Party shall be released from any
liability or accountability with respect to payments or FTE work performed as
reflected in such books of such Party for such calendar year (including, for
clarity, with respect to the calculation of royalties payable with respect to
each such calendar year).  The Parties
shall no longer be required to retain such books and records for any calendar
year after the expiration of the [***] calendar
year following such calendar year.

 

6.11     Credit Against Payments for Third Party
License.

 

6.11.1  Right of Offset; Amount.  If Amgen or its Sublicensee believes that it
is reasonably necessary to obtain a license or similar rights to intellectual
property rights of a Third Party or Third Parties for Amgen or its Sublicensee
to research, develop, make, have made, use, offer for sale, sell, have sold,
import or otherwise exploit a Compound or Product (“Third Party
License(s)”), then Amgen shall have the right to credit [***] of any compensation (including up-front payments,
milestones and royalties) actually paid by Amgen or its Sublicensees with
respect to such Compound or Product under any such Third Party License(s) against
royalties otherwise 

 

 

 - 36 -  

 

[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

payable to Array hereunder; provided,
however, that the application of such credits shall not reduce the royalties
otherwise due to Array for any such Product in any given calendar year during
the applicable Royalty Term by more than the Creditable Percentage;  further  provided,
however, that unused credits in any period may be carried forward
against royalties due in future periods. 
As used herein, the “Creditable Percentage”
shall be [***] with respect to payments for
intellectual property licensed from Third Parties that [***],
and [***] with respect to all other
payments under Third Party Licenses (including [***]).  Such credit against royalties payable
hereunder shall be allocated as follows: (a) [***] of
royalties payable under a Third Party License with respect a Product shall be
creditable against royalties payable hereunder for such Product; and (b) [***] of the portion of any up-front payments, milestones or
other amounts payable under a Third Party License that is reasonably allocable
to the exploitation of Products (as opposed to the exploitation of non-Products
or other use of intellectual property that is the subject of the applicable
Third Party License in a manner unrelated to the Products) shall be creditable
against royalties payable hereunder.  Notwithstanding
anything herein to the contrary, Amgen shall further have the right, solely
with respect to credits under this Section 6.11.1 that arise from
compensation paid to one or more Third Parties under any Third Party License(s) for
rights under any Patents in the United States that [***],
to reduce the royalties otherwise payable to Array hereunder with respect to
Net Sales in the United States of Products that [***]
by [***].

 

6.11.2  Generic Product Reduction.  Notwithstanding the foregoing provisions of Section 6.5,
if, in a particular calendar year, one or more Third Parties is or are selling
Generic Product in the Field in a country in the Territory during the Royalty
Term and the sales of all such Generic Products in the Field in such country
represent [***] sold in the Field during the
Royalty Term in such calendar year in such country, then in such case the
royalty rates attributable to the Net Sales of such Product in the Field in
such country during the Royalty Term shall thereafter [***]
of the amount otherwise payable under Section 6.5.  For purposes of the foregoing, “Generic Product” means any Product that is not developed,
the subject of regulatory approval obtained, manufactured, offered for sale,
sold or used, by or under the authority of Amgen or its Sublicensee but that obtains
Marketing Approval through an abbreviated regulatory pathway for generic
products.

 

6.11.3  Aggregate Floor.  Except as expressly provided in the last
sentence of Section 6.11.1, in no event shall the credits and reductions
set forth in this Section 6.11 plus any reduction to royalty rate pursuant
to Section 6.5.1(c) reduce the royalties paid to Array hereunder with
respect to a particular Product to [***] payable
for such Product under Section 6.5.1(a) or (b), as applicable (or
with respect to royalties payable under Section 6.16 with respect to Amgen
Retained Compounds, [***] payable
for Amgen Retained Compounds under Section 6.16; or with respect to
royalties payable under clause (y) or (z) of Section 4.5 with
respect to Non-Program Products, [***] payable
for such Non-Program Products under clause (y) or (z) of Section 4.5).

 

 

 - 37 -  

 

[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is being
sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

6.12     Invoices.  To the extent an invoice is required to be
submitted by Array to Amgen hereunder or at Amgen’s request, such invoice shall
be addressed to:

 

[***]

 

Invoices not submitted to
the foregoing address may be subject to delay or return.  In addition, each invoice should reference an
applicable reference number to be provided by Amgen to Array promptly after the
Effective Date.  Amgen may change the
address and contact set out above upon written notice to Array.

 

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

 

6.14     Confidentiality.  Array shall treat all financial information
subject to review under this Article VI of this Agreement (including all
royalty reports) as Amgen’s Confidential Information.

 

6.15     Change
of Reporting Periods.  In the event that
Amgen elects in the future to change its accounting and public financial
reporting practices from calendar quarters and calendar years to fiscal
quarters and years or vice versa, Amgen will provide written notice of such
election to Array and thereafter the payment, reporting and other obligations
related to calendar quarters and calendar years under Article VI of this
Agreement (and as may be applicable elsewhere in this Agreement) shall be
deemed satisfied by compliance therewith in accordance with the new reporting
periods (fiscal reporting periods or calendar reporting periods, as the case
may be) instead of the previously utilized reporting periods.

 

6.16     Residual
Royalties.  In the event of a
termination of this Agreement under Section 11.2 by reason of a breach by
Amgen, or any termination of this Agreement under Section 11.3 by Amgen,
or any termination of this Agreement under Section 11.4 by Array, [***] that, as of the effective date of such termination, [***] pursuant and subject to the provisions of this Article VI,
[***] under this Article VI, [***].

 

ARTICLE
VII - COMMERCIALIZATION

 

7.1       Commercialization Rights.  Subject to the provisions of Section 7.2
below, Amgen shall have all rights and responsibility for commercialization of
Products.

 

7.2       Co-Promotion Option of Array.  Array will have an option (the “Co-Promotion Option”) to co-promote Products in the United
States with Amgen according to the terms and conditions set forth in this Section 7.2.  Array shall notify Amgen of its intent to
exercise its Co-Promotion Option with respect to a particular Product in a
particular indication at any time prior 

 

 

 - 38 -  

 

[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

to the date that is [***] after the date on which Array receives written notice
from Amgen, [***], of the [***]
of such Product (provided that if such [***] of such
Product for the indication that Array elected to exercise its Co-Promotion
Option is discontinued or such Product otherwise does not receive Marketing
Approval in the United States for such indication, then such Product shall not
be a Co-Promoted Product and the Co-Promotion Option shall no longer be deemed
to have been exercised and Array may exercise its Co-Promotion Option again in
accordance with the procedures set forth above in this Section) (each such
Product for which Array exercises the Co-Promotion Option being referred to as
a “Co-Promoted Product”).  Once Array elects to exercise its first
Co-Promotion Option, then subsequent Co-Promotion Options shall be limited to
the co-promotion of Products in indications that have the same target
population of physicians, nurses, pharmacists and other individuals who provide
health care services to patients (the “Target Audience”)
that are to be detailed as that of the first Co-Promoted Product (and such
Co-Promotion Option shall only be exercisable for utilizing the same sales
representatives then being utilized by Array for the first Co-Promoted
Product).  As used in this Section 7.2,
“co-promote” shall mean to promote a
Product through Amgen and Array’s respective sales forces under a single
trademark; “details” shall mean face-to-face
sales presentations made to Target Audience, in their capacity as such.  Amgen shall not grant any sublicense to sell
any Product in the United States unless the applicable Sublicensee agrees in
writing to be subject to Array’s Co-Promotion Option and associated rights of
Array set forth in this Agreement to the same extent as, and on the same terms
and conditions as, Amgen is obligated under this Agreement.

 

7.2.1    Scope of Co-Promotion.  At such time as Array exercises its
Co-Promotion Option with respect to a Co-Promoted Product, it shall notify
Amgen of the maximum percentage of the total details that Array intends to
perform annually for such Co-Promoted Product (such percentage being referred
to as the “Co-Promotion Percentage” for such
Co-Promoted Product) in the United States. 
This Co-Promotion Percentage shall not be less than [***]
and not greater than [***] of the
total details in the United States to be conducted for such Co-Promoted Product
in a calendar year of such Co-Promoted Product, and shall in no event exceed [***], unless otherwise agreed by the Parties (provided
that, the Parties intend that the Co-Promotion Percentage for any Co-Promoted
Product that is subsequent to Array detailing a first Co-Promoted Product shall
be discussed between the Parties in an effort to minimize disruption to the
co-promotion activities with respect to the first Co-Promoted Product).  Array shall have the right to phase-in such
detailing efforts over the initial three (3) years of co-promoting a
Co-Promoted Product pursuant to an agreed upon plan therefor; provided that,
Array must commit to provide at least [***] of its
maximum designated commitment in the first, and [***]
of such commitment in the second, calendar year of co-promoting such
Co-Promoted Product.

 

7.2.2    Commercialization
Committee.

 

(a)  Establishment.  Within thirty (30) days after the first
filing of an MAA in the United States for the first Co-Promoted Product, Array
and Amgen shall establish a Joint Commercialization Committee (“JCC”).  The JCC shall
have as its sole purpose the sharing of 

 

 

 - 39 -  

 

[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

information with respect to each Co-Promoted Product in the United
States and the co-promotion activities of the Parties with respect to each
Co-Promoted Product.  The JCC shall not
be a decision making body.

 

(b)  Meetings;
Information.  The JCC shall meet at
least quarterly.  Amgen shall notify
Array at least two weeks in advance of the date of each JCC meeting, and Array
shall have the opportunity to send at least one Array employee to each such
meeting, who shall be designated as a member of the JCC.  Either Party may replace its respective JCC
representative(s) at any time with prior written notice to the other
Party.

 

7.2.3    Co-Promotion
Plan.  Amgen shall prepare an
operating plan for co-promotion of each Co-Promoted Product in the United
States for the applicable indication (each, a “Co-Promotion
Plan”), which shall be reviewed by the JCC reasonably prior to the
anticipated first commercial sale of the applicable Co-Promoted Product in the
United States.  Each Co-Promotion Plan
shall set out in reasonable detail:  (i) overall
strategies with respect to promoting and marketing the applicable Co-Promoted Product
in the United States for the applicable indication; (ii) the activities to
be conducted and the responsibilities of each Party in connection with the
co-promotion of the applicable Co-Promoted Product; and (iii) a reasonable
allocation between Amgen and Array of activities under such Co-Promotion Plan,
including a reasonable allocation of promotion responsibilities with respect to
key members of the Target Audience in major metropolitan areas.

 

7.2.4    Changes
to the Co-Promotion Plan.  Amgen
shall promptly provide the JCC with any material changes to the Co-Promotion
Plan for a Co-Promoted Product.

 

7.2.5    Co-Promotion
Coordination.  The JCC shall be
responsible for coordinating the co-promotion activities under this Section 7.2
with respect to each Co-Promoted Product. 
Amgen shall develop the strategies and programs to carry-out
co-promotion activities, including the assignment of co-promotion activities
and details in accordance with the Co-Promotion Plan. After exercise of the
Co-Promotion Option, upon the request of either Party, the Parties will in good
faith enter into an agreement specifying in more detail how the Parties will
carry out the co-promotion activities.

 

7.2.6    Sales
Representatives.

 

(a)  Qualifications.  Array shall employ professional and trained
sales representatives to co-promote each Co-Promoted Product, and such sales
representatives shall meet Amgen’s standards for its sales representatives for
the Product and such competence and professionalism as is common in the
pharmaceutical industry.  With the prior written consent of
Amgen (which shall not be withheld or delayed unreasonably), Array may utilize
a Third Party contract sales organization (that is not an affiliate of a
pharmaceutical or biotechnology company) to supply sales representatives for
Array to perform its co-promotion obligations, provided that the 

 

 

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[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

number of contract sales representatives so used by Array shall not
exceed [***] of Array’s sales representatives
detailing the applicable Product in the first, and [***]
of Array’s sales representatives detailing the applicable Product in the
second, calendar year of co-promoting such Co-Promoted Product; provided
further, that Amgen has the right to approve the sales representatives
performing details for a Co-Promoted Product hereunder and to cause the removal
from such detailing activities of such Sales Representatives.  Array will not have the right to use any
person other than employees of Array to co-promote the Co-Promoted Product
after the second calendar year of Co-Promoting the Co-Promoted Product.

 

(b)  Training.  Amgen shall provide, at its expense, the same
sales training on each Co-Promoted Product for Array sales representatives who
will be promoting such Co-Promoted Product as the training on the Co-Promoted
Product Amgen provides to its own sales representatives who promote such
Co-Promoted Product in the United States. 
Array shall be responsible for the travel and housing costs of its sales
representatives for such training with no reimbursement of such costs by Amgen.

 

(c)  Promotional
Materials.  With respect to the
co-promotion of each Co-Promoted Product, Amgen will provide to the Array sales
representatives, free of charge, the same promotional, advertising, educational
and communication materials as are provided to its own sales representatives
who promote such Co-Promoted Product in the United States for the applicable
indication, and Array sales representatives will utilize only the promotional,
advertising, educational and communication materials so provided to them by
Amgen, and will not utilize any other promotional, advertising, educational or
communication materials or other materials relating to or referring to the
Co-Promoted Product.  Array sales
representatives will conduct only those promotional and other activities
relating to the Co-Promoted Product that have been approved in advance in
accordance with the Co-Promotion Plan. 
Array sales representatives shall not modify, change or alter the promotional,
advertising, educational and communication materials provided by Amgen in any
way whatsoever, without the express prior written consent of Amgen.  Array sales representatives shall use such
materials solely for the purpose of performing their obligations under this
Agreement.  Array shall ensure that its
sales representatives perform in compliance with all Law.

 

(d)  Timing.  Array and Amgen shall cooperate to have the
Array sales representatives hired and trained prior to the commencement of
their co-promotion activities with respect to a particular Co-Promoted Product.

 

7.2.7    Reimbursement.  Amgen shall compensate Array for its
co-promotion activities at an agreed, fee-per-detail intended to approximate
the amount that would be charged by a qualified commercial sales organization
for similar services (“Co-Promotion Costs”).  Upon exercise of the Co-Promotion Option, the
Parties shall agree upon the specific compensation terms of the co-promotion
arrangement, which shall be consistent with terms customary in contract sales
organization agreements.  Agreement on
such compensation terms shall not be a 

 

 

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[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

pre-condition to Array’s right to exercise the Co-Promotion Option or
to co-promote the applicable Product. 
Notwithstanding the foregoing, the Parties agree that Amgen will not participate
in start-up costs to build Array’s sales force. 
Following each calendar quarter in which Co-Promotion Costs are
incurred, Array shall provide Amgen an invoice for Array’s Co-Promotion Costs
following such calendar quarter, and Amgen shall reimburse such amounts within
forty-five (45) days of receipt of such invoice.

 

7.2.8    Array
Right to Terminate.  Array shall have
the right to terminate its co-promotion of any Co-Promoted Product, and its
obligations under this Article VII with respect to such Co-Promoted
Product, upon [***] prior notice to Amgen. Array
shall not have the right to sublicense or otherwise transfer its rights under
this Section 7.2.

 

7.2.9    Array
is not a Distributor.  It is
recognized by the Parties that Array, under its Co-Promotion Option, may
receive orders from Third Parties for the Co-Promoted Product.  In such event, Array will transmit said
orders to Amgen and Amgen shall book all sales resulting from such orders.

 

7.2.10  Audits. 
Amgen shall have the right to audit the detailing performance of Array’s sales
representatives with respect to Co-Promoted Products, including details
performed, detail position, and other matters.  Array will cooperate with
Amgen in the performance of any such audits.  Amgen may use a Third Party
vendor to perform such audits.

 

7.2.11  Other
Products.  Array’s sales
representatives that are co-promoting a Co-Promoted Product shall not promote
any other product that [***], without
Amgen’s prior written consent, which shall not be unreasonably withheld,
conditioned or delayed, and Array shall notify Amgen in advance of any other
products being promoted by Array sales representatives that are co-promoting a
Co-Promoted Product and discuss with Amgen any questions or concerns that Amgen
may have with respect to the promotion of such product by the same sales
representatives who are promoting a Co-Promoted Product and reasonably
cooperate to mitigate any concerns that Amgen may have.

 

ARTICLE
VIII - OWNERSHIP OF INTELLECTUAL PROPERTY AND PATENT RIGHTS

 

8.1       Ownership of Inventions; Disclosure.  Each Party and its Affiliates shall retain
all of its rights, title and interest in and to technology it owns as of the
Effective Date, including the right to transfer or license such intellectual
property to others for any purpose, subject only to its obligations under this
Agreement.  All right, title and interest
in and to all inventions made solely by personnel of a Party or its Affiliate
shall be owned by such Party or its Affiliate. 
All right, title and interest in and to all inventions made jointly
hereunder by personnel of Amgen and Array shall be jointly owned by Amgen and
Array, subject to any applicable licenses and payment and other obligations set
forth in this Agreement.  Inventorship
shall be determined in accordance with the patent Law of the United
States.  Except as expressly provided in
this Agreement, neither Party nor 

 

 

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[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

any of its Affiliate shall
have any obligation to account to the other for profits, or to obtain any
consent of the other Party or its Affiliates to license or exploit patented
jointly-owned subject matter, by reason of joint ownership thereof, and each
Party, on behalf of itself and its Affiliates, hereby waives any right it may
have under the Law of any jurisdiction to require any such consent or
accounting.

 

8.2       Patent Filings.  Except as set forth in this Section 8.2
and Section 4.4, (i) Array shall have all rights with respect to
Prosecution and Maintenance of Array Patents, other than Composition Patents; (ii) Amgen
shall have all rights with respect to Prosecution and Maintenance of Amgen
Patents; and (iii) Amgen shall have the first right to Prosecute and
Maintain the Composition Patents and Joint Patents, and Array shall have the
second right as set forth in this Section 8.2.

 

8.2.1    Responsibilities.  Amgen will control, by itself or through
outside counsel reasonably acceptable to Array and directed by Amgen, and have
final decision making authority and bear all costs with respect to the
Prosecution and Maintenance of Composition Patents and Joint Patents (“First Right Patents”). 
Amgen will (i) provide Array with copies of and an opportunity to
review and comment upon the text of the applications relating to the First
Right Patents at least thirty (30) days before filing; provided, that if it is
not reasonably practicable to provide such application in such thirty (30) day
period, then Amgen will provide either a draft copy of such application or a
statement of intent to file such application in such thirty (30) day period; (ii) provide
Array with a copy of each submission made to and document received from a
patent authority, court or other tribunal regarding any First Right Patent
reasonably promptly after making such filing or receiving such document,
including a copy of each application for each First Right Patent as filed
together with notice of its filing date and application number; (iii) keep
Array advised of the status of all material communications, actual and
prospective filings or submissions regarding the First Right Patents, and will
give Array copies of and an opportunity to review and comment on any such
material communications, filings and submissions proposed to be sent to any
patent authority or judicial body; and (iv) consider in good faith Array’s
comments on the communications, filings and submissions for the First Right
Patents.  Array shall reasonably
cooperate with and assist Amgen, upon Amgen’s request and at Amgen’s expense,
in connection with such activities, including by making scientists and
scientific records reasonably available to Amgen.

 

8.2.2    Assumption.  If Amgen proposes to abandon or fail to
maintain any First Right Patent, or if Amgen proposes to offer Array the right
to control Prosecution and Maintenance of any First Right Patent, Amgen will
give Array reasonable notice thereof (which, whenever practicable, shall be at
least sixty (60) days prior to the date upon which such Patent shall lapse or
become abandoned) and thereafter Array may, upon prompt written notice to Amgen
(delivered in no event later than thirty (30) days after receipt of Amgen’s
notice), control Prosecution and Maintenance with respect to such Patent in
accordance with this Section 8.2.2 (any Patent so assumed, an “Assumed Item”).  In
such case, Array will control, by itself or through outside counsel reasonably
acceptable to Amgen and directed by Array, and have final decision making
authority 

 

 

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[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

with
respect to the Prosecution and Maintenance of Assumed Items, at Array’s sole
cost and expense.  Array will have the
same obligations to Amgen for Assumed Items as Amgen has to Array with respect
to First Right Patents as set forth in clauses (i)-(iv) of Section 8.2.1.

 

8.2.3    Other Matters Pertaining to Prosecution
of Patents.

 

(a)  Each Party
shall keep the other informed as to material developments with respect to the
Prosecution and Maintenance of Patents claiming Collaboration Technology
(except for Joint Patents, which are addressed in Section 8.2.1 and 8.2.2
and not in this Section 8.2.3) or of Patents included within the Array
Technology that pertain to Clinical Candidates or Products, including by
providing upon request copies of any substantive documents that such Party or
its Affiliate receives from any patent office, including notice of all interferences,
reissues, re-examinations, oppositions or requests for patent term extensions,
and by providing the other Party the opportunity to have reasonable input into
the Prosecution and Maintenance.

 

(b)  If, during
the term of this Agreement, the Party responsible for prosecuting a Patent
within the Collaboration Technology solely owned by such Party or its Affiliate
pursuant to Section 8.2.3 above (the “Prosecuting Party”)
intends to allow such Patent to lapse or become abandoned without having first
filed a substitute, the Prosecuting Party shall, whenever practicable, notify
the other Party of such intention at least sixty (60) days prior to the date
upon which such Patent shall lapse or become abandoned, and such other Party
shall thereupon have the right, but not the obligation, to assume
responsibility for the Prosecution and Maintenance thereof at its own expense
with counsel of its own choice.

 

(c)  The
Prosecuting Party shall be responsible for costs associated with the
Prosecution and Maintenance of such Patents within the Collaboration Technology
that it owns solely.  The other Party and
its Affiliates shall reasonably cooperate with and assist the Prosecuting
Party, at the Prosecuting Party’s request and expense, in connection with such
activities, including by making scientists and scientific records reasonably
available to the Prosecuting Party.

 

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

 

(e)  If
requested by Amgen, Array will in good faith discuss with Amgen whether it
would be appropriate to transition to Amgen for Prosecution and Maintenance any
Program-related Patents not then being Prosecuted or Maintained by Amgen.

 

 

 - 44 -  

 

[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

8.3       Enforcement Rights.

 

8.3.1    Defense and Settlement of Third Party
Claims.  Subject to the
indemnification obligations of each Party under Section 10.4 of this
Agreement, each Party shall have the right, but not the obligation, at its own
cost and expense, to defend against Third Party claims brought against it;
provided that, if a Third Party asserts against Array or against Array and
Amgen that a Patent or other right owned by it is [***],
Amgen shall have the first right, but not the obligation, to defend against
such assertions at its cost and expense (so long as Amgen has the right to sell
such Product hereunder), subject to the indemnification obligations of each
Party under Section 10.4 of this Agreement.

 

8.3.2    Infringement by Third Parties.

 

(a)  If any
Patent within the Licensed Technology Controlled by Array or Joint Patent is
infringed by a Third Party in any country in connection with [***], Amgen 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 separately represented by
counsel of its own choice (but Amgen will continue to control such action).  If Amgen fails to bring an action or
proceeding within a period of [***] days
after a request by Array to do so (or (i) if later, within such time
period after an action can viably be brought by Law (as, for example, in the
case of expiration of a clinical trial exemption to patent infringement) or (ii) if
earlier, [***] days before expiration of any
time period within which an action can viably be brought by Law), then, upon
notice to Amgen, Array shall have the right to bring and control such action by
counsel of its own choice, and Amgen shall have the right to be separately
represented in any such action by counsel of its own choice at its own expense;
provided that, Array will not commence or maintain an enforcement action under
this Section 8.3.2 (x) with respect to Joint Patents, or (y) with
respect to Array Patents in connection with the manufacture, use or sale of a
glucokinase activator, a product substantially similar to a Product, or a
product competitive to a Product in such country, in each case if Amgen informs
Array in writing that Amgen reasonably believes such action would be reasonably
likely to have a material adverse effect on the Licensed Technology.

 

(b)  If one Party
or its Affiliate brings an action or proceeding in accordance with this Section 8.3.2,
the second Party and its Affiliates agree to be joined as a party plaintiff if
necessary to maintain the action, and to give the first Party or its Affiliate
reasonable assistance and authority to file and prosecute the suit.  Except as otherwise provided in Section 8.3.2(a) above
with respect to a Party’s (or its Affiliate’s) separate representation (if any)
using counsel of its own choice, the non-controlling Party (and its Affiliates)
will cooperate with the controlling Party (and its Affiliates) at the controlling Party’s (or its
Affiliate’s) request and the
controlling Party will reimburse all reasonable, documented, out-of-pocket
expenses incurred by the non-controlling Party and its Affiliates in connection therewith.

 

 

 - 45 -  

 

[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

(c)  The amount
of any recovery from the enforcement activities under this Section 8.3.2
actually received by the Party (and its Affiliates) controlling such action
shall first be applied to the out-of-pocket costs of such action, and then (i) if
Amgen is the party that brings such action or proceeding, then Array shall be
paid an amount equal to the royalties that would have been due upon sales of
the infringing product as if such infringing sales had been Net Sales of a
Product sold by Amgen, and the remaining portion of such recovery shall be paid
to Amgen, or (ii) if Array is the party that brings such action or
proceeding, then the remaining portion of such recovery shall be retained by
Array.  Neither Party nor its Affiliates
will enter into a settlement or consent judgment or other voluntary final
disposition of a suit under this Section 8.3.2 without the consent of the
other Party (which consent shall not be unreasonably conditioned, withheld or
delayed), unless such settlement, consent judgment or other disposition does
not admit the invalidity or unenforceability of any Patent within the Licensed
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 that the granting Party (and its Affiliates) otherwise
has the right to grant to a Third Party.

 

8.4       Patent Term Extensions.  The Parties will reasonably discuss for which
Patents related to a Product to pursue patent term extension.  Array will provide reasonable assistance to
Amgen in connection with obtaining supplemental protection certificates for
Patents within the Licensed Technology. 
To the extent reasonably and legally required to obtain any such
supplemental protection certificates in a particular country, Array will make
available to Amgen copies of all necessary documentation to enable Amgen to use
the same for the purpose of obtaining the supplemental protection certificates
in such country.

 

8.5       Patent Marking.  At Array’s request, Amgen shall mark (or
caused to be marked) all Products marketed and sold hereunder with appropriate
Patent numbers or indicia to the extent permitted by Law, in those countries in
which such notices impact recoveries of damages or remedies available with
respect to infringements of Patents.

 

ARTICLE
IX - CONFIDENTIALITY

 

9.1       Confidentiality; Exceptions.  Except to the extent
expressly authorized by this Agreement or otherwise agreed in writing, the
Parties hereby agree that, during the Term and for five (5) years
thereafter, the receiving Party and its Affiliates (hereinafter referred to in
this Section 9.1 as the “receiving Party”)
shall keep confidential and shall not publish or otherwise disclose or use for
any purpose other than as provided for in this Agreement any Information and
other confidential and proprietary information and materials furnished to it by
the other Party or its Affiliate (hereinafter referred to in this Section 9.1
as the “disclosing Party”) pursuant to this
Agreement (collectively, “Confidential Information”),
except to the extent that it can be established by the receiving Party that
such Confidential Information:

 

 

 - 46 -  

 

[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

 

(i)        was in the lawful knowledge and
possession of the receiving party prior to the time it was disclosed to, or
learned by, the receiving Party, or was otherwise developed independently by
the receiving Party, as evidenced by written records kept in the ordinary
course of business, or other documentary proof of actual use by the receiving
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;
or

 

(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.

 

9.2       Program Information.  During the Term, all activities conducted and
data generated within the Program (or within Array’s glucokinase activator
program conducted prior to the Effective Date), including the Discovery
Program, the 403 MAD and the 403 Bioequivalence Trial, shall be treated as
Amgen Confidential Information hereunder. 
Upon any termination of this Agreement, activities conducted and data
generated in the Program that relate to Amgen Retained Products shall be
treated as Amgen Confidential Information hereunder to the extent related
thereto, and activities conducted and data generated in the Program that relate
to Returned Compounds shall be treated as Confidential Information of Array to
the extent related thereto.  With respect
to other information or data generated in the Program, if any, such information
and data shall be treated as the Confidential Information of the Party (and its
Affiliates) that generated such Confidential Information.  If, prior to termination of this Agreement or
within a reasonable time after termination, either Party or its Affiliate
becomes aware of Confidential Information for which the allocation described in
the second and third sentences of this Section 9.2 would preclude use or
disclosure of such Confidential Information (i) by Amgen that would be
reasonably necessary in the course of exercising such rights as Amgen may have
after termination with respect to Amgen Retained Products, or (ii) by
Array that would be reasonably necessary in the course of exercising such
rights as Array may have after termination with respect to Returned Compounds,
then the Parties agree to reasonably discuss appropriate modifications to such
allocation.

 

9.3       Authorized Disclosure.  Except as expressly provided otherwise in
this Agreement, each Party (and its Affiliates) may use and disclose
Confidential Information of the other Party (and its Affiliates) as follows:  (i) in connection with the exercise of
rights granted or reserved in this Agreement (including the rights to
commercialize Products and to grant licenses and sublicenses hereunder) or to [***] actual or potential licensees of Amgen or sublicensees
hereunder, or actual or potential licensees of Array in connection with any
Compound or Product after any termination of this Agreement, or Contractors
used in the Program on a need to know basis, under reasonable and 

 

 

 - 47 -  

 

[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

customary contractual
obligations of confidentiality (provided that, with respect to any [***], Array will act in good faith during the Term of this
Agreement to restrict the disclosure of any Program-related information to such
persons until an [***]), or (ii) to the extent
such disclosure is reasonably necessary in filing or prosecuting patent,
copyright and trademark applications, prosecuting or defending litigation,
complying with governmental regulations, obtaining regulatory approval,
conducting preclinical or clinical trials, or marketing Products, in each case
in accordance with this Agreement, or as otherwise required by Law; provided,
however, that if a Party (or its Affiliate) is required by Law to make any such
disclosure of the other Party’s (or its Affiliate’s) Confidential Information
it will, except where impracticable for necessary disclosures, give reasonable
advance notice to the other Party of such disclosure requirement and, except to
the extent inappropriate in the case of patent applications, will use its reasonable
efforts to secure confidential treatment of such Confidential Information
required to be disclosed or (iii) to the extent mutually agreed to by the
Parties.

 

9.4       Termination of Prior Agreements.  This Agreement
supersedes the Confidential Disclosure Agreement between the Parties (or their
predecessors) dated September 15, 2009, including all modifications.  All information exchanged between the Parties
(or their Affiliates) under those Agreements shall be deemed Confidential
Information and shall be subject to the terms of this Article IX.

 

9.5       403 MAD and the 403 Bioequivalence
Trial.  Except as
required by Law or as permitted under this Section 9.5 or under Section 12.1, during the term of
this Agreement Array shall not publish any information on ARRY-403 or any other
Compound without the prior written consent of Amgen.  Notwithstanding the foregoing, [***] to the extent such [***]
as of the Effective Date; provided, however, that Array shall to the extent
permitted under its agreements with such [***] as of the Effective Date, (i) submit any proposed publication to Amgen at least thirty (30) days in advance to
allow Amgen to review and
comment on such planned publication, and shall reasonably consider, and use
reasonable efforts to incorporate, all Amgen comments on such publication; (ii) postpone
the publication for up to an additional sixty (60) days upon request by Amgen
in order to allow the consideration of appropriate patent applications or other
protection to be filed on information contained in the publication; (iii) upon
request of Amgen, remove Confidential Information of Amgen from the information
intended to be published; and (iv) reasonably cooperate with Amgen with
respect to the handling of any competitively sensitive information in such
potential publication. 
Notwithstanding the foregoing, in no event shall Array or its
Contractors publish or otherwise
disclose the chemical structure of ARRY-403.

 

9.6       Publications.  Prior to initiation of the first Phase III of
a Product containing ARRY-403, any publication relating to a clinical trial of
a Product containing ARRY-403 shall include in the description of such Product
the Array compound number (i.e., ARRY-403). 
Amgen shall submit any proposed publication containing Confidential
Information of Array to Array at least thirty (30) days in advance to
allow Array to review such planned public disclosure.  Array will promptly review such proposed
publication and make any objections that it may have to the publication of 

 

 

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[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

Confidential Information of
Array contained therein.  Amgen shall
consider all reasonable comments made by Array to the proposed publication,
including whether to postpone the publication for up to an additional sixty
(60) days in order to allow the consideration of appropriate patent
applications or other protection to be filed on Confidential Information of
Array contained in the publication or remove Confidential Information of Array
from the information intended to be published.

 

9.7       Attorney-Client Privilege.  Neither
Party is waiving, nor shall be deemed to have waived or diminished, any of its
attorney work product protections, attorney-client privileges or similar
protections and privileges as a result of disclosing information pursuant to
this Agreement, or any of its Confidential Information (including Confidential
Information related to pending or threatened litigation) to the receiving
Party, regardless of whether the disclosing Party has asserted, or is or may be
entitled to assert, such privileges and protections.  The Parties:  (a) share a common legal and commercial
interest in such disclosure that is subject to such privileges and protections;
(b) are or may become joint defendants in proceedings to which the
information covered by such protections and privileges relates; (c) intend
that such privileges and protections remain intact should either Party become
subject to any actual or threatened proceeding to which the disclosing Party’s
Confidential Information covered by such protections and privileges relates;
and (d) intend that after the Effective Date both the receiving Party and
the disclosing Party shall have the right to assert such protections and
privileges.

 

ARTICLE
X - REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

 

10.1     Mutual Representations and Warranties.  Each of the Parties hereby represents and
warrants as of the Effective Date as follows:

 

(a)  It is duly
organized and validly existing under the Law of its jurisdiction of
incorporation and it has full corporate power and authority and has taken all
corporate action necessary to enter into and perform this Agreement.

 

(b)  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.

 

(c)  To its
knowledge, no government authorization, consent, approval, license, exemption
of or filing or registration with any court or governmental authority or under
Law, is or will be necessary for, or in connection with, the transaction
contemplated by this Agreement or any other agreement or instrument executed
concurrently herewith, or (except for Marketing Approvals, licenses, clearances
and the like necessary for the commercialization, research, development,
manufacture, sales or marketing of pharmaceutical products and except for any
required filing with the United States Securities and Exchange Commission) for
the performance by it of its obligations under this Agreement.

 

 

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[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

(d)  It has not
granted any right to any Third Party relating to its respective technology in
the Field which conflicts with the rights granted to the other Party hereunder.

 

10.2     Array Representations and Warranties.  Array represents and warrants to Amgen that
as of the Effective Date:

 

(a)  Array has
sufficient legal and/or beneficial title to grant to Amgen the licenses
purported to be granted to Amgen hereunder, and with respect to the Array
Patents listed on Exhibit 10.2(a), all fees required to be paid by Array
or its Affiliates in order to maintain such Array Patents have been paid to
date, and none of the listed Array Patents have been abandoned or cancelled for
failure to prosecute or maintain them.

 

(b)  Array has [***] prior to the Effective Date.

 

(c)  None of
the Array Patents is the subject of any interference or opposition, suit or
legal proceeding, and Array has not received written notice from any Third
Party challenging Array’s ownership rights in, or the validity, enforceability
or scope of, any Array Patent.

 

(d)  Exhibit 10.2(a) contains
a complete list of all Patents owned or Controlled by Array that are within the
Array Technology, including all Patents owned or Controlled by Array that claim
ARRY-403 or processes for making or using, or compositions containing the same.

 

(e)  Array has
not nor has any of its Affiliates previously assigned, transferred or conveyed
titled to, or licensed in any manner inconsistent with the licenses to Amgen
set forth herein, or otherwise encumbered any of its right, title and interest
in the Patents set forth on Exhibit 10.2(a) or the Array Know-How.

 

(f)   Array has
disclosed in a written letter dated as of the Effective Date to Amgen (the “Inventory Letter”) a complete inventory, to its knowledge,
of the Compounds and Products owned or Controlled by Array (the “Inventory”).  Array
owns all right, title and interest in the listed Inventory.  The Inventory set forth on Section B of
the Inventory Letter has been manufactured in accordance with current Good
Manufacturing Practices (as defined in the United States Code of Federal
Regulations) and Law, and Array is not aware of any circumstance with respect
to the Inventory listed on Section B of the Inventory Letter that would
make it unfit for human use in clinical trials intended to support development
of Products in accordance with U.S. Law.

 

(g)  Array has
disclosed to Amgen all material data and information in its possession or of
which it is aware with respect to ARRY-403, including: (i) safety data and
information, including adverse events, toxicology results and pharmacology
results, (ii) filings and correspondence, including records of contact,
with regulatory authorities with respect to the Compounds and/or Products, and (iii) preclinical
and clinical results; and has provided Amgen an 

 

 

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[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

opportunity, on request, to review all material data and information of
which Array is aware with respect to its glucokinase activator program; and in
each of the foregoing cases Array does not possess, and has not omitted to
disclose to Amgen, any information that would be inconsistent with any material
information that Array has disclosed to Amgen or that would make such
information misleading.

 

(h)  Array has,
and to its knowledge Array’s Contractors have, performed all development and
manufacturing of Compounds and Products in accordance with Law and, with
respect to clinical trial supplies and Compound or drug product intended for
human use, current Good Clinical Practices (as defined in the United States
Code of Federal Regulations).

 

(i)   None of
the Array Patents has been licensed from a Third Party, and neither Array nor
any of its Affiliates is party to any agreement with a Third Party that
requires any financial payments to such Third Party based on development,
manufacturing or commercialization of any Compound or Product other than
fee-for-service payments to contract manufacturers, contract research organizations
and other Contractors performing services for Array in connection with the
development, manufacturing or commercialization of Compounds and/or
Products.  For the sake of clarity, Array
is under no obligation to pay a milestone or royalty to any such contract
manufacturer, contract research organization or other Contractor with respect
to the research, development, use, manufacture, sale or other commercialization
of Compounds and/or Products.

 

(j)   Array has
not used in connection with the research or development within its glucokinase
activator program any employee, consultant or investigator that has been
debarred or the subject of debarment proceedings by any regulatory agency.

 

10.3     Disclaimer.  Array and Amgen specifically disclaim any
guarantee that the Discovery Program will be successful, in whole or in
part.  The failure or lack of success of
any activities of either or both of the Parties in developing Clinical
Candidates or Products will not be construed to constitute a breach of any representation
or warranty or other obligation under this Agreement.  EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN
THIS AGREEMENT, ARRAY AND AMGEN MAKE NO REPRESENTATIONS AND EXTEND NO
WARRANTIES OR CONDITIONS OF ANY KIND, EITHER EXPRESS OR IMPLIED, WITH RESPECT
TO THE LICENSED TECHNOLOGY, ARRAY TECHNOLOGY, AMGEN TECHNOLOGY, COLLABORATION
TECHNOLOGY, AMGEN ABANDONED PRODUCT TECHNOLOGY, COMPOUNDS, CLINICAL CANDIDATES,
INFORMATION DISCLOSED HEREUNDER OR PRODUCTS INCLUDING, BUT NOT LIMITED TO,
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OF
ANY TECHNOLOGY LICENSED HEREUNDER, PATENTED OR UNPATENTED, OR NONINFRINGEMENT
OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.

 

 

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[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

10.4     Indemnification.

 

10.4.1  Indemnification by Amgen.  Amgen hereby agrees to indemnify, defend and
hold harmless Array and its agents, directors and employees (the “Array Indemnitees”) from and against any and all suits,
claims, actions, demands, liabilities, expenses and/or loss, including
reasonable legal expense and attorneys’ fees (“Losses”),
resulting from Third Party claims based on, and to the extent attributable
to:  [***], but
excluding the Losses in this Section 10.4.1 to the extent they arise from
or are attributable to causes described in (a), (b), (c) or (d) in Section 10.4.2
below or to the negligence or willful misconduct of any Array Indemnitee.

 

10.4.2  Indemnification by Array. 
Array hereby agrees to indemnify, defend and hold Amgen and its agents,
directors and employees (the “Amgen Indemnitees”)
harmless from and against any and all Losses resulting from Third Party claims
based on, and to the extent attributable to: 
[***], but excluding the Losses in this
Section 10.4.2 to the extent they arise from or are attributable to causes
described in (a), (b) or (c) in Section 10.4.1 above or to the
negligence or willful misconduct of any Amgen Indemnitee.

 

10.4.3  Procedure.  In the event an Amgen
Indemnitee or Array Indemnitee is seeking indemnification under Section 10.4.1
or 10.4.2 (the “Indemnified Party”), it shall
promptly inform the other Party (the “Indemnifying Party”)
of the applicable Third Party claim and, when known, the facts constituting the
basis for the Third Party’s claim; provided that the failure by an Indemnified
Party to give such notice or to otherwise meet its obligations under this Section 10.4.3
shall not relieve the Indemnifying Party of its indemnification obligation
under this Agreement except and only to the extent that the Indemnifying Party
is actually prejudiced as a result of such failure.  The Indemnifying Party shall assume the
defense of all Third Party claims for which it is responsible for
indemnification under this Section 10.4.3 at its own expense promptly upon
notice of such Third Party claim, and will have exclusive control of the
defense and settlement of the claims for which it assumes such defense.  The Indemnified Party will not settle or
compromise any Third Party claim for which it is entitled to indemnification
without the prior written consent of the Indemnifying Party, unless the
Indemnifying Party is in breach of its obligation to defend hereunder.  In no event will the Indemnifying Party
settle any Third Party claim without the prior written consent of the Indemnified
Party if such settlement does not include a complete release from liability on
such Third Party claim or if such settlement would involve undertaking an
obligation by the Indemnified Party other than the payment of money, would bind
or impair the Indemnified Party (or any of its tangible or intangible assets or
properties), or includes any admission of wrongdoing by the Indemnified Party
or that any intellectual property or proprietary right of the Indemnified Party
is invalid or unenforceable.  The Indemnified
Party will reasonably cooperate with the Indemnifying Party at the Indemnifying
Party’s expense and will make available to the Indemnifying Party reasonably
requested information under the control of the Indemnified Party, which
information will be subject to applicable confidentiality obligations set forth
in Article IX above.  The
Indemnifying Party shall permit the Indemnified Party to participate in (but
not to control) the defense of the Third 

 

 

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[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

Party claim through counsel
of its choosing to the extent it has the ability to do so (at the Indemnified
Party’s expense).  Notwithstanding the
foregoing, the Indemnified Party will [***].

 

10.5     Limitation of Liability.  NOTWITHSTANDING ANY OTHER PROVISION CONTAINED
HEREIN, OTHER THAN TO THE EXTENT RESULTING FROM A BREACH OF ARTICLE IV
(EXCLUSIVITY) OR ARTICLE IX (CONFIDENTIALITY), IN NO EVENT WILL ARRAY OR AMGEN
BE LIABLE TO THE OTHER OR ANY OF THE OTHER’S AFFILIATES FOR ANY CONSEQUENTIAL,
INCIDENTAL, INDIRECT, SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES (INCLUDING LOST
PROFITS, BUSINESS OR GOODWILL) SUFFERED OR INCURRED BY SUCH OTHER PARTY OR ITS
AFFILIATES IN CONNECTION WITH A BREACH OR ALLEGED BREACH OF THIS
AGREEMENT.  THE FOREGOING SENTENCE SHALL
NOT BE CONSTRUED TO LIMIT THE OBLIGATIONS OF EITHER PARTY TO INDEMNIFY THE
OTHER PARTY FROM AND AGAINST THIRD PARTY CLAIMS AS SET FORTH IN SECTION 10.4
(INDEMNIFICATION).

 

10.6     Covenants.  Each Party hereby covenants to the other
Party that, during the Term of the Agreement:

 

10.6.1  It and its Affiliates will not grant any right
to any Third Party relating to any intellectual property or proprietary right
licensed by it or its Affiliates to the other Party hereunder that conflicts
with the rights granted to the other Party hereunder.

 

10.6.2  It and its Affiliates will not knowingly use
in connection with the Discovery Program any employee, consultant or
investigator that has been debarred or the subject of debarment proceedings by
any regulatory agency.

 

ARTICLE
XI - TERM AND TERMINATION

 

11.1     Term.  Unless earlier terminated, the Agreement will
continue in full force and effect, on a product-by-product and
country-by-country basis until the date no further payments are due under Article VI
above with respect to sales of the applicable Product in the applicable
country, at which time the licenses granted to Amgen pursuant to Article V
will be fully paid-up and royalty- free with respect to such Product in such
country.

 

11.2     Termination For Breach.  Either Party may terminate this Agreement in
the event the other Party shall have materially breached in the performance of
any of its material obligations hereunder, and such breach shall have continued
for [***] (or such extended period as set
forth below, if applicable) after written notice thereof was provided to the
breaching Party by the non-breaching Party. 
Any termination shall become effective at the end of such [***] period unless the breaching Party (or any other party
on its behalf) has cured any such breach or default prior to the expiration of
the [***] period or, if such breach is capable
of being cured, but not reasonably capable of being cured within such [***] period, the breaching Party is diligently undertaking
substantive and progressive efforts to cure such breach on or before such date,
in which case the cure period 

 

 

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[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

shall be extended for so
long as such substantive and progressive efforts are continuing during such
period, up to an additional [***].

 

11.3     Termination Upon Notice. Amgen may
terminate this Agreement in its entirety at any time (i) upon [***] written notice to Array if any Phase II or Phase III
clinical trial of a Product is “on-going” (as defined in Section 11.5.2
below) at the time of such notice (or if Amgen commences such a Phase II or
Phase III clinical trial during the period between such notice and the
effective date of such termination), or (ii) otherwise, upon [***] written notice to Array.

 

11.4     Termination on Bankruptcy.  Either Party may terminate this Agreement,
if, at any time, the other Party shall file in any court or agency pursuant to any
statute or regulation of any state or country, a petition in bankruptcy or
insolvency or for reorganization or for an arrangement or for the appointment
of a receiver or trustee of the Party or of substantially all of its assets, or
if the other Party shall be served with an involuntary petition against it,
filed in any insolvency proceeding, and such petition shall not be dismissed
within sixty (60) days after the filing thereof, or if the other Party shall
propose or be a party to any dissolution or liquidation, unless in connection
with such dissolution or liquidation this Agreement is assigned under Section 12.4,
or if the other Party shall make an assignment of substantially all of its
assets for the benefit of creditors.

 

11.5     Effect of Termination.

 

11.5.1  Certain Payment Terms.  In the event of a termination of this
Agreement under Section 11.2 by reason of a material breach by Amgen, or
any termination of this Agreement under Section 11.3 by Amgen, or
termination of this Agreement by Array pursuant to Section 11.4, Amgen
shall pay to Array an amount equal to: (i) the FTE amounts budgeted to be
incurred by Array in accordance with the then-current Discovery Plan over the [***] immediately following the notice of termination under Section 11.2,
Section 11.3 or Section 11.4 
(the “Wind-Down Period”) (or such
shorter period if less than [***] remains
in the Discovery Program Term) related to matters under the Discovery Program;
and (ii) any non-cancelable out-of-pocket costs reasonably incurred by
Array hereunder in accordance with Section 6.2.3 (excluding any such
commitments to the extent reimbursed in clause (i) above or
otherwise).  Amgen shall make the
payments to Array under clauses (i) and (ii) above [***] after Array invoices Amgen therefor, and Amgen shall
have no further obligation  to fund any of
Array’s activities under the Discovery Program or otherwise.  For purposes of the foregoing, it is
understood that with respect to Array FTEs, the FTE rate therefor shall be the
FTE rate in effect as of the date of notice of termination for a termination
event described in this Section 11.5.

 

11.5.2  Clinical Trials.  In the event that any clinical trial of a
Product being conducted by or on behalf of a Party or its Affiliate (such
Party, the “Clinical Trial Party”) is on-going
as of the effective date of any termination of this Agreement and the Clinical
Trial Party is not the Party who will continue to have rights to develop,
manufacture and commercialize such Product after such termination of this Agreement
(the “Other Party”) (in the event of a
termination of this 

 

 

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[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

Agreement
by either Party, the Other Party shall be Array with respect to any Product
(other than a Product containing an Amgen Retained Compound) and shall be Amgen
with respect to any Product containing an Amgen Retained Compound), then the
following shall apply:

 

(a)  Upon
written request of the Other Party no later than [***]
prior to the effective date of termination of this Agreement, and provided that
the Other Party can demonstrate [***], the
Clinical Trial Party shall reasonably cooperate to transfer responsibility for
such clinical trial to the Other Party or its designee as expeditiously as
possible in an orderly manner and in compliance with Law and common standards
of pharmaceutical practice,  and, in such
event, shall cooperate to facilitate the transfer to the Other Party of,
as applicable, regulatory filings, CRO contracts, site agreements and the like
as expeditiously as possible and in compliance with applicable Law and common
standards of pharmaceutical practice, provided that (i) in no event shall
the Clinical Trial Party’s obligation hereunder extend longer than [***] from the effective date of termination of this
Agreement, (ii) the Clinical Trial Party shall remain responsible for the
costs of conducting such clinical trial up to the effective date of termination
of this Agreement, and the Other Party shall be responsible for out-of-pocket
costs of conducting such clinical trial incurred after the effective date of
termination of this Agreement (including without limitation for costs incurred
by the Clinical Trial Party after the effective date of such termination of the
Agreement but prior to completion of transfer of responsibility for such
clinical trial to the Other Party, which out-of-pocket costs shall be
reimbursed quarterly after receipt of an invoice therefor from the Clinical
Trial Party), and (iii) all documented out-of-pocket costs of the Clinical
Trial Party in transferring such clinical trial shall be reimbursed or
otherwise paid for by the Other Party to the extent reasonably incurred; and

 

(b)  In the
event that the Other Party does not request in writing to the Clinical Trial
Party to transfer responsibility to the Other Party for the conduct of such on-going
clinical trial of a Product [***] to the
effective date of termination of this Agreement or if the Clinical Trial Party
notifies the other Party in writing [***], then the
Clinical Trial Party shall wind-down such on-going clinical trial as expeditiously
as possible, consistent with the Clinical Trial Party’s ethical and regulatory
obligations and in compliance with Law and common standards of pharmaceutical
practice, provided that all out-of-pocket costs of the Clinical Trial Party in
winding-down such clinical trial shall be borne by the Clinical Trial Party.

 

For
purposes of this Section 11.5.2 and Section 11.3, a clinical trial
shall be deemed to be “on-going” from the time the first patient is dosed in
such trial until the last patient has received the last dose in such trial.

 

11.5.3  Accrued Rights, Surviving Obligations.  Termination, relinquishment or expiration of
the Agreement for any reason shall be without prejudice to any liabilities
which shall have accrued prior to such termination, relinquishment or
expiration, including, to the extent applicable, the payment obligations under Article VI
hereof and any and all damages arising from any breach hereunder.

 

 

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[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

11.5.4  Survival.  Article 1 and Sections [***] shall survive the expiration and any termination of
this Agreement; and Section [***] and Article [***] shall survive the expiration but not an earlier
termination (except as provided below) of this Agreement.  Except as provided in this Section 11.5.4,
or as otherwise provided in this Section 11.5, all obligations of each
Party under this Agreement shall terminate upon any termination of this
Agreement.

 

11.5.5  Effect of Certain Terminations.  In the event of a termination
of this Agreement pursuant to Section 11.3, or termination by Array
pursuant to Section 11.2 or Section 11.4, all [***]
under this Agreement shall be deemed “Abandoned Products.”  Promptly after termination of this Agreement
pursuant to Section 11.3, or termination by Array pursuant to Section 11.2
or Section 11.4, Amgen shall assign and transfer to Array
the regulatory filings pertaining to each Abandoned Product.  Should Amgen
have any inventory of the Abandoned Products suitable for use in clinical
trials, then Amgen and Array shall, upon request by Array, negotiate in good
faith for Amgen to sell such inventory to Array (which sale would include an
appropriate indemnity from Array for any liability resulting from use of such
inventory).  If any Abandoned Product is being commercialized as of the
date of any such termination, the Parties will agree upon a plan to transition
the commercialization of such Abandoned Product from Amgen to Array as soon as
reasonably practicable.  To facilitate
continued access to Product by existing patients, Amgen (and, if applicable,
its Sublicensees) shall have the right, but not the obligation, to continue to
sell such Abandoned Product after any such termination in countries where such
Abandoned Product was sold prior to such termination (subject to the payment to
Array of royalties on Net Sales on the terms set forth in this Agreement), provided however, that (i) such
right shall terminate, on a country-by-country basis, subject to Amgen’s
ethical and safety obligations and compliance with Law, upon the earlier of (A) as
soon as practicable, but in no event later than thirty (30) days, after
transfer of the Marketing Approval for such Abandoned Product in such country
to Array or (B) within ninety (90) days of such time that Array or a
sublicensee of Array begins to commercially sell such Abandoned Product in the
applicable country and Amgen’s receipt of a notice thereof from Array (such
period of time, the “Post-Term Sales Period”),
(ii) such Abandoned Product shall not be sold at discounts greater than
the discounts previously provided to such purchaser for the Abandoned Product
in the applicable country, and (iii) Amgen agrees to cease, and shall use
reasonable efforts to wind-down as quickly as reasonably practicable, its
promotion and marketing of the Abandoned Product after termination of this
Agreement.  Upon request of Array
following any such termination of this Agreement by Array pursuant to Section 11.2
for Amgen’s material breach, by
Array pursuant to Section 11.4, or by
Amgen pursuant to Section 11.3, Amgen shall reasonably cooperate with
Array, as may be reasonably requested by Array, to put Array in contact with
Third Party manufacturers that are as of the effective date of such
termination, manufacturing Abandoned Products for, and pursuant to a contract
with, Amgen and reasonably cooperate in the transfer of manufacturing
arrangements regarding Abandoned Products to Array (which may include, where
reasonable and permitted by such contractual arrangements, assignment to Array
of contracts to the extent related to Abandoned Products).

 

 

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[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

11.5.6  Effect on Licenses to Amgen.  Upon any termination of this Agreement by
either Party, all licenses granted to Amgen, and all licenses granted to Array
except for the licenses granted pursuant to Section 5.3, hereunder shall
concurrently terminate; except that the licenses granted to Amgen hereunder
shall survive, on a non-exclusive basis, during the Post-Term Sales Period
solely with respect to sales of Abandoned Products as described in Section 11.5.5.  Upon any termination of this Agreement by Array
pursuant to Section 11.2 for Amgen’s material breach, by Array pursuant to
Section 11.4, or by Amgen pursuant to Section 11.3, then the license
granted to Array pursuant to Section 5.3 shall survive as set forth
therein.  In the event that this Agreement
is terminated by Amgen pursuant to Section 11.2 for Array’s material
breach or by Amgen pursuant to Section 11.4, all licenses granted to Array
hereunder shall terminate and, upon written request of Array, the Parties agree
to negotiate in good faith for Array to obtain a license of the same scope as
set forth in Section 5.3, on mutually acceptable terms and conditions.

 

11.6     Termination Not Sole Remedy.  Termination is not the sole remedy under this
Agreement and, whether or not termination is effected, all other remedies will
remain available except as agreed or otherwise provided herein.

 

11.7     Change of Control; Termination of
Co-Promotion Right.  Array will  give Amgen written notice [***]
the
public announcement or disclosure of, or if earlier the signing of any
agreement for, a proposed Change
of Control of Array.  In the event of the occurrence of,
signing of an agreement for, or public announcement or disclosure of, a Change of Control of Array involving a Third
Party that is an Industry Buyer, Amgen will have the right [***]
(i) immediately upon written notice to Array if Array has not [***], or (ii) if Array has [***],
upon at least [***] and no more than [***] notice (as specified by Amgen in its notice), and
Array shall continue to [***] in accordance
with this Agreement during the notice period and shall, as directed by Amgen
(including with respect to timing), [***] and in
compliance with Law and common standards of pharmaceutical practice.  For clarity, in the event of such a notice of
[***] by Amgen pursuant to this Section 11.7
of [***], [***],
but the other provisions of this Agreement shall not terminate, and this
Agreement shall otherwise continue in effect unless and until it expires or is
terminated in accordance with this Article XI.  “Industry Buyer”
means an entity that (x) together with its affiliates, in the calendar
year preceding the applicable Change of Control of Array, has annual
pharmaceutical and/or biotechnology revenues of more than [***],
or (y) at the time of the applicable Change of Control of Array has a
product for which it has either filed an application for Marketing Approval
(which application remains pending), or has obtained Marketing Approval, in the
United States or a Major European Country (1) [***],
or (2) [***]; in any such case, unless [***].

 

ARTICLE XII - MISCELLANEOUS

 

12.1     Publicity.  Each of the Parties hereto
agrees not to disclose to any Third Party any terms of this Agreement that
are not then publicly available, without the prior written consent of the other
Party hereto; except to advisors and actual or potential investors (excluding
biotechnology or pharmaceutical companies or their affiliates, except financial
entities that own or control one or 

 

 

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[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

more
biotechnology or pharmaceutical companies as part of a portfolio and do not
operate biotechnology or pharmaceutical companies as a primary line of business
(e.g., private equity firms)), acquirers, actual or potential licensees of
Amgen or sublicensees hereunder, or actual or potential licensees of Array in
connection with any Compound or Product after any termination of this
Agreement, or Contractors used in the Program, in each case on a need-to-know
basis under circumstances that reasonably ensure the confidentiality thereof,
or to the extent required by Law.  
Notwithstanding the foregoing, the Parties shall agree upon a press
release to announce the execution of this Agreement, together with a
corresponding Question & Answer outline for use in responding to
inquiries about the Agreement.  Each Party shall to the extent consistent
with Law limit the disclosure of the terms set forth in this Agreement (such as
by requesting confidential treatment of such terms in documents required to be
filed with the U.S. Securities and Exchange Commission).  If any such
disclosure is required to be made by either Array or Amgen (the “Disclosure Party”)
by Law, the Disclosure Party shall provide a proposed draft to the other Party
of any intended press releases or other public disclosure as soon as practicable
and when possible at least ten (10) business days in advance of its
proposed release.  The other Party shall consider the Disclosure Party’s
request to make such press release or statement and within five (5) business
days of receiving such press release or statement or sooner if reasonably
requested by the Disclosure Party, indicate to the Disclosure Party whether it
requests that any changes be made prior to the release thereof, and the
Disclosure Party shall make any changes reasonably requested by the other Party
prior to making such press release or other public disclosure, unless the
making of such changes would, in the Disclosure Party’s reasonable belief,
put  the Disclosure Party in violation of a legal requirement to disclose
a material fact pursuant to Law.  Notwithstanding the foregoing, if Law,
in the opinion of counsel, requires disclosure in a time frame that makes prior
disclosure by the Disclosure Party to the other Party in accordance with the
foregoing procedures impractical under the circumstances, the Disclosure Party
may make such disclosure provided that it promptly provides such disclosure to
the other Party.  Subsequent disclosures consistent with past disclosures
shall, to the extent still accurate, be allowed in the usual course of
business.  Array will not issue any press
releases with respect to the progress of or activities under the Program,
without Amgen’s prior consent; which will not be unreasonably withheld with
respect to a press release disclosing the achievement of [***],
provided that, subject to Law, Array will use reasonable efforts to cooperate
with Amgen as to the timing of such release so that Amgen has the first
opportunity to announce such event and as to the content of such disclosure.

 

12.2     Overall Management of Collaboration.

 

12.2.1  Joint Steering Committee.  The Parties shall establish an overall
committee (“Joint Steering Committee,” or “JSC”) to oversee the relationship of the Parties hereunder,
including discussing the progress of the Products and any significant issues
under this Agreement.  The Joint Steering
Committee shall be comprised of one (1) member each from Array and
Amgen, with the members selected from management of each Party.  Unless otherwise agreed, the Joint Steering
Committee shall at all times include Array’s Chief Executive Officer, and Amgen’s
Vice President, Development.  The Joint
Steering Committee shall meet at least annually.  Unless 

 

 

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[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

otherwise
agreed by the Parties, all meetings for the Joint Steering Committee shall be
held on an alternating basis between Array’s facilities and Amgen’s facilities.

 

12.2.2  Termination of Committee Participation.  Array can elect at any time after the
termination of the Discovery Program Term, on ten (10) days prior notice
to Amgen, to withdraw from participation in the JSC, JDC and, if applicable,
the JCC, in which case such committees shall be disbanded upon such
withdrawal.  Thereafter, all information
that the Parties were obligated to disclose to such committees shall be
disclosed directly between the Parties.

 

12.3     Governing Law.  This Agreement and any dispute arising from
the performance or breach hereof shall be governed by and construed and
enforced in accordance with, the laws of the State of New York, U.S.A., without
reference to conflicts of laws principles.

 

12.4     Assignment.

 

12.4.1  General.  This Agreement shall not be assignable by
either Party to any Third Party hereto without the written consent of the other
Party hereto; except either Party may assign this Agreement, without such
consent, to an entity that acquires all or substantially all of the business or
assets of such Party to which this Agreement pertains (whether by merger,
reorganization, acquisition, sale or otherwise), and agrees in writing to be
bound by the terms and conditions of this Agreement.  It is understood that the provisions of Section 12.4.2
shall apply in the event of assignment of this Agreement under the
circumstances described therein.  If any
permitted assignment would result in withholding or other similar taxes
becoming due on payments from the assigning Party to the other Party under this
Agreement, the assigning Party shall be responsible for all such taxes
resulting from such assignment, and the amount of such taxes shall not be
withheld or otherwise deducted from any amounts payable to other Party.  No assignment and transfer shall be valid and
effective unless and until the assignee/transferee agrees in writing to be
bound by the provisions of this Agreement. 
The terms and conditions shall be binding on and inure to the benefit of
the permitted successors and assigns of the Parties.  Any assignment of this Agreement not in
accordance with this Section 12.4.1 shall be null and void and of no force
or effect.

 

12.4.2  Certain Matters Relating to Acquisitions.  In the event (i) Amgen assigns this Agreement to
an entity that acquires all or substantially all of the business or assets of
Amgen, or (ii) Amgen merges or consolidates or enters into a similar
transaction with an entity in which such entity becomes an Affiliate of Amgen
(each such event, a “Subject Transaction”),
and, as a result of the Subject Transaction, Amgen (or its successor) is
thereafter required to divest, or chooses to license, one or more Products to a
Third Party, then, if Amgen (or its successor) elects to do so in the form of a
bidding process, Amgen (or its successor) shall notify Array and provide Array
the opportunity to participate in such bidding process.

 

 

 - 59 - 

 

[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

12.5     Performance Warranty.  Each Party may utilize its Affiliates in
fulfilling its obligations and exercising its rights under this Agreement.  Each Party shall be responsible for and
guarantees the performance of any and all obligations hereunder on behalf of
its Affiliate(s).

 

12.6     Compliance with Law.  Each Party shall comply with all Law in
connection with its research, development and commercialization of Compounds
and Products hereunder and in performing its activities under this Agreement.

 

12.7     Notices.  All notices, requests and communications
hereunder shall be in writing and shall be personally delivered or sent by
facsimile transmission (confirmed by prepaid registered or certified mail,
return receipt requested or by international express delivery service) (e.g.,
Federal Express), mailed by registered or certified mail (return receipt
requested), postage prepaid, or sent by international express courier service,
and shall be deemed to have been properly served to the addressee upon receipt
of such written communication, to the following addresses of the Parties, or
such other address as may be specified in writing to the other Party hereto:

 

If to Array,

 

addressed to:                  Array BioPharma Inc.

3200 Walnut Street

Boulder, Colorado 80301

Attention: Chief Operating Officer

Telephone: [***]

Telecopy: [***]
]

 

With copy to:                  Array BioPharma Inc.

3200 Walnut Street

Boulder, Colorado 80301

Attention: General Counsel

Telephone: [***]

Telecopy: [***]

 

If to Amgen,

 

addressed to:                  Amgen Inc.

One Amgen Center Drive

Thousand Oaks, CA 91320-1799

Attention: Corporate Secretary

Telephone: [***]

Telecopy: [***]

 

With a copy to:              Vice President, Corporate
Development

 

 

 - 60 - 

 

[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

Amgen Inc.

One Amgen Center Drive

Thousand Oaks, CA 91320-1799

Telephone: [***]

Telecopy: [***]

 

12.8     Waiver.  Neither Party may waive or release any of its
rights or interests in this Agreement except in writing.  The failure or either Party to assert a right
hereunder or to insist upon compliance with any term or condition of this
Agreement shall not constitute a waiver of that right or excuse a similar
subsequent failure to perform any such term or condition.  No waiver by either Party of any condition or
term in any one or more instances shall be construed as a continuing waiver of
such condition or term or of another condition or term.

 

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

 

12.10   Entire Agreement.  This Agreement set forth all the covenants,
promises, agreements, warranties, representations, conditions and understandings
between the Parties hereto and supersedes and terminates all prior agreements
and understanding between the Parties relating to the subject matter
hereof.  There are no covenants,
promises, agreements, warranties, representations conditions or understandings,
either oral or written, between the Parties relating to the subject matter
hereof other than as set forth herein. 
No subsequent alteration, amendment, change or addition to this
Agreement shall be binding upon the Parties hereto unless reduced to writing
and signed by the respective authorized officers of the Parties.

 

12.11   Independent Contractors.  Nothing herein shall be construed to create
any relationship of employer and employee, agent and principal, partnership or
joint venture between the Parties.  Each
Party is an independent contractor. 
Neither Party shall assume, either directly or indirectly, any liability
of or for the other Party.  Neither Party
shall have the authority to bind or obligate the other Party and neither Party
shall represent that it has such authority.

 

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

 

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

 

 

 - 61 - 

 

[ * ] = Confidential treatment of certain confidential
information contained in this document, marked by brackets, is being sought
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

 

12.14   Construction.  The definitions of the terms herein will
apply equally to the singular and plural forms of the terms defined.  The words “include,” “includes” and “including”
will be deemed to be followed by the phrase “without limitation.”  The Parties each acknowledge that they have
had the advice of counsel with respect to this Agreement, that this Agreement
has been jointly drafted, and that no rule of strict construction will be
applied in the interpretation hereof. 
Unless the context requires otherwise, (i) any definition of or
reference to any agreement, instrument or other document herein will be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein
or therein), (ii) any reference to any Law herein will be construed as
referring to such Law as from time to time enacted, repealed or amended, (iii) any
reference herein to any person will be construed to include the person’s
permitted successors and assigns, (iv) the words “herein,” “hereof” and “hereunder,”
and words of similar import, will be construed to refer to this Agreement in
its entirety and not to any particular provision hereof, and (v) all
references herein to Articles, Sections or Exhibits, unless otherwise
specifically provided, will be construed to refer to Articles, Sections or
Exhibits of this Agreement.

 

12.15   Force Majeure.  No failure or omission by the Parties hereto
in the performance of any obligation of this Agreement shall be deemed a breach
of this Agreement nor shall it create any liability if the same shall arise
from any cause or causes beyond the reasonable control of the affected Party,
including the following, which for purposes of this Agreement shall be regarded
as beyond the control of the Party in question: acts of nature; acts or
omissions of any government; any rules, regulations, or orders issued after the
Effective Date by any governmental authority or by any officer, department,
agency or instrumentality thereof; fire; storm; flood; earthquake; accident;
war; rebellion; insurrection; riot; invasion; strikes; and lockouts or the
like; provided that the Party so affected shall promptly notify the other Party
in writing and shall use its commercially reasonable efforts to avoid or remove
such causes of nonperformance, and to mitigate the effect of such occurrence,
and shall continue performance hereunder with the utmost dispatch whenever such
causes are removed.

 

12.16   Further Assurances.  Each Party agrees to do and perform all such
further acts and things and shall execute and deliver such other agreements,
certificates, instruments and documents necessary or that the other Party may
deem advisable in order to carry out the intent and accomplish the purposes of
this Agreement and to evidence, perfect or otherwise confirm its rights
hereunder, including that, upon request of Amgen, Array will execute short-form
license documents that can be filed to evidence and perfect Amgen’s rights
hereunder.

 

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

 

 

 - 62 - 

 

[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

IN WITNESS WHEREOF, the Parties have executed this Agreement by their duly authorized
representatives as of the date and year first above written.

 

 

	
  Array BioPharma Inc.

  	
   

  	
  Amgen Inc.

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Robert Conway

  	
   

  	
  By:

  	
  /s/
  Kevin Sharer

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Robert
  Conway

  	
   

  	
  Name:

  	
  Kevin
  Sharer

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Chief Executive Officer

  	
   

  	
  Title:

  	
  Chief Executive Officer

  
									

 

 

 - 63 - 

 

[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

 

 

[***]

 

 

 - 64 - 

 

[ * ] = Confidential treatment of certain
confidential information contained in this document, marked by brackets, is
being sought pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.EXHIBIT
10.1

 

 

SECURITIES
PURCHASE AGREEMENT

 

by and
between

 

META
FINANCIAL GROUP, INC.

 

and

 

NETSPEND
HOLDINGS, INC.

 

January 29,
2010

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.     PURCHASE AND SALE OF COMMON
  STOCK

  	
  1

  
	
   

  	
   

  	
   

  
	
  (A)

  	
  COMMON STOCK

  	
  1

  
	
  (B)

  	
  CLOSING

  	
  1

  
	
  (C)

  	
  PURCHASE PRICE

  	
  1

  
	
  (D)

  	
  FORM OF PAYMENT

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.     BUYER’S REPRESENTATIONS
  AND WARRANTIES

  	
  2

  
	
   

  	
   

  	
   

  
	
  (A)

  	
  ORGANIZATION; AUTHORITY

  	
  2

  
	
  (B)

  	
  NO PUBLIC SALE OR DISTRIBUTION

  	
  2

  
	
  (C)

  	
  ACCREDITED INVESTOR STATUS; SOPHISTICATION

  	
  2

  
	
  (D)

  	
  RELIANCE ON EXEMPTIONS

  	
  2

  
	
  (E)

  	
  CERTAIN SECURITIES TRANSACTIONS

  	
  3

  
	
  (F)

  	
  INFORMATION

  	
  3

  
	
  (G)

  	
  NO GOVERNMENTAL REVIEW

  	
  3

  
	
  (H)

  	
  TRANSFER OR RESALE

  	
  3

  
	
  (I)

  	
  LEGENDS

  	
  4

  
	
  (J)

  	
  VALIDITY; ENFORCEMENT

  	
  5

  
	
  (K)

  	
  NO CONFLICTS

  	
  5

  
	
  (L)

  	
  STOCK OWNERSHIP

  	
  5

  
	
  (M)

  	
  RESIDENCY

  	
  5

  
	
  (N)

  	
  NO BROKER

  	
  5

  
	
   

  	
   

  	
   

  
	
  3.     REPRESENTATIONS AND
  WARRANTIES OF THE COMPANY

  	
  6

  
	
   

  	
   

  	
   

  
	
  (A)

  	
  ORGANIZATION AND QUALIFICATION

  	
  6

  
	
  (B)

  	
  STATUS OF COMPANY AND SUBSIDIARIES

  	
  6

  
	
  (C)

  	
  AUTHORIZATION; ENFORCEMENT; VALIDITY

  	
  6

  
	
  (D)

  	
  ISSUANCE OF PURCHASED SHARES; NO RESTRICTIONS ON
  TRANSFER

  	
  7

  
	
  (E)

  	
  NO CONFLICTS

  	
  7

  
	
  (F)

  	
  CONSENTS

  	
  7

  
	
  (G)

  	
  NO GENERAL SOLICITATION; PLACEMENT AGENT’S FEES

  	
  7

  
	
  (H)

  	
  NO REGISTRATION DUE TO INTEGRATED OFFERING

  	
  8

  
	
  (I)

  	
  APPLICATION OF TAKEOVER AND OTHER PROTECTIONS;
  RIGHTS AGREEMENT

  	
  8

  
	
  (J)

  	
  SEC DOCUMENTS; FINANCIAL STATEMENTS

  	
  8

  
	
  (K)

  	
  ACCURACY OF INFORMATION

  	
  9

  
	
  (L)

  	
  ABSENCE OF CERTAIN CHANGES

  	
  9

  
	
  (M)

  	
  NO UNDISCLOSED LIABILITIES

  	
  10

  
	
  (N)

  	
  CONDUCT OF BUSINESS; REGULATORY PERMITS

  	
  11

  
	
  (O)

  	
  INVESTMENT COMPANY STATUS

  	
  11

  
	
  (P)

  	
  TRANSACTIONS WITH AFFILIATES

  	
  11

  
	
  (Q)

  	
  AGREEMENTS WITH REGULATORY AGENCIES

  	
  12

  
	
  (R)

  	
  EQUITY CAPITALIZATION

  	
  12

  

 

i

 

	
  (S)

  	
  SUBSIDIARIES

  	
  13

  
	
  (T)

  	
  ABSENCE OF LITIGATION

  	
  14

  
	
  (U)

  	
  PROPERTIES AND LEASES

  	
  14

  
	
  (V)

  	
  INSURANCE

  	
  14

  
	
  (W)

  	
  TAX STATUS

  	
  14

  
	
  (X)

  	
  MANIPULATION OF PRICE

  	
  15

  
	
  (Y)

  	
  SHELL COMPANY STATUS

  	
  15

  
	
  (Z)

  	
  U.S. REAL PROPERTY HOLDING CORPORATION STATUS

  	
  15

  
	
  (AA)

  	
  ALLOWANCE FOR POSSIBLE LOAN LOSSES

  	
  15

  
	
   

  	
   

  	
   

  
	
  4.     COVENANTS

  	
  15

  
	
   

  	
   

  	
   

  
	
  (A)

  	
  FORM D AND BLUE SKY

  	
  15

  
	
  (B)

  	
  REPORTS

  	
  15

  
	
  (C)

  	
  USE OF PROCEEDS

  	
  15

  
	
  (D)

  	
  LISTING

  	
  16

  
	
  (E)

  	
  EXPENSES

  	
  16

  
	
  (F)

  	
  PLEDGE OF PURCHASED SHARES

  	
  16

  
	
  (G)

  	
  DISCLOSURE OF TRANSACTIONS AND OTHER MATERIAL
  INFORMATION

  	
  16

  
	
  (H)

  	
  CERTAIN FUTURE ACTIONS

  	
  17

  
	
  (I)

  	
  STANDSTILL

  	
  18

  
	
  (J)

  	
  STOCK CERTIFICATES

  	
  19

  
	
   

  	
   

  	
   

  
	
  5.     CONDITIONS TO THE
  COMPANY’S OBLIGATION TO SELL

  	
  19

  
	
   

  	
   

  	
   

  
	
  6.     CONDITIONS TO THE
  BUYER’S OBLIGATION TO PURCHASE

  	
  20

  
	
   

  	
   

  	
   

  
	
  7.     SURVIVAL AND
  INDEMNIFICATION

  	
  21

  
	
   

  	
   

  	
   

  
	
  (A)

  	
  SURVIVAL

  	
  21

  
	
  (B)

  	
  INDEMNIFICATION

  	
  21

  
	
  (C)

  	
  PROCEDURE

  	
  22

  
	
  (D)

  	
  REIMBURSEMENT

  	
  23

  
	
   

  	
   

  	
   

  
	
  8.     TERMINATION

  	
  23

  
	
   

  	
   

  	
   

  
	
  (A)

  	
  TERMINATION BY MUTUAL AGREEMENT

  	
  23

  
	
  (B)

  	
  TERMINATION FOR FAILURE TO CLOSE

  	
  23

  
	
  (C)

  	
  TERMINATION FOR BREACH

  	
  23

  
	
  (D)

  	
  EFFECTS OF TERMINATION

  	
  23

  
	
   

  	
   

  	
   

  
	
  9.     MISCELLANEOUS

  	
  23

  
	
   

  	
   

  	
   

  
	
  (A)

  	
  DEFINITIONS

  	
  23

  
	
  (B)

  	
  GOVERNING LAW; JURISDICTION; JURY TRIAL

  	
  28

  
	
  (C)

  	
  COUNTERPARTS

  	
  28

  
	
  (D)

  	
  HEADINGS

  	
  29

  
	
  (E)

  	
  SEVERABILITY

  	
  29

  
	
  (F)

  	
  ENTIRE AGREEMENT; AMENDMENTS

  	
  29

  
	
  (G)

  	
  NOTICES

  	
  29

  
	
  (H)

  	
  SUCCESSORS AND ASSIGNS

  	
  30

  
	
  (I)

  	
  NO THIRD PARTY BENEFICIARIES

  	
  30

  

 

ii

 

	
  (J)

  	
  FURTHER ASSURANCES

  	
  30

  
	
  (K)

  	
  NO STRICT CONSTRUCTION

  	
  30

  
	
  (L)

  	
  REMEDIES

  	
  30

  
	
  (M)

  	
  ACKNOWLEDGMENT REGARDING BUYER’S PURCHASED SHARES

  	
  31

  
	
  (N)

  	
  INTERPRETIVE MATTERS

  	
  31

  

 

 

Disclosure Letter

 

Exhibits

 

	
  Exhibit A

  	
  Katten Legal Opinion

  
	
  Exhibit B

  	
  Registration Rights Agreement

  

 

iii

 

SECURITIES PURCHASE AGREEMENT

 

SECURITIES PURCHASE
AGREEMENT (the “Agreement”), dated as of January 29, 2010, by and
among Meta Financial Group, Inc., a Delaware corporation, with
headquarters located at 121 East Fifth Street, Storm Lake, Iowa 50588 (the “Company”),
and NetSpend Holdings, Inc., a Delaware corporation (the “Buyer”).  Certain defined terms used herein are listed
in Section 9(a).

 

WHEREAS:

 

A.                                   Each of the
Company and the Buyer is executing and delivering this Agreement in reliance
upon the exemption from securities registration afforded by Section 4(2) of
the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506
of Regulation D (“Regulation D”) as promulgated by the United States
Securities and Exchange Commission (the “SEC”) under the 1933 Act.

 

B.                                     The Buyer
wishes to purchase, and the Company wishes to sell, upon the terms and
conditions stated in this Agreement, 150,000 shares (the “Purchased Shares”)
of the Company’s common stock, par value $0.01 per share (the “Common Stock”).

 

C.                                     The Company has
agreed to file a registration statement with respect to the resale of the
Purchased Shares in accordance with the terms of the Registration Rights
Agreement (hereinafter defined).

 

NOW, THEREFORE, the Company
and the Buyer hereby agree as follows:

 

1.                                       PURCHASE AND SALE OF COMMON STOCK.

 

(a)                             Common Stock.  Subject to the satisfaction (or waiver) of
the conditions set forth in Sections 5 and 6 below, the Company
shall issue and sell to the Buyer, and the Buyer agrees to purchase from the
Company, on the Closing Date the Purchased Shares.

 

(b)                            Closing.  The closing (the “Closing”) of the
purchase of the Purchased Shares by the Buyer shall occur at the offices of
Finn Dixon & Herling LLP, 177 Broad Street, Stamford, Connecticut
06901.  The date and time of the Closing
(the “Closing Date”) shall be 10:00 a.m., New York City Time, on January 29,
2010, subject to the satisfaction of the conditions to the Closing set forth in
Sections 5 and 6 below (or such other date and time as is
mutually agreed to by the Company and the Buyer).

 

(c)                             Purchase Price.  The aggregate purchase price for all the
Purchased Shares to be purchased by the Buyer (the “Purchase Price”)
shall be $3,210,000.

 

(d)                            Form of Payment.  On the Closing Date, (i) the Buyer shall
pay the Purchase Price to the Company for the Purchased Shares to be issued and
sold to the Buyer at the Closing, by wire transfer of immediately available
funds in accordance with the Company’s written wire instructions which shall be
given to the Buyer in writing not later than one (1) day prior to the
Closing Date, and (ii) the Company shall instruct its transfer agent,
Registrar and Transfer Company (the “Transfer Agent”), to issue and
deliver to the Buyer the Purchased Shares in a

 

 

single stock certificate,
free and clear of all restrictive legends (except as expressly provided in Section 2(i) hereof),
evidencing the number of Purchased Shares being purchased by the Buyer.

 

2.                                       BUYER’S REPRESENTATIONS AND WARRANTIES.

 

As of the date hereof, the
Buyer represents and warrants that:

 

(a)                             Organization; Authority.  The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization with the requisite corporate power and authority to enter into and
to consummate the transaction contemplated by this Agreement and otherwise to
carry out its obligations hereunder. This Agreement has been duly executed and
delivered by the Buyer and constitutes the legal, valid and binding obligation
of the Buyer, enforceable against the Buyer in accordance with its terms,
except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar Laws relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies.

 

(b)                            No Public Sale or
Distribution.  The Buyer
is acquiring the Purchased Shares for its own account and not with a view
towards, or for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered or exempt from the registration
requirements under the 1933 Act; provided, however, that by
making the representations herein, the Buyer does not agree to hold any of the
Purchased Shares for any minimum or other specific term and reserves the right
to dispose of the Purchased Shares at any time in accordance with or pursuant
to a registration statement or an exemption from the registration requirements
under the 1933 Act.  The Buyer does not
presently have any agreement or understanding, directly or indirectly, with any
Person to resell or distribute any of the Purchased Shares in violation of the
1933 Act.

 

(c)                             Accredited Investor Status;
Sophistication.

 

(i)                                     The Buyer is an “accredited investor” as that term is
defined in Rule 501(a) of Regulation D.

 

(ii)                                  The Buyer has, by reason of its business and financial
experience, such knowledge, sophistication and experience in financial and
business matters and in making investment decisions of the type contemplated
hereby that it is capable of (A) evaluating the merits and risks of
an investment in the Purchased Shares and making an informed investment
decision, (B) protecting its own interests (financially or
otherwise), and (C) bearing the economic risk of such investment
for an indefinite period of time.

 

(d)                            Reliance on Exemptions.  The Buyer understands that the Purchased
Shares are being offered and sold to it in reliance on specific exemptions from
the registration requirements of United States federal and state securities
laws and that the Company is relying in part upon the truth and accuracy of,
and the Buyer’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of the Buyer
to acquire the Purchased Shares.

 

2

 

(e)                             Certain Securities
Transactions.  During the
period (the “Pre-Announcement Period”) beginning with the date on which
the Buyer commenced discussions with the Company in respect of the transaction
contemplated hereby and ending on the date of the 8-K Filing (as defined
below), and except for the purchase of the Purchased Shares hereunder on the
Closing Date, neither the Buyer nor any Affiliate controlled by the Buyer, nor
to the knowledge of the Buyer any Affiliate controlling the Buyer or under
common control with the Buyer, has entered, or will not enter, into any
transaction in respect of or involving the Common Stock or any Convertible
Securities or Options, including any purchase or sale, derivative or hedging
transaction.  Without limiting the
foregoing, during the Pre-Announcement Period, the Buyer has not and will not
engage in any transaction constituting a “short sale” (as defined in Rule 200
of Regulation SHO under the 1934 Act) of shares of Common Stock or establish an
open “put equivalent position” (within the meaning of Rule 16a-1(h) under
the 1934 Act) with respect to the Common Stock.

 

(f)                               Information.  The Buyer and its advisors, if any, have received
all materials relating to the business, finances and operations of the Company
and materials relating to the offer and sale of the Purchased Shares which have
been requested by the Buyer.  The Buyer
and its advisors, if any, have been afforded the opportunity to ask questions
of, and have received answers from, the Company regarding the Company and the
transactions contemplated hereby. 
Neither such inquiries nor any other due diligence investigations
conducted by the Buyer or its advisors or representatives, nor any other
statement made by Buyer in this Section 2, shall modify, amend or
affect the Company’s representations and warranties contained herein or the
Buyer’s right to rely thereon.  The Buyer
understands that its investment in the Purchased Shares involves a high degree
of risk.  The Buyer has sought such
accounting, legal and tax advice as it has considered necessary to make an
informed investment decision with respect to its acquisition of the Purchased
Shares.

 

(g)                            No Governmental Review.  The Buyer understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Purchased Shares or
the fairness or suitability of the investment in the Purchased Shares nor have
such authorities passed upon or endorsed the merits of the offering of the
Purchased Shares.

 

(h)                            Transfer or Resale.  The Buyer understands that:

 

(i)                                     the Purchased Shares have not been and, except as provided
in the Registration Rights Agreement, are not being registered under the 1933
Act or any state securities Laws, and may not be offered for sale, sold,
assigned or transferred unless (A) subsequently registered thereunder and
sold, assigned or transferred pursuant to an effective registration statement, (B) the
Buyer shall have delivered to the Company an opinion of counsel reasonably
acceptable to the Company, which opinion shall be in a form reasonably
acceptable to the Company and the transfer agent for the Common Stock, to the
effect that such Purchased Shares to be sold, assigned or transferred have been
or are being sold, assigned or transferred pursuant to an exemption from such
registration, or (C) the Buyer provides the Company with reasonable
assurance, and certifications to the effect, that (I) such Purchased
Shares have been or are being sold, assigned or transferred pursuant to Rule 144
promulgated under the 1933 Act (or a successor rule thereto) (“Rule 144”)
or Rule 144A promulgated under the 1933 Act (or

 

3

 

successor
rule thereto) (“Rule 144A”) or (II) the Buyer is not an
Affiliate of the Company and the Purchased Shares can then be sold by the Buyer
pursuant to Rule 144 without any restrictions or limitations thereunder
and without compliance with the current public information requirement thereof;

 

(ii)                                  any sale of the Purchased Shares made in reliance on Rule 144
or Rule 144A shall be made in accordance with the terms of Rule 144
or Rule 144A, as applicable, and, further, if Rule 144 or Rule 144A
is not applicable, any resale of the Purchased Shares under circumstances in
which the seller (or the Person through whom the sale is made) may be deemed to
be an underwriter (as that term is defined in the 1933 Act) may require
compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and

 

(iii)                               except as set forth in the Registration Rights Agreement,
neither the Company nor any other Person is under any obligation to register
the Purchased Shares under the 1933 Act or any state securities Laws or to
comply with the terms and conditions of any exemption thereunder.

 

The Purchased Shares may be
pledged in connection with a bona fide margin account or other loan or
financing arrangement secured by the Purchased Shares and such pledge of
Purchased Shares shall not be deemed to be a transfer, sale or assignment of
the Purchased Shares hereunder, and, except as required by applicable law, the
Buyer shall not be required to provide the Company with any notice thereof or
otherwise make any delivery to the Company pursuant to this Agreement,
including this Section 2(h), in connection with such a pledge.

 

(i)                                Legends.  The Buyer understands that the stock
certificates representing the Purchased Shares, except as set forth below,
shall bear any legend as required by the “blue sky” Laws of any state and a
restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of such stock certificates in violation of
the restrictions on transfer set forth herein):

 

THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “1933 ACT”), OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE 1933 ACT OR (B) AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, IN FORM AND
SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY AND THE TRANSFER AGENT FOR THE
COMPANY’S COMMON STOCK, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT AND
APPLICABLE STATE SECURITIES LAWS OR (II) UNLESS SOLD PURSUANT TO RULE 144
OR RULE 144A UNDER SAID ACT. 
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED
PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT.

 

4

 

The legend set forth above
shall be removed and the Company shall issue a certificate without such legend
to the holder of the Purchased Shares upon which it is stamped, unless
otherwise required by state securities Laws, if (i) such Purchased Shares
are registered for resale and shall be resold pursuant to an effective
registration statement under the 1933 Act, (ii) the Buyer shall have
delivered to the Company an opinion of counsel reasonably acceptable to the
Company, which opinion shall be in a form reasonably acceptable to the Company
and the transfer agent for the Common Stock, to the effect that such Purchased
Shares may be freely sold without restriction or limitation without
registration under the 1933 Act, or (iii) such holder provides the Company
with reasonable assurance, and certification to the effect, that (A) the
Purchased Shares have been or are being sold, assigned or transferred pursuant
to Rule 144 or Rule 144A or (B) such holder is not an Affiliate
of the Company and the Purchased Shares can be sold by such holder pursuant to Rule 144
without any restrictions or limitations under Rule 144 and without
compliance with the current public information requirement thereof.

 

(j)                                Validity; Enforcement.  This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Buyer and constitutes the
legal, valid and binding obligation of the Buyer, enforceable against the Buyer
in accordance with its terms, except as such enforceability may be limited by
general principles of equity or by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar Laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies.

 

(k)                             No Conflicts.  The execution, delivery and performance by
the Buyer of this Agreement and the consummation by the Buyer of the
transactions contemplated hereby, will not (i) result in a violation of
the organizational documents of the Buyer, (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Buyer is a party, or (iii) result in a violation
of any Law (including federal and state securities Laws) applicable to the Buyer,
except in the case of clauses (ii) and (iii) above,
for such conflicts, defaults, rights or violations which would not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of the Buyer to perform its obligations
hereunder.

 

(l)                                Stock Ownership.  Neither the Buyer nor any of its Affiliates
own beneficially or of record any Common Stock or other securities of the
Company other than (i) in the case of the Buyer as of the Closing
Date, the Purchased Shares, and (ii) in the case of any such Affiliate,
shares of capital stock of the Company that are held through the mutual fund
holdings of such Affiliate.

 

(m)                          Residency.  The Buyer is incorporated, and its principal
office is located, in the State of Texas.

 

(n)                            No Broker.  Buyer has not engaged any broker or other
similar agent in connection with its purchase of the Purchased Shares.

 

5

 

 

3.                                       REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

The Company represents and
warrants to the Buyer that, except as otherwise disclosed or incorporated by
reference and readily apparent in: (i) the Company’s Annual Report on Form 10-K
for the year ended September 30, 2009 or any of its other reports and
forms filed with or furnished to the SEC under Section 12, 13, 14 or 15(d) of
the Securities Exchange Act of 1934, as amended (the “1934 Act”), after September 30,
2009 and publicly available before the date of this Agreement (including any
amendments or supplements thereto, but excluding risk factors and/or any other
disclosures of risks included in any forward-looking statement disclaimers or
other statements that are similarly nonspecific and are predictive and
forward-looking in nature) (all such reports and forms, collectively, the “SEC
Reports”); or (ii) as set forth in the disclosure letter dated as of
the date hereof provided to the Buyer separately (the “Disclosure Letter”),
it being agreed that a disclosure set forth on any particular Schedule of the
Disclosure Letter shall constitute disclosure on each other Schedule thereof
provided it is readily apparent that the information so disclosed on the first
Schedule shall apply to such other Schedule or the representation and warranty
as to which such Schedule relates:

 

(a)                                  Organization
and Qualification.  The Company
and its Subsidiaries (other than MetaBank) are entities duly organized and
validly existing and in good standing, and MetaBank is duly organized and
validly existing, under the laws of the jurisdiction in which they are formed,
and have the requisite power and authorization to own their properties and to
carry on their business as now being conducted. 
Each of the Company and its Subsidiaries is duly qualified as a foreign
entity to do business and is in good standing in every jurisdiction in which
its ownership of property or the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not reasonably be expected to have a
Material Adverse Effect.

 

(b)                                 Status of
Company and Subsidiaries.  The
Company is a savings and loan holding company under the Home Owners’ Loan Act
of 1933, as amended (“HOLA”). 
MetaBank is a federally chartered stock savings bank duly organized and
validly existing under HOLA.  The deposit
accounts of MetaBank are insured up to applicable limits by the Deposit
Insurance Fund, which is administered by the Federal Deposit Insurance
Corporation, and no proceedings for the termination or revocation of such
insurance are pending or, to the Knowledge of the Company, threatened.  The federal stock savings bank charter of
MetaBank complies in all material respects with applicable Law.  MetaBank is considered “well capitalized” and
“well managed” under the prompt corrective action provisions of the Federal
Deposit Insurance Act (12 U.S.C. §1831o and 12 C.F.R. Part 565).

 

(c)                                  Authorization;
Enforcement; Validity.  The
Company has the requisite power and authority to enter into and perform its
obligations under this Agreement and the Registration Rights Agreement and to
issue the Purchased Shares in accordance with the terms hereof.  The execution and delivery of this Agreement
and the Registration Rights Agreement by the Company and the consummation by
the Company of the transactions contemplated hereby and thereby, including the
issuance of the Purchased Shares, have been duly authorized by the Company’s
board of directors (the “Board of Directors”).  No further corporate consent or authorization
is required by the Company, the Board of Directors or the Company’s
stockholders in connection with the execution and delivery by the Company of
this Agreement and the 

 

6

 

Registration
Rights Agreement and the performance of the Company’s obligations hereunder and
thereunder, including the issuance of the Purchased Shares.  This Agreement and the Registration Rights
Agreement have been duly executed and delivered by the Company and constitute
the legal, valid and binding obligations of the Company, enforceable against
the Company in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar Laws
relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies.

 

(d)                                 Issuance of
Purchased Shares; No Restrictions on Transfer.  Upon the issuance of and payment for the
Purchased Shares in accordance with this Agreement, such Purchased Shares will
be validly issued, fully paid and nonassessable, and free and clear of all
liens and/or restrictions on transfer (other than restrictions on transfer
provided for by applicable federal and state securities Laws or expressly
provided for herein) and will not be subject to preemptive rights of any other
stockholder of the Company.  Subject to
the representations and warranties of the Buyer in this Agreement, the offer
and sale by the Company of the Purchased Shares to the Buyer hereunder are
exempt from registration under the 1933 Act.

 

(e)                                  No Conflicts.  Except as set forth on Schedule 3(e) of
the Disclosure Letter, the execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transaction
contemplated hereby (including the issuance of the Purchased Shares) will not (i) violate
the Certificate of Incorporation or the Bylaws, (ii) violate, conflict
with, or constitute a default (or an event which with notice or lapse of time
or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a
party, (iii) assuming the filing of a Form D and state securities Law
filings, and such filings as are required by the Principal Market (or the rules and
regulations thereof), result in a violation of any Law, or rules and
regulations of the Principal Market, applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected or (iv) result in or require the
creation or imposition of any lien upon or with respect to any of the
properties or assets of the Company or any of its Subsidiaries, except in the
case of clauses (ii) and (iv), as would not reasonably be
expected to have a Material Adverse Effect.

 

(f)                                    Consents.  Neither the Company nor any of its
Subsidiaries is required to obtain any consent, authorization or order of, or
make any filing or registration with, any court, governmental agency, including
the OTS, or any regulatory or self-regulatory agency (including the Principal
Market) or any other Person in order for the Company to execute, deliver or
perform any of its obligations under or contemplated by this Agreement in
accordance with the terms hereof, other than the filing with the SEC of a Form D
and any other filings as may be required by any state securities agencies and
such filings as are required by the Principal Market (or the rules and
regulations thereof).

 

(g)                                 No General
Solicitation; Placement Agent’s Fees.  Neither the Company, nor any of its Subsidiaries
or Affiliates, nor any Person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D) in connection with the offer or sale of the Purchased Shares.  The Company shall be responsible for 

 

7

 

the
payment of any placement agent’s fees, financial advisory fees, or brokers’
commissions (other than for persons engaged by the Buyer) relating to or
arising out of the transaction contemplated hereby.  The Company shall pay, and hold the Buyer
harmless against, any liability, loss or expense (including, without
limitation, reasonable attorney’s fees and out-of-pocket expenses) arising in
connection with any fee claimed by any placement agent, financial advisor or
broker claiming to have been engaged by, or to otherwise have been acting on
the Company’s behalf, in connection with the transaction contemplated
hereby.  Neither the Company nor any of
its Subsidiaries has engaged any placement agent or other similar agent in
connection with the sale of the Purchased Shares.

 

(h)                                 No Registration
Due to Integrated Offering.  None of the Company, its Subsidiaries, any of
their Affiliates, and any Person acting on their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of the
offer or sale to the Buyer of any of the Purchased Shares under the 1933 Act or
require approval by the stockholders of the Company of the sale to the Buyer of
the Purchased Shares under the rules and regulations of the Principal
Market.  None of the Company or its
Subsidiaries or any Person acting on their behalf will take any action or steps
referred to in the preceding sentence that would require registration of the
offer or sale to the Buyer of any of the Purchased Shares under the 1933 Act
(except as contemplated by the Registration Rights Agreement) or require
approval by the stockholders of the Company of the sale to the Buyer of the
Purchased Shares under the rules and regulations of the Principal Market.

 

(i)                                     Application of
Takeover and Other Protections; Rights Agreement.  The Company and its Board of Directors have
taken all necessary action, if any, in order to render inapplicable any control
share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision
under the Certificate of Incorporation or any certificates of designations or
the laws of the jurisdiction of its formation or incorporation which is or
could become applicable to the Buyer as a result of the transaction
contemplated by this Agreement, including the Company’s issuance of the
Purchased Shares and the Buyer’s ownership of the Purchased Shares.

 

(j)                                     SEC Documents; Financial Statements.

 

(i)                                     Except as set forth on Schedule 3(j)(i) of the
Disclosure Letter, since September 30, 2009, the Company has timely filed
with or furnished to the SEC all forms, reports, schedules, statements,
certificates and other documents required to be filed by it with or furnished
by it to the SEC pursuant to the reporting requirements of the 1934 Act (all of
the foregoing filed or furnished since September 30, 2009 and prior to the
date hereof being hereinafter referred to as the “SEC Documents”).  As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the 1934
Act, and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time
they were filed with or furnished to the SEC, contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.  There are no outstanding unresolved written
comments from the SEC with respect to any SEC Document.

 

8

 

(ii)                                  As of their respective dates, the consolidated financial
statements of the Company and its Subsidiaries included in the SEC Documents
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with
respect thereto as in effect as of the time of filing.  Such financial statements (A) have been
prepared from, and are in accordance in all material respects with, the books
and records of the Company and its Subsidiaries, (B) have been prepared in
accordance with GAAP, consistently applied, during the periods involved (except
(1) as may be otherwise indicated in such financial statements or the
notes thereto, or (2) in the case of unaudited interim statements, to the
extent they may exclude footnotes or may be condensed or summary statements),
and (C) fairly present in all material respects the financial position of
the Company as of the dates thereof and the results of its operations, changes
in stockholders’ equity and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end adjustments). 
Since the date of the most recent balance sheet included in the SEC
Documents, the Company has not effected any
change in any method of accounting or accounting practice, except for any such
change required because of a concurrent change in GAAP, nor has it been advised
by its independent registered accounting firm or any Governmental Entity that
any such change in method of accounting or accounting practice is appropriate.

 

(iii)                               Solely to the extent that the Sarbanes-Oxley Act of 2002, as
amended, and the rules and regulations promulgated by the SEC and the
Principal Market thereunder (collectively, the “Sarbanes-Oxley Act”) has
been applicable to the Company, the Company is in compliance in all material
respects with any provision of the Sarbanes-Oxley Act applicable to the
Company.

 

(k)                                  Accuracy of
Information.  All factual
information, taken as a whole, furnished by or on behalf of the Company in
writing to the Buyer on or prior to the date of this Agreement for purposes of
this Agreement and all other such factual information, taken as a whole,
furnished by the Company on behalf of itself and its Subsidiaries in writing to
the Buyer pursuant to the terms of this Agreement does not, when taken together
with the SEC Documents, contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that with respect to any projected
financial information or forward-looking statements, business assumptions,
strategic plans or similar information, the Company represents only that such
information was prepared in good faith based upon assumptions, and subject to
such qualifications, believed to be reasonable at the time.  The Company
understands and confirms that the Buyer will rely on the representations and
warranties contained in this Section 3 in effecting transactions in
securities of the Company.

 

(l)                                     Absence of Certain Changes.

 

(i)                                     Except as disclosed in Schedule 3(l)(i) of the
Disclosure Letter or in the SEC Documents, since September 30, 2009, no
event or events have occurred that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.

 

(ii)                                  Except as set forth in Schedule 3(l)(ii) of the
Disclosure Letter or in the SEC Documents, since September 30, 2009, each
of the Company and each Subsidiary has 

 

9

 

conducted
its business in the ordinary course of business consistent with past practice,
and during such period neither the Company nor any Subsidiary has:

 

(A)                              issued any
note, bond, or other debt security or created, incurred, assumed, or guaranteed
any Indebtedness for borrowed money or capitalized lease obligation,
individually or in the aggregate, in excess of $250,000;

 

(B)                                (x) acquired
any other Person (or any significant business, portion or division thereof),
whether by merger, consolidation or reorganization or by purchase of such
Person’s assets or capital stock or otherwise and/or (y) terminated and/or
made material modifications to any material provisions of any agreements
evidencing or relating to the transactions described in the preceding clause (x);

 

(C)                                incurred any
material loss except for losses adequately provided for on the Company’s most
recent balance sheet included in the SEC documents and expenses associated with
this transaction;

 

(D)                               in the case of
the Company, declared or paid any dividends;

 

(E)                                 sold any
material assets outside the ordinary course of business;

 

(F)                                 experienced any
material change in asset concentrations as to customers or industries or in the
nature and source of its liabilities or in the mix of interest-bearing versus
noninterest-bearing deposits such that any such material change would have, or
can reasonably be anticipated to have, a Material Adverse Effect; or

 

(G)                                committed to
any of the foregoing.

 

(iii)                               Neither the Company nor any of its Subsidiaries has taken
any steps to seek protection pursuant to any bankruptcy Law nor does the
Company have any Knowledge or reason to believe that its creditors intend to
initiate involuntary bankruptcy proceedings or any actual Knowledge of any fact
that would reasonably lead a creditor to do so. 
The Company and its Subsidiaries, individually and on a consolidated
basis, are not as of the date hereof, and after giving effect to the
transactions contemplated hereby to occur at the Closing will not, be
Insolvent.

 

(m)                               No Undisclosed
Liabilities.  Neither the
Company nor any of its Subsidiaries has any liabilities or obligations of any
nature (absolute, accrued, contingent or otherwise) which are not properly
reflected or reserved against in the Company’s financial statements included in
the SEC Documents to the extent required to be so reflected or reserved against
in accordance with generally accepted accounting principles in the United
States, except for (i) liabilities that are listed or disclosed in Schedule
3(m) included in the Disclosure Letter, and (ii) liabilities that
have not had, and would not reasonably be expected to have, either individually
or in the aggregate, a Material Adverse Effect.

 

10

 

(n)                                 Conduct of Business; Regulatory Permits.

 

(i)                                     Neither the Company nor any of its Subsidiaries is in
violation of any term of its Certificate of Incorporation, any certificate of
designation, preferences or rights of any outstanding series of its preferred
stock or its Bylaws.

 

(ii)                                  The Company is not in violation in any material respect of
any of the rules, regulations or requirements of the Principal Market and has
no Knowledge of any facts or circumstances existing as of the date hereof that
would reasonably lead to delisting or suspension of the Common Stock by the
Principal Market in the foreseeable future. 
Since September 30, 2009, (A) the Common Stock has been
listed on the Principal Market, (B) trading in the Common Stock has
not been suspended by the SEC or the Principal Market (other than pursuant to
ordinary marketwide circuit breakers and excluding ordinary temporary
suspensions in connection with announcements of material Company news) and (C) the
Company has received no communication, written or oral, from the SEC or the
Principal Market regarding the suspension or delisting of the Common Stock from
the Principal Market.

 

(iii)                               The Company and its Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate regulatory authorities
necessary for them to own or lease their properties and assets and to conduct
their respective businesses as presently conducted, except where the failure to
possess such certificates, authorizations or permits would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect,
and neither the Company nor any such Subsidiary has received any written notice
of proceedings relating to the revocation or modification of any such
certificate, authorization or permit. 
The Company and its Subsidiaries have complied with and are not in
default or violation in any respect of any Law, policy or guideline of any
Governmental Entity, other than such defaults or violations that, individually
or in the aggregate, would not reasonably be expected to result in a Material
Adverse Effect.  To the Knowledge of the
Company, neither the Company nor any of its Subsidiaries is under investigation
with respect to, or has been threatened to be charged with or given notice of
any material violation of, any Law, policy or guideline of any Governmental
Entity.

 

(o)                                 Investment
Company Status.  The Company
is not, and upon consummation of the sale of the Purchased Shares will not be,
an “investment company”, or an “affiliated person” of, or “promoter” or “principal
underwriter” for, an “investment company” as such terms are defined in the
Investment Company Act of 1940, as amended.

 

(p)                                 Transactions
With Affiliates.  Except as
set forth in the SEC Documents and other than the outstanding stock options
and/or restricted stock disclosed on Schedule 3(p) of the
Disclosure Letter, none of the officers, directors or employees of the Company
or any of its Subsidiaries, or any of their respective Family Members, is
presently a party to any transaction with the Company or any of its
Subsidiaries (other than for services as employees, officers or directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from, any such
officer, director, employee or Family Member, or, to the Knowledge of the
Company or any of its Subsidiaries, any corporation, partnership, trust or
other 

 

11

 

entity
in which any such officer, director, employee or Family Member has a
substantial interest or is an officer, director, trustee or partner.

 

(q)                                 Agreements with
Regulatory Agencies.  Except as
set forth on Schedule 3(q) of the Disclosure Letter:

 

(i)                                     Since January 1, 2008, neither the Company, nor any of
its Subsidiaries is or has been subject to any cease and desist order, consent
order, assistance agreement, capital directive, supervisory agreement or other
formal agreement or memorandum of understanding with, or a party to any
commitment letter or similar undertaking to, or is subject to any formal or
informal order or directive by, or is a recipient of any supervisory letter
from any Governmental Entity which places any restriction on the business of
the Company or any Subsidiary (each, a “Regulatory Agreement”).

 

(ii)                                  Since January 1, 2008, neither the Company nor any
Subsidiary (A) has been advised by any Government Entity that it is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any Regulatory Agreement, or (B) has been any
obligation to submit a capital restoration plan.

 

(iii)                               The Company and each Subsidiary, as applicable, is in
compliance with all terms of any Regulatory Agreement that is disclosed on Schedule
3(q).

 

(iv)                              Except for examinations conducted by a Governmental Entity
in the ordinary course of the business of the Company and each Subsidiary, to
the Knowledge of the Company, no Governmental Entity initiated since January 1,
2008 or has pending any proceeding, enforcement action or formal investigation
into the business, disclosures or operations of the Company or any Subsidiary.

 

(v)                                 Since January 1, 2008, no Governmental Entity has
resolved any proceeding, enforcement action or formal investigation into the
business, disclosures or operations of the Company or any Subsidiary.

 

(vi)                              There is no unresolved violation, criticism or exception by
any Governmental Entity with respect to any report or statement relating to any
examination or inspection of the Company or any Subsidiary, except where such
violation, criticism or exceptions would not reasonably be expect to have,
individually or in the aggregate, a Material Adverse Effect.

 

(vii)                           Since January 1, 2008, other than in the ordinary
course of the Company’s business, there have been no formal inquiries by, or
disagreements or disputes with, any Governmental Entity with respect to the
business, operations, policies or procedures of the Company or any Subsidiary.

 

(r)                                    Equity
Capitalization.  As of the
date hereof (and without giving effect to the issuance of the Purchased
Shares), the authorized capital stock of the Company consists of (i) 5,200,000
shares of Common Stock, par value $.01 per share, of which as of the date
hereof, 2,915,895 are issued and outstanding and 1,118,497 shares are reserved
for issuance pursuant to securities exercisable or exchangeable for, or
convertible into, shares of Common Stock and 

 

12

 

(ii) 800,000  shares of preferred stock, par value $.01 per share, of
which as of the date hereof none are issued and outstanding.  All of such outstanding and reserved shares
have been, or upon issuance will be, validly issued and are fully paid and
nonassessable.  Except as disclosed in Schedule
3(r) of the Disclosure Letter: (i) none of the Company’s capital
stock is subject to preemptive rights or any other similar rights or any liens
or encumbrances suffered or permitted by the Company; (ii) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any capital stock of the
Company or any of its Subsidiaries, or contracts or arrangements by which the
Company or any of its Subsidiaries is or may become bound to issue additional
capital stock of the Company or any of its Subsidiaries or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any capital stock of the Company or any of its Subsidiaries; (iii) except
as provided in the Registration Rights Agreement, there are no agreements or
arrangements under which the Company or any of its Subsidiaries is obligated to
register the sale of any of their securities, whether presently outstanding or
securities that may be issued subsequently, under the 1933 Act; (iv) there
are no outstanding securities or instruments of the Company or any of its
Subsidiaries which contain any redemption or similar provisions, and, except as
set forth in Section 4(h)(ii), there are no contracts, commitments
or arrangements by which the Company or any of its Subsidiaries is or may
become bound to redeem a security of the Company or any of its Subsidiaries; (v) there
are no securities or instruments of the Company containing anti-dilution or
similar provisions, other than provisions for equitable adjustments upon a
stock split, stock dividend, combination or similar recapitalizations with
respect to the Company’s capital stock; and (vi) the Company does not have
any stock appreciation rights or “phantom stock” plans or agreements or any
similar plan or agreement.  To the
Company’s Knowledge, no stockholder of the Company has entered into any
agreement with respect to the voting of equity securities of the Company.  The Company has furnished to the Buyer true,
correct and complete copies of the Company’s Certificate of Incorporation, as
amended and as in effect on the date hereof (the “Certificate of
Incorporation”), and the Company’s Bylaws, as amended and as in effect on
the date hereof (the “Bylaws”).

 

(s)                                  Subsidiaries.  Schedule 3(s) of the Disclosure
Letter sets forth a complete and accurate list of all direct and indirect
Subsidiaries of the Company, showing in each case as of the date of this
Agreement (as to each such Subsidiary) the jurisdiction of its formation, and,
with respect to each non-wholly owned Subsidiary, the number of shares,
membership interests or partnership interests (as applicable) of each class of
its equity interests authorized, and the number outstanding, on the date of
this Agreement and the percentage of each such class of its equity interests
owned (directly or indirectly) by the Company, and the number of shares covered
by all outstanding options, warrants, rights of conversion or purchase and
similar rights as of the date of this Agreement.  All of the outstanding equity interests in
each of the Subsidiaries of the Company have been validly issued, are fully
paid and non-assessable and are owned by the Company or one or more of its
subsidiaries, free and clear of all liens. 
Except as set forth in Schedule 3(s) of the Disclosure
Letter, the Company or one of its Subsidiaries has the unrestricted right to
vote, and (subject to limitations imposed by applicable Law) to receive
dividends and distributions on, all capital securities of its Subsidiaries as
owned by the Company or such Subsidiary.

 

13

 

(t)                                    Absence of
Litigation.  Except as
set forth in Schedule 3(t) of the Disclosure Letter or as set forth
in the SEC Documents, there is no action, suit, proceeding, inquiry or
investigation before or by the Principal Market, any court, public board,
government agency, arbiter, mediator, self-regulatory organization or body
pending or, to the Knowledge of the Company, threatened against or affecting
the Company or any of its Subsidiaries, or, to the Company’s Knowledge, any of
the Company’s or its Subsidiaries’ officers or directors, that (i) is
reasonably likely to have a Material Adverse Effect or (ii) purports to
affect the legality, validity or enforceability of this Agreement or the
consummation of the transaction contemplated by this Agreement.

 

(u)                                 Properties and
Leases.  The Company and its
Subsidiaries have good and marketable title to all real properties and all other
material properties and assets that purport to be owned by them, in each case
free from liens, encumbrances, claims and defects that would affect the value
thereof or interfere with the use made or to be made thereof by them, except
for such defects in title or liens, encumbrances and claims that would not,
individually or in the aggregate, reasonably be likely to result in a Material
Adverse Effect.  The Company and its
Subsidiaries hold all leased real or personal property under valid and
enforceable leases with no exceptions that would interfere with the use made or
to be made thereof by them, and neither the Company nor any of its Subsidiaries
has any notice of any claim of any sort that has been asserted by anyone
adverse to the rights of the Company or any such Subsidiary under any such
leases, or affecting or questioning the rights of such entity to the continued
possession of the leased premises, except for such title exceptions or claims
that would not, individually or in the aggregate, reasonably be likely to
result in a Material Adverse Effect.

 

(v)                                 Insurance.  The Company and each of its Subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as companies engaged in a similar business would,
in accordance with good business practice, customarily be insured.

 

(w)                               Tax Status.  (i) Each of the Company and its
Subsidiaries has (A) duly and timely filed (including pursuant to
applicable extensions granted without penalty) all material Tax Returns
required to be filed by it, (B) paid in full all Taxes due, whether or not
shown as due on such Tax Returns, other than such Taxes being contested in good
faith or such Taxes the nonpayment of which would not, individually or in the
aggregate, reasonably be likely to result in a Material Adverse Effect, and (C) made
adequate provision for any unpaid Taxes not yet due in the financial statements
of the Company (in accordance with GAAP); (ii) no material deficiencies
for any Taxes have been proposed, asserted or assessed in writing against or
with respect to any Taxes due by or Tax Returns of the Company or any of its
Subsidiaries, which deficiencies have not since been resolved, except for Taxes
proposed, asserted or assessed that are being contested in good faith by
appropriate proceedings and for which reserves adequate in accordance with GAAP
have been provided in the financial statements of the Company; and (iii) there
are no material liens for Taxes upon the assets of either the Company or its
material Subsidiaries except for statutory liens for current Taxes not yet due
or liens for Taxes that are being contested in good faith by appropriate
proceedings and for which reserves adequate in accordance with GAAP have been
provided in the financial statements of the Company.

 

14

 

(x)          Manipulation of Price.  The Company has not, and to its Knowledge no
one acting on its behalf has, taken, directly or indirectly, any action
designed to cause or to result in the stabilization or manipulation of the
price of any security of the Company to facilitate the sale of any of the
Purchased Shares to the Buyer hereunder.

 

(y)         Shell Company Status.  The Company is not, and has never been, an
issuer of the type described in paragraph (i) of Rule 144 under the
1933 Act.

 

(z)          U.S. Real Property Holding Corporation Status.  The Company is not, nor has ever been, a U.S.
real property holding corporation within the meaning of Section 897 of the
Code of 1986, as amended.

 

(aa)        Allowance for Possible Loan Losses.  The allowance for possible loan or credit
losses (the “Allowance”) shown on the consolidated balance sheets of
each Subsidiary, as applicable, included in the most recent SEC Documents dated
prior to the date of this Agreement was, as of the dates thereof, adequate
(within the meaning of GAAP and applicable regulatory requirements or
guidelines) to provide for all known, reasonably anticipated or probable losses
relating to or inherent in the loan and lease portfolios (including accrued
interest receivables) of such Subsidiary and other extensions of credit
(including letters of credit and commitments to make loans or extend credit) by
such Subsidiary as of the date thereof; provided, however, that there can be no
assurance that future losses will not exceed the Allowance, or that additional
provisions for loan losses will not be required in future periods, and
provided, further, that it is understood that the Company’s determination of
the Allowance is subject to review by the Company’s bank regulator, which can
require the establishment of additional general or specific allowances.

 

4.             COVENANTS.

 

(a)          Form D and Blue Sky.  The Company agrees to file a Form D with
respect to the Purchased Shares as required under Regulation D and to provide a
copy thereof to the Buyer promptly after such filing.  The Company shall, on or before the Closing
Date, take such action (if any) as the Company shall reasonably determine is
necessary in order to obtain an exemption for or to qualify the Purchased
Shares for sale to the Buyer at the Closing pursuant to this Agreement under
applicable securities or “Blue Sky” laws of the states of the United States (or
to obtain an exemption from such qualification), and shall provide evidence of
any such action so taken to the Buyer on or prior to the Closing Date.  The Company shall make all filings and
reports relating to the offer and sale to the Buyer of the Purchased Shares
required under applicable securities or “Blue Sky” laws of the states of the
United States following the Closing Date.

 

(b)         Reports.  The Company shall timely file all reports
required to be filed with the SEC pursuant to the 1934 Act from and after the
date hereof and so long as the Company shall be required to do so.

 

(c)          Use of Proceeds.  The Company will use the proceeds from the
sale of the Purchased Shares as follows: (i) at least 75% of the proceeds
shall be contributed by the Company to MetaBank as Tier 1 Capital (as defined
pursuant to 12 C.F.R. 567.5(a)), and (ii) the

 

15

 

remainder shall be used for
general corporate purposes (including to pay expenses associated with the
transactions contemplated hereby and to pay dividends to the Company’s
shareholders).

 

(d)         Listing.  The Company shall promptly secure the listing
of all of the Purchased Shares upon the Principal Market and, at all times
while the Common Stock is listed on the Principal Market, shall maintain such
listing of all Purchased Shares.  The
Company shall use its commercially reasonable efforts to maintain the Common
Stock’s authorization for quotation on the Principal Market or any other
Eligible Market, and so long as the Buyer owns at least 33% of the number of
Purchased Shares originally purchased hereunder, neither the Company nor any of
its Subsidiaries shall take any action which would reasonably be expected to
result in the delisting or suspension of the Common Stock on the Principal
Market or any other Eligible Market (other than in connection with a change of
listing to another Eligible Market and excluding ordinary temporary suspensions
in connection with announcements of material Company news).  The Company shall pay all fees and expenses
in connection with satisfying its obligations under this Section 4(d).

 

(e)          Expenses.  Each party hereto shall be responsible for
its own costs and expenses incurred by it in connection with the transaction
contemplated hereby.

 

(f)          Pledge of Purchased Shares.  The Company acknowledges and agrees that the
Purchased Shares may be pledged by the Buyer and that such pledge of Purchased
Shares shall not be deemed to be a transfer, sale or assignment of the
Purchased Shares hereunder, and, except as required by applicable Law, the
Buyer shall not be required to provide the Company with any notice thereof or
otherwise make any delivery to the Company pursuant to this Agreement;
provided, however, that the Buyer and its pledgee shall be required to provide
notice to the Company and comply with the applicable provisions hereof,
including the requirements of Section 2(h), in order to effect (and otherwise
in connection with) any sale, transfer or assignment of the Purchased Shares to
such pledgee.

 

(g)         Disclosure of Transactions and Other Material
Information.  On or
before 5:30 p.m., New York City time, on the fourth (4th) Business Day following the
date of this Agreement, the Company shall issue a press release and file a
current report on Form 8-K describing the terms of the transaction
contemplated by this Agreement, in the form required by the 1934 Act and
attaching this Agreement as an exhibit to such filing (including such
attachment, the “8-K Filing”).  A
reasonable time prior to issuing the press release referred to in the previous
sentence, the Company shall provide the Buyer with a copy of the proposed press
release and shall consult with Buyer with respect to the content of such press
release and Form 8-K.  Subject to
the foregoing, none of the Company, its Subsidiaries and the Buyer shall issue
any press releases or any other public statements with respect to the
transaction contemplated hereby; provided, however, that (i) the
Company shall be entitled, without the prior approval of the Buyer, to make any
press release or other public disclosure with respect to such transaction in
substantial conformity with the 8-K Filing (provided that the Company shall
consult with the Buyer in connection with any such press release or other
public disclosure prior to its release) and (ii) either party may make
such disclosure as is required by applicable Law.

 

16

 

(h)         Certain Future
Actions.

 

(i)            From the Closing Date and so
long as the Buyer and its Affiliates, individually or collectively, shall hold
any Purchased Shares, neither the Buyer nor the Company shall, or permit any of
their respective Affiliates to, knowingly enter into any transaction or
otherwise take any other action that, after giving effect thereto, would result
in Buyer or any of its Affiliates to be determined by the OTS (A) to
have the power, directly or indirectly, to exercise a controlling influence
over, or direct, the management or policies of the Company or any Subsidiary, (B) to
be in “control” (as such term is used in 12 CFR Part 574) of the Company
or any Subsidiary, or otherwise be required to register as a savings and loan
holding company, as such term is defined in 12 C.F.R. § 583.20, (C) to
be an “affiliate” (as defined under 12 C.F.R. § 223.2) of any Subsidiary, such
that any transactions between Buyer and such Subsidiary would be subject to
compliance with §§ 23A and 23B of the Federal Reserve Act or Regulation W, 12
C.F.R. Part 223, or (D) to be an “insider” (as defined in 12
C.F.R. § 215.2) of the Company or any Subsidiary such that any transactions
between Buyer and its Affiliates, on the one hand, and the Company and such
Subsidiary, on the other, would be subject to compliance with Regulation O
of 12 C.F.R. § 215.  Notwithstanding the foregoing, the Buyer
hereby agrees that no pro-rata repurchase or pro-rata redemption by the Company
of any shares of its Common Stock shall result in a breach by the Company of
the provisions of this Section 4(h)(i).

 

(ii)           From the Closing Date and so
long as the Buyer and its Affiliates (who are known to the Company to be a
holder of any Purchased Shares), individually or collectively, shall hold any
Purchased Shares, if the
Company offers a redemption or repurchase of Common Stock to any holder of
Common Stock on a non-pro-rata basis that would cause the Buyer’s and such
Affiliates’ collective ownership of the Company’s Common Stock to exceed 4.999%
of the total outstanding Common Stock of the Company, as calculated for the
purposes of the Bank Holding Company Act of 1956 (as amended) or HOLA, then,
provided the Company shall have so redeemed or repurchased Common Stock
pursuant to such offer (such shares so redeemed or repurchased, the “Non-Pro-Rata
Repurchased Shares”), the Company shall, on or prior to the date of the
redemption or repurchase of such Non-Pro-Rata Repurchased Shares, purchase that
portion of the shares of Company Common Stock held by the Buyer and/or such
Affiliates in excess of 4.999% of the total outstanding Common Stock of the
Company for an aggregate cash purchase price equal to (x) in the case of
any purchase occurring during the period commencing on the Closing Date and
ending on the eighteen (18) month anniversary of the Closing Date, the greater
of the fair market value of such excess shares and the price paid for the
shares purchased under this Agreement, and (y) in the case of any purchase
occurring at any time after the eighteen (18) month anniversary of the Closing
Date, the fair market value of such excess shares. For purposes of this
commitment, fair market value shall mean (a) if the Company’s common stock
is traded on an Eligible Market, the price which represents the trailing
20-trading day average of the closing “bid” price (determined without regard to
after hours trading or any other trading outside of the regular trading session
trading hours) or (b) if not so traded, the fair market value of such
shares on such date as determined in good faith between the Buyer and the
Company.  Should the Company and the
Buyer not reach an agreement as to such shares fair market value within 15 days
from the date the Company provided notice to the Buyer pursuant to this
commitment, then such fair market value shall be determined by an independent,
nationally recognized investment banking firm, accounting firm or appraisal
firm selected by the Buyer and reasonably acceptable to the Company and paid
for by the Company. The closing of any purchase and sale shall occur on or
prior to the date that the Buyer shall have redeemed or repurchased such
Non-Pro-Rata Repurchased Shares (as specified in a written notice to the

 

17

 

Buyer
by the Company), at such place as the Company and the Buyer may agree and
pursuant to a stock purchase or redemption agreement in form and substance
reasonably acceptable to the Company and the Buyer.  At the closing, the Buyer and/or its
Affiliates, as applicable, shall assign the relevant excess shares then owned
by them to the Company free and clear of all liens, and the Company shall pay
the purchase price for such shares in cash or other immediately available
funds. Notwithstanding anything to the contrary contained herein, the Company’s
obligation to repurchase any such excess shares pursuant to this Section 4(h)(ii) shall
be subject to applicable law (including the provisions of Section 160 of
the Delaware General Corporation Law).

 

(i)           Standstill.  The Buyer hereby agrees that, during the
period commencing on the Closing Date and on the second annual anniversary
thereof (the “Standstill Period”), unless specifically invited in writing by
the Company, the Buyer will not, and will not permit any director, officer or
Affiliate of the Buyer to, in any manner, directly or indirectly (including by
directing or causing any other Person that is not the Buyer or a director,
officer of Affiliate of the Buyer to):

 

(i)            effect
or seek, offer or propose (whether publicly or otherwise) to effect, or
announce any intention to effect or cause or participate in or in any way
assist, facilitate or encourage any other Person to effect or seek, offer or
propose (whether publicly or otherwise) to effect or participate in, (A) any
acquisition of any securities (or beneficial ownership thereof) or rights or
options to acquire any securities (or beneficial ownership thereof) of the
Company or any of its Subsidiaries or Company Controlled Affiliates if, after
giving effect to any such acquisition, the Buyer and/or any Buyer Controlled
Entity and/or Control Group Member, either individually or in the aggregate,
would beneficially own more than four and ninety-nine one hundreths percent
(4.99%) of the Common Stock then outstanding, (B) any tender or
exchange offer, merger or other business combination involving the Company or
any of its Subsidiaries or Company Controlled Affiliates or any division or
line of business of any thereof, (C) any recapitalization,
restructuring, liquidation, dissolution or other extraordinary transaction with
respect to the Company or any of its Subsidiaries or Company Controlled
Affiliates or any division thereof, or (D) any “solicitation” of “proxies”
(as such terms are used in the proxy rules of the SEC) or consents to vote
any voting securities of the Company;

 

(ii)           form,
join or in any way participate in a “group” (within the meaning of Section 13(d)(3) of
the 1934 Act) with respect to the securities of the Company or any of its
Subsidiaries or Company Controlled Affiliates;

 

(iii)          otherwise
act, alone or in concert with others, to seek to control or influence the
management, the board of directors or the policies of the Company or any of its
Subsidiaries or Company Controlled Affiliates;

 

(iv)          take
any action which would or would reasonably be expected to force the Company to
make a public announcement regarding any of the types of matters set forth in
clause (i) above; or

 

(v)           enter
into any discussions or arrangements with any third party with respect to any of
the foregoing.

 

18

 

The Buyer further agrees
that it shall not, and shall not permit any director, officer of Affiliate of
the Buyer to, during the Standstill Period, directly or indirectly, request the
Company (or its directors, officers, employees or agents) to amend or waive any
provision of this Section 4(i)(including this sentence).

 

(j)           Stock Certificates.  The Company shall instruct the Transfer Agent
to issue the stock certificates representing the Purchased Shares as required
by this Agreement and take such actions as shall be requested by the Transfer
Agent such that such stock certificates shall be delivered to the Buyer within
five (5) Business Days after the Closing Date.

 

5.             CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

 

The obligation of the
Company hereunder to issue and sell the Purchased Shares to the Buyer at the
Closing is subject to the satisfaction, at or before the Closing Date, of each
of the following conditions; provided that these conditions are for the
Company’s sole benefit and may be waived by the Company at any time in its sole
discretion by providing the Buyer with prior written notice thereof:

 

(i)            The
Buyer shall have delivered to the Company the Purchase Price for the Purchased
Shares by wire transfer of immediately available funds pursuant to the wire
instructions provided by the Company.

 

(ii)           The
representations and warranties of the Buyer shall be true and correct in all
material respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which shall be true and
correct in all respects) as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that speak
as of a specific date, which shall be true and correct as of such specified
date), and the Buyer shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by the Buyer at or
prior to the Closing Date.  The Company
shall have received a certificate, executed by the Chief Executive Officer or
Chief Financial Officer (or other senior executive officer reasonably
acceptable to the Company) of the Buyer and dated as of the Closing Date, to
the foregoing effect.

 

(iii)          No
Laws shall have been enacted, entered, promulgated or endorsed by any court or
governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement, nor
shall there be on file any complaint by any Governmental Entity seeking an
order or decree, restraining, enjoining or prohibiting the transactions
contemplated by this Agreement.

 

(iv)          The
Buyer shall have delivered to the Company a certificate, executed by the
Secretary of the Buyer and dated as of the Closing Date, as to (A) the
certificate of incorporation of the Buyer, as in effect at the Closing, (B) the
by-laws of the Buyer as in effect at the Closing, and (C) the incumbency
signatures of the officers of the Buyer executing this Agreement or any other
document executed in connection with this Agreement.

 

19

 

6.             CONDITIONS TO THE BUYER’S OBLIGATION TO PURCHASE.

 

The obligation of the Buyer
hereunder to purchase the Purchased Shares at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for the Buyer’s sole benefit and
may be waived by the Buyer at any time in its sole discretion by providing the
Company with prior written notice thereof:

 

(i)            No
Laws shall have been enacted, entered, promulgated or endorsed by any court or
governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement, nor
shall there be on file any complaint by any Governmental Entity seeking an
order or decree, restraining, enjoining or prohibiting the transactions
contemplated by this Agreement.

 

(ii)           The
Company shall have delivered to the Buyer a copy of the instructions delivered
to the Transfer Agent instructing the Transfer Agent to issue the stock
certificates evidencing the Purchased Shares as required by this Agreement and
deliver such stock certificates to the Buyer within five (5) Business Days
after the Closing Date.

 

(iii)          The
Buyer shall have received the opinion of Katten Muchin Rosenman LLP, the
Company’s outside counsel, substantially in the form of Exhibit A hereof
dated as of the Closing Date.

 

(iv)          The
Company shall have delivered to the Buyer a certificate evidencing the
formation and good standing of the Company issued by the Secretary of State of
the State of Delaware as of a date within fifteen (15) days of the Closing
Date.

 

(v)           The
Company shall have delivered to the Buyer a certificate, executed by the
Secretary of each of the Company and MetaBank and dated as of the Closing Date,
as to (A) the resolutions consistent with Section 3(c) as
adopted by the Board of Directors, (B) the Certificate of
Incorporation and the federal stock charter of MetaBank, as in effect at the
Closing, (C) the Bylaws and the bylaws of MetaBank, as in effect at
the Closing, and (D) the incumbency signatures of the officers of the
Company executing this Agreement or any other document executed in connection
with this Agreement.

 

(vi)          The
representations and warranties of the Company shall be true and correct in all
material respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect or like qualifiers, which
shall be true and correct in all respects) as of the date when made and as of
the Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date, which shall be true and correct as
of such specified date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing Date. 
The Buyer shall have received a certificate, executed by the Chief
Executive Officer or Chief Financial Officer (or other senior executive officer
reasonably acceptable to the Buyer) of the Company, dated as of the Closing
Date, to the foregoing effect.

 

20

 

(vii)         The
Company shall have delivered to the Buyer a letter from the Company’s transfer
agent certifying the number of shares of Common Stock outstanding as of a date
within five (5) Business Days of the Closing Date.

 

(viii)        The
Common Stock (including the Purchased Shares) (A) shall be listed
on the Principal Market and (B) shall not have been suspended, as
of the Closing Date, by the SEC or the Principal Market from trading on the
Principal Market nor shall suspension by the SEC or the Principal Market have
been threatened, as of the Closing Date, either (x) in writing by the SEC
or the Principal Market or (y) by the Company’s falling below the minimum
listing maintenance requirements of the Principal Market.

 

(ix)           The
Company shall have obtained all governmental, regulatory or third party
consents and approvals, if any, necessary for the sale of the Purchased Shares.

 

(x)            The
Company shall have executed and delivered to the Buyer the Registration Rights
Agreement.

 

(xi)           The
Company shall have delivered to the Buyer such other documents relating to the
transaction contemplated by this Agreement as the Buyer or its counsel may
reasonably request.

 

7.             SURVIVAL AND INDEMNIFICATION.

 

(a)          Survival.  Unless this Agreement is terminated under Section 8,
the representations and warranties of the Company and the Buyer contained in Sections 2
and 3 and the agreements and covenants set forth in Sections 4,
7, 8 and 9(b) shall survive the Closing and the
delivery of the Purchased Shares.

 

(b)         Indemnification.  Subject to the other terms and conditions of
this Section 7, the Company shall indemnify, defend and hold harmless
the Buyer, its Affiliates and their respective partners, directors, officers,
employees, advisors and representatives (each, an “Indemnified Party”
and collectively, the “Indemnified Parties”) against any and all Losses
(as hereinafter defined), including Losses arising out of or relating to any
legal, administrative or other actions (including actions brought by the Buyer
or the Company or any equity holders of the Company or derivative actions
brought by any Person claiming through or in the Company’s name other than
actions brought by the Company for breach of any of the Buyer’s
representations, warranties or covenants made by it under this Agreement),
proceedings or investigations (whether formal or informal), or threats thereof,
based upon, resulting from, relating to or arising out of (i) any breach
of any representation or warranty of the Company in this Agreement, or (ii) any
breach of any covenant, agreement or obligation of the Company contained in
this Agreement; provided, that if and to the extent that such
indemnification is unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of such Losses which shall
be permissible under applicable Laws; and, provided, further,
that the Company shall have no obligation to indemnify, defend or hold harmless
(or make contribution to the payment and satisfaction to) any Indemnified Party
to the extent the Losses suffered by such Indemnified Party arise out of or
result from a breach of any representation, warranty or

 

21

 

covenant made or to be
complied with by such Indemnified Party hereunder or the gross negligence or
willful misconduct of such Indemnified Party.

 

(c)          Procedure.  Promptly after receipt by an Indemnified
Party of notice by a third party of any complaint or the commencement of any
audit, investigation, action or proceeding with respect to which such
Indemnified Party may be entitled to receive payment from the Company for any
Losses, such Indemnified Party will notify the Company in writing following the
Indemnified Party’s receipt of such complaint or of notice of the commencement
of such audit, investigation, action or proceeding; provided, however,
that the failure to so notify the Company in writing will not relieve the
Company from liability under this Agreement with respect to such claim unless
such failure to notify the Company in writing results in the forfeiture of
material rights or defenses otherwise available to the Company with respect to
such claim.  The Company will have the
right, upon written notice delivered to the Indemnified Party within 20 days
thereafter, which notice shall include the Company’s written statement that it
is assuming full responsibility for any Losses resulting from such audit,
investigation, action or proceeding, to assume the defense of such audit,
investigation, action or proceeding, including the employment of counsel
reasonably satisfactory to the Indemnified Party and the payment of the fees
and disbursements of such counsel.  In
the event, however, that the Company declines or fails to assume the defense of
the audit, investigation, action or proceeding on the terms provided above or
to employ counsel reasonably satisfactory to the Indemnified Party, in either
case within such 20 day period, then such Indemnified Party may employ counsel
to represent or defend it in any such audit, investigation, action or
proceeding and the Company will pay the reasonable fees and disbursements of
such counsel as incurred; provided, however, that the Company will not
be required to pay the fees and disbursements of more than one counsel plus
appropriate local counsel for all Indemnified Parties in any jurisdiction in
any single audit, investigation, action or proceeding.  In any audit, investigation, action or
proceeding with respect to which indemnification is being sought hereunder, the
Indemnified Party or the Company, whichever is not assuming the defense of such
action, will have the right to participate in such matter and to retain its own
counsel at such party’s own expense.  The
Company or the Indemnified Party, as the case may be, shall at all times use
reasonable efforts to keep the Company or the Indemnified Party, as the case
may be, reasonably apprised of the status of the defense of any matter the
defense of which they are maintaining and to cooperate in good faith with each
other with respect to the defense of any such matter.  No Indemnified Party may settle or compromise
any claim or consent to the entry of any judgment with respect to which
indemnification is being sought hereunder without the prior written consent of
the Company, unless (i) the Company fails to assume and maintain the
defense of such claim pursuant to this Section 7(c) or (ii) such
settlement, compromise or consent (A) includes an unconditional release of
the Company from all liability arising out of such claim, (B) does not
contain any admission or statement suggesting any wrongdoing or liability on
behalf of the Company, and (C) does not contain any equitable order,
judgment or term which in any manner affects, restrains or interferes with the
business of the Company or any of the Company’s Affiliates.  The Company may not, without the prior
written consent of the Indemnified Party (which consent shall not be
unreasonably withheld or delayed), settle or compromise any claim or consent to
the entry of any judgment with respect to which indemnification is being sought
hereunder unless such settlement, compromise or consent (A) includes an
unconditional release of the Indemnified Party from all liability arising out
of such claim, (B) does not contain any admission or statement suggesting
any wrongdoing or liability on behalf of the Indemnified Party, (C) does
not contain

 

22

 

any equitable order,
judgment or term which in any manner affects, restrains or interferes with the
business of the Indemnified Party or any of the Indemnified Party’s Affiliates
and (D) does not require payment of any amount that is not being paid by
the Company.

 

(d)         Reimbursement.  In the event the Company is obligated to
indemnify for expenses, the Company shall, subject to the provisions of this Section 7,
upon presentation of appropriate invoices containing reasonable detail,
reimburse each Indemnified Party for all such expenses (including reasonable
expenses of investigation and reasonable fees, disbursements and other charges
of counsel in connection with any claim, action, suit or proceeding) as they
are incurred by such Indemnified Party.  “Losses”
means all losses, claims (including any claim by a third party), damages and
expenses (including reasonable expenses of investigation and reasonable fees,
disbursements and other charges of counsel in connection with any claim,
action, suit or proceeding) actually incurred by the Indemnified Party in
connection with any claim, action, suit or proceeding.

 

8.             TERMINATION.

 

(a)          Termination by Mutual Agreement.  This Agreement may be terminated prior to the
Closing by mutual written agreement of the Company and the Buyer.

 

(b)         Termination for Failure to Close.  In the event that the Closing shall not have
occurred on or before January 29, 2010, either the Company or the Buyer
shall have the option to terminate this Agreement at the close of business on
such date, without liability to such party, by the giving of written notice of
termination, unless the Closing has not occurred by reason of the failure of
the party seeking to terminate this Agreement to comply in all material respects
with its obligations under this Agreement.

 

(c)           Termination for Breach.  This Agreement may be terminated by the
Company or the Buyer in the event the other party is in breach in any material
respect of any representation, warranty, covenant or agreement contained in
this Agreement such that the conditions to the nonbreaching party’s obligation
to consummate the transactions contemplated by this Agreement would not be
satisfied, the terminating party has notified the other party of the breach,
and such breach has continued without cure for a period of ten (10) days
after the notice of breach.

 

(d)           Effects of Termination.  In the event of any termination of this
Agreement as provided in Section 8(a), 8(b) or 8(c),
this Agreement (other than this Section 8(d), Section 7
and Section 9, which shall remain in full force and effect) shall
forthwith become wholly void and of no further force and effect; provided,
that the Company will remain liable to the Buyer for any breach of this
Agreement by the Company existing at the time of such termination, the Buyer
will remain liable to the Company for any breach of this Agreement by the Buyer
existing at the time of such termination, and the Buyer or the Company, as the
case may be, may seek such remedies against the other with respect to any such
breach as are provided in this Agreement or as are otherwise available at Law
or in equity.

 

9.             MISCELLANEOUS.

 

(a)          Definitions.

 

23

 

“8-K
Filing” has the meaning set forth in Section 4(g).

 

“1933
Act” has the meaning set forth in the first Whereas clause.

 

“1934
Act” has the meaning set forth in Section 3.

 

“Affiliate”
means any Person controlling, controlled by or under common control with any
other Person.  For purposes of this
definition, “control” (including “controlled by” and “under common control with”)
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through
the ownership of securities, partnership or other ownership interests, by
contract or otherwise.

 

“Agreement”
has the meaning set forth in the preamble.

 

“Allowance”
has the meaning set forth in Section 3(aa).

 

“Board
of Directors” has the meaning set forth in Section 3(c).

 

“Business
Day” any day other than a Saturday, Sunday or other day on which commercial
banks in The City of New York are authorized or required by Law to remain
closed.

 

“Buyer”
has the meaning set forth in the preamble.

 

“Bylaws”
has the meaning set forth in Section 3(r).

 

“Certificate
of Incorporation” has the meaning set forth in Section 3(r).

 

“Closing”
has the meaning set forth in Section 1(b).

 

“Closing
Date” has the meaning set forth in Section 1(b).

 

“Common
Stock” has the meaning set forth in the second Whereas clause.

 

“Company”
has the meaning set forth in the preamble.

 

“Company
Controlled Affiliate” means any Affiliate controlled, directly or
indirectly, by the Company.

 

“Confidentiality
Agreement” shall mean that certain Mutual Confidentiality Agreement by and
between the Company and the Buyer dated as of December 10, 2008.

 

“Contingent
Obligation” means, as to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to any indebtedness,
lease, dividend or other obligation of another Person if the primary purpose or
intent of the Person incurring such liability, or the primary effect thereof,
is to provide assurance to the obligee of such liability that such liability
will be paid or discharged, or that any agreements relating thereto will be
complied with, or that the holders of such liability will be protected (in
whole or in part) against loss with respect thereto.

 

24

 

“Convertible
Securities” means any stock or securities (other than Options) convertible
into or exercisable or exchangeable for shares of Common Stock.

 

“Disclosure
Letter” has the meaning set forth in Section 3.

 

“Eligible
Market” means the NYSE Amex, the NASDAQ Capital Market, the NASDAQ Global
Market, the NASDAQ Global Select Market, the New York Stock Exchange or the
Over-the-Counter Bulletin Board.

 

“Family
Member” means, with respect to any Person, such Person’s spouse, children,
parents or siblings.

 

“FDIC” means the
Federal Deposit Insurance Corporation

 

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

 

“Governmental
Entity” means any federal, state, local or foreign, court, governmental,
legislative, judicial, administrative or regulatory authority, agency,
commission, body or other governmental entity or self regulatory organization
or stock exchange, including the OTS, the FDIC and the SEC.

 

“HOLA”
has the meaning set forth in Section 3(b).

 

“Indebtedness”
of any Person means, without duplication (i) all indebtedness (including
principal, interest, fees and charges) for borrowed money, but exclusive of “deposits”
(as defined in 12 U.S.C. § 1813(l)), (ii) all obligations issued,
undertaken or assumed as the deferred purchase price of property or services
(including, without limitation, “capital leases” in accordance with generally
accepted accounting principles) (other than trade payables incurred in the
ordinary course of business), (iii) all reimbursement or payment
obligations with respect to letters of credit, surety bonds and other similar
instruments, (iv) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses, (v) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in
the event of default are limited to repossession or sale of such property), (vi) all
monetary obligations under any leasing or similar arrangement which, in
connection with generally accepted accounting principles, consistently applied
for the periods covered thereby, is classified as a capital lease, (vii) all
indebtedness referred to in clauses (i) through (vi) above
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge,
security interest or other encumbrance upon or in any property or assets
(including accounts and contract rights) owned by any Person, even though the
Person which owns such assets or property has not assumed or become liable for
the payment of such indebtedness; provided that the amount of the
indebtedness included in “Indebtedness” pursuant to this clause (vii) shall
be limited to the fair market value of the property or asset subject to such
mortgage, lien, pledge, charge, security interest or other encumbrance, and (viii) all
Contingent Obligations in respect of indebtedness or obligations of others of
the kinds referred to in clauses (i) through (vii) above.

 

25

 

“Indemnified
Party” or “Indemnified Parties” has the meaning set forth in Section 7(b).

 

“Insolvent”
means, with respect to any Person, that (i) the fair value of the assets
of such Person, at a fair valuation, will exceed his, her or its debts and
liabilities, subordinated, contingent or otherwise; (ii) the present fair
saleable value of the property of such Person will be greater than the amount
that will be required to pay the probable liability of his, her or its debts
and other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (iii) such Person will be
able to pay his, her or its debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured; and (iv) such
Person will not have unreasonably small capital with which to conduct the
business in which he, she or it is engaged as such business is now conducted.

 

“Knowledge
of the Company” or phrases of similar effect (including the words “Known”
or “Know”) means the knowledge, after reasonable investigation, of the
individuals listed on Schedule 9(a) attached hereto.

 

“Law”
means any statute, ordinance, license, rule, regulation, order, demand, writ,
injunction, decree or judgment of any Governmental Entity, including any of the
foregoing which relate to the business of banking generally, lending
activities, deposit taking, money transmission, stored value cards, credit
cards, savings associations, savings and loan holding companies, trust
operations, government contracts, national security, and protection of
classified information, including, without limitation, the Home Owners Loan Act
of 1934, the Savings and Loan Holding Company Act, the Bank Secrecy Act, the
United States Foreign Corrupt Practices Act, the Fair Housing Act, the Home
Mortgage Disclosure Act, the Equal Credit Opportunity Act, the Community
Reinvestment Act of 1977, the Gramm-Leach-Bliley Act, the Fair Consumer Credit
Protection Act, and all regulations promulgated thereunder.

 

“Material
Adverse Effect” means any material adverse effect on the business,
properties, assets, operations, results of operations or condition (financial
or otherwise) of the Company and its Subsidiaries, taken as a whole, or on the
transaction contemplated hereby, or on the authority or ability of the Company
to perform its obligations under this Agreement, but shall not include facts,
circumstances, effects, events or changes: (i) generally affecting any of
the industries in which the Company, taken together with its Subsidiaries,
operates, in the United States or elsewhere in the world or the economy or the
financial or securities markets in the United States or elsewhere in the world;
(ii) resulting from political conditions, including acts of war (whether
or not declared), armed hostilities and terrorism, or developments or changes
therein; (iii) resulting from any announcement of this Agreement or the
transactions contemplated hereby, in each case, solely to the extent due to
such announcement; (iv) resulting from a change in the Company’s stock
price or the trading volume in the Common Stock in and of itself (it being
understood that the underlying circumstances, event or reasons giving rise to
any such failure (to the extent provided for in this definition) can be taken
into account in determining whether a Material Adverse Effect has occurred or
would reasonably be expected to occur); or (v) resulting from a failure to
meet securities analysts’ published revenue or earnings predictions for the Company
in and of itself (it being understood that the underlying circumstances, event
or reasons giving rise to any such failure (to the extent provided for in this
definition) can be taken into account in determining whether a Material Adverse
Effect has 

 

26

 

occurred
or would reasonably be expected to occur); provided, however,
that the facts, circumstances, events or changes set forth in clause (i) above
may be taken into account in determining whether there is or has been a
Material Adverse Effect if and only to the extent such act, circumstance,
event, effect or change has a materially disproportionate impact on the Company
and its Subsidiaries, relative to the other participants in the industries in which
the Company and its Subsidiaries operate.

 

“MetaBank”
means MetaBank, a federally-chartered savings association and wholly owned
subsidiary of the Company.

 

“Options”
means any rights, warrants or options to subscribe for or purchase shares of
Common Stock or Convertible Securities.

 

“OTS”
means the U.S. Department of Treasury’s Office of Thrift Supervision.

 

“Person”
means an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization or a government
or any department or agency thereto.

 

“Pre-Announcement
Period” has the meaning set forth in Section 2(e).

 

“Principal
Market” means the NASDAQ Global Market.

 

“Purchase
Price” has the meaning set forth in Section 1(c).

 

“Purchased
Shares” has the meaning set forth in the second Whereas clause.

 

“Registration
Rights Agreement” means a Registration Rights Agreement between the Company
and the Buyer substantially in the form set forth on Exhibit B hereto.

 

“Regulation
D” has the meaning set forth in the first Whereas clause.

 

“Regulatory
Agreement” has the meaning set forth in Section 3(q).

 

“Rule 144”
has the meaning set forth in Section 2(h)(i).

 

“Sarbanes-Oxley
Act” has the meaning set forth in Section 3(j)(iii).

 

“SEC”
has the meaning set forth in the first Whereas clause.

 

“SEC
Documents” has the meaning set forth in Section 3(j)(i).

 

“SEC
Reports” has the meaning set forth in Section 3.

 

“Securities”
has the meaning set forth in Section 4(j)(i).

 

“Subsidiaries”
means MetaBank, First Midwest Financial Capital Trust I, Meta Trust Company,
First Services Financial Limited, Brookings Service Corporation and any other
joint venture or any entity in which the Company, directly or indirectly, owns
capital stock or 

 

27

 

holds
an equity or similar interest having general voting power in respect of more
than fifty percent (50%) of all of the capital stock or equity or similar
interest of such joint venture or entity.

 

“Tax” means all
federal, state, local, foreign or other governmental taxes, assessments,
duties, fees, levies or similar charges of any kind imposed by a Governmental
Entity, including, but not limited to, all income, profit, gross receipts,
franchise, excise, property, use, intangibles, sales, payroll, social security,
employment, value added, withholding and other taxes, and including all
interest, penalties and additional amounts imposed with respect to such
amounts, whether as a primary obligor or as a result of being a “transferee” (within
the meaning of Section 6901 of the Code or any other applicable Law) of
another Person or as a result of being a member of an affiliated, consolidated,
unitary or combined group.

 

“Tax
Return” means any return, declaration, report, claim for refund, information
return, statement or other document relating to Taxes, including any schedule
or attachment thereto, and including any amendment thereof.

 

“Transfer
Agent” has the meaning set forth in Section 1(d).

 

(b)           Governing Law; Jurisdiction; Jury
Trial.  All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal Laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdictions) that would cause the
application of the Laws of any jurisdictions other than the State of New
York.  Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting
in The City of New York, Borough of Manhattan, for the adjudication of any
dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is
not personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is brought in an inconvenient forum or that the venue of
such suit, action or proceeding is improper. 
Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by Law.  EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH
OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

(c)           Counterparts.  This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided, that a facsimile or
electronic (i.e., “PDF”) signature shall be considered due execution and
shall be binding upon the signatory thereto with the same force and effect as
if the signature were an original.

 

28

 

(d)           Headings.  The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.

 

(e)           Severability.  If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.

 

(f)            Entire Agreement; Amendments.  This Agreement and the Confidentiality
Agreement supersede all other prior oral or written agreements among the Buyer
and the Company, their Affiliates and Persons acting on their behalf with
respect to the matters discussed herein, and this Agreement and the
Confidentiality Agreement contain the entire understanding of the parties
hereto with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Buyer
makes any representation, warranty, covenant or undertaking with respect to
such matters.  No provision of this
Agreement may be amended other than by an instrument in writing signed by the
Company and the Buyer.  No provision
hereof may be waived other than by an instrument in writing signed by the party
against whom enforcement is sought.

 

(g)           Notices.  Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered:  (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) Business Day
after deposit with a nationally recognized overnight courier service, in each
case properly addressed to the party to receive the same.  The addresses and facsimile numbers for such
communications shall be:

 

If
to the Company:

 

Meta Financial Group, Inc.

5501 S. Broadband Lane

Sioux Falls, South Dakota  57108

	
  Telephone:

  	
  (605) 782-1738

  
	
  Facsimile:

  	
  (605) 338-0596

  
	
  Attention:

  	
  General Counsel

  

 

with
a copy (for informational purposes only) to:

 

Katten Muchin Rosenman LLP

2900 K Street, NW

Suite 200

Washington, DC  20007

	
  Telephone:

  	
  (202) 625-3500

  
	
  Facsimile:

  	
  (202) 339-8281

  
	
  Attention:

  	
  Jeffrey M. Werthan, Esq.

  

 

29

 

If
to the Buyer:

 

NetSpend Holdings, Inc.

701 Brazos Street, Suite 1200

Austin, Texas 78701

	
  Telephone:

  	
  (512) 532-8200

  
	
  Facsimile:

  	
  (512) 496-9951

  
	
  Attention:

  	
  General
  Counsel

  

 

with a copy (for
informational purposes only) to:

 

Finn
Dixon & Herling LLP

177
Broad Street

Stamford,
CT 06901

	
  Telephone:

  	
  (203) 325-5000

  
	
  Facsimile:

  	
  (203) 325-5001

  
	
  Attention:

  	
  Michael J. Herling, Esq

  

 

or to such other address and/or facsimile number and/or to the
attention of such other Person as the recipient party has specified by written
notice given to each other party pursuant to this Section.

 

(h)           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns.  Neither the Company
nor the Buyer shall assign or delegate this Agreement or any of its rights or
obligations hereunder without the prior written consent of the other party
hereto.

 

(i)            No Third Party Beneficiaries.  This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and
is not for the benefit of, nor may any provision hereof be enforced by, any
other Person.

 

(j)            Further Assurances.  Each party hereto shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as any other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.

 

(k)           No Strict Construction.  The language used in this Agreement will be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rules of strict construction will be applied against any
party.

 

(l)            Remedies.  The Buyer shall have all rights and remedies
set forth in this Agreement and all rights and remedies which it has been
granted at any time under any other agreement or contract and all of the rights
which such holders have under any Law. 
Each party hereto shall be entitled to enforce its rights hereunder
specifically (without posting a bond or other security or proving actual
damages), to recover damages by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by Law.  Notwithstanding 

 

30

 

anything to the contrary contained herein, neither party hereto shall
be entitled to consequential, special, exemplary, indirect or incidental
damages hereunder.

 

(m)          Acknowledgment Regarding Buyer’s
Purchased Shares.  The Company
acknowledges and agrees that the Buyer is acting solely in the capacity of arm’s
length purchaser with respect to this Agreement and the transaction
contemplated hereby.  The Company further
acknowledges that the Buyer is not acting as a financial advisor or fiduciary
of the Company or any of its Subsidiaries (or in any similar capacity) with
respect to this Agreement and the transaction contemplated hereby, and any
advice given by the Buyer or any of its representatives or agents in connection
with this Agreement and the transaction contemplated hereby is merely
incidental to the Buyer’s purchase of the Purchased Shares.  The Company further represents to the Buyer
that the Company’s decision to enter into this Agreement has been based solely
on the independent evaluation by the Company and its representatives.

 

(n)           Interpretive
Matters.  Unless the context
otherwise requires, (i) all references to Sections, Schedules, Appendices
or Exhibits are to Sections, Schedules, Appendices or Exhibits contained in or
attached to this Agreement, (b) words in the singular or plural include
the singular and plural and pronouns stated in either the masculine, the
feminine or neuter gender shall include the masculine, feminine and neuter, (c) the
words “hereof,” “herein” and words of similar effect shall reference this
Agreement in its entirety, and (d) the use of the word “including” in this
Agreement shall be by way of example rather than limitation.

 

[Signature Page Follows]

 

31

 

IN WITNESS WHEREOF, the
Buyer and the Company have caused their respective signature page to this
Securities Purchase Agreement to be duly executed as of the date first written
above.

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  META FINANCIAL GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ J. Tyler Haahr

  
	
   

  	
   

  	
  Name:

  	
  J. Tyler Haahr

  
	
   

  	
   

  	
  Title:

  	
  President and Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BUYER:

  
	
   

  	
   

  
	
   

  	
  NETSPEND HOLDINGS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Daniel R. Henry

  
	
   

  	
   

  	
  Name:

  	
  Daniel R. Henry

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  

 

 

Schedule 9(a)

 

Knowledge of the Company

 

James S. Haahr

J. Tyler Haahr

Troy Moore

David W. Leedom

Brad C. Hanson

John Hagy

 

 

EXHIBIT B

 

REGISTRATION RIGHTS AGREEMENT

 

THIS
REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of January 29,
2010, by and among Meta Financial Group, Inc., a Delaware corporation (the
“Company”), and NetSpend Holdings, Inc., a Delaware corporation
(the “Buyer”).

 

RECITALS:

 

WHEREAS,
this Agreement is made in connection with the Securities Purchase Agreement
(the “Securities Purchase Agreement”), dated as of January 29,
2010, by and among the Company and the Buyer; and

 

WHEREAS,
as an inducement to the Buyer’s investment in the Company pursuant to the
Securities Purchase Agreement, the parties desire to enter into this Agreement
in order to grant certain registration rights to the Buyer as set forth below.

 

NOW,
THEREFORE, in consideration of the foregoing premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

SECTION 1.

GENERAL

 

1.1           Definitions.  As
used in this Agreement, the following terms shall have the following respective
meanings:

 

“Affiliate”
of any particular Person means any other Person controlling, controlled by or
under common control with such particular Person or entity.

 

“Agreement”
shall have the meaning ascribed to it in the preamble hereof.

 

“Business Day” means
any day that is not a Saturday or Sunday or a day on which banks are required
or permitted to be closed in the State of New York.

 

“Buyer”
shall have the meaning ascribed to it in the preamble hereof.

 

“Closing
Date” means the date on which the closing of the transactions contemplated
by the Securities Purchase Agreement occurs.

 

“Common
Stock” means shares of common stock, $0.01 par value per share, of the
Company.

 

“Company”
shall have the meaning ascribed to it in the preamble hereof.

 

 

“Exchange Act” means
the Securities Exchange Act of 1934, as amended, or similar federal statute,
and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.

 

“Holder”
or “Holders” means the Buyer and any holder of Registrable Securities to
whom the registration rights conferred by this Agreement have been transferred
in compliance with Section 2.8 hereof.

 

“Mandatory
Registration Statement” shall have the meaning ascribed to it in Section 2.1
hereof.

 

“Misstatement”
shall have the meaning ascribed to it in Section 2.4 hereof.

 

“Person”
means any individual, corporation, partnership, joint venture, limited
liability company, business trust, joint stock company, trust or unincorporated
organization or any government or any agency or political subdivision thereof.

 

“Register,”
“registered,” and “registration” shall refer to a registration
effected by preparing and filing a registration statement in compliance with
the Securities Act, and the declaration or ordering of effectiveness of such
registration statement.

 

“Registrable
Securities” means (a) the Shares; and (b) any Common Stock issued
as (or issuable upon the conversion or exercise of any warrant, right,
preferred stock or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, the
Shares held by the Holders; provided, however, that Registrable
Securities shall not include any shares of Common Stock (i) which have
been sold or otherwise disposed of either pursuant to a registration statement
or Rule 144 under the Securities Act; (ii) which have been sold in a
private transaction in which the transferor’s rights under this Agreement are
not assigned in compliance with the terms of this Agreement; or (iii) which
may be sold by the Holder in question pursuant to Rule 144 without volume
restrictions or public information requirements.

 

“Registration
Expenses” shall mean all expenses incurred by the Company in effecting any
registration pursuant to this Agreement (including any Mandatory Registration
Statement), including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the Company, blue sky
fees and expenses, and expenses of the Company’s independent accountants in
connection with any regular or special reviews or audits incident to or
required by any such registration, and any other Persons retained by the
Company and the compensation of regular employees of the Company, which shall
be paid in any event by the Company, but shall not include Selling Expenses.

 

“SEC”
or “Commission” means the Securities and Exchange Commission and any
successor agency.

 

2

 

“Securities
Act” shall mean the Securities Act of 1933, as amended, or similar federal
statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.

 

“Securities
Purchase Agreement” shall have the meaning ascribed to it in the recitals
hereof.

 

“Selling
Expenses” shall mean all underwriting discounts, selling commissions, fees
of underwriters, selling brokers, dealer managers and similar securities
industry professionals and stock transfer taxes applicable to the sale of
Registrable Securities and fees and disbursements of counsel for any Holder.

 

“Shares”
mean shares of Common Stock issued by the Company to the Buyer pursuant to the
Securities Purchase Agreement.

 

“Violation”
shall have the meaning ascribed to it in Section 2.7(a) hereof.

 

SECTION 2.

REGISTRATION

 

2.1           Registration Statement.

 

2.1.1        In accordance with the
requirements of Section 2.3 below, the Company shall file with the
SEC within 30 calendar days after the Closing Date, and shall use commercially
reasonable efforts to cause to be declared effective by the SEC as soon as
practicable after the date of such filing, and in any event within 120 calendar
days after the Closing Date, a registration statement on Form S-1 or Form S-3
with respect to the resale of the Registrable Securities by the Holders
thereof.  The Company shall also, once such registration statement
becomes effective, maintain the effectiveness of the registration effected
pursuant to this Section 2.1 and keep such registration statement free
of any material misstatements or omissions at all times, subject only to the
limitations on effectiveness set forth below.  The registration
statement contemplated by this Section 2.1 is referred to herein as
the “Mandatory Registration Statement.” 
The Company shall cause the Mandatory Registration Statement to remain
effective until such date as is the earlier of (i) the date on which all
Registrable Securities included in the registration statement shall have been
sold or shall have otherwise ceased to be Registrable Securities and (ii) the
date on which all remaining Registrable Securities may be sold pursuant to Rule 144
without volume restrictions or public information requirements and any and all
restrictive legends have been removed from the Shares.

 

2.1.2        If: (i) the Mandatory
Registration Statement is not filed on or prior to 30 calendar days after the
Closing Date (subject to the provisions of Section 2.11), or (ii) the
Company fails to file with the Commission a request for acceleration in accordance
with Rule 461 promulgated under the Securities Act, within five Business
Days after the date that the Company is notified (orally or in writing,
whichever is earlier) by the Commission that the Mandatory Registration
Statement will not be “reviewed,” or not subject to further review, or (iii) the
Mandatory Registration Statement filed or required to be filed hereunder is not
declared effective by the 

 

3

 

Commission
within 120 calendar days after the Closing Date (the “120-Day Deadline”),
or (iv) in the event that, after the 120-Day Deadline, the Registrable
Securities have not been listed on the Trading Markets (as defined below), or (v) after
the 120-Day Deadline, the Mandatory Registration Statement ceases for any
reason to remain continuously effective as to all Registrable Securities for
which it is required to be effective, or the Holders are otherwise not
permitted to utilize the prospectus therein to resell such Registrable
Securities (except as may be restricted pursuant to Section 2.4 or 2.11)
for more than 14 consecutive calendar days or more than an aggregate of 20
calendar days during any 12-month period (which need not be consecutive
calendar days) (any such failure or breach being referred to as an “Event”,
and for purposes of clause (i), (iii) or (iv) the date on which such
Event occurs, or for purposes of clause (ii) the date on which such five
Business Day period is exceeded, or for purposes of clause (v) the date on
which such 14 or 20 calendar day period, as applicable, is exceeded being
referred to as “Event Date”), then in addition to any other rights the
Holders may have hereunder or under applicable law, on each such Event Date and
on the expiration of each thirty (30) day-period following such Event Date (if
the applicable Event shall not have been cured by such date) until the
applicable Event is cured or such Holder no longer owns Registrable Securities,
the Company shall pay to each Holder an amount in cash, as partial liquidated damages
and not as a penalty, equal to two and one-half percent (2.50%) of the
aggregate purchase price paid by such Holder for all Registrable Securities
then held by such Holder.  If the Company
fails to pay any partial liquidated damages pursuant to this Section in
full within seven calendar days after the date payable, the Company will pay
interest thereon at a rate of 18% per annum (or such lesser maximum amount that
is permitted to be paid by applicable law) to the Holder, accruing daily from
the date such partial liquidated damages are due until such amounts, plus all
such interest thereon, are paid in full. The partial liquidated damages
pursuant to the terms hereof shall apply on a daily pro-rata basis for any
portion of a month prior to the cure of an Event.

 

2.2           Expenses of Registration.  All
reasonable Registration Expenses incurred in connection with any registration
hereunder shall be borne by the Company. 
All Selling Expenses incurred in connection with any registrations
hereunder, shall be borne by the Holders of the Registrable Securities so
registered pro rata on the basis of the number of shares so registered.

 

2.3           Additional Obligations of
the Company.  The Company
shall:

 

(a) 
At least three Business Days before filing the Mandatory Registration
Statement, furnish to counsel selected by the Holders of a majority of the
Registrable Securities covered by such registration statement copies of all
such documents proposed to be filed (except for Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and
any similar or successor reports that have been filed via EDGAR which may be
incorporated or deemed to be incorporated by reference thereto), and the
Company shall in good faith consider any reasonable comments of such counsel
received at least one Business Day prior to filing.

 

(b) 
Promptly notify the Holders when the Mandatory Registration Statement is
declared effective by the Commission.  The Company shall respond as
promptly as reasonably practicable to any comments received from the Commission
with respect to the registration 

 

4

 

statement
or any amendments thereto and shall furnish to the Holders, upon request, any
comments of the Commission staff regarding the Holders.  The Company
shall promptly file with the Commission a request for acceleration of
effectiveness in accordance with Rule 461 promulgated under the Securities
Act after the Company concludes that the staff of the Commission has no further
comments on the filing.

 

(c) 
Furnish to the Holders such number of copies of a prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents as they may reasonably request in order to facilitate
the disposition of Registrable Securities owned by them.

 

(d) 
Use commercially reasonable efforts to register and qualify the securities
covered by the Mandatory Registration Statement under such other securities or
Blue Sky laws of such U.S. jurisdictions as shall be reasonably requested by
the Holders unless an exemption from registration and qualification exists; provided
that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business, file a general consent to service
of process or subject itself to general taxation in any such states or
jurisdictions.

 

(e) 
Promptly notify each Holder of Registrable Securities covered by the Mandatory
Registration Statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing
(provided that in no event shall such notice contain any material, non-public
information regarding the Company) and, when such state of facts no longer
exists whether due to passage of time or filing of supplemental disclosure by
the Company, the Company shall promptly furnish to each such Holder a
reasonable number of copies of any supplement or amendment to such prospectus
filed by the Company.

 

(f) 
Use commercially reasonable efforts to prevent the issuance of any stop order
or other suspension of effectiveness of the Mandatory Registration Statement,
or the suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction in the United States, and in the event of the
issuance of any stop order suspending the effectiveness of such registration
statement, or any order suspending or preventing the use of any related prospectus
or suspending the qualification of any equity securities included in such
registration statement for sale in any jurisdiction, the Company shall use
commercially reasonable efforts to obtain promptly the withdrawal of such
order.

 

(g) 
Cause all Shares to be listed on each securities exchange on which similar
securities issued by the Company are then listed (collectively, the “Trading
Markets”), including, without limitation, the filing of any required
additional listing applications.

 

(h) 
Use commercially reasonable efforts to cooperate with the Holders who hold
Registrable Securities being offered and, to the extent applicable, facilitate
the timely preparation and delivery of certificates (not bearing any
restrictive legend) representing the Registrable 

 

5

 

Securities
sold pursuant to the Mandatory Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the
Holders may reasonably request and registered in such names as the Holders may
request.

 

(i) 
Provide and cause to be maintained a registrar and transfer agent for all
Registrable Securities covered by any registration statement from and after a
date not later than the effective date of the Mandatory Registration Statement.

 

(j) 
Not, nor shall any subsidiary or affiliate thereof, identify any Holder as an
underwriter in any public disclosure or filing with the SEC or the NASDAQ Stock
Market or any other securities exchange or market without the consent of such
Holder except as required by law.

 

2.4           Suspension of Sales.  Upon receipt of written notice from the
Company that the Mandatory Registration Statement or a prospectus relating
thereto contains an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading (a “Misstatement”), each Holder of Registrable
Securities shall forthwith discontinue disposition of Registrable Securities
until such Holder has received copies of the supplemented or amended prospectus
that corrects such Misstatement, or until such is advised in writing by the
Company that the use of the prospectus may be resumed, and, if so directed by
the Company, such Holder shall deliver to the Company all copies, other than
permanent file copies then in such Holder’s possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice.  The total number of calendar days that any such suspension
may be in effect in any 365 day period shall not exceed 90 days.

 

2.5           Termination of Registration
Rights.  A Holder’s registration rights, including any right to
payment under Section 2.1.2, shall expire if all Registrable
Securities held by such Holder may be sold pursuant to Rule 144 without
volume restrictions or public information requirements.  Termination
of such registration rights shall be conditioned upon the Company’s removal of
the restrictive legends from any Registrable Securities held by such Holder and
the Holder agrees to take such reasonable actions requested by the Company to
facilitate such removal.

 

2.6           Furnishing Information.  It
shall be a condition precedent to the obligations of the Company to take any
action pursuant to this Agreement that the selling Holders shall furnish to the
Company such information regarding themselves, the Registrable Securities held
by them and the intended method of disposition of such securities as shall be
required to effect the registration of their Registrable Securities.

 

2.7           Indemnification.  In
the event any Registrable Securities are included in a registration statement
under this Section 2:

 

(a) 
To the extent permitted by law, the Company shall indemnify and hold harmless
each Holder and each person, if any, who controls such Holder within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Securities Act, the Investment Company 

 

6

 

Act
or the Exchange Act or other federal or state law, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereof) arise out of or
are based upon any of the following statements, omissions or violations
(collectively, a “Violation”):  (i) any untrue statement
or alleged untrue statement of a material fact contained in such registration
statement, including any related preliminary prospectus or final prospectus or
any amendments or supplements thereto, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act, or state securities laws or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any other federal or
state securities law in connection with the registration of the Registrable
Securities; and the Company will pay to each such Holder or controlling person,
as incurred any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement
contained in this Section 2.7(a) shall not apply to any Holder
(or any related controlling person) with respect to amounts paid in settlement
of any such loss, claim, damage, liability, or action if such settlement is
effected without the consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be liable in any such case for
any such loss, claim, damage, liability, or action to the extent that it arises
out of or is based upon a Violation which occurs (i) solely in reliance
upon and in conformity with written information furnished expressly for use in
connection with such registration statement by any such Holder or controlling
person, (ii) as a result of any failure of such Holder or controlling
person to deliver or cause to be delivered a prospectus made available by the
Company in a timely manner, or (iii) as a result of a violation by such
Holder or controlling person of such Holder’s obligations under Section 2.4
hereof.

 

(b) 
To the extent permitted by law and provided that such Holder is not entitled to
indemnification pursuant to Section 2.7(a) above with respect
to such matter, each selling Holder (severally and not jointly) shall indemnify
and hold harmless the Company, each of its directors, officers, persons, if
any, who control the Company within the meaning of the Securities Act, any
other Holder selling securities in such registration statement and any
controlling person of any such other Holder, against any losses, claims,
damages, or liabilities to which any of the foregoing persons may become
subject under the Securities Act, the Exchange Act or other federal or state
securities law, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any (i) untrue
statement or alleged untrue statement of a material fact regarding such Holder
and provided in writing by such Holder expressly for use in connection with a
registration statement which is contained in such registration statement,
including any related preliminary prospectus or final prospectus or any
amendments or supplements thereto, (ii) the omission or alleged omission
to state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, in each case to the extent (and
only to the extent) that such untrue statement or alleged untrue statement or
omission or alleged omission was made in such registration statement,
preliminary or final prospectus, amendment or supplement thereto, in reliance
upon and in conformity with written information furnished by such Holder
expressly for use in connection with such registration statement, (iii) any
failure by such Holder or controlling person to deliver or cause to be
delivered a prospectus made available by the Company in a timely manner, or (iv) violation
by such Holder or controlling person of such Holder’s obligations under 

 

7

 

Section 2.4 hereof; and
each such Holder will pay, as incurred, any legal or other expenses reasonably
incurred by any Person intended to be indemnified pursuant to this Section 2.7(b),
in connection with investigating or defending any such loss, claim, damage,
liability, or action as a result of such Holder’s untrue statement, omission,
failure or violation; provided, however, that the indemnity
agreement contained in this Section 2.7(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Holder (which consent
shall not be unreasonably withheld); provided, that, (x) the
indemnification obligations in this Section 2.7(b) shall be
individual and ratable not joint and several for each Holder and (y) in no
event shall the aggregate of all indemnification payments by any Holder under
this Section 2.7(b) exceed the net proceeds from the offering
received by such Holder.

 

(c) 
Promptly after receipt by an indemnified party under this Section 2.7
of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 2.7, deliver
to the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an
indemnified party (together with all other indemnified parties which may be
represented without conflict by one counsel) shall have the right to retain one
separate counsel, with the reasonable fees and expenses of such counsel to be
paid by the indemnifying party, if (i) the indemnifying party shall have
failed to assume the defense of such claim within twenty (20) days after
receipt of notice of the claim and to employ counsel reasonably satisfactory to
such indemnified party, as the case may be; or (ii) in the reasonable
opinion of counsel retained by the indemnifying party, representation of such
indemnified party by such counsel would be inappropriate due to actual or
potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding.  The
indemnified party shall cooperate fully with the indemnifying party in
connection with any negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the indemnified party which relates to such action or
claim. The indemnifying party shall keep the indemnified party reasonably
apprised of the status of the defense or any settlement negotiations with
respect thereto.  No indemnifying party shall be liable for any
settlement of any action, claim or proceeding effected without its prior
written consent; provided, however, that the indemnifying party
shall not unreasonably withhold, delay or condition its consent.  The
failure to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action shall not relieve such indemnifying
party of any liability to the indemnified party under this Section 2.7,
except to the extent such failure to give notice actually and materially
prejudices the indemnifying party.

 

(d) 
If the indemnification provided for in this Section 2.7 is held by
a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand 

 

8

 

and
of the indemnified party on the other in connection with the statements or
omissions that resulted in such loss, liability, claim, damage, or expense as
well as any other relevant equitable considerations.  The relative
fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties’ relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.  Notwithstanding the foregoing, the amount
that any Holder will be obligated to contribute pursuant to this Section 2.7(d) will
be limited to an amount equal to the per share public offering price (less any
underwriting discount and commissions) multiplied by the number of shares of
Registrable Securities sold by such Holder pursuant to the registration
statement which gives rise to such obligation to contribute (less the aggregate
amount of any damages which such Holder has otherwise been required to pay in
respect of such loss, liability, claim, damage, or expense or any substantially
similar loss, liability, claim, damage, or expense arising from the sale of
such Registrable Securities).  No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution hereunder from any person who
was not guilty of such fraudulent misrepresentation.

 

(e) 
The obligations of the Company and Holders under this Section 2.7
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 2, and otherwise.

 

2.8           Assignment of Registration
Rights.  The rights to cause the Company to register Registrable
Securities pursuant to this Agreement may be assigned by a Holder to a
transferee or assignee of Registrable Securities if (a) such transferee is
an Affiliate, subsidiary or parent company of a party hereto, or (b)  such
transferee acquires at least 25% of the Registrable Securities then owned by
such Holder; provided, that (i) the transferor shall furnish to the
Company written notice at or prior to the time of transfer of the name and
address of such transferee or assignee and the securities with respect to which
such registration rights are being assigned, (ii) such transferee shall
agree in writing to be subject to all restrictions set forth in this Agreement
in the same capacity and to the same extent as the transferring Holder; and (iii) such
transferee shall acknowledge, immediately following such assignment, that the
further disposition of such securities by such assignee may be restricted under
the Securities Act.

 

2.9           Rule 144 Reporting.  With
a view to making available to the Holders the benefits of certain rules and
regulations of the SEC which may permit the sale of the Registrable Securities
to the public without registration, the Company agrees to use its reasonable best
efforts to:

 

(a) 
make and keep public information available, as those terms are understood and
defined in Securities Act Rule 144 or any similar or analogous rule promulgated
under the Securities Act, at all times after the effective date of this Agreement;

 

(b) 
file with the SEC, in a timely manner, all annual and quarterly reports
required of the Company under Section 13 or Section 15(d) of the
Exchange Act; and

 

9

 

(c) 
so long as a Holder owns any Registrable Securities, furnish to such Holder
forthwith upon request a written statement by the Company as to its compliance
with the reporting requirements of Rule 144 under the Securities Act, and
of the Exchange Act; a copy of the most recent annual or quarterly report of
the Company; and such other reports and documents as a Holder may reasonably
request in availing itself of any rule or regulation of the SEC allowing
it to sell any such securities without registration.

 

2.10         Obligations of the Holders

 

(a)           Each Holder shall furnish in
writing to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the
registration of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably request in
connection therewith.  Upon the execution
of this Agreement, each Holder shall complete, execute and deliver to the
Company a selling securityholder notice and questionnaire in form reasonably
satisfactory to the Company.  At least five Business Days prior to
the first anticipated filing date of any registration statement, the Company
shall notify each Holder of any additional information the Company requires
from such Holder if such Holder elects to have any of the Registrable
Securities included in such registration statement.  A Holder shall
provide such information to the Company at least two Business Days prior to the
first anticipated filing date of such Registration Statement. Each holder
agrees that, in connection with any sale of Registrable Securities by it
pursuant to a registration statement, it shall comply with the “Plan of
Distribution” section of the then current prospectus relating to such
registration statement.

 

(b)           Each Holder, by its
acceptance of the Registrable Securities, agrees to cooperate with the Company
as reasonably requested by the Company in connection with the preparation and
filing of a Registration Statement hereunder, unless such Holder has notified
the Company in writing of its election to exclude all of its Registrable
Securities from such Registration Statement.

 

(c) 
Each Holder covenants and agrees that it shall comply with the prospectus
delivery requirements of the Securities Act as applicable to it in connection
with sales of Registrable Securities pursuant to any Registration Statement.

 

2.11         Suspension of Registration
Rights.

 

(a)           Notwithstanding anything to
the contrary herein, if the Company shall at any time furnish to the Holders a
certificate signed by any of its authorized officers (a “Suspension Notice”)
stating that the Company is engaged in a material merger, acquisition or sale,
or a pending material financing, material corporate reorganization or other
material corporate transaction, and the Board of Directors of the Company
determines, in good faith and by appropriate resolution after consultation with
its outside counsel, that the filing of the Mandatory Registration Statement
would require additional disclosure of material information that would be
materially detrimental to the Company, then the right of the Holders to require
the Company to file the Mandatory Registration Statement shall be suspended for
a period (a “Black Out Period”) 

 

10

 

of
not more than sixty (60) days in the aggregate in any three hundred and sixty
(360) consecutive-day period (and no more than ten (10) consecutive
Business Days in any three hundred and sixty (360) consecutive day period.

 

(b)           Notwithstanding anything to
the contrary in this Section 2.11, the Company shall not impose any
Black Out Period in a manner that is more restrictive (including, without
limitation, as to duration) than the comparable restrictions that the Company
may impose on transfers of the Company’s equity securities by its directors and
senior executive officers.

 

(c)           During any Black Out Period,
no Holder shall offer or sell any Registrable Securities pursuant to or in
reliance upon the Mandatory Registration Statement (or the prospectus relating
thereto) filed by the Company. Notwithstanding the foregoing, if the public
announcement of the applicable material transaction or material, nonpublic
information is made during a Black Out Period, then the Black Out Period shall
terminate without any further action of the parties and the Company shall
immediately notify the Holders of such termination.

 

SECTION 3.

MISCELLANEOUS

 

3.1           Successors and Assigns.  Except
as otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
permitted assigns of the parties (including, subject to Section 2.8,
transferees of Registrable Securities).  Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.

 

3.2           Governing Law; Jurisdiction;
Jury Trial.  All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal Laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdictions) that would cause the
application of the Laws of any jurisdictions other than the State of New
York.  Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting
in The City of New York, Borough of Manhattan, for the adjudication of any
dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is
not personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper. 
Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit
in any way any right to serve process in any manner permitted by Law.  EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH
OR 

 

11

 

ARISING
OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

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

 

3.4           Titles and Subtitles.  The
titles and subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this Agreement

 

3.5           Notices.  Any
notices, consents, waivers or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed
to have been delivered:  (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); or (iii) one (1) Business
Day after deposit with a nationally recognized overnight courier service, in
each case properly addressed to the party to receive the same.  The addresses and facsimile numbers for such
communications shall be:

 

	
  If to the Company:

  
	
   

  	
   

  
	
   

  	
  Meta Financial Group, Inc.

  
	
   

  	
  5501 S. Broadband Lane

  
	
   

  	
  Sioux Falls, South Dakota 57108

  
	
   

  	
  Telephone:

  	
  (605) 782-1738

  
	
   

  	
  Facsimile:

  	
  (605) 338-0596

  
	
   

  	
  Attention:

  	
  General
  Counsel

  
	
   

  	
   

  
	
  with a copy (for informational purposes only) to:

  
	
   

  	
   

  
	
   

  	
  Katten Muchin Rosenman LLP

  
	
   

  	
  2900 K Street, NW

  
	
   

  	
  Suite 200

  
	
   

  	
  Washington, DC 20007

  
	
   

  	
  Telephone:

  	
  (202) 625-3500

  
	
   

  	
  Facsimile:

  	
  (202)
  339-8281

  
	
   

  	
  Attention:

  	
  Jeffrey
  M. Werthan, Esq.

  
	
   

  	
   

  
	
  If to the Buyer:

  
	
   

  	
   

  
	
   

  	
  NetSpend Holdings, Inc.

  
	
   

  	
  701 Brazos Street, Suite 1200

  
	
   

  	
  Austin, Texas 78701

  
	
   

  	
  Telephone:

  	
  (512) 532-8200

  
	
   

  	
  Facsimile:

  	
  (512) 496-9951

  
	
   

  	
  Attention:

  	
  General Counsel

  

 

12

 

or
to such other address and/or facsimile number and/or to the attention of such
other Person as the recipient party has specified by written notice given to
each other party pursuant to this Section.

 

3.6           Expenses.  If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys’ fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.

 

3.7           Amendments and Waivers.  Any
term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and
either retroactively or prospectively), only with the prior written consent of
the Company and a majority-in-interest of the Holders.

 

3.8           Severability.  Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.

 

3.9           Entire Agreement.  This
Agreement supersedes all other prior oral or written agreements between the
Buyer, the Company, their Affiliates and Persons acting on their behalf with
respect to the matters discussed herein, and this Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor the Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters.

 

[Remainder
of page intentionally left blank]

 

13

 

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first written above.

 

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  META
  FINANCIAL GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  J. Tyler Haahr

  
	
   

  	
   

  	
  Name:

  	
  J.
  Tyler Haahr

  
	
   

  	
   

  	
  Title:

  	
  President
  and Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BUYER:

  
	
   

  	
   

  
	
   

  	
  NETSPEND
  HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Daniel R. Henry

  
	
   

  	
   

  	
  Name:

  	
  Daniel
  R. Henry

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Executive Officer

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00167-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00167-of-00352.parquet"}]]