Document:

Exhibit
10.4

 

[TIME
VESTED FORM FOR EVPs]

THE MACERICH COMPANY

 

LTIP UNITS AWARD AGREEMENT

 

LTIP UNITS AWARD AGREEMENT made as of date set forth
on Schedule A hereto between The Macerich Company, a Maryland
corporation (the “Company”), its subsidiary The Macerich Partnership, L.P.,
a Delaware limited partnership and the entity through which the Company
conducts substantially all of its operations (the “Partnership”), and
the party listed on Schedule A (the “Grantee”).

 

RECITALS

 

A.            The Grantee is an employee of the Company
or one of its Subsidiaries or affiliates and provides services to the
Partnership.

 

B.            Pursuant to The
Macerich Company 2003 Equity Incentive Plan, as amended, which includes any
applicable programs thereunder (the “2003
Plan”), the Company has granted to the Grantee with reference to
services rendered and to be rendered to the Company, upon the terms and
conditions set forth herein, an award of LTIP Units (this “Award”) as described
in this Award Agreement (this “Agreement”
or “Award Agreement”). This Award
was made by the Compensation Committee (the “Committee”) of the Board of
Directors of the Company (the “Board”) pursuant to authority delegated
to it by the Board as set forth in the Committee’s charter, including authority
to make grants of equity interests in the Partnership which may, under certain
circumstances, become exchangeable for shares of the Company’s Common Stock
reserved for issuance under the 2003 Plan, or any successor equity plan (as any
such plan may be amended, modified or supplemented from time to time,
collectively the “Stock Plan”).

 

C.            Effective
as of the Effective Date specified in Schedule
A hereto, the
Committee awarded to the Grantee the number of LTIP Units set forth in Schedule A.

 

NOW, THEREFORE, the Company, the
Partnership and the Grantee agree as follows:

 

1.             Administration.
This Award and this Agreement shall be administered by the Committee
pursuant to its powers and authority in the administration of the Stock Plan, as
set forth in the Stock Plan. The Committee may from time to time adopt any
rules or procedures it deems necessary or desirable for the proper and
efficient administration of this Award and this Agreement, consistent with the
terms hereof and of the Stock Plan. The Committee’s determinations and
interpretations with respect to this Award and this Agreement shall be final
and binding on all parties.

 

 

2.             Definitions.
Capitalized terms used herein without definitions shall have the meanings
given to those terms in the Stock Plan. In addition, as used herein:

 

“Award
LTIP Units” has the meaning set forth in Section 3.

 

“Change
of Control” means any of the following:

 

(a)           The acquisition by any Person
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 33% or more of either (A) the then-outstanding shares of
common stock of the Company (the “Outstanding Company Common Stock”) or
(B) the combined voting power of the then-outstanding voting securities of the
Company entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that, for purposes of this
definition, the following acquisitions shall not constitute a Change of
Control; (i) any acquisition directly from the Company, (ii) any acquisition by
the Company, (iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by 

 

2

 

the Company or any affiliate of the Company or
successor or (iv) any acquisition by any entity pursuant to a transaction that
complies with (c)(i), (c)(ii) and (c)(iii) below;

 

(b)           Individuals who, as of the date hereof, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least two-thirds of the directors
then comprising the Incumbent Board (including for these purposes, the new
members whose election or nomination was so approved, without counting the
member and his predecessor twice) shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an actual
or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board;

 

(c)           Consummation of a reorganization, merger, statutory share exchange or
consolidation or similar corporate transaction involving the Company or any of
its subsidiaries, a sale or other disposition of all or substantially all of
the assets of the Company, or the acquisition of assets or stock of another
entity by the Company or any of its subsidiaries (each, a “Business
Combination”), in each case unless, following such Business Combination, (i)
all or substantially all of the individuals and entities that were the
beneficial owners of the Outstanding Company Common Stock and the Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of the then-outstanding
shares of common stock and the combined voting power of the then-outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the entity resulting from such Business Combination (including,
without limitation, an entity that, as a result of such transaction, owns the
Company or all or substantially all of the Company’s assets directly or through
one or more subsidiaries (“Parent”)) in substantially the same
proportions as their ownership immediately prior to such Business Combination
of the Outstanding Company Common Stock and the Outstanding Company Voting
Securities, as the case may be, (ii) no Person (excluding any entity resulting
from such Business Combination or a Parent or any employee benefit plan (or
related trust) of the Company or such entity resulting from such Business
Combination or Parent) beneficially owns, directly or indirectly, 20% or more
of, respectively, the then-outstanding shares of common stock of the entity resulting
from such Business Combination or the combined voting power of the
then-outstanding voting securities of such entity, except to the extent that
the ownership in excess of 20% existed prior to the Business Combination, and (iii)
at least a majority of the members of the board of directors or trustees of the
entity resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement or of the action of
the Board providing for such Business Combination; or

 

(d)           Approval by the stockholders of the Company of a complete liquidation
or dissolution of the Company.

 

3

 

“Code”
means the Internal Revenue Code of 1986, as amended.

 

“Common
Stock” means shares of the Company’s common stock, par value $0.01 per
share, either currently existing or authorized hereafter.

 

“Continuous Service” means the
continuous service to the Company or any Subsidiary or affiliate, without
interruption or termination, in any capacity of employee, or, with the written consent
of the Committee, consultant. Continuous Service shall not be considered
interrupted in the case of (A) any approved leave of absence, (B) transfers
among the Company and any Subsidiary or affiliate, or any successor, in any
capacity of employee, or with the written consent of the Committee, consultant,
or (C) any change in status as long as the individual remains in the service of
the Company and any Subsidiary or affiliate in any capacity of employee, member
of the Board or (if the Company specifically agrees in writing that the
Continuous Service is not uninterrupted) a consultant. An approved leave of
absence shall include sick leave, military leave, or any other authorized
personal leave.

 

“Disability”
means (1) a “permanent and total disability” within the meaning of Section
22(e)(3) of the Code, or (2) the absence of the Grantee from his duties with
the Company on a full-time basis for a period of nine months as a result of
incapacity due to mental or physical illness which is determined to be total
and permanent by a physician selected by the Company or its insurers and
acceptable to the Grantee or his legal representative (such agreements as to
acceptability not to be unreasonably withheld). For purposes of the definition
of Disability “incapacity” shall be limited only to a condition that
substantially prevents the Grantee from performing his or her duties.

 

“Effective
Date” means                                             ,
        .

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended.

 

“LTIP
Units” means units of limited partnership interest of the Partnership
designated as “LTIP Units” in the Partnership Agreement having the rights,
voting powers, restrictions, 

 

4

 

limitations
as to distributions, qualifications and terms and conditions of redemption set
forth in the Partnership Agreement.

 

“Partnership
Agreement” means the Amended and Restated Limited Partnership Agreement of
the Partnership, dated as of March 16, 1994, among the Company, as general
partner, and the limited partners who are parties thereto, as amended from time
to time.

 

“Person” means an individual, corporation,
partnership, limited liability company, joint venture, association, trust,
unincorporated organization, other entity or “group” (as defined in the
Exchange Act).

 

 “Qualified Termination”
means a termination of the Grantee’s employment as a result of the Grantee’s
death or Disability.

 

“Service Agreement” means, as of a particular
date, any employment, consulting or
similar service agreement, including, without limitation, management continuity
agreement, then in effect between the Grantee, on the one hand, and the Company
or one of its affiliates, on the other hand, as amended or supplemented through
such date.

 

“Units”
means Partnership Units (as defined in the Partnership Agreement) that are outstanding
or are issuable upon the conversion, exercise, exchange or redemption of any
securities of any kind convertible, exercisable, exchangeable or redeemable for
Partnership Units.

 

“Vesting
Date” means each of the vesting dates set forth in Section 4.

 

“Vesting
Schedule” means the vesting schedule set forth in Section 4.

 

3.             Award
of LTIP Units. On the terms and conditions set forth in this Agreement, as
well as the terms and conditions of the Stock Plan, the Grantee is hereby
granted this Award consisting of the number of LTIP Units set forth on Schedule A hereto, which is incorporated herein by reference (the “Award
LTIP Units”). Award LTIP Units
constitute and shall be treated as the property of the Grantee, subject to the
terms of this Agreement and the Partnership Agreement. Award LTIP Units
will be: (A) subject to forfeiture to the extent provided in Section 5;
and (B) subject to vesting as provided in Sections 4 and 5 hereof.

 

4.             Vesting
of Award LTIP Units.

 

(a)           Vesting Schedule. Except as otherwise provided in Section
5 hereof, and/or the Stock Plan, the Award LTIP Units shall become vested
in the following amounts, provided that the Continuous Service of the
Grantee continues through and on the relevant Vesting Date.

 

5

 

 

	
  Vesting Date

  	
   

  	
  Number
  of

  Award LTIP Units Becoming

  Vested

  	
   

  	
  Cumulative

  Percentage Vested

  	
   

  
	
                  ,
            

  	
   

  	
  [(33 1/3%)]

  	
   

  	
  [33 1/3%]

  	
   

  
	
                  ,
          

  	
   

  	
  [(33 1/3%)]

  	
   

  	
  [66 2/3%]

  	
   

  
	
                  ,
          

  	
   

  	
  [(33 1/3%)]

  	
   

  	
  [100%]

  	
   

  

 

[Vesting schedule subject
to change by the Committee.]

 

(b)           Continuous Service
Requirement. The Grantee agrees to provide Continuous Service to the
Company in consideration for the conditional rights to the unvested Award LTIP
Units. Except as otherwise provided in Section 5 or pursuant to the
Stock Plan, the Vesting Schedule requires Continuous Service through each
applicable Vesting Date as a condition to the vesting of the applicable
installment and rights and benefits under this Agreement. Partial service, even
if substantial, during any vesting period will not entitle the Grantee to any
proportionate vesting or avoid or mitigate a termination of rights and benefits
upon or following a termination of employment or service as provided in Section
5 below or under the Stock Plan.

 

5.             Change
of Control or Termination of Grantee’s Service Relationship.

 

(a)           Forfeiture after
Certain Events. If the Grantee is a party to a Service Agreement, the
provisions of Sections 5(b), 5(c) and 5(d) below shall
govern the vesting of the Grantee’s Award LTIP Units exclusively in the event
of a Change of Control or termination of the Grantee’s service relationship
with the Company or any Subsidiary or affiliate, unless the Service Agreement
contains provisions that expressly refer to this Section 5 and provides
that those provisions of the Service Agreement shall instead govern the vesting
of the Grantee’s Award LTIP Units. The foregoing sentence will be deemed an
amendment to any applicable Service Agreement to the extent required to apply
its terms consistently with this Section 5, such that, by way of
illustration, any provisions of the Service Agreement with respect to
accelerated vesting or payout of the Grantee’s bonus or incentive compensation
awards in the event of certain types of terminations of Grantee’s service relationship
shall not be interpreted as requiring that vesting occur with respect to this
Award other than as specifically provided in this Section 5. In the event an entity ceases to be a
Subsidiary or affiliate of the Company, such action shall be deemed to be a
termination of employment of all employees of that entity for purposes of this
Agreement, provided that the Committee, in its sole and absolute
discretion, may make provision in such circumstances for accelerated vesting of
some or all of the Grantee’s remaining unvested Award LTIP Units that have not
previously been forfeited, effective immediately prior to such event.

 

(b)           Change of Control,
Qualified Termination or Retirement. In the event of a Change of Control or
Qualified Termination, the unvested
Award LTIP Units subject to this Agreement that have not been previously
forfeited shall automatically and 

 

6

 

 

immediately vest as of the
date of the Change of Control or Qualified Termination (or effective
immediately prior to such event to the extent necessary in order to enable the
realization of the benefits of such acceleration), subject to the provisions of
Sections 6.4 and 6.5 of the Stock Plan. If the Grantee’s employment with the Company or a Subsidiary or
affiliate terminates as a result of his or her Retirement, the Committee may,
on a case-by-case basis and in its sole discretion, provide for partial or
complete vesting prior to the Retirement of all or a portion of his or her
Award LTIP Units that have not previously been forfeited.

 

(c)           Change of Control
Benefits. To the extent that the Grantee’s Service Agreement entitles the
Grantee to receive any severance payments, or any other similar term used in
the Grantee’s Service agreement, from the Company in case of a termination of
the Grantee’s employment following a Change of Control or a similar event (“Change
of Control Benefits”), then for purposes of calculating the Grantee’s
entitlement to such Change of Control Benefits the amount of the Award LTIP
Units awarded with respect to any calendar year shall be included as part of
the Grantee’s annual incentive bonus amount, or any other similar term used in
the Grantee’s Service Agreement, for such calendar year.

 

(d)           Return
of Award LTIP Units. In the event of a termination of employment or other
cessation of the Grantee’s Continuous Service other than a Qualified
Termination, effective as of the date of such termination or cessation all
Award LTIP Units except for those that had previously become vested pursuant to
Section 4 or 5 hereof shall automatically and immediately be
forfeited by the Grantee. Upon
the occurrence of any forfeiture of Award LTIP Units hereunder, such unvested,
forfeited LTIP Units shall, without payment of any consideration by the Company
for such transfer, be automatically transferred to the Company, without any
other action by the Grantee, or the Grantee’s Beneficiary or Personal
Representative, as the case may be. The Company may take any other action
necessary or advisable to evidence such transfer. Any such forfeited Award LTIP
Units shall automatically and without notice, terminate and be and become null
and void, and neither the Grantee nor any of his Beneficiaries or Personal
Representatives will thereafter have any further rights or interests in such
forfeited Award LTIP Units. The Grantee, or the Grantee’s Beneficiary or
Personal Representative, as the case may be, and the Partnership shall deliver
any additional documents of transfer that the Company may request to confirm
the transfer of such unvested, forfeited LTIP Units to the Company.

 

(e)           Section 409A Matters.
Notwithstanding the foregoing, in the event vesting pursuant to Section 5
is determined to constitute “nonqualified deferred compensation” subject to
Section 409A of the Code, then, to the extent the Grantee is a “specified
employee” under Section 409A of the Code subject to the six-month delay
thereunder, any such vesting or related payments to be made during the
six-month period commencing on the Grantee’s “separation from service” (as
defined in Section 409A of the Code) shall be delayed until the expiration of
such six-month period.

 

7

 

(f)            Schedule A Controls.
To the extent that Schedule A provides for amounts or schedules of
vesting that conflict with the provisions of this Section 5, the provisions of Schedule A will be
controlling and determinative.

 

6.             Payments
by Award Recipients. No amount shall be payable to the Company or the
Partnership by the Grantee at any time in respect of this Award.

 

7.             Distributions.
The Grantee shall be entitled to receive distributions with respect to the Award
LTIP Units to the extent provided for in the Partnership Agreement, as modified
hereby, if applicable. The Distribution Participation Date (as defined in the Partnership
Agreement) with respect to the Award LTIP Units shall be the Effective Date and
the Award LTIP Units shall be entitled to the full distribution payable on
Units outstanding as of the record date for the quarterly distribution in which
the Effective Date falls even though the Award LTIP Units will not have been
outstanding for the whole quarterly period. All distributions paid with respect to Award LTIP Units shall be fully
vested and non-forfeitable when paid whether the underlying Award LTIP Units
are vested or unvested.

 

8.             Restrictions
on Transfer. None of the Award LTIP Units shall be sold, assigned,
transferred, pledged or otherwise disposed of or encumbered (whether voluntarily
or involuntarily or by judgment, levy, attachment, garnishment or other legal
or equitable proceeding) (each such action a “Transfer”), or redeemed in
accordance with the Partnership Agreement (a) prior to vesting, (b) for a
period of two (2) years beginning on the Effective Date other than in
connection with a Change of Control, and (c) unless such Transfer is in
compliance with all applicable securities laws (including, without limitation,
the Securities Act of 1933, as amended (the “Securities Act”)), and such
Transfer is in accordance with the applicable terms and conditions of the
Partnership Agreement; provided
that, upon the approval of, and subject to the terms and conditions specified
by, the Committee, unvested Award LTIP Units that have been held for a period
of at least two (2) years may be Transferred to (i) the spouse, children or
grandchildren of the Grantee (“Immediate Family Members”), (ii) a trust
or trusts for the exclusive benefit of the Grantee and such Immediate Family
Members, (iii) a partnership in which the Grantee and such Immediate Family
Members are the only partners, or (iv) one or more entities in which the
Grantee has a 10% or greater equity interest, provided that the Transferee
agrees in writing with the Company and the Partnership to be bound by all the
terms and conditions of this Agreement and that subsequent transfers of
unvested Award LTIP Units shall be prohibited except those in accordance with
this Section 8. In connection with any Transfer of Award LTIP
Units, the Partnership may require the Grantee to provide an opinion of
counsel, satisfactory to the Partnership, that such Transfer is in compliance
with all federal and state securities laws (including, without limitation, the
Securities Act). Any attempted Transfer of Award LTIP Units not in accordance
with the terms and conditions of this Section 8 shall be null and void,
and the Partnership shall not reflect on its records any change in record
ownership of any LTIP Units as a result of any such Transfer, shall otherwise
refuse to recognize any such Transfer and shall not in any way give effect to
any such Transfer of any LTIP Units. This Agreement is personal to the Grantee,
is non-assignable and is not transferable in any manner, by operation of law or
otherwise, other than by will or the laws of descent and distribution.

 

9.             Changes
in Capital Structure. Without duplication with the provisions of Section 6.2
of the Stock Plan, if (a) the Company shall at any time be involved in a
merger, 

 

8

 

consolidation,
dissolution, liquidation, reorganization, exchange of shares, sale of all or
substantially all of the assets or stock of the Company or other fundamental transaction
similar thereto, (b) any stock dividend, stock split, reverse stock split,
stock combination, reclassification, recapitalization, significant repurchases
of stock, or other similar change in the capital structure of the Company shall
occur, (c) any extraordinary dividend or other distribution to holders of shares
of Common Stock or Units other than regular cash dividends shall be made, or (d)
any other event shall occur that in each case in the good faith judgment of the
Committee necessitates action by way of appropriate equitable adjustment in the
terms of this Award or the LTIP Units, then the Committee shall take such
action as it deems necessary to maintain the Grantee’s rights hereunder so that
they are substantially proportionate to the rights existing under this Award
and the terms of the LTIP Units prior to such event, including, without
limitation: (i) adjustments in the Award LTIP Units or other pertinent terms of
this Award; and (ii) substitution of other awards under the Stock Plan or
otherwise. The Grantee shall have the right to vote the Award LTIP Units if and
when voting is allowed under the Partnership Agreement, regardless of whether
vesting has occurred.

 

10.           Possible Early Termination of Award LTIP
Units. As permitted by Section 6.2(b) of the Stock Plan, and without
limiting the authority of the Committee under other provisions of Section 6.2
of the Stock Plan or Section 5 of this Agreement, the Committee retains
the right to terminate the Award LTIP Units, to the extent they have not
vested, upon a dissolution of the Company or a reorganization event or
transaction in which the Company does not survive (or does not survive as a
public company in respect of its outstanding Common Stock). This Section 10
is not intended to prevent future vesting of any Award LTIP Units if they (or a
substituted award) remain outstanding following a Change of Control.

 

11.           Miscellaneous.

 

(a)           Amendments;
Modifications. This Agreement may be amended or modified only with the
consent of the Company and the Partnership acting through the Committee; provided
that any such amendment or modification materially and adversely affecting the
rights of the Grantee hereunder must be consented to by the Grantee to be
effective as against him; and provided,
further, that the Grantee
acknowledges that the Stock Plan may be amended or discontinued in accordance
with Section 6.6 thereof and that this Agreement may be amended or canceled by
the Committee, on behalf of the Company and the Partnership, for the purpose of
satisfying changes in law or for any other lawful purpose, so long as no such
action shall impair the Grantee’s rights under this Agreement without the
Grantee’s written consent. Notwithstanding the foregoing, this Agreement may be
amended in writing signed only by the Company to correct any errors or
ambiguities in this Agreement and/or to make such changes that do not materially
adversely affect the Grantee’s rights hereunder. No promises, assurances,
commitments, agreements, undertakings or representations, whether oral,
written, electronic or otherwise, and whether express or implied, with respect
to the subject matter hereof, have been made by the parties which are not set
forth expressly in this Agreement. This grant shall in no way affect the
Grantee’s participation or benefits under any other plan or benefit program
maintained or provided by the Company.

 

(b)           Incorporation of Stock
Plan; Committee Determinations. The provisions of the Stock Plan are hereby
incorporated by reference as if set forth herein.
In the event of a 

 

9

 

conflict between this
Agreement and the Stock Plan, this Agreement shall be controlling and determinative. The
Committee will make the determinations and certifications required by this
Award as promptly as reasonably practicable following the occurrence of the
event or events necessitating such determinations or certifications.

 

(c)           Status as a Partner.
As of the grant date set forth on Schedule A, the Grantee shall be
admitted as a partner of the Partnership with beneficial ownership of the number
of Award LTIP Units issued to the Grantee as of such date pursuant to Section 3 hereof by: (A) signing
and delivering to the Partnership a copy of this Agreement; and (B) signing, as
a Limited Partner, and delivering to the Partnership a counterpart signature
page to the Partnership Agreement (attached hereto as Exhibit A). The
Partnership Agreement shall be amended from time to time as applicable to
reflect the issuance to the Grantee of Award LTIP Units pursuant to Section 3 hereof, if any, whereupon
the Grantee shall have all the rights of a Limited Partner of the Partnership
with respect to the number of LTIP Units then held by the Grantee, as set forth
in the Partnership Agreement, subject, however, to the restrictions and
conditions specified herein and in the Partnership Agreement.

 

(d)           Status of LTIP Units
under the Stock Plan. The Award LTIP Units are both issued as equity
securities of the Partnership and granted as awards under the Stock Plan. The
Company will have the right at its option, as set forth in the Partnership
Agreement, to issue shares of Common Stock in exchange for Units into which
Award LTIP Units may have been converted pursuant to the Partnership Agreement,
subject to certain limitations set forth in the Partnership Agreement, and such
shares of Common Stock, if issued, will be issued under the Stock Plan. The
Grantee must be eligible to receive the Award LTIP Units in compliance with
applicable federal and state securities laws and to that effect is required to
complete, execute and deliver certain covenants, representations and warranties
(attached as Exhibit B). The Grantee acknowledges that the Grantee will
have no right to approve or disapprove such determination by the Committee.

 

(e)           Legend. The
records of the Partnership evidencing the Award LTIP Units shall bear an
appropriate legend, as determined by the Partnership in its sole discretion, to
the effect that such LTIP Units are subject to restrictions as set forth herein,
in the Stock Plan and in the Partnership Agreement.

 

(f)            Compliance With Securities
Laws. The Partnership and the Grantee will make reasonable efforts to
comply with all applicable securities laws. In addition, notwithstanding any
provision of this Agreement to the contrary, no LTIP Units will become vested
or be issued at a time that such vesting or issuance would result in a
violation of any such laws.

 

(g)           Investment
Representations; Registration. The Grantee hereby makes the covenants,
representations and warranties and set forth on Exhibit B attached
hereto. All of such covenants, warranties and representations shall survive the
execution and delivery of this Agreement by the Grantee. The Partnership will
have no obligation to register under the Securities Act any LTIP Units or any
other securities issued pursuant to this Agreement or upon conversion or
exchange of LTIP Units. The Grantee agrees that any resale of the shares of Common
Stock received upon the exchange of Units into which LTIP Units may be
converted 

 

 

10

 

shall not occur during
the “blackout periods” forbidding sales of Company securities, as set forth in
the then applicable Company employee manual or insider trading policy. In
addition, any resale shall be made in compliance with the registration
requirements of the Securities Act or an applicable exemption therefrom,
including, without limitation, the exemption provided by Rule 144
promulgated thereunder (or any successor rule).

 

(h)           Section 83(b)
Election. In connection with each separate issuance of LTIP Units under
this Award pursuant to Section 3
hereof the Grantee hereby agrees to make an election to include in gross income
in the year of transfer the applicable Award LTIP Units pursuant to Section
83(b) of the Code substantially in the form attached hereto as Exhibit C
and to supply the necessary information in accordance with the regulations
promulgated thereunder.

 

(i)            Severability. If,
for any reason, any provision of this Agreement is held invalid, such
invalidity shall not affect any other provision of this Agreement not so held
invalid, and each such other provision shall to the full extent consistent with
law continue in full force and effect. If any provision of this Agreement shall
be held invalid in part, such invalidity shall in no way affect the rest of
such provision not held so invalid, and the rest of such provision, together
with all other provisions of this Agreement, shall to the full extent
consistent with law continue in full force and effect.

 

(j)            Governing Law. This
Agreement is made under, and will be construed in accordance with, the laws of State
of Delaware, without giving effect to the principles of conflict of laws of
such state.

 

(k)           No Obligation to
Continue Position as an Employee, Consultant or Advisor. Neither the
Company nor any affiliate is obligated by or as a result of this Agreement to
continue to have the Grantee as an employee, consultant or advisor and this
Agreement shall not interfere in any way with the right of the Company or any
affiliate to terminate the Grantee’s service relationship at any time.

 

(l)            Notices. Any
notice to be given to the Company shall be addressed to the Secretary of the
Company at its principal place of business and any notice to be given the
Grantee shall be addressed to the Grantee at the Grantee’s address as it
appears on the employment records of the Company, or at such other address as
the Company or the Grantee may hereafter designate in writing to the other.

 

(m)          Withholding and Taxes.
No later than the date as of which an amount first becomes includible in the
gross income of the Grantee for income tax purposes or subject to the Federal
Insurance Contributions Act withholding with respect to this Award, the Grantee
will pay to the Company or, if appropriate, any of its affiliates, or make
arrangements satisfactory to the Committee regarding the payment of, any United
States federal, state or local or foreign taxes of any kind required by law to
be withheld with respect to such amount. The obligations of the Company under
this Agreement will be conditional on such payment or arrangements, and the
Company and its affiliates shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment otherwise due to the Grantee.

 

11

 

 

(n)           No Service
Commitment by Company. Nothing contained in this Agreement or the Stock
Plan constitutes an employment or service commitment by the Company, affects
the Grantee’s status as an employee at will who is subject to termination
without cause, confers upon the Grantee any right to remain employed by the
Company, interferes in any way with the right of the Company at any time to
terminate such employment, or affects the right of the Company to increase or
decrease the Grantee’s other compensation or benefits. Nothing in this Section,
however, is intended to adversely affect any independent contractual right of
the Grantee without his consent thereto. Employment for any period of time
(including a substantial period of time) after the Effective Date will not
entitle the Grantee to any proportionate vesting or avoid or mitigate a
termination of rights and benefits upon or following a termination of
employment as provided in Section 4 or 5 above if the express
conditions to vesting set forth in such Sections have not been satisfied.

 

(o)           Headings. The
headings of paragraphs hereof are included solely for convenience of reference
and shall not control the meaning or interpretation of any of the provisions of
this Agreement.

 

(p)           Counterparts. This
Agreement may be executed in multiple counterparts with the same effect as if
each of the signing parties had signed the same document. All counterparts
shall be construed together and constitute the same instrument.

 

(q)           Successors and
Assigns. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and any successors to the Company and the Partnership, on
the one hand, and any successors to the Grantee, on the other hand, by will or
the laws of descent and distribution, but this Agreement shall not otherwise be
assignable or otherwise subject to hypothecation by the Grantee.

 

(r)            Section 409A. This Agreement shall be construed, administered and interpreted in
accordance with a good faith interpretation of Section 409A of the Code. Any
provision of this Agreement that is inconsistent with Section 409A of the Code,
or that may result in penalties under Section 409A of the Code, shall be
amended, in consultation with the Grantee and with the reasonable
cooperation of the Grantee and the Company, in the least restrictive manner
necessary to (i) exclude the Award LTIP Units from the definition of “deferred
compensation” within the meaning of such Section 409A or (ii) comply
with the provisions of Section 409A, other applicable provision(s) of the
Code and/or any rules, regulations or other regulatory guidance issued under
such statutory provisions, in each case without diminution in the value of the
benefits granted hereby to the Grantee.

 

 

12

 

(s)           Complete Agreement.
This Agreement (together with those agreements and documents expressly referred
to herein, for the purposes referred to herein) embody the complete and entire
agreement and understanding between the parties with respect to the subject
matter hereof, and supersede any and all prior promises, assurances,
commitments, agreements, undertakings or representations, whether oral,
written, electronic or otherwise, and whether express or implied, which may
relate to the subject matter hereof in any way.

 

[signature page follows]

 

 

 

13

 

IN WITNESS WHEREOF, the undersigned have caused this Award
Agreement to be executed as of the      day of                     ,
        .

 

 

	
   

  	
  THE MACERICH COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   Name:

  
	
   

  	
   Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE MACERICH PARTNERSHIP, L.P.

  
	
   

  	
   

  
	
   

  	
  By: The Macerich Company, its general partner

  
	
   

  	
   

  
	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  
	
   

  	
   

  
	
   

  	
  GRANTEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  
								

 

EXHIBIT A

 

FORM OF LIMITED PARTNER
SIGNATURE PAGE

 

The Grantee, desiring to become one of the within
named Limited Partners of The Macerich Company, L.P., hereby accepts all of the
terms and conditions of (including, without limitation, the provisions related
to powers of attorney), and becomes a party to, the Agreement of Limited
Partnership, dated as of March 16, 1994, of The Macerich Partnership, L.P., as
amended (the “Partnership Agreement”). The Grantee agrees that this
signature page may be attached to any counterpart of the Partnership Agreement
and further agrees as follows (where the term “Limited Partner” refers to the
Grantee:

 

1.             The Limited Partner
hereby confirms that it has reviewed the terms of the Partnership Agreement and
affirms and agrees that it is bound by each of the terms and conditions of the
Partnership Agreement, including, without limitation, the provisions thereof
relating to limitations and restrictions on the transfer of Partnership Units.
Without limitation of the foregoing, the Limited Partner is deemed to have made
all of the acknowledgements, waivers and agreements set forth in Section 10.6
and 13.11 of the Partnership Agreement.

 

2.             The Limited Partner
hereby confirms that it is acquiring the Partnership Units for its own account
as principal, for investment and not with a view to resale or distribution, and
that the Partnership Units may not be transferred or otherwise disposed of by
the Limited Partner otherwise than in a transaction pursuant to a registration
statement filed by the Partnership (which it has no obligation to file) or that
is exempt from the registration requirements of the Securities Act of 1933, as
amended (the “Securities Act”), and all applicable state and foreign
securities laws, and the General Partner may refuse to transfer any Partnership
Units as to which evidence of such registration or exemption from registration
satisfactory to the General Partner is not provided to it, which evidence may
include the requirement of a legal opinion regarding the exemption from such
registration. If the General Partner delivers to the Limited Partner shares of
common stock of the General Partner (“Common Shares”) upon redemption of
any Partnership Units, the Common Shares will be acquired for the Limited
Partner’s own account as principal, for investment and not with a view to
resale or distribution, and the Common Shares may not be transferred or
otherwise disposed of by the Limited Partner otherwise than in a transaction
pursuant to a registration statement filed by the General Partner with respect
to such Common Shares (which it has no obligation under the Partnership
Agreement to file) or that is exempt from the registration requirements of the
Securities Act and all applicable state and foreign securities laws, and the
General Partner may refuse to transfer any Common Shares as to which evidence
of such registration or exemption from such registration satisfactory to the
General Partner is not provided to it, which evidence may include the
requirement of a legal opinion regarding the exemption from such registration.

 

3.             The Limited Partner
hereby affirms that it has appointed the General Partner, any liquidator and
authorized officers and attorneys-in-fact of each, and each of those acting
singly, in each case with full power of substitution, as its true and lawful
agent and attorney-in-fact, with full power and authority in its name, place
and stead, in accordance with Section 6.10 of the Partnership Agreement, which
section is hereby incorporated by

 

 

reference. The foregoing power of attorney is hereby
declared to be irrevocable and a power coupled with an interest, and it shall
survive and not be affected by the death, incompetency, dissolution,
disability, incapacity, bankruptcy or termination of the Limited Partner and
shall extend to the Limited Partner’s heirs, executors, administrators, legal
representatives, successors and assigns.

 

4.

(a)           The Limited Partner
hereby irrevocably consents in advance to any amendment to the Partnership
Agreement, as may be recommended by the General Partner, intended to avoid the
Partnership being treated as a publicly-traded partnership within the meaning
of Section 7704 of the Internal Revenue Code, including, without
limitation, (x) any amendment to the provisions of Section 9.1 or the
Redemption Rights Exhibit of the Partnership Agreement intended to increase the
waiting period between the delivery of a notice of redemption and the
redemption date to up to sixty (60) days or (y) any other amendment to the
Partnership Agreement intended to make the redemption and transfer provisions,
with respect to certain redemptions and transfers, more similar to the
provisions described in Treasury Regulations Section 1.7704-1(f).

 

(b)           The Limited Partner
hereby appoints the General Partner, any Liquidator and authorized officers and
attorneys-in-fact of each, and each of those acting singly, in each case with
full power of substitution, as its true and lawful agent and attorney-in-fact,
with full power and authority in its name, place and stead, to execute and
deliver any amendment referred to in the foregoing paragraph 4(a) on the Limited
Partner’s behalf. The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall survive and not
be affected by the death, incompetency, dissolution, disability, incapacity,
bankruptcy or termination of the Limited Partner and shall extend to the
Limited Partner’s heirs, executors, administrators, legal representatives,
successors and assigns.

 

5.             The Limited Partner
agrees that it will not transfer any interest in the Partnership Units (x) through
(i) a national, non-U.S., regional, local or other securities exchange, (ii)
PORTAL or (iii) an over-the-counter market (including an interdealer quotation
system that regularly disseminates firm buy or sell quotations by identified
brokers or dealers by electronic means or otherwise) or (y) to or through (a) a
person, such as a broker or dealer, that makes a market in, or regularly quotes
prices for, interests in the Partnership or (b) a person that regularly makes
available to the public (including customers or subscribers) bid or offer
quotes with respect to any interests in the Partnership and stands ready to
effect transactions at the quoted prices for itself or on behalf of others.

 

6.             The Limited Partner
acknowledges that the General Partner shall be a third party beneficiary of the
representations, covenants and agreements set forth in Sections 4 and 5 hereof.
The Limited Partner agrees that it will transfer, whether by assignment or
otherwise, Partnership Units only to the General Partner or to transferees that
provide the Partnership and the General Partner with the representations and
covenants set forth in Sections 4 and 5 hereof.

 

 

7.             This Acceptance shall
be construed and enforced in accordance with and governed by the laws of the
State of Delaware, without regard to the principles of conflicts of law.

 

 

	
   

  	
  Signature Line for Limited Partner:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Date:

  	
                        ,
          

  	
   

  
	
   

  	
   

  
	
   

  	
  Address of Limited Partner:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
							

 

 

EXHIBIT B

 

GRANTEE’S COVENANTS, REPRESENTATIONS
AND WARRANTIES

 

The Grantee hereby represents, warrants and covenants
as follows:

 

(a)           The Grantee has
received and had an opportunity to review the following documents (the “Background
Documents”):

 

(i)            The
Company’s latest Annual Report to Stockholders;

 

(ii)           The
Company’s Proxy Statement for its most recent Annual Meeting of Stockholders;

 

(iii)          The Company’s Report on Form 10-K for the
fiscal year most recently ended;

 

(iv)          The
Company’s Form 10-Q, if any, for the most recently ended quarter filed by the
Company with the Securities and Exchange Commission (“SEC”) since the filing of
the Form 10-K described in clause (iii) above;

 

(v)           Each
of the Company’s Current Report(s) on Form 8-K, if any, filed since the end of
the fiscal year most recently ended for which a Form 10-K has been filed by the
Company (except for those Items of the Form 8-K that are not deemed to be
“filed” with the SEC or incorporated by reference into any filing with the
SEC);

 

(vi)          The
Partnership Agreement;

 

(vii)         The Stock Plan; and

 

(viii)        The Company’s Articles of Amendment and
Restatement, as amended.

 

The Grantee also acknowledges that any delivery of the
Background Documents and other information relating to the Company and the
Partnership prior to the determination by the Partnership of the suitability of
the Grantee as a holder of LTIP Units shall not constitute an offer of LTIP
Units until such determination of suitability shall be made.

 

(b)           The Grantee hereby
represents and warrants that

 

(i)            The
Grantee either (A) is an “accredited investor” as defined in Rule 501(a) under
the Securities Act, or (B) by reason of the business and financial
experience of the Grantee, together with the business and financial experience
of those persons, if any, retained by the Grantee to represent or advise him
with respect to the grant to him of LTIP Units, the potential conversion of
LTIP Units into units of limited partnership of the Partnership (“Common
Units”) and the potential redemption of such Common Units for shares the
Company’s common stock (“REIT Shares”), has such knowledge,
sophistication and experience in financial and business matters and in making
investment decisions of this type that the Grantee (I) is capable of evaluating
the merits

 

 

and
risks of an investment in the Partnership and potential investment in the
Company and of making an informed investment decision, (II) is capable of
protecting his own interest or has engaged representatives or advisors to
assist him in protecting his interests, and (III) is capable of bearing the
economic risk of such investment.

 

(ii)           The
Grantee understands that (A) the Grantee is responsible for consulting his own
tax advisors with respect to the application of the U.S. federal income tax
laws, and the tax laws of any state, local or other taxing jurisdiction to
which the Grantee is or by reason of the award of LTIP Units may become
subject, to his particular situation; (B) the Grantee has not received or
relied upon business or tax advice from the Company, the Partnership or any of their
respective employees, agents, consultants or advisors, in their capacity as
such; (C) the Grantee provides services to the Partnership on a regular basis
and in such capacity has access to such information, and has such experience of
and involvement in the business and operations of the Partnership, as the
Grantee believes to be necessary and appropriate to make an informed decision
to accept the award of LTIP Units; and (D) an investment in the Partnership
and/or the Company involves substantial risks. The Grantee has been given the
opportunity to make a thorough investigation of matters relevant to the LTIP
Units and has been furnished with, and has reviewed and understands, materials
relating to the Partnership and the Company and their respective activities
(including, but not limited to, the Background Documents). The Grantee has been
afforded the opportunity to obtain any additional information (including any
exhibits to the Background Documents) deemed necessary by the Grantee to verify
the accuracy of information conveyed to the Grantee. The Grantee confirms that
all documents, records, and books pertaining to his receipt of LTIP Units which
were requested by the Grantee have been made available or delivered to the
Grantee. The Grantee has had an opportunity to ask questions of and receive
answers from the Partnership and the Company, or from a person or persons
acting on their behalf, concerning the terms and conditions of the LTIP Units. The Grantee has relied upon, and is making its decision solely upon,
the Background Documents and other written information provided to the Grantee
by the Partnership or the Company.

 

(iii)          The LTIP Units to be issued, the Common Units
issuable upon conversion of the LTIP Units and any REIT Shares issued in
connection with the redemption of any such Common Units will be acquired for
the account of the Grantee for investment only and not with a current view to,
or with any intention of, a distribution or resale thereof, in whole or in
part, or the grant of any participation therein, without prejudice, however, to
the Grantee’s right (subject to the terms of the LTIP Units, the Stock Plan,
the agreement of limited partnership of the Partnership, the articles of
organization of the Company, as amended, and the Award Agreement) at all times
to sell or otherwise dispose of all or any part of his LTIP Units, Common Units
or REIT Shares in compliance with the Securities Act, and applicable state
securities laws, and subject, nevertheless, to the disposition of his assets being
at all times within his control.

 

(iv)          The
Grantee acknowledges that (A) neither the LTIP Units to be issued, nor the
Common Units issuable upon conversion of the LTIP Units, have been registered
under the Securities Act or state securities laws by reason of a specific
exemption or exemptions from registration under the Securities Act and
applicable state

 

 

securities
laws and, if such LTIP Units or Common Units are represented by certificates,
such certificates will bear a legend to such effect, (B) the reliance by
the Partnership and the Company on such exemptions is predicated in part on the
accuracy and completeness of the representations and warranties of the Grantee
contained herein, (C) such LTIP Units or Common Units, therefore, cannot be
resold unless registered under the Securities Act and applicable state
securities laws, or unless an exemption from registration is available, (D)
there is no public market for such LTIP Units and Common Units and (E) neither
the Partnership nor the Company has any obligation or intention to register
such LTIP Units or the Common Units issuable upon conversion of the LTIP Units
under the Securities Act or any state securities laws or to take any action
that would make available any exemption from the registration requirements of
such laws, except, that, upon the redemption of the Common Units for REIT
Shares, the Company may issue such REIT Shares under the Stock Plan and
pursuant to a Registration Statement on Form S-8 under the Securities Act, to
the extent that (I) the Grantee is eligible to receive such REIT Shares under
the Stock Plan at the time of such issuance, (II) the Company has filed a Form
S-8 Registration Statement with the Securities and Exchange Commission
registering the issuance of such REIT Shares and (III) such Form S-8 is
effective at the time of the issuance of such REIT Shares. The Grantee hereby
acknowledges that because of the restrictions on transfer or assignment of such
LTIP Units acquired hereby and the Common Units issuable upon conversion of the
LTIP Units which are set forth in the Partnership Agreement or this Agreement,
the Grantee may have to bear the economic risk of his ownership of the LTIP
Units acquired hereby and the Common Units issuable upon conversion of the LTIP
Units for an indefinite period of time.

 

(v)           The
Grantee has determined that the LTIP Units are a suitable investment for the
Grantee.

 

(vi)          No
representations or warranties have been made to the Grantee by the Partnership
or the Company, or any officer, director, shareholder, agent, or affiliate of
any of them, and the Grantee has received no information relating to an
investment in the Partnership or the LTIP Units except the information
specified in paragraph (b) above.

 

(c)           So long as the Grantee
holds any LTIP Units, the Grantee shall disclose to the Partnership in writing
such information as may be reasonably requested with respect to ownership of
LTIP Units as the Partnership may deem reasonably necessary to ascertain and to
establish compliance with provisions of the Code, applicable to the Partnership
or to comply with requirements of any other appropriate taxing authority.

 

(d)           The Grantee hereby
agrees to make an election under Section 83(b) of the Code with respect to
the LTIP Units awarded hereunder, and has delivered with this Agreement a
completed, executed copy of the election form attached hereto as Exhibit C.
The Grantee agrees to file the election (or to permit the Partnership to file
such election on the Grantee’s behalf) within thirty (30) days after the
award of the LTIP Units hereunder with the IRS Service Center at which such
Grantee files his personal income tax returns, and to file a copy of such
election with the Grantee’s U.S. federal income tax return for the taxable year
in which LTIP Units are issued or awarded to the Grantee.

 

 

(e)           The address set forth
on the signature page of this Agreement is the address of the Grantee’s
principal residence, and the Grantee has no present intention of becoming a
resident of any country, state or jurisdiction other than the country and state
in which such residence is sited.

 

 

EXHIBIT C

 

ELECTION TO INCLUDE IN GROSS
INCOME IN YEAR OF

TRANSFER OF PROPERTY PURSUANT TO
SECTION 83(B)

OF THE INTERNAL REVENUE CODE

 

The undersigned hereby makes an election pursuant to
Section 83(b) of the Internal Revenue Code with respect to the property
described below and supplies the following information in accordance with the
regulations promulgated thereunder:

 

1.             The
name, address and taxpayer identification number of the undersigned are:

 

Name:
                                                              
(the “Taxpayer”)

 

Address:                                                                   

 

                                                                                 

 

Social Security No./Taxpayer Identification No.:                              

 

2.             Description
of property with respect to which the election is being made:

 

The election is being
made with respect to                              
LTIP Units in The Macerich Partnership, L.P. (the “Partnership”).

 

3.             The
date on which the LTIP Units were transferred is                               
           ,                       .
The taxable year to which this election relates is calendar year                   .

 

4.             Nature
of restrictions to which the LTIP Units are subject:

 

(a)           With
limited exceptions, until the LTIP Units vest, the Taxpayer may not transfer in
any manner any portion of the LTIP Units without the consent of the
Partnership.

 

(b)           The
Taxpayer’s LTIP Units vest in accordance with the vesting provisions described
in the Schedule attached hereto. Unvested LTIP Units are forfeited in
accordance with the vesting provisions described in the Schedule attached
hereto.

 

5.             The
fair market value at time of transfer (determined without regard to any
restrictions other than restrictions which by their terms will never lapse) of
the LTIP Units with respect to which this election is being made was $0 per
LTIP Unit.

 

6.             The
amount paid by the Taxpayer for the LTIP Units was $0 per LTIP Unit.

 

7.             A
copy of this statement has been furnished to the Partnership and The Macerich
Company.

 

	
  Dated: 

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
     Name:

  

 

 

SCHEDULE
TO EXHIBIT C

 

Vesting
Provisions of LTIP Units

 

LTIP Units are subject to
time-based vesting with 33 1/3% of such units vesting on each successive                       ,
beginning                                 
and ending                                .
[Vesting schedule subject to change by the Compensation Committee.]  The above vesting is conditioned upon the
Taxpayer remaining an employee of The Macerich Company (the “Company”) through
the applicable vesting dates, and subject to acceleration in the event of a
change of control of the Company or termination of the Taxpayer’s service
relationship with the Company under specified circumstances. Unvested LTIP
Units are subject to forfeiture in the event of failure to vest based on the
passage of time and continued employment with the Company or its subsidiaries.

 

 

SCHEDULE
A TO LTIP UNITS AWARD AGREEMENT

 

	
  Date of Award Agreement:

  	
   

  
	
   

  	
   

  
	
  Name of Grantee:

  	
   

  
	
   

  	
   

  
	
  Number of LTIP Units Subject to Grant:

  	
   

  
	
   

  	
   

  
	
  Effective Date:

  	
   

  

 

 

 

Initials of Company representative:  

 

Initials of Grantee:EXHIBIT 10.1

 

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

 

EXECUTION
COPY

 

 

DRUG
DISCOVERY AND DEVELOPMENT AGREEMENT

THIS DRUG DISCOVERY AND
DEVELOPMENT AGREEMENT (the “Agreement”) is made effective as of September 21, 2007 (“Effective
Date”) by and between Array BioPharma Inc., a Delaware corporation, having
its principal offices located at 3200 Walnut, Boulder, CO 80301 (“Array”),
and Celgene Corporation, a Delaware corporation, having its principal offices
located at 86 Morris Avenue, Summit, NJ 07901 (“Celgene”).

BACKGROUND

A.            Array
has skills, expertise and technology relating to the discovery and development
of therapeutics that modulate molecular targets involved in oncology and other
disease areas.

B.            Celgene
is engaged in the discovery, development and commercialization of therapeutics
in the fields of oncology and immunological diseases.

C.            Celgene
and Array desire to establish a collaboration to apply Array’s expertise and
technology to the discovery, optimization and development of small molecule
compounds that directly bind and modulate certain molecular targets, and to
provide for the development and commercialization of certain products based on
such compounds, all on the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and
mutual covenants contained herein, 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

 

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

 

1.1           “[ * ]” shall mean those [ * ]
previously agreed by the Parties.

1.2           “Affiliate” of a Party shall mean any person, corporation or
other entity that, directly or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with such Party, as the
case may be, for so long as such control exists.  As used in this Section 1.1, “control”
shall mean: (a) to possess, directly or indirectly, the power to direct the
management and policies of such person, corporation or other entity, whether
through ownership of voting securities or by contract relating to voting rights
or corporate governance; or (b) direct or indirect beneficial ownership of at
least fifty percent (50%) (or such lesser percentage that is the maximum
allowed to be owned by a foreign corporation in a particular jurisdiction) of
the voting share capital in such person, corporation or other entity.

1.3           “Analog” shall mean, with respect to a
specific Development Compound, Development Back-Up Compound, Collaboration
Compound, Collaboration Back-Up Compound or Abandoned Compound, molecules (a)
that have the same core structure (meaning exact atom arrangement that makes up
the original core structure present in the structure of such specific chemical
compound, minus any substituent R groups) as such specific Development
Compound, Development Back-Up Compound, Collaboration Compound, Collaboration
Back-Up Compound or Abandoned Compound; (b) that modulates the Target to which
such Development Compound, Development Back-Up Compound, Collaboration
Compound, Collaboration Back-Up Compound or Abandoned Compound is directed, the
mechanism of action of which is a specific interaction with such Target; and
(c) that has a [ * ].

1.4           “Annual Net Sales” shall mean total Net Sales of Licensed
Products in a particular calendar year, as derived from audited financial
statements of Celgene (or the applicable Affiliate or Sublicensee), provided,
however, that Celgene shall use U.S. generally accepted accounting principles
to calculate in good faith the Net Sales from any entities that are not audited
or have not completed their audit within seventy-five (75) days of the end of
the preceding calendar year.

1.5           “Array Technology” shall mean the Array Patents and Array
Know-How.

 

2

 

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

 

1.5.1        “Array Know-How” shall mean any and all Information
Controlled by Array and created prior to the Effective Date that:  (a) covers a Collaboration Compound or a
Collaboration Back-Up Compound (including the composition of matter, or
manufacture or any use thereof); and (b) is necessary for Celgene to exercise
the rights licensed to it under the Agreement or perform its obligations with
respect to Collaboration Compounds, Collaboration Back-Up Compounds and
Licensed Products under the Agreement. 
For the purposes of the license granted in Section 5.1.2, Array Know-How
shall also include any and all Information Controlled by Array and created
prior to the Effective Date that is necessary  for,
or specifically pertains to, the discovery, development or use of Compounds,
Development Compounds and Development Back-Up Compounds.

1.5.2        “Array Patents” shall mean all Patents owned or Controlled by
Array (a) as of the Effective Date, or (b) during the Term of this Agreement to
the extent that such Patents claim Array Know-How, in each case that:  (i) claim a Collaboration Compound or a
Collaboration Back-Up Compound (including the composition of matter, or
manufacture or any use thereof); and (ii) are necessary for Celgene to exercise
the rights licensed to it under the Agreement or perform its obligations with
respect to Collaboration Compounds, Collaboration Back-Up Compounds and
Licensed Products under the Agreement. 
For the purposes of the license granted in Section 5.1.2, Array Patents
shall also include all Patents owned or Controlled by Array as of the Effective
Date covering inventions that are necessary  for the
discovery, development, or use of Compounds, Development Compounds and
Development Back-Up Compounds.

Notwithstanding Sections 1.5.1 and 1.5.2 above,
the Array Technology shall not include Collaboration Patents or Collaboration
Know-How.

1.6           “Celgene Compound” shall mean a chemical entity provided to
Array by Celgene, in Celgene’s sole discretion, and agreed on by the JRC as
evidenced by written notice that such chemical entity is provided for research
and development purposes under this Agreement.

1.7           “Celgene Technology” shall mean the Celgene Patents and
Celgene Know-How.

 

3

 

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

 

1.7.1        “Celgene Know-How” shall mean any and all Information
Controlled by Celgene and (a) created prior to the Effective Date or during the
Option Term that is necessary  for the
discovery, development, manufacture, use or sale of Compounds, Development
Compounds and Back-Up Compounds directed to each Target for which Celgene does
not exercise the Celgene Product Option, and (b) which is contributed by
Celgene during the Option Term, in Celgene’s sole discretion, to the
collaboration hereunder, as evidenced by written notice from Celgene to Array
and agreed on by the JRC or JDC.

1.7.2        “Celgene Patents” shall mean all Patents owned or Controlled
by Celgene (a) prior to the Effective Date or during the Option Term covering
inventions that are necessary  for the
discovery, development, manufacture, use or sale of Compounds, Development
Compounds and Back-Up Compounds directed to each Target for which Celgene does
not exercise the Celgene Product Option, and (b) which are contributed by
Celgene during the Option Term, in Celgene’s sole discretion, the collaboration
hereunder, as evidenced by written notice from Celgene to Array and agreed on
by the JRC or JDC.

Notwithstanding Sections 1.7.1 and 1.7.2 above,
the Celgene Technology shall not include Collaboration Patents or Collaboration
Know-How.

1.8           “Collaboration Compound” means each Development Compound for
which Celgene has exercised its Celgene Product Option under Section 3.5
of this Agreement and which is identified in the written notice given by
Celgene to effect such exercise.

1.9           “Collaboration Technology” shall mean the Collaboration
Patents and Collaboration Know-How.

1.9.1        “Collaboration Know-How” shall mean any Information
generated, solely or jointly, by employees, consultants or agents of Array
and/or Celgene in the course of performing activities under the Discovery
Program or in accordance with the applicable Development Plan, or, solely with
respect to Array, activities directed to the development, manufacture and/or
use of Compounds, Development Compounds, Collaboration Compounds, Back-Up
Compounds,

 

4

 

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

 

Development Back-Up Compounds, Collaboration Back-Up Compounds,
Licensed Products, in each case during the Option Term.

1.9.2        “Collaboration Patents” shall mean all Patents covering
inventions conceived or created, solely or jointly, by employees, consultants
or agents of Array and/or Celgene in the course of performing activities under
the Discovery Program or in accordance with the applicable Development Plan,
or, solely with respect to Array, activities directed to the development,
manufacture and/or use of  Compounds,
Development Compounds,  Collaboration
Compounds, Back-Up Compounds, Development Back-Up Compounds, Collaboration
Back-Up Compounds or Licensed Products, in each case during the Option Term.

1.10         “Combination Product” shall mean a Licensed Product that is a
pharmaceutical preparation for human use incorporating two or more
therapeutically active ingredients and including a Collaboration Compound as
one of its 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 under this
Section 1.10.

1.11         “Compound” shall mean a small molecule chemical entity (a)
that is (i) synthesized and/or assayed against a Target by Array prior to the
Effective Date, (ii) first synthesized and/or assayed by or on behalf of a
Party in the course of performing activities under the Discovery Program, or
(iii) a Celgene Compound; (b) that modulates one or more Target(s), the
mechanism of action of which is a specific interaction with such Target; and
(c) that has [ * ].

1.12         “Control” (including any variations, such as “Controlled”
or “Controlling”), with respect to any Compound or intellectual property
rights, shall mean rights to a Compound or intellectual property sufficient to
grant the applicable license under this Agreement, without violating the terms
of any agreement or other arrangement with any Third Party or, without the
other Party’s written consent, requiring any payment to a Third Party.

 

5

 

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

 

1.13         “Derivative” shall mean a molecule (a) that is synthesized using the same synthetic
route such that such molecule is derived from the Development Compound
by one synthetic step and such that any
compound modifications (i.e., differences between such molecule and the corresponding
Development Compound) are readily determined to be related to or derived
from the Development Compound, and
(b) that has [ * ].

1.14         “Development Back-Up Compound” shall mean,
with respect to each Compound designated as a Development Compound, additional
Lead Compounds suitable for clinical development designated in accordance with
Section 3.5.3 below.

1.15         “Development Compound” shall mean a Compound that is
designated for further development in clinical trials, in accordance with
Section 3.5.2 below.

1.16         “Diligent Efforts” shall mean the carrying out of obligations
or tasks in a manner consistent with the efforts a Party devotes to a product
or a research, development or marketing project at a similar stage of research
or development that is of similar market potential, profit potential or
strategic value resulting from its own research efforts, but in no event using
less than the commercially reasonable standards applied by other public
biotechnology companies to their pharmaceutical products at a similar stage of
research or development that is of similar market potential, profit potential
or strategic value.

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

1.18         “FD&C Act”  shall mean the United States Federal
Food, Drug, and Cosmetic Act, as amended from time to time, and the regulations
promulgated thereunder, as amended from time to time.

1.19“       FTE” shall mean a full-time person employed by Array,
dedicated full-time to the Discovery Program, or in the case of less than a
full-time dedicated person, a full-time, equivalent

 

6

 

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

 

person year, based
upon a total of one thousand eight hundred eighty (1,880) hours per year
of work on the Discovery Program.

1.20         “GAAP” shall mean generally accepted
accounting principles as applicable in the United States of America.

1.21         “IND” shall mean any Investigational New Drug Application
filed with the FDA pursuant to 21 C.F.R. § 312 before the
commencement of clinical trials involving a Development Compound, a Development
Back-Up Compound, a Collaboration Compound or a Collaboration Back-Up Compound
(or any Licensed Product incorporating a Collaboration Compound or
Collaboration Back-Up Compound), or any comparable filings with any Regulatory
Authority in any other jurisdiction.

1.22         “Information” shall mean materials, data and other
information relating to the subject matter of this Agreement and including:
(a) techniques and data, including screens, models, inventions, methods,
test data (including, pharmacological, toxicological and clinical test data),
analytical and quality control data, 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); (b) compositions of matter,
including compounds, biological materials and assays; and (c) the subject
matter and content of all JRC, JDC, JMC and JCC discussions and meetings.  As used herein, “clinical test data”
shall be deemed to include all information related to the clinical or
preclinical testing of a Compound or Licensed Product, including patient report
forms, investigators’ reports, biostatistical, pharmaco-economic and other
related analyses, regulatory filings and communications, and the like.

1.23         “Initiation” of a particular clinical trial shall be deemed
to occur upon the date of first dosing of the first subject in such trial.

1.24         “Licensed Product” shall mean a product that incorporates a
Collaboration Compound or a Collaboration Back-Up Compound as an active
ingredient.

 

7

 

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

 

1.25         “Marketing Approval” shall mean all approvals, licenses,
registrations or authorizations of a Regulatory Authority in a country
necessary for the manufacture, use, storage, import, marketing and sale of a
Licensed Product in such country.

1.26         “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 application for Marketing Approval
(not including pricing or reimbursement approval) in another jurisdiction, in
each case with respect to a Licensed Product.

1.27         “Marketing Exclusivity” shall mean, with respect to a Licensed Product that the
Licensed Product has been granted marketing exclusivity afforded approved drug
products pursuant to (a) Sections 505(c), 505(j), and 505A of the FD&C Act
or its equivalent in a country other than the United States, or (b) the orphan
drug exclusivity afforded approved drugs designated for rare diseases or
conditions under Sections 526 and 527 of the FD&C Act or its equivalent in
a country other than the United States, or (c) applicable law covering the
Licensed Product which precludes the Regulatory Authority in a country from
granting Marketing Approval for another product that contains the same active
ingredient as that which is contained in the applicable Licensed Product.

1.28         “Net Sales” shall mean the gross amounts billed or invoiced
by Celgene, its Affiliates or Sublicensees to non-Sublicensee Third Parties for
the sale or other commercial disposition of Licensed Products less deductions
from such amounts calculated in accordance with GAAP, so as to arrive at
reported Net Product Sales under GAAP, and further reduced by write offs of
accounts receivable or increased for collection of accounts that were
previously written off.

Sales between Celgene and its Affiliates or
Sublicensees and Licensed Products provided to Third Parties at no cost, or
below direct manufacturing cost, in connection with research and development,
clinical trials, compassionate sales or indigent programs or for use as samples
shall be excluded from the computation of Net Sales, and no payments will be
payable on such sales or no-cost transfers except where such Affiliates or
Sublicensees are end users.  If a
Licensed Product is sold or transferred for consideration other than cash, or
in a transaction not at arm’s length, the Net 

 

8

 

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

 

Sales from such sale or transfer shall be deemed the
then-fair market value of such Licensed Product.

In the event a Licensed
Product is sold which is a Combination Product, for purposes of determining
royalty payments due Array under Section 6.5, Net Sales of Combination Products
shall be calculated by multiplying the Net Sales of the Combination Product
during the applicable reporting period by the fraction A/(A+B), in which “A”
is the average sales price of the Licensed Product when such Licensed Product
comprising a single Collaboration Compound or Collaboration Back-Up Compound as
the sole therapeutically active ingredient is sold separately  in substantial quantities, and “B” is the average
sales price of the other therapeutically active ingredients contained in the
Combination Product sold separately in substantial quantities; in each case
during the applicable reporting period. 
In the event that no separate sales of either the Licensed Product
comprising a single Collaboration Compound or Collaboration Back-Up Compound,
as the case may be, as the sole therapeutically active ingredient or the other
therapeutically active ingredients of the Combination Product are made during
the applicable reporting period, or if the average sales price for a particular
therapeutically active ingredient cannot be determined for the applicable
reporting period, the respective average sales prices during the most recent
reporting period in which sales of both occurred shall be used.  In the event that either or both of A or
(and) B is (are) not available, then Net Sales of Combination Products for the
purposes of determining royalty payments hereunder shall be reasonably allocated
based on the relative values contributed by each component, and agreement by
the Parties to such allocation shall not be unreasonably withheld or delayed.

1.29         “Option Term” shall have the meaning set forth in Section
4.1.1(a).

1.30         “Party” or “Parties” shall
mean Array and/or Celgene.

1.31         “Patent” shall mean any patents and patent applications,
together with all additions, divisions, continuations, continuations-in-part,
substitutions, reissues, re-examinations, extensions, registrations, patent
term extensions, supplemental protection certificates and renewals of any of
the foregoing.

 

9

 

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

 

1.32         “Phase I” shall mean a human clinical trial conducted on
a limited number of study subjects for the purpose of gaining evidence of
the safety and tolerability of, and information regarding pharmacokinetics and,
with respect to applicable oncology trials, potential pharmacological activity
for, a product or compound, as described in 21 C.F.R.§ 312.21(a)
(including any such clinical study in any country other than the United States).

1.33         “Phase II” shall mean a human clinical trial conducted
on study subjects with the disease or condition being studied for the principal
purpose of achieving a preliminary determination of efficacy
and/or appropriate dosage ranges, as further described in
21 C.F.R. §312.21(b) (including any such clinical study in any
country other than the United States).

1.34         “Phase III” shall mean a human clinical trial, the
principal purpose of which is to establish safety and efficacy in study subjects with the
disease or condition being studied, as further described in 21 C.F.R.
§312.21(c) (including any such clinical study in a country other than the
United States), which is designed and intended to be of a size and statistical
power sufficient to serve as a pivotal study to support the filing of a MAA for
the indication being studied.

1.35         “Regulatory Authority” shall mean the FDA, or a regulatory
body with similar regulatory authority in any jurisdiction outside the United
States.

1.36         “Sales Representative” shall mean a professional
pharmaceutical sales representative engaged or employed by either Party to
conduct sales activities and other promotional efforts with respect to a
Co-Promoted Product.

1.37         “Sublicensee” shall mean, with respect to a particular
Collaboration Compound, a Collaboration Back-Up Compound or Licensed Product, a
Third Party to whom Celgene has granted a license or sublicense to make and
sell such Collaboration Compound, Collaboration Back-Up Compound or Licensed
Product; and a “sublicense” shall mean any agreement or arrangement between
Celgene and a Sublicensee granting such rights.

 

10

 

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

 

1.38         “Target” shall mean those targets listed on Schedule 1.38
attached hereto, or any substitute for such a target mutually agreed by the
Parties in accordance with Section 3.2 below or selected by Array from two (2)
proposed substitute targets in accordance with Section 3.5.1 below.

1.39         “Third Party” shall mean any entity other than Array, Celgene
and their respective Affiliates.

1.40         “Valid Claim” shall mean (a) 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; or (b) a claim of a patent application, which claim has been
pending less than five (5) years from the original filing date of such claim in
a given country, unless or until such claim thereafter issues as a claim of an
issued Patent (from and after which time the same shall be deemed a Valid Claim
subject to paragraph (a) above).

1.41         Additional
Definitions.  Each of the following terms shall have the
meaning described in the corresponding section of this Agreement below.

 

	
  Term

  	
   

  	
  Section Defined

  
	
  Abandoned
  Product

  	
   

  	
  12.3.2

  
	
  Array
  Indemnitees

  	
   

  	
  11.4.2

  
	
  [ * ]

  	
   

  	
  [ * ]

  
	
  [ * ]

  	
   

  	
  [ * ]

  
	
  Celgene
  Indemnitees

  	
   

  	
  11.4.1

  
	
  Celgene
  Product Option

  	
   

  	
  4.1

  
	
  Clinical
  Candidate Guidelines

  	
   

  	
  3.5.1

  
	
  Collaboration Back-Up
  Compound

  	
   

  	
  4.1.1(b)

  

 

11

 

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

 

	
  Commercialization
  Plan

  	
   

  	
  8.1.2

  
	
  Compound
  Improvement

  	
   

  	
  9.2.2

  
	
  Confidential
  Information

  	
   

  	
  10.1

  
	
  Cooperating
  Party

  	
   

  	
  10.4.2

  
	
  Co-Promoted
  Product

  	
   

  	
  8.2.1

  
	
  Co-Promotion
  Option

  	
   

  	
  8.2.1

  
	
  Co-Promotion
  Plan

  	
   

  	
  8.2.2

  
	
  Development Back-Up
  Compound

  	
   

  	
  3.5.2

  
	
  Development
  Milestone

  	
   

  	
  6.3.1

  
	
  Development
  Plan

  	
   

  	
  3.6.1

  
	
  Discovery
  Milestone

  	
   

  	
  6.2

  
	
  Discovery
  Program

  	
   

  	
  3.1

  
	
  Dispute

  	
   

  	
  13.1

  
	
  Escalation
  Notice

  	
   

  	
  2.2.3

  
	
  Exclusivity
  Period

  	
   

  	
  5.6.2

  
	
  force majeure event

  	
   

  	
  13.4

  
	
  Indemnify

  	
   

  	
  11.4

  
	
  JCC

  	
   

  	
  2.1

  
	
  JDC

  	
   

  	
  2.1

  
	
  JMC

  	
   

  	
  2.1

  
	
  JRC

  	
   

  	
  2.1

  
	
  [ * ]

  	
   

  	
  [ * ]

  
	
  Losses

  	
   

  	
  11.4.1

  
	
  Prosecution
  and Maintenance

  	
   

  	
  9.5.1(a)

  
	
  Prosecuting
  Party

  	
   

  	
  9.5.1(b)

  
	
  Requesting
  Party

  	
   

  	
  10.4.2

  
	
  Subject
  Transaction

  	
   

  	
  13.3.2

  

 

12

 

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

 

	
  Third-Party Claim

  	
   

  	
  11.4.1

  
	
  Trial Design Guidelines

  	
   

  	
  2.3

  

ARTICLE II

GOVERNANCE

2.1           General.  The Parties shall establish (i) a Joint
Research Committee (“JRC”) to oversee and coordinate activities under
the Discovery Program; (ii) a Joint Development Committee (“JDC”) for
each Development Compound to oversee and coordinate clinical development of
such Development Compound; (iii) a Joint Manufacturing Committee (“JMC”) to
oversee and coordinate CMC activities with respect to each Development Compound
and Development Back-Up Compounds; and (iv) if applicable, a Joint
Commercialization Committee (“JCC”) for each Co-Promoted Product.  Each Committee may from time to time
establish sub-committees to handle matters within the scope of its authority.

2.1.1        Joint Research
Committee.  Within thirty (30)
days following the Effective Date, Array and Celgene shall establish a Joint
Research Committee.

(a)   Duties.  The JRC shall:

(i)    establish,
oversee, review and coordinate the Discovery Program, including assigning
activities to be performed by each Party under the Discovery Program (subject
to Section 3.1), which may require the Parties to enter into material transfer
and other appropriate agreements in connection with such activities;

(ii)   discuss
designation of Compounds as Development Compounds and Back-Up Compounds in
accordance with Section 3.5;

(iii)  provide a
forum for the Parties:  (1) to
discuss the objectives of the Discovery Program; and (2) to exchange and
review scientific information and data relating to

 

13

 

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

 

the activities being conducted under, and the then-current progress of,
the Discovery Program, including the exchange and review of data, Compound
structures and the like resulting from the Discovery Program;

(iv)  determine
when and for which general disease area (specifically, cancer or inflammatory
disease) an IND will be filed on each Development Compound; provided, however,
that the Parties shall mutually agree which general disease area the IND will
be filed for a Development Compound directed to a cancer/inflammation Target;
and

(v)   make any
such decisions as are expressly allocated to the JRC under this Agreement.

(b)           Termination
of JRC.  The JRC, on a
Target-by-Target basis, shall exist until the end of the Option Term for such
Target.

2.1.2        Joint
Development Committee.  Promptly but
no later than thirty (30) days following the Effective Date, Array and Celgene
shall establish a Joint Development Committee.

(a)           Duties.  The JDC shall:

(i)    Establish
and direct the strategy for the worldwide development of each Development
Compound and corresponding Development Back-Up Compounds, if any, and products
containing each Development Compound or a corresponding Development Back-Up
Compound;

(ii)   Review and
finalize the applicable Development Plan for each Development Compound and, if
applicable a corresponding Development Back-Up Compound, and propose revisions
to each Development Plan as needed, but no less frequently than annually;

(iii)  Subject to
and within the parameters of each Development Plan:  (1) oversee the implementation of the such
Development Plan (including approval of clinical trial protocols and review of
the conduct of clinical trials conducted pursuant to the Development

 

14

 

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

 

Plan); and (2) review and approve the overall strategy and positioning
of all material submissions and filings with the applicable Regulatory
Authorities; and

(iv)          Perform such other
duties as are specifically assigned to such JDC under this Agreement.

(b)           Termination
of JDC.  The JDC shall exist, on a
Target-by-Target basis, until the end of the Option Term for such Target.

2.1.3        Joint Manufacturing Committee.  Promptly but no later than thirty (30) days
following the designation of the first Development Compound, Array and Celgene
shall establish a Joint Manufacturing Committee.

(a)           Duties.  The JMC shall:

(i)            oversee, review and
coordinate the studies required for the preparation of the CMC section of an
IND for filing with the FDA for each Development Compound and, if applicable,
Development Back-Up Compounds, including studies relating to analytical methods
and purity analysis, and formulation and manufacturing development studies,
together with associated regulatory activities;

(ii)           oversee, review and
coordinate process research and development activities (including manufacturing
scale-up) and formulation development activities; and

(iii)          Perform such other
duties as are specifically assigned to such JMC under this Agreement.

(b)           Termination of JMC.  The JMC shall exist, on a Target-by-Target
basis, until the end of the Option Term for such Target.

 

15

 

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

 

2.1.4        Joint
Commercialization Committee. Within thirty (30) days following a
request by either Party after Array’s exercise of the Co-Promotion Option,
Array and Celgene shall establish a Joint Commercialization Committee, which at
Celgene’s option may be split into separate Joint Commercialization Committees
for each Co-Promoted Product.  The JCC
shall have as its overall purpose oversight of the commercialization of
Co-Promoted Products in the United States.

(a)           Duties:  The JCC shall:

(i)            Review and approve the Co-Promotion
Plan for each Co-Promoted Product developed in accordance with
Section 8.2.2 below;

(ii)           Subject to and within the parameters
of the Co-Promotion Plan, oversee the implementation of the Co-Promotion Plan;
and

(iii)          Perform such other duties as are
specifically assigned to such JCC under this Agreement.

2.2           General
Committee Membership and Procedures.

2.2.1        Committee
Membership.  Each Committee shall
each be composed of three (3) representatives from each of Celgene and
Array.  Each Party may replace any of its
representatives on any Committee at any time with prior written notice to the
other Party; provided that such replacement is of comparable standing and
authority within that Party’s organization as the person he or she is
replacing.

2.2.2        Committee
Meetings.  The JRC and JDC shall hold
an initial joint meeting within forty-five (45) days of the Effective Date or
as otherwise agreed by the Parties. 
Thereafter, each Committee shall meet at least once every calendar
quarter, unless the respective Committee members otherwise agree.  All Committee meetings may be conducted by
telephone, video-conference or in person as determined by the applicable
Committee; provided, however, that each Committee shall meet in person at least
once each calendar year, unless the Parties mutually agree to 

 

16

 

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

 

meet by alternative means. 
Unless otherwise agreed by the Parties, all in-person meetings for each
Committee shall be held on an alternating basis between Array’s facilities and
Celgene’s facilities.  With the consent of
the Parties (not to be unreasonably withheld or delayed), a reasonable number
of other representatives of a Party may attend any Committee meeting as
non-voting observers (provided that such additional representatives are under
obligations of confidentiality and non-use applicable to the Confidential
Information of the other Party that are at least as stringent as those set
forth in Article 10).  Each Party shall
be responsible for all of its own personnel and travel costs and expenses
relating to participation in Committee meetings.

2.2.3        Decision-Making.  Decisions of each Committee with
decision-making authority shall be made by unanimous vote.  In the event such Committee fails to reach
unanimous agreement with respect to a particular matter within its
decision-making authority, then, either Party may, by written notice to the
other Party (an “Escalation Notice”), have such matter referred to the
following individuals of each Party or his/her designee (the “Negotiators”):  for disputes originating in the JRC, the
heads of research of each Party shall serve as Negotiators; and the Negotiators
for disputes originating in the JDC and the JMC shall be the heads of clinical
development and manufacturing, respectively. 
The Negotiators shall meet promptly and negotiate in good faith to
resolve such matter.  If the Negotiators
are unable to resolve such matter within thirty (30) days of the date of
the applicable Escalation Notice, or such longer period of time as the
Negotiators may agree, the matter shall be referred to the Chief Executive
Officers of the Parties, who shall meet promptly and negotiate in good faith to
resolve such matter.  If the Chief
Executive Officers are unable to resolve such matter within thirty (30)
days, or such longer period of time as the Chief Executive Officers may
agree:  (a) Celgene shall cast the
deciding vote on any such matter before the JCC; (b) except as set forth
in Section 3.5 below, Array shall cast the deciding vote on any such
matter before the JRC; (c) except as set forth in Section 3.5 below, the
deciding vote on any such matter before the JDC shall be made by an arbitrator
in accordance with Section 2.3 below, provided, however, that, Celgene shall
have the exclusive right to select the indication for each Development Compound
from the list attached hereto as Schedule 2.2.3(c); and (d) Array shall
cast the deciding vote on any such matter before the JMC.  Notwithstanding the foregoing, neither Party

 

17

 

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

 

nor the arbitrator (for matters subject to Section 2.3 below)
shall have the right to cast the deciding vote in any manner that would
unilaterally impose a financial obligation on Array or Celgene, as the case may
be, beyond the commitments set forth herein or cause it to violate any
obligation or agreement it may have with any Third Party.

2.3           Binding Arbitration.  In the event the JDC cannot reach
agreement with respect to a particular matter that is properly to be decided by
unanimous vote of the JDC under Section 2.2.3(c) above, and such matter is not
resolved by the applicable Negotiators in accordance with Section 2.2.3
above, then the matter shall be referred to binding arbitration by one (1)
arbitrator.  In such arbitration, the
arbitrator shall be an independent expert (including in the area of the
dispute) in the pharmaceutical or biotechnology industry mutually acceptable to
the Parties.  The Parties shall use their
best efforts to mutually agree upon one (1) arbitrator; provided, however, that
if the Parties have not done so within ten (10) days after initiation of
arbitration hereunder, or such longer period of time as the Parties have agreed
to in writing, then such arbitrator shall be an independent expert as described
in the preceding sentence selected by the Chicago office of the American
Arbitration Association.  Such
arbitration shall be limited to casting the deciding vote with respect to
matter in dispute, and in connection therewith, each Party shall submit to the
arbitrator in writing its position on and desired resolution of such
matter.  Such submission shall be made
within ten (10) days of the selection or appointment of the arbitrator, and the
arbitrator shall rule on such matter and cast the deciding vote within ten (10)
days of receipt of the written submissions by both Parties.  The arbitrator shall select one of the Party’s
positions as his decision, and shall not have authority to render any
substantive decision other than to so select the position of either Celgene or
Array; provided, however, that the arbitrator shall not have the authority to
select a Party’s position if such position would require Array to conduct
clinical trial activities that are not within the general guidelines and
objectives for trial designs previously agreed by the Parties (“Trial Design
Guidelines”) as interpreted by the arbitrator.  Except as provided in the preceding sentence,
such arbitration shall be conducted in accordance with the then-current
Commercial Arbitration Rules of the American Arbitration Association.  The arbitrator’s ruling and vote shall be
final and binding upon the Parties.  The
costs of any arbitration conducted pursuant to this Section 2.3 shall be borne

 

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the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.

 

equally by the
Parties.  The Parties shall use diligent
efforts to cause the completion of any such arbitration within sixty (60) days
following a request by any Party for such arbitration.

2.4           Scope
of Governance.  Notwithstanding the
creation of each of the Committees, each Party shall retain the rights, powers
and discretion granted to it under this Agreement, and no Committee shall be
delegated or vested with rights, powers or discretion unless such delegation or
vesting is expressly provided herein, or the Parties expressly so agree in
writing.  No Committee shall have the
power to amend or modify this Agreement, and no decision of any Committee shall
be in contravention of any terms and conditions of this Agreement.  It is understood and agreed that issues to be
formally decided by a particular Committee are only those specific issues that
are expressly provided in this Agreement to be decided by such Committee, as
applicable.

ARTICLE
III

DISCOVERY PROGRAM

3.1           Discovery
Program.  During the Option Term,
Array and, if directed by the JRC, JDC or JMC and expressly agreed by Celgene
in writing, Celgene shall be responsible for conducting a discovery research
program with the principal goals of:  (i)
identifying and discovering Compounds that directly modulate each of the
Targets; (ii) characterizing, optimizing and supporting the pre-clinical
development of such Compounds; (iii) conducting a Phase I clinical trial and,
where applicable under Section 3.7.3 below, a Phase II clinical trial with
respect to Compounds that have been designated as Development Compounds pursuant
to Section 3.5 below; and (iv) if required pursuant to Section 3.7.4 below,
conducting continued preclinical development and potentially a Phase I clinical
trial with respect to certain Development Back-Up Compounds (“Discovery
Program”).  During the Option Term,
Array shall, on a Target-by-Target basis, use Diligent Efforts to conduct the
Discovery Program with respect to such Target.

3.2           Targets.

3.2.1        General.  Except as otherwise specified in this
Section 3.2, the Discovery Program shall be focused on identifying, for
each of the Targets, Development Compounds and

 

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Exchange Act of 1934, as amended.

 

corresponding Development Back-Up Compounds that directly modulate the
activity of each such Target, with the goal of completing early clinical development
of a Development Compound and, if required pursuant to Section 3.7.4 below, a
corresponding Development Back-Up Compound, directed to each of up to four (4)
Targets for possible exercise by Celgene of its Product Options.

3.2.2        Abandonment
and Substitution of Targets.  From
time to time during the Option Term, the JRC may determine in good faith that
the Discovery Program has not yielded sufficient progress with respect to one
or more Targets (e.g., because
such Target is found to be intractable, modulation of such Target does not
yield a therapeutically relevant outcome or modulation of such Target presents
unwanted side effects), and that research and/or development activities with
respect to such Target should be discontinued. 
If such activities are [ * ], then
Celgene may propose, after discussion with the JRC, and subject to the mutual
written agreement of the Parties, another molecular target as a substitute for
such discontinued Target.  In such case,
(i) the discontinued Target shall cease to be a Target, the substitute
target shall be deemed a Target for the purposes of this Agreement and Schedule
1.38 shall be deemed to be updated accordingly; and (ii) the Option
Term for the substitute Target shall commence on the date that Parties agree on
the substitute Target (i.e., such date
shall be deemed the Effective Date for such Target for purposes of Section
4.1.1(a)); provided, however, that if research and/or development activities
with respect to such substitute Target, or with respect to a substitute Target
selected pursuant to Section 3.5.1, are subsequently discontinued pursuant
to this Section 3.2.2, the discontinued substitute Target shall not be
replaced with a new molecular target.

3.3           Discovery
Program Funding.  Except as otherwise
provided in this Agreement, Array will be responsible for funding its
activities under the Discovery Program, including under each Development Plan,
during the Option Term.

3.4           Updates;
Reports.  During the Option Term,
Array shall provide Celgene with regular updates no less than once a month on
the results of the Discovery Program. 
Such updates shall be conducted by telephone or video-conference, and
prior to each such update, Array shall provide Celgene with a written summary
of the activities conducted under the Discovery Program for the

 

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the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.

 

preceding calendar
month and supporting data related thereto. 
Celgene shall have the right to reasonably request and to receive in a
timely manner clarifications and answers to questions with respect to such
reports.

3.5           Designation
of Development Compounds and Development Back-Up Compounds.

3.5.1        Clinical
Candidate Guidelines; Lead Compounds. 
The Parties have previously established clinical candidate guidelines (“Clinical
Candidate Guidelines”) for each Target to indicate the suitability of Compounds
as Development Compounds.  Such Clinical
Candidate Guidelines may be amended upon mutual written agreement of the
Parties or subsequent Clinical Candidate Guidelines may be agreed in writing by
the Parties and attached to this Agreement from time to time as appropriate,
and in each case such agreement shall not be unreasonably withheld or
delayed.  For each Target, the JRC shall [ * ].  If the Parties
mutually agree that a particular Compound does not strictly meet the Clinical
Candidate Guidelines, but should be considered as a potential Development
Compound, then the JRC may [ * ], the
Parties may mutually agree that the JRC may [ * ],
then Celgene shall have the right to discontinue activities with respect to
such Target and to propose
in writing, after discussion with Array, two (2) molecular targets as potential
substitutes for such discontinued Target that are (i) [ * ], and (ii) are not the subject of an
agreement that Array has with a Third Party or the target of Array’s own
research or drugs in Array’s clinical development pipeline or marketed product
portfolio; provided that Celgene may only exercise such right with respect to
the four (4) initial Targets or with respect to any Target substituted for an
initial Target pursuant to Section 3.2.2, but not with respect to any
substitute Target selected pursuant to this Section 3.5.1; and provided
further that Celgene may only propose as a potential substitute a molecular
target directed to the same general disease area (specifically, cancer or
inflammatory disease) as the discontinued Target.  Array shall notify Celgene in writing which
of the proposed substitute targets it selects for inclusion in the Discovery
Program.  In such case, the discontinued
Target shall cease to be a Target, the substitute target shall be deemed a
Target for the purposes of this Agreement, Schedule 1.38 shall be deemed
to be updated accordingly, and the Option Term for the substitute Target shall
commence on the date Celgene receives notice of

 

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Array’s selection (i.e., such date
shall be deemed the Effective Date for such Target for purposes of Section
4.1.1(a)).

3.5.2        Development
Compounds.  Based upon the Clinical
Candidate Guidelines and the results of the Discovery Program [ * ], Celgene shall designate for each Target one (1)
Compound as a Development Compound from [ * ], and each
such Compound so designated shall be deemed a “Development Compound” for
the purposes of this Agreement.  Based on
[ * ], Celgene may, within forty-five
(45) days of receipt thereof, de-select a particular Development Compound and
select an alternate Lead Compound as a Development Compound.  In such case, the de-selected Compound shall
cease to be a Development Compound for the purposes of this Agreement, but
shall continue to be a Lead Compound and may be selected by Celgene as a
Development Back-Up Compound.

3.5.3        Development
Back-up Compounds.  At such time as
Celgene designates a Development Compound for a particular Target, Celgene
shall, based upon the Clinical Candidate Guidelines and the results of the
Discovery Program including the results of the Acute Tox Studies, designate for
such Target up to two (2) Lead Compounds as Development Back-Up
Compounds.  Each such Back-up Compound so
designated shall be deemed a “Development Back-Up Compound” for the
purposes of this Agreement.

3.6           Development Plan.

3.6.1        Establishment.  The JDC, for a particular Development
Compound and, if required pursuant to 3.7.4 below, a corresponding Development
Back-Up Compound, shall have the responsibility for establishing a
comprehensive, multi-year plan for the development of such Development Compound
and, if applicable, Development Back-Up Compound (a “Development Plan”).  The initial Development Plan shall be
finalized by the Parties within three (3) months after the designation of
such Development Compound and corresponding Development Back-Up Compounds.

 

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Exchange Act of 1934, as amended.

 

3.6.2        Contents.  Each Development Plan shall fully describe
the proposed activities related to ongoing preclinical studies (e.g., toxicology), formulation, clinical
studies and regulatory plans, and other activities and timelines directed to
IND filing, Phase I clinical development and preparation for Phase II clinical
development and shall be in accordance with the Trial Design Guidelines.  If the first IND for a particular Development
Compound is to be filed in a division of the FDA other than the cancer division,
the Development Plan shall also include a single Phase II clinical trial for
the subject Development Compound and associated continuing development
activities (e.g., continued and
ongoing preclinical studies, formulation and process development).  Where a Phase II trial is to be included, the
Development Plan shall also include [ * ] such
Phase II trial and continuing development activities.

3.6.3        Annual
Review.  After the establishment of
the initial Development Plan for a Development Compound and, if applicable, a
corresponding Development Back-Up Compound, the JDC shall review and update
such Development Plan at least annually and prior to any material modification
or addition thereto.

3.7           Development.

3.7.1        IND.  During the Option Term following designation
of a Development Compound, Array shall use Diligent Efforts to continue
pre-clinical development of such Development Compound and, to the extent
required pursuant to Section 3.7.4 below, a corresponding Development Back-Up
Compound, with the goal of submitting an IND with the FDA on such Development
Compound.  Unless otherwise agreed by the
Parties, such IND shall include those IND toxicology and ADME studies
previously agreed by the Parties, and taking into account the Development
Plan.  Array shall not be required to
submit more than one (1) IND for each Development Compound.

3.7.2        Phase I.

(a)   After the date of the first filing of an IND
with the FDA with respect to a Development Compound and prior to the earlier of
(i) the date of Celgene’s exercise of the Celgene

 

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Exchange Act of 1934, as amended.

 

Product Option with respect to such Development Compound (or
termination of the Celgene Product Option with respect to the Target to which
such Development Compound is directed) and (ii) the expiration of the Option
Term, Array shall use Diligent Efforts to conduct and manage a Phase I clinical
trial of such Development Compound in accordance with the Development Plan for
such Development Compound and to perform additional development activities to
prepare for later stage clinical development (e.g., ongoing toxicity studies
and CMC-related activities).  Array shall
not be required (i) to conduct a Phase I clinical trial exceeding the Trial
Design Guidelines, or (ii) to conduct more than one (1) Phase I clinical trial
for each Development Compound.

(b)   Array shall be responsible for all costs
incurred by Array, its Affiliates or subcontractors in performing its
activities under this Section 3.7.2, including the following: (i) out-of-pocket
costs paid to Third Parties (such as contract research organizations, testing
labs, imaging labs, quality assurance auditors or groups for trial sites or
vendors, or other contractors) for the performance of such activities; (ii)
Array FTEs overseeing the activities set forth in (i) above; (iii) Array’s
out-of-pocket costs for obtaining or manufacturing quantities of the
Development Compound used as clinical supplies (including stability testing,
form selection and testing, and radiolabelled derivative preparation) in
performing such activities; and (iv) costs incurred with respect to meeting of
investigators and associated travel expenses.

3.7.3        Phase
II.

(a)   If the first IND for a particular Development
Compound was filed in a division of the FDA other than the cancer division and
Celgene has not exercised the Celgene Product Option with respect to such
Development Compound (or terminated the Celgene Product Option with respect to
the Target to which such Development Compound is directed), then Array shall
use Diligent Efforts during the Option Term to conduct and manage one Phase II
clinical trial of such Development Compound and to perform additional
development activities to prepare for further clinical development, in
accordance with the Development Plan for such Development Compound.  Array shall not be required (i) to conduct a
Phase II clinical trial exceeding the Trial

 

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the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.

 

Design Guidelines, or (ii) except as provided in subparagraph (c)
below, to conduct more than two (2) Phase II clinical trials under this
Agreement.

(b)   For the first two (2) Development Compounds
for which Array is obligated to conduct a Phase II clinical trial pursuant to
Section 3.7.3(a) or (c), Array shall be responsible for [ * ]
in performing the studies and/or activities described in paragraph (a) above
with respect to each applicable Development Compound, and Celgene shall [ * ].  If Array is
obligated to conduct a third Phase II clinical trial pursuant to Section
3.7.3(a) or (c), Celgene shall [ * ].  Celgene shall [ * ].  Upon request, Array shall provide Celgene
with [ * ]. 
Prior to commencing a Phase II trial for which Celgene [ * ], Array shall provide Celgene [ * ];
such [ * ] shall be revised or updated from
time to time by the JDC.

(c)   If the Parties selected inflammation as the
general disease area for the IND for a Development Compound directed to a
cancer/inflammation Target under Section 2.1.1(a)(iv) above, and Celgene has
not exercised the Celgene Product Option with respect to such Development
Compound (or terminated the Celgene Product Option with respect to the Target
to which such Development Compound is directed), then Array shall use Diligent
Efforts during the Option Term to conduct and manage one Phase II clinical
trial of such Development Compound, in accordance with the Development Plan for
such Development Compound and within the Trial Design Guidelines.

(d)   “[ * ]” shall
mean [ * ].

3.7.4        Development
Back-Up Compounds.

(a)           IND-Enabling
Studies.  At the request of Celgene,
Array shall use Diligent Efforts to perform continued IND-Enabling Studies for
one (1) Development Back-Up Compound per Target during the Option Term for such
Target.  For purposes of this Section
3.7.4, “IND-Enabling Studies” shall mean studies which are specifically
required for an IND filing with the FDA, including without limitation, ADME and
GLP toxicology studies, or studies required for the preparation of the CMC
section of such IND including studies relating to analytical methods and

 

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the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.

 

purity analysis,
and formulation and manufacturing development studies, all as necessary to
obtain the permission of regulatory authorities to begin human clinical
testing.

(b)           Phase
I.  Upon mutual written agreement,
prior to the earlier of (i) the date of Celgene’s exercise of the Celgene
Product Option with respect to the Development Compound for the Target to which
such Development Back-Up Compound is directed (or termination of the Celgene
Product Option with respect to the Target to which such Development Back-Up
Compound is directed) and (ii) the expiration of the Option Term, Array shall
use Diligent Efforts to prepare and submit an IND with the FDA and to conduct
and manage a Phase I clinical trial for any Development Back-Up Compound for
which Array conducted IND-Enabling Studies, all in accordance with the
Development Plan for such Development Back-Up Compound; provided that such
Phase I trial shall be for the same indication as the corresponding Development
Compound and shall not exceed the Trial Design Guidelines.  If the Parties do not agree, Celgene shall
have the right[ * ] to perform, or have
performed on its behalf, the activities described in this Section 3.7.4(b) with
respect to such Development Back-Up Compound under the Discovery Program
pursuant to a Development Plan; provided that (a) such activities can and shall
be completed prior to expiration of the Option Term or extensions thereof for
the Target to which such Development Back-Up Compound is directed, (b) Celgene
shall share all clinical trial data with Array, and (c) at the conclusion of
such activities, unless Celgene exercises the Celgene Product Option with
respect to such Target, Celgene shall (1) at Array’s option, close or
inactivate its IND for such Development Back-Up Compound or transfer such IND
to Array [ * ], and (2) shall reasonably
cooperate with Array to promptly, and in any event within thirty (30) days of
Array’s written request, provide Array with all Collaboration Technology and
Information generated in the course of such activities.

(c)           Budget
and Reimbursement.  Array shall
provide Celgene with a proposed budget outlining anticipated Back-Up
Development Costs for each Development Back-Up Compound for which Array is
performing activities under this Section 3.7.4, which budget shall be revised
or updated from time to time by the JDC. 
Celgene shall reimburse Array [ * ], for all
Back-Up Development Costs incurred under Sections 3.7.4(a) and/or (b) above
with respect to such

 

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Exchange Act of 1934, as amended.

 

Development
Back-Up Compound, and, upon request, Array shall provide Celgene with
reasonably detailed documentation thereof.

(d)           Substitution
of Development Compounds.  From time
to time during the Option Term, Celgene may determine in good faith that a
Development Plan has not yielded sufficient progress with respect the
applicable Development Compound, and that development activities with respect
to such Development Compound should be discontinued.  If such development activities are
discontinued with respect to any Development Compound, then Celgene may
propose, after discussion with the JDC, a Development Back-Up Compound
corresponding to such Development Compound as a substitute Development
Compound.  In such case, the discontinued
Development Compound shall cease to be a Development Compound, the proposed
Development Back-Up Compound shall be deemed a Development Compound, and the
discontinued Development Compound shall be deemed a Development Back-Up
Compound to such substitute Development Compound.  Celgene shall [ * ]
of a Development Back-Up Compound that is selected as a substitute for the
corresponding Development Compound [ * ] in the
development of the substituted Development Compound, [ * ].

(e)           “Back-Up
Development Costs” shall mean the following costs incurred by Array, its
Affiliates or subcontractors in performing IND-Enabling Studies pursuant to
Section 3.7.4(a) or activities under the applicable Development Plan
pursuant to Section 3.7.4(b), as applicable, including the following: (i)
Array FTEs engaged in IND drafting, preparation and submission; (ii)
out-of-pocket costs paid to Third Parties (such as contract research
organizations, testing labs, imaging labs, quality assurance auditors or groups
for trial sites or vendors, or other contractors) for the performance of such
activities on a pass-through basis; (iii) Array FTEs planning, performing or
overseeing the activities under Section 3.7.4(a) or (b), as applicable at a
rate of $325,000 per FTE; (iv) Array’s actual costs for obtaining or
manufacturing reasonable quantities of the Development Compound for use as
clinical supplies (such as stability testing) in performing Array’s obligations
under Sections 3.7.4(a) and 3.7.4(b) above; and (v) costs incurred with respect
to meeting of investigators (single site, regional and global) and associated
travel expenses.

 

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3.7.5        Manufacturing.  Array shall be responsible, either itself or
through Third Parties, for the manufacture and supply of each Development
Compound and, if required pursuant to Section 3.7.4 above, corresponding
Development Back-Up Compounds, as necessary to conduct its activities under the
Discovery Program.  All such
manufacturing and supply activities shall be in accordance with the
manufacturing guidelines previously agreed by the Parties.

3.8           Records.

3.8.1        Retention.  Array shall maintain, or cause to be
maintained records of all (a) activities conducted under the Discovery Program,
(b) [ * ], (c) Back-Up Development Costs,
and (d) all [ * ], in each case in sufficient
detail and, as applicable, in a scientific manner as will properly reflect all
work done and results achieved in the performance of the Discovery Program and
which are otherwise sufficient to determine the identity and inventorship dates
of inventions.  Array shall retain such
records during the Option Term and for a period of five (5) years
thereafter, or such other period agreed by the Parties.

3.8.2        Inspection.  During the Option Term and for a period of [ * ] thereafter, Array shall make available to Celgene, as
reasonably requested and upon reasonable notice, during Array’s normal business
hours, such records as may be reasonably necessary for Celgene:  (a) to inquire about details of the results
generated under the Discovery Program (both discovery research and support for
clinical development); (b) to supplement the reports furnished by Array
pursuant to Section 3.8.1 above; and/or (c) [ * ],
Back-Up Development Costs and [ * ].  Such disclosures shall occur no more than
once every six (6) months during the Option Term and shall be pursuant to
reasonable procedures to protect the confidentiality of such records.  Upon the expiration of the period for record
retention specified in Section 3.8.1 above and upon request by Celgene, Array
shall provide to Celgene, at Celgene’s expense, copies of such records
associated with any Collaboration Compound or Collaboration Back-Up Compound
for retention in Celgene’s archives, it being understood that such records
shall remain subject to the confidentiality obligations in Article 10.

 

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Exchange Act of 1934, as amended.

 

ARTICLE
IV

CELGENE PRODUCT OPTION

4.1           Celgene Product Option.  Celgene shall have the option to select one (1)
Development Compound, along with corresponding Development Back-Up Compounds,
each for up to two (2) Targets to acquire an exclusive, worldwide license
to develop and commercialize such Development Compound and Development Back-Up
Compounds (the “Celgene Product Option”), all in accordance with the
terms and conditions set forth in this Article 4.

4.1.1        Exercise.

(a)   Option Term.  Unless earlier partially terminated with
respect to a particular Target as provided in Section 6.2.1, Celgene may
exercise the Celgene Product Option with respect to a particular Development
Compound and its corresponding Development Back-Up Compounds, at any time
before the earliest of: (a) for Development Compounds with respect to
which the first IND was filed in the cancer division of the FDA, [ *  ]; and
(b) for Development Compounds with respect to which the first IND was
filed in a division of the FDA other than the cancer division, [ * and (c) the [ * ] of the
Effective Date (the “Option Term”); provided that the Option Term shall
terminate upon:  (i) an earlier
termination of this Agreement in accordance with Article 12; or
(ii) the date on which Celgene has exercised the Celgene Product Option
with respect to two (2) Development Compounds.  Celgene may extend the Option Term set forth
in (c) of this subsection for up to [ * ] upon
written notice to Array, such notice to be provided no earlier than one hundred
eighty (180) days prior to the [ * ]
anniversary of the Effective Date or the end of the then-current Option Term,
as applicable.  The Parties may further
extend the Option Term set forth in (c) of this subsection for up to [ * ], commencing immediately after expiration of the [ * ] exercised by Celgene, by mutual written agreement;
provided, however, that if Array does not agree to so extend the Option Term, [ * ].  As used in
this Section 4.1.1, (1) the “completion of the first Phase I clinical
trial” shall be deemed to have occurred (A) upon the later of (1) receipt
of clearance from the FDA to commence Phase II clinical trials with respect to
the relevant Development Compound, whether by affirmative communication from
the FDA or the passage of the time period for placing such 

 

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the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.

 

Phase II clinical
trial on hold, or (2) sixty (60) days after Array delivers to Celgene a draft
clinical trial report containing all tables and graphs related to the key
endpoints for the subject clinical trial as defined in the protocol for such
clinical trial, which report shall be based on trial data obtained as of the
date all trial subjects have completed the trial (on a last patient, last visit
basis pursuant to the protocol for such clinical trial) or the date on which
the last trial subject has received the relevant Development Compound for a
period of four (4) months (or such other mutually agreed time period),
whichever is earlier, and (B) after receipt by Celgene of reasonable supporting
Information requested by Celgene and held by Array with respect to the subject
clinical trial of the relevant Development Compound; and (2) the “completion
of the first Phase II clinical trial” shall be deemed to have occurred
sixty (60) days after (A) Array delivers to Celgene a draft clinical trial
report containing all tables and graphs related to the key endpoints for the subject
clinical trial as defined in the protocol for such clinical trial, and (B)
after receipt by Celgene of reasonable supporting Information requested by
Celgene and held by Array with respect to the subject clinical trial of the
relevant Development Compound.

(b)           Exercise.  To exercise the Celgene Product Option with
respect to a particular Development Compound, Celgene shall so notify Array in
writing at any time during the Option Term. 
Upon receipt by Array of such notice, the subject Development Compound
and its corresponding two (2) Development Back-Up Compounds shall cease to
be a Development Compound or Development Back-Up Compounds, respectively, and
shall thereafter be deemed a Collaboration Compound or Collaboration Back-Up
Compounds, respectively.

(c)           Transition.  Subject to paragraph (a) above, and
incident to the extent reasonably necessary for Celgene to perform activities
assigned to it under the Development Plan approved by the JDC:

(i)    From and
after the time that Celgene exercises the Celgene Product Option with respect
to a Development Compound (which will then become a Collaboration Compound),
Array shall cooperate fully with Celgene to promptly, and in any event within
thirty (30) days of Celgene’s written request, provide Celgene with all
Collaboration Technology and 

 

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the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.

 

Array Technology and Information to which Celgene has a right or
license under this Agreement and which is necessary for Celgene to perform such
activities.  Such cooperation shall
include the reasonable disclosure of all Information (including, study
protocols, study results, analytical methodologies,
product manufacturing processes, batch records, vendor
information, validation documentation, regulatory documentation, patent information),
regulatory filings, information related to regulatory information and filings,
pre-clinical and clinical data, adverse event data, regulatory correspondence,
expert opinions, analyses, manufacturing data, manufacturing and supply
agreements, and the like, all to the extent that such material is not in the
possession of Celgene, and such other disclosures and transfers as are
reasonably necessary or useful for Celgene to exercise its rights and perform
such activities with respect to such Collaboration Compound and corresponding
Collaboration Back-Up Compounds. 
Notwithstanding the foregoing, Array shall not be considered to be in
breach of this Section 4.1.1(c) for failure to disclose information, if, despite
commercially reasonable efforts, Array cannot identify such information.  Without limiting the foregoing, Array shall
use commercially reasonable efforts to ensure orderly transition and
uninterrupted research and development of Collaboration Compounds, and if
applicable, corresponding Collaboration Back-Up Compounds, under this Section
4.1.1.

(ii)   In
addition, the JDC shall meet and discuss how best to transition the manufacture
of such Collaboration Compound and, if applicable, Collaboration Back-Up
Compounds to Celgene (or its designee) and shall establish a supply transition
plan with respect to such Collaboration Compound and Collaboration Back-Up
Compounds.  Array shall cooperate fully
to transition to Celgene all manufacturing activities related to the
Collaboration Compound and its corresponding Collaboration Back-Up Compounds as
reflected in the Development Plan and supply transition plan approved by the
JDC.  Celgene, at its option, may
purchase from Array any surplus quantities of GMP Collaboration Compound and
Collaboration Back-Up Compounds [ * ].

(iii)  Array
shall provide Celgene with a proposed budget outlining anticipated costs
incurred by Array, its Affiliates or subcontractors in performing those
additional development activities (e.g., preclinical studies and CMC-related
activities, including formulation and process development, together with
associated regulatory activities, and in each case relating

 

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

 

directly to the Development Compound) not directly attributable to the
ongoing conduct of clinical trials that Array performed in accordance with the
Development Plan during the last clinical trial of a Collaboration Compound or
Collaboration Back-Up Compound conducted prior to Celgene’s exercise of the
Celgene Product Option in respect of such Collaboration Compound or
Collaboration Back-Up Compound, which budget shall be revised or updated from
time to time, provided that any [ * ] above the
original budget submitted by Array shall [ * ].  Array shall submit an itemized invoice to
Celgene outlining such costs, and, upon request, Array shall provide Celgene
with reasonably detailed documentation thereof. 
Such costs described in the preceding sentence shall be calculated as
follows: (a) for Array FTEs performing such activities, [ * ];
(b) [ * ] costs paid to Third Parties for
the performance of such activities [ * ]; and (c)
Array’s [ * ] for obtaining or manufacturing
reasonable quantities of the Development Compound or Development Back-up
Compound used as in performing such activities. 
Celgene shall pay any invoice issued under this
Section 4.1.1(c)(iii) [ * ],
provided, however, that Celgene shall not be obligated to pay any amounts [ * ] submitted by Array if Celgene [ * ].  For the avoidance of doubt, Celgene shall not
be obligated to reimburse Array for any such costs with respect to any
Development Compound or Development Back-Up Compound on which Celgene does not
exercise the Celgene Product Option.

4.1.2        Termination.  In the event that Celgene fails to exercise
its Celgene Product Option with respect to a particular Development Compound,
in accordance with Section 4.1.1 above, then the Celgene Product Option,
and all of Array’s obligations under Article 3 and this Section 4.1 with
respect to such Development Compound and corresponding Development Back-Up
Compounds, as well as with respect to any and all Compounds for the same
Target, shall terminate.  Array shall
thereafter be free to develop such Compounds, Development Compounds, Back-Up
Compounds and other compounds that modulate the activity of such Targets
outside the collaboration, alone or in connection with Third Parties, in each
case subject to the license grant set forth in Section 5.3.

4.2           Development.  Following the exercise of the Celgene Product
Option with respect to a Development Compound and corresponding Development
Back-Up Compounds, and the designation of such Compounds as a Collaboration
Compound and Collaboration Back-Up

 

32

 

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

 

Compounds,
respectively, Array shall, at Celgene’s option and sole discretion, close or
inactivate its IND(s) for such Collaboration Compound and, if applicable,
Collaboration Back-Up Compounds, or transfer such IND(s) to Celgene at Celgene’s
expense; and Array shall complete all relevant clinical trial and IND
administrative activities and shall share all clinical trial data with
Celgene.  Celgene shall be responsible,
at its expense, for the preparation and filing of all subsequent INDs with
respect to any subsequent clinical development for such Collaboration Compound
or Collaboration Back-Up Compounds. 
Array shall also provide to Celgene in support of any Celgene IND
filings all relevant non-clinical data, including CMC, pharmacology and
toxicology generated by Array with respect to such Collaboration Compound and
Collaboration Back-Up Compounds.

4.3           Manufacturing.  Celgene shall have the right and
responsibility to arrange for manufacturing of the Collaboration Compounds,
Collaboration Back-Up Compounds and Licensed Products, including both clinical
materials and commercial product, consistent with Celgene’s reasonable internal
practices and industry standards. 
Celgene shall make reasonable commercial efforts to ensure adequate
manufacturing capacity to meet forecast demand for Collaboration Compounds, Collaboration
Back-Up Compounds and Licensed Products, as applicable, including, if deemed
necessary by Celgene, the establishment of an alternative supply source.  Celgene shall also make reasonable commercial
efforts to ensure an adequate clinical and commercial supply of such
Collaboration Compounds, Collaboration Back-Up Compounds and Licensed Products,
as applicable.

ARTICLE V

LICENSE GRANTS; EXCLUSIVITY

5.1           Research
Licenses.  Subject to the terms and
conditions of this Agreement:

5.1.1        To
Array.  Celgene hereby grants to
Array a non-exclusive worldwide license to make and use and otherwise exploit
subject matter within the Celgene Technology and Celgene’s rights under the
Collaboration Technology to the extent necessary to:  (a) cooperate with Celgene in connection with
the performance of the Discovery Program and any Development Plan during the

 

33

 

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

 

Option Term; (b) to conduct the activities under the Discovery Program
in accordance with the applicable Development Plan during the Option Term; and
(c) to conduct activities assigned to Array in accordance with Section 4.1.1(c)
above for a Collaboration Compound and a corresponding Collaboration Back-Up
Compound(s).

5.1.2        To
Celgene.  Array hereby grants to
Celgene a non-exclusive worldwide license to make and use and otherwise exploit
subject matter within the Array Technology and Array’s rights under the
Collaboration Technology to the extent necessary to:  (a) cooperate with Array in connection with
the performance of the Discovery Program and any Development Plan during the
Option Term; and (b) conduct the activities assigned to Celgene under the
Discovery Program in accordance with the applicable Development Plan during the
Option Term.

5.1.3        No
Right to Sublicense. The licenses granted under this Section 5.1 shall
not include the right to grant or authorize sublicenses; provided however that
the use by a Party of subcontractors shall not be construed as a sublicense.

5.2           Commercial
License to Celgene.

5.2.1        License
Grant.  Subject to the terms and
conditions of this Agreement, on and from the date of exercise of the Celgene
Product Option with respect to a particular Collaboration Compound, Array
hereby grants Celgene an exclusive, worldwide license under the Array Technology
and Array’s interest in any Collaboration Technology to develop, make, have
made, use, sell, offer for sale and import such Collaboration Compound and each
corresponding Collaboration Back-Up Compound, in each case alone or in Licensed
Products.  In addition, subject to the
terms and conditions of this Agreement, on and from the date of exercise of the
Celgene Product Option with respect to a particular Collaboration Compound,
Array hereby grants Celgene a non-exclusive, worldwide license, under any
Patent Controlled by Array that is necessary to develop, make, use, sell, offer
for sale or import such Collaboration Compound or its corresponding
Collaboration Back-Up Compounds, in each case alone or in Licensed Products, other than Collaboration Technology and
Array Technology, to develop, make, use, sell, offer for sale or import such
Collaboration

 

34

 

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

 

Compound and each corresponding Collaboration Back-Up Compound, in each
case alone or in Licensed Products.

5.2.2        Sublicenses.  The licenses granted under this
Section 5.2 shall include the right to grant and authorize
sublicenses:  (a) to a Third Party;
and/or (b) to its Affiliates solely for so long as such entity remains an
Affiliate of Celgene; provided that Celgene shall remain responsible for the
compliance of such Affiliate with the applicable terms of this Agreement.  Each sublicense granted by Celgene shall be
consistent with all of the terms and conditions of this Agreement and
subordinate thereto, and Celgene shall remain responsible to Array for the
compliance of each such Sublicensee with the financial and other obligations
due under this Agreement.  Except for
sublicenses granted under Section 9.6.2, any sublicensee of Celgene must have
reasonable capabilities to support the further development and
commercialization of such Development Compound(s) and/or Development Back-Up
Compound(s), as applicable.  Any such
sublicense to a Third Party (and any right of a Third Party to obtain such a
sublicense) shall be granted no earlier than the date the Compound included
therein has been designated as a Collaboration Compound or Collaboration
Back-Up Compound, as applicable, in accordance with Section 4.1.1 above.

5.2.3        Analogs
and Derivatives.  Subject to the terms
and conditions of this Agreement, Array shall not make, use or sell Analogs or
Derivatives of Collaboration Compounds or Collaboration Back-Up Compounds,
provided, however, that the foregoing shall not apply to any Compound that
Array has under development as of the Effective Date, as reasonably documented
by Array.  Notwithstanding the foregoing,
nothing in this Section 5.2.3 shall modify Array’s obligations under Section
5.6.

5.3           Commercial
License to Array.

5.3.1        License
Grant.  Subject to the terms and conditions of this
Agreement, Celgene hereby grants Array an exclusive, worldwide, royalty-free
license under the Celgene Technology and Celgene’s interest in any
Collaboration Technology to develop, make, have made, use, sell, offer for sale
and import (i) Development Compounds and Development Back-Up

 

35

 

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

 

Compounds for which the Celgene Product Option has expired or been
terminated, and (ii) Abandoned Products, in each case alone or as incorporated
in products.

5.3.2        Sublicenses.  The licenses granted under this
Section 5.3 shall include the right to grant and authorize
sublicenses:  (a) subject to Section
5.3.4 below, to a Third Party; and/or (b) to its Affiliates solely for so long
as such entity remains an Affiliate of Array; provided that Array shall remain
responsible for the compliance of such Affiliate with the applicable terms of
this Agreement.  Each sublicense granted
by Array shall be consistent with all of the terms and conditions of this
Agreement and subordinate thereto, and Array shall remain responsible to
Celgene for the compliance of each such sublicensee with all of the obligations
due under this Agreement.  Any such
sublicense to a Third Party (and any right of a Third Party to obtain such a
sublicense) of a Development Compound, Development Back-Up Compound or
Abandoned Product shall be granted no earlier than the date the Celgene Product
Option has expired or been terminated for such Development Compound and
Development Back-Up Compound or the date such Abandoned Product becomes same as
set forth in Section 12.3.2, respectively.

5.3.3        Analogs
and Derivatives.  Subject to the
terms and conditions of this Agreement, Celgene shall not make, use or sell
Analogs or Derivatives of Development Compounds or Development Back-Up
Compounds or Abandoned Compounds, provided, however, that the foregoing shall
not apply to any Compound that Celgene has under development as of the
Effective Date, as reasonably documented by Celgene.  Notwithstanding the foregoing, nothing in
this Section 5.3.3 shall modify Celgene’s obligations under Section 5.6.

5.3.4        Right of First
Opportunity.  If Array intends to
offer any Third Party any sublicense under Section 5.3.2 above, then Celgene
shall have an opportunity to negotiate with Array for a period of sixty (60)
days to enter into a sublicense granting Celgene such rights on terms to be
discussed at the time.

5.4           No
Other Rights.  Except for the rights
expressly granted under this Agreement, no right, title or interest of any
nature whatsoever is granted, whether by implication, estoppel or 

 

36

 

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

 

otherwise, by any
Party to the other Party.  All rights
with respect to Information, Patent or other intellectual property rights that
are not specifically granted herein are reserved to the owner thereof.

5.5           No
Implied Licenses.  Each Party
acknowledges that the licenses granted under this Article 5 are limited to
the scope expressly granted, and all other rights to Patents and Information of
such Party are expressly reserved to the Party owning such Patent and
Information.  Without limiting the
foregoing, it is understood that where an exclusive license under any Patent
and/or Information is granted to a Party under this Article 5 for a
particular purpose, the Party granting such license retains all of its rights
to such Patent and Information for all purposes not expressly licensed.

5.6           Exclusivity of Efforts.

5.6.1        During the Exclusivity Period.  During the applicable Exclusivity Period,
except pursuant to this Agreement, neither Party shall [ * ],
alone or with any Affiliate or any Third Party, any [ * ].  It is understood and agreed that the
provisions of this Section 5.6 shall not apply to [ * ]
for which such Party has [ * ], as
reasonably documented by such Party; provided, however, that in no event shall
a Party or any of its Affiliates [ * ],
including, without limitation, [ * ], or
enable a Third Party to do any of the foregoing.

5.6.2        Exclusivity
Period.  As used in this
Section 5.6, “Exclusivity Period” shall mean, with respect to
Celgene, the period commencing on the Effective Date and expiring, on a
Target-by-Target basis, on the earlier of: 
(a) [ * ]; (b) [ * ]; or (c) [ * ].  With respect to Array, the Exclusivity Period
shall commence on the Effective Date and shall extend, on a Target-by-Target
basis, (y) [ * ]; and (z) [ * ]

5.6.3        Change
of Control; Acquisitions.

(a)           Notwithstanding
the provision of Sections 5.6.1 and 5.6.2, in the event of a Change of Control
(as defined below) of either Party, the provisions of such Sections shall not
apply to any research or development program that a portion of the surviving
entity that was not Array or Celgene (prior to the Change of Control), as the
case may be, had ongoing as of

 

37

 

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

 

immediately prior
to the date of such Change of Control. 
For purposes of this Section 5.6, a “Change of Control” shall mean the
merger, consolidation, sale of substantially all of a Party’s assets or similar
transaction or series of transactions, as a result of which such Party’s
shareholders before such transaction or series of transactions own less than
fifty percent (50%) of the total number of voting securities of the surviving
entity immediately after such transaction or series of transactions.  For clarity, if as a result of any such
Change of Control, either Party exists as a wholly owned subsidiary of a
parent, then the provisions of this Section 5.6 shall continue to apply to such
Party as the surviving entity, but not to such parent.  Further, it is understood that, on and from
the date of closing of any transaction(s) constituting a Change of Control as
described above, each reference to a “Party” in Section 1.29 above shall
be deemed also to include any surviving entity into which Array or Celgene, as
applicable, merged, was consolidated or which acquired substantially all of
Array’s or Celgene’s assets, as applicable, as a result of such Change of
Control.

(b)           If,
during the Exclusivity Period with respect to a particular Target, either Party
acquires a Third Party, whether by way of merger, purchase of substantially all
of a Third Party’s assets or in a similar transaction or series of
transactions, that * ], then (i) if the acquiring Party is Celgene, either
(1) Celgene shall [ * ] after the
date Celgene [ * ], or (2) if Celgene does
not [ * ] pursuant to paragraph (i)(1)
of this Section 5.6.3(b), [ * ]; and
(ii) if the acquiring Party is Array, Array shall have the option, in its
sole discretion, to either (1) [ * ] after the
date Array [ * ], or (2) [ * ].  Celgene shall
notify Array in writing within ninety (90) days after the date Celgene obtains
control over the Acquired Program of its election of (i)(1) or (i)(2) above;
and Array shall notify Celgene in writing within ninety (90) days after the
date Array obtains control over the Acquired Program of its election of (ii)(1)
or (ii)(2) above.  In the event Celgene
elects (i)(2) above, then provisions thereof shall become effective on the date
Array receives such notice, and in the event Array elects (ii)(2) above, then
the provisions thereof shall become effective on the date Celgene receives such
notice.  For the purposes of this
Section 5.6.3(b), “[ * ]” shall
mean, [ * ].

 

38

 

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

 

ARTICLE VI

PAYMENTS

6.1           Initial
Payment.  In partial consideration of
Array’s performance of its obligations under the Discovery Program and the
rights and licenses granted by Array to Celgene in this Agreement, Celgene
shall pay to Array an initial fee of Forty Million Dollars ($40,000,000) within
ten (10) days following the Effective Date in accordance with the payment
provisions of Article 7.  The
initial fee set forth in this Section shall not be refundable or creditable
against any other amounts due Array under this Agreement.

6.2           Research Milestones.  Celgene shall pay to Array the amounts set
forth below upon the achievement of each of the corresponding milestones with
respect to each Target (each, a “Discovery Milestone”):

 

	
  Discovery Milestone

  	
   

  	
  Payment Amount

  
	
  1.[ * ]

  	
   

  	
  $[ * ]

  
	
  2.[ * ]

  	
   

  	
  $[ * ]

  

6.2.1        Celgene
shall have the option, on a Target-by-Target basis, to elect not to pay a
Discovery Milestone.  To exercise such
option, Celgene shall so notify Array in writing during the period such
Discovery Milestone payment is due.  If
Celgene exercises such option, then (i) Celgene shall have no further rights
(including the Celgene Product Option), other than Celgene’s rights in any
applicable Celgene Technology (subject to the license granted to Array in
Section 5.3), and Array shall have no further obligation, with respect to any
Development Compound and corresponding Development Back-Up Compounds that
modulates the Target modulated by the Development Compound for which Celgene
elected not to pay the Discovery Milestone, and (ii) such Target shall cease to
be a Target under this Agreement, and the Parties’ obligations with respect to
such Target under Section 5.6 shall immediately expire.  Notwithstanding the foregoing, it is

 

39

 

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

 

understood that Celgene shall be obligated to pay each Discovery
Milestone only once upon the first achievement of the applicable Discovery
Milestone with respect to each Target (i.e.,
if a particular Discovery Milestone is achieved by a Development Back-Up
Compound with respect to a particular Target, Celgene shall not also be
obligated to pay such Discovery Milestone upon the achievement of such
Discovery Milestone by the corresponding Development Compound or the other
Development Back-up Compound with respect to such Target).

6.2.2        For
purposes of this Section 6.2, “clearance” of an IND shall be deemed to have
occurred on the earlier of (i) thirty (30) days after filing, or (ii) the date
on which the FDA indicates that clinical trials under such IND may commence and
there are no clinical hold issues outstanding.

6.3           Development
Milestones.

6.3.1        Development
Milestone Payments.  Celgene shall
pay to Array the amounts set forth below following the achievement of each of
the corresponding milestones with respect to each Development Compound for
which the Celgene Product Option has not expired or been terminated or
corresponding Collaboration Compound or Collaboration Back-Up Compound, regardless
of whether the  development, promotion or marketing of
such Development
Compound or corresponding Collaboration Compounded or Collaboration Back-Up
Compound is discontinued at any
time after the  achievement of such milestone (each, a “Development Milestone”):

 

	
  Development Milestone Event

  	
   

  	
  Payment Amount

  
	
  1.[ * ]

  	
   

  	
  $[ * ]

  
	
  2.[ * ]

  	
   

  	
  $[ * ]

  
	
  3.[ * ]

  	
   

  	
  $[ * ]

  
	
  4.[ * ]

  	
   

  	
  $[ * ]

  

 

40

 

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

 

	
  5.[ * ]

  	
   

  	
  $[ * ]

  
	
  6.[ * ]

  	
   

  	
  $[ * ]

  
	
  7.[ * ]

  	
   

  	
  $[ * ]

  
	
  8.[ * ]

  	
   

  	
  $[ * ]

  
	
  9.[ * ]

  	
   

  	
  $[ * ]

  

For the purposes
of this Section 6.3.1, “Initiation” of a clinical trial shall mean the date of
the first visit with the first patient pursuant to the protocol for such
clinical trial.

6.3.2        Second
Indication.  If, with respect to a
particular Collaboration Compound or Collaboration Back-Up Compound, Celgene,
itself or through its Affiliates or Sublicensee, achieves Development
Milestones [ * ] for a second therapeutic
indication having a separate histology (i.e.,
multiple myeloma and breast cancer, not first-line to second-line multiple
myeloma therapies), Celgene shall make an additional payment to Array of [ * ] of the corresponding milestone payments set forth in
Section 6.3.1 above.  For the
avoidance of doubt, Celgene shall not be obligated to make any milestone
payments beyond the second indication.

6.3.3        Skipped
Development Milestones.  If
Development Milestone 4, 5 or 6 is achieved with respect to a particular
Licensed Product before Development Milestone 1, 2 or 3 is achieved (each a “prior”
Development Milestone), then each such prior Development Milestones shall be
deemed achieved upon achievement of Development Milestone 4, 5 or 6, as
applicable, and become payable (if not previously paid) in accordance with this
Section 6.3; provided that Celgene shall only pay the applicable Development
Milestone 2 or 3, but not both.

 

41

 

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

 

6.3.4        Certain
Terms.  For purposes of this
Section 6.3, and Section 6.6 below, all dosages, dosage forms and all
formulations of products containing a particular Collaboration Compound or
Collaboration Back-Up Compound shall be deemed a single Licensed Product, and
Celgene shall not be obligated to pay any additional Development Milestones
therefor, except as set forth in Section 6.3.2 above.  Notwithstanding anything set forth in this
Section 6.3 to the contrary, Celgene shall not be obligated to pay any
Development Milestone with respect to a Collaboration Back-Up Compound that
Celgene has substituted for the corresponding Collaboration Compound for which
Celgene has previously paid such Development Milestone for such corresponding
Collaboration Compound if Celgene has terminated all development activities
with respect to such Collaboration Compound.

6.4           Milestone
Payment Timing.  Celgene and Array
each agree to promptly notify the other of its achievement of any milestone
event set forth in Sections 6.2 and 6.3 above and the payment of each
corresponding milestone payment set forth in the Section 6.2 or 6.3, as
applicable, shall be due and payable by Celgene to Array as follows:  (a) for milestones events set out in
Section 6.3 above achieved by Celgene, its Affiliate
or Sublicensee, Celgene shall notify Array in writing [ * ]
after the achievement of each such milestone by Celgene, its Affiliate or
Sublicensee, and each such notice shall be accompanied by the appropriate
milestone payment; and (b) for milestone events set out in
Section 6.2 or Section 6.3 achieved by Array, the appropriate
milestone payment shall be due [ * ] after
receipt by Celgene of notification from Array thereof, subject to Celgene’s verification
during such [ * ] period that the applicable
milestone event occurred.  For the
avoidance of doubt, the milestone payments set forth in Sections 6.2 and
6.3 above shall not be refundable and shall not be creditable against future
milestone payments, royalties or other payments to Array under this Agreement,
and notification of achievement of Development Milestones 7, 8 and 9 and the
payments therefor shall be due within [ * ] of the
end of the calendar year in which they were achieved.

 

42

 

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

 

6.5           Royalties.

6.5.1        Royalty
Payment.  Celgene shall pay Array a
royalty [ * ] of Net Sales of Licensed Products
when the Licensed Product(s) are (a) covered by a Valid Claim within an Array
Patent or Collaboration Patent in the country in which such product is sold, or
(b) subject to Marketing Exclusivity in the country in which such Licensed
Product is sold at the time of such sale; provided that, Celgene shall pay
Array a reduced royalty [ * ] of Net
Sales of Licensed Products in a country where both (y) no Marketing Exclusivity
applies to a Licensed Product and (z) the sale of such Licensed Product would
not infringe a Valid Claim within an Array Patent or Collaboration Patent; and
provided further, that Celgene shall pay Array a [ * ]
royalty [ * ] of Net Sales of Licensed Products
if in such country there are other products on the market that contain, as one
of their active ingredients, the same Collaboration Compound or Collaboration
Back-Up Compound that is contained in such Licensed Product.

6.5.2        Royalty
Term.  The royalties due pursuant to
this Section 6.5 shall be payable on a country-by-country and Licensed
Product-by-Licensed Product basis until the later of:  (a) the date of expiration of the
last-to-expire Valid Claim of an Array Patent or Collaboration Patent covering
such Licensed Product in the country in which such Licensed Product is
manufactured or sold at the time of such manufacture or sale; or (b) [ * ] after the first commercial sale of such Licensed
Product in such country.

6.5.3        One
Royalty.  Only one royalty shall be
paid to Array with respect to a particular Licensed Product subject to
royalties under this Section 6.5, without regard to whether more than one
issued and unexpired claim of a Patent within the Array Patents or
Collaboration Patents is applicable to such Licensed Product.  In no event shall more than one royalty be
due hereunder with respect to any Licensed Product unit.

6.5.4        Third
Party Obligations.  In the event that
(i) it becomes necessary for Celgene, its Affiliates or Sublicensees to
obtain a license under a Patent of a Third Party, where such [ * ], and such patent would be infringed by the development
or sale of such Licensed Product, and (ii) Celgene, its Affiliates or
Sublicensees must pay such Third Party for such license a royalty on Licensed
Product in a particular country, then Celgene may [ * ]
of the royalties actually being paid

 

43

 

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

 

to such Third Party against royalties due Array on Net Sales of such
Licensed Product in such country; provided, however, that the royalties payable
to Array in any given calendar year shall not be [ * ]
nor shall the royalties payable to Array on Net Sales of Licensed Products be [ * ], and provided further that any Third Party royalties
properly deductible under this Section 6.5.4 that are not credited against
royalties paid to Array in the calendar year in which they were accrued shall
be carried forward and credited against royalties payable to Array in the
subsequent calendar year(s) and/or credited against milestones directed to the
applicable Collaboration Compound or Collaboration Back-Up Compound payable by
Celgene in the subsequent calendar year(s), at Celgene’s option, until such
royalty credits are completely expended. 
Celgene shall not be entitled to continue to take such credit in any
country in the event the Patents of such Third Party for which such obligations
have been incurred are held invalid or unenforceable in such country in a final
decision of a court or other government agency of competent jurisdiction from
which no appeal may be or has been taken after the date of such holding.

6.5.5        Timing
of Royalty Payments and Reports. 
Royalty payments under this Agreement shall be made to Array quarterly [ * ] following the end of each calendar quarter for which
such royalties are due.  Together with
any such payment, Celgene shall deliver to Array a report setting out in
reasonable detail the information necessary to calculate the royalty payments
due under this Section 6.5 for such calendar quarter, including the
following information, specified in the aggregate and on a Licensed
Product-by-Licensed Product and country-by-country basis:  (a) total gross invoiced amount from
sales of Licensed Products by Celgene, its Affiliates and Sublicensees;
(b) all relevant deductions from gross invoiced amounts to calculate Net
Sales; (c) Net Sales; (d) any other deductions or credits permitted in
accordance with the terms of this Agreement; and (e) royalties payable.

6.6           Conflicts
of Interest.  Celgene agrees to
establish list prices and discounts for each Licensed Product solely in the
interest of the commercial success of such Licensed Product in a particular
country, taking into account the competitive environment, product profile and
commercial potential of the Licensed Product, and not in the interests of
Celgene’s other products and services.

 

44

 

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

 

However, the foregoing
shall not be construed to dictate to Celgene any resale prices for Licensed
Products.

ARTICLE
VII

PAYMENTS; BOOKS AND RECORDS

7.1           Payment
Method.  Unless otherwise expressly
stated in this Agreement, all payments under this Agreement to Array shall be
made by bank wire transfer in immediately available funds to an account
designated by Array.  Any payments or
portions thereof payable under this Agreement that are not paid when due shall
bear interest at a rate equal to: 
(a) the prime rate as reported by Citibank N.A. on the date such
payment is due, plus two percent (2%); or (b) if lower, the maximum rate
permitted by law; calculated on the number of days such payment is delinquent,
compounded annually and computed on the basis of a three hundred sixty five
(365) day year.  This Section 7.1
shall in no way limit any other remedies available to the Parties.

7.2           Foreign
Exchange.  Unless otherwise expressly
stated in this Agreement, all amounts specified in, and all payments made
under, this Agreement shall be in United States Dollars.  If any currency conversion shall be required
in connection with the calculation of amounts payable under this Agreement,
such conversion shall be made using the average of the buying and selling
exchange rate for conversion of the applicable foreign currency into United
States Dollars, quoted for current transactions reported in The Wall Street
Journal (U.S., Eastern Edition) for the last thirty (30) business days of
the calendar quarter to which such payment pertains.

7.3           Taxes.  If laws or
regulations require that taxes be withheld from any amounts payable hereunder,
Celgene will:  (a) deduct those taxes
from the otherwise remittable payment; (b) timely pay the taxes to the
proper taxing authority; and (c) notify Array and promptly furnish Array
with copies of any documentation evidencing such withholding.

7.4           Records.  Celgene shall keep, and shall cause its
Affiliates and Sublicensees to keep, complete, true and accurate books of
accounts and records, in accordance with generally accepted accounting
practices and sufficient to determine and establish the amounts payable to
Array under

 

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this document, marked by brackets, has been omitted and filed separately with
the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.

 

this Agreement,
and compliance with the other terms and conditions of this Agreement.  Such books and records shall be kept at the
principal place of business for a party for at least three (3) years
following the end of the calendar quarter to which they pertain and shall be
made available for inspection throughout such three (3) year period by an
independent Third Party auditor selected by or under authority of Array for
such purposes in accordance with Section 7.5 below.

7.5           Inspection
of Records.  Upon no less than thirty
(30) days’ written notice by Array to Celgene, Celgene shall permit, and shall
require its Affiliates and Sublicensees to permit, an independent certified
public accountant (subject to reasonable obligations of confidentiality to
Celgene and its Affiliates and Sublicensees, as applicable), appointed by Array
and reasonably acceptable to Celgene and its Affiliates and Sublicensees, as
applicable, to inspect the books and records of such party described in
Section 7.4 above for the sole purpose of verifying the accuracy of the
royalty payments required to be made hereunder; provided that such inspection
shall occur during normal business hours and not more often than once per
calendar year, unless a material error is discovered in such inspection in
which case Array shall have the right to conduct an additional audit in such
period.  The independent certified public
accountant shall report to Array only whether there has been a royalty
underpayment or overpayment and, if so, the amount thereof and information
related to the determination of such amount. 
Any inspection conducted under this Section 7.6 shall be at the
expense of Array, unless such inspection establishes any underpayment of any
amount due to Array hereunder by at least five  percent
(5%) for any annual period, in which case the full costs of such inspection
shall be borne by Celgene.  Any
underpayment shall be paid by Celgene to Array within fifteen (15) business
days with interest on the underpayment at the rate specified in
Section 7.1 above from the date such payment was originally due.  Any overpayment shall be paid by Array to
Celgene within fifteen (15) business days or credited against future royalties
due, at Array’s sole discretion.

 

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the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.

 

ARTICLE VIII

COMMERCIALIZATION

8.1           Commercialization of Licensed
Products.

8.1.1        Celgene
Responsibility.  Except as provided
below, Celgene shall have sole responsibility for the development,
commercialization, distribution, marketing and promotion of Licensed Products.

8.1.2        Diligence.

(a)   General.  For each Collaboration Compound and each
Collaboration Back-Up Compound Celgene has elected to develop and
commercialize, Celgene shall use Diligent Efforts  to
develop and achieve Marketing Approval for, and launch Licensed Products
incorporating a Collaboration Compound, or, if applicable, a Collaboration
Back-Up Compound, as soon as practicable in the United States and the European
Union, and thereafter to market, promote and sell such Licensed Products and to
maximize Net Sales of such Licensed Product in such markets.  Without
limiting the foregoing, Celgene shall develop and commercialize Licensed Products solely in the
interest of the commercial success of such Licensed Products in a particular
country, taking into account the competitive environment, product profile and
commercial potential of such Licensed Products, and not in the interests of
Celgene’s other products and services.

(b)   Reports.  Until first commercial introduction of each
Licensed Product by or on behalf of Celgene hereunder, Celgene shall keep Array
apprised of the status of the pre-clinical, clinical and commercial development
of such Licensed Product (and the Collaboration Compound or Collaboration
Back-Up Compound from which such Licensed Product is being developed) by
providing Array with quarterly updates by phone, video-conference or email and
a semi-annual written reports containing a reasonably detailed summary of such
activities with respect to each applicable Licensed Product (and the
Collaboration Compound or Collaboration Back-Up Compound from which such
Licensed Product is being developed) during the prior year, together with all
material correspondence with the FDA or similar regulatory agencies concerning
such

 

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the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.

 

Licensed Product (or the Collaboration Compound or Collaboration
Back-Up Compound from which such Licensed Product is being developed).  The semi-annual written reports described in
this Section 8.1.2(b) shall contain sufficient information to allow Array
to monitor Celgene’s compliance with this Agreement, including Celgene’s
obligations with respect to accomplishment of the Development Milestones set
forth in Section 6.3.  All reports
and information provided under this Section 8.1.2(b) shall be deemed
Confidential Information of Celgene.

(c)   Meetings.  Twice each calendar year, on dates and times
mutually agreed by the Parties, Array may, at its option, send at least one (1)
Array representative, at Array’s cost, to meet with the Celgene product team(s)
responsible for the development and regulatory activities for each
Collaboration Compound and its corresponding Collaboration Back-Up Compounds
and Licensed Products and to discuss the conduct and progress of, and plans
for, the development and regulatory affairs with respect to such Collaboration
Compound and its corresponding Collaboration Back-up Compounds and Licensed
Products.  In addition, and without
limiting Celgene’s reporting obligations under any other provision of this
Agreement, Celgene, at its sole discretion, shall provide Array with such
information as Array may reasonably request from time to time to pertaining to
each Collaboration Compound, its corresponding Collaboration Back-up Compound
and Licensed Products, which, for illustrative purposes, may include, at
Celgene’s sole discretion, the following categories:  (i) clinical studies; (ii) summaries of clinical study results; (iii) schedules of meetings planned with regulatory agencies; (iv) summaries of key CMC issues, including manufacturing
and formulation; (v)
prior notice of the initiation of clinical trials; and (vi) prior notice of public communication
of clinical results.

8.2           Co-Promotion
Option of Array.

8.2.1        Exercise
of Co-Promotion Option.  Subject to [ * ], Array shall have an option to co-promote each
Licensed Product in the United States (the “Co-Promotion Option”) in
accordance with the terms and conditions set forth in this
Section 8.2.  To exercise its
Co-Promotion Option with respect to a particular Licensed Product, Array shall
notify Celgene in writing no earlier than the date of first filing of a MMA for
such Licensed Product in the United States and no later

 

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the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.

 

than one hundred eighty (180) days after such date (each such
Licensed Product for which Array exercises the Co-Promotion Option being
referred as a “Co-Promoted Product”). 
To facilitate such election, Celgene shall notify Array in writing
within no less than forty-five (45) days prior to the anticipated filing
of such MAA and shall confirm such notice within ten (10) days after
actually filing such MAA.  It is understood that Array’s
election not to exercise its Co-Promotion Option, or failure to exercise its
Co-Promotion Option within period referenced above, for a particular Licensed
Product shall not in any manner affect Array’s Co-Promotion Option with respect
to any other Licensed Product.  As used
in this Agreement, “co-promote” shall mean to promote jointly a Licensed
Product through Celgene and Array’s respective sales forces under a single
brand and trademark in a given country; and “details” shall mean
face-to-face sales presentations made to physicians, nurses, pharmacists and
other individuals who provide healthcare services to patients, in their
capacity as such.

8.2.2        Co-Promotion
Plan.  If Celgene has not [ * ] and Array has exercised its Co-Promotion Option in
accordance with Section 8.2.1 above, Celgene shall prepare, in consultation
with Array and the JCC, the operating plan for co-promotion of each Co-Promoted
Product (each, a “Co-Promotion Plan”), which shall be reviewed and
approved by the JCC at least twelve (12) months 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:  (a) overall
strategies with respect to promoting and marketing the applicable Co-Promoted
Product in the United States; (b) the activities to be conducted and the
responsibilities of each Party in connection with the co-promotion of the
applicable Co-Promoted Product; and (c) a fair and reasonable allocation
between Celgene and Array of activities under such Co Promotion Plan, including
for example, a reasonable allocation of promotion responsibilities within major
metropolitan areas, indications and channels and of access to key opinion
leaders and the like in accordance with such allocation.  Without limiting the foregoing, with respect
to any Co-Promoted Product within the field of oncology, the applicable
Co-Promotion Plan shall include a fair and reasonable allocation to Array of
promotion responsibilities in the major cancer centers in each of the United
States and to oncologists and other specialist physicians in the United States.

 

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the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.

 

8.2.3        Changes
to the Co-Promotion Plan.  After the
submission of the initial Co-Promotion Plan for each Co-Promoted Product, the
JCC shall review the Co-Promotion Plan for such Co-Promoted Product on an
ongoing basis and in no event less frequently than once each calendar
half-year.

8.2.4        Scope
of Co-Promotion.  At the time Array
exercises its Co-Promotion Option for a particular Licensed Product, Array
shall notify Celgene of the total number of Sales Representatives that Array
desires to deploy annually for the applicable Co-Promoted Product in the United
States.  Except as provided below, Array
will dedicate the number of Sales Representatives to the co-promotion of the
applicable Co-Promoted Product that would be required to perform approximately
no less than twenty-five percent (25%) and no more than fifty percent (50%) of
the total details made to physicians and other health care providers and
customers to be conducted for such Co-Promoted Product in the United States in
any calendar year, unless otherwise agreed by the JCC.  Array shall have the right to phase-in such
detailing efforts over the initial three (3) years of co-promoting a
Co-Promoted Product; provided that Array must commit to provide at least fifty
percent (50%) of its maximum designated commitment in the first, and
seventy-five percent (75%) of such commitment in the second, calendar year
of such Co-Promoted Products.  Subject to
the limitations set forth in this Section 8.2.4, the number of such Sales
Representatives that Array deploys in any calendar year may be increased or
decreased by Array, subject to prior approval by the JCC.  In addition, on an annual basis in accordance
with the timetable established by the JCC for review and update of the relevant
Co-Promotion Plan (but in no case less than ninety (90) days or more than
one hundred eighty (180) days prior to the start of each calendar year),
the JCC shall have the right to adjust the total number of Sales
Representatives that Array may deploy with respect to each Co-Promoted Product
in the United States.

8.2.5        Co-Promotion
Coordination.  The JCC shall be
responsible for coordinating the co-promotion activities under this
Section 8.2 with respect to each Co-Promoted Product, and shall develop
the strategies and programs to carry-out co-promotion activities in an optimal
fashion, including the assignment of co-promotion activities and details in
accordance with the Co-Promotion Plan.

 

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the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.

 

8.2.6        Sales
Representatives.

(a)   Qualifications.  Array shall employ professional and trained
Sales Representatives to co-promote each Co-Promoted Product in the United
States, and such Sales Representatives shall meet standards of competence and
professionalism as is common in the pharmaceutical industry.  With the prior written consent of
the JCC, Array may sub-contract its co-promotion obligations to a Third Party;
provided that Celgene shall have the right to approve the hiring of Sales
Representatives performing details for a Co-Promoted Product hereunder and to
cause the removal of such Sales Representatives from such detailing activities;
provided that in exercising such rights of approval and removal, Celgene shall
apply the same standards as Celgene applies with respect to its own Sales
Representatives.

(b)   Training.  Celgene 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 Product
Celgene provides to its own Sales Representatives who promote such Co-Promoted
Product in the United States.  Array
shall be responsible for all of its costs.

(c)   Promotional Materials.  With respect to the co-promotion of each
Co-Promoted Product, Array Sales Representatives will utilize only the promotional,
advertising, educational and communication materials provided to them by
Celgene, free of charge, 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 sales 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 Celgene in any way whatsoever, without the express prior
written consent of Celgene.  Array Sales
Representatives shall use such materials solely for the purpose of performing
their obligations under this Agreement. 
Array shall ensure that its and its Sales Representatives, including

 

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the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.

 

any permitted subcontracted Sales Representatives, perform in compliance
with all applicable laws, rules and regulations.

(d)   Timing.  Array and Celgene 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.

8.2.7        Reimbursements.

(a)   In addition to the payments
due to Array under Article 6 above, Celgene shall compensate Array for
performing promotional activities with respect to each Co-Promoted Product by
paying to Array:  (i) a Per Detail Fee (as
defined below) based on the number of details conducted by Array during each
calendar quarter under the Co-Promotion Plan; and (ii) a commission, calculated
in accordance with Section 8.2.7(b) below (“Commission”), on all sales of
such Co-Promoted Product booked by Celgene as a result of Array’s co-promotion
activities with respect to such Co-Promoted Product.

(b)   Promptly following Array’s
exercise of its Co-Promotion Option in accordance with Section 8.2.1, the
Parties shall, acting in good faith, reasonably agree upon: (i) the fee to be
paid to Array for each detail performed by Array for the applicable Co-Promoted
Product in accordance with the Co-Promotion Plan then in effect (“Per Detail
Fee”) and such Per Detail Fee shall equal Array’s average cost of performing
such details over a quarterly period, on a fully allocated basis, provided that
the Per Detail Fee shall not exceed Celgene’s average cost per detail for such
Co-Promoted Product, on a fully allocated basis, for the same period; and (ii)
the Commission, and the basis for calculation thereof.  In the event that the Parties are unable to
agree upon either the Per Detail Fee or Commission for such Co-Promoted
Product, such matter shall be submitted to an arbitrator for resolution in
accordance with Section 2.3 above as to an amount that would constitute a
reasonable Per Detail Fee or Commission, as applicable.

(c)   Within forty-five (45) days
after the end of each calendar quarter following Array’s exercise of its
Co-Promotion Option for a particular Co-Promoted Product

 

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pursuant to
Section 8.2.1: (i) Array shall submit to Celgene a report summarizing
the number of details performed by Array during such calendar quarter and the
total amount of Per Detail Fees payable to Array for such calendar quarter; and
(ii) Celgene shall provide to Array Celgene’s good faith determination of the
number of sales of such Co-Promoted Product booked as a result of Array’s
co-promotion activities with respect to such Co-Promoted Product during such
calendar quarter and the Commission payable to Array on such sales.  Payments due under this Section 8.2.7
shall be made quarterly by Celgene to Array within thirty (30) days after receipt
of the applicable report from Array pursuant to this Section 8.2.7(b).

8.3           [ * ];
Termination of Co-Promotion.

8.3.1        Celgene
[Buy-Out Option].  Celgene shall have [ * ],
on a Licensed Product-by-Licensed Product basis, in accordance with the terms
of this Section 8.3.1.  At any time after
Celgene’s exercise of the Celgene Product Option with respect to a Licensed
Product [ * ], Celgene may notify Array in
writing that it wishes to [ * ] in
accordance with the payment provisions of Article 7.  Upon Array’s receipt of such notice [ * ].  For the avoidance
of doubt, in no event shall Celgene be obligated to [ * ].

8.3.2        Array
Termination Right.  Array shall have
the right to terminate its co-promotion of any Co-Promoted Product, and its
obligations under this Article 8 with respect to such Co-Promoted Product,
on a Licensed Product-by-Licensed Product basis, upon one hundred eighty (180)
days’ prior written notice to Celgene.

8.3.3        Celgene
Termination Right.  Celgene shall
have the right to terminate Array’s co-promotion of any Co-Promoted Product, on
a Licensed Product-by-Licensed Product basis, upon a material breach by Array
of its other obligations under this Article 8 with respect to the Licensed
Product, which breach is not cured by Array within sixty (60) days after
receipt of a notice of such breach from Celgene.  Celgene shall not have the right to terminate
this Agreement due to an uncured material breach by Array under this Article 8;
however, Celgene shall otherwise have the

 

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the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.

 

right to pursue any and all other remedies available to it at law and
in equity with respect to any such breach.

8.3.4        Consequences
of Termination.  Upon termination of
Array’s right to co-promote any Co-Promoted Product, Array shall have no
further right to co-promote such Co-Promoted Product.  It is understood that termination of Array’s
co-promotion rights with respect to a particular Co-Promoted Product shall not
affect Array’s co-promotion rights with respect to any other Licensed Product
under this Article 8.

8.4           Array Logo.  To the extent permitted by applicable law, for
such time as Array is co-promoting a Licensed Product, Array’s name and logo
(collectively, the “Array Marks”) shall appear, in reasonable size and
prominence, on all labels and package inserts and marketing materials for each
Co-Promoted Product sold in the United States identifying Array as a
co-promoter.  Accordingly, Array hereby
grants to Celgene a non-exclusive, royalty-free license to use the Array Marks
solely in connection with the marketing, promotion and sale of the Co-Promoted
Product(s) in the United States.  Celgene
shall ensure that use of the Array Marks is consistent with high levels of
business professionalism and product quality and reasonable written guidelines
provided from time to time by Array to Celgene. 
All ownership and goodwill arising out of the use of the Array Marks
shall vest in and inure solely to the benefit of Array.  Notwithstanding anything herein to the
contrary, upon Array’s written request, Celgene, its Affiliates and Sublicensees
agree to cease the use of the Array Marks; provided:  (a) that Celgene, its Affiliates and
Sublicensees may continue to use any labels, package inserts and marketing
materials in existence as of the receipt of such notice; and (b) in such
case, Celgene’s obligation to include the Array Marks on labels, package
inserts and marketing materials for Co-Promoted Product(s) in the United States
shall terminate.

 

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this document, marked by brackets, has been omitted and filed separately with
the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.

ARTICLE
IX

OWNERSHIP OF INTELLECTUAL PROPERTY AND PATENT
RIGHTS

9.1           Materials.

 

9.1.1        Ownership.  Except as otherwise expressly provided
herein, as between the Parties, all right, title and interest in and to all
transferred materials, including any compounds and chemical scaffold
information provided by Celgene to Array hereunder, (and any intellectual
property rights relating thereto) shall remain in the Party transferring such
materials to the other Party.

9.1.2        Use; Transfer. 
Each Party agrees that, except as otherwise expressly provided herein,
it shall use the other Party’s materials only in connection with activities
conducted pursuant to this Agreement or in order to further the purposes of
this Agreement, and shall not transfer such materials of the other Party to any
Third Party without such other Party’s prior written consent.

9.2           Ownership of Inventions.

9.2.1        Generally.  Each Party shall retain all of its right,
title and interest in and to its Technology (i.e.,
with respect to Array, the Array Technology; and with respect to Celgene,
Celgene Compounds and the Celgene Technology), subject only to its obligations
under this Agreement.  As between the
Parties, title to all inventions and other intellectual property made:  (a) solely by Array personnel in
connection with this Agreement shall be owned by Array; (b) solely by Celgene
personnel in connection with this Agreement shall be owned by Celgene; and
(c) jointly by personnel of Array and Celgene in connection with this
Agreement shall be jointly owned by Array and Celgene.  Except as expressly provided in this
Agreement, it is understood that neither Party shall have any obligation to
account to the other for profits, or to obtain any consent of the other Party
to practice, enforce, license, assign or otherwise exploit jointly-owned
inventions or intellectual property, by reason of joint ownership thereof, and
each Party hereby waives any right it may have under the laws of any
jurisdiction to require any such consent or accounting; subject, in all cases,
to the licenses and rights granted by the Parties in this Agreement.

9.2.2        Celgene
Compounds and Compound Improvements. 
Notwithstanding Section 9.2.1 above, as between the Parties, (i) title
to all Analogs having the same core structure of any Celgene Compound (i.e.,
having the exact atom arrangement that makes up the original core

 

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the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.

 

structure of such Celgene Compound minus any substituent R groups) made
by or under the authority of a Party, whether alone or jointly with others, in
connection with the activities conducted pursuant to this Agreement, shall be
owned by, and are hereby assigned to, Celgene; and (ii) title to all other
Compound Improvements made by or under the authority of a Party, whether alone
or jointly with others, in connection with the activities conducted pursuant to
this Agreement, shall be owned by, and are hereby assigned to, Array.  As used herein, “Compound Improvement”
means any invention or other subject matter (including Information) comprising
the composition of matter of any Compound, Development Compound, Collaboration
Compound, Back-Up Compound, Development Back-Up Compound, Collaboration Back-Up
Compound, Abandoned Compound or Licensed Product, or method of use or
manufacture thereof (together with all intellectual property rights therein,
including Patents).  Upon the owning
Party’s request, the assigning Party shall take, or cause to be taken, any and
all actions necessary to confirm and perfect the owning Party’s rights in and
to Celgene Compounds or Compound Improvements, as applicable.

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

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

 

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this document, marked by brackets, has been omitted and filed separately with
the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.

 

9.5           Patent
Prosecution.  The Prosecuting Party
(as defined below) of Patents covering inventions within the Collaboration
Technology shall use diligent efforts  to
obtain a reasonable scope of protection for such inventions.  Each Party will provide copies of all Patent
prosecution correspondence to the other with sufficient time to allow for
review and comment by the other Party, and, to the extent possible, at least
sixty (60) days prior to any response being due to the applicable patent
office, and will consider in good faith reasonable comments provided by the
other Party.

9.5.1        Definitions.  The following definitions shall be used only
for the purposes of this Section 9.5 (or as otherwise expressly referenced
in this Agreement):

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

(b)   “Prosecuting Party” means the Party
that is responsible for the Prosecution and Maintenance of a Patent under this
Section 9.5.

9.5.2        Existing
Technology.  Each
of Array and Celgene, in its sole discretion, may Prosecute and Maintain
Patents covering the Array Technology or Celgene Technology, respectively, and
such Prosecution and Maintenance shall be at the expense of the Party owning
such Patent; provided, however, that during the Option Term and for so long
thereafter as Celgene retains rights (under the Celgene Product Option, by
license or otherwise) to Compounds that modulate the Target to which the
Patents listed in Schedule 9.5.2 relate, Array shall provide Celgene
with copies of all correspondence regarding the prosecution of such Patents
with sufficient time for Celgene to comment, and to the extent possible, at
least sixty (60) days prior to any response being due to the applicable patent
office, and Array will consider in good faith reasonable comments provided by
Celgene.  If either Party elects not to
Prosecute and Maintain Patents covering such Party’s Technology in any country,
then such Party shall provide at least sixty (60) days written notice to the

 

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Exchange Act of 1934, as amended.

 

other Party.  Thereafter, the
other Party shall have the right, but not the obligation, to pursue, at its
sole expense and in its sole discretion, the Prosecution and Maintenance of
such Patents in such country.  The
ownership of such Patents shall not be affected, notwithstanding any transfer
of Prosecution and Maintenance of such Patents to such other Party in
accordance with this Section 9.5.2.

9.5.3        Collaboration
Technology.

(a)   Jointly Owned Patents.  The Parties shall jointly decide on a
strategy for the Prosecution and Maintenance of Patents covering Collaboration
Technology that are jointly owned, which strategy may include retention of
mutually acceptable outside counsel to conduct such Maintenance and
Prosecution, and the Parties shall equally share the expenses therefor.

(b)   Solely Owned Patents.  Celgene or Array, as the case may be, shall
control the Prosecution and Maintenance of Patents within the Collaboration
Technology that are owned by such Party, in each case using counsel of its
choice and in such countries as such Party determines is appropriate, and such
Prosecution and Maintenance shall be at the expense of the Party owning such
Patent.

(c)   Cooperation. 
Each Party shall, at its own expense, reasonably cooperate with and
assist the other Party, at such other Party’s request, in connection with the
Prosecution and Maintenance the Patents covering any Collaboration Technology,
including by making scientists and scientific records reasonably available to
such other Party.

9.5.4        Disclosure of Developments. 
Each Party shall keep the other informed as to material developments
with respect to the Prosecution and Maintenance of Patents covering any
Collaboration Technology including by promptly providing to the other Party
copies of any substantive documents that such Party receives from any patent
office (including notice of interferences, reissues, re-examinations, oppositions
or requests for patent term extensions), and by providing such other Party the
opportunity to have reasonable input into the strategic aspects of such
Prosecution and Maintenance.

 

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

 

9.5.5        Transfer of Prosecution and Maintenance. 
If a Prosecuting Party elects not to Prosecute and Maintain Patents
covering Collaboration Technology in a country, and the other Party retains
rights to such Patent at the time of such election, such Prosecuting Party
shall provide at least sixty (60) days written notice to the other Party.  Thereafter, such other Party shall have the
right, but not the obligation, to pursue, at its sole expense, in its sole
discretion and in its sole name, the Prosecution and Maintenance of such
Patents in such country.  Upon the
transfer of Prosecution and Maintenance of such Patents to such other Party in
accordance with the foregoing, the transferring Party shall also assign and
transfer its ownership rights in and to such Patents to the such other Party.

9.6           Enforcement
Rights.

9.6.1        Defense
and Settlement of Third Party Claims. 
If any Collaboration Compound, Collaboration Back-Up Compound or
Licensed Product manufactured, used or sold by Celgene, its Affiliates or
Sublicensees becomes the subject of a Third Party’s claim or assertion of
infringement of a Patent or other intellectual property relating to the
manufacture, use, sale, offer for sale or importation of such Collaboration
Compound or Licensed Product, the Party first having notice of the claim or
assertion shall promptly notify the other Party, and the Parties shall promptly
confer to consider the claim or assertion and the appropriate course of
action.  Unless the Parties otherwise
agree in writing and, if applicable, subject to the indemnification obligations
and procedure set forth in Section 11.4 below, each Party shall have the right
to defend itself against a suit that names it as a defendant.  Neither Party shall enter into any settlement
of any claim described in this Section 9.5 that adversely affects the other
Party’s rights or interests without such other Party’s written consent, which
consent shall not be unreasonably conditioned, withheld or delayed.  In any event, the Parties shall reasonably
assist one another and cooperate in any such litigation at the other Party’s
request and expense.

9.6.2        Infringement by Third Parties.

(a)   If any Array Patent or Collaboration Patent
is infringed by a Third Party in any country in connection with the
manufacture, use and sale of a product substantially similar to a

 

59

 

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

 

Licensed Product in such country, Celgene shall have the primary right,
but not the obligation to institute, prosecute, and control any action or
proceeding with respect to such infringement of such Patent, by counsel of its
own choice, and Array shall have the right, at its own expense, to be
represented in that action by counsel of its own choice.  If Celgene fails to bring an action or proceeding
or sublicense such Third Party (if permitted under this Agreement) within a
period of one hundred twenty (120) days after a written request by Array
to enforce the Patent rights licensed to Celgene hereunder, Array shall have
the right to bring and control any such action by counsel of its own choice,
and Celgene shall have the right to be represented in any such action by
counsel of its own choice at its own expense.

(b)   If one Party brings any such action or proceeding in
accordance with this Section 9.6.2, the second Party agrees to be joined
as a party plaintiff and to give the first Party reasonable assistance and
authority to file and prosecute the suit. 
The costs and expenses of the Party bringing suit under this Section
shall be borne by such Party, and any damages or other monetary awards
recovered shall be shared as follows:  [ * ], and then (i) if Celgene is the Party that brings
such action or proceeding, then [ * ], or
(ii) if Array is the Party that brings such action or proceeding, then [ * ].  A settlement
or consent judgment or other voluntary final disposition of a suit under this
Section 9.6.2 may be entered into without the consent of the Party not
bringing the suit; provided that such settlement, consent judgment or other
disposition does not admit the invalidity or unenforceability of any Array
Patent or any Collaboration Patent Controlled by Array if entered by Celgene
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 otherwise has the right to grant.

9.7           Patent
Marking.  Celgene shall mark (or
caused to be marked) all Licensed Products marketed and sold hereunder with
appropriate Array Patent or Collaboration Patent numbers or indicia at Array’s
request 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.  Array shall
mark (or caused to be marked) all Development Compounds and Abandoned Products
subject to the license granted to Array under Section 5.3 above and marketed
and sold by Array with

 

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

 

appropriate
Celgene Patent or Collaboration Patent numbers or indicia at Celgene’s request
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 X

CONFIDENTIALITY

10.1         Confidentiality;
Exceptions.  Except to the extent
expressly authorized by this Agreement or otherwise agreed in writing, the
Parties agree that the receiving Party shall keep confidential and shall not
publish or otherwise disclose and shall not 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
pursuant to this Agreement (collectively, “Confidential Information”).  Notwithstanding the foregoing, Confidential
Information shall not be deemed to include information and materials to the
extent that it can be established by written documentation by the receiving
Party that such information or material:

(a)   was already known to the receiving Party,
other than under an obligation of confidentiality (except to the extent such
obligation has expired or an exception is applicable under the relevant
agreement pursuant to which such obligation was established), at the time of
disclosure;

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

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

(d)   was independently developed by the receiving
Party without any use of or reference to the disclosing Party’s Confidential
Information, as demonstrated by documented evidence prepared contemporaneously
with such independent development; or

 

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

 

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

It is understood
that Confidential Information that is assigned to a Party under
Section 9.2.2 shall be considered Confidential Information of the Party to
whom such Confidential Information is assigned.

10.2         Authorized
Disclosure.  Except as expressly
provided otherwise in this Agreement, each Party may use and disclose
Confidential Information of the other Party as follows: (a) under
appropriate confidentiality provisions substantially equivalent to those in
this Agreement, in connection with the performance of its obligations or
exercise of rights granted or reserved by such Party in this Agreement
(including, in the case of Celgene, the rights to develop and commercialize
Collaboration Compounds, Collaboration Back-Up Compounds and Licensed Products;
and in the case of Array, to develop and commercialize Development Compounds
and Development Back-Up Compounds for which the Celgene Product Option has
expired or been terminated and Abandoned Products; and in the case of either
Party, to grant sublicenses as expressly permitted hereunder) and complying
with the terms of agreements with Third Parties; (b) to the extent such
disclosure is reasonably necessary in filing for, prosecuting or maintaining
Patents, copyrights and trademarks (including applications therefor),
prosecuting or defending litigation, complying with applicable governmental
regulations, obtaining and maintaining regulatory approvals (including
Marketing Approvals), conducting preclinical or clinical trials, marketing
Licensed Products (in the case of Celgene) or products containing Development
Compounds or Development Back-Up Compounds for which the Celgene Product Option
has expired or been terminated and/or Abandoned Products (in the case of
Array), or as otherwise required by applicable laws or court order (including
securities laws, regulations and guidances); provided, however, that if a Party
is required by law or regulation to make any such disclosure of the other Party’s
Confidential Information such Party will, except where impracticable for
necessary disclosures (for example in the event of medical emergency), 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 commercially

 

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

 

reasonable efforts
to secure confidential treatment of such Confidential Information required to
be disclosed; (c) in communication with existing and potential investors,
consultants, advisors (including financial advisors, lawyers and accountants)
or others on a need-to-know basis, in each case under appropriate
confidentiality provisions substantially similar to those in this Agreement; or
(d) to the extent mutually agreed to by the Parties.

10.3         Scientific
Publications.  During the Option Term
for a particular Target, (a) neither Party shall publish or present the results
of activities carried out under this Agreement with respect to such Target, and
(b) to the extent any clinical site or investigator has any right to publish,
present or otherwise publicly disclose any data or results from any clinical
trial conducted hereunder, the Party contracting with such clinical site and/or
investigator shall require same to (i) provide each Party with a copy of each
proposed publication, presentation or other disclosure and (ii) grant each
Party the right to review, comment on, require the deletion of its Confidential
Information from and delay, for the purpose of filing intellectual property
applications, submission of each such publication, presentation or other
disclosure or presentation.  Thereafter,
each Party shall have the right to publish on the particular Target(s) to which
it has or retains rights hereunder (i.e.,
Celgene shall have the right to publish on the Targets to which Collaboration
Compounds and Collaboration Back-Up Compounds are directed, and Array shall
have the right to publish on the other Targets), but not the other Targets,
provided, however, that each Party shall submit any proposed publication containing
the disclosing Party’s Confidential Information to the other Party at least
thirty (30) days in advance to allow that Party to review such planned
public disclosure.  The reviewing Party
will promptly review such proposed publication and make any objections that it
may have to the publication of Confidential Information of the reviewing Party
contained therein.  The publishing Party
shall consider in good faith any comments provided by the other Party during
such thirty (30) day period.  Should the
reviewing Party make an objection to the publication of any such Confidential
Information, then the Parties shall discuss the advantages and disadvantages of
publishing or disclosing such information. 
Notwithstanding the foregoing, each Party shall have the right to
publicly disclose any information, including Confidential Information,
pertaining to safety or efficacy of a Compound and/or any Licensed Product that
such Party, in the reasonable opinion of its

 

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

 

legal counsel, it
is obligated or ethically bound to disclose. 
The contribution of each Party shall be noted in all publications or
presentations by acknowledgment or co-authorship, whichever is appropriate.  This Section shall not be deemed to limit the
Parties’ obligations under Section 10.1 above.

10.4         Publicity.

10.4.1      Confidential
Terms.  Each of the Parties
agrees not to disclose to any Third Party the terms and conditions of this
Agreement without the prior written consent of the other Party, except each Party
may disclose the terms of this Agreement: 
(a) to advisors (including financial advisors, lawyers and
accountants), existing and potential investors, others on a need-to-know basis
and to Third Parties to the extent necessary to comply with the terms of
agreements with such Third Parties, in each case under circumstances and/or
obligations of confidentiality that reasonably protect the confidentiality
thereof; and (b) to the extent necessary to comply with applicable laws and
court orders (including securities laws, regulations and guidances); provided
that in the case of the foregoing paragraph (b), the disclosing Party shall
promptly notify the other Party and (other than in the case where such
disclosure is necessary, in the reasonable opinion of the disclosing Party’s
legal counsel, to comply with securities laws, regulations or guidances) allow
the other Party a reasonable opportunity to oppose with the body initiating the
process and, to the extent allowable by law, to seek limitations on the portion
of this Agreement that is required to be disclosed.  Notwithstanding the foregoing, the Parties
shall agree upon a joint press release to announce the execution of this
Agreement, together with a corresponding Question & Answer outline for use
in responding to inquiries about this Agreement; thereafter, Celgene and Array
may each disclose to Third Parties the information contained in such press
release and Question & Answer outline without the need for further approval
by the other.

10.4.2      Publicity
Review.  The
Parties acknowledge the importance of supporting each other’s efforts to
publicly disclose results and significant developments regarding Collaboration
Compounds and Licensed Products and other activities in connection with this
Agreement, beyond what may be strictly required by applicable law or
regulation, and each Party may make such

 

64

 

disclosures from time to time with the approval of the other Party,
which approval shall not be unreasonably withheld, conditioned or delayed.  Such disclosures may include achievement of
milestones under Section 6.2 or 6.3, significant events in the research,
development and regulatory process with respect to a Collaboration Compound or
Licensed Product or commercialization activities and the like.  When a Party (the “Requesting Party”)
elects to make any such public disclosure under this Section 10.4.2, it
will give the other Party (the “Cooperating Party”) reasonable written
notice to allow the Cooperating Party to review and comment on such statement,
it being understood that if the Cooperating Party does not notify the
Requesting Party in writing within ten (10) business days of such notice (or
such shorter period if required by applicable law and expressly set forth in
the applicable notice; or, if the nature of the announcement does not permit
the usual ten (10) business day waiting period, then two (2) business days,
provided that the Cooperating Party’s head of investor relations is notified
directly in writing) of any reasonable objections as contemplated in this
Section 10.4.2, such disclosure shall be deemed approved, and in any event
the Cooperating Party shall work diligently and reasonably to agree on the text
of any proposed disclosure in an expeditious manner.  The principles to be observed in such
disclosures shall be accuracy, compliance with applicable laws, rules,
regulations and regulatory guidance documents, reasonable sensitivity to
potential negative reactions of applicable Regulatory Authorities (including
the FDA) and the need to keep investors and others informed regarding the
Requesting Party’s business. 
Accordingly, the Cooperating Party shall not withhold or delay its
approval of a proposed disclosure that complies with such principles.

10.5         Prior
Non-Disclosure Agreements.  Upon
execution of this Agreement, the terms of this Article 10 shall supersede
any prior non-disclosure, secrecy or confidentiality agreement between the
Parties.  Any information disclosed by a
Party under such prior agreement shall be deemed such Party’s Confidential
Information and shall be subject to the terms of this Article 10.

10.6         Expiration.  Each Party’s obligations under this Article
10 shall survive for a period of five (5) years after the expiration or termination
of this Agreement.

 

65

 

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

 

ARTICLE XI

REPRESENTATIONS, WARRANTIES AND COVENANTS;

INDEMNIFICATION

11.1         General Representations and
Warranties.  Each Party represents
and warrants to the other that:

(a)   it is duly organized and validly existing
under the laws of its state of incorporation, and has full corporate power and
authority to enter into this Agreement and to carry out the provisions hereof;

(b)   it is duly authorized to execute and deliver
this Agreement and to perform its obligations hereunder, and the person or
persons executing this Agreement on its behalf has been duly authorized to do
so by all requisite corporate action;

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

(d)   it has not granted, and shall not grant
during the term of this Agreement, any right to any Third Party which would
conflict with the rights granted to the other Party hereunder; and

(e)   it is not aware of any action, suit or
inquiry or investigation instituted by any person or governmental agency which
could reasonably question or threaten the validity of this Agreement.

 

66

 

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

 

11.2         Array’s Representations, Warranties
and Covenants.  Array represents,
warrants and covenants that as of the Effective Date:

(a)   Array owns all right, title and interest in
and to all Array Patents in existence as of the Effective Date;

(b)   as of the Effective Date Array does not have
any obligation to any Third Party that conflicts with this Agreement or its
obligations hereunder, and Array has not granted, and will not grant during the
term of this Agreement, rights to any Third Party under the Array Technology or
Array’s interest in the Collaboration Technology that conflict with the rights
granted to Celgene hereunder;

(c)   Array has not received any written notice of
any threatened claims or litigation seeking to invalidate or otherwise
challenge the Array Patents or Array’s rights therein;

(d)   to its knowledge, none of the Array Patents
are subject to any pending re-examination, opposition, interference or
litigation proceedings;

(e)   Array shall not [ * ];
and

(f)    After [ * ].

11.3         Disclaimer
of Warranties. ARRAY AND CELGENE EXPRESSLY DISCLAIM ANY GUARANTEE THAT THE
DISCOVERY PROGRAM WILL BE SUCCESSFUL, IN WHOLE OR IN PART.  THE FAILURE OF THE PARTIES TO SUCCESSFULLY
DEVELOP COMPOUNDS, DEVELOPMENT COMPOUNDS, COLLABORATION COMPOUNDS OR LICENSED
PRODUCTS WILL NOT CONSTITUTE A BREACH OF ANY REPRESENTATION OR WARRANTY OR OTHER
OBLIGATION UNDER THIS AGREEMENT.  EXCEPT
AS SET FORTH IN THIS AGREEMENT, ARRAY AND CELGENE MAKE NO WARRANTIES OR
CONDITIONS OF ANY KIND (EXPRESS, IMPLIED, STATUTORY OR OTHERWISE) WITH RESPECT
TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING THE ARRAY

 

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

 

TECHNOLOGY,
COLLABORATION TECHNOLOGY OR CELGENE TECHNOLOGY, INCLUDING ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT OF THE
INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.

11.4         Indemnification.

11.4.1      Indemnification
by Array.  Array hereby agrees to
defend, hold harmless and indemnify (collectively “Indemnify”) Celgene
and its Affiliates, and its and their agents, directors, officers, employees
and consultants (the “Celgene Indemnitees”) from and against any
liability or expense (including reasonable legal expenses and attorneys’ fees)
(collectively “Losses”) resulting from suits, claims, actions and
demands, in each case brought by a Third Party (each, a “Third-Party Claim”)
arising out of:  (i) a breach of any of
Array’s representations and warranties under Sections 11.1 or 11.2 or any other
material breach of this Agreement by Array; (ii) personal injury resulting from
the performance of activities by Array under the Discovery Program or any
Development Plan; (iii) the development,
manufacture, commercialization, storage, handling, use, sale, offer for sale or
importation of Development Compounds subject to the license granted to Array in
Section 5.3 above and Abandoned Products or other exercise of the licenses
granted hereunder, in each case by or under authority of Array; or (iv) the
gross negligence or intentional misconduct of any Array Indemnitee in the
performance of activities under this Agreement. 
Array’s obligation to Indemnify the Celgene Indemnitees pursuant to this
Section 11.4.1 shall not apply to the extent that any such Losses are Losses
for which Celgene is obligated to Indemnify the Array Indemnitees pursuant to
Section 11.4.2 below.

11.4.2      Indemnification
by Celgene.  Celgene hereby agrees to
Indemnify Array and its Affiliates, and its and their agents, directors,
officers, employees and consultants (the “Array Indemnitees”) from and
against any and all Losses resulting from Third-Party Claims arising out of: (i)
a breach of any of Celgene’s representations and warranties under Section 11.1 or any other material breach of this
Agreement by Celgene; (ii) personal injury
resulting from the performance of activities by Celgene under the Discovery
Program or any Development Plan; (iii) the development,

 

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

 

manufacture, commercialization, storage, handling, use, sale, offer for
sale or importation of Collaboration Compounds, Collaboration Back-Up Compounds
and/or Licensed Products or other exercise of the licenses granted hereunder,
in each case by or under authority of Celgene; or (iv) the gross negligence or
intentional misconduct of any Celgene Indemnitee in the performance of
activities under this Agreement.  Celgene’s
obligation to Indemnify the Array Indemnitees pursuant to the foregoing
sentence shall not apply to the extent that any such Losses are Losses for
which Array is obligated to Indemnify the Celgene Indemnitees pursuant to
Section 11.4.1 above.

11.4.3      Procedure.
 To be eligible to be Indemnified
hereunder, the indemnified Party shall provide the indemnifying Party with
prompt written notice of the Third-Party Claim giving rise to the
indemnification obligation pursuant to this Section 11.4 and the exclusive
right to defend (with the reasonable cooperation of the indemnified Party) or
settle any such claim using counsel of its choice; provided, however, that the
indemnifying Party shall not enter into any settlement that admits fault,
wrongdoing or damages without the indemnified Party’s written consent, such
consent not to be unreasonably withheld, conditioned or delayed.  The indemnified Party shall have the right to
participate, at its own expense and with counsel of its choice, in the defense
of any claim or suit that has been assumed by the indemnifying Party.

ARTICLE XII

TERM AND TERMINATION

12.1         Term.  Unless earlier terminated, this Agreement and
the payment obligations under Article 6 will continue in effect, on a
Licensed Product-by-Licensed Product and country-by-country basis until Celgene
has no remaining royalty payment obligations in such country with respect to
such Licensed Product pursuant to Section 6.5 above.  Effective upon the expiration (but not earlier
termination) of this Agreement, on a Licensed Product-by-Licensed Product and
country-by-country basis, Array hereby grants to Celgene a fully-paid-up,
royalty-free license under Array Technology and Array’s interest in
Collaboration Technology to make, have made, use, sell, offer for sale and import
such Collaboration Compounds, Collaboration Back-Up Compounds and Licensed
Products in such country(ies) without further payment or consideration to
Array.

 

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

 

12.2         Termination
For Breach.

12.2.1      Termination.  In the event a Party shall have materially
breached or defaulted in the performance of any of its material obligations
hereunder, the other Party may terminate this Agreement in accordance with this
Section 12.2.  The non-breaching Party
shall provide written notice to the other Party of its material breach or
default in the performance of any of its material obligations.  If the Party receiving such notice disputes
that the non-breaching Party is entitled to terminate this Agreement under this
Section 12.2.1 (including, without limitation, whether a breach or default
occurred or whether such breach or default was material), then the matter shall
be referred to binding arbitration pursuant to Section 12.2.2 below.  Any permitted termination shall become
effective (a) if no arbitration occurs, ninety (90) days after the
effective date of such notice, (b) if arbitration is resolved in favor of the
non-breaching Party, ninety (90) days after the arbitrator’s ruling,
unless, in either case, the breaching Party (or any other party on its behalf)
has cured any such breach or default prior to the expiration of the
ninety (90) day period. 
Notwithstanding the foregoing, in the event of a failure to perform a
material obligation under this Agreement that is capable of being cured, but is
not reasonably capable of being cured within the ninety (90) day cure period,
provided that (i) the breaching Party proposes within such ninety (90) day
period a written plan to cure such non-performance within a defined time frame,
(ii) such written plan and timeframe are reasonably acceptable to the
non-breaching Party, and (iii) the breaching Party makes good faith efforts to
cure such default and to implement such written cure plan, then the
non-breaching Party may not terminate this Agreement for so long as the
breaching Party is diligently pursuing such cure; provided, however, that the
breaching Party shall lose its right to continue to cure pursuant to this
sentence if at any time such Party ceases to make a good faith effort to cure
such default for a period exceeding fourteen (14) days during the extended cure
period or if such Party fails to cure such default within the defined time
frame, and in such case the notifying Party shall have the right to terminate
immediately on written notice to the breaching Party.  The right of either Party to terminate this
Agreement as herein above provided shall not be affected in any way by its
waiver of, or failure to take action with respect to, any previous default or
non-performance.

12.2.2      Arbitration.  In the event a Party disputes whether the
other Party is entitled to

 

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

 

terminate this
Agreement under Section 12.2.1 above, then the matter shall be finally settled
by binding arbitration, held in Chicago, Illinois.

(a)   Choice of Arbitrators and
Governing Rules.  The Parties shall
use their best efforts to mutually agree upon one (1) arbitrator; provided,
however, that if the Parties have not done so within ten (10) days after
initiation of arbitration hereunder, or such longer period of time as the
Parties have agreed to in writing, then there shall be three (3) arbitrators,
including one nominee of Array, one nominee of Celgene, and a third person
selected by said nominees.  The
arbitrator’s(s’) ruling shall be final and binding upon the Parties.  The Party against which the arbitrator(s)
rule shall bear all costs of such arbitration, and additionally, the prevailing
Party shall be entitled to reasonable attorneys’ fees and costs to be fixed by
the arbitrator(s).  Any arbitration
conducted pursuant to this Article 12.2.2 shall be in accordance with the
then-current Commercial Arbitration Rules of the American Arbitration
Association.  The Parties shall use
diligent efforts to cause the completion of any such arbitration within one
hundred eighty (180) days following a request by any Party for such
arbitration.

(b)   Injunctive Relief.  Notwithstanding the above, pending the
outcome of any arbitration proceedings, the non-breaching Party shall be
entitled to apply to any court having jurisdiction over the allegedly breaching
party seeking injunctive relief (interim, interlocutory and/or final) to
prevent the allegedly breaching party from breaching or continuing to breach
any of its obligations under this Agreement.

12.3         Termination Upon Notice.

12.3.1      Termination
by Celgene on Notice.  Celgene may
terminate this Agreement upon six (6) months’ written notice to Array.

12.3.2      Termination
by Celgene on a Product-by-Product Basis. 
In addition, Celgene may terminate this Agreement as to any particular
Collaboration Compound, corresponding Collaboration Back-Up Compounds and any
Licensed Product incorporating such Collaboration Compound or Collaboration
Back-Up Compounds (an “Abandoned Product”) by so notifying Array,

 

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

 

which termination shall be effective six (6) months after the date
of such notice.  On and from the
effective date of any such termination by Celgene pursuant to this
Section 12.3.2, such Collaboration Compound, Collaboration Back-Up
Compounds and the Target which is modulated by such Compounds shall cease to be
a Collaboration Compound, Collaboration Back-Up Compounds and a Target,
respectively, for all purposes of this Agreement.

12.3.3      For
each Abandoned Product for which rights revert to Array under this Section
12.3, Array and Celgene shall, at Array’s request, transfer to Array any MAA or
Marketing Approval and all clinical test data in Celgene’s possession or
control for such Abandoned Product, provide any surplus quantities of such
Licensed Product [ * ], negotiate with Array in
good faith for a royalty-bearing license to any intellectual property
Controlled by Celgene necessary for Array to develop, make, have made, use,
sell, offer for sale and import Abandoned Products, and enter into any other
commercially reasonable arrangements as the Parties may mutually agree;
provided that Array shall reimburse Celgene for any out-of-pocket costs
reasonably incurred at Array’s request to effectuate such transfer.  Notwithstanding the
foregoing, for each Abandoned Product for which rights revert to Array under
this Section 12.3, Celgene hereby grants Array a world-wide, royalty-free,
non-exclusive right and license under Manufacturing Technology (defined below),
solely to develop, make, have made, use, sell, offer for sale and import such
Abandoned Product; provided that Array reimburses Celgene for its out-of-pocket
costs incurred in creating such Manufacturing Technology; and provided further
that such license shall include the right to grant sublicenses to Third Parties
identified to Celgene, but not to authorize further sublicenses.  “Manufacturing Technology” shall mean Celgene
intellectual property comprising a method of manufacturing an Abandoned Product
that is included in Celgene’s MAA or Marketing Approval for such Abandoned
Product.

12.4         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 proposes a written agreement of composition or extension of
substantially all of its debts,

 

72

 

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

 

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.  Notwithstanding the
foregoing, the rights and licenses granted to Celgene
and to Array under Sections 5.2 and 5.3 above are, and shall otherwise be
deemed to be, for purposes of Section 365(n) of the United States Bankruptcy
Code, licenses of rights to “intellectual property” as defined under Section
101 of the United States Bankruptcy Code. 
The Parties acknowledge and agree that Celgene and Array, as applicable,
as a licensee of such rights under this Agreement, shall retain and may fully
exercise all of its rights and elections under the United States Bankruptcy
Code.

12.5         Effect of Termination.

12.5.1      Accrued Rights, Surviving Obligations. 
Termination, relinquishment or expiration of this Agreement for any
reason shall be without prejudice to any obligations which shall have accrued
prior to such termination, relinquishment or expiration, including the payment
obligations under Article 6 hereof and any and all damages arising from
any breach hereunder.

12.5.2      Certain Terminations.  In addition
to the provisions of Section 12.6, the following shall apply.

(a)   Notwithstanding anything herein to the
contrary, (i) Celgene shall not be obligated to pay any payment otherwise
payable under Section 6.2 as a result of occurrence of a Discovery Milestone or under Section 6.3 as the result
of occurrence of a Development Milestone if the Discovery Milestone or
Development Milestone occurs after the effective date of a termination pursuant
to Section 12.2, 12.3 or 12.4 above and (ii) in the event that [ * ] terminates this Agreement [ * ],
the following shall apply:

(i)    if such termination is [ * ], then (1) if Celgene has exercised the Celgene Product
Option with respect to two (2) Targets, (A) [ * ]
shall survive without [ * ], (B) [ * ]

 

73

 

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

 

rights and [ * ] obligations under [ * ] shall
survive, and (C) [* ] obligations under [ * ] shall
survive [ * ] basis until [ * ]
(y) such time as [ * ] and (z) [ * ];
or (2) if Celgene has not exercised the Celgene Product Option with respect to
two (2) Targets, then (A) [ * ] shall
have the right to [ * ], in its
sole discretion, [ * ], (B) [ * ]
shall survive and include [ * ], and in
connection therewith, [ * ], (C) [Section 5.2] shall survive without [ * ],
(D) [ * ] shall immediately terminate, (E) [ * ] rights and [ * ]
obligations under [ * ] shall
survive, and (F) [ * ] obligations under [ * ] shall survive [ * ] basis
until [ * ] (y) such time as [ * ] and (z) [ * ];

(ii)   if such termination is [ * ], then [ * ] right to
terminate shall be limited to [ * ], and [ * ] shall have the right, in its sole discretion, to
either (1) [ * ], in which event (A) [ * ] shall survive and shall include [ * ],
and in connection therewith, [ * ], (B) [ * ] shall survive with respect to [ * ]
without [ * ], (C) [ * ]
rights and [ * ] obligations under [ * ] shall survive, and (D) [ * ]
obligations under [ * ] shall
survive [ * ] basis until [ * ]
(y) such time as [ * ] and (z) [ * ];
or (2) terminate the Agreement with respect to [ * ],
in which event [ * ] shall [ * ]
as [ * ] for [ * ]
and [ * ].

(iii)  if such termination is [ * ] other than as set forth in subsections (i) or (ii)
above, then (1) if Celgene has exercised the Celgene Product Option with
respect to two (2) Targets, (A) [ * ] shall
survive, except that [ * ]
obligations under [ * ], as the
only [ * ], shall be [ * ],
(B) [ * ] rights and [ * ]
obligations under [ * ] shall
survive, and (C) [ * ] obligations under [ * ] shall continue [ * ] as if
this Agreement had not been terminated; or (2) if Celgene has not exercised the
Celgene Product Option with respect to two (2) Targets, then (A) [ * ] shall have the right to [ * ],
in its sole discretion, [ * ], (B) [ * ] shall survive and include [ * ],
and in connection therewith, [ * ], (C) [ * ] shall survive, except that [ * ]
obligations under [ * ], as the
only [ * ], shall be [ * ],
(D) [ * ] shall immediately terminate, (E) [ * ] rights and [ * ]
obligations under [ * ] shall
survive, and (F) [ * ] obligations under [ * ] shall continue [ * ] as if
this Agreement had not been terminated.

(b)   Further, in the event of a termination of
this Agreement [ * ], or termination by [ * ]:  (1) all
Licensed Products, Collaboration Compounds and Collaboration Back-Up Compounds
then being developed or commercialized by Celgene shall [ * ];
provided, however,

 

74

 

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

 

if such
termination is [ * ], [ * ]
shall grant [ * ] a [ * ];
(2) [ * ] shall survive; (3) [ * ] rights and [ * ]
obligations under [ * ] shall
survive; and (4) [ * ]
obligations under [ * ] shall
continue [ * ] as if this Agreement had not been
terminated.  From and after the effective
date of termination for the events described in this Section 12.5.2(b), [ * ] shall have no further obligations under this Agreement
beyond those obligations that survive termination in such events as specified
in this Section 12.5.2(b) and Section 12.5.3 below.

12.5.3      Survival.  Articles 1, 10 (subject to expiration
pursuant to Section 10.6) and 13 (except for Sections 13.3.2  and 13.4) and Sections 5.3 (unless such
Section is terminated by Array pursuant to Section 5.6.3(b)(ii)(2) or
terminated in accordance with Section 12.5.2(a)), 9.1, 9.2, 9.3, 11.3, 11.4,
12.5 and 12.6 shall survive the expiration and any termination of this
Agreement; and Section 5.2 shall survive the expiration but not an earlier
termination (except as provided above) of this Agreement.

12.6         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 to
otherwise herein or separately by the Parties in writing.

ARTICLE
XIII

MISCELLANEOUS

13.1         Dispute
Resolution.  Except for any
disagreements that are within the authority of any Committee as provided in
Article 2 above or disagreements under Section 12.2.1 above, which
disagreements shall be resolved in accordance with Section 2.2.3 or
Section 12.2.2 above, respectively, the Parties agree that any disputes arising
with respect to the interpretation, enforcement, termination or invalidity of
this Agreement (each, a “Dispute”), the Dispute shall first be presented
to the Parties’ respective head of research or his/her designee for
resolution.  If each Party’s head of
research or his/her designee cannot resolve such Dispute within thirty (30)
days or such longer period of time as such heads of research or their
respective designees may agree, either Party may initiate legal proceedings
with respect thereto.  Notwithstanding
anything in this

 

75

 

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

 

Section 13.1
to the contrary, each Party shall each have the right to apply to any court of
competent jurisdiction for appropriate interim or provisional relief, as
necessary to protect the rights or property of such Party.

13.2         Governing
Law.  This Agreement and all
questions regarding its validity or interpretation, or the performance or
breach of this Agreement, shall be governed by and construed and enforced in
accordance with the laws of the State of New York, without reference to
conflicts of laws principles.

13.3         Assignment.

13.3.1      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 that either Party may assign this Agreement, without the
written consent of the other Party, to an entity that acquires all or
substantially all of the business or assets of the assigning Party to which
this Agreement pertains, whether by merger, acquisition, sale or otherwise,
provided that the acquirer assumes this Agreement in writing or by operation of
law.  In addition, either Party shall
have the right to assign this Agreement to an Affiliate upon written notice to
the non-assigning Party; provided that: 
(a) the assigning Party guarantees the performance of this
Agreement by such Affiliate; and (b) if the non-assigning Party reasonably
believes that such assignment could result in material adverse tax consequences
to the non-assigning Party, such assignment shall not be made without the
non-assigning Party’s consent.  Subject
to the foregoing, this Agreement inure to the benefit of each Party and its
successors and permitted assigns.  Any
assignment in contravention of this Section 13.3 shall be null and void.

13.3.2      Certain Matters
Relating to Acquisitions.  In the
event (i) Celgene assigns this Agreement to an entity that acquires all or
substantially all of the business or assets of Celgene, or (ii) Celgene
merges or consolidates or enters into a similar transaction with an entity in
which such entity becomes an Affiliate of Celgene (each such event, a “Subject
Transaction”), and, as a result of the Subject Transaction, Celgene (or its
successor) is thereafter required to divest, or chooses to

 

76

 

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

 

license, one or
more Licensed Products to a Third Party, Celgene (or its successor) shall so
notify Array and provide Array an opportunity to purchase or license such
rights on terms to be discussed at the time.

13.4         Force
Majeure.  If the performance of any
part of this Agreement by a Party is prevented, restricted, interfered with or
delayed by an occurrence beyond the control of such Party (and which did not
occur as a result of such Party’s financial condition, negligence or fault),
including fire, earthquake, flood, embargo, power shortage or failure, acts of
war or terrorism, insurrection, riot, lockout or other labor disturbance,
governmental acts or orders or restrictions, acts of God (for the purposes of
this Agreement, a “force majeure
event”), such Party shall, upon giving written notice to the other Party, be
excused from such performance to the extent of such prevention, restriction,
interference or delay; provided that the affected Party shall use its
reasonable efforts to avoid or remove such causes of non-performance and shall
continue performance with the utmost dispatch whenever such causes are removed.

13.5         Notices.  Unless otherwise agreed by the Parties or
specified in this Agreement, all notices required or permitted to be given
under this Agreement shall be in writing and shall be sufficient if:
(a) personally delivered; (b) sent by registered or certified mail
(return receipt requested and postage prepaid); (c) sent by express
courier service providing evidence of receipt and postage prepaid where
applicable; or (d) sent by facsimile transmission (receipt verified and a
copy promptly sent by another permissible method of providing notice described
in paragraphs (a), (b) or (c) above), to address for a Party set forth
below, or such other address for a Party as may be specified in writing by like
notice:

 

77

 

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

 

	
  To Array:

  

  Array
  BioPharma, Inc.

  3200 Walnut Street 

  Boulder, CO 80301 

  Attention: Chief Operating Officer

  Phone: (303) 381-6699

  Facsimile: (303) 381-6697

   

  	
  To Celgene:

  

  Celgene
  Corporation

  86 Morris Avenue

  Summit, NJ 07901

  Attention: President of Research

  Telephone: (908) 673-9000

  Facsimile: (908) 673-2766

  
	
  With a copy to:

  

  Array BioPharma Inc.

  3200 Walnut Street 

  Boulder, CO 80301 

  Attention: General Counsel

  Phone: (303) 381-6679

  Facsimile: (303) 386-1290

  	
  With a copy to:

  

  Celgene Corporation

  86 Morris Avenue

  Summit, NJ 07901 

  Attention: General Counsel

  Telephone: (908) 673-9000

  Facsimile: (908) 673-2771

  

Any such notices shall be effective upon receipt by
the Party to whom it is addressed, or within three (3) business days of
dispatch, whichever is earlier.

13.6         Waiver.  Except as otherwise expressly provided in
this Agreement, any term of this Agreement may be waived only by a written
instrument executed by a duly authorized representative of the Party waiving
compliance.  The delay or failure of
either Party at any time to require performance of any provision of this
Agreement shall in no manner affect such Party’s rights at a later time to
thereafter enforce such provision.  No
waiver by either Party of any condition or term in any one or more instances
shall be construed as a further or continuing waiver of such condition or term
or of another condition or term.

 

78

 

13.7         Severability.  If any provision of this Agreement 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 of this Agreement 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.

13.8         Entire
Agreement.  This Agreement (including
the Exhibits attached hereto) constitutes the entire agreement between the
Parties relating to its subject matter, and supersedes all prior and
contemporaneous agreements, representations or understandings, either written
or oral, between the Parties with respect to such subject matter.  There are no covenants, promises, agreements,
warranties, representations, conditions or understandings, either oral or
written, between the Parties other than as set forth herein and therein.

13.9         Modification.  No modification, amendment or addition to
this Agreement, or any provision hereof, shall be effective unless reduced to
writing and signed by a duly authorized representative of each Party.  No provision of this Agreement shall be
varied, contradicted or explained by any oral agreement, course of dealing or
performance or any other matter not set forth in an agreement in writing and
signed by a duly authorized representative of each Party.

13.10       Independent
Contractors.  Nothing contained in
this Agreement is intended, or shall be deemed or 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 any express or implied right or authority to assume or create any
obligations on behalf of, or in the name of, the other Party, nor to bind the
other Party to any contract, agreement or undertaking with any Third Party.

 

79

 

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

 

13.11       Interpretation.  The captions to the several Articles and
Sections of this Agreement are included only for convenience of reference and
shall not in any way affect the construction of, or be taken into consideration
in interpreting, this Agreement.  In this
Agreement:  (a) the word “including”
shall be deemed to be followed by the phrase “without limitation” or like
expression; (b) references to the singular shall include the plural and
vice versa; (c) references to masculine, feminine and neuter pronouns and
expressions shall be interchangeable; and (d) the words “herein” or “hereunder”
relate to this Agreement.  Each
accounting term used herein that is not specifically defined herein shall have
the meaning given to it under GAAP, but only to the extent consistent with its
usage and the other definitions in this Agreement.

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

[Remainder of page intentionally
left blank; signature page follows]

 

80

 

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

 

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

 

	
  ARRAY
  BIOPHARMA INC.

  By:____________________________________

  Name:
  _________________________________

  Title:
  __________________________________

  Date:
  __________________________________

  	
   

  	
  CELGENE
  CORPORATION

  By:____________________________________

  

  Name: _________________________________

  Title:
  __________________________________

  Date:
  __________________________________

  

 

81

 

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

 

Schedule 1.38

TARGETS

 

[ * ]  Targets

•                  [ * ]

[ * ]

•                  [ * ]

[ * ]  Targets

•                  [ * ]

•                  [ * ]

 

 

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

 

Schedule 2.2.3(c)

TARGET INDICATIONS

 

[ * ]

•                  [ * ]

•                  [ * ]

•                  [ * ]

[ * ]

•                  [ * ]

•                  [ * ]

[ * ]

•                  [ * ]

•                  [ * ]

[ * ]

•                  [ * ]

 

2

 

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

 

Schedule 9.5.2

[ * ]

 

	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  
	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  
	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  
	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  
	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  
	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  
	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  
	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  

 

3

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