Document:

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                                                                   EXHIBIT 10.33

                      DIVERSITY LIBRARY SCREENING AGREEMENT

         This DIVERSITY LIBRARY SCREENING AGREEMENT (the "Agreement"), effective
as of June 8, 1999 (the "Effective Date"), is made by and between Array
BioPharma Inc., a Delaware corporation having its principal offices located at
1885 33rd Street, Boulder, CO 80301 ("Array"), and Tularik Inc., a Delaware
corporation, having a principal place of business at Two Corporate Drive, South
San Francisco, CA 94080 ("Tularik").

                                   BACKGROUND

         A. Array has developed novel proprietary methods for the generation of
compound libraries.

         B. Array and Tularik have entered into a Preview Library Agreement
effective as of February 22, 1999 (the "Preview Library Agreement") pursuant to
which Array transferred to Tularik a certain library of compounds for screening
and evaluation, all as set forth therein.

         C. Tularik now desires to obtain certain additional compound libraries
for screening to identify candidate compounds for further evaluation and at
Tularik's option to further optimize such compounds, all on the terms and
conditions set forth below.

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

DEFINITIONS

                  1.1 "Active Compound" shall mean a Compound that Tularik shall
have the exclusive right to develop and commercialize pursuant to the exclusive
license granted in Section 3.1(a)(ii) below, provided that Tularik has
designated the same as an Active Compound pursuant to Section 3.2 below and is
paying, or has paid, each Annual Maintenance Fee for the same pursuant to
Section 3.3 below.

                  1.2 "Annual Maintenance Fee" shall have the meaning as set
forth in Section 3.3(a) below.

                  1.3 "Array Invention" shall have the meaning as set forth in
Section 3.4(a) below.

                  1.4 "Collaboration" shall mean an arrangement between Tularik
and a third party that is focused on the discovery or development of drugs for
specified diseases or targets, under which Tularik either retains rights to
commercialize the resulting products or will receive a portion of the sales of
the resulting products from the other party (by way of royalty, profit
participation or similar mechanism).

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   2

                  1.5 "Compound" shall mean each chemically distinct compound
which is contained in the Diversity Library or the Second Diversity Library
provided to Tularik by Array under this Agreement.

                  1.6 "Diversity Library" shall have the meaning set forth in
Section 2.1.

                  1.7 "Explosion Agreement" shall have the meaning set forth in
Section 2.3.

                  1.8 "Field" shall mean any and all therapeutic applications.

                  1.9 "FTE" shall mean a full-time scientific/technical employee
or the equivalent thereof.

                  1.10 "FTE Week" shall mean the amount of time one FTE would
spend working during one work week, i.e., five (5) calendar days.

                  1.11 "Licensed Technology" shall mean Array Patent Rights and
Know-How. Notwithstanding the foregoing, it is understood that Licensed
Technology shall not include any patent or other rights to high-speed synthesis
technology, methods or compound libraries (except the Diversity Library or
Second Diversity Library delivered hereunder).

                           (a) "Array Patent Rights" shall mean Array's rights
in (i) any patent or patent application filed by Array covering an Array
Invention that claims an Active Compound, the method of use or process for the
synthesis of an Active Compound or composition-of-matter containing an Active
Compound, for which the earliest effective filing date is prior to the end of
the Selection Period for such Active Compound and (ii) any divisions,
continuations, continuations-in-part, reissues, reexaminations, or extensions to
the extent the same have an earliest effective filing date prior to the date
described in clause (i) above, and any substitutions, confirmations or
registrations of any of the foregoing that are owned by Array, to the extent
Array has the right to license or sublicense the same.

                           (b) "Know-How" shall mean synthetic protocols used
for the synthesis of the Compounds, any technical information, know how,
process, procedure, composition, device, method, formula, technique, software,
design, drawing or data directly relating to the Compounds.

                  1.12 "Public Domain Compound" shall mean a Compound that
cannot be claimed as a composition of matter in a patent application because of
failure to meet the requirements for patentability under U.S. patent law (i.e.,
35 U.S.C. et seq.).

                  1.13 "Re-Supply Compound" shall have the meaning as set forth
in Section 2.2 below.

[ * ] = 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 406 of the Securities Act of 1933, as amended.

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                  1.14 "Scaffold" shall mean the core chemical structure of the
Compounds within a TA Library.

                  1.15 "Second Diversity Library" shall have the meaning set
forth in section 2.10.

                  1.16 "Selection Period" shall mean, for a particular Compound,
the period commencing upon the first delivery of such Compound to Tularik and
ending on the date five (5) years thereafter.

                  1.17 "Template Array Library" or "TA Library" shall mean a
library of related yet distinct Compounds delivered to Tularik by Array under
this Agreement.

                  1.18 "Termination Notice" shall mean a writing that identifies
an Active Compound for which Tularik is terminating its designation as an Active
Compound in accordance with Section 3.7 below.

         2. DIVERSITY LIBRARY

                  2.1 Diversity Library. Subject to the terms and conditions of
this Agreement, Array shall deliver to Tularik the small molecule compound
library described in this Section 2.1 (the "Diversity Library") on a
nonexclusive basis. The Diversity Library shall consist of [ * ] TA Libraries
and shall contain a total of [ * ] Compounds. Each TA Library shall contain on
average [ * ] of each Compound, and each Compound within a TA Library shall be
based on the same Scaffold. The TA Libraries shall be based on the Scaffolds set
forth on Exhibit A, or such other Scaffolds as the parties may mutually agree in
writing. Each of the Compounds shall conform to the specifications and meet the
quality control criteria set forth on Exhibit B.

                  2.2 Additional Quantities. Subject to the terms of this
Section 2.2 below, Tularik shall have the option to obtain additional quantities
of any Compound already delivered hereunder as part of a TA Library
(collectively, "Re-Supply Compounds"), by written order to Array specifying the
Compound(s) desired, together with a complete description of the chemical
structure and the amount desired (i.e., [ * ])

                           (a) [ * ] . With respect to [ * ] quantities of
Re-Supply Compounds, the cumulative number of such Re-Supply Compounds that
Tularik has ordered at any given time shall in no event exceed [ * ] of the
total number of Compounds delivered hereunder, in the aggregate, as of the date
of such order, and no more than one (1) such re-supply order may be made in any
[ * ] . Tularik shall pay [ * ] for each such Re-Supply Compound (i.e., [ * ]
quantities) delivered hereunder. Unless otherwise agreed, the same compound
shall not be re-supplied to Tularik more than once under this Section 2.2(a).

                           (b) [ * ]. With respect to [ * ] quantities of
Re-Supply Compounds, the cumulative number of such Re-Supply Compounds that
Tularik ordered at any given time shall in no event exceed [ * ] compounds in
any given [ * ] day period. Tularik shall pay [ * ] FTE

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   4

Week for re-synthesis of Re-Supply Compounds, but in no event shall Tularik pay
more than [ * ] for each such Re-Supply Compound (i.e., [ * ] quantity)
delivered hereunder.

                  Array shall deliver [ * ] quantities of a Re-Supply Compound
(if in stock) within [ * ] business days of Array's receipt of Tularik's order.
If Array has to re-synthesize a Re-Supply Compound then Array shall use good
faith efforts to deliver Re-Supply Compounds to Tularik within [ * ] of Array's
receipt of Tularik's order therefor, and each Re-Supply Compound supplied
hereunder shall comply with the applicable specifications of Exhibit B. Array's
obligation to deliver Re-Supply Compounds shall continue for a period of [ * ]
following the delivery of the Diversity Library or the Second Diversity Library,
as the case may be, unless this Agreement is earlier terminated by Array for
breach by Tularik.

                  2.3 [ * ]. Upon Tularik's written request, the parties shall
negotiate the term and conditions of an - agreement based on the term sheet
attached hereto as Exhibit C (each an "Explosion Agreement") with respect to a
particular Compound for which Tularik desires to obtain access to an [ * ] all
as to be set forth in the Explosion Agreement; provided that, unless Array
otherwise agrees in writing Array shall have no obligation to enter into an
Explosion Agreement with respect to more than [ * ] at the same time. Such a
request shall: (i) be given prior to the expiration of the Selection Period for
the particular Compound that is to be the subject of the Explosion Agreement,
(ii) reference this Section 2.3 and (iii) designate the Compound (including a
complete description of its chemical structure) that is to the be subject of the
Explosion Agreement . In such case the parties shall negotiate for a period of
[ * ] and, if for any reason the parties are unable to execute a definitive
Explosion Agreement with respect to a particular Compound within such [ * ]
period, neither party shall have any further obligation under this Section 2.3
with respect to such Compound thereafter.

                  2.4 Compound Information. Together with each TA Library
delivered hereunder, Array shall provide to Tularik the following Compound
Information for the Compounds in such TA Library: (i) structural data for each
Compound; (ii) plate location coordinates and an identification number for each
Compound; and (iii) [ * ] (collectively, the "Compound Information").
 In addition, Array shall make available a copy of the quality control data and
methods used for each TA Library delivered hereunder.

                  2.5 Delivery. Array shall use good faith efforts to deliver
each TA Library in accordance with a schedule mutually agreed upon by the
parties. Each TA Library shall be delivered [ * ] to Tularik's address set forth
above (or such other address as Tularik may specify in writing prior to the
shipping date therefor). The carrier shall be selected by agreement between
Array and Tularik, provided that in the event no such agreement is reached
Tularik shall select the carrier.

                  2.6 Price. Except as set forth in Section 2.2 with respect to
Re-Supply Compounds, the price to be paid by Tularik for Compounds actually
delivered in accordance with this Agreement shall be [ * ] , payable as follows:
(i) within thirty (30) days of the Effective Date, Tularik shall pay to Array
[ * ] (i.e., [ * ] of the estimated total price of the

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   5

Diversity Library) and (ii) the balance (i.e., [ * ] ) upon Tularik's receipt of
such Compound. In the event that Tularik reasonably demonstrates to Array that
any Compound does not conform to the specifications and meet the quality control
criteria set forth on Exhibit B, Array shall either: (A) offset future payments
due under Section 2.6(ii) by the amount previously paid by Tularik relating to
every such non-conforming Compound; or (B) refund to Tularik the amount
previously paid by Tularik relating to every such non-conforming Compound.

                  2.7 Payment. Together with each shipment of Compounds
hereunder, Array shall submit an invoice to Tularik therefor. Each invoice shall
state the total invoiced amount and the number of Compounds included in a
particular shipment, plus any insurance, taxes or other costs incident to the
shipment or delivery of Compounds hereunder [ * ] . All payments hereunder shall
be made in U.S. Dollars, by direct bank transfer to an account designated in
Array's invoice, within [ * ] days after Tularik's receipt of the particular
shipment. Any payments hereunder that are not paid on the date such payments are
due under this Agreement shall bear interest to the extent permitted by
applicable law at the prime rate reported by Norwest Bank, Denver, Colorado, on
the date such payment is due, calculated on the number of days such payment is
delinquent.

                  2.8 Taxes. Any sales, use or other taxes or other governmental
charges (excluding taxes on Array's income) incident to the transfer of
Compounds to Tularik pursuant to this Agreement shall be [ * ].

                  2.9 Title. Without limiting Tularik's rights under Article 3
below, it is understood and agreed that Array retains title to the TA Libraries
and Compounds delivered to Tularik under this Agreement.

                  2.10 Second Diversity Library. Upon receipt of a written
notice from Tularik, Array shall deliver to Tularik the small molecule compound
library described in this Section 2.10 (the "Second Diversity Library"). The
Second Diversity Library shall consist of [ * ] TA Libraries and shall contain a
total of [ * ] Compounds. Each TA Library shall contain on average [ * ] of each
Compound, and each Compound within a TA Library shall be based on the same
Scaffold. The TA Libraries within the Second Diversity Library shall be based on
such Scaffolds as the parties mutually agree upon in writing. If Tularik
provides the written notice described in the first sentence of this Section 2.10
on or prior to the [ * ] anniversary of the Effective Date, Tularik will pay
[ * ] per Compound for Compounds within the Second Diversity Library. If Tularik
provides the written notice set forth in the first sentence of this Section 2.10
more than [ * ] after the Effective Date, Tularik will pay [ * ] per Compound
for Compounds within the Second Diversity Library. In the event that Tularik
reasonably demonstrates to Array that any Compound within the Second Diversity
Library does not conform to the specifications and meet the quality control
criteria set forth on Exhibit B, Array shall refund to Tularik the price paid
pursuant to this Section 2.10 for every such non-conforming Compound. For
avoidance of doubt, the parties understand and agree that Sections 2.5, 2.7, 2.8
and 2.9 shall apply to Compounds and TA Libraries within the Second Diversity
Library.

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   6

         3. LICENSES; ACTIVE COMPOUNDS

                  3.1 Licenses.

                           (a) License Grant. Subject to the terms and
conditions of this Agreement, Array hereby grants to Tularik the following
licenses under the applicable Licensed Technology, (i) a non-exclusive,
worldwide royalty-free license (without the right to sublicense) to make, have
made and use the Compounds for developmental purposes and (ii) an exclusive,
worldwide royalty-free license (with the right to sublicense) to make, have
made, use, sell and import Active Compounds for applications in the Field.

                           (b) Sublicenses.

                                    (i) Generally. The license granted under
Section 3.1(a)(ii) above shall include the right to grant sublicenses, but the
license granted under Section 3.1(a)(i) shall be without the right to
sublicense. Accordingly, Tularik shall not disclose or transfer any Compounds or
Compound Information to any third party except to the extent necessary to
manufacture Active Compounds or as provided in Section 3.2(b)(ii) below.

                                    (ii) Collaboration. In the event that
Tularik establishes a Collaboration with a third party, Tularik may provide
Compounds and/or Active Compounds to such third party for use by such third
party as reasonably necessary for the purposes of such Collaboration. The
Collaboration must be evidenced by a written agreement that provides, among
other things, that the third party agrees not to provide any Compound to others
unless the same is an Active Compound hereunder.

                           (c) Reservation. Notwithstanding Section 3.1(a)
above, Array hereby reserves the right, including the right to authorize others,
under the Licensed Technology to make, have made, and use all Compounds for
research and/or other purposes. Notwithstanding the foregoing, for so long as a
Compound is an Active Compound, Array agrees not to provide such Active Compound
to third parties as part of a compound library or otherwise.

                  3.2 Designation of Active Compounds. At any time prior to the
expiration of the Selection Period applicable to a particular Compound, Tularik
shall have the right to designate the same as an Active Compound as set forth in
this Section 3.2 below. Tularik may designate up to [ * ] such Compounds as
Active Compounds hereunder at any particular time.

                           (a) Designation. To designate a Compound as an Active
Compound, Tularik shall so notify Array in writing, with a description of the
Compound (including a complete description of its chemical structure), and pay
the first Annual Maintenance Fee for such Active Compound pursuant to Section
3.3 below. It is understood, however, that any such designation shall be subject
to Sections 3.2(b) and 3.5 below. To the extent such designation is precluded as
described in Section 3.5 below, such Compound shall not be an Active Compound
hereunder.

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   7

                           (b) Restriction. Tularik agrees that it shall not,
and shall not authorize any third party to, sell or otherwise commercialize any
Compound unless such Compound is an Active Compound hereunder.

                  3.3 Annual Maintenance Fees for Active Compounds.

                           (a) Maintenance Fee. To maintain Tularik's exclusive
rights to Active Compounds under Section 3.1(a)(ii) above, Tularik shall pay to
Array an annual maintenance fee for each Active Compound ("Annual Maintenance
Fee") [ * ] . The amount of the Annual Maintenance Fee will be based upon the
aggregate number of Active Compounds at any particular time, according to the
following schedule:

<TABLE>
<CAPTION>
NUMBER OF ACTIVE COMPOUNDS                ANNUAL MAINTENANCE FEE PER COMPOUND
--------------------------                -----------------------------------
<S>                                     <C>
First [  *  ]                             [  *  ] /Compound
Next [  *  ]                              [  *  ] /Compound
Above [  *  ]  [  *  ] )                  [  *  ] /Compound
</TABLE>

                           (b) Calculation. The Annual Maintenance Fees shall be
calculated on a calendar year basis. The first Annual Maintenance Fee for an
Active Compound shall be prorated based upon the number of days remaining in the
calendar year from the date of such designation. Thereafter, the Annual
Maintenance Fee for such Active Compound shall be due no later than January 15
of the particular calendar year. Once paid, an Annual Maintenance Fee shall be
nonrefundable.

                           (c) Proration; Redesignation. In the event that the
first Annual Maintenance Fee was prorated on the basis of less than a full
calendar year, such Annual Maintenance Fee for the [ * ] calendar year shall be
prorated from January 1 of such year until the date that is the [ * ]
anniversary of the date of designation of the particular Active Compound. If an
Active Compound is terminated, and later re-designated as an Active Compound
under Section 3.2 above, such [ * ] period shall begin as of the date of the
subsequent re-designation.

                  3.4 Intellectual Property.

                           (a) Ownership. Title to patent rights in an invention
made solely by Array personnel ("Array Invention") shall be owned by Array.
Title to patent rights in an invention made solely by Tularik personnel
("Tularik Invention") shall be owned by Tularik. Title to patent rights in an
invention made jointly by Tularik personnel and Array personnel ("Joint
Invention") shall be owned jointly by Tularik and Array. [ * ] however, in no
event shall such patent or patent application include claims to Array's
high-speed synthesis technology or methods.

                           (b) Patent Prosecution. Tularik shall not include any
Compound or Active Compound in any compound claim in any patent or patent
application covering a Tularik Invention. [ * ] Tularik shall (i) designate such
Compound as an Active Compound and pay an

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   8

Annual Maintenance Fee on such Active Compound pursuant to Sections 3.2 and 3.3,
respectively [ * ]. Tularik shall be solely responsible for filing, prosecuting
and maintaining any such patent or patent application at its expense and shall
keep Array reasonably informed as to the same.

                           (c) Infringement. In the event a third party is
infringing Array Patent Rights by reason of the manufacture, sale or use of an
Active Compound, provided that such infringement is substantial and continuing,
Tularik shall have the right to bring a lawsuit or other appropriate legal
proceeding to enforce such Array Patent Rights with respect to such
infringement. Otherwise, the parties agree that Array shall have and retain the
exclusive right to enforce Array Patent Rights (itself or through third
parties). The parties agree to cooperate with respect to the enforcement of
Array Patent Rights pursuant to this Section 3.4(c), including, upon request of
the party initiating such action (the "Initiating Party"), by joining as a
nominal party at the Initiating Party's expense, where so joining is required
for the Initiating Party to bring such suit. Any action brought in accordance
with this Section 3.4(c) shall be at the expense of the [ * ], and as between
the parties hereto, any recoveries shall be [ * ].

                  3.5 Third Party Rights. The Diversity Library (and the
Secondary Diversity Library, if applicable) is being provided to Tularik on a
non-exclusive basis. Provided that any particular Compound has not been
previously designated as an Active Compound by Tularik hereunder, nothing herein
shall prevent or restrict Array from (i) providing such Compound to third
parties under licenses similar to those granted to Tularik hereunder or (ii)
using such Compound for any purpose. Accordingly, Tularik's right to designate
any particular Compound as an Active Compound, and Array's grant of rights to
Tularik under this Article 3, is limited to the extent that, prior to Tularik
designating such Compound as an Active Compound hereunder, (i) a third party
(either alone or jointly with Array) has filed a patent application with respect
to such Compound or (ii) Array has granted such third party an exclusive license
with respect to such Compound. It is understood that, so long as Array complies
with the terms of this Agreement, Array shall have no liability with respect to
any conflict between Tularik's rights and rights of the nature described in this
Section 3.5 granted to a third party by Array.

                  3.6 Termination of Licenses. The licenses granted to Tularik
herein shall continue in perpetuity unless Tularik materially breaches this
Agreement, in which case the licenses shall terminate, provided that Tularik
does not cure any such material breach within sixty (60) days of notification of
the same by Array.

                  3.7 [ * ] of Active Compounds. Tularik may [ * ] of any
particular Active Compound at any time by submitting a [ * ] to Array. From and
after the date Array receives such [ * ]. Without limiting the foregoing, in the
event [ * ] Active Compound, Tularik shall promptly [ * ] to Array all [ * ]
such Active Compound. In addition, in the event that Tularik [ * ], Tularik
shall, at Array's request, [ * ] on [ * ] reasonable and customary for the
[ * ], which [ * ].

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   9

         4. CONFIDENTIALITY

                  4.1 Confidential Information. Except as expressly provided
herein, the receiving party (hereinafter, the "Receiving Party") shall not
disclose to any third party or use for any purpose any Confidential Information
furnished to it by the other party (hereinafter the "Disclosing Party") pursuant
to this Agreement. For purposes of this Article 4, "Confidential Information"
shall mean any information disclosed by the Disclosing Party to the Receiving
Party pursuant to this Agreement. Notwithstanding the foregoing, Confidential
Information shall not include any information that, in each case as demonstrated
by written documentation: (i) was already known to the Receiving Party, other
than under an obligation of confidentiality, at the time of disclosure; (ii) was
generally available to the public or otherwise part of the public domain at the
time of its disclosure to the Receiving Party; (iii) became generally available
to the public or otherwise part of the public domain after its disclosure and
other than through any act or omission of the Receiving Party in breach of this
Agreement; (iv) was subsequently lawfully disclosed to the Receiving Party by a
third party who did not acquire it directly or indirectly from the Disclosing
Party; or (v) was developed by the Receiving Party without use of or reference
to any Confidential Information of the Disclosing Party.

                  4.2 Disclosure to Array. Notwithstanding Section 4.1 above, if
Tularik desires to disclose to Array Confidential Information related to (i) the
activity of a Compound in biological or other screens or targets, (ii) the
targets against which a Compound is or will be screened, or (iii) other
development or screening efforts with respect to a Compound, Array shall not
review such Confidential Information if Array does not desire to receive such
Confidential Information. Notwithstanding the foregoing provisions of this
Section 4.2, if Tularik provides to Array information within clauses (i) - (iii)
above and Array does not notify Tularik within fifteen (15) days that it does
not desire to receive such information and return all such information to
Tularik, the same shall be treated as Confidential Information of Tularik under
Section 4.1 above (subject to the exclusion of clauses (i) - (v) thereof).

                  4.3 Permitted Use and Disclosures. The Receiving Party may use
and disclose the Confidential Information of the Disclosing Party to the extent
necessary to exercise its rights or perform its obligations under this
Agreement, in filing or prosecuting patent applications and patents, prosecuting
or defending litigation, complying with applicable governmental regulations or
court orders or otherwise submitting information to tax or other governmental
authorities, conducting trials, or making a permitted sublicense or otherwise
exercising license rights expressly granted to the other party to it pursuant to
the terms of this Agreement, provided that if the Receiving Party is required to
make any such disclosure of the Disclosing Party's Confidential Information,
other than pursuant to a confidentiality agreement, it shall give reasonable
advance notice to the Disclosing Party of such disclosure and, save to the
extent inappropriate in the case of patent applications, shall use its
reasonable efforts to secure confidential treatment of such Confidential
Information in consultation with the Disclosing Party prior to its disclosure
(whether through protective orders or otherwise) and disclose only that portion
of the Confidential Information necessary to comply with such requirements.

                  4.4 Nondisclosure of Terms. Each of the parties hereto agrees
not to disclose to any third party the terms of this Agreement without the prior
written consent of the other party

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   10

hereto, except to such party's attorneys, advisors, investors and others on a
need to know basis under circumstances that reasonably ensure the
confidentiality thereof, or to the extent required by law. Notwithstanding the
foregoing, the parties shall agree upon a press release to announce the
execution of this Agreement.

                  4.5 Publication. Any non-confidential publication, abstract or
presentation (including information to be presented orally) by or authorized by
Tularik relating to a Compound, or derivatives thereof or products based thereon
shall be subject to the prior review and reasonable agreement of Array at least
thirty (30) days prior to submission. Without limiting the foregoing, at Array's
request, Tularik shall remove any and all Array Confidential Information
therefrom prior to publication or disclosure. The parties shall treat matters of
authorship of scientific abstracts, manuscripts or other publications in a
proper collaborative spirit, giving credit where credit is due.

         5. REPRESENTATIONS AND WARRANTIES

                  5.1 Tularik. Tularik warrants and represents that: (i) it has
the legal power, authority and right to enter into this Agreement, and to
perform all its obligations hereunder; and (ii) this Agreement is a legal and
valid obligation binding upon it and enforceable in accordance with its terms.

                  5.2 Array. Array represents and warrants that: (i) it has the
legal right and power to extend the rights granted in this Agreement; (ii) it
has the legal power, authority and right to enter into this Agreement, and to
perform all its obligations hereunder; and (iii) this Agreement is a legal and
valid obligation binding upon it and enforceable in accordance with its terms.

                  5.3 Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN
THIS ARTICLE 5, NEITHER ARRAY NOR TULARIK MAKES ANY REPRESENTATION OR WARRANTIES
OR CONDITIONS OF ANY KIND, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE
DIVERSITY LIBRARY, TA LIBRARIES, COMPOUNDS OR PRODUCTS BASED THEREON, OR
INFORMATION DISCLOSED HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OF ANY
LICENSED TECHNOLOGY, PATENTED OR UNPATENTED, OR NONINFRINGEMENT OF THE
INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.

         6. INDEMNIFICATION

                  6.1 Tularik. Tularik agrees to indemnify, defend and hold
Array, and its directors, officers, employees and agents harmless from and
against any losses, costs, claims, damages, liabilities or expense (including
reasonable attorneys' and professional fees and court and other expenses of
litigation) (collectively, "Liabilities") arising out of or in connection with
third party claims relating to (i) any Compounds or product based thereon
developed, manufactured, used, sold or otherwise distributed by or under
authority of Tularik or its

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   11

designees (including, without limitation, product liability claims), or (ii) any
breach by Tularik of the representations and warranties made in this Agreement,
except in each case, to the extent such Liabilities resulted from the gross-
negligence or intentional misconduct of Array.

                  6.2 Array. Array agrees to indemnify, defend and hold Tularik,
and its directors, officers, employees and agents harmless from and against any
losses, costs, claims, damages, liabilities or expense (including reasonable
attorneys' and professional fees and court and other expenses of litigation)
(collectively, "Liabilities") arising out of or in connection with third party
claims relating to (i) the preparation and supply of Compounds in connection
with Array's performance under this Agreement; and (ii) any breach by Array of
the representations and warranties made in this Agreement, except in each case,
to the extent such Liabilities resulted from the gross negligence or intentional
misconduct of Tularik.

                  6.3 Procedure. A party that intends to claim indemnification
(the "Indemnitee") under this Article 6 shall promptly notify the indemnifying
party (the "Indemnitor") in writing of any third party claim, suit or proceeding
included within the indemnification described in this Article 6 above (each a
"Claim") with respect to which the Indemnitee intends to claim such
indemnification, and the Indemnitor shall have sole control of the defense
and/or settlement thereof; provided that the Indemnitee shall have the right to
participate, at its own expense, with counsel of its own choosing in the defense
and/or settlement of such Claim. The indemnification under this Article 6 shall
not apply to amounts paid in settlement of any Claim if such settlement is
effected without the consent of the Indemnitor, which consent shall not be
unreasonably withheld or delayed. The Indemnitee under this Article 6, and its
employees, at the Indemnitor's request and expense, shall provide full
information and reasonable assistance to Indemnitor and its legal
representatives with respect to such Claims.

         7. TERM AND TERMINATION

                  7.1 Term. This Agreement shall become effective on the
Effective Date and shall remain in full force and effect until expiration of the
Selection Period for the last Compound delivered hereunder, unless earlier
terminated in accordance with this Article 7 below.

                  7.2 Termination for Cause. Either party to this Agreement
shall have the right to terminate this Agreement in the event the other party
materially breaches or defaults in the performance of any of its material
obligations hereunder, and such default continues for sixty (60) days after
written notice thereof is provided to the breaching party by the non-breaching
party. Any such termination shall become effective at the end of such sixty (60)
day period unless the breaching party (or any other party on its behalf) has
cured any such breach or default prior to the expiration of the sixty (60) day
period; provided in the case of a failure to pay any amount due hereunder, such
default may be the basis of termination thirty (30) days following the date that
notice of such default was provided to the breaching party.

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   12

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

                  7.4 Effects.

                           (a) Accrued Liability. It is understood that
termination of this Agreement shall not relieve a party from any liability
which, at the time of such termination, has already accrued to the other party.

                           (b) Survival. The provisions of Articles 1, 4, 6 and
8 and Sections 3.4, 3.5, 3.6, 3.7 and 7.4 shall survive the expiration or
termination of this Agreement for any reason. In addition, the provisions of
Sections 2.1, 3.1 and 3.3 shall survive the expiration or termination of this
Agreement for cause by Tularik following breach by Array but not termination for
cause by Array following breach by Tularik. All other rights and obligations of
the parties shall cease upon expiration or termination of this Agreement. For
purposes of the foregoing, if a Section that so survives is expressly stated to
continue for a period of time specified in such surviving Section, the same
shall survive only for the remainder of the period specified in such Section.
Except as otherwise expressly provided in this Article 7, all other rights and
obligations of the parties shall terminate.

         8. MISCELLANEOUS

                  8.1 Governing Laws. This Agreement and any dispute arising
from the construction, performance or breach hereof shall be governed by and
construed and enforced in accordance with the laws of the state of Colorado,
without reference to conflicts of laws principles.

                  8.2 No Implied Licenses. Nothing herein shall be construed as
granting either party, by implication, estoppel or otherwise, any license or
other right to any intellectual property, except for the licenses expressly
granted herein.

                  8.3 Waiver. Any waiver of the terms and conditions hereof must
be explicitly in writing. The waiver by either party of any breach of any
provision hereof by the other party shall not be construed to be a waiver of any
succeeding breach of such provision or a waiver of the provision itself.

                  8.4 Assignment. The parties agree that their rights and
obligations under this Agreement may not be assigned or otherwise transferred to
a third party without the prior written consent of the other party hereto.
Notwithstanding the foregoing, either party may transfer or

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   13

assign its rights and obligations under this Agreement to a successor to all or
substantially all of its business or assets relating to this Agreement whether
by sale, merger, operation of law or otherwise; provided that such assignee or
transferee has agreed in writing to be bound by the terms and conditions of this
Agreement. Any attempted transfer or assignment in violation of this Section 8.4
shall be void. Subject to the foregoing, this Agreement shall be binding upon
and inure to the benefit of the parties hereto, their successors and assigns.

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

                  8.6 Compliance with Laws. In exercising their rights under
this Agreement, each party shall fully comply in all material respects with the
requirements of any and all applicable laws, regulations, rules and orders of
any governmental body having jurisdiction over the exercise of rights hereunder
including, without limitation, those applicable to the discovery, development,
manufacture, distribution, import and export and sale of products pursuant to
this Agreement.

                  8.7 Notices. Any notice required or permitted to be given or
made under this Agreement by either party shall be in writing and delivered to
the other party at its address indicated below (or to such other address as a
party may specify by notice hereunder by courier or by registered or certified
airmail, postage prepaid, or by facsimile; provided, however, that all facsimile
notices shall be promptly confirmed, in writing, by registered or certified
airmail, postage prepaid. All notices shall be effective as of the date received
by the addressee.

         if to Array, to:                   Array BioPharma Corporation
                                            1885 33rd Street
                                            Boulder, Colorado  80301
                                            Fax number:  (303) 449-5376

         with a copy to:                    Wilson Sonsini Goodrich & Rosati
                                            650 Page Mill Road
                                            Palo Alto, California 94304-1050
                                            Attn:  Kenneth A. Clark, Esq.
                                            Fax number: (650) 493-6811

         if to Tularik, to:                 Tularik Inc.
                                                     Two Corporate Drive
                                            South San Francisco, CA  94080
                                            Attn:  General Counsel
                                            Fax number:  (650) 829-4303

                  8.8 Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   14

Agreement shall continue in full force and effect without said provision, and
the parties shall amend the Agreement to the extent feasible to lawfully include
the substance of the excluded provision to as fully as possible realize the
intent of the parties and their commercial bargain, unless the invalid
provision(s) are of such essential importance to this Agreement that it is to be
reasonably assumed that the parties would not have entered into this Agreement
without the invalid provision(s).

                  8.9 Force Majeure. Nonperformance of either party (except for
payment obligations) shall be excused to the extent that performance is rendered
impossible by acts of God, strike, fire, earthquake, flood, governmental acts or
orders or restrictions, failure of suppliers, or any other reason where failure
to perform is beyond the reasonable control and not caused by the negligence,
intentional conduct or misconduct of the non-performing party, provided such
party uses its best efforts to resume performance as promptly as possible.

                  8.10 No Consequential Damages. EXCEPT PURSUANT TO ARTICLE 6,
NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, CONSEQUENTIAL,
EXEMPLARY OR INCIDENTAL DAMAGES (INCLUDING LOST OR ANTICIPATED REVENUES OR
PROFITS RELATING TO THE SAME), ARISING FROM ANY CLAIM RELATING TO THIS
AGREEMENT, WHETHER SUCH CLAIM IS BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE)
OR OTHERWISE, EVEN IF AN AUTHORIZED REPRESENTATIVE OF SUCH PARTY IS ADVISED OF
THE POSSIBILITY OR LIKELIHOOD OF SAME. THESE LIMITATIONS SHALL APPLY
NOTWITHSTANDING THE FAILURE OF THE ESSENTIAL PURPOSE OF ANY LIMITED REMEDY, AND
THE PARTIES ACKNOWLEDGE THAT THIS SECTION 8.10 REPRESENTS A REASONABLE
ALLOCATION OF RISK.

                  8.11 Further Assurances. At any time and from time to time
after the Effective Date, each party hereby agrees to execute, acknowledge and
deliver, and cause to be done, executed, acknowledged or delivered, and take or
cause to be taken all such further acts, transfers, conveyances, or assignments
as may be reasonably required to carry out the transactions contemplated by this
Agreement.

                  8.12 Headings. Headings included herein are for convenience
only, do not form a part of this Agreement and shall not be used in any way to
construe or interpret this Agreement.

                  8.13 Entire Agreement. The terms and provisions contained in
the Agreement, including the Exhibits hereto, constitute the entire agreement
between the parties and shall supersede all previous communications,
representations, agreements or understandings, either oral or written, between
the parties with respect to the subject matter hereof. No agreement or
understanding varying or extending this Agreement shall be binding upon either
party hereto, unless set forth in a writing which specifically refers to the
Agreement signed by duly authorized officers or representatives of the
respective parties, and the provisions hereof not specifically amended thereby
shall remain in full force and effect. ANY ADDITIONAL OR

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   15

INCONSISTENT TERMS OR CONDITIONS OF ANY PURCHASE ORDER, ACKNOWLEDGMENT OR
SIMILAR STANDARDIZED FORM GIVEN OR RECEIVED PURSUANT TO THIS AGREEMENT SHALL
HAVE NO EFFECT AND SUCH TERMS AND CONDITIONS ARE HEREBY EXCLUDED.

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

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

ARRAY BIOPHARMA INC.                      TULARIK INC.

By:      /s/ David Snitmann               By:      /s/ John P. McLaughlin
   ---------------------------               ----------------------------------
Name:    David Snitmann                   Name:    John P. McLaughlin
     -------------------------                 --------------------------------
Title:   COO                              Title:   President
      ------------------------                  -------------------------------

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   16

                                    EXHIBIT A

                        TEMPLATE ARRAY LIBRARY SCAFFOLDS

                                      [ * ]

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   17

                                    EXHIBIT B

                     COMPOUND SPECIFICATIONS/QUALITY CONTROL

                                      [ * ]

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   18

                                    EXHIBIT C

                         HIT EXPLOSION LIBRARY AGREEMENT

                                   TERM SHEET

                                      [ * ]

[ * ] = 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 406 of the Securities Act of 1933, as amended.<PAGE>   1

                                                                  EXHIBIT 10.34

                           RESEARCH SERVICES AGREEMENT

                              ELI LILLY AND COMPANY

                                       AND

                              ARRAY BIOPHARMA, INC.

                                 MARCH 22, 2000

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   2

                               TABLE OF CONTENTS

<TABLE>
<S>                                                                                                              <C>
ARTICLE I DEFINITIONS  ...........................................................................................1
     1.1   Array Alliance Manager  ...............................................................................1
     1.2   Array Confidential Information  .......................................................................1
     1.3   Array FTE  ............................................................................................2
     1.4   Array Process  ........................................................................................2
     1.5   Array Project Leader  .................................................................................2
     1.6   Array Technology  .....................................................................................2
     1.7   Associate Chemist  ....................................................................................2
     1.8   Calendar Quarter  .....................................................................................2
     1.9   Calendar Year  ........................................................................................2
     1.10  cGCP  .................................................................................................2
     1.11  cGLP  .................................................................................................3
     1.12  cGMP  .................................................................. ..............................3
     1.13  Chemistry Invention  ..................................................................................3
     1.14  FTE Rate  .............................................................................................3
     1.15  Lilly Chemistry Research Services Director  ...........................................................3
     1.16  Lilly Confidential Information  .......................................................................3
     1.17  Lilly Project Leader  .................................................................................4
     1.18  Project  ..............................................................................................4
     1.19  Project Rights  .......................................................................................4
     1.20  Project Services  .....................................................................................4
     1.21  Project Team  .........................................................................................4
     1.22  Senior Chemist  .......................................................................................4
     1.23  Target Family  ........................................................................................4
     1.24  Third Party  ..........................................................................................4
     1.25  Work Plan  ............................................................................................4

ARTICLE 2  PROJECT SERVICES  .....................................................................................5
     2.1   Project Services and Other Services  ..................................................................5
     2.2   Conflicts of Interest  ................................................................................5
     2.3   Project Management; Meetings  .........................................................................5
     2.4   Commitment to Project Staffing  .......................................................................6
     2.5   Array Employees Assigned to Each Project  .............................................................6
     2.6   Reduction of Array FTEs Assigned to Projects...........................................................7
     2.7   Communication and Access to Array Employees  ..........................................................8
     2.8   Reports, Records and Project Rights Transfer  .........................................................8
     2.9   Project Diligence  ....................................................................................9
     2.10  Governing Authority of Projects  ......................................................................9
     2.11  Array's Alliance Management  ..........................................................................9

ARTICLE 3 CONSULTING SERVICES  ...................................................................................9

ARTICLE 4 PROJECT RESOURCES AND COSTS  ..........................................................................10
     4.1   Project Resources and Costs  .........................................................................10
     4.2   Subcontracting Project Services or Other Services  ...................................................11
     4.3   Training  ............................................................................................12
</TABLE>

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   3

<TABLE>
<S>                                                                                                              <C>
ARTICLE 5 PROJECT OWNERSHIP, PROCEDURAL SAFEGUARDS AND
                SECURITY  .......................................................................................12
     5.1   Ownership of Project Rights...........................................................................12
     5.2   Safeguards to Protect Confidentiality and Project Rights Ownership  ..................................13
     5.3   Security  ............................................................................................13

ARTICLE 6 RECORD-KEEPING AND AUDIT  .............................................................................14
     6.1   Records Retention; Maintenance of Project Records  ...................................................14
     6.2   Financial Audit  .....................................................................................14
     6.3   Scientific and Legal Audit  ..........................................................................15
     6.4   Quality Assurance and Security Audits; On-Site Lilly Personnel  ......................................15

ARTICLE 7 CONFIDENTIALITY AND NON-USE  ..........................................................................15
     7.1   Disclosure of Agreement  .............................................................................15
     7.2   Array's Confidentiality Obligations  .................................................................16
     7.3   Lilly's Confidentiality Obligations  .................................................................16

ARTICLE 8 TERM AND TERMINATION  .................................................................................17
     8.1   Term   20
     8.2   Lilly Voluntary Termination  .........................................................................17
     8.3   Termination for Default  .............................................................................19
     8.4   Termination Due to Array Ownership Change  ...........................................................19
     8.5   Termination Due to Insolvency or Liquidation  ........................................................19
     8.6   Surviving Rights and Obligations  ....................................................................19

ARTICLE 9 REPRESENTATIONS AND WARRANTIES  .......................................................................20
     9.1   Lilly's Authority to Perform Agreement  ..............................................................20
     9.2   Array's Authority to Perform Agreement  ..............................................................20
     9.3   No Debarment  ........................................................................................20
     9.4   Year 2000  ...........................................................................................20

ARTICLE 10 MUTUAL INDEMNIFICATION  ..............................................................................21
     10.1  Array's Right to Indemnification  ....................................................................21
     10.2  Lilly's Right to Indemnification  ....................................................................21
     10.3  Indemnification Notice and Defense Procedures  .......................................................21

ARTICLE 11 MISCELLANEOUS  .......................................................................................22
     11.1  Further Assurances  ..................................................................................22
     11.2  No Agency; Independent Contractor  ...................................................................23
     11.3  Compliance with Laws  " ..............................................................................23
     11.4  Compliance with Work Plan and Lilly Protocols and Specifications   ...................................23
     11.5  Insurance  ...........................................................................................23
     11.6  Amendment  ...........................................................................................23
     11.7  Notices and Reports  .................................................................................23
     11.8  Governing Law  .......................................................................................24
     11.9  Assignment  ..........................................................................................24
     11.10 Headings  ............................................................................................24
</TABLE>

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   4

<TABLE>
<S>                                                                                                             <C>
     11.11 Severance of Clauses  ................................................................................24
     11.12 No Waiver  ...........................................................................................24
     11.13 Entire Agreement  ....................................................................................24
     11.14 Force Majeure  .......................................................................................24
     11.15 Counterparts  ........................................................................................24
     11.16 No Licenses  .........................................................................................24
     11.17 Jointly Prepared  ....................................................................................24
</TABLE>

Schedule 1.25 Work Plan(s)

Exhibit A: Initial Press Release

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   5

                           RESEARCH SERVICES AGREEMENT

         THIS RESEARCH SERVICES AGREEMENT (the "Agreement") is made and entered
into effective as of March 22, 2000 (the "Effective Date"), by and between Eli
Lilly and Company, Lilly Corporate Center, Indianapolis, IN, 46285 ("Lilly"),
and Array BioPharma, Inc., 188533 d Street, Boulder, CO, 80301 ("Array")
(together Lilly and Array, the "Parties").

                                    RECITALS

         WHEREAS, Lilly is engaged in the discovery, development, manufacturing
and marketing of pharmaceutical products; and

         WHEREAS, Array provides research services in all aspects of chemistry,
high through-put screening, structural biology, and information management; and

         WHEREAS, Lilly proposes to retain Array for the specific purpose of
providing chemical research, analysis, manufacturing of specialty chemical
products or related services that Array may offer.

         NOW, THEREFORE, it is agreed as follows:

                                    ARTICLE I

                                   DEFINITIONS

         Terms defined in this Article I and parenthetically elsewhere shall
have the same meaning throughout this Agreement, including the recitals. Defined
terms may be used in the singular or plural.

         1.1 "ARRAY ALLIANCE MANAGER" shall have the meaning set forth in
Section 2.11.

         1.2 "ARRAY CONFIDENTIAL INFORMATION" means (1) any and all Array
Technology and (2) any and all information, items, material or know-how (whether
or not patentable), except Project Rights and Array Processes, that is disclosed
to and/or received by Lilly from Array (whether orally, in writing, through
observation, or otherwise) during the term of this Agreement or prior to the
Effective Date, including, without limitation, any and all suggestions,
descriptions, ideas, inventions (whether or not patentable) discoveries,
know-how, trade secrets, techniques, data, strategies, methods, syntheses,
processes, practices, documents, apparatus, devices, chemical formulations,
chemical synthesis, compounds, composition of matter, chemical samples, assays,
cell lines, vectors, screens, databases, database structures, and data analysis
methods.

         Array Confidential Information shall not include any information that
Lilly can prove by competent evidence: (a) is now, or hereafter becomes, through
no act or failure to act

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   6

on the part of Lilly, generally known or available; (b) is known by Lilly at the
time of receiving such information; (c) is hereafter disclosed to Lilly by a
Third Party, as a matter of right and without restriction on disclosure; (d) is
independently developed by Lilly without the aid, application, or use of Array
Confidential Information; (e) is the subject of a written permission to disclose
provided by Array; or (f) is required to be disclosed by law, government agency,
court order or valid discovery request in connection with a legal proceeding

         1.3 "ARRAY FTE" means a full time equivalent scientific person year
consisting of no less than a total of [ * ] of Project Services carried out by a
Lilly approved, Array employee who is either (except as the Parties may
otherwise agree in writing) (i) the Array Alliance Manager or (ii) an Array
Project Leader, Senior Chemist, or Associate Chemist exclusively assigned and
fully dedicated to Projects. Time spent by Array FTEs will qualify for
reimbursement under Subsection (a) of Section 4.1 only if it involves Project
Services on or directly related to a Project.

         1.4 "ARRAY PROCESS" means a chemical method or process that Array owns
or has a right to license and that Array used, by its choice, in at least one
Project, but the term expressly excludes all high-speed synthesis technology and
methods of Array.

         1.5 "ARRAY PROJECT LEADER" means an Array employee assigned to lead
other Array employees working on a particular Project who, unless otherwise
agreed to by the Parties in writing, has a Ph.D. in organic chemistry, at least
[ * ] of professional medicinal chemistry experience, and previous project
leadership experience. Each Array Project Leader shall be responsible for
managing the day-to-day activities of Array FTEs assigned to his/her particular
Project to achieve the Project's goals in accordance with the Work Plan. An
Array Project Leader is subordinate to a Project's Lilly Project Leader
regarding all aspects of such Project, and therefore, any disagreements between
them regarding the direction, priorities, goals or other aspects of the Project
shall be resolved ultimately by the Lilly Project Leader.

         1.6 "ARRAY TECHNOLOGY" means Array inventions (whether or not
patentable) and Array know-how. Array Technology expressly excludes all Project
Rights regardless of Array's contribution to such Rights and, for purposes of
this Agreement, also expressly excludes Array Processes.

         1.7 "ASSOCIATE CHEMIST" means an Array employee who has at least a
Masters Degree in organic chemistry or its equivalent (i.e., a Bachelor Degree
in organic chemistry with several years of chemistry experience), but who is
neither an Array Project Leader, nor a Senior Chemist, nor the Array Alliance
Manager.

         1.8 "CALENDAR QUARTER" means a three-month period ending on March 3 1,
June 30, September 30, or December 31.

         1.9 "CALENDAR YEAR" means the twelve-month period ending on December
31.

         1.10 "CGCP" means the then-current Good Clinical Practice Standards
promulgated or

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   7

         endorsed by the FDA (or in the case of foreign jurisdictions,
comparable regulatory standards), including those regulations or guidelines
expressed or implied in the regulatory filings made with respect to a particular
compound or product at issue with the FDA or foreign regulatory agents.

         1.11 "CGLP" means the then-current Good Laboratory Practices
promulgated or endorsed by the FDA (or in the case of foreign jurisdictions,
comparable regulatory standards), including those procedures expressed or
implied in the regulatory filings made with respect to a particular compound or
product at issue with the FDA or foreign regulatory agents.

         1.12 "CGNIP" means current Good Manufacturing Practices as defined in
the U.S. regulations 21 CFR Section 210 et seq., and the EEC Guide to Good
Manufacturing Practices for Medicinal Products (Vol. IV Rules Governing
Medicinal Products in the European Community 1992).

         1.13 "CHEMISTRY INVENTION" means [ * ] that is conceived and invented
by Array (by itself or jointly with Lilly) as a direct or indirect result of
performing Project Services or Other Services.

         1.14 "FTE RATE" means [ * ] (12) month period ending December 31, 2000.
The FTE Rate for any Calendar Year after December 31, 2000 shall be adjusted
annually by Lilly in accordance with the annual percentage change in the
Consumer Price Index for all Urban Consumers as published by the United States
Department of Labor, Bureau of Labor Statistics.

         1.15 "LILLY CHEMISTRY RESEARCH SERVICES DIRECTOR" means [ * ] (or his
successor as appointed by Lilly). As the Lilly Chemistry Research Services
Director, [ * ] (or his successor) will be responsible for, among other things,
(i) issuing Projects to Array, (ii) discontinuing Projects, (iii) reviewing
Array FTE rosters, (iv) informing Array of each Project's initial staffing
needs, (v) communicating changes in staffing levels, (vi) coordinating Lilly's
communications with Array, and (vii) facilitating the smooth operations of all
Projects.

         1.16 "LILLY CONFIDENTIAL INFORMATION" means (1) any and all Project
Rights and (2) any and all other information, items, material or know-how
(whether or not patentable) that is disclosed to and/or received by Array from
Lilly (whether orally, in writing, through observation, or otherwise) during the
term of this Agreement or prior to the Effective Date, including, without
limitation, any and all suggestions, descriptions, ideas, inventions (whether or
not patentable) discoveries, know-how, trade secrets, techniques, data,
strategies, methods, syntheses, processes, practices, documents, apparatus,
devices, chemical formulations, chemical synthesis, compounds, composition of
matter, chemical samples, assays, cell lines, vectors, screens, databases,
database structures, and data analysis methods.

         Lilly Confidential Information shall not include any information that
Array can prove by competent evidence: (a) is now, or hereafter becomes, through
no act or failure to act on the part of Array, generally known or available; (b)
is known by Array at the time of receiving such information; (c) is hereafter
disclosed to Array by a Third Party, as a matter of right and without
restriction on disclosure; (d) is independently developed by Array without the
aid, application, or use of Lilly Confidential Information; (e) is the subject
of a written permission to disclose

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   8

provided by Lilly; or (f) is required to be disclosed by law, government agency,
court order or valid discovery request in connection with a legal proceeding.

         1.17 "LILLY PROJECT LEADER" means a Lilly employee assigned by Lilly to
lead a particular Project. Each Lilly Project Leader shall, with appropriate
input from Array, establish the direction, priorities, and goals of the Project
assigned to such Lilly Project Leader. However, the Lilly Project Leader shall
be the ultimate authority with respect to all issues and decisions pertaining to
such Project and as such, may at any time accept, reject, or modify any portion
of such Project or its Work Plan, except as specified in Section 2.10, to the
extent he or she deems appropriate.

         1.18 "PROJECT" means a chemistry project for a specific biological
target submitted by Lilly and accepted by Array under the terms of this
Agreement and which is fully described in a Work Plan. "PROJECTS" means each and
every Project under the terms of this Agreement.

         1.19 "PROJECT RIGHTS" shall have the meaning set forth in Subsection
(a) of Section 5.1.

         1.20 "PROJECT SERVICES" shall have the meaning set forth in Section
2.1.

         1.21 "PROJECT TEAM" means the Array FTEs who are assigned to and
Lilly's employees, independent contractors, and research collaboration partners
who are working on a particular Project.

         1.22 "SENIOR CHEMIST" means an Array employee who has a Ph.D. in
organic chemistry and at least [ * ] of organic synthesis chemistry experience
subsequent to obtaining such Ph.D.

         1.23 "TARGET FAMILY" means a group of targets related to each other by,
for example, [ * ]. Although the term is broader than a single target such as
"[ * ]" or "[ * ]", it is not as broad as "all [ * ]" or "all [ * ]". The
following non-comprehensive list contains examples of Target Families; [ * ],
and [ * ] and [ * ].

         1.24 "THIRD PARTY" means any person or organization, incorporated or
unincorporated, other than Array, Lilly, or an employee of Array or Lilly.

         1.25 "WORK PLAN" means the detailed plan established and submitted by
Lilly to Array for each Project that defines the parameters, scope, and
deliverables of such Project. Each Work Plan shall include, without limitation:
(i) a detailed plan for the Project at issue including specific milestones to be
accomplished throughout the Project; (ii) a determination of the Array FTEs
(including the composition thereof) reasonably necessary to carry out the
Project; and (iii) a designation by Lilly of whether the Project is a "[ * ],"
"[ * ]," or "[ * ]". It is anticipated that before finalizing a Work Plan the
Parties shall attempt to fully discuss and reach consensus regarding the
parameters, scope, deliverables, and other details of the Project described in
that Work Plan, but in the absence of such consensus, Lilly shall make the final
determination with respect to all issues and decisions related to a Project and
its Work Plan. All Work Plans shall be subsequently appended hereto as part of
SCHEDULE 1.25.

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   9

                                   ARTICLE 2

                                PROJECT SERVICES

         2.1 PROJECT SERVICES AND OTHER SERVICES. Lilly hereby retains Array to
perform, and Array hereby agrees to perform, for Projects usual and customary
chemistry services and related services in the areas of compound design,
synthesis, isolation, and purification, structure, confirmation, and composition
and purity determination, in accordance with the applicable Work Plans ("Project
Services"). Depending on the Project, Project Services may include, without
limitation, consulting and technical assistance, chemical synthesis (including,
without limitation, design and synthesis of organic compounds), routine
computational analysis customary to compound design, synthetic chemical
research, medicinal chemistry, compound identification and quantification,
compound physical chemical characterization, and compound purification.

         From time to time, Lilly may request Array to provide for Projects
chemistry and other services that are not Project Services ("Other Services"),
but Lilly recognizes that Array has the option to provide Other Services on a
case-by-case basis. Other Services may include, without limitation, synthesis of
general use chemical libraries, process research & development, and large scale
compound preparation, but expressly excludes the consulting services described
in Article 3. [ * ]

         2.2 CONFLICTS OF INTEREST. Lilly recognizes that Array provides
research services to Third Parties: therefore, at the time the Lilly Chemistry
Research Services Director proposes a Project, he or she will identify the
Project's target and Target Family. If a Project that Lilly desires to issue to
Array deals with the same target or Target Family as that of a project,
assignment, or task on which Array is working or has agreed to work for a Third
Party, Array shall immediately, but no later than five (5) business days after
Lilly's proposed issuance of the Project, notify Lilly in writing of this
potential conflict of interest. In such cases, the Project will be issued to
Array only by mutual consent of the Parties.

         2.3 PROJECT MANAGEMENT; MEETINGS. Each project shall be conducted in
accordance with its Work Plan and under the overall direction and guidance of
the Array Project Leader and Lilly Project Leader assigned to it (the "Project
Steering Committee"), but subject to the Lilly Project Leader's ultimate
authority. Each Project Steering Committee shall hold meetings regularly, and
except as the Lilly Project Leader may reasonably determine otherwise, shall
hold such meetings weekly. Such meetings may be held in-person, via video
conference and/or teleconference, provided that at least quarterly the Project
Steering Committee shall meet in-person, unless they otherwise agree. The Lilly
Project Leader, after consultation with the Array Project Leader, will determine
in good faith whether individual members of the Project Team or other persons
should also be in attendance at a Project Steering Committee meeting; however,
for in-person Project Steering Committee meetings, the in-person attendance of
individuals other than the Project Steering Committee members will be required
only upon the mutual consent of the Parties. In-person, Project Steering
Committee meetings will alternate between Lilly's Indianapolis, Indiana
facilities and Array's Boulder, Colorado facilities, unless the Parties
otherwise agree. Each [ * ] with the attendance of its employees and consultants
at such meetings.

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   10

         2.4 COMMITMENT TO PROJECT STAFFING. During the term of this Agreement,
Array hereby agrees to have at least the following number of Array FTEs
available for Projects:

         [ * ]

         If Lilly desires to increase the number of Array FTEs beyond [ * ], all
such increases must be mutually agreed upon by the Parties in writing. Array,
however, will notify Lilly in writing each Calendar Quarter as to: (i) how many
Array employees are then-currently available to serve as Array FTEs for
Projects; and (ii) its forecast of how many such persons will be available
during the next three Calendar Quarters.

         2.5 ARRAY EMPLOYEES ASSIGNED TO EACH PROJECT. Critical to the ultimate
success of each Project is the quality, make-up, and continuity of Array
employees assigned thereto. To that end, the Parties hereby agree as follows:

         (a)      Qualifications and Make-Up. Array hereby agrees that Array
                  employees assigned to perform Project Services or Other
                  Services shall have the skills necessary to efficiently
                  perform such services in a form and of a quality suitable to
                  Lilly.

         Moreover, except as the Parties may otherwise agree in writing, Array
hereby agrees that each Array FTE shall consist only of Array employees that are
either: (i) the Array Alliance Manager or (ii) Array Project Leaders, Senior
Chemists, or Associate Chemists exclusively assigned and fully dedicated to
Projects. Moreover, except as the Parties may otherwise agree in writing, each
Project shall have at least one Array Project Leader and a ratio of Senior
Chemists to Associate Chemists no lower than as follows (the "Experience
Ratio"):

<TABLE>
<CAPTION>
         Type of Project                       Ratio - Senior/Associate
<S>                                            <C>
             [ * ]                                        [ * ]
</TABLE>

         For purposes of calculating the Experience Ratio, an Array Project
Leader, to the extent he is actually conducting work on a particular Project,
shall count as a Senior Chemist.

         Finally, Array agrees to use reasonable efforts to ensure that [ * ] on
each Project shall not exceed [ * ]. The term "New Hire" means an Array employee
who has not been employed by Array [ * ] immediately preceding assignment to a
Project, and the term "Existing Employee" means an Array employee who has been
employed by Array for at least the [ * ] immediately preceding assignment to a
Project. If Array is unable to satisfy the [ * ] on a Project, it is acceptable
to Lilly that at least one Senior Chemist assigned to such Project is an
Existing Employee.

         (b) Continuity to Projects. Array hereby agrees that: (1) Array
employees assigned to a Project as an Array FTE will [ * ]; and (2) Array
employees assigned to a Project as an Array FTE will [ * ]. An Array employee
assigned to a Project as an Array FTE, however, will not be required to continue
work on Projects under the following circumstances:

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   11

         (i)      The employee's termination from employment with Array;

         (ii)     The employee's temporary or permanent leave from Array (e.g.,
                  paternity, maternity, disability, etc.);

         (iii)    The removal of the employee from a Project [ * ] as described
                  in Subsection (c) below or;

         (iv)     Mutual agreement of the Parties.

         (c)      [ * ] Array Employees or Permitted Subcontractors from
                  Projects. In the event [ * ] the work of any Array employee or
                  permitted subcontractor on a Project or otherwise determines
                  [ * ] that [ * ] Array will [ * ] immediately (but no later
                  than two (2) business days [ * ]. Upon [ * ] Array will use
                  [ * ].

         (d)      Array FTE [ * ]. Prior to the commencement of a Project, Array
                  will provide Lilly with a [ * ] to the Project as Array FTEs
                  [ * ]. Upon [ * ], such persons shall be deemed to be [ * ]
                  the particular Project at issue and subject to the relevant
                  provisions pertaining thereto set forth in this Agreement.
                  Array shall notify Lilly in writing immediately (but in no

                  case later than two (2) business days after the occurrence
                  [ * ].

         2.6      REDUCTION OF ARRAY FTES ASSIGNED TO PROJECTS.

         (a)      Reduction of Array FTEs. At any time, [ * ] Projects as Array
                  FTEs by providing Array with at least [ * ] advance written
                  notice, but [ * ] under this Section by [ * ] during any [ * ]
                  period, if so requested [ * ], to the extent that it can
                  rotate or move such additional Array FTEs [ * ] and provided
                  that such [ * ] is not inconsistent with Section 5.2 and the
                  other provisions of this Agreement.

         (b)      [ * ] Period. During a [ * ] day notice period described in
                  Subsection (a) above, the Array FTEs who are [ * ]

                  [ * ], except to the extent necessary to [ * ] a Project (or
                  their portion of one), if applicable, in an orderly and
                  efficient fashion including, without limitation, (i)
                  furnishing Lilly with all required reports, records and other
                  items as described in and in accordance with Section 2.8; (ii)
                  [ * ] Project Rights by Array [ * ] Lilly in accordance with
                  Section 5.1; (iii) [ * ] Lilly any and all [ * ]; and (iv)
                  [ * ] Lilly of any equipment, supplies, commodity chemicals,
                  non-commodity chemicals, solvents, reagents, materials, and
                  other capital items [ * ] as described in Subsection (e) of
                  Section 4.1, Lilly will [ * ] Array, pursuant to Subsection
                  (a) of Section 4.1, for the Project Services or Other Services
                  [ * ] Array FTEs during the [ * ] period, but no reduction
                  [ * ] of Array FTEs under this Section, even if more than
                  [ * ] Array FTEs during a [ * ] .

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   12

         (c)      Subsequent Increases in Array FTEs. If, after a reduction of
                  Array FTEs under this Section, Lilly requests additional Array
                  FTEs, Array agrees to use reasonable efforts to satisfy
                  Lilly's requests up to the [ * ] FTEs threshold in Section
                  2.4. Any increase in the number of Array FTEs beyond such
                  threshold must be mutually agreed upon by the Parties in
                  writing.

         2.7 COMMUNICATION AND ACCESS TO ARRAY EMPLOYEES. In addition to the
meetings described in Section 2.3, during the term of the Agreement, Lilly shall
have reasonable and informal access to and communication and interaction with
Array employees assigned to each Project. It is anticipated that such access,
communication and interaction shall be similar to the access, communication, and
interaction that would occur between scientists in a fully integrated, drug
discovery project team effort. Furthermore, upon Lilly's request, Array shall
interact and communicate with Lilly regarding any issue raised by Lilly about a
Project as soon as reasonably practical.

         2.8 REPORTS, RECORDS AND PROJECT RIGHTS TRANSFER. Array will provide to
Lilly the following reports and records:

         (a)      Quarterly Status Reports. For each Project, Array shall
                  provide the applicable Lilly Project Leader with a quarterly
                  status report that summarizes Array's efforts on such Project
                  during the Calendar Quarter at issue and that includes,
                  without limitation, a general summary of important events
                  and/or milestones achieved, personnel changes (if any),
                  learning points and other matters that Lilly may reasonably
                  deem appropriate, and a general description of Project Rights
                  (if any) discovered, invented, developed and/or conceived. The
                  Lilly Project Leader of each Project, with appropriate
                  consultation from the Array Project Leader assigned thereto,
                  shall determine the appropriate format of the quarterly status
                  report for his or her Project. In addition to the foregoing,
                  each quarterly status report shall include for each compound
                  discovered or made during the Calendar Quarter at issue: (i)
                  the structure of such compound; (ii) the name of the
                  discover/maker of such compound; (iii) the date such compound
                  was discovered or made; (iv) the list of analytical methods
                  for which data was obtained on such compound [ * ] and (v) the
                  quantity of such compound made.

         (b)      Project Reports. For each Project, Array will provide the
                  applicable Lilly Project Leader a report fully summarizing the
                  results and experimental procedures of the Project and
                  include, without limitation, a description of all Project
                  Rights, compound structures, analytical data, physical
                  chemical characterization data, compound numbers, lot numbers,
                  names of compound (including the name of the person who
                  prepared such compound), dates when compounds were prepared,
                  full details of synthesis methods (especially new methods or
                  modifications and new applications of existing methods),
                  compound purification conditions and protocols, chemical
                  reaction schemes, conditions, protocols, yields, certificate
                  of analysis, other items relevant to such Project, and such
                  other matters as Lilly may reasonably request. Array shall
                  provide such a report within thirty (30) days after the
                  earlier of: (i) Lilly's written request, (11) the completion
                  or termination of a Project, or (iii) the termination or
                  expiration of this Agreement.

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   13

         (c)      Records. Array will provide the applicable Lilly Project
                  Leader copies of all experimental and other Project records
                  and laboratory notebooks containing experimental descriptions
                  and data generated from work conducted under a Project within
                  thirty (30) days after the earlier of: (i) Lilly's written
                  request, (ii) the completion or termination of a Project, or
                  (iii) the termination or expiration of this Agreement.

         (d)      Project Rights & Other Lilly Confidential Information. To the
                  extent not already transferred to Lilly in accordance with
                  Subsection (b) of Section 5.1 or otherwise under this
                  Agreement, Array shall disclose and transfer ownership to
                  Lilly [ * ] within thirty (30) days of the earlier of: (i)
                  Lilly's written request, (ii) the completion or termination of
                  a particular Project, or (iii) the termination or expiration
                  of this Agreement.

         2.9 PROJECT DILIGENCE. Array shall diligently use its best efforts to
render Project Services and Other Services hereunder in accordance with
prevailing high professional standards and will make all reasonable efforts to
produce consistently high levels of accuracy and expertise and to meet
timetables set forth under this Agreement for completion of Project Services and
Other Services.

         2.10 GOVERNING AUTHORITY OF PROJECTS. Each Project shall be conducted
by its Project Team in accordance with its Work Plan and under the overall
directions and guidance of its Project Steering Committee, [ * ].

         2.11 ARRAY'S ALLIANCE MANAGEMENT. Array hereby designates Kevin Koch,
Ph.D. (and any successor President/Chief Science Officer) as the Array officer
who is ultimately responsible for ensuring its performance under this Agreement.
Array also agrees to designate, with Lilly's prior written approval, an Array
employee to oversee Array's day-to-day activities on all Projects, to coordinate
Array's communications with Lilly, and to otherwise facilitate the smooth
operations of all Projects (the "Array Alliance Manager"). Along with his other
responsibilities for this Agreement, the Parties agree that Dr. Koch will serve
as the interim Array Alliance Manager until a successor Array Alliance Manager
is appointed in accordance with this Section. However, notwithstanding Section
1.2 and Subsection (a) of Section 2.5, Array is not entitled to any compensation
from Lilly for Dr. Koch's work as the interim Array Alliance Manager.

                                    ARTICLE 3

                               CONSULTING SERVICES

         Array employees who, as reasonably determined by a Lilly Project Leader
after consultation with the Array Project Leader, possess useful technical
expertise to a Project but who are not assigned to that Project shall be made
available at such times as Lilly reasonably requests for technical consultations
with Lilly personnel via telephone or in-person. Such Array employees may
include, without limitation, senior management of Array. In the event that such

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   14

consultation is in the form of an in-person consultation, the time and location
of such consultation shall be mutually agreed upon by the Parties in good faith
[ * ].

                                    ARTICLE 4

                           PROJECT RESOURCES AND COSTS

         4.1      PROJECT RESOURCES AND COSTS.

         (a)      FTE Funding and Reimbursement of Other Costs. [ * ]. In
                  addition, in the event that (i) Other Services are used by
                  Array in accordance with Section 2. 1, (ii) Third Parties are
                  used by Array in accordance with Section 4.2, or (iii) Array
                  incurs reimbursable expenses under Subsection (e) of this
                  Section 4. 1, Lilly shall reimburse Array for only the
                  incremental actual costs incurred by Array for such services
                  or items (i.e., no mark-up) and not according to the FTE Rate.

         (b)      Invoice. Within thirty (30) days [ * ], Array shall provide
                  the Lilly Chemistry Research Services Director with an invoice
                  detailing: (i) the name, number, and title of each Array FTE
                  performing Project Services during the preceding [ * ]; (ii)
                  the total Project Service hours worked by each Array FTE
                  during the preceding [ * ]; (iii) the Project Service hours
                  worked on each Project during the preceding [ * ]; (iv) the
                  number of Project Services hours that were United
                  States-based; (v) the Other Services performed by Array during
                  the preceding [ * ] (if any); (vi) the permitted Third
                  Parties' services used by Array during the preceding [ * ] (if
                  any); and (vii) the actual costs incurred by Array during the
                  preceding [ * ] for items reimbursable under Subsection (e) of
                  this Section 4.1 (if any). Array's invoice for the last month
                  in a Calendar Year will also contain sufficient information
                  and documentation to calculate the year end Array FTE true-up,
                  if any, under Subsection (d) of this Section. Lilly, or its
                  representatives, shall have the right to audit Array records
                  with respect to any invoice in accordance with Section 6.2.

         (c)      Project Payments. [ * ]

         (d)      Year End Array FTE True-Up. If:

                  (i)      an Array FTE worked [ * ];

                  (ii)     Lilly, under Subsection (a) of this Section, paid a
                           pro-rated FTE Rate for that Array FTE's reduced work
                           hours during that [ * ]; and

                  (iii)    that Array FTE worked [ * ] on Project Services in
                           another month during the Calendar Year,

                  Lilly, to the extent of such excess hours, will pay Array the
                  difference between the pro-rated amount it paid Array for the
                  Array FTE's reduced hours month [ * ] of the FTE Rate. Lilly's
                  payment of such amount, if any, will accompany Lilly's

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   15

                  payment made under Subsection (c) of this Section for the last
                  month in a Calendar Year. An Array FTE's excess hours do not
                  carry over to the next Calendar Year nor are they applicable
                  to another Array FTE.

         (e)      Equipment, Supplies, and Reasonable Capital Expenditures.
                  Except for non- commodity chemicals or except as the Parties
                  otherwise agree in writing, the Parties acknowledge and agree
                  that Array is solely responsible for the cost of all
                  equipment, supplies, commodity chemicals (e.g., chemicals that
                  are readily available in bulk quantities and obtainable from
                  multiple suppliers and whose cost is generally considered
                  relatively low, fairly well-defined, and consistent across the
                  chemical supply industry), solvents, reagents, materials, and
                  reasonable capital items that Array uses (or is required to
                  use) in connection with the Projects. Lilly agrees to
                  reimburse Array for its purchases of non-commodity chemicals
                  that are necessary for a Project, but only if Lilly
                  pre-approved such purchase in writing.

                  When Lilly reimburses Array for necessary and pre-approved
                  non-commodity chemicals or in the event, Lilly, in its sole
                  discretion, supplies, leases, or purchases (or reimburses
                  Array for) any equipment, supplies, commodity chemicals,
                  non-commodity chemicals, solvents, reagents, materials, or
                  other capital items in connection with Array's efforts on a
                  Project, Lilly shall be the sole owner of such item, and,
                  Array shall, to the extent not already done so, transfer sole
                  ownership in such item to Lilly and deliver possession of such
                  item to Lilly at the earlier of: (i) the completion or
                  termination of the Project at issue, (ii) Lilly's request, or
                  (iii) the termination or expiration of this Agreement. In
                  certain cases (e.g., Lilly determines that the item might be
                  useful in another Project), Lilly may reasonably delay
                  transfer of ownership and/or possession of such item by
                  notifying Array of the same.

         (f)      Research Tax Credits. To the extent permitted by law, Lilly
                  shall be entitled to any tax credits due on account of
                  research and development expenses it pays to Array under this
                  Agreement.

         4.2 SUBCONTRACTING PROJECT SERVICES OR OTHER SERVICES. The Parties
acknowledge and agree that subcontracting (including, without limitation, any
consultation by Third Parties) of Project Services or Other Services by Array is
generally prohibited under this Agreement. However, Array may subcontract
Project Services or Other Services if, prior to such subcontract:

                  (i)      The Lilly Chemistry Research Services Director
                           approves, in writing, that such subcontract would be
                           useful or beneficial to a Project and that the
                           selected Third Party is an appropriate subcontractor
                           for the particular Project Services or Other Services
                           at issue;

                  (ii)     The Lilly Chemistry Research Services Director
                           approves, in writing, the cost associated therewith;

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   16

                  (iii)    Array and/or Lilly, as appropriate, obtain written
                           confidentiality and nonuse agreements from the Third
                           Party;

                  (iv)     Array and/or Lilly, as appropriate, obtain written
                           assignments from the Third Party of all patent rights
                           and know-how that such Third Party may develop by
                           reason of work performed under this Agreement (which,
                           in turn, shall ultimately be assigned to Lilly in
                           accordance with Section 5. 1); and

                  (v)      Array and/or Lilly, as appropriate, obtain a
                           certification from the Third Party that such work
                           will be performed according to cGLPs, cGCPs and/or
                           cGMPs, as applicable.

To be reimbursed for the incremental actual costs incurred from such approved
Third Parties' services, Array shall provide Lilly with all documentation of
such costs as Lilly may reasonably require. The foregoing prohibition is
intended to apply only to Array's ability to subcontract Project Services or
Other Services and is not intended to limit Lilly's ability to subcontract in
any respect.

         4.3 TRAINING. Except as the Parties otherwise agree in writing, the
Parties acknowledge and agree that Array is solely responsible for providing and
paying for training, including attendance at scientific meetings, as may be
necessary for its employees and permitted subcontractors to perform their duties
under this Agreement.

                                    ARTICLE 5

              PROJECT OWNERSHIP, PROCEDURAL SAFEGUARDS AND SECURITY

         5.1      OWNERSHIP OF PROJECT RIGHTS.

         (a)      Lilly Sole Ownership. Lilly shall be the sole and exclusive
                  owner of any and all information, items, material, and
                  know-how that is either (i) disclosed (whether orally, in
                  writing, through observation, or otherwise) to Array from
                  Lilly under this Agreement or (ii) acquired, generated,
                  developed, discovered, evolved or derived [ * ] Project
                  Services or Other Services, including, without limitation, any
                  and all suggestions, descriptions, ideas, inventions (whether
                  or not patentable) discoveries, know-how, trade secrets,
                  techniques, data, strategies, methods, syntheses, processes,
                  practices, documents, apparatus, devices, chemical
                  formulations, chemical synthesis, compounds, composition of
                  matter, chemical samples, assays, cell lines, vectors,
                  screens, databases, database structures, and data analysis
                  methods (collectively, "Project Rights").

         (b)      Assignment and Transfer of Project Rights. In order to ensure
                  the sole ownership interest in Project Rights is fully and
                  exclusively vested in Lilly, Array, after the conception,
                  discovery, invention and/or development of Project Rights,
                  shall (and shall cause its employees, permitted
                  subcontractors, and other agents providing Project Services or
                  Other Services hereunder to) promptly cooperate with Lilly in

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   17

                  taking all steps that Lilly believes reasonably necessary or
                  desirable to secure its ownership rights in such Project
                  Rights including, without limitation, cooperating in
                  completing any patent applications relating to such Project
                  Rights, as well as executing and delivering any instrument
                  that may be reasonably required to assign, convey and transfer
                  to Lilly any ownership interest, if any, that Array or its
                  employees, permitted subcontractors, and other agents
                  providing Project Services or Other Services hereunder may
                  have in such Project Rights.

                  Moreover, after the conception, discovery, invention and/or
                  development of Project Rights, [ * ] (and shall cause its
                  employees, permitted subcontractors, and other agents
                  providing Project Services or Other Services to) [ * ] items,
                  material, and know-how encompassed in Project Rights together
                  with any other information, items, material, and know-how
                  [ * ] Project Rights. Finally, [ * ] with reasonable technical
                  assistance in connection with such disclosure and transfer of
                  Project Rights.

         (c)      [ * ]. Pursuant to Subsection (a) above, Lilly has exclusive
                  rights to [ * ]. Array shall have the right to practice a
                  [ * ] for purposes other than a Project [ * ].

         (d)      Non-Exclusive License to [ * ]. Array hereby grants to Lilly
                  [ * ] to practice [ * ] only to Third Parties that are
                  involved with Lilly in research and development
                  collaborations, and such sublicenses shall be only for the
                  purpose of carrying out such collaborations. Lilly shall not
                  have any other sublicense rights.

         5.2      SAFEGUARDS TO PROTECT CONFIDENTIALITY AND PROJECT RIGHTS
                  OWNERSHIP.

         (a)      As a means reasonably designed to protect Lilly's sole
                  ownership rights in [ * ] and otherwise to ensure Array's
                  compliance with its obligations set forth in Section 5.1 and
                  Section 7.2, Array agrees [ * ]. In addition, Array agrees
                  that [ * ]. Array's obligations under this Subsection shall
                  survive until [ * ] after the expiration or termination date
                  of this Agreement.

         (b)      Array hereby agrees that, each of its employees and permitted
                  subcontractors will, prior to commencing work on any Project,
                  execute an instrument agreeing to: (i) assign to Array all
                  [ * ] arising during the course of and as a result of their
                  association with Array (which shall ultimately be assigned by
                  Array to Lilly in accordance with the assignment provisions of
                  Subsection (b) of Section 5.1); and (ii) to abide by
                  confidentiality and non-use restrictions regarding the terms
                  of the Agreement and Lilly Confidential Information in a
                  manner consistent with Array's obligations under Section 7.1
                  and Section 7.2.

         5.3 Security. As a means reasonably designed to protect Lilly's sole
ownership rights in [ * ], to protect the secrecy and confidentiality of all
[ * ] and other Lilly Confidential Information, and to otherwise ensure Array's
compliance with its obligations set forth in Section 5.1 and Section 7.2, Array
agrees to maintain appropriate security measures no less stringent than measures
that are customary in the industry. In addition to customary security measures,

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   18

Array shall: (i) conduct all [ * ] and Other Services in a facility or
facilities solely dedicated and exclusively used for Projects; and (ii) maintain
informational technology systems that are compatible with Lilly's informational
technology systems and that ensure confidential communications and data
transfers between Array and Lilly.

                                    ARTICLE 6

                            RECORD-KEEPING AND AUDIT

         6.1 RECORDS RETENTION; MAINTENANCE OF PROJECT RECORDS. In addition to
providing copies of records and other Project Rights in accordance with Section
2.8, during the term of this Agreement and consistent with Array's security
obligations set forth in Section 5.3, Array shall retain and maintain all
written materials and all other data and information obtained or generated by
Array in the course of providing Project Services and Other Services in a secure
area reasonably protected from fire, theft and destruction for up to ten (10)
years after the expiration or termination of this Agreement. Upon the expiration
or termination of this Agreement, such items, at Lilly's option, may be (i)
delivered to Lilly or its designee in such form as is then currently in the
possession of Array, (ii) retained by Array for Lilly for a period of time
mutually agreed upon by the Parties, or (iii) disposed of, at the direction and
written request of Lilly, unless such materials are otherwise required to be
stored or maintained by Array as a matter of law or regulation. In no event
shall Array dispose of any materials, data, or other information obtained or
generated by Array in the course of providing Project Services and Other
Services without first giving, Lilly sixty (60) days prior written notice of
Array's intent to do so.

         For those records pertaining to the accuracy and correctness of an
Array invoice, such records shall be maintained for a three (3) year period
following the year in which such invoice was paid by Lilly.

         Array shall keep complete and accurate records pertaining to each
Project that are reasonably useful to confirm the efforts. Array shall record
all information relating to Projects in written or electronic form. Such records
shall be kept separately from written records documenting other research and
development that may be conducted by Array. All such written records shall be
maintained in a form sufficient to satisfy regulatory authorities. Moreover,
from time to time, upon Lilly's request Array will promptly provide copies of
any of the records that it maintains for Lilly.

         6.2 FINANCIAL AUDIT. Upon written notice from Lilly, Array shall permit
Lilly or Lilly's representative to have access during normal business hours to
audit the books and records of Array and its permitted subcontractors as may be
reasonably necessary to verify the accuracy of any payments made under this
Agreement. The audit shall be limited to books and records for any Calendar Year
ending not more than twenty-four (24) months prior to the date of such notice.
All reports, invoices and payments not disputed as to correctness by Lilly
within three (3) years after receipt thereof shall thereafter conclusively be
deemed correct for all purposes. Such audit shall be at Lilly's expense unless
the audit establishes that Lilly's payments for the period examined exceeded the
amount that should have been paid by five percent (5%) or more, in which case
Array shall be responsible for the reasonable expenses of such audit. Within
thirty (30) days after both Parties have received an audit report, Lilly or
Array, as appropriate, will

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   19

compensate the other Party for any errors or omissions revealed by an audit.
This audit night shall survive for a period of two (2) years from the date this
Agreement terminates or expires.

         6.3 SCIENTIFIC AND LEGAL AUDIT. Upon written notice from Lilly, Array
shall permit Lilly or Lilly's representative to have access during normal
business hours to audit the books and records of Array and its permitted
subcontractors as may be reasonably necessary to confirm that Project Services
and Other Services have been performed accurately and in compliance with (i)
prevailing professional standards of quality, (ii) applicable Lilly protocols
and/or specifications of which Array was reasonably advised, (iii) applicable
laws and regulations, and (iv) applicable Work Plans. Such an audit shall be at
Lilly's expense unless the audit establishes a material error by Array. In such
case, in addition to other remedies Lilly may have against Array for such
material error, Array shall be responsible for the reasonable expenses of the
audit. This audit right shall survive for a period of ten (10) years from the
date this Agreement terminates or expires.

         6.4 QUALITY ASSURANCE AND SECURITY AUDITS; ON-SITE LILLY PERSONNEL.
During the term of this Agreement, Lilly retains the right at reasonable times
and upon reasonable prior written notice to conduct quality assurance and
security audits of Array's research and development facilities, as well as of
the facilities of Array's permitted subcontractors (if any), where work on a
Project is conducted. Furthermore, from time to time, upon Lilly's reasonable
written request, Array will allow Lilly personnel to be located at Array
facilities where Projects are conducted to further a particular Project as well
as to ensure that such facilities meet Lilly and regulatory authority standards
and the security standards set forth in Section 5.3. Array hereby agrees to
cooperate with Lilly and take such other acts as may be reasonably necessary or
appropriate to carry out the purpose and intent of this Section.

                                    ARTICLE 7

                           CONFIDENTIALITY AND NON-USE

         7.1      DISCLOSURE OF AGREEMENT.

         (a)      Existence of the Agreement. Except as the Parties otherwise
                  agree, neither Array nor Lilly shall release any information
                  to any Third Party with respect to the existence of this
                  Agreement (including, without limitation, either Party's name)
                  until the Parties issue the press release, which has been
                  agreed to by both Parties and a copy of which is attached as
                  Exhibit A. Afterwards, each Party may use the substance of
                  such press release and the substance of other public
                  announcements of the other Party without prior notice.

         (b)      Terms of the Agreement. Except as required by law or except
                  for a request from an authorized representative of a U.S.
                  and/or foreign tax authority for a copy of the Agreement,
                  neither Array nor Lilly shall release any information to any
                  Third Party with respect to the terms of this Agreement
                  without the prior written consent of the other. This
                  prohibition includes, but is not limited to, any press
                  releases, educational and scientific conferences,
                  publications, promotional

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   20

                  materials, governmental filings, and discussions with public
                  officials and the media.

         If a Party determines a release of information regarding the terms of
         this Agreement is required by law, that Party will notify the other
         Party as soon as practical and give as much detail as possible in
         relation to the disclosure required. The Parties will then cooperate
         with respect to determining what information will actually be released.

         If a Party receives a request from an authorized representative of a
         U.S. and/or foreign tax authority for a copy of the Agreement, that
         Party may provide a copy of the Agreement to such tax authority
         representative without advance notice to or the consent or cooperation
         of the other Party, but the disclosing Party must notify the other
         Party of the disclosure as soon as practical. The release of any
         additional information to a tax authority is subject to the notice and
         cooperation requirements for other disclosures required by law as set
         forth in this Section.

         7.2 ARRAY'S CONFIDENTIALITY OBLIGATIONS. Except upon obtaining Lilly's
prior written consent to the contrary, Array agrees that while this Agreement is
in effect and for [ * ] after the date this Agreement terminates or expires:

                  (i)      it will not, nor will it permit any of its employees
                           or Permitted Third Parties to, use Lilly Confidential
                           Information other than for the purposes of this
                           Agreement;

                  (ii)     it will not, nor will it permit any of its employees
                           or Permitted Third Parties to, disclose any Lilly
                           Confidential Information to a Third Party (including
                           Third Party consultants, representatives, or agents
                           of Array);

                  (iii)    it will not, nor will it permit any of its employees
                           or Permitted Third Parties to, disclose any Lilly
                           Confidential Information. to any Array employee or
                           Permitted Third Party who does not need to know such
                           Lilly Confidential Information to further a Project;
                           and

                  (iv)     it will not, nor will it permit any of its employees
                           or Permitted Third Parties to, publish or submit for
                           publication Lilly Confidential Information.

A "Permitted Third Party" is a Third Party for whom Lilly has given written
consent to Array for Array's disclosure of specified Lilly Confidential
Information. For the sole purpose of monitoring its obligations hereunder, Array
may retain in its legal files one copy of all Lilly Confidential Information
that it receives.

         7.3      LILLY'S CONFIDENTIALITY OBLIGATIONS.

         (a)      Array Confidential Information. Except upon obtaining Array's
                  prior written consent to the contrary, Lilly agrees that while
                  this Agreement is in effect and for [ * ] after the date this
                  Agreement terminates or expires:

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   21

                  (i)      it will not, nor will it permit any of its employees
                           or Excepted Third Parties to, use Array Confidential
                           Information other than for the purposes of this
                           Agreement;

                  (ii)     it will not, nor will it permit any of its employees
                           or Excepted Third Parties to, disclose any Array
                           Confidential Information to a Third Party;

                  (iii)    it will not, nor will it permit any of its employees
                           or Excepted Third Parties to, disclose any Array
                           Confidential Information to any Lilly employee or
                           Excepted Third Party who does not need to know such
                           Array Confidential Information to further a Project;
                           and

                  (iv)     it will not, nor will it permit any of its employees
                           or Excepted Third Parties to, publish or submit for
                           publication Array Confidential Information.

                  An "Excepted Third Party" is a Third Party for whom Array has
                  given written consent to Lilly for Lilly's disclosure of
                  specified Array Confidential Information. Lilly agrees that
                  its Excepted Third Parties shall be bound by confidentiality
                  and non-use obligations regarding the terms of this Agreement
                  and Array Confidential Information consistent with Lilly's
                  under Section 7.1 and this Subsection. For the sole purpose of
                  monitoring its obligations hereunder, Lilly may retain in its
                  legal files one copy of all Array Confidential Information
                  that it receives.

         (b)      Array Processes. Lilly agrees that, while this Agreement is in
                  effect and for [ * ] after the date this Agreement terminates
                  or expires, it may disclose Array Processes to a Third Party
                  only with Array's prior written consent, except that Lilly
                  may, without Array's consent, disclose Array Processes to a
                  Third Party (i) working on behalf of Lilly or (ii) involved
                  with Lilly in a research and development collaboration. Lilly
                  agrees that Third Parties to whom Array Processes are
                  disclosed under this Subsection shall be bound by
                  confidentiality obligations regarding Array Processes
                  consistent with Lilly's under this Subsection.

                                   ARTICLE 8

                              TERM AND TERMINATION

         8.1 TERM. This Agreement shall commence on the Effective Date and shall
continue in effect until five (5) years thereafter, unless earlier terminated as
provided in this Agreement or extended by mutual written agreement of the
Parties.

         8.2 LILLY VOLUNTARY TERMINATION. At any time after the Effective Date,
with or without cause, Lilly may terminate this Agreement upon providing Array
with thirty (30) days advance written notice of the same. Such termination shall
be effective upon the expiration of such thirty (30) day period. In the event
that Lilly terminates the Agreement under this Section

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   22

(and only under this Section), Lilly shall pay Array the applicable, one-time
lump sum termination payment below:

                  (i) [ * ] Array FTEs. If [ * ] Array FTEs were charged to
Projects during the Calendar Quarter immediately preceding Lilly's notice of
termination, then Lilly shall pay Array an amount equal to [ * ] of the Array
FTE funding obligation incurred by Lilly under Subsection (a) of Section 4.1
with respect to such [ * ] (i.e., only the amount of such obligation incurred
with respect to Array FTEs, specifically excluding any other reimbursable items
described in Subsection (a) of Section 4.1).

                  (ii) [ * ] Array FTEs. If [ * ] Array FTEs were charged to
         Projects during the Calendar Quarter immediately preceding Lilly's
         notice of termination, then Lilly shall pay Array an amount equal to
         [ * ] of the Array FTE funding obligation incurred by Lilly under
         Subsection (a) of Section 4.1 with respect to such [ * ] (i.e., only
         the amount of such obligation incurred with respect to Array FTEs,
         specifically excluding any other reimbursable items described in
         Subsection (a) of Section 4.1).

                  (iii) [ * ] Array FTEs. If [ * ] Array FTEs were charged to
         Projects during the Calendar Quarter immediately preceding Lilly's
         notice of termination, then Lilly shall pay Array an amount equal to
         [ * ] of the Array FTE funding obligation incurred by Lilly under
         Subsection (a) of Section 4.1 with respect to such [ * ] (i.e., only
         the amount of such obligation incurred with respect to Array FTEs,
         specifically excluding any other reimbursable items described in
         Subsection (a) of Section 4.1).

                  (iv) [ * ] Array FTEs. If [ * ] Array FTEs were charged to
         Projects during the Calendar Quarter immediately preceding Lilly's
         notice of termination, then Lilly shall pay Array an amount equal to
         [ * ] of the Array FTE funding obligation incurred by Lilly under
         Subsection (a) of Section 4.1 with respect to such [ * ] (i.e., only
         the amount of such obligation incurred with respect to Array FTEs,
         specifically excluding any other reimbursable items described in
         Subsection (a) of Section 4.1).

                  (v) [ * ] Array FTEs. If greater then [ * ] Array FTEs were
         charged to Projects during the Calendar Quarter immediately preceding
         Lilly's notice of termination, then Lilly shall pay Array an amount
         equal to [ * ] of the Array FrE funding obligation incurred by Lilly
         under Subsection (a) of Section 4.1 with respect to such [ * ] (i.e.,
         only the amount of such obligation incurred with respect to Array FTEs,
         specifically excluding any other reimbursable items described in
         Subsection (a) of Section 4.1).

         The lump sum termination payment due under this Section shall be paid
by Lilly within thirty (30) days of the later of: (i) Lilly's receipt of all
reports, records, and other items due to Lilly under Section 2.8; (ii) the
completed transfer and assignment of all Project Rights by Array to Lilly in
accordance with Section 5. 1; (iii) the completed transfer to Lilly of any and
all Lilly Confidential Information that Array possesses; and (iv) the transfer
of possession and ownership to Lilly of any equipment, supplies, commodity
chemicals, non-commodity chemicals, solvents, reagents, materials, and other
capital items that Lilly supplied, leased, or purchased (or reimbursed Array
for) as described in Subsection (e) of Section 4.1.

         In addition, the lump sum payment due under this Section shall be in
lieu of Lilly's payment obligations under Subsection (a) of Section 4.1 during
the thirty (30) day notice period.

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   23

Therefore, Lilly shall neither be required nor obligated to fund Array FTEs
under Subsection (a) of Section 4.1 during such thirty (30) day notice period.
Similarly, Array FTEs need not work on Projects during such thirty (30) day
notice period, except to the extent necessary to wind-down the Projects in an
orderly and efficient fashion including, without limitation, (i) furnishing
Lilly with all required reports, records, and other items as described in and in
accordance with Section 2.8; (ii) transferring and assigning all Project Rights
to Lilly in accordance with Section 5. 1; (ill) transferring to Lilly of any and
all Lilly Confidential Information that Array possesses; and (iv) transferring
ownership and possession to Lilly of any equipment, supplies, commodity
chemicals, non-commodity chemicals, solvents, reagents, materials, and other
capital items that Lilly either supplied, leased, or purchased (or reimbursed
Array for) as described in Subsection (e) of Section 4. 1.

         8.3 TERMINATION FOR DEFAULT. If a Party believes the other Party is in
default of any material obligation under this Agreement, it may give notice of
such default to the other Party. Upon receipt of such notice, the defaulting
Party shall have thirty (30) days to remedy such default. If such default is not
remedied within those thirty (30) days, the Party claiming default may give
notice of termination, and termination of this Agreement shall be effective
immediately upon the defaulting Party's receipt of such notice.

         8.4 TERMINATION DUE TO ARRAY OWNERSHIP CHANGE. In the event that Array
is reorganized, acquired by or merged with a Third Party, or substantially all
of its assets to which this Agreement relates are acquired by a Third Party
(collectively and individually, an "Ownership Change Event"), Lilly may, in its
sole discretion, terminate this Agreement upon thirty (30) days written notice
to Array (or, if applicable, Array's successor). Lilly may provide Array (or, if
applicable, Array's successor) with such notice at any time within twelve (12)
months of the occurrence of an Ownership Change Event.

         8.5 TERMINATION DUE TO INSOLVENCY OR LIQUIDATION. Upon written notice
to the other Party, a Party may terminate this Agreement immediately if: (1) the
other Party goes into liquidation, other than for the purpose of a bona fide
reorganization, (ii) a receiver or trustee is appointed for the other Party's
property or estate, or (iii) the other Party makes an assignment for the benefit
of its creditors (whether or not any of the aforesaid acts are the outcome of a
voluntary act of the non-terminating Party). Termination of the Agreement under
this Section shall be effective as the occurrence of the applicable event.

         8.6 SURVIVING RIGHTS AND OBLIGATIONS. The obligations of the Parties
under Section 5.1 (Ownership of Project Rights), Section 5.2 (Procedural
Safeguard Restrictions to Protect Confidentiality and Project Right Ownership),
Article 6 (Record Keeping and Audit), Article 7 (Confidentiality), the
applicable termination provisions of Article 8 (Termination), Article 9
(Representations & Warranties), Article 10 (Indemnification), and Article 11
(Miscellaneous) will survive the termination or expiration of this Agreement.
Also, termination or expiration of this Agreement shall not relieve either Party
from obligations that are expressly indicated to survive termination or
expiration of the Agreement. Finally, except as specifically provided to the
contrary in this Agreement, termination or expiration of the Agreement for any
reason shall be without prejudice to any rights that shall have accrued to the
benefit of either Party prior to such termination or expiration and shall not
relieve the Parties of any obligations accrued hereunder prior to such
termination or expiration.

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   24

         Moreover, to the extent not already done so under this Agreement, Array
shall promptly (but in no event later than thirty (30) days after the effective
date of the termination of expiration of the Agreement): (i) submit to Lilly all
required reports, records, and other items as described in and in accordance
with Section 2.8; (ii) transfer ownership and possession to Lilly of all Project
Rights and Lilly Confidential Information as described further in Sections 2.8
and 5. 1; and (iii) transfer ownership and possession to Lilly of any equipment,
supplies, commodity chemicals, non-commodity chemicals, solvents, reagents,
materials, and other capital items that Lilly either supplied, leased, or
purchased (or reimbursed Array for) as described in Subsection (e) of Section
4.1.

                                    ARTICLE 9

                         REPRESENTATIONS AND WARRANTIES

         9.1 LILLY'S AUTHORITY TO PERFORM AGREEMENT. Lilly represents and
warrants to Array that (i) it is free to enter into and perform this Agreement;
(ii) it has no agreement, policy, or other understanding with any other person,
firm, or entity exists that would interfere or conflict with its obligations
hereunder; and (iii) it has and will maintain all regulatory or governmental
permits, licenses, and approvals necessary for it to perform its obligations
legally in accordance with this Agreement. Moreover, Lilly represents and
war-rants to Array that this Agreement is a legal, valid, and binding obligation
of it, enforceable against it in accordance with the terms of this Agreement.

         9.2 ARRAY'S AUTHORITY TO PERFORM AGREEMENT. Array represents and
warrants to Lilly that (i) it is free to enter into and perform this Agreement;
(ii) it has no agreement, policy, or other understanding with any other person,
firm or entity exists that would interfere or conflict with its obligations
hereunder; and (iii) it has and will maintain all regulatory or governmental
permits, licenses, and approvals necessary for it to perform its obligations
legally in accordance with this Agreement. Moreover, Array represents and
warrants to Lilly that this Agreement is a legal, valid, and binding obligation
of it, enforceable against it in accordance with the terms of this Agreement.

         9.3 NO DEBARMENT. Array hereby represents and warrants that it is in
compliance with the provisions of the Generic Drug Enforcement Act of 1992 and
covenants that at all times during this Agreement, it, its employees, and its
permitted subcontractors will comply with such Act. Array agrees, upon Lilly's
request, to certify in writing that neither it nor its employees or permitted
subcontractors have been debarred under the provisions of such Act.

         9.4 YEAR 2000. Array hereby represents and warrants that its business
systems and/or computer systems and the business systems and/or computer systems
of any Third Party on which it is dependent are Year 2000 compliant. Array also
covenants to Lilly that it shall use commercially reasonable efforts to ensure
its obligations under this Agreement are not materially delayed, interrupted, or
otherwise hindered to the detriment of Lilly due to: (i) the business systems
and/or computer systems of Array ceasing to function or otherwise malfunctioning
because of date-based problems related to the Year 2000; or (ii) the business
systems and/or

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   25

computer systems of any Third Party on which Array is dependent ceasing to
function or otherwise malfunctioning because of date-based problems related to
the Year 2000.

                                   ARTICLE 10

                             MUTUAL INDEMNIFICATION

         10.1 ARRAY'S RIGHT TO INDEMNIFICATION. Lilly shall indemnify and hold
harmless Array, its successors and assigns, and the directors, officers,
employees, agents and counsel thereof (the "Array Indemnitees") from and against
any and all liabilities, damages, losses, penalties, fines, costs, interest, or
expenses, including, without limitation reasonable attorneys, fees, ("Damages")
arising from or occurring as a result of a Third Party's, Lilly employee's, or
governmental agency's claim, action, suit, judgment, or settlement against an
Array Indemnitee that is due to or based upon: (i) the failure of Lilly to
disclose to Array any chemical handling and exposure hazards information related
to a Project known by Lilly; (ii) any breach of this Agreement by Lilly; (iii) a
clinical trial conducted or authorized by Lilly or its designee that is based
upon a compound transferred to Lilly by Array; or (iv) a product developed,
manufactured, used, sold, or otherwise distributed by or under authority of
Lilly or its designees that is based upon a compound transferred to Lilly by
Array (a "Third Party Claim"). However, Lilly shall not indemnify or hold
harmless Array Indemnitees from a Third Party Claim to the extent that Damages
from such Third Party Claim are finally determined to have resulted from the
acts or omissions of an Array Indemnitee, including the failure of Array to
disclose to Lilly any chemical handling and exposure hazards information known
by Array that was related to a compound that it transferred to Lilly.

         10.2 LILLY'S RIGHT TO INDEMNIFICATION. Array shall indemnify and hold
harmless Lilly, its successors and assigns, and the directors, officers,
employees, agents and counsel thereof (the "Lilly Indemnitees") from and against
any and all Damages, payroll taxes, employment taxes, and employee benefits
arising from or occurring as a result of a Third Party's, Array employee's, or
governmental agency's claim, action, suit, judgment, or settlement against a
Lilly Indemnitee that is due to or based upon: (i) the failure of Array to
disclose to Lilly any chemical handling and exposure hazards information related
to a Project known by Array; (ii) any breach of this Agreement by Array; or
(iii) the Parties' classification or characterization of an Array employee or
independent contractor as a non-Lilly employee or the denial to an Array
employee or independent contractor of benefits extended to Lilly employees (a
"Lilly Third Party Claim"). However, Array shall not indemnify or hold harmless
Lilly Indemnitees from a Lilly Third Party Claim to the extent that Damages from
such Lilly Third Party Claim are finally determined to have resulted from the
acts or omissions of a Lilly Indemnitee.

         10.3 INDEMNIFICATION NOTICE AND DEFENSE PROCEDURES.

         (a)      Notice. Promptly after a Lilly Indemnitee or an Array
                  Indemnitee (each, an "Indemnitee") receive notice of a pending
                  or threatened Third Party Claim or Lilly Third Party Claim, as
                  the case may be (an "Action"), such Indemnitee shall give
                  written notice of the Action to the Party to whom the
                  Indemnitee is entitled to look for indemnification pursuant to
                  this Article 10 (the "Indemnifying Party"). However, an
                  Indemnitee's delay in providing or failure to provide such
                  notice

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   26

                  shall not relieve the Indemnifying Party of its
                  indemnification obligations, except to the extent it can
                  demonstrate prejudice due to the delay or lack of notice.

         (b)      Defense. The Indemnifying Party shall be entitled to
                  participate in and, if it so desires, to assume the defense of
                  an Action with counsel reasonably satisfactory to the
                  Indemnitee. Once the Indemnifying Party notifies the
                  Indemnitee of its election to assume the defense of an Action,
                  the Indemnifying Party is not liable to the Indemnitee for the
                  fees of other counsel or any other expenses subsequently
                  incurred by the Indemnitee in connection with such defense,
                  other than reasonable costs of investigation. However, the
                  Indemnitee shall have the right to employ separate counsel and
                  to participate in the defense of an Action (and the
                  Indemnifying Party shall bear the reasonable fees, costs, and
                  expenses of such separate counsel) if:

                  (i)      the use of the counsel chosen by the Indemnifying
                           Party would present such counsel with a conflict of
                           interest;

                  (ii)     the actual or potential defendants in, or targets of,
                           such Action include both the Indemnifying Party and
                           the Indemnitee, and the Indemnitee reasonably
                           concludes that there may be legal defenses available
                           to it that are different from or additional to those
                           available to the Indemnifying Party (in which case
                           the Indemnifying Party shall not have the right to
                           assume the defense of such Action on the Indemnitee's
                           behalf);

                  (iii)    the Indemnifying Party does not employ counsel
                           satisfactory to the Indemnitee to represent the
                           Indemnitee within a reasonable time after the
                           Indemnitee's notice of such Action; or

                  (iv)     the Indemnifying Party authorizes the Indemnitee to
                           employ separate counsel at the Indemnifying Party's
                           expense.

         (c)      Settlement. If an Indemnifying Party assumes the defense of an
                  Action, no compromise or settlement of such Action may be
                  effected by the Indemnifying Party without the Indemnitee's
                  written consent (which consent shall not be unreasonably
                  withheld or delayed), unless (i) there is no finding or
                  admission of any violation of law or any violation of the
                  rights of any person and no effect on any other claims that
                  may be made against the Indemnitee and (ii) the sole relief
                  provided is monetary damages that are paid in full by the
                  Indemnifying Party.

                                   ARTICLE 11
                                 MISCELLANEOUS

         11.1 FURTHER ASSURANCES. Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   27

         11.2 NO AGENCY; INDEPENDENT CONTRACTOR. It is understood and agreed
that nothing in this Agreement shall be construed as authorization for either
Array or Lilly to act as agent for the other. Lilly shall not incur any
liability for any act or failure to act by employees of Array, and Array shall
not incur any liability for any act or failure to act by employees of Lilly.
Array shall perform all of its services under this Agreement as an independent
contractor, and nothing herein shall be construed as creating any other
relationship between the Parties, including, without limitation, a joint
venture, partnership, agency relationship or employment relationship. Neither
Array nor its employees or agents shall be deemed for any purpose to be
employees of Lilly nor participants in any programs, insurance, or other
benefits extended to Lilly's employees. Array has sole authority and
responsibility to hire, fire, supervise, and otherwise control its employees and
is solely responsible for all employee benefits, wages, and employment taxes of
its employees.

         11.3 COMPLIANCE WITH LAWS. Array hereby covenants that its Project
Services and Other Services shall be carried out in compliance with all
applicable laws including, without limitation, federal, state, or local laws,
regulations, or guidelines governing the work at the site where such work is
being conducted. Array further covenants that its Project Services and Other
Services will be performed in accordance with current cGLP, cGCP, and cGMP, as
applicable.

         11.4 COMPLIANCE WITH WORK PLAN AND LILLY PROTOCOLS AND SPECIFICATIONS.
Except as otherwise required by law, Array covenants that Project Services and
Other Services shall be conducted in compliance with the applicable Work Plan,
as well as with applicable Lilly protocols and/or specifications of which Array
is reasonably advised.

         11.5 INSURANCE. Array has obtained and shall maintain insurance
coverage covering risks associated with its business in such amounts as are
customary in the industry including, without limitation, covering liabilities
that may arise due to injuries to its employees or the negligent performance of
Project Services and Other Services hereunder.

         11.6 AMENDMENT. This Agreement may not be amended, supplemented, or
otherwise modified except by an instrument signed by the Parties.

         11.7 NOTICES AND REPORTS. All notices required by this Agreement shall
be in writing. All notices and reports shall be deemed given if delivered
personally or by registered or certified mail, return receipt requested and
postage prepaid or sent by express courier service, to the Parties at the
following addresses or such other addresses as may be designated in writing by
the respective Parties:

         To Lilly:         Eli Lilly and Company
                           Lilly Corporate Center
                           Indianapolis, Indiana 46285
                           Attn: General Counsel

         To Array:         Array BioPharma, Inc.
                           1885 33rd Street
                           Boulder, Colorado 80301
                           Attn: President

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   28

         11.8 GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the internal laws of the State of Indiana, excluding any
choice of law rules which may direct the application of the law of any other
jurisdiction.

         11.9 ASSIGNMENT. Array may not assign its rights and obligations under
this Agreement without Lilly's prior written consent. This Agreement shall be
binding upon and shall inure to the benefit of the successors and permitted
assigns of the Parties.

         11.10 HEADINGS. The captions or headings of the articles, sections, and
other subdivisions hereof are inserted only as a matter of convenience or for
reference and shall have no effect on the meaning of the provisions.

         11.11 SEVERANCE OF CLAUSES. Should any provision of this Agreement be
determined by a court of competent jurisdiction to violate or contravene any
applicable law or policy, such provision will be severed or modified by the
court to the extent necessary to comply with the applicable law or policy, and
such modified provision and the remainder of the provisions hereof will continue
in full force and effect.

         11.12 NO WAIVER. The waiver of a breach hereunder may be effected only
by a writing signed by the waiving Party and shall not constitute a waiver of
any other breach.

         11.13 ENTIRE AGREEMENT. The Agreement constitutes the entire Agreement
of the Parties relating to the subject matter.

         11.14 FORCE MAJEURE. Neither Party shall be liable to the other for
loss or damages or shall have any right to terminate this Agreement for any
default or delay attributable to any force majeure event, including but not
limited to acts of God, acts of government, war, fire, flood, earthquake,
strike, labor dispute and the like, if the Party affected shall give prompt
notice of any such cause to the other Party. The Party giving such notice shall
thereupon be excused from such of its obligations hereunder as it is thereby
disabled from performing for so long as it is so disabled and for sixty (60)
days thereafter; provided, however, that such affected Party commences and
continues to take reasonable and diligent actions to cure such cause.

         11.15 COUNTERPARTS. This Agreement may be executed in one or more
counterparts; each of which shall constitute an original, but which together
shall constitute the same instrument.

         11.16 NO LICENSES. Except as specifically provided for in this
Agreement, neither Party grants, expressed or implied, any license to the other
Party under this Agreement.

         11.17 JOINTLY PREPARED. This Agreement has been prepared jointly and
shall not be strictly construed against either Party.

         IN WITNESS WHEREOF, each Party, through its duly-authorized
representative, has executed this Agreement as of the Effective Date.

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   29

ELI LILLY AND COMPANY                           ARRAY BIOPHARMA, INC.

/s/ August M. Watanabe  3/22/2000               /s/ Robert E. Conway 3/20/2000
---------------------------------               -------------------------------
August M. Watanabe, M.D.                        Robert E. Conway
Executive Vice President                        Chief Executive Officer

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   30

                                   EXHIBIT A

                                 PRESS RELEASE

                                     [ * ]

[ * ] = 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 406 of the Securities Act of 1933, as amended.

<PAGE>   31
                                  CONFIDENTIAL

                                AMENDMENT NO. 1
                                       TO
                          RESEARCH SERVICES AGREEMENT

     THIS AMENDMENT NO. 1 TO RESEARCH SERVICES AGREEMENT (the "Amendment")
amends the Research Services Agreement, dated March 22, 2000 (the "Agreement"),
by and between Eli Lilly and Company, Lilly Corporate Center, Indianapolis, IN
46285 ("Lilly") and Array BioPharma, Inc., 1885 33rd Street, Boulder, CO 80301
("Array") (together with Lilly and Array, the "Parties") and is made and entered
into by and between the Parties, pursuant to Section 11.6 of the Agreement,
effective as of July 19, 2000 (the "Amendment Effective Date").

     Terms defined in the Agreement will have the same meaning in this
Amendment, unless specifically noted otherwise.

     1.   The following new sections are added to Article 5 of the Agreement:

     "5.4 NON-SOLICITATION OF LILLY EMPLOYEES.

     (a)  Prohibition. Except as provided in Subsection (b) below, while the
          [***] after the termination or expiration of the Agreement, Array
          agrees that it will not, directly or indirectly, (i) solicit or
          recruit for employment, (ii) offer to employ, or (iii) employ any
          Lilly employee.

     (b)  Exceptions. Array may offer to employ a Lilly employee who approaches
          Array for the purpose of employment: (i) on his or her own initiative;
          or (ii) as a result of Array's use of a general solicitation (such as
          an advertisement) not specifically directed to Lilly employees.

     5.5  NON-SOLICITATION OF ARRAY EMPLOYEES.

     (a)  Prohibition. Except as provided in Subsection (b) below, while the
          [***] after the termination or expiration of the Agreement, Lilly
          agrees that it will not, directly or indirectly, (i) solicit or
          recruit for employment, (ii) offer to employ, or (iii) employ any
          Array employee.

     (b)  Exceptions. Lilly may offer to employ an Array employee who approaches
          Lilly for the purpose of employment: (i) on his or her own initiative;
          or (ii) as a result of Lilly's use of a general solicitation (such as
          an advertisement) not specifically directed to Array employees.

                                              ***CONFIDENTIAL TREATMENT IS
                                              REQUESTED FOR THE PORTIONS OF THIS
                                              EXHIBIT WHICH WAS UNDERLINED,
                                              MARKED BY BRACKETS ("[ ]"), AND/OR
                                              OTHERWISE INDICATED.***
<PAGE>   32
                                                                    CONFIDENTIAL

     2.   Except as specifically amended herein, all other provisions of the
Agreement remain in full force and effect

     IN WITNESS WHEREOF, each Party, through its duly-authorized representative,
has executed this Amendment as of the Amendment Effective Date.

ELI LILLY AND COMPANY                   ARRAY BIOPHARMA, INC.

ROBERT W. ARMSTRONG                     ROBERT E. CONWAY
-------------------------               -------------------------
Robert W. Armstrong, Ph.D               Robert E. Conway
Vice President, LRL                     Chief Executive Officer
Discovery Chemistry Research

                                       2

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