Research Services Agreement

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.


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TABLE OF CONTENTS


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


[ * ] = 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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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


[ * ] = 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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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


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.


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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.


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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.


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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.


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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.


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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 Com ...