Exhibit
10.24.10


 


FOURTH LOAN
MODIFICATION AGREEMENT


 


This Fourth Loan
Modification Agreement (“this Agreement”) is made as of September 3, 2003
between ArQule, Inc., a Delaware corporation (the “Borrower”) and Fleet
National Bank (the “Bank”).  The Bank is
the successor by merger to the entity formerly known as “Fleet National Bank”
(“Old FNB”).  For good and valuable
consideration, receipt and sufficiency of which are hereby acknowledged, the
Borrower and the Bank act and agree as follows:


 


1.          Reference is made
to:  (i) that certain letter
agreement dated March 18, 1999 (the “Original Letter Agreement”) between
the Borrower and Old FNB, the Bank having succeeded to the rights and
obligations of Old FNB thereunder; (ii) that certain Loan Modification
Agreement dated as of March 2, 2001 (the “First Modification”) between the Bank
and the Borrower, that certain Second Loan Modification Agreement dated as of
September 27, 2002 (the “Second Modification”) between the Bank and the
Borrower, and that certain Third Loan Modification Agreement dated as of
February 12, 2003 (the Original Letter Agreement, as amended by the First
Modification, the Second Modification and the Third Modification, being
hereinafter referred to as the “Letter Agreement”); (iii) that certain
$15,000,000 face principal amount promissory note dated March 18, 1999, as
amended by Allonge to Note dated as of March 2, 2001 (as so amended, the
“Facility One Term Note”) originally made by the Borrower and payable to the
order of Old FNB, the Bank having succeeded to the interests of Old FNB
thereunder; (iv) that certain $16,000,000 original principal amount
promissory note dated as of March 2, 2001 (the “Facility Two Term Note”) made
by the Borrower and payable to the order of the Bank; (v) that certain
$2,500,000 face principal amount promissory note dated September 27, 2002 (the
“Facility Three Term Note”) made by the Borrower and payable to the order of
the Bank; (vi) that certain Mortgage and Security Agreement and Assignment
of Leases and Rents dated as of March 2, 2001 given by the Borrower, as
mortgagor, to the Bank, as mortgagee, as amended by Amendment to Mortgage dated
as of September 27, 2002 (as so amended, the “Mortgage”); (vii) that
certain Environmental Compliance and Indemnity Agreement dated as of March 2,
2001 (the “Environmental Agreement”) given by the Borrower to the Bank; and
(viii) that certain Security Agreement (All Assets Except Intellectual
Property) dated as of September 27, 2002 (the “Security Agreement”) from the
Borrower to the Bank.  The Letter
Agreement, the Facility One Term Note, the Facility Two Term Note, the Facility
Three Term Note, the Mortgage, the Environmental Agreement and the Security
Agreement are hereinafter collectively referred to as the “Financing Documents”.


 


2.          The Bank hereby consents
to the acquisition of Cyclis Pharmaceuticals, Inc. by ArQule substantially on
the economic terms described on Exhibit A attached, and (ii) waives any
default under Sections 3.5, 4.6, 4.7 and 4.8 of the Loan Agreement which would
otherwise have resulted from this acquisition.


 

















 


3.             The Letter Agreement
is hereby amended, effective as of September 30, 2003, by deleting the
penultimate sentence of Section 3.9 of the Letter Agreement (as most recently
amended by the Third Modification) and by substituting in its stead the
following:


 


“As used herein, ‘Cash
Burn’ for any period is the sum of (1) consolidated EBITDA of the Borrower and
Subsidiaries for such period (negative EBITDA being expressed as a positive
number for this purpose and positive EBITDA being expressed as a negative
number for this purpose), plus (2) all taxes actually paid by the
Borrower during such period, plus (3) all Capital Expenditures (except
to the extent financed with a Term Loan or with other purchase money financing
permitted under §4.1) incurred by the Borrower and/or any of its Subsidiaries
during such period, plus (4) all payments on account of Debt Service
paid or accrued by the Borrower and/or any of its Subsidiaries during such
period, but minus (5) all non-cash charges relating to (a) goodwill
and/or intangible asset impairment and (b) acquired in-process research and
development which were deducted by the Borrower on its consolidated books for
the purposes of determining consolidated EBITDA for the relevant period.”


 


4.          Wherever in any
Financing Document, or in any certificate or opinion to be delivered in
connection therewith, reference is made to a “letter agreement” or to the
“Letter Agreement”, from and after the date hereof same will be deemed to refer
to the Letter Agreement, as hereby amended.


 


5.          In order to induce the
Bank to enter into this Agreement, the Borrower agrees to pay to the Bank, at
the date hereof, an amendment fee of $5,000. 
Said fee is in addition to, and shall not be reduced by or applied
against, any interest, fees, charges or other amounts paid or payable with
respect to the Letter Agreement and/or with respect to any note issued
thereunder.


 


6.          In order to induce the
Bank to enter into this Agreement, the Borrower also agrees to pay, promptly
upon receipt of an invoice therefor, all costs and expenses (including, without
limitation, reasonable attorneys’ fees) incurred by the Bank with respect to
this Agreement and/or the transactions contemplated hereby.


 


7.          In order to induce the
Bank to enter into this Agreement, the Borrower further represents and warrants
as follows:


 


a.          The execution, delivery
and performance of this Agreement have been duly authorized by the Borrower by
all necessary corporate and other action, will not require the consent of any
third party and will not conflict with, violate the provisions of, or cause a
default or constitute an event which, with the passage of time or the giving of
notice or both, could cause a default on the part of the Borrower under its
charter documents or by-laws or under any contract, agreement, law, rule,
order, ordinance, franchise, instrument or other document, or result in the
imposition of any lien or encumbrance on any property or assets of the
Borrower, except (I) liens and encumbrances in favor of the Bank and (II) liens
and encumbrances on the property and assets of Cyclis Corporation created prior
to the acquisition.


 


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b.          The Borrower has duly
executed and delivered this Agreement.


 


c.          This Agreement is the
legal, valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms.


 


d.          The statements,
representations and warranties of the Borrower made in the Letter Agreement
and/or in the Security Agreement continue to be correct as of the date hereof;
except as amended, updated and/or supplemented by the attached Supplemental
Disclosure Schedule.


 


e.          The covenants and
agreements of the Borrower contained in the Letter Agreement (as amended
hereby) and/or in the Security Agreement have been complied with on and as of
the date hereof.


 


f.           Giving effect to the
amendment set forth above, no event which constitutes or which, with notice or
lapse of time, or both, could constitute, an Event of Default (as defined in
the Letter Agreement) has occurred and is continuing.


 


g.          No material adverse
change has occurred in the financial condition of the Borrower from that
disclosed in the financial statements of the Borrower filed with the Securities
and Exchange Commission to date.


 


8.          Except as expressly
affected hereby, the Letter Agreement and each of the other Financing Documents
remains in full force and effect as heretofore.  All of the Borrower’s obligations, indebtedness and liabilities
to the Bank as evidenced by or otherwise arising under the Financing Documents,
except as otherwise expressly modified in this Agreement, are, by the
Borrower’s execution of this Agreement, ratified and confirmed in all respects
by the Borrower.  In addition, by the
Borrower’s execution of this Agreement, the Borrower represents and warrants
that no counterclaim, right of set-off or defense of any kind exists or is
outstanding with respect to such obligations, indebtedness and liabilities.  The Borrower acknowledges that the security
interests and liens created by the Security Agreement and/or the Mortgage run
in favor of the Bank and constitute valid liens on the Collateral (as defined
in the Security Agreement) and the Mortgaged Premises (as defined in the
Mortgage) and the Borrower agrees that the Borrower shall take no action to
impair or invalidate said security interests and liens.  The Borrower acknowledges that the
obligations secured by such security interests and liens include, without
limitation, the Facility One Term Note, the Facility Two Term Note, the
Facility Three Term Note and the Letter Agreement (as amended by this
Agreement).


 


9.          Nothing contained herein
nor in any documents delivered herewith will be deemed to constitute a waiver
or a release of any provision of any of the Financing Documents.  Nothing contained herein will in any event
be deemed to constitute an agreement to give a waiver or release or to agree to
any amendment or modification of any provision of any of the Financing
Documents on any other or future occasion.


 


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Executed, as an
instrument under seal, as of the day and year first above written.


 


	
   

  	
  ARQULE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
  Accepted and agreed:

  	
   

  
	
  FLEET NATIONAL BANK

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  David E. Meagher

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
						



 


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SUPPLEMENTAL
DISCLOSURE SCHEDULE


 


ArQule, Inc. Acquisition of Cyclis
Pharmaceuticals, Inc. Term Sheet dated June 26, 2003.