EXHIBIT
10.38


 


FACILITY
AGREEMENT


 


This FACILITY AGREEMENT (this “Agreement”),
dated as of May 15, 2009, between Array BioPharma Inc., a Delaware
corporation (the “Borrower”), and Deerfield Private Design Fund, L.P., a
Delaware limited partnership, and Deerfield Private Design International,
L.P.  a limited partnership organized
under the laws of the British Virgin Islands (individually, an “Investor”
and together,  the “Investors”
and, together with the Borrower, the “Parties”).


 


W I T N
E S S E T H


 


WHEREAS, the Borrower wishes to borrow from
the Investors, and the Investors desire to lend to the Borrower, $40 million in
aggregate principal amount for the purpose described in Section 2.1;


 


WHEREAS, the Parties have previously entered
into a Facility Agreement, dated as of April 29, 2008 (the “April 29
Facility Agreement”), pursuant to which (a) Warrants to purchase
capital stock of the Borrower were delivered to the Investors  and (b) Promissory Notes, dated such
date, were delivered by the Borrower to each Investor (the “Old Notes”)
in the aggregate principal amount of $80 million;


 


WHEREAS, the Parties desire to amend certain
provisions of the April 29 Facility Agreement in the manner set forth
herein;


 


NOW, THEREFORE, in consideration of the
mutual agreements set forth herein, the Investors and the Borrower agree as
follows:


 


ARTICLE I


 


DEFINITIONS


 


Section 1.1                                   General Definitions. 
Wherever used in this Agreement, the Exhibits or the Schedules attached
hereto, unless the context otherwise requires, the following terms have the
following meanings:


 


“Additional Amounts” has the meaning
given to it in Section 2.9(b).


 


“Business Day” means a day on which
banks are open for business in The City of New York.


 


“Cash and Cash Equivalents” means the
sum of (a) all  Cash and Cash
Equivalents and Marketable Securities shown on the Borrower’s condensed balance
sheet included in reports filed by the Borrower with the SEC under the Exchange
Act or otherwise made available to the Borrower’s stockholders and (b) the
Loan that the Borrower is entitled to request pursuant to Section 2.2 ,
subject to the satisfaction of the conditions precedent to effecting such
Loan.   .


 


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


 


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“Code” means the Internal Revenue Code
of 1986, as amended, and any Treasury Regulations promulgated thereunder.


 


“Common Stock” means the common stock,
par value $0.001 per share, of the Borrower.


 


“Default” means any event which, at
the giving of notice, lapse of time or fulfillment of any other applicable
condition (or any combination of the foregoing), would constitute an Event of
Default.


 


“Disbursement” has the meaning given
to it in Section 2.2(a).


 


“Disbursement Date” means the date on
which a Disbursement occurs.


 


“Disbursement Request” has the meaning
given to it in Section 2.2(a).


 


“Dollars” and the “$” sign mean
the lawful currency of the United States of America.


 


“Event of Default” has the meaning
given to it in Section 5.5.


 


“Evidence of Disbursement” has the
meaning given to it in Section 2.2(a).


 


“Exchange Act” means the Securities
Exchange Act of 1934, as amended, including the rules and regulations
promulgated thereunder.


 


“Excluded Taxes” means all income
taxes, minimum or alternative minimum income taxes, withholding taxes imposed
on gross amounts, any tax determined based upon income, capital gains, gross
income, sales, net profits, windfall profits or similar items, franchise taxes
(or any other tax measured by capital, capital stock or net worth), gross
receipts taxes, branch profits taxes, margin taxes (or any other taxes imposed
on or measured by net income, or imposed in lieu of net income) payable by the
Investors in any jurisdiction to any Government Authority (or political
subdivision or taxing authority thereof) in connection with any payments received
under this Agreement by the Investors, or any such tax imposed in connection
with the execution and delivery of, and the performance of its obligations
under, this Agreement.


 


“Final Payment” means such amount as
may be necessary to repay the Loan in full and any other amounts owing by the
Borrower to the Investors pursuant to the Financing Documents.


 


“Final Payment Date” means the earlier
of (i) the date on which the Borrower repays the outstanding principal of
the Loan (together with any other amounts accrued and unpaid under this
Agreement) to the Investors pursuant to this Agreement and (ii) April 29,
2014.


 


“Financing Documents” means the April 29
Agreement, this Agreement, the Notes, the Registration Rights Agreement, the
Security Agreement, the Subordination Agreement, the Warrants and any other
document or instrument delivered in connection with any of the foregoing
whether or not specifically mentioned herein or therein.


 


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


 


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“Government Authority” means any
government, governmental department, ministry, cabinet, commission, board,
bureau, agency, tribunal, regulatory authority, instrumentality, judicial,
legislative, fiscal, or administrative body or entity, domestic or foreign,
federal, state or local having jurisdiction over the matter or matters and
Person or Persons in question, including, with limitation, the SEC.


 


“Indemnified Person” has the meaning
given to it in Section 6.11.


 


“Indemnity” has the meaning given to
it in Section 6.11.


 


“Interest Rate” means, commencing on
the date of the Disbursement of $40 million provided for in Section 2.2, (a) if
Cash and Cash Equivalents on the first Business Day of a month is at least $60
million, 7.5% simple interest per annum on the aggregate principal amount of
the Notes outstanding from time to time (which amount shall initially be $120
million and shall exclude such principal amount added to the Old Notes pursuant
to the definition of Interest Rate contained in the April 29 Agreement), (b) if
such Cash and Cash Equivalents is between $50,000,000 and $59,999,999, 8.5% on
such aggregate outstanding principal amount, (c) if such Cash and Cash
Equivalents  is between $40,000,000 and
$49,999,999, 9.5% on such aggregate outstanding principal amount, (d) if
such Cash and Cash Equivalents is between $30,000,000 and $39,999,999, 12.0% on
such aggregate outstanding principal amount and (e) if such Cash and Cash
Equivalents is between $0 and $29,999,999, 14.5% on such aggregate outstanding
principal amount.  Interest shall accrue
on the Old Notes at the applicable Interest Rate as set forth in the April 29
Facility Agreement until such time as the Disbursement provided for in Section 2.2
is made, and, for the purpose of calculating simple interest payable hereunder
thereafter, the amount of principal outstanding under the Old Notes shall not
include any interest added to the principal amount pursuant thereto.


 


“Lien” means any lien, pledge,
preferential arrangement, mortgage, security interest, deed of trust, charge,
assignment, hypothecation, title retention, privilege or other encumbrance on
or with respect to property or interest in property having the practical effect
of constituting a security interest, in each case with respect to the payment
of any obligation with, or from the proceeds of, any asset or revenue of any
kind.


 


“Loan” means the loan made to the
Borrower under the April 29 Facility Agreement in the principal amount of
$80 million and the loan to be made available by the Investors to the Borrower
pursuant to Section 2.2 of this Agreement in the principal amount of $40
million or, as the context may
require, the principal amount thereof from time to time outstanding.


 


“Loss” has the meaning given to it in Section 6.11.


 


“Major Transaction” has the meaning set
forth in the Warrants.


 


“Material Adverse Effect” means a
material adverse effect on (a) the business, operations, prospects,
condition (financial or otherwise) or property of the Borrower, (b) the
validity or enforceability of any provision of any Financing Document, (c) the
ability 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 24b-2 of the Securities Exchange Act of
1934, as amended.


 


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Borrower to timely perform
its Obligations  or (d) the rights
and remedies of the Investors under any Financing Document.


 


“New Notes” means the notes issued to
the Investors in the forms attached hereto as Exhibit A-1 and Exhibit A-2.


 


“Notes” mean the Old Notes and the New
Notes.


 


“Obligations” means all obligations
(monetary or otherwise) of the Borrower arising under or in connection with the
Financing Documents.


 


“Organizational Documents” means the
Certificate of Incorporation and By-laws of the Borrower.


 


“Permitted Indebtedness” means: (i) indebtedness
of Borrower in favor of the  Investors
arising under this Agreement, (ii) the Senior Debt, (iii) indebtedness
to trade creditors, collaborators or licensors 
incurred in the ordinary course of business,  and (iv) subject to the provisions of Section 5.2(d),
extensions,  refinancing and renewal of
the Senior Debt.


 


“Permitted Liens” means: (i) Liens
existing on the date hereof and disclosed on Exhibit B hereof; and any
renewals or extensions thereof; (ii) Liens in favor of the Investors; (iii) statutory
Liens created by operation of applicable law; (iv) Liens arising in the
ordinary course of business and securing obligations that are not overdue or
are being contested in good faith by appropriate proceedings; (v) Liens
securing purchase money or other lease equipment financing; (vi) Liens for
Taxes not yet due and payable or that are being contested in good faith by
appropriate proceedings; and (v) leases or subleases granted to others not
interfering in any material respect with the Borrower’s business or licenses
granted in the course of the Borrower’s business.


 


“Person” means and includes any
natural person, individual, partnership, joint venture, corporation, trust,
limited liability company, limited company, joint stock company, unincorporated
organization, government entity or any political subdivision or agency thereof,
or any other entity.


 


“Registration Rights Agreement” means
the Registration Rights Agreement, dated as of the date hereof, between the
Borrower and the Investors.


 


“SEC” means the United States
Securities and Exchange Commission.


 


“Securities Act” means the Securities
Act of 1933, as amended, including the rules and regulations promulgated
thereunder.


 


“Security Agreement” means the
Security Agreement, dated as of April 29, 2008, between the Borrower and
the Investor granting to the Investors a security interest in certain assets of
the Borrower specified therein.


 


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


 


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“Senior Debt” means the Borrower’s
obligations owing to Comerica Bank pursuant to that certain Loan and Security
Agreement dated June 28, 2005 (as amended as of December 19, 2005 and
as of July 7, 2006 and as may be amended from time to time) (the “Comerica
Loan Agreement”) for loans in the principal amount of $15,000,000 on the
date hereof.


 


“Subordination Agreement” means the
Subordination Agreement, dated as of April 29, 2008, between Comerica Bank
and the Investors.


 


“Subsidiary or Subsidiaries means, as
to the Borrower, any entity that is controlled by Borrower.  As used in this definition, the term
“control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through ownership of voting securities or partnership or other ownership
interest, by contract, or otherwise.


 


“Taxes” means all deductions or
withholdings for any and all present and future taxes, levies, imposts, stamp
or other duties, fees, assessments, deductions, withholdings, all other
governmental charges, and all liabilities with respect thereto.


 


“Trading Day” means any day on which
the Common Stock is traded for 2 hours on NASDAQ, or on the principal
securities exchange or other securities market on which the Common Stock is
then being traded.


 


“Warrants” means the warrants attached
hereto as part of Exhibit C-1 and Exhibit C-2 issued pursuant to Section 2.13.


 


Section 1.2                                   Interpretation. 
In this Agreement, unless the context otherwise requires, all words and
personal pronouns relating thereto shall be read and construed as the number
and gender of the party or parties requires and the verb shall be read and
construed as agreeing with the required word and pronoun; the division of this
Agreement into Articles and Sections and the use of headings and captions is
for convenience of reference only and shall not modify or affect the
interpretation or construction of this Agreement or any of its provisions; the
words “herein,” “hereof,” “hereunder,” “hereinafter” and “hereto” and words of
similar import refer to this Agreement as a whole and not to any particular Article or
Section hereof; the words “include,” “including,” and derivations thereof
shall be deemed to have the phrase “without limitation” attached thereto unless
otherwise expressly stated; references to a specified Article, Exhibit, Section or
Schedule shall be construed as a reference to that specified Article, Exhibit, Section or
Schedule of this Agreement; and any reference to any of the Financing Documents
means such r document as the same shall be amended, supplemented or modified
and from time to time in effect.


 


Section 1.3                                   Business Day Adjustment. 
If the day by which a payment is due to be made is not a Business Day,
that payment shall be made by the next succeeding Business Day unless that next
succeeding Business Day falls in a different calendar month, in which case that
payment shall be made by the Business Day immediately preceding the day by
which such payment is due to be made.


 


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


 


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ARTICLE II


 


AGREEMENT FOR THE LOAN


 


Section 2.1                                   Use of Proceeds. 
The Borrower shall use the Loan 
for general corporate purposes.


 


Section 2.2                                   Disbursements.  Prior to the date of this Agreement disbursements of
the Loan in the amount of $40,000,000 each were made on June 20, 2008 and December 22,
2008 pursuant to the April 29 Facility Agreement.  Subject to satisfaction of the conditions
contained in Article IV, the Investors agree to make a third disbursement
of $40,000,000 (a “Disbursement”) that shall be delivered to the
Borrower on such date between June 29, 2009 and September 30, 2009 as
specified by the Borrower in a disbursement request (a “Disbursement Request”)
in the form of Schedule 1, delivered to the Investors on, and prior to
the opening of trading on, the fifteenth (15th) Business Day prior to the
requested Disbursement Date. Against such Disbursement, the Borrower shall
deliver to the Investors a completed receipt (the “Evidence of Disbursement”)
in the form of Schedule 2, which receipt shall not be effective
until the Disbursement is actually advanced to the Borrower. Such Disbursement
shall be allocated 61.7% to Deerfield Private Design Fund International, L.P.
and 38.3% to Deerfield Private Design Fund, L.P.


 


Section 2.3                                   Repayment. 
The Borrower shall remit the Final Payment to the Investors on the
earlier to occur of (i) the Final Payment Date and (ii) an Event of
Default, after the expiration of all applicable cure or grace periods.


 


Section 2.4                                   Mandatory
Prepayment of New Notes. 
Notwithstanding Section 2.3, the Borrower shall prepay the New
Notes in an amount equal to 15% of any amounts, in the form of cash or property
(valued at its fair market value determined in good faith by the Board of
Directors of the Borrower), received by the Borrower  pursuant to the terms of any collaborative arrangements, licensing
agreement, joint venture or partnership, or similar arrangement providing for
the development or commercial exploitation of, or right to develop or
commercially exploit, the technology, intellectual property or products of the
Borrower, including arrangements that involve the assignment or licensing of
any existing or newly developed intellectual property under such arrangements entered into by
the Borrower after January 1, 2011 (the “Commercialization Agreements”).  Such amounts shall be applied to the
outstanding principal amount under the New Notes and shall be remitted by the
Borrower within 30 days of receipt; provided, however, that the maximum
principal amount required to be prepaid pursuant to this Section 2.4 is
$40 million.  The obligation  to prepay the Notes provided for in this Section 2.4
shall not include amounts received by the Borrower pursuant to a
Commercialization Agreement (a) to fund costs for research and
development, pre-marketing or commercialization activities the Borrower is
required to perform under such Commercialization Agreement that are incurred
after the effective date of such Commercialization Agreement (the “CA Date”),
or that were incurred prior to the CA Date at the request of the other party to
such Commercialization Agreement, (b) for 
products supplied pursuant to such Commercialization Agreement after the
CA Date, (c) from loans at reasonable and customary rates of interest made



 


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


 


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to the Borrower pursuant to such Commercialization
Agreement after the CA Date, (d) as payment for the issuance of capital
stock pursuant to such Commercialization Agreement (limited to the prevailing
market value of such capital stock) after the CA Date, (e) in connection
with the formation of joint ventures, partnerships or similar arrangements in
which the Borrower receives or has an equity interest in such arrangement and
cash or other property is contributed to such arrangement and required to be
used for operating purposes, (g) to pay the Borrower for patent
prosecution, maintenance and enforcement costs and expenses for patents or
patent applications related to such Commercialization Agreement after the CA
Date and (h) consisting of intellectual property, other rights, technology
or materials contributed by the other party to the Commercialization Agreement,
whether by assignment, license or otherwise.


 


Section 2.5                                   Optional Prepayment. The Borrower may prepay the Old Notes
and the New Notes, at any time without premium or penalty, in cash or, subject
to the provisions of Section 2.14, in Common Stock.


 


Section 2.6                                   Application of Payments. The proceeds of any prepayment made
hereunder shall be applied, pro rata, first to accrued and unpaid
interest, second, to interest payable on such interest payment date, and third
to the outstanding principal amount.


 


Section 2.7                                   Transaction Fee. The Borrower agrees pay Deerfield
Management Company, L.P. a transaction fee of $500,000 on July 10, 2009
and $500,000 on the date the Disbursement is made.


 


Section 2.8                                   Payments. 
Subject to the provisions of Section 2.14, payments of any amounts
due to the Investors under this Agreement shall be made in Dollars in
immediately available funds prior to 11:00 a.m. New York City time on such
date that any such payment is due, at such bank or places, as the Investors
shall from time to time designate in writing at least five Business Days prior
to the date such payment is due.  The
Borrower shall pay all and any costs (administrative or otherwise) imposed by
banks, clearing houses, or any other financial institution, in connection with
making any payments under any of the Financing Documents, except for any costs
imposed by the Investors’ banking institutions.


 


Section 2.9                                   Taxes, Duties and Fees.


 


(a)                                  The Borrower
shall pay or cause to be paid all present and future Taxes (other than Excluded
Taxes, if any), duties, fees and other charges of whatsoever nature, if any,
now or at any time hereafter levied or /imposed by any Government Authority, by
any department, agency, political subdivision or taxing or other authority
thereof or therein, by any organization of which the applicable Government
Authority is a member, or by any jurisdiction through which the Borrower makes
payments hereunder, on or in connection with the payment of any and all amounts
due under this Agreement, and all payments of principal and other amounts due
under this Agreement shall be made without deduction for or on account of any
such Taxes, duties, fees and other charges, except for Excluded Taxes, which
may be deducted or withheld from payments made by the Borrower only if such
deduction or withholding is required by applicable law.


 


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


 


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(b)                                 If the Borrower
is required to withhold any such amount or is prevented by operation of law or
otherwise from paying or causing to be paid such Taxes, duties, fees or other
charges as aforesaid except for Excluded Taxes, the principal or other amounts
due under this Agreement (as applicable) shall be increased to such amount as
shall be necessary to yield and remit to the Investors the full amount it would
have received taking into account any such Taxes (except for Excluded Taxes),
duties, fees or other charges payable on amounts payable by the Borrower under
this Section 2.9(b) had such payment been made without deduction of
such Taxes, duties, fees or other charges (all and any of such additional
amounts, herein referred to as the “Additional Amounts”).


 


(c)                                  If Section 2.9(b) above
applies and the Investors so require the Borrower shall deliver to the
Investors official tax receipts evidencing payment (or certified copies of
them) of the Additional Amounts within thirty (30) days of the date of payment.


 


(d)                                 If the
Investors receive a refund from a Government Authority to which the Borrower
has paid withholding Taxes pursuant to this Section 2.9, the Investors
shall pay such refund to the Borrower.


 


Section 2.10                            Costs, Expenses and
Losses.  If, as a result of any failure by the
Borrower to pay any sums when due under this Agreement (after expiration of any
grace periods), or to borrow in accordance with a Disbursement Request  made pursuant to Section 2.2, the
Investors shall incur costs, expenses and/or losses, by
reason of the liquidation or redeployment of deposits from third parties or in
connection with obtaining funds to make or maintain any Disbursement, the Borrower shall pay to the Investors
upon request by the Investors, the amount of such costs, expenses and/or losses
within fifteen (15) days after receipt by it of a certificate from the
Investors setting forth in reasonable detail such costs, expenses and/or
losses.  For the purposes of the
preceding sentence, “costs, expenses and/or losses” shall include, without
limitation, any interest paid or payable to carry any unpaid amount and any
loss, premium, penalty or expense which may be incurred in obtaining,
liquidating or employing deposits of or borrowings from third parties in order
to make, maintain or fund the Loan or any portion thereof.


 


Section 2.11                     Interest Rate. 
The Notes shall bear interest at the Interest Rate (calculated on a
monthly basis).  Interest shall be paid
monthly in arrears commencing on the first Business Day of the second full
month following the month in which the Disbursement occurs, and on the first
Business Day of each month thereafter.


 


Section 2.12                     Interest on Late Payments.  Without limiting the remedies available to
the Investors under the Financing Documents or otherwise, to the maximum extent
permitted by applicable law, if the Borrower fails to make any payment of
principal or  interest  with respect to the Loan, the Borrower shall
pay, in respect of the outstanding principal amount and interest  of the Loan, interest at the rate per annum
equal to the Interest Rate plus eight hundred (800) basis points for so long as
such payment remains outstanding.  Such
interest shall be payable on demand.


 


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


 


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Section 2.13                     Delivery of Warrants.


 


(a)                                  On the date
hereof, the Original Warrants shall be cancelled and the Borrower shall issue
to the Investors warrants to purchase an aggregate of 6,000,000 shares of
Common Stock in substantially the form set forth on Exhibit C-1 hereto
(the “Exchange Warrants”) at an initial Exercise Price (as defined in
the Warrants) of $3.65.  As used herein,
“Original Warrants” shall mean the Warrants to purchase an aggregate of
six million (6,000,000) shares of Common Stock issued to the Investors on April 29,
2008.


 


(b)                                 Concurrently
with the Disbursement, the Borrower shall issue to Investors warrants to
purchase six million (6,000,000) shares of Common Stock in the form annexed
hereto as Exhibit C-2 (the “New Warrants”) containing an initial
Exercise Price equal to the greater of (i) $3.13 [market price on signing]
and (ii) 120% of the average of the Volume Weighted Average Price (as
defined in subsection (c) below) of the Common Stock for each of the
fifteen (15) consecutive Trading Days beginning with the date of delivery of
the Disbursement Request.


 


(c)                                  As used herein,
the “Volume Weighted Average Price” for the Common Stock as of any date
means the volume weighted average price (based on regular hours trading) of the
Common Stock on the NASDAQ Global Select Market (“NASDAQ”) as reported
by Bloomberg Financial L.P. using the AQR function or an equivalent, reliable
reporting service mutually acceptable to and hereafter designated by the Investors
and the Borrower (“Bloomberg”) or, if NASDAQ is not the principal
trading market for the Common Stock, the volume weighted average sale price of
the Common Stock on the principal trading market for the Common Stock on the
principal securities exchange or trading market where the Common Stock is
listed or traded as reported by Bloomberg, or, if no volume weighted average
sale price is reported for the Common Stock, then the last closing trade price
of the Common Stock as reported by Bloomberg, or, if no last closing trading
price is reported for the Common Stock by Bloomberg, the average of the bid
prices of any market makers for the Common Stock in the over the counter market
maintained by the Financial Industry Regulatory Authority, Inc. or in the “pink
sheets” maintained by the Pink OTC Market, Inc.  If the Volume Weighted Average Price cannot
be calculated for the Common Stock on such date in the manner provided above,
the Volume Weighted Average Price shall be the fair market value as mutually determined
by the Investors and the Borrower.


 


(d)                                 All Warrants
issued pursuant to this Section 2.13 shall be allocated among the
Investors as set forth on Schedule 1.


 


(e)                                  Notwithstanding
anything herein to the contrary, if the Borrower shall at any time prior to the
issuance of the New Warrants effect a stock split, recapitalization,
reclassification or other similar transaction of such character that the shares
of Common Stock shall be changed into or become exchangeable for a larger or
smaller number of shares, then upon the effective date thereof, the number of
shares of Common Stock into which the New Warrants shall be exercisable shall
be increased or decreased, as the case may be, in direct proportion to the
increase or decrease in the number of shares of 


 


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


 


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Common Stock by reason of such stock split,
recapitalization, reclassification or similar transaction.


 


Section 2.14                     Payment in Common Stock


 


(a)                                  In lieu of
making any payment of principal or interest required or permitted to be made
under the Notes (including without limitation pursuant to Section 2.4 but
other than as a result of acceleration pursuant to Sections 5.5 and 5.6), the
Borrower may elect to satisfy any such payment (in the order of priority set
forth in Section 2.6) by the issuance to the Investors of shares of Common
Stock registered for issuance under the Securities Act of 1933 (a “Share
Issuance”) so long as it complies with each of the following conditions:


 


(b)                                 Exercise of
Right to Make Share Issuance.  The
Borrower must deliver to the Investors notice by phone and facsimile (the “Share
Payment Notice”) of its intention to issue shares of Common Stock pursuant
to the provisions of this Section 2.14. 
Subject to such provisions, the Share Payment Notice shall be
irrevocable and shall provide for a closing of the Share Issuance at or prior
to 10:40 a.m. eastern time on the Share Payment Closing Date.


 


(c)                                  Share Payment
Closing.  For purposes herein, the “Share
Payment Closing Date” shall mean (i) for [***]
Share Issuances, the [***] Trading
Day following the occurrence of two full Trading Days following the receipt by
the Investors of the Share Payment Notice, and (ii) for all other Share
Issuances, a date specified in the Share Payment Notice that is, [***], the [***] Trading
Day following the occurrence of [***] Trading
Days following receipt by the Investors of the Share Payment Notice.  For the avoidance of doubt, if a Share
Payment Notice is received by the Investors prior to the commencement of
trading on a Trading Day, that day shall count as a full Trading Day for
purposes of computing the time periods above. [***]  At or prior to each closing of a Share
Issuance, (i) the Borrower shall cause its transfer agent to
electronically transmit the number of shares deliverable in such Share Issuance
pursuant to this Section 2.14 by crediting the account of the Investors’
prime broker with DTC through its Deposit Withdrawal Agent Commission (DWAC)
system, (ii) the Investors shall execute and deliver to the Borrower a
written acknowledgement of receipt of such shares and a release of the amount
of the Obligations satisfied by the Borrower pursuant to the Share Issuance and
(iii) the Borrower shall file with the SEC and deliver to the Investors a
prospectus supplement covering the shares issuable in such Share Issuance.


 


(d)                                 Maximum
Issuance.  The maximum number of shares
which the Borrower shall be permitted to issue to the Investors in accordance
with this Section 2.14 on any Share Payment Closing Date (the “Maximum
Issuance”) shall, except as hereinafter provided, be equal to a percentage
of the total number of shares of Common Stock [***]


 


(e)                                  Restrictions on
Trading.  [***]


 


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


 


10














 


(f)                                    Borrower
Reporting.  The Borrower shall file with
the SEC a Current Report on Form 8-K disclosing its delivery of a Share
Payment Notice and the number of shares to be issued to the Investors on the
applicable Share Payment Closing Date within three (3) hours of delivery
of the Share Payment Notice, provided, however, that if the Investors shall
have provided a notice to the Borrower pursuant to subsection (i) below
then the Borrower shall file such Current Report on Form 8-K within three
hours of receipt of said notice, unless said notice provides that no shares
will be issued in respect of such Share Payment Notice in which case Borrower
need not file such Report.


 


(g)                                 Subsequent
Share Payments.  Following any Share
Payment Closing Date, the Borrower may not deliver a subsequent Share Payment
Notice (a “Subsequent Share Payment Notice”) until the date following
expiration of the Applicable Period following such prior Share Payment Closing
Date; provided, however, that such restriction shall not apply [***].  The “Applicable
Period” shall mean (i) [***] (ii) [***] and (iii) [***].


 


(h)                                 [***]


 


(i)                                     [***]


 


(j)                                     Valuation of
Shares.  Common Stock issued pursuant to
this Section 2.14 shall be valued at [***] on the
Share Payment Closing Date multiplied by the Applicable Percentage (reflected
as a decimal).  The “Applicable
Percentage” shall be (i) [***]% in the
case of a [***], (ii) [***]%
in the case of a [***] (iii) [***]% in the case of [***] (iv) [***]% in the case of a Share Issuance [***];
provided, however, that [***].


 


(k)                                  Limitations on
Share Issuances.  Notwithstanding
anything herein to the contrary, (i) no payments under the Notes may be
made in shares of Common Stock to the extent the number of shares so issued,
together with the number of other shares of Common Stock beneficially owned by
the Investors and their affiliates and any other persons or entities whose
beneficial ownership of Common Stock would be aggregated with the Investors for
purposes of Section 13(d) of the Exchange Act (includes “group”
members), would exceed 9.98% of the total number of shares of Common Stock of
the Borrower then outstanding and (ii) the maximum number of shares of
Common Stock that the Borrower may issue pursuant to the provisions of this Section 2.14
may not exceed 9,622,220 shares.


 


Section 2.15                            Amendment of April 29
Facility Agreement.
The April 29 Facility Agreement is hereby amended as follows: (a) upon
the Disbursement contemplated by Section 2.2 hereof, the definition of
“Interest” in Section 1.1 of the April 29 Facility Agreement shall be
amended and replaced with the definition of “Interest” in Section 1.1
hereof; (b) Section 2.6 (Optional Prepayment) shall be added to Article II
of the April 29 Facility Agreement; (c) effective as of the date of
the Disbursement pursuant to Section 2.2 hereof, Section 2.8
(Interest Rate) of the April 29 Facility Agreement shall be amended and
replaced in its entirety with Section 2.11 (Interest Rate) hereof; (d) the
provisions of Section 2.13 (Delivery of Warrants) hereof, to the extent
applicable to the Exchange Warrants, shall supersede and be deemed to amend the
provisions of Section 2.10 (Delivery of Warrants) of the April 29
Facility 


 


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


 


11

















 


Agreement to the extent such provisions are
inconsistent with Section 2.13 hereof; (e) Section 2.11 (Payment
in Common Stock) of the April 29 Facility Agreement shall be amended and
replaced in its entirety with Section 2.14 (Payment in Common Stock)
hereof; and (f) Section 5.5(k) of the April 29 Facility
Agreement shall be amended and replaced in its entirety with Section 5.5(k) hereof.


 


ARTICLE III


 


REPRESENTATIONS AND WARRANTIES


 


Section 3.1                                   Representations and
Warranties of the Borrower.  The Borrower represents and warrants as of
the date hereof and as of the Disbursement Date as follows:


 


(a)                                  The Borrower is
a corporation duly organized and validly existing under the laws of the State
of Delaware.


 


(b)                                 The Borrower is
conducting its business in compliance with its Organizational Documents.  The Organizational Documents of the Borrower
(including all amendments thereto) as currently in effect have been furnished
to the Investors and remain in full force and effect with no defaults
outstanding thereunder.


 


(c)                                  The Borrower
has full power and authority to enter into each of the Financing Documents and
to make the borrowings and the other transactions contemplated thereby.


 


(d)                                 All
authorizations, consents, approvals, registrations, exemptions and licenses
with or from Government Authorities or other Persons that are necessary for the
conduct of its business as currently conducted and as proposed to be conducted,
for the borrowing hereunder, the execution and delivery of the Financing
Documents and the performance by the Borrower of its Obligations, have been
obtained and are in full force and effect.


 


(e)                                  Each Financing
Document has been duly authorized, executed and delivered by the Borrower and
constitutes the valid and legally binding obligation of the Borrower,
enforceable in accordance with its terms, except as such enforceability may be
limited by (i) applicable insolvency, bankruptcy, reorganization,
moratorium or other similar laws affecting creditors’ rights generally, and (ii) applicable
equitable principles (whether considered in a proceeding at law or in equity).


 


(f)                                    No Default or
Event of Default (or any other default or event of default, however described)
has occurred (or after the initial Disbursement Date is continuing) under any
of the Financing Documents.


 


(g)                                 Neither the
entering into any of the Financing Documents nor the compliance with any of its
terms conflicts with, violates or results in a breach of any of the terms of,
or constitutes a default or event of default (however described) or requires 


 


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


 


12

















 


any consent under, any agreement to which the
Borrower is a party or by which it is bound, or violates any of the terms of
the Organizational Documents or any judgment, decree, resolution, award or
order or any statute, rule or regulation applicable to the Borrower or its
assets.


 


(h)                                 The Borrower is
not engaged in or the subject of any litigation, arbitration, administrative
regulatory compliance proceeding, or investigation, nor are there any
litigation, arbitration, administrative regulatory compliance proceedings or
investigations pending or, to the knowledge of the Borrower, threatened before
any court or arbitrator or before or by any Government Authority against the
Borrower, and the Borrower is not aware of any facts likely to give rise to any
such proceedings.


 


(i)                                     The Borrower (i) is
capable of paying its debts as they fall due, is not unable and has not
admitted its inability to pay debts as they fall due, (ii) is not bankrupt
or insolvent and (iii) has not taken action, and no such action has been
taken by a third party, for the Borrower’s winding up, dissolution, or
liquidation or similar executory or judicial proceeding or for the appointment
of a liquidator, custodian, receiver, trustee, administrator or other similar
officer for the Borrower or any or all of its assets or revenues.


 


(j)                                     No Lien exists
on Borrower’s property, except for Permitted Liens.


 


(k)                                  The obligation
of the Borrower to make any payment under this Agreement (together with all
charges in connection therewith) is absolute and unconditional, and there
exists no right of setoff or recoupment, counterclaim, cross-claim or defense
of any nature whatsoever to any such payment.


 


(l)                                     No uncured
“Event of Default,” as such term is defined in the Comerica Loan Agreement, exists
that constitutes a Material Adverse Effect..


 


Section 3.2                                   Borrower Acknowledgment. 
The Borrower acknowledges that it has made the representations and
warranties referred to in Section 3.1 at request of the Investors as a
condition to entering into the Financing Documents and that the Investors have
entered into the Financing Documents on the basis of, and in full reliance on,
each of such representations and warranties. The Borrower represents and
warrants to the Investors that none of such representations and warranties
omits any matter the omission of which makes any of such representations and
warranties materially misleading.


 


Section 3.3                                   Representations and
Warranties  of the Investors. 
Each of the Investors represents and warrants to the Borrower as of the
date hereof and as of each date Warrants are granted pursuant to this Agreement
that:


 


(a)                                  It is acquiring
the Warrants and the shares of Common Stock issued upon exercise of the
Warrants (the “Exercise Shares”) solely for its account for investment
and not with a view to or for sale or distribution of the Warrants or Exercise
Shares or any part thereof.  Each of the
Investors also represents that the entire legal and beneficial 


 


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


 


13

















 


interests of the Warrants and Exercise Shares
such Investor is acquiring is being acquired for, and will be held for, its
account only.


 


(b)                                 It has substantial experience
evaluating and investing in securities of companies, will bear the full
economic risk of its investment and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Warrants and the Exercise Shares. It has made as thorough and complete an
investigation of the Borrower and this investment as it considers prudent in
the circumstances and acknowledges that the Borrower may possess
information that has not been disclosed to the public that may be material to
an investor.


 


(c)                                  The Warrants
and the Exercise Shares have not been registered under the Securities Act on
the basis that no distribution or public offering of the stock of the Borrower
is to be effected.  Each of the Investors
realizes that the basis for the exemptions may not be present, if
notwithstanding its representations such Investor has a present intention of
acquiring the securities for a fixed or determinable period in the future,
selling (in connection with a distribution or otherwise), granting any
participation in, or otherwise distributing the securities.  None of the Investors has such present
intention.


 


(d)                                 The Warrants
and the Exercise Shares must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption for such registration is
available.


 


(e)                                  Neither the
Warrants nor the Exercise Shares may be sold pursuant to Rule 144 adopted
under the Securities Act unless certain conditions are met, including, among
other things, the existence of a public market for the shares, the availability
of certain current public information about the Borrower, the resale following
the required holding period under Rule 144 and the number of shares being
sold during any three month period not exceeding specified limitation.


 


(f)                                    It will not
make any disposition of all or any part of the Warrants or Exercise Shares
until:


 


(i)                                     The Borrower
shall have received a  letter secured by
such Investor from the SEC stating that no action will be recommended to the
SEC with respect to the proposed disposition;


 


(ii)                                  There is then
in effect a registration statement under the Securities Act covering such
proposed disposition and such disposition is made in accordance with said
registration statement; or


 


(iii)                               Such Investor
shall have notified the Borrower of the proposed disposition and shall have
furnished counsel for the Borrower with an opinion of counsel, substantially in
the form annexed as Exhibit C to the Warrant.  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 24b-2 of the Securities Exchange Act of
1934, as amended.


 


14

















 


Borrower agrees that it will not require an
opinion of counsel with respect to transactions under Rule 144 of the
Securities Act.


 


(g)                                 It understands
and agrees that the Warrants and all certificates evidencing the shares to be
issued to the Investors upon exercise of the Warrants may bear the following
legend until such time as the Warrants and such shares, as applicable, have
been registered under the Securities Act or otherwise may be sold pursuant to
such Rule 144 or an exemption from registration under the Securities
Act  without any restriction as to the
number of securities as of a particular date that can be immediately sold.


 


“THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”) OR     ANY  STATE
SECURITIES LAWS.  THE SECURITIES MAY NOT
BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED
UNLESS  (I) A REGISTRATION STATEMENT
REGISTERING SUCH SECURITIES UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE OR (II) THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT THAT SUCH TRANSFER MAY LAWFULLY
BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OR QUALIFICATION UNDER
APPLICABLE STATE SECURITIES LAWS, OR (III) SUCH SECURITIES ARE SOLD
PURSUANT TO RULE 144 OR RULE 144A.


 


“THE SALE, TRANSFER OR ASSIGNMENT OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF A
CERTAIN REGISTRATION RIGHTS AGREEMENT DATED AS OF 

APRIL 29, 2008. AS AMENDED FROM TIME TO TIME, AMONG THE COMPANY AND CERTAIN
HOLDERS OF ITS OUTSTANDING SECURITIES. 
COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF
THE COMPANY.”


 


(h)                                 Such Investor
is an “accredited investor” as defined in Regulation D promulgated the
Securities Act.


 


(i)                                     Such Investor
is a limited partnership duly organized and validly existing under the laws of
the jurisdiction of its formation.


 


(j)                                     Such Investor
has full power and authority to make the Disbursement and to enter into and
perform its other obligations under each of the Financing Documents and carry
out the other transactions contemplated thereby.


 


(k)                                  All
authorizations, consents, approvals, registrations, exemptions and licenses
with or from Government Authorities or other Persons that are necessary, for
the making of a Disbursement  hereunder,
the execution and delivery of the Financing Documents and the performance by
such Investor of its obligations thereunder, have been 


 


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


 


15

















 


obtained and are, and will be on the date of
such Disbursement hereunder, in full force and effect.


 


(l)                                     Each Financing
Document has been duly authorized, executed and delivered by such Investor and
constitutes the valid and legally binding obligation of such Investor, enforceable
in accordance with its terms, except as such enforceability may be limited by (i) applicable
insolvency, bankruptcy, reorganization, moratorium or other similar laws
affecting creditors’ rights generally, and (ii) applicable equitable
principles (whether considered in a proceeding at law or in equity).


 


(m)                               [***]


 


ARTICLE IV


 


CONDITIONS OF DISBURSEMENT


 


Section 4.1                                   Conditions to
Disbursement of the Loan.  The obligation of the
Investors to make a  Disbursement  shall be subject to the fulfillment of the
following conditions:


 


(a)                                  The Investors
shall have received evidence reasonably satisfactory to it of the Borrower’s
authority to execute, deliver and perform each of the Financing Documents and
to engage in the transactions contemplated thereby and an opinion of Borrower’s
counsel satisfactory to the Investor; and


 


(b)                                 No Event of
Default or event which with the passage of time or notice would reasonably be
likely to become an Event of Default has occurred.


 


ARTICLE V


 


PARTICULAR COVENANTS AND EVENTS OF DEFAULT


 


Section 5.1                                   Affirmative Covenants. 
Unless the Investors shall otherwise agree:


 


(a)                                  The Borrower
shall (i) maintain its existence and qualify and remain qualified to do
its business as currently conducted, (ii) maintain all approvals necessary
for the Financing Documents to be in effect, and (iii) operate its
principal business with commercially reasonable due diligence, efficiency and
in conformity with sound business practices.


 


(b)                                 The Borrower
shall comply in all material respects with 
all applicable laws, rules, regulations and orders of any Government
Authority, except where the necessity of compliance therewith is contested in
good faith by appropriate proceedings or where the failure to so comply,
individually or in the aggregate, would not have a Material Adverse Effect.


 


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


 


16

















 


(c)                                  The Borrower
shall obtain, make and keep in full force and effect all licenses, contracts,
consents, approvals and authorizations from and registrations with Government
Authorities that may be required to conduct its business, except where the
failure to obtain, make or keep in full force and effect any of the foregoing
would not have a Material Adverse Effect.


 


(d)                                 The Borrower
shall promptly notify the Investors of the occurrence of (i) any Default
or Event of Default; or (ii) any claims, litigation, arbitration,
mediation or administrative or regulatory proceedings that are instituted or
threatened against the Borrower, except for matters that, individually or in
the aggregate, could not have a Material Adverse Effect; and (iii) each
event which, at the giving of notice, lapse of time, determination of
materiality or fulfillment of any other applicable condition (or any
combination of the foregoing), could constitute an event of default (however
described) under any of the Financing Documents.


 


(e)                                  The Borrower
shall comply with the terms of each of the Financing Documents (subject to any
cure or grace periods therein).


 


(f)                                    (i) If the
Borrower is not required to file reports pursuant to Section 13 or 15(d) of
the Exchange Act, the Borrower will provide quarterly financial statements for
itself and its Subsidiaries with 45 days after the end of each quarter, and
annual financial statements within 120 days after the end of each year; (ii) the
Borrower will  timely file with the SEC
(subject to appropriate extensions made under Rule 12b-25 of  the 
Exchange Act) any annual reports, quarterly reports and other periodic
reports pursuant to Section 13 or 15(d) of the Exchange Act; (iii) the
Borrower and its Subsidiaries will provide to the Investors copies of all
documents, reports, financial data and other information as the Investors may
reasonably request, and permit the Investors to visit and inspect any of the
properties of the Borrower and its Subsidiaries, and to discuss its and their
affairs, finances and accounts with its and their officers, all at such times
as the Investors may reasonably request; and (iv) the Investors shall have
the right to consult with and advise the management of the Borrower and its
Subsidiaries on matters relating to the operation of the Borrower and it
Subsidiaries.


 


Section 5.2                                   Negative Covenants. Unless the Investors shall otherwise
agree:


 


(a)                                  The Borrower
shall not (i) liquidate or dissolve or (ii) consolidate with or merge
into any other entity or reorganize, or (iii) enter into any transaction
whereby its income or profits are, or might be shared with any other Person, or
enter into any management contract or similar arrangement whereby its business
or operations are managed by another Person; provided, however, that the
Borrower may form, capitalize and conduct business operations through
Subsidiaries upon notice to Investors; and provided further, however, that the
Borrower may enter into any collaborative arrangements, licensing agreement,
joint venture or partnership, or similar business arrangement providing for the
development or commercial exploitation of, or right to develop or commercially
exploit, the technology, intellectual property or products 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 24b-2 of the Securities Exchange Act of
1934, as amended.


 


17

















 


Borrower and/or of the other party thereto
(including arrangements that involve the assignment or licensing of any
existing or newly developed intellectual property under such arrangements) whereby
its income or profits are or might be shared with any other Person


 


(b)                                 The Borrower
shall not:  (i) create, incur or
suffer any Lien upon any of its assets, now owned or hereafter acquired, except
Permitted Liens; or (ii) assign, sell transfer or otherwise dispose of,
any of the Financing Documents, or the rights and obligations thereunder.


 


(c)                                  The Borrower shall not
create, incur assume, guarantee or become liable with respect to any
indebtedness for borrowed money, other than Permitted Indebtedness, or take any
actions which impose on the Borrower an obligation to prepay any indebtedness,
except indebtedness to the Investors or pursuant to the Senior Debt.


 


(d) The Borrower shall not amend or grant any waiver of any term
or condition of the Senior Debt or the documents evidencing the Senior Debt;
provided, however, that the Borrower may not (i) extend the Comerica Loan
Agreement beyond April 28, 2013 or (ii) increase the aggregate amount
of the Credit Extensions (as such term is defined therein) in excess of  a maximum aggregate principal amount of
$30,000,000.


 


Section 5.3                                   Reimbursement of Taxes. 
The Borrower shall pay all Taxes, duties, fees or other charges payable
on or in connection with the execution, issue, delivery, registration,
notarization or enforcement of the Financing Documents and shall, upon notice
from the Investors, reimburse the Investors for any such Taxes, duties, fees or
other charges paid by the Investors thereon; provided, however, that
notwithstanding the foregoing, under no circumstances shall the Borrower have
any obligation to reimburse the Investors for Excluded Taxes.


 


Section 5.4                                   Major Transaction. If a Major Transaction occurs, and [***], then the Investors may deliver a notice to the
Borrower (the “Put Notice”) within 15 days of the date of the  announcement of such Major Transaction that
the outstanding  principal of, and  accrued and unpaid interest on, the Notes,
together with any other amounts accrued or payable under the Financing
Documents (together, the “Put Price”) is immediately due and payable. If
the Investors deliver a Put Notice within such 15 day period,  then on a date specified in the Put Notice,
which shall not  be later than the
scheduled closing date of the Major Transaction,  the Borrower shall pay the Put Price to the
Investors in immediately available funds and the Obligations  shall terminate. [***]


 


Section 5.5                                   General Acceleration
Provision upon Events of Default.  If one or
more of the events specified in this Section 5.5 (each an “Event of
Default”) shall have happened and be continuing beyond the applicable cure
period, the Investors, by written notice to the Borrower, may cancel the
Borrower’s right to request a Disbursement and declare the principal of,
accrued and unpaid interest on, the Notes or any part of any of them (together
with any other amounts accrued or payable under this Agreement) to be, and the
same shall thereupon become, immediately due and payable, without any further
notice and without any presentment, demand, 


 


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


 


18

















 


or protest of any kind, all of which are hereby
expressly waived by the Borrower, and take any further action available at law
or in equity, including, without limitation, the sale of the Loan and all other
rights acquired in connection with the Loan:


 


(a)                                  An Investor
shall have failed to receive payment when due of principal or any other amounts
due under the Loan or the Notes.


 


(b)                                 The Borrower
shall have  failed to comply in any
material respect with the due observance or performance of any other covenant
contained in the April 29 Agreement and 
this Agreement or any Note and such failure shall not have been cured by
Borrower within 15 days after receiving written notice of such default or
failure from the Investors.


 


(c)                                  Any representation
or warranty made by the Borrower in any Financing Document shall be have been
incorrect, false or misleading in any material respect as of the date it was
made, deemed made, reaffirmed or confirmed.


 


(d)                                 (i)  The
Borrower shall generally be unable to pay its debts as such debts become due,
or shall admit in writing its inability to pay its debts as they come due or
shall make a general assignment for the benefit of creditors; (ii) the
Borrower shall declare a moratorium on the payment of its debts; (iii) the
commencement by the Borrower of proceedings to be adjudicated bankrupt or
insolvent, or the consent by it to the commencement of bankruptcy or insolvency
proceedings against it, or the filing by it of a petition or answer or consent
seeking reorganization, intervention or other similar relief under any
applicable law, or the consent by it to the filing of any such petition or to
the appointment of an intervenor, receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of all or substantially all of its
assets; (iv) the commencement against the Borrower of a proceeding in any
court of competent jurisdiction under any bankruptcy or other applicable law
(as now or hereafter in effect) seeking its liquidation, winding up,
dissolution, reorganization, arrangement, adjustment, or the appointment of an
intervenor, receiver, liquidator, assignee, trustee, sequestrator (or other
similar official), and any such proceeding shall continue undismissed, or any
order, judgment or decree approving or ordering any of the foregoing shall
continue unstayed or otherwise in effect, for a period of ninety (90) days; (v) the
making by the Borrower of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debt generally as they
become due; or (vi) any other event shall have occurred which under any
applicable law would have an effect analogous to any of those events listed
above in this subsection.


 


(e)                                  One or more
judgments against the Borrower taken as a whole or attachments against any of
its property, which in the aggregate would reasonably be expected to have a
Material Adverse Effect remain(s) unpaid, unstayed on appeal,
undischarged, unbonded or undismissed for a period of thirty (30) days from the
date of entry of such judgment.


 


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


 


19

















 


(f)                                    Any license,
permit or approval held by the Borrower from any Government Authority shall
have been suspended, canceled or revoked, except where any such suspension, cancellation
or revocation would not reasonably be expected to have a Material Adverse
Effect.


 


(g)                                 Any
authorization necessary for the execution, delivery or performance of any
Financing Document or for the validity or enforceability of any of the
Obligations under any Financing Document is not given or is withdrawn or ceases
to remain in full force or effect.


 


(h)                                 The validity of
any Financing Document shall be contested by any legislative, executive or
judicial body of any jurisdiction, or any treaty, law, regulation, communiqué,
decree, ordinance or policy of any jurisdiction shall purport to render any
material provision of any Financing Document invalid or unenforceable or shall
purport to prevent or materially delay the performance or observance by the Borrower
of the Obligations, and the parties are unable to negotiate a replacement
provision pursuant to Section 6.7 below.


 


(i)                                     The Borrower
has failed to comply in any material respect with the reporting requirements of
the   Exchange Act, unless corrected by
Borrower promptly (if capable of correction) through the filing of an amendment
to an existing report or making an appropriate subsequent filing with the SEC.


 


(j)                                     If an Event of
Default pursuant to the Warrants (as such term is defined in the Warrants)
shall have occurred beyond any applicable cure periods.


 


(k)                                  The amount of
Cash and Cash Equivalents on the last day of each calendar quarter is  less than $20,000,000.


 


(l)                                     The occurrence
of an “Event of Default”, as such term is defined in the Comerica Loan
Agreement and Comerica Bank has exercised any of its rights and remedies under Section 9
thereof.


 


Section 5.6                                   Automatic Acceleration
on Dissolution or Bankruptcy. 
Notwithstanding any other provisions of this Agreement, if an Event of
Default under Section 5.5(d) shall occur, the principal of the Loan
(together with any other amounts accrued or payable under this Agreement) shall
thereupon become immediately due and payable without any presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived by the
Borrower.


 


Section 5.7                                   Recovery of Amounts Due. 
If any amount payable hereunder is not paid as and when due, the
Borrower hereby authorizes the Investor to proceed, to the fullest extent
permitted by applicable law, without prior notice, by right of set-off,
banker’s lien or counterclaim, against any moneys or other assets of the
Borrower to the full extent of all amounts payable to the Investors.


 


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


 


20














 


ARTICLE VI


 


MISCELLANEOUS


 


Section 6.1            Notices. 
Any notice, request or other communication to be given or made under
this Agreement shall be in writing.  Such
notice, request or other communication shall be deemed to have been duly given
or made when it shall be delivered by hand, international courier (confirmed by
facsimile), or facsimile (with a hard copy delivered within two (2) Business
Days) to the Party to which it is required or permitted to be given or made at
such Party’s address specified below or at such other address as such Party
shall have designated by notice to the other Parties.


 


For the Borrower:


 


Array BioPharma Inc.


3200 Walnut Street


Boulder, CO 80301


Attention:  R. Michael
Carruthers,


Chief Financial Officer


Facsimile:  (303) 381-6697


 


with
a courtesy copy to each of:


 


Array BioPharma Inc.


3200 Walnut Street


Boulder, CO 80301


Attention:  John R. Moore


Vice President and General Counsel


Facsimile:  (303) 386-1290


 


Hogan &
Hartson, LLP


1470
Walnut Street, Suite 200


Boulder,
CO 80302


Attention:  Carin M. Kutcipal


Facsimile:  (702) 406-5301


 


For the Investors c/o:


 


Deerfield Private Design Fund, L.P.


780 Third Avenue, 37th Floor


New York, New York  10017


Attention: 
James E. Flynn


Facsimile: 
(212) 573-8111


 


with a courtesy copy to:


 


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


 


21

















 


Katten Muchin Rosenman LLP


575 Madison Avenue


New York, New York 10022-2585


Facsimile: (212) 894-5827


Attention:  Robert I. Fisher


 


Section 6.2            Waiver of Notice.  Whenever any notice is
required to be given to the Investors or the Borrower under the any of the
Financing Documents, a waiver thereof in writing signed by the person or
persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice.


 


Section 6.3            Reimbursement of Legal and Other
Expenses.  If any amount owing to the Investors under
any Financing Document shall be collected through enforcement of this
Agreement, any refinancing or restructuring of the Loan in the nature of a
work-out, settlement, negotiation, or any process of law, or shall be placed in
the hands of third Persons for collection, the Borrower shall pay (in addition
to all monies then due in respect of the Loan or otherwise payable under any
Financing Document) attorneys’ and other fees and expenses incurred in respect
of such collection.


 


Section 6.4            Applicable Law and Consent to
Non-Exclusive New York Jurisdiction.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving effect to the conflicts of laws principles thereof
other than Sections
5-1401 and 5-1402 of the General Obligations Law of such State.


 


(a)           Any rights of the Investors arising out of or relating to
any Financing Document, may, at the option of the Investors, be enforced by the
Investors in the courts of the United States of America located in the Southern
District of the State of New York or in any other courts having
jurisdiction.  For the benefit of the
Investors, the Borrower hereby irrevocably agrees that any legal action, suit
or other proceeding arising out of any Financing Document may be brought in the
courts of the State of New York or of the United States of America for the
Southern District of New York.  By the
execution and delivery of this Agreement, the Borrower hereby irrevocably
consents and submits to the jurisdiction of any such court in any such action,
suit or other proceeding.  Final judgment
against the Borrower in any such action, suit or other proceeding shall be
conclusive and may be enforced in any other jurisdiction by suit on the
judgment.  Nothing contained in any
Financing Document shall affect the right of the Investors to commence legal
proceedings in any court having jurisdiction, or concurrently in more than one
jurisdiction, or to serve process, pleadings and other legal papers upon the
Borrower in any manner authorized by the laws of any such jurisdiction.


 


(b)           The Borrower irrevocably waives, to the fullest extent
permitted by applicable law, any objection which it may now or hereafter have
to the laying of venue of any action, suit or other proceeding arising out of
or relating to any  Financing Document,
brought in the courts of the State of New York or in the United States District



 


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


 


22

















 


Court for the Southern District of New York,
and any claim that any such action, suit or other proceeding brought in any
such court has been brought in an inconvenient forum.


 


(c)           The Borrower hereby waives any and all rights to demand a
trial by jury in any action, suit or other proceeding arising out of any
Financing Document or the transactions contemplated by any Financing Document.


 


(d)           To the extent that the Parties may, in any suit, action or
other proceeding brought in any court arising out of or in connection with any
Financing Document, be entitled to the benefit of any provision of law
requiring the Borrower or the Investors, as applicable,  in such suit, action or other proceeding to
post security for the costs of the Borrower or the Investors, as applicable, or
to post a bond or to take similar action, the Parties hereby irrevocably waive
such benefit, in each case to the fullest extent now or hereafter permitted
under any applicable laws.


 


Section 6.5            Successor and Assigns.  This Agreement shall bind and inure to the benefit of
the respective successors and assigns of the Parties, except that the Borrower
may not assign or otherwise transfer all or any part of its rights under this
Agreement or the Obligations without the prior written consent of the
Investors.


 


Section 6.6            Entire Agreement. 
The Financing Documents contain the entire understanding of the Parties
with respect to the matters covered thereby and supersede any and all other
written and oral communications, negotiations, commitments and writings with
respect thereto.  The provisions of this
Agreement may be waived, modified, supplemented or amended only by an
instrument in writing signed by the authorized officer of each Party.


 


Section 6.7            Severability. 
If any provision contained in this Agreement shall be invalid, illegal
or unenforceable in any respect under any law, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.  The Parties shall
endeavor in good faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provision.


 


Section 6.8            Counterparts. 
This Agreement may be executed in several counterparts, and by each
Party on separate counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same agreement.


 


Section
6.9            Survival.


 


(a)           This Agreement and all agreements, representations and
warranties made  in the Financing
Documents, and in any document, certificate or statement delivered pursuant
thereto or in connection therewith shall be considered to have been relied upon
by the other Parties and shall survive the execution and delivery of this
Agreement and the making of the Loan hereunder regardless of any investigation
made by any such other Party or on its behalf, and shall continue in force
until all amounts payable under the Financing Documents shall have been fully
paid in accordance with the provisions hereof 


 


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


 


23

















 


and thereof, and the Investors shall not be
deemed to have waived, by reason of making the Loan, any Event of Default that
may arise by reason of such representation or warranty proving to have been
false or misleading, notwithstanding that the Investors may have had notice or
knowledge of any such Event of Default or may have had notice or knowledge that
such representation or warranty was false or misleading at the time any
Disbursement was made hereunder.


 


(b)           The obligations of the Borrower under Section 2.7 and
the obligations of the Borrower and the Investors under this Article VI
hereof shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loan, or the termination of this Agreement or any provision hereof.


 


Section 6.10         Waiver. 
Neither the failure of, nor any delay on the part of, any Party in
exercising any right, power or privilege hereunder, or under any agreement,
document or instrument mentioned herein, shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege
hereunder, or under any agreement, document or instrument mentioned herein,
preclude other or further exercise thereof or the exercise of any other right,
power or privilege; nor shall any waiver of any right, power, privilege or
default hereunder, or under any agreement, document or instrument mentioned
herein, constitute a waiver of any other right, power, privilege or default or
constitute a waiver of any default of the same or of any other term or
provision.  No course of dealing and no
delay in exercising, or omission to exercise, any right, power or remedy
accruing to the Investors upon any default under this Agreement, or any other
agreement shall impair any such right, power or remedy or be construed to be a
waiver thereof or an acquiescence therein; nor shall the action of the
Investors in respect of any such default, or any acquiescence by it therein,
affect or impair any right, power or remedy of the Investors in respect of any
other default.  All rights and remedies
herein provided are cumulative and not exclusive of any rights or remedies
otherwise provided by law.


 


Section 6.11         Indemnity.


 


(a)           The Parties shall, at all times, indemnify and hold each
other harmless (the “Indemnity”) and each of their respective directors,
partners, officers, employees, agents, counsel and advisors (each, an “Indemnified
Person”) in connection with any losses, claims (including the cost of
defending against such claims), damages, liabilities, penalties, or other
expenses arising out of, or relating to, the Financing Documents, the extension
of credit hereunder or the Loan or the use or intended use of the Loan, which
an Indemnified Person may incur or to which an Indemnified Person may become
subject (each, a “Loss”).  The
Indemnity shall not apply to the extent that a court or arbitral tribunal with
jurisdiction over the subject matter of the Loss, and over the Investors or the
Borrower, as applicable, and such other Indemnified Person that had an adequate
opportunity to defend its interests, determines that such Loss resulted from
the gross negligence or willful misconduct of the Indemnified Person, which
determination results in a final, non-appealable judgment or decision of a
court or tribunal of competent jurisdiction. 
The Indemnity is independent of and in addition to any other agreement
of 


 


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


 


24

















 


any Party under any Financing Document to pay
any amount to the Investors or the Borrower, as applicable, and any exclusion
of any obligation to pay any amount under this subsection shall not affect the
requirement to pay such amount under any other section hereof or under any
other agreement.


 


(b)           Without prejudice to the survival of any other agreement
of any of the Parties hereunder, the agreements and the obligations of the
Parties contained in this Section 6.11 shall survive the termination of
each other provision hereof and the payment of all amounts payable to the
Investors hereunder.


 


Section 6.12         No Usury. 
The Financing Documents are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of acceleration or
otherwise, shall the amount paid or agreed to be paid to the Investors for the
Loan exceed the maximum amount permissible under applicable law.  If from any circumstance whatsoever
fulfillment of any provision hereof, at the time performance of such provision
shall be due, shall involve transcending the limit of validity prescribed by
law, then, ipso facto, the obligation to be fulfilled shall be reduced to the
limit of such validity, and if from any such circumstance the Investors shall
ever receive anything which might be deemed interest under applicable law, that
would exceed the highest lawful rate, such amount that would be deemed
excessive interest shall be applied to the reduction of the principal amount
owing on account of the Loan, or if such deemed excessive interest exceeds the
unpaid balance of principal of the Loan, such deemed excess shall be refunded
to the Borrower.  All sums paid or agreed
to be paid to the Investors for the Loan shall, to the extent permitted by applicable
law, be deemed to be amortized, prorated, allocated and spread throughout the
full term of the Loan  until payment in
full so that the deemed  rate of interest
on account of the Loan is uniform throughout the term thereof.  The terms and provisions of this paragraph
shall control and supersede every other provision of this Agreement and the
Notes.


 


Section 6.13         Further Assurances. 
From time to time, the Borrower shall perform any and all acts and
execute and deliver to the Investors such additional documents as may be
necessary or as requested by the Investors to carry out the purposes of any
Financing Document or any or to preserve and protect the Investors’ rights as
contemplated therein.


 


Section 6.14         Termination.  Subject to the provisions of Section 6.9(b) upon
repayment of all outstanding principal of the Loan (together with any other
amounts accrued and unpaid under this Agreement), the Borrower may terminate
this Agreement upon 10 days’ notice to the Investors.


 


[SIGNATURE
PAGE FOLLOWS]


 


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


 


25

















 


IN WITNESS WHEREOF, the Parties, acting
through their duly authorized representatives, have caused this Agreement to be
signed in their respective names as of the date first above written.


 


	
  BORROWER:

  ARRAY BIOPHARMA INC.

  	
   

  	
  INVESTOR:

  DEERFIELD PRIVATE DESIGN FUND, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ R. Michael Carruthers

  	
   

  	
  By:

  	
  /s/ James Flynn

  
	
   

  	
  Name:  R. Michael Carruthers

  	
   

  	
   

  	
  Name:  James Flynn

  
	
   

  	
  Title:   Chief Financial Officer

  	
   

  	
   

  	
  Title:   General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  INVESTOR:

  DEERFIELD PRIVATE DESIGN INTERNATIONAL, L.P.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ James Flynn  

  	
   

  	
   

  
	
   

  	
  Name:  James Flynn

  	
   

  	
   

  
	
   

  	
  Title:   General Partner

  	
   

  	
   

  



 


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


 


26

















 


SCHEDULE
1


 


FORM OF
DISBURSEMENT REQUEST


 


[LETTERHEAD
OF THE BORROWER]


 


[Date]


 


Ladies and Gentlemen:


 


Request for Disbursement of
the Loan


 


1.             Please
refer to the Facility Agreement (the “Facility Agreement”), dated as of May 15,
2009, between Array BioPharma Inc. (the
“Borrower”) and Deerfield Private Design Fund, L.P. and Deerfield
Private Design International, L.P. (together the “Investors”).


 


2.             Terms
defined in the Facility Agreement shall have the same meanings herein.


 


3.             The
Borrower hereby requests a Disbursement, on [date], of the amount of [amount of
drawdown], in accordance with the provisions of Section 2.2 of the
Facility Agreement.  You are requested to
pay the amount to the following account [account number] at [name of bank].


 


4.             Attached
hereto is a signed but undated receipt for the amount hereby requested to be
disbursed, and we hereby authorize the Investors to date such receipt as of the
date of actual disbursement by the Investors and confirmation of receipt of the
funds to the bank account listed in paragraph 3 above of the funds hereby
requested to be disbursed.


 


5.             The
Borrower hereby certifies as follows:


 


(a)           The representations and warranties in Article III of
the Facility Agreement are true in all material respects on the date hereof
with the same effect as though such representations and warranties had been
made on today’s date; and


 


(b)           All of the conditions set forth in Article IV of the
Facility Agreement have been satisfied.


 


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


 

















 


6.             The
above certifications are effective as of the date of this request for
Disbursement and will continue to be effective as of the Disbursement
Date.  If any of these certifications is
no longer valid as of or prior to the Disbursement Date, the Borrower will
immediately notify the Investors and will repay the amount disbursed upon
demand by the Investors if Disbursement is made prior to the receipt of such
notice.


 


	
   

  	
  ARRAY BIOPHARMA INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


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


 

















 


SCHEDULE
2


 


FORM OF
EVIDENCE OF DISBURSEMENT


 


[LETTERHEAD
OF THE BORROWER]


 


[Date]


 


Ladies and Gentlemen:


 


Re:          Disbursement Receipt


 


Array BioPharma
Inc. (the “Borrower”) hereby acknowledge receipt of the sum of
[insert amount of disbursement] disbursed to us by Deerfield Private Design
Fund, L.P. and Deerfield Private Design International, L.P. (together the
“Investors”) under the Loan provided for in the Facility Agreement, dated as of  May 15, 2009, between the Borrower and
the Investors.


 


	
   

  	
  Yours faithfully,

  
	
   

  	
   

  
	
   

  	
  ARRAY BIOPHARMA INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title

  	
   

  



 


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


 














 


EXHIBIT
A-1


 


FORM OF
NOTE


 


PROMISSORY NOTE


 


May 15, 2009


 


FOR VALUE RECEIVED, ARRAY BIOPHARMA INC., a
Delaware corporation (the “Maker”), by means of this Promissory Note
(this “Note”), hereby unconditionally promises to pay to Deerfield
Private Design International, L.P. (the “Payee”), a principal amount
equal to the lesser of (a) 24,680,000 and (b) the  Disbursement allocated to the Payee pursuant
to Section 2.2 of the Facility Agreement (as defined below), in lawful
money of the United States of America and in immediately available funds, on
the dates provided in the Facility Agreement.


 


This Note is a “New Note” referred to in the
Facility Agreement dated as of the date hereof among the Maker, the Payee and
the other parties thereto (as modified and supplemented and in effect from time
to time, the “Facility Agreement”), with respect to the Loan made by the
Payee thereunder.  Capitalized terms used
herein and not expressly defined in this Note shall have the respective
meanings assigned to them in the Facility Agreement.


 


This Note shall bear interest on the
principal amount hereof at the rates and pursuant to the provisions set forth
in the Facility Agreement.


 


The Maker shall make all payments to the
Payee of interest and principal under this Note in the manner provided in and
otherwise in accordance with the Facility Agreement.  The outstanding principal amount of this Note
shall be due and payable in full on the 
Final Payment Date.


 


If default is made in the punctual payment of
principal or any other amount under this Note in accordance with the Facility
Agreement, or if any other Event of Default has occurred, this Note shall, at
the Payee’s option exercised at any time upon or after the occurrence of any
such payment default or other Event of Default and in accordance with the
applicable provisions of the Facility Agreement, become immediately due and
payable.


 


All payments of any kind due to the Payee
from the Maker pursuant to this Note shall be made in the full face amount
thereof.  All such payments will be free
and clear of, and without deduction or withholding for, any present or future
taxes.  The Maker shall pay all and any
costs (administrative or otherwise) imposed by banks, clearing houses, or any
other financial institution, in connection with making any payments hereunder,
except for any costs imposed by the Payee’s banking institutions.


 


The Maker shall pay all costs of collection,
including, without limitation, all reasonable, documented legal expenses and
attorneys’ fees, paid or incurred by the Payee in collecting and enforcing this
Note.


 


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


 

















 


The Maker and every endorser of this Note, or
the obligations represented hereby, expressly waives presentment, protest,
demand, notice of dishonor or default, and notice of any kind with respect to
this Note and the Facility Agreement or the performance of the obligations
under this Note and/or the Facility Agreement. 
No renewal or extension of this Note or the Facility Agreement, no
release of any Person primarily or secondarily liable on this Note or the Facility
Agreement, including the Maker and any endorser, no delay in the enforcement of
payment of this Note or the Facility Agreement, and no delay or omission in
exercising any right or power under this Note or the Facility Agreement shall
affect the liability of the Maker or any endorser of this Note.


 


No delay or omission by the Payee in
exercising any power or right hereunder shall impair such right or power or be
construed to be a waiver of any default, nor shall any single or partial
exercise of any power or right hereunder preclude the full exercise thereof or
the exercise of any other power or right. 
The provisions of this Note may be waived or amended only in a writing
signed by the Maker and the Payee.  This
Note may be prepaid in whole or in part without premium or penalty including in
shares of Common Stock in accordance with the provisions of the Facility
Agreement.


 


THIS NOTE, AND ANY RIGHTS OF THE PAYEE
ARISING OUT OF OR RELATING TO THIS NOTE, MAY, AT THE OPTION OF THE PAYEE, BE
ENFORCED BY THE PAYEE IN THE COURTS OF THE UNITED STATES OF AMERICA LOCATED IN
THE SOUTHERN DISTRICT OF THE STATE OF NEW YORK OR IN ANY OTHER COURTS HAVING
JURISDICTION.  FOR THE BENEFIT OF THE
PAYEE, THE MAKER HEREBY IRREVOCABLY AGREES THAT ANY LEGAL ACTION, SUIT OR OTHER
PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND HEREBY CONSENTS THAT PERSONAL SERVICE OF
SUMMONS OR OTHER LEGAL PROCESS MAY BE MADE AS SET FORTH IN SECTION 6.4
OF THE FACILITY AGREEMENT, WHICH SERVICE THE MAKER AGREES SHALL BE SUFFICIENT
AND VALID.  THE MAKER HEREBY WAIVES ANY
AND ALL RIGHTS TO DEMAND A TRIAL BY JURY IN ANY ACTION, SUIT OR OTHER
PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR THE TRANSACTIONS
CONTEMPLATED BY THIS NOTE.


 


This Note shall be governed by, and construed
in accordance with, the laws of the State of New York applicable to contracts
made and to be performed in such State, without giving effect to the conflicts
of laws principles thereof other than Sections 5-1401 and 5-1402 of the General
Obligations Law of the State of New York.


 


Whenever this Note is held by a noteholder
that is not a “United States person” within the meaning of Section 7701(a)(30)
of the Internal Revenue Code of 1986, as amended (the “Code”), then it is the
intention of the Maker and such noteholder that (x) all interest accrued
and paid on this Note will qualify for exemption from United States withholding
tax as “portfolio interest” because this Note is an obligation which is in
“registered form” within the meaning of Sections 871(h)(2)(B) and
881(c)(2)(B) of the Code and the applicable Treasury Regulations
promulgated thereunder, and (y) as such, all interest accrued and paid on
this Note will be exempt from 


 


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


 

















 


United States information
reporting under Sections 6041 and 6049 of the Code and United States backup
withholding under Section 3406 of the Code.  The Maker and the Payee shall cooperate with
one another, and execute and file such forms or other documents, or do or
refrain from doing such other acts, as may be required, to secure such
exemptions from United States withholding tax, information reporting, and
backup withholding.  In furtherance of
the foregoing, any transferee or assignee noteholder that is not a United
States person shall represent, warrant and covenant to the Maker that (i) such
noteholder is not, and will not be as long as any amounts due under this Note
have not been paid in full, a “United States person,” within the meaning of Section 7701(a)(30)
of the Code; (ii) such noteholder is not, and will not be as long as any
amounts due under this Note have not been paid in full, a person described in Section 881(c)(3) of
the Code; (iii) on or prior to the date of transfer or assignment (and on
or prior to the date the form provided pursuant to this clause (iii) is no
longer valid) until all amounts due under this Note have been paid in full,
such noteholder shall provide the Maker with a properly executed U.S. Internal
Revenue Service (“IRS”) Form W-8BEN, Certificate of Foreign Status
of Beneficial Owner for United States Tax Withholding (or any successor form
prescribed by the IRS), certifying as to such noteholder’s status for purposes
of determining exemption from United States withholding tax, information
reporting and backup withholding with respect to all payments to be made to
such noteholder hereunder; (iv) if an event occurs that would require a
change in the exempt status of such noteholder or any of the other information
provided on the most recent IRS Form W-8BEN (or successor form) previously
submitted by such noteholder to the Maker, such noteholder will so inform the
Maker in writing (or by submitting to the Maker a new IRS Form W-8BEN or
successor form) within 30 days after the occurrence of such event; and (v) such
noteholder will not assign or otherwise transfer this Note or any of its rights
hereunder except in accordance with the provisions hereof.


 


In order to qualify as a “registered note”
for purposes of the Code, transfer of this Note may be effected only by (i) surrender
of this Note to the Maker and the re-issuance of this Note to the transferee,
or the Maker’s issuance to the Payee of a new note in the same form as this
Note but with the transferee denoted as the Payee, or (ii) the recording
of the identity of the transferee by the Affiliate of the Payee that is
maintaining a record ownership register of this Note as agent to, and on behalf
of, the Maker.  Such Affiliate in its
capacity as such agent shall notify the Maker in writing immediately upon any
change in such identity.  The terms and
conditions of this Note shall be binding upon and inure to the benefit of the
Maker and the Payee and their permitted assigns; provided, however, that if any
such assignment (whether by operation of law, by way of transfer or
participation, or otherwise) is to any noteholder that is not a “United States
person” within the meaning of Section 7701(a)(30) of the Code, then such
noteholder shall submit to the Maker on or before the date of such assignment
an IRS Form W-8BEN (or any successor form) certifying as to such
noteholder’s status for purposes of determining exemption from United States
withholding tax, information reporting and backup withholding with respect to
all payments to be made to such noteholder under the new note (or other
instrument).  Any attempted transfer in
violation of the relevant provisions of this Note shall be void and of no force
and effect.  Until there has been a valid
transfer of this Note and of all of the rights hereunder by the Payee in
accordance with this Note, the Maker shall deem and treat the Payee as the
absolute beneficial owner and holder of this Note and of all of the rights
hereunder for all purposes (including, without limitation, for the purpose of
receiving all payments to be made under this Note).


 


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


 

















 


It is the intention of the Maker and the
Payee that this Note is to be a registered instrument and not a bearer
instrument and the provisions of this Note are to be interpreted accordingly.  This Note is intended to be registered as to
both principal and interest and all payments hereunder shall be made to the
named Payee or, in the event of a transfer pursuant to the Facility Agreement
and this Note, to the transferee identified in the record of ownership of this
Note maintained by the Payee on behalf of the Maker. Transfer of this Note may
not be effected except in accordance with the provisions hereof.


 


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


 

















 


IN WITNESS WHEREOF, an authorized
representative of the Maker has executed this Note as of the date first written
above.


 


 


	
   

  	
  ARRAY BIOPHARMA INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title

  	
   

  



 


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


 

















 


EXHIBIT
A-2


 


FORM OF
NOTE


 


PROMISSORY NOTE


 


May 15, 2009


 


FOR VALUE RECEIVED, ARRAY BIOPHARMA INC., a
Delaware corporation (the “Maker”), by means of this Promissory Note
(this “Note”), hereby unconditionally promises to pay to Deerfield
Private Design Fund, L.P. (the “Payee”), a principal amount equal to the
lesser of (a) $15,320,000 and (b) the 
Disbursement allocated to the Payee pursuant to Section 2.2 of the
Facility Agreement (as defined below), in lawful money of the United States of
America and in immediately available funds, on the dates provided in the
Facility Agreement.


 


This Note is a “New Note” referred to in the
Facility Agreement dated as of the date hereof among the Maker, the Payee and
the other parties thereto (as modified and supplemented and in effect from time
to time, the “Facility Agreement”), with respect to the Loan made by the
Payee thereunder.  Capitalized terms used
herein and not expressly defined in this Note shall have the respective
meanings assigned to them in the Facility Agreement.


 


This Note shall bear interest on the
principal amount hereof, at the rates and pursuant to the provisions set forth
in the Facility Agreement.


 


The Maker shall make all payments to the
Payee of interest and principal under this Note in the manner provided in and
otherwise in accordance with the Facility Agreement.  The outstanding principal amount of this Note
shall be due and payable in full on the 
Final Payment Date.


 


If default is made in the punctual payment of
principal or any other amount under this Note in accordance with the Facility
Agreement, or if any other Event of Default has occurred, this Note shall, at
the Payee’s option exercised at any time upon or after the occurrence of any
such payment default or other Event of Default and in accordance with the
applicable provisions of the Facility Agreement, become immediately due and
payable.


 


All payments of any kind due to the Payee
from the Maker pursuant to this Note shall be made in the full face amount
thereof.  All such payments will be free
and clear of, and without deduction or withholding for, any present or future
taxes.  The Maker shall pay all and any
costs (administrative or otherwise) imposed by banks, clearing houses, or any
other financial institution, in connection with making any payments hereunder,
except for any costs imposed by the Payee’s banking institutions.


 


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


 

















 


The Maker shall pay all costs of collection,
including, without limitation, all reasonable, documented legal expenses and
attorneys’ fees, paid or incurred by the Payee in collecting and enforcing this
Note.


 


The Maker and every endorser of this Note, or
the obligations represented hereby, expressly waives presentment, protest,
demand, notice of dishonor or default, and notice of any kind with respect to
this Note and the Facility Agreement or the performance of the obligations
under this Note and/or the Facility Agreement. 
No renewal or extension of this Note or the Facility Agreement, no
release of any Person primarily or secondarily liable on this Note or the
Facility Agreement, including the Maker and any endorser, no delay in the
enforcement of payment of this Note or the Facility Agreement, and no delay or
omission in exercising any right or power under this Note or the Facility
Agreement shall affect the liability of the Maker or any endorser of this Note.


 


No delay or omission by the Payee in
exercising any power or right hereunder shall impair such right or power or be
construed to be a waiver of any default, nor shall any single or partial
exercise of any power or right hereunder preclude the full exercise thereof or
the exercise of any other power or right. 
The provisions of this Note may be waived or amended only in a writing signed
by the Maker and the Payee.  This Note
may be prepaid in whole or in part without premium or penalty including in
shares of Common Stock in accordance with the provisions of the Facility
Agreement.


 


THIS NOTE, AND ANY RIGHTS OF THE PAYEE
ARISING OUT OF OR RELATING TO THIS NOTE, MAY, AT THE OPTION OF THE PAYEE, BE
ENFORCED BY THE PAYEE IN THE COURTS OF THE UNITED STATES OF AMERICA LOCATED IN
THE SOUTHERN DISTRICT OF THE STATE OF NEW YORK OR IN ANY OTHER COURTS HAVING
JURISDICTION.  FOR THE BENEFIT OF THE
PAYEE, THE MAKER HEREBY IRREVOCABLY AGREES THAT ANY LEGAL ACTION, SUIT OR OTHER
PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE MAY BE BROUGHT IN THE
COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND HEREBY CONSENTS THAT PERSONAL SERVICE OF
SUMMONS OR OTHER LEGAL PROCESS MAY BE MADE AS SET FORTH IN SECTION 6.4
OF THE FACILITY AGREEMENT, WHICH SERVICE THE MAKER AGREES SHALL BE SUFFICIENT
AND VALID.  THE MAKER HEREBY WAIVES ANY
AND ALL RIGHTS TO DEMAND A TRIAL BY JURY IN ANY ACTION, SUIT OR OTHER
PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR THE TRANSACTIONS
CONTEMPLATED BY THIS NOTE.


 


This Note shall be governed by, and construed
in accordance with, the laws of the State of New York applicable to contracts
made and to be performed in such State, without giving effect to the conflicts
of laws principles thereof other than Sections 5-1401 and 5-1402 of the General
Obligations Law of the State of New York.


 


Whenever this Note is held by a noteholder
that is not a “United States person” within the meaning of Section 7701(a)(30)
of the Internal Revenue Code of 1986, as amended (the “Code”), then it is the
intention of the Maker and such noteholder that (x) all interest accrued
and paid on 


 


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


 

















 


this Note will qualify for
exemption from United States withholding tax as “portfolio interest” because
this Note is an obligation which is in “registered form” within the meaning of
Sections 871(h)(2)(B) and 881(c)(2)(B) of the Code and the applicable
Treasury Regulations promulgated thereunder, and (y) as such, all interest
accrued and paid on this Note will be exempt from United States information
reporting under Sections 6041 and 6049 of the Code and United States backup
withholding under Section 3406 of the Code.  The Maker and the Payee shall cooperate with
one another, and execute and file such forms or other documents, or do or
refrain from doing such other acts, as may be required, to secure such
exemptions from United States withholding tax, information reporting, and
backup withholding.  In furtherance of
the foregoing, any transferee or assignee noteholder that is not a United
States person shall represent, warrant and covenant to the Maker that (i) such
noteholder is not, and will not be as long as any amounts due under this Note
have not been paid in full, a “United States person,” within the meaning of Section 7701(a)(30)
of the Code; (ii) such noteholder is not, and will not be as long as any
amounts due under this Note have not been paid in full, a person described in Section 881(c)(3) of
the Code; (iii) on or prior to the date of transfer or assignment (and on
or prior to the date the form provided pursuant to this clause (iii) is no
longer valid) until all amounts due under this Note have been paid in full,
such noteholder shall provide the Maker with a properly executed U.S. Internal
Revenue Service (“IRS”) Form W-8BEN, Certificate of Foreign Status
of Beneficial Owner for United States Tax Withholding (or any successor form
prescribed by the IRS), certifying as to such noteholder’s status for purposes
of determining exemption from United States withholding tax, information
reporting and backup withholding with respect to all payments to be made to
such noteholder hereunder; (iv) if an event occurs that would require a
change in the exempt status of such noteholder or any of the other information
provided on the most recent IRS Form W-8BEN (or successor form) previously
submitted by such noteholder to the Maker, such noteholder will so inform the
Maker in writing (or by submitting to the Maker a new IRS Form W-8BEN or
successor form) within 30 days after the occurrence of such event; and (v) such
noteholder will not assign or otherwise transfer this Note or any of its rights
hereunder except in accordance with the provisions hereof.


 


In order to qualify as a “registered note”
for purposes of the Code, transfer of this Note may be effected only by (i) surrender
of this Note to the Maker and the re-issuance of this Note to the transferee,
or the Maker’s issuance to the Payee of a new note in the same form as this
Note but with the transferee denoted as the Payee, or (ii) the recording
of the identity of the transferee by the Affiliate of the Payee that is
maintaining a record ownership register of this Note as agent to, and on behalf
of, the Maker.  Such Affiliate in its
capacity as such agent shall notify the Maker in writing immediately upon any
change in such identity.  The terms and
conditions of this Note shall be binding upon and inure to the benefit of the
Maker and the Payee and their permitted assigns; provided, however, that if any
such assignment (whether by operation of law, by way of transfer or
participation, or otherwise) is to any noteholder that is not a “United States
person” within the meaning of Section 7701(a)(30) of the Code, then such
noteholder shall submit to the Maker on or before the date of such assignment
an IRS Form W-8BEN (or any successor form) certifying as to such
noteholder’s status for purposes of determining exemption from United States
withholding tax, information reporting and backup withholding with respect to
all payments to be made to such noteholder under the new note (or other
instrument).  Any attempted transfer in
violation of the relevant provisions of this Note shall be void and of no force
and effect.  Until there has been a valid
transfer of this Note and of 


 


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


 

















 


all of the rights hereunder
by the Payee in accordance with this Note, the Maker shall deem and treat the
Payee as the absolute beneficial owner and holder of this Note and of all of
the rights hereunder for all purposes (including, without limitation, for the
purpose of receiving all payments to be made under this Note).


 


It is the intention of the Maker and the
Payee that this Note is to be a registered instrument and not a bearer
instrument and the provisions of this Note are to be interpreted
accordingly.  This Note is intended to be
registered as to both principal and interest and all payments hereunder shall
be made to the named Payee or, in the event of a transfer pursuant to the
Facility Agreement and this Note, to the transferee identified in the record of
ownership of this Note maintained by the Payee on behalf of the Maker. Transfer
of this Note may not be effected except in accordance with the provisions hereof.


 


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


 

















 


IN WITNESS WHEREOF, an authorized
representative of the Maker has executed this Note as of the date first written
above.


 


 


	
   

  	
  ARRAY BIOPHARMA INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title

  	
   

  



 


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


 

















 


EXHIBIT
B


 


PERMITTED
LIENS


 


Liens on certain assets and property of the
Borrower granted to Comerica Bank to secure the Borrower’s obligations under
the Senior Debt.


 


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