Document:

EXHIBIT 10.1

 

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.

 

1

 

“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.

 

2

 

“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.

 

3

 

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.

 

4

 

“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.

 

5

 

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.

 

6

 

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.

 

7

 

(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.

 

8

 

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.

 

9

 

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 outstanding as of the close of business on the Trading
Day immediately preceding the date of the Share Payment Notice calculated as a
fraction, (x) the numerator of which is the quotient of the Market
Capitalization (as defined below) at the close of regular 

 

[***] 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

 

trading on the Trading Day
immediately preceding the date of the Share Payment Notice divided by
$350,000,000 and (y) the denominator of which is 100; provided, however, that
the Maximum Issuance shall be no greater than 1,920,000 shares and no less than
480,000 shares, if the Market Capitalization is at least $150,000,000, (ii) the
Maximum Issuance shall be 400,000 shares if the Market Capitalization is more
than $100,000,000 but less than $150,000,000 and (iii) the Maximum Issuance
shall be 300,000 shares if the Market Capitalization is $100,000,000 or
less.  As an example, if the Market
Capitalization were $700,000,000 and the total number of shares of Common Stock
outstanding were 47,000,000 then the applicable percentage would be 2%
(($700,000,000/$350,000,000) / 100) and the Maximum Issuance would equal
940,000 shares (2% x 47,000,000).  For
purposes of this Section 2.14, “Market Capitalization” shall mean the product
of (x) the number of issued and outstanding shares of Common Stock as of the
date of the calculation (exclusive of any shares issuable upon exercise of
options or warrants or conversion of any convertible securities) multiplied by (y)
the applicable price per share of Common Stock.

 

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

 

(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 the Volume Weighted Average Price of Common Stock for the
first full hour of regular trading (typically 9:30 a.m. to 10:30 a.m. eastern
time) on the Share Payment Closing Date multiplied by the Applicable Percentage
(reflected as a decimal).  The
“Applicable Percentage” shall be (i) 92% in the case of a Share Issuance equal
to more than 75% of the Maximum Issuance, (ii) 92.5% in the case of a [Share
Issuance equal to more than 50% and up to and including 75% of the Maximum
Issuance, (iii) 93.25% in the case of a Share Issuance equal to more than 25%
and up to and including 50% of the Maximum Issuance and (iv) 95% in the case of
a Share Issuance 

 

[***] 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

 

equal to 25% or less of the
Maximum Issuance; provided, however, that the Applicable Percentage shall be
increased by .25% if the Market Capitalization is at least $100,000,000 but
less than $150,000,000 and the Applicable Percentage shall be increased by .50%
if the Market Capitalization is less than $100,000,000.

 

(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
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.

 

[***] 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

 

(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
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.

 

[***] 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

 

(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 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.

 

[***] 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

 

(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 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 

 

[***] 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

 

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 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:

 

[***] 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

 

(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.

 

(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 

 

[***] 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

 

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 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.

 

[***] 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

 

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, 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 

 

[***] 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

 

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.

 

(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 

 

[***] 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

 

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.

 

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.

 

[***] 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

 

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:

 

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.

 

[***] 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

 

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 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 

 

[***] 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

 

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 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.

 

[***] 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

 

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 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 

 

[***] 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

 

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.

 

26

 

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.

 

27

 

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.Exhibit 10.1

 

EIGHTH AMENDMENT AND AGREEMENT
RELATED TO

SECOND AMENDED AND RESTATED
CREDIT AGREEMENT

 

THIS EIGHTH
AMENDMENT AND AGREEMENT RELATED TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
(this “Amendment”), dated as of
September 29, 2009 and effective as of the date on which all of the
conditions set forth in Section 6 have been satisfied or waived by the
Administrative Agent (the “Amendment Effective Date”),
which amends that certain Second Amended and Restated Credit
Agreement dated as of March 30, 2006, as amended by the First Amendment to
Second Amended and Restated Credit Agreement dated as of May 2, 2006, the
Second Amendment to Second Amended and Restated Credit Agreement dated as of
October 25, 2006, the Third Amendment to Second Amended and Restated
Credit Agreement dated as of November 29, 2006, the Fourth Amendment to
Second Amended and Restated Credit Agreement dated as of March 1, 2007,
the Fifth Amendment to Second Amended and Restated Credit Agreement dated as of
May 7, 2007, the Sixth Amendment to Second Amended and Restated Credit
Agreement dated as of May 9, 2008, and the Seventh Amendment to Second
Amended and Restated Credit Agreement dated as of June 18, 2009, by and
among VENOCO, INC., a Delaware corporation (the “Company”),
the Guarantors, each of the Lenders party thereto, BANK OF MONTREAL, a Canadian
chartered bank acting through certain of its U.S. branches or agencies, as
Administrative Agent (in such capacity, the “Administrative
Agent”), CREDIT SUISSE, CAYMAN ISLANDS BRANCH, and LEHMAN
COMMERCIAL PAPER INC., as Co-Syndication Agents and FORTIS CAPITAL CORP., as
Documentation Agent (as in effect immediately prior to the Amendment Effective
Date, the “Credit Agreement”), is by and
among the Company, the Guarantors, each of the Lenders party hereto and the
Administrative Agent.

 

WHEREAS, the Company has
requested that the Credit Agreement be amended to permit the Company to
refinance its Senior Notes with the proceeds of an issuance of senior unsecured
notes (the “New Senior Notes”) on the
terms and conditions set forth in this Amendment; and

 

WHEREAS, the Required
Lenders have agreed to such amendments and the agreement set forth in Section 2
below, subject to the terms and conditions set forth in this Amendment.

 

NOW, THEREFORE, in
consideration of the mutual agreements, provisions and covenants contained
herein and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:

 

Section 1.               Defined Terms; Interpretation.

 

(a)           Capitalized terms used but not otherwise defined
herein shall have the meanings assigned such terms in the Credit Agreement.

 

(b)           The rules of interpretation set
forth in Section 1.2 of the Credit Agreement are incorporated in this
Amendment as if set forth herein.

 

 

Section 2.               Agreement.  The Required
Lenders acknowledge that under the terms of Article XI of the Senior Notes
Indenture, the Senior Notes Indenture will be discharged and will cease to be
of further effect as to the Senior Notes. 
For the avoidance of doubt, the Required Lenders agree that for all
purposes of Sections 8.12, 8.13, 8.14 and 8.15 of the Credit Agreement,
the Indebtedness evidenced by the Senior Notes (including all principal,
interest, premium and any other amounts paid pursuant to the Satisfaction and
Discharge) will cease to exist upon consummation of the Satisfaction and
Discharge and written confirmation to the Company from the trustee under the
Senior Notes Indenture to the effect that the Satisfaction and Discharge has
been validly completed.

 

Section 3.               Amendments.  The Credit
Agreement is hereby amended as follows:

 

(a)           The following new definitions are hereby inserted into
Section 1.1 of the Credit Agreement in the appropriate alphabetical order:

 

“Eighth Amendment”
means that certain Eighth Amendment to Second Amended and Restated Credit
Agreement dated as of September 29, 2009 by and among the Company, the
Guarantors, each of the Lenders party thereto, the Administrative Agent and
other parties.

 

“New Senior Notes”
means the senior unsecured notes of the Company, with respect to which
(a) the aggregate principal amount does not exceed $200,000,000,
(b) the terms do not provide for any scheduled repayment, mandatory redemption
or sinking fund obligation prior to November 7, 2014, (c) no
Subsidiary is an obligor thereon that is not a Loan Party, (d) no Default
would result from the incurrence of such Indebtedness after giving effect to
the incurrence of such Indebtedness, and (e) the covenants, events of
default, subsidiary guarantees and other terms (other than interest rate and
redemption premiums), taken as a whole, are not more restrictive of the Loan
Parties than those in the Loan Documents nor more onerous than those imposed by
the Senior Notes Indenture.

 

“New Senior Notes Debt
Documents” means, collectively, the New Senior Notes Indenture,
the New Senior Notes, and the New Senior Notes Subsidiary Guarantees.

 

“New Senior Notes Indenture”
means that certain indenture governing the terms of the New Senior Notes, to be
executed by the Company, the guarantors party thereto, if any, and the
indenture trustee named therein.

 

“New Senior Notes
Subsidiary Guarantees” mean, collectively, the guarantees by
certain Subsidiaries of the New Senior Notes.

 

“Satisfaction and Discharge”
has the meaning given such term in Section 5(b) of the Eighth
Amendment.

 

(b)           The following existing definitions set
forth in Section 1.1 of the Credit Agreement are hereby amended and
restated in their entirety to read as follows:

 

2

 

“Second Lien Debt Documents”
means each of the Second Lien Loan Documents, the Senior Notes Debt Documents,
and the New Senior Notes Debt Documents.

 

“Second Lien Debt Instruments”
means each of the Second Lien Term Loan Agreement, the Senior Notes Indenture,
and the New Senior Notes Indenture.

 

(c)         Section 8.5(f) of the Credit Agreement is
hereby amended and restated to read in its entirety as follows:

 

“(f)          Indebtedness represented by (1) the Senior Notes
and the Senior Notes Indenture in an aggregate principal amount not to exceed
$150,000,000; provided that the Company shall have consummated the Satisfaction
and Discharge and (2) the New Senior Notes and the New Senior Notes
Indenture in an aggregate principal amount not to exceed $200,000,000.”

 

(d)           Section 8.9 is hereby amended by amending and
restating sub-clause (z) thereof to read in its entirety as follows:

 

“(z) make optional prepayments, redemptions,
purchases or other defeasances in respect of any Second Lien Debt Instrument
using the Net Cash Proceeds of an “Equity Offering” (as defined in the Senior
Notes Indenture or the New Senior Notes Indenture, as applicable) or the
issuance of debt securities or instruments or the incurrence of loans; provided, further, however,
that (A) no Default has occurred and is continuing, (B) no such
Restricted Payment shall cause a Default, and (C) at the time any such
Restricted Payment is made by the Company, and giving pro forma effect to such
payment, the ratio of the Effective Amount to the Borrowing Base does not
exceed .75 to 1.00.”

 

(e)           Section 8.19 is amended and restated to read in
its entirety as follows:

 

“8.19       Senior
Notes.        The Company and each Guarantor shall not, and shall
not permit any of its respective Subsidiaries to, directly or indirectly:

 

(a)           except as contemplated by the Defeasance and
Redemption, amend or modify any of the terms or provisions of the Senior Notes
Indenture or the Senior Notes, or after execution thereof, the New Senior Notes
Indenture or, after issuance thereof, the New Senior Notes, if such amendment
or modification would have the effect of (i) accelerating the maturity
date of the principal amount thereof, or any scheduled interest payment
thereon; (ii) increasing the principal amount thereof or interest rate
thereon; (iii) causing, or purporting to cause, the Liens securing the
Obligations to cease to be “Permitted Liens” (as defined in the Senior Notes
Indenture or the New Senior Notes Indenture, as applicable); or
(iv) requiring the Company to grant any Lien for the benefit of the
holders thereof, except to the extent described in Section 3.5 of the
Senior Notes Indenture or any comparable “equal and ratable” clause in the New
Senior Notes Indenture (it being understood in all events that no Lien which
would cause the Company to be required to grant any such Lien may be granted if
prohibited by any term of this Agreement);

 

3

 

(b)           amend or modify any other term or provision of the
Senior Notes Indenture, the Senior Notes, or after execution thereof, the New
Senior Notes Indenture, or after issuance thereof, the New Senior Notes, if
such amendment or modification would be materially adverse to the Lenders; or

 

(c)           prepay, redeem, purchase or defease any
(i) Senior Notes, except with proceeds of (x) an “Equity Offering” (as defined in the
Senior Notes Indenture) or (y) the issuance of the New Senior Notes, debt
securities or instruments or the incurrence of loans and subject to compliance
with Section 8.9 or (ii) New Senior Notes, except with proceeds of an
“Equity Offering” (as defined in the New Senior Notes Indenture and subject to
compliance with Section 8.9).”

 

Section 4.               The Issuance.

 

(a)           The Company may, at its option, consummate the
offering and issuance of the New Senior Notes (the “Issuance”).

 

(b)           Immediately upon the consummation of the Issuance, the
Company shall (i) deliver to the trustee under the Senior Notes Indenture
an unconditional notice of redemption in accordance with Sections 5.3 and 5.5
of the Senior Notes Indenture to redeem all outstanding Senior Notes in full on
December 15, 2009 and (ii) irrevocably deposit with the trustee under
the Senior Notes Indenture, in accordance with the satisfaction and discharge
provisions of Article XI of the Senior Notes Indenture, such portion of
the Net Cash Proceeds of the Issuance as will be sufficient to pay the
aggregate redemption price (including accrued and unpaid interest) for all Senior
Notes on December 15, 2009 (the “Satisfaction and Discharge”).  Default by the Company in the performance of
its obligations under this Section 4(b) shall constitute an Event of
Default under the Credit Agreement.

 

Section 5.               Amendment and Ratification. 
Upon the effectiveness hereof as provided in Section 6 of
this Amendment, this Amendment shall be deemed to be an amendment to the Credit
Agreement, and the Credit Agreement, as modified hereby, is hereby ratified,
approved and confirmed to be in full force and effect in each and every
respect.  The execution, delivery and
effectiveness of this Amendment shall neither operate as a waiver of any right,
power or remedy of any Lender or any Agent, nor constitute a waiver of any
provision of any of the Loan Documents. 
All references to the Credit Agreement in any other document,
instrument, agreement or writing shall hereafter be deemed to refer to the
Credit Agreement as amended hereby and as may be further amended, amended and
restated, supplemented or otherwise modified from time to time pursuant to the
terms thereof and the Intercreditor Agreement.

 

Section 6.               Conditions to Effectiveness. 
The effectiveness of this Amendment is subject to the condition that the
Administrative Agent shall have received all of the following, in form and
substance satisfactory to the Administrative Agent and each Lender, and in
sufficient copies for each Lender:

 

(a)           Amendment. 
This Amendment, duly executed and delivered by each of the Company, the
Guarantors and each Supermajority Lender.

 

(b)           Payment of Fees. 
Evidence of payment by the Company of all accrued 

 

4

 

and unpaid fees, costs and expenses owed pursuant to
the Credit Agreement or this Amendment, in each case to the extent then due and
payable at the Amendment Effective Date and invoiced prior to the Amendment
Effective Date, including any such costs, fees and expenses arising under or
referenced in Sections 2.8 and 11.4 of the Credit Agreement.

 

(c)           New Senior Notes Purchase Agreement. 
The purchase agreement among the Company and the initial purchasers of
the New Senior Notes shall have been executed and delivered by such Persons, or
shall be executed and delivered contemporaneously with the execution and
delivery of this Amendment by the Company, the Guarantors, the Supermajority
Lenders and the Administrative Agent, and the Company shall have delivered to
the Administrative Agent a certificate of the Chief Financial Officer of the
Company to such effect.

 

(d)           Opinion of Counsel.  An opinion of
Bracewell & Giuliani LLP covering such matters as the Administrative
Agent may require and in form and substance satisfactory to the Administrative
Agent dated as of the Amendment Effective Date.

 

(e)           Reliance Letter.  A letter
from Bracewell & Giuliani LLP to the Administrative Agent permitting
the Administrative Agent and the Lenders to rely on such firm’s opinions to the
initial purchasers of the New Senior Notes, the underwriter for the Defeasance
and Redemption, the indenture trustee under the Senior Notes Indenture and the
indenture trustee under the New Senior Notes Indenture in each case as if the
Administrative Agent and the Lenders were original addressees thereof.

 

(f)            Other Documents. 
Such other approvals, opinions, documents or materials as the
Administrative Agent or any Lender may reasonably request.

 

Section 7.               Representations and Warranties. 
The Company and each Guarantor each hereby represent and warrant that,
as of the date hereof and the Amendment Effective Date, after giving effect to
this Amendment:

 

(a)           Bring-Down of Representations and Warranties. 
The representations and warranties of the Company and each Guarantor
contained in Article VI and Section 4.5(b) of the Credit
Agreement are true and correct in all material respects on and as of the
Amendment Effective Date, as though made on and as of such date (except to the
extent such reps and warranties expressly refer to an earlier date, in which
case they shall be true and correct as of such earlier date);

 

(b)           No Litigation.  No litigation
is pending or threatened against the Company or any Subsidiary in which there
is a reasonable probability of an adverse decision which would result in a
Material Adverse Effect.

 

(c)           No Material Adverse Effect. 
There has occurred no event or circumstance that has resulted or would
reasonably be expected to result in a Material Adverse Effect since
December 31, 2008.

 

(d)           No Default or Event of Default. 
No event has occurred and is continuing which constitutes a Default, an
Event of Default or both.

 

5

 

Section 8.               Governing Law.  THIS
AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT
SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW
OF THE STATE OF NEW YORK.

 

Section 9.               Costs and Expenses.  The Company
shall pay all reasonable costs and expenses incurred by the Administrative
Agent or any other Agent, the Lenders or any of their Affiliates in connection
with the development, preparation, administration and execution of this
Amendment, including Attorney Costs incurred by any such Person with respect
thereto.

 

Section 10.             Counterparts.  This
Amendment may be executed in any number of separate counterparts, no one of which
need be signed by all parties; each of which, when so executed, shall be deemed
an original, and all of such counterparts taken together shall be deemed to
constitute but one and the same instrument. 
A fully executed counterpart of this Amendment by facsimile signatures
or delivered in portable document format (.pdf) shall be binding upon the
parties hereto.

 

[Signature
Pages Follow]

 

6

 

IN WITNESS WHEREOF, the
parties hereto have caused this Eighth Amendment and Agreement Related to
Second Amended and Restated Credit Agreement be duly executed and delivered by
their respective duly authorized officers as of the date first set forth above,
to be effective as of the Amendment Effective Date.

 

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  	
   

  
	
   

  	
  VENOCO, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:  

  	
  /s/ Timothy M. Marquez

  
	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GUARANTORS:

  
	
   

  	
   

  	
   

  
	
   

  	
  WHITTIER PIPELINE CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy M. Marquez

  
	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TEXCAL ENERGY (LP) LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  VENOCO, INC., its Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy M. Marquez

  
	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TEXCAL ENERGY (GP) LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  VENOCO, INC., its Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy M. Marquez

  
	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
  Chief Executive Officer

  

 

Venoco
Eighth Amendment Signature Page

 

 

	
   

  	
  GUARANTORS:

  
	
   

  	
   

  	
   

  
	
   

  	
  TEXCAL ENERGY SOUTH TEXAS L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:  

  	
  TEXCAL ENERGY (GP) LLC,

  as general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  VENOCO, INC., its Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy M. Marquez

  
	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  CATCO ENERGY LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  VENOCO, INC., its Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy M. Marquez

  
	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Address for Notice to the Company and the Guarantors:

  Principal Place of Business and Chief Executive Office:

  
	
   

  	
   

  
	
   

  	
  370 17th Street, Suite 2950

  Denver, Colorado 80202-1370

  Attention: Chief Financial Officer

  Facsimile No.: (303) 626-8315

  

 

Venoco
Eighth Amendment Signature Page

 

 

	
   

  	
  ADMINISTRATIVE
  AGENT:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BANK
  OF MONTREAL, acting through its U.S. branches and agencies,
  including its Chicago, Illinois branch, as Administrative Agent and as a
  Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:  

  	
  /s/ James V. Ducote

  
	
   

  	
   

  	
  James V. Ducote

  
	
   

  	
   

  	
  Managing
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BMO
  CAPITAL MARKETS FINANCING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James V. Ducote

  
	
   

  	
   

  	
  James V. Ducote

  
	
   

  	
   

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
  CO-SYNDICATION AGENT AND A LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
  CREDIT
  SUISSE, CAYMAN ISLANDS BRANCH

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Nupur Kumar

  
	
   

  	
   

  	
  Name:

  	
  Nupur Kumar

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Kevin Buddhdew

  
	
   

  	
   

  	
  Name:

  	
  Kevin
  Buddhdew

  
	
   

  	
   

  	
  Title:

  	
  Associate

  
	
   

  	
   

  	
   

  

 

Venoco
Eighth Amendment Signature Page

 

 

	
   

  	
  CO-SYNDICATION AGENT AND A LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
  LEHMAN
  COMMERCIAL PAPER INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:  

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  DOCUMENTATION AGENT AND A LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
  FORTIS CAPITAL CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  A LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
  ALLIED IRISH BANKS p.l.c.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert F. Moyle

  
	
   

  	
   

  	
  Name:

  	
  Robert F. Moyle

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James Giordano

  
	
   

  	
   

  	
  Name:

  	
  James Giordano

  
	
   

  	
   

  	
  Title:

  	
  Assistant Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  A LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
  AMEGY BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Cameron D. Jones

  
	
   

  	
   

  	
  Name:

  	
  Cameron D. Jones

  
	
   

  	
   

  	
  Title:

  	
  Banking Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  A LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
  THE BANK OF NOVA SCOTIA

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Keith Buchanan

  
	
   

  	
   

  	
  Name:

  	
  Keith Buchanan

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  

 

Venoco
Eighth Amendment Signature Page

 

 

	
   

  	
  A LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
  UNION BANK, N.A.

  
	
   

  	
  (Formerly known as Union Bank of California, N.A.)

  
	
   

  	
   

  	
   

  
	
   

  	
  By:  

  	
  /s/ Brian Caddell

  
	
   

  	
   

  	
  Name:

  	
  Brian Caddell

  
	
   

  	
   

  	
  Title:

  	
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  A LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
  BANK OF OKLAHOMA,  NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  A LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
  KEYBANK NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Todd Coker

  
	
   

  	
   

  	
  Name:

  	
  Todd Coker

  
	
   

  	
   

  	
  Title:

  	
  AVP

  
	
   

  	
   

  	
   

  
	
   

  	
  A LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
  RZB FINANCE LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Shirley Ritch

  
	
   

  	
   

  	
  Name:

  	
  Shirley Ritch

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Astrid Nocbaner

  
	
   

  	
   

  	
  Name:

  	
  Astrid Nocbaner

  
	
   

  	
   

  	
  Title:

  	
  Group Vice President

  

 

Venoco
Eighth Amendment Signature Page

 

 

	
   

  	
  A LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
  THE ROYAL BANK OF SCOTLAND PLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ P.R. Ballad

  
	
   

  	
   

  	
  Name:

  	
  P.R. Ballad

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00163-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00163-of-00352.parquet"}]]