Document:

Exhibit 10.30

 

This
LOAN AND SECURITY AGREEMENT is entered into as of June 28, 2005, by and
between COMERICA BANK (“Bank”) and ARRAY BIOPHARMA, INC. (“Borrower”).

 

RECITALS

 

Borrower
wishes to obtain credit from time to time from Bank, and Bank desires to extend
credit to Borrower.  This Agreement sets
forth the terms on which Bank will advance credit to Borrower, and Borrower
will repay the amounts owing to Bank.

 

AGREEMENT

 

The
parties agree as follows:

 

1.                                       DEFINITIONS
AND CONSTRUCTION.

 

1.1                                 Definitions.
 As used in this Agreement, the following
terms shall have the following definitions:

 

“Accounts”
means all presently existing and hereafter arising accounts, contract rights
for the receipt of money, payment intangibles, and all other forms of
obligations owing to Borrower arising out of the sale or lease of goods
(including, without limitation, the licensing of software and other technology)
or the rendering of services by Borrower, whether or not earned by performance,
and any and all credit insurance, guaranties, and other security therefor.

 

“Account
Control Agreement” means an executed account control agreement in favor of Bank
covering an account or accounts of Borrower held at another financial
institution, in form and substance acceptable to Bank and Borrower; provided,
that any Account Control Agreement will be structured such that Collateral will
not be classified as restricted cash for financial reporting purposes.

 

“Advance”
or “Advances” means a cash advance or cash advances under the Revolving Line.

 

“Affiliate”
means, with respect to any Person, any Person that owns or controls directly or
indirectly such Person, any Person that controls or is controlled by or is
under common control with such Person, and each of such Person’s senior
executive officers, directors, and partners.

 

“Bank
Expenses” means all:  reasonable costs or
expenses (including reasonable attorneys’ fees and expenses, whether generated
in-house or by outside counsel) incurred in connection with the preparation,
negotiation, administration, and enforcement of the Loan Documents; reasonable
Collateral audit fees; and Bank’s reasonable attorneys’ fees and expenses
(whether generated in-house or by outside counsel) incurred in amending,
enforcing or defending the Loan Documents (including fees and expenses of
appeal), incurred before, during and after an Insolvency Proceeding commenced
by or against Borrower, whether or not suit is brought.

 

“Borrower
State” means Delaware, the state under whose laws Borrower is organized.

 

“Borrower’s
Books” means all of Borrower’s books and records including:  ledgers; records concerning Borrower’s assets
or liabilities, the Collateral, business operations or financial condition; and
those portions of computer programs, or tape files, and the equipment,
containing such information.

 

“Business
Day” means any day that is not a Saturday, Sunday, or other day on which banks
in the State of California are authorized or required to close.

 

“Cash”
means unrestricted cash and cash equivalents.

 

 

“Change
in Control” shall mean a transaction in which any “person” or “group” (within
the meaning of Section 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934) becomes the “beneficial owner” (as defined in Rule 13d-3
under the Securities Exchange Act of 1934), directly or indirectly, of a
sufficient number of shares of all classes of stock then outstanding of
Borrower ordinarily entitled to vote in the election of directors, empowering
such “person” or “group” to elect a majority of the Board of Directors of Borrower,
who did not have such power before such transaction.

 

“Chief
Executive Office State” means Colorado, where Borrower’s chief executive office
is located.

 

“Closing
Date” means the date of this Agreement.

 

“Code”
means the California Uniform Commercial Code, as amended or supplemented from
time to time.

 

“Collateral”
means the property described on Exhibit A attached hereto and all
Negotiable Collateral to the extent not described on Exhibit A, except to
the extent any such property (i) is nonassignable by its terms without the
consent of another party (but only to the extent such prohibition on transfer
is enforceable under applicable law, including, without limitation, Sections
9406 and 9408 of the Code), or (ii) the granting of a security interest
therein is contrary to applicable law, provided that upon the cessation of any
such restriction or prohibition, such property shall automatically become part
of the Collateral; provided that in no case shall the definition of “Collateral”
exclude any Accounts, proceeds of the disposition of any property, or general
intangibles consisting of rights to payment therefor.

 

“Collateral
State” means the state or states where the Collateral is located, which is
Colorado.

 

“Contingent
Obligation” means, as applied to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to (i) any
indebtedness, lease, dividend, letter of credit or other obligation of another,
including, without limitation, any such obligation directly or indirectly
guaranteed, endorsed, co-made or discounted or sold with recourse by that
Person, or in respect of which that Person is otherwise directly or indirectly
liable; (ii) any obligations with respect to undrawn letters of credit,
corporate credit cards, or merchant services issued for the account of that
Person; and (iii) all obligations arising under any interest rate,
currency or commodity swap agreement, interest rate cap agreement, interest
rate collar agreement, or other agreement or arrangement designated to protect
a Person against fluctuation in interest rates, currency exchange rates or
commodity prices; provided, however, that the term “Contingent Obligation”
shall not include endorsements for collection or deposit in the ordinary course
of business.  The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determined amount of the primary obligation in respect of which such Contingent
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith; provided, however, that such amount shall not in any event exceed the
maximum amount of the obligations under the guarantee or other support
arrangement.

 

“Credit
Extension” means each Advance, Equipment Advance, the Term Loan or any other
extension of credit by Bank to or for the benefit of Borrower hereunder.

 

“Environmental
Laws” means all laws, rules, regulations, orders and the like issued by any
federal state, local foreign or other governmental or quasi-governmental
authority or any agency pertaining to the environment or to any hazardous
materials or wastes, toxic substances, flammable, explosive or radioactive
materials, asbestos or other similar materials.

 

“Equipment”
means all present and future machinery, equipment, tenant improvements,
furniture, fixtures, vehicles, tools, parts and attachments in which Borrower
has any interest.

 

“Equipment
Advance(s)” means a cash advance or cash advances under the Equipment Line.

 

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“Equipment
Line” means a Credit Extension of up to Five Million Dollars ($5,000,000).

 

“Equipment
Maturity Date” means June 28, 2010.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended, and the
regulations thereunder.

 

“Event
of Default” has the meaning assigned in Article 8.

 

“GAAP”
means generally accepted accounting principles, consistently applied, as in
effect from time to time.

 

“Indebtedness”
means (a) all indebtedness for borrowed money or the deferred purchase
price of property or services, including without limitation reimbursement and
other obligations with respect to surety bonds and letters of credit, (b) all
obligations evidenced by notes, bonds, debentures or similar instruments, (c) all
capital lease obligations, and (d) all Contingent Obligations.

 

“Insolvency
Proceeding” means any proceeding commenced by or against any Person or entity
under any provision of the United States Bankruptcy Code, as amended, or under
any other bankruptcy or insolvency law, including assignments for the benefit
of creditors, formal or informal moratoria, compositions, extension generally
with its creditors, or proceedings seeking reorganization, arrangement, or
other relief.

 

“Inventory”
means all present and future inventory in which Borrower has any interest.

 

“Investment”
means any beneficial ownership of (including stock, partnership or limited
liability company interest other securities) any Person, or any loan, advance
or capital contribution to any Person.

 

“IRC”
means the Internal Revenue Code of 1986, as amended, and the regulations
thereunder.

 

“Letter
of Credit” means a commercial or standby letter of credit or similar
undertaking issued by Bank at Borrower’s request in accordance with Section 2.1(b)(iii).

 

“Letter
of Credit Sublimit” means a sublimit for Letters of Credit under the Revolving
Line not to exceed Two Million Dollars ($2,000,000)

 

“Lien”
means any mortgage, lien, deed of trust, charge, pledge, security interest or
other encumbrance.

 

“Loan
Documents” means, collectively, this Agreement, any note or notes executed by
Borrower, and any other document, instrument or agreement entered into in
connection with this Agreement, all as amended or extended from time to time.

 

“Material
Adverse Effect” means a material adverse effect on (i) the business
operations, condition (financial or otherwise) or prospects of Borrower and its
Subsidiaries taken as a whole, (ii) the ability of Borrower to repay the
Obligations or otherwise perform its obligations under the Loan Documents, (iii) Borrower’s
interest in, or the value, perfection or priority of Bank’s security interest
in the Collateral.

 

“Negotiable
Collateral” means all of Borrower’s present and future letters of credit of
which it is a beneficiary, drafts, instruments (including promissory notes),
securities (other than treasury stock of Borrower), documents of title, and
chattel paper.

 

“Obligations”
means all debt, principal, interest, Bank Expenses and other amounts owed to
Bank by Borrower pursuant to this Agreement or any other agreement, whether
absolute or contingent, due or to become due, now existing or hereafter
arising, including any interest that accrues after the commencement of an

 

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Insolvency Proceeding and including any debt,
liability, or obligation owing from Borrower to others that Bank may have
obtained by assignment or otherwise.

 

“Periodic
Payments” means all installments or similar recurring payments that Borrower
may now or hereafter become obligated to pay to Bank pursuant to the terms and
provisions of this Agreement.

 

“Permitted
Indebtedness” means:

 

(a)                                  Indebtedness
of Borrower in favor of Bank arising under this Agreement or any other Loan
Document;

 

(b)                                 Indebtedness
existing on the Closing Date and disclosed in the Schedule;

 

(c)                                  Indebtedness
of Borrower secured by a lien described in clause (c) of the defined term “Permitted
Liens;” provided such Indebtedness does not exceed the lesser of the cost or
fair market value of the equipment financed with such Indebtedness;

 

(d)                                 Subordinated
Debt;

 

(e)                                  Indebtedness
to trade creditors incurred in the ordinary course of business; and

 

(f)                                    Extensions,
refinancings and renewals of any items of Permitted Indebtedness, provided that
the principal amount is not increased or the terms modified to impose more
burdensome terms upon Borrower or its Subsidiary, as the case may be.

 

“Permitted
Investment” means:

 

(a)                                  Investments
existing on the Closing Date disclosed in the Schedule; and

 

(b)                                 Investments
allowed under the Borrower’s investment policy as approved by Borrower’s Audit
Committee and/or Board of Directors from time to time, including (i) Marketable
direct obligations issued or unconditionally guaranteed by the United States of
America or any agency or any State thereof maturing within one (1) year
from the date of acquisition thereof, (ii) commercial paper maturing no
more than one (1) year from the date of creation thereof and currently
having rating of at least A-2 or P-2 from either Standard & Poor’s
Corporation or Moody’s Investors Service, (iii) certificates of deposit
from Bank or another financial institution maturing no more than one year from
the date of investment therein, and (iv) money market accounts from Bank
or another financial institution;

 

(c)                                  Repurchases
of stock from former employees or directors of Borrower under the terms of
applicable repurchase agreements;

 

(d)                                 Investments
accepted in connection with Permitted Transfers;

 

(e)                                  Investments
of Subsidiaries in or to other Subsidiaries or Borrower and Investments by
Borrower in Subsidiaries;

 

(f)                                    Investments
consisting of (i) travel advances and employee relocation loans and other
employee loans and advances in the ordinary course of business, and (ii) loans
to employees, officers or directors relating to the purchase of equity
securities of Borrower or its Subsidiaries pursuant to employee stock purchase
plan agreements approved by Borrower’s Board of Directors;

 

(g)                                 Investments
(including debt obligations) received in connection with the bankruptcy or
reorganization of customers or suppliers and in settlement of delinquent
obligations of, and other disputes with, customers or suppliers arising in the
ordinary course of Borrower’s business;

 

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(h)                                 Investments
consisting of notes receivable of, or prepaid royalties and other credit
extensions, to customers and suppliers who are not Affiliates, in the ordinary
course of business, provided that this subparagraph (h) shall not apply to
Investments of Borrower in any Subsidiary; and

 

(i)                                     Joint
ventures or strategic alliances in the ordinary course of Borrower’s business.

 

“Permitted
Liens” means the following:

 

(a)                                  Any
Liens existing on the Closing Date and disclosed in the Schedule (excluding
Liens to be satisfied with the proceeds of the Advances) or arising under this
Agreement or the other Loan Documents;

 

(b)                                 Liens
for taxes, fees, assessments or other governmental charges or levies, either
not delinquent or being contested in good faith by appropriate proceedings and
for which Borrower maintains adequate reserves, provided the same have no
priority over any of Bank’s security interests;

 

(c)                                  Liens
(i) upon or in any Equipment (other than Equipment financed by an
Equipment Advance) acquired or held by Borrower or any of its Subsidiaries to
secure the purchase price of such Equipment or indebtedness incurred solely for
the purpose of financing the acquisition or lease of such Equipment, or (ii) existing
on such Equipment at the time of its acquisition, provided that the Lien is
confined solely to the property so acquired and improvements thereon, and the
proceeds of such Equipment;

 

(d)                                 Liens
incurred in connection with the extension, renewal or refinancing of the
indebtedness secured by Liens of the type described in clauses (a) through
(c) above, provided that any extension, renewal or replacement Lien shall
be limited to the property encumbered by the existing Lien and the principal
amount of the indebtedness being extended, renewed or refinanced does not
increase;

 

(e)                                  Liens
arising from judgments, decrees or attachments in circumstances not
constituting an Event of Default under Sections 8.5 or 8.9; and

 

(f)                                    Liens
in favor of other financial institutions arising in connection with Borrower’s
deposit accounts held at such institutions to secured standard fees for deposit
services charged by, but not financing made available by such institutions,
provided that Bank has a perfected security interest in the amounts held in
such deposit accounts.

 

“Permitted Transfer” means the conveyance, sale,
lease, transfer or disposition by Borrower or any Subsidiary of:

 

(a)                                  Inventory
in the ordinary course of business;

 

(b)                                 licenses
and similar arrangements for the use of the property of Borrower or its
Subsidiaries in the ordinary course of business;

 

(c)                                  worn-out,
unused or obsolete Equipment not financed with the proceeds of Equipment
Advances; or

 

(d)                                 other
assets of Borrower or its Subsidiaries that do not constitute Collateral (other
than expenditures of cash in the ordinary course of Borrower’s business).

 

“Person”
means any individual, sole proprietorship, partnership, limited liability
company, joint venture, trust, unincorporated organization, association,
corporation, institution, public benefit corporation, firm, joint stock
company, estate, entity or governmental agency.

 

5

 

“Prime
Rate” means the variable rate of interest, per annum, most recently announced
by Bank, as its “prime rate,” whether or not such announced rate is the lowest
rate available from Bank.

 

“Responsible
Officer” means each of the Chief Executive Officer, the Chief Operating
Officer, the Chief Financial Officer and the Controller of Borrower.

 

“Revolving
Line” means a Credit Extension of up to Two Million Dollars ($2,000,000)
(inclusive of any amounts outstanding under the Letter of Credit Sublimit).

 

“Revolving
Maturity Date” means June 28, 2008.

 

“Schedule”
means the schedule of exceptions attached hereto and approved by Bank, if
any.

 

“SOS
Reports” means the official reports from the Secretaries of State of each
Collateral State, Chief Executive Office State and the Borrower State and other
applicable federal, state or local government offices identifying all current
security interests filed in the Collateral and Liens of record as of the date
of such report.

 

“Subordinated
Debt” means any debt incurred by Borrower that is subordinated in writing to
the debt owing by Borrower to Bank on terms reasonably acceptable to Bank (and
identified as being such by Borrower and Bank).

 

“Subsidiary”
means any corporation, partnership or limited liability company or joint
venture in which (i) any general partnership interest or (ii) more
than fifty percent (50%) of the stock, limited liability company interest or
joint venture of which by the terms thereof has the ordinary voting power to
elect the Board of Directors, managers or trustees of the entity, at the time
as of which any determination is being made, is owned by Borrower, either
directly or through an Affiliate.

 

“Term
Loan” has the meaning set forth in Section 2.1(d).

 

“Term
Loan Maturity Date” means June 28, 2010.

 

1.2                                 Accounting
Terms.  Any accounting term not
specifically defined herein shall be construed in accordance with GAAP and all
calculations shall be made in accordance with GAAP.  The term “financial statements” shall include
the accompanying notes and schedules.

 

2.                                       LOAN
AND TERMS OF PAYMENT.

 

2.1                                 Credit
Extensions.

 

(a)                                  Promise
to Pay.  Borrower promises to pay to
Bank, in lawful money of the United States of America, the aggregate unpaid
principal amount of all Credit Extensions made by Bank to Borrower, together
with interest on the unpaid principal amount of such Credit Extensions at rates
in accordance with the terms hereof.

 

(b)                                 Advances
Under Revolving Line.

 

(i)                  Amount.  Subject to and upon the terms and conditions
of this Agreement (1) Borrower may request Advances in an aggregate
outstanding amount not to exceed the Revolving Line, less any amounts
outstanding under the Letter of Credit Sublimit, and (2) amounts borrowed
pursuant to this Section 2.1(b) may be repaid and reborrowed at any
time prior to the Revolving Maturity Date, at which time all Advances under this
Section 2.1(b) shall be immediately due and payable.  Borrower may prepay any Advances without
penalty or premium.

 

6

 

(ii)               Form of
Request.  Whenever Borrower desires
an Advance, Borrower will notify Bank by facsimile transmission or telephone no
later than 3:00 p.m. Pacific time (1:00 p.m. Pacific time for wire
transfers), on the Business Day that the Advance is to be made.  Each such notification shall be promptly
confirmed by a Payment/Advance Form in substantially the form of Exhibit B
hereto.  Bank is authorized to make
Advances under this Agreement, based upon instructions received from a
Responsible Officer or a designee of a Responsible Officer, or without
instructions if in Bank’s discretion such Advances are necessary to meet
Obligations which have become due and remain unpaid.  Bank shall be entitled to rely on any
telephonic notice given by a person who Bank reasonably believes to be a
Responsible Officer or a designee thereof, and Borrower shall indemnify and
hold Bank harmless for any damages or loss suffered by Bank as a result of such
reliance.  Bank will credit the amount of
Advances made under this Section 2.1(b) to Borrower’s deposit
account.

 

(iii)            Letter
of Credit Sublimit. Subject to the availability under the Revolving Line,
and in reliance on the representations and warranties of Borrower set forth
herein, at any time and from time to time from the date hereof through the
Business Day immediately prior to the Revolving Maturity Date, Bank shall issue
for the account of Borrower such Letters of Credit as Borrower may request by
delivering to Bank a duly executed letter of credit application on Bank’s
standard form; provided, however, that the outstanding and undrawn amounts
under all such Letters of Credit (i) shall not at any time exceed the
Letter of Credit Sublimit, and (ii) shall be deemed to constitute Advances
for the purpose of calculating availability under the Revolving Line.  Any drawn but unreimbursed amounts under any
Letters of Credit shall be charged as Advances against the Revolving Line. All
Letters of Credit shall be in form and substance acceptable to Bank in its sole
reasonable discretion and shall be subject to the terms and conditions of Bank’s
form application and letter of credit agreement.  Borrower will pay any standard issuance and
other fees that Bank notifies Borrower it will charge for issuing and
processing Letters of Credit, not to exceed 0.50% annually.

 

(iv)           Collateralization
of Obligations Extending Beyond Maturity. 
If Borrower has not secured to Bank’s satisfaction its obligations with
respect to any Letters of Credit by the Revolving Maturity Date, then,
effective as of such date, the balance in any deposit accounts held by Bank and
the certificates of deposit or time deposit accounts issued by Bank in Borrower’s
name (and any interest paid thereon or proceeds thereof, including any amounts
payable upon the maturity or liquidation of such certificates or accounts),
shall automatically secure such obligations to the extent of the then
continuing or outstanding and undrawn Letters of Credit.  Borrower authorizes Bank to hold such
balances in pledge and to decline to honor any drafts thereon or any requests
by Borrower or any other Person to pay or otherwise transfer any part of such
balances for so long as the Letters of Credit are outstanding or continue.

 

(c)                                  Equipment
Advances.

 

(i)                  Subject
to and upon the terms and conditions of this Agreement, Bank agrees to make
Equipment Advances to Borrower.  Borrower
may request Equipment Advances at any time from the date hereof through December 28,
2006.   The aggregate outstanding amount
of the Equipment Advances shall not exceed the Equipment Line.  Each Equipment Advance shall not exceed one
hundred percent (100%) of the invoice amount of equipment, capitalized software
and tenant improvements (which Borrower shall, in any case, have purchased
within 90 days of the date of the corresponding Equipment Advance or after April 1,
2005 in the case of Equipment, capitalized software and/or tenant improvements
not present at Borrower at the time of Bank’s appraisal), excluding taxes,
shipping, warranty charges, freight discounts and installation expense.  Equipment Advances for capitalized software
and tenant improvements shall not exceed ten percent (10%) of the Equipment
Line.

 

(ii)               Interest
shall accrue from the date Borrower receives each Equipment Advance at the rate
specified in Section 2.3 (a), and shall be payable in accordance with Section 2.3(c).  Any Equipment Advances that are outstanding
on the Equipment Maturity Date shall be payable in a single payment of
principal, plus all accrued interest, on the Equipment Maturity Date, at which
time all amounts due in connection with Equipment Advances made under this Section 2.1(c) shall
be immediately due and payable. 
Equipment Advances, once repaid, may not be reborrowed.  Borrower may prepay any Equipment Advances
without penalty or premium.

 

7

 

(iii)            When
Borrower desires to obtain an Equipment Advance, Borrower shall notify Bank
(which notice shall be irrevocable) by facsimile transmission to be received no
later than 3:00 p.m. Pacific time three (3) Business Days before the
day on which the Equipment Advance is to be made.  Such notice shall be substantially in the
form of Exhibit B.  The notice shall
be signed by a Responsible Officer or its designee and include a copy of the
invoice for any Equipment to be financed.

 

(d)                                 Term
Loan.

 

(i)                  Subject
to and upon the terms and conditions of this Agreement, on the Closing Date or
as soon thereafter as is practical, Bank shall make one term loan to Borrower
in an aggregate amount not to exceed Ten Million Dollars ($10,000,000) (the “Term
Loan”), which amount shall be used to refinance existing fixed assets and to
support working capital requirements.

 

(ii)               Interest
shall accrue from the date Borrower receives the funds under the Term Loan is
made at the rate specified in Section 2.3(a), and shall be payable monthly
on the first day of each month commencing on the first day of the first month
after the Term Loan is made.  The Term
Loan shall be repaid in a single payment of principal plus accrued but unpaid
interest on the Term Loan Maturity Date, at which time all amounts owing under
this Section 2.1(d) shall be immediately due and payable.  The Term Loan, once repaid, may not be
reborrowed.  Borrower may prepay the Term
Loan without penalty or premium.

 

(iii)            When
Borrower desires to obtain the Term Loan, Borrower shall notify Bank (which
notice shall be irrevocable) by facsimile transmission to be received no later
than 3:00 p.m. Pacific time three (3) Business Days before the day on
which the Term Loan is to be made.  Such
notice shall be substantially in the form of Exhibit B.  The notice shall be signed by a Responsible
Officer or its designee.

 

2.2                                 Intentionally
Omitted.

 

2.3                                 Interest
Rates, Payments, and Calculations.

 

(a)                                  Interest
Rates.  Except as set forth in Section 2.3(b),
the Advances, the Equipment Advances and the Term Loan shall bear interest, on
the outstanding daily balance thereof, as set forth in the LIBOR/Cost of Funds
Addendum to Loan & Security Agreement attached as Exhibit D
hereto.

 

(b)                                 Late
Fee; Default Rate.  If any payment is
not made within ten (10) days after the date such payment is due, Borrower
shall pay Bank a late fee equal to the lesser of (i) five percent (5%) of
the amount of such unpaid amount or (ii) the maximum amount permitted to
be charged under applicable law.

 

(c)                                  Payments.  Interest hereunder shall be due and payable
on the first calendar day of each month during the term hereof.  Bank shall, at its option, charge such
interest, all Bank Expenses, and all Periodic Payments against any of Borrower’s
deposit accounts or against the Revolving Line, in which case those amounts
shall thereafter accrue interest at the rate then applicable hereunder.  Any interest not paid when due shall be
compounded by becoming a part of the Obligations, and such interest shall
thereafter accrue interest at the rate then applicable hereunder.

 

(d)                                 Computation.  In the event the Prime Rate is changed from
time to time hereafter, the applicable rate of interest hereunder shall be
increased or decreased, effective as of the day the Prime Rate is changed, by
an amount equal to such change in the Prime Rate.  All interest chargeable under the Loan
Documents shall be computed on the basis of a three hundred sixty (360) day
year for the actual number of days elapsed.

 

2.4                                 Crediting
Payments.  Prior to the occurrence of
an Event of Default, Bank shall credit a wire transfer of funds, check or other
item of payment to such deposit account or Obligation as Borrower specifies
except that to the extent Borrower uses the Advances to purchase Collateral,
Borrower’s repayment of the Advances shall apply on a “first-in-first-out”
basis so that the portion of the Advances used to purchase a particular item of
Collateral shall be paid in the chronological order the Borrower purchased the
Collateral.  After the occurrence of an

 

8

 

Event of Default, Bank shall
have the right, in its sole discretion, to immediately apply any wire transfer
of funds, check, or other item of payment to reduce Obligations, but such
applications of funds shall not be considered a payment on account unless such
payment is of immediately available federal funds or unless and until such
check or other item of payment is honored when presented for payment.  Notwithstanding anything to the contrary
contained herein, any wire transfer or payment received by Bank after 12:00
noon Pacific time shall be deemed to have been received by Bank as of the
opening of business on the immediately following Business Day.  Whenever any payment to Bank under the Loan
Documents would otherwise be due (except by reason of acceleration) on a date
that is not a Business Day, such payment shall instead be due on the next
Business Day, and additional fees or interest, as the case may be, shall accrue
and be payable for the period of such extension.

 

2.5                                 Bank
Expenses.  On the Closing Date,
Borrower shall pay to Bank, Bank Expenses incurred through the Closing Date
(not to exceed $5,000) and, after the Closing Date, all Bank Expenses as and
when they become due provided that Bank provides Borrower with written notice
thereof.

 

2.6                                 Term.  This Agreement shall become effective on the
Closing Date and, subject to Section 13.7, shall continue in full force
and effect for so long as any Obligations remain outstanding or Bank has any
obligation to make Credit Extensions under this Agreement.  Notwithstanding the foregoing, Bank shall
have the right to terminate its obligation to make Credit Extensions under this
Agreement immediately and without notice upon the occurrence and during the
continuance of an Event of Default.

 

3.                                       CONDITIONS
OF LOANS.

 

3.1                                 Conditions
Precedent to Initial Credit Extension. 
The obligation of Bank to make the initial Credit Extension is subject
to the condition precedent that Bank shall have received, in form and substance
satisfactory to Bank, the following:

 

(a)                                  this
Agreement;

 

(b)                                 an
officer’s certificate of Borrower with respect to incumbency and resolutions
authorizing the execution and delivery of this Agreement;

 

(c)                                  UCC
National Form Financing Statement;

 

(d)                                 current
SOS Reports indicating that except for Permitted Liens, there are no other
security interests or Liens of record in the Collateral;

 

(e)                                  a
deposit account control agreement with respect to Borrower’s investment account
held at Lehman Brothers (the “Lehman Account”).

 

(f)                                    securities
and/or deposit account control agreements with respect to any accounts
permitted hereunder to be maintained outside Bank;

 

(g)                                 a
Lessor’s Acknowledgment and Subordination for Borrower’s Boulder location;

 

(h)                                 a
Lessor’s Acknowledgment and Subordination for Borrower’s Longmont location;

 

(i)                                     agreement
to provide insurance;

 

(j)                                     payment
of the fees and Bank Expenses then due specified in Section 2.5 hereof;

 

(k)                                  current
financial statements, including audited statements for Borrower’s most recently
ended fiscal year, together with an unqualified opinion, company prepared
consolidated and consolidating balance sheets and income statements for the
most recently ended month in accordance with Section 6.2, and such other
updated financial information as Bank may reasonably request;

 

9

 

(l)                                     current
Compliance Certificate in accordance with Section 6.2; and

 

(m)                               such
other documents or certificates, and completion of such other matters, as Bank may
reasonably deem necessary or appropriate.

 

3.2                                 Conditions
Precedent to all Credit Extensions. 
The obligation of Bank to make each Credit Extension, including the
initial Credit Extension, is further subject to the following conditions:

 

(a)                                  timely
receipt by Bank of the Payment/Advance Form as provided in Section 2.1;
and

 

(b)                                 the
representations and warranties contained in Section 5 shall be true and
correct in all material respects on and as of the date of such Payment/Advance Form and
on the effective date of each Credit Extension as though made at and as of each
such date, and no Event of Default shall have occurred and be continuing, or
would exist after giving effect to such Credit Extension (provided, however,
that those representations and warranties expressly referring to another date
shall be true, correct and complete in all material respects as of such
date).  The making of each Credit
Extension shall be deemed to be a representation and warranty by Borrower on
the date of such Credit Extension as to the accuracy of the facts referred to
in this Section 3.2.

 

4.                                       CREATION
OF SECURITY INTEREST.

 

4.1                                 Grant
of Security Interest.  Borrower
grants and pledges to Bank a continuing security interest in the Collateral to
secure prompt repayment of any and all Obligations and in order to secure
prompt performance by Borrower of each of its covenants and duties under the
Loan Documents.  Except as set forth in
the Schedule, such security interest constitutes a valid, first priority
security interest in the presently existing Collateral, and will constitute a
valid, first priority security interest in later-acquired Collateral.  Notwithstanding any termination, Bank’s Lien
on the Collateral shall remain in effect for so long as any Obligations are
outstanding.

 

4.2                                 Perfection
of Security Interest.  Borrower
authorizes Bank to file at any time financing statements, continuation
statements, and amendments thereto that (i) either specifically describe
the Collateral or describe the Collateral as all assets of Borrower of the kind
pledged hereunder, and (ii) contain any other information required by the
Code for the sufficiency of filing office acceptance of any financing
statement, continuation statement, or amendment, including whether Borrower is
an organization, the type of organization and any organizational identification
number issued to Borrower, if applicable. 
Any such financing statements may be signed by Bank on behalf of
Borrower, as provided in the Code, and may be filed at any time in any
jurisdiction whether or not Revised Article 9 of the Code is then in
effect in that jurisdiction.  Borrower
shall from time to time endorse and deliver to Bank, at the request of Bank,
all Negotiable Collateral and other documents that Bank may reasonably request,
in form satisfactory to Bank, if necessary to perfect and continue perfected
Bank’s security interests in the Collateral and in order to fully consummate
all of the transactions contemplated under the Loan Documents.  Borrower shall have possession of the Collateral,
except where expressly otherwise provided in this Agreement or where Bank is
required to perfect its security interest by possession in addition to the
filing of a financing statement.  Where
Collateral is in possession of a third party bailee, Borrower shall take such
steps as Bank reasonably requests for Bank to (i) obtain an
acknowledgment, in form and substance satisfactory to Bank, of the bailee that
the bailee holds such Collateral for the benefit of Bank, (ii) obtain “control”
of any Collateral consisting of investment property, deposit accounts,
letter-of-credit rights or electronic chattel paper (as such items and the term
“control” are defined in Revised Article 9 of the Code) by causing the
securities intermediary or depositary institution or issuing bank to execute a
control agreement in form and substance satisfactory to Bank.  Borrower will not create any chattel paper
without placing a legend on the chattel paper acceptable to Bank indicating that
Bank has a security interest in the chattel paper.  Borrower from time to time may deposit with
Bank specific cash collateral to secure specific Obligations; Borrower
authorizes Bank to hold such specific balances in pledge and to decline to
honor any drafts thereon or any request by Borrower or any other Person to pay
or otherwise transfer any part of such balances for so long as the specific
Obligations are outstanding.

 

4.3                                 Right
to Inspect.  Bank (through any of its
officers, employees, or agents) shall have the right, upon reasonable prior
notice, from time to time during Borrower’s usual business hours but no more
than twice a year (unless an Event of Default has occurred and is continuing),
to inspect Borrower’s Books and to make copies

 

10

 

thereof and to check, test, and
appraise the Collateral in order to verify Borrower’s financial condition or
the amount, condition of, or any other matter relating to, the Collateral.

 

5.                                       REPRESENTATIONS
AND WARRANTIES.

 

Borrower
represents and warrants as follows:

 

5.1                                 Due
Organization and Qualification. 
Borrower and each Subsidiary is duly existing under the laws of the
state in which it is organized and qualified and licensed to do business in any
state in which the conduct of its business or its ownership of property
requires that it be so qualified, except where the failure to do so could not
reasonably be expected to cause a Material Adverse Effect.

 

5.2                                 Due
Authorization; No Conflict.  The
execution, delivery, and performance of the Loan Documents are within Borrower’s
powers, have been duly authorized, and are not in conflict with nor constitute
a breach of any provision contained in Borrower’s Certificate of Incorporation
or Bylaws, nor will they constitute an event of default under any material agreement
by which Borrower is bound.  Borrower is
not in default under any agreement by which it is bound, except to the extent
such default could not reasonably be expected to cause a Material Adverse
Effect.

 

5.3                                 Collateral.  Borrower has rights in or the power to
transfer the Collateral, and its title to the Collateral is free and clear of
Liens, adverse claims, and restrictions on transfer or pledge except for
Permitted Liens.  Except as set forth on
the Schedule, all Collateral is located solely in the Collateral States.  All Inventory is in all material respects of
good and merchantable quality, except for Inventory for which adequate reserves
have been made.  Except as set forth in
the Schedule, none of the Collateral is maintained or invested with a Person
other than Bank or Bank’s Affiliates.

 

5.4                                 Name;
Location of Chief Executive Office. 
Except as disclosed in the Schedule, Borrower has not done business
under any name other than that specified on the signature page hereof, and
its exact legal name is as set forth in the first paragraph of this
Agreement.  The chief executive office of
Borrower is located in the Chief Executive Office State at the address
indicated in Section 10 hereof.

 

5.5                                 Litigation.  Except as set forth in the Schedule, there are
no actions or proceedings pending by or against Borrower or any  Subsidiary before any court or administrative
agency in which a likely adverse decision could reasonably be expected to have
a Material Adverse Effect.

 

5.6                                 No
Material Adverse Change in Financial Statements.  All consolidated and consolidating financial
statements related to Borrower and any Subsidiary that are delivered by
Borrower to Bank fairly present in all material respects Borrower’s
consolidated and consolidating financial condition as of the date thereof and
Borrower’s consolidated and consolidating results of operations for the period
then ended.  There has not been a
material adverse change in the consolidated or in the consolidating financial
condition of Borrower since the date of the most recent of such financial
statements submitted to Bank.

 

5.7                                 Solvency,
Payment of Debts.  Borrower is able
to pay its debts (including trade debts) as they mature; the fair saleable
value of Borrower’s assets (including goodwill minus disposition costs) exceeds
the fair value of its liabilities; and Borrower is not left with unreasonably
small capital after the transactions contemplated by this Agreement.

 

5.8                                 Compliance
with Laws and Regulations.  Borrower
and each Subsidiary have met the minimum funding requirements of ERISA with
respect to any employee benefit plans subject to ERISA.  No event has occurred resulting from Borrower’s
failure to comply with ERISA that is reasonably likely to result in Borrower’s
incurring any liability that could have a Material Adverse Effect.  Borrower is not an “investment company” or a
company “controlled” by an “investment company” within the meaning of the
Investment Company Act of 1940.  Borrower
is not engaged principally, or as one of the important activities, in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulations T and U of the Board of Governors of
the Federal Reserve System).  Borrower
has complied in all material respects with all the

 

11

 

provisions of the Federal Fair
Labor Standards Act.  Borrower is in
compliance with all environmental laws, regulations and ordinances except where
the failure to comply is not reasonably likely to have a Material Adverse
Effect.  Borrower has not violated any
statutes, laws, ordinances or rules applicable to it, the violation of
which could reasonably be expected to have a Material Adverse Effect.  Borrower and each Subsidiary have filed or
caused to be filed all tax returns required to be filed, and have paid, or have
made adequate provision for the payment of, all taxes reflected therein except
those being contested in good faith with adequate reserves under GAAP or where
the failure to file such returns or pay such taxes could not reasonably be
expected to have a Material Adverse Effect.

 

5.9                                 Subsidiaries.  Borrower does not own any stock, partnership
interest or other equity securities of any Person, except for Permitted
Investments.

 

5.10                           Government
Consents.  Borrower and each
Subsidiary have obtained all consents, approvals and authorizations of, made
all declarations or filings with, and given all notices to, all governmental
authorities that are necessary for the continued operation of Borrower’s
business as currently conducted, except where the failure to do so could not
reasonably be expected to cause a Material Adverse Effect.

 

5.11                           Inbound
Licenses.  Except as disclosed on the
Schedule, Borrower is not a party to, nor is bound by, any license or other
agreement that prohibits or otherwise restricts Borrower from granting a
security interest in Borrower’s interest in any Collateral.

 

5.12                           Full
Disclosure.  No representation,
warranty or other statement made by Borrower in any certificate or written
statement furnished to Bank taken together with all such certificates and
written statements furnished to Bank contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained in such certificates or statements not misleading it being
recognized by Bank that the projections and forecasts provided by Borrower in
good faith and based upon reasonable assumptions are not to be viewed as facts
and that actual results during the period or periods covered by any such
projections and forecasts may differ from the projected or forecasted results.

 

6.                                       AFFIRMATIVE
COVENANTS.

 

Borrower
covenants and agrees that, until payment in full of all outstanding
Obligations, and for so long as Bank may have any commitment to make a Credit
Extension hereunder, Borrower shall do all of the following:

 

6.1                                 Good
Standing and Government Compliance. 
Borrower shall maintain its and each of its Subsidiaries’ corporate
existence and good standing in the state or other location of each such entity’s
organization, shall maintain qualification and good standing in each other
jurisdiction in which the failure to so qualify could have a Material Adverse
Effect, and shall furnish to Bank the organizational identification number
issued to Borrower by the authorities of the state in which Borrower is
organized, if applicable.  Borrower shall
meet, and shall cause each Subsidiary to meet, the minimum funding requirements
of ERISA with respect to any employee benefit plans subject to ERISA.  Borrower shall comply in all material
respects with all applicable Environmental Laws, and maintain all material
permits, licenses and approvals required thereunder where the failure to do so
could have a Material Adverse Effect. 
Borrower shall comply, and shall cause each Subsidiary to comply, with
all statutes, laws, ordinances and government rules and regulations to
which it is subject, and shall maintain, and shall cause each of its
Subsidiaries to maintain, in force all licenses, approvals and agreements, the
loss of which or failure to comply with which could reasonably be expected to
have a Material Adverse Effect.

 

6.2                                 Financial
Statements, Reports, Certificates. 
Borrower shall deliver the following to Bank: (i) as soon as
available, but in any event within twenty (20) days after the end of each
calendar month, a company prepared consolidated and consolidating balance sheet
and income statement covering Borrower’s operations during such period, in a
form reasonably acceptable to Bank and certified by a Responsible Officer; (ii) copies
of all statements, reports and notices sent or made available generally by
Borrower to its security holders or to any holders of Subordinated Debt and all
reports on Forms 10-K and 10-Q filed with the Securities and Exchange
Commission within five (5) days of filing; (iii) promptly upon
receipt of notice thereof, a report of any legal actions pending or threatened
against Borrower or any Subsidiary that could result in damages or costs to
Borrower or any Subsidiary of Five Million Dollars ($5,000,000) or more; (iv) promptly
upon receipt, each management letter

 

12

 

prepared by Borrower’s
independent certified public accounting firm regarding Borrower’s management
control systems; and (v) such budgets as Bank may reasonably request from
time to time.

 

(a)                                  Within
twenty (20) days after the last day of each month and within five (5) days
after the Securities and Exchange Commission’s standard filing date for 10-Qs,
Borrower shall deliver to Bank a Compliance Certificate certified as of the
last day of the applicable month and signed by a Responsible Officer in
substantially the form of Exhibit C hereto.

 

(b)                                 Within
five (5) days after the last day of each month, Borrower shall provide
Bank with a cash balance certificate certifying Borrower’s total Cash held at
Bank and at other financial institutions subject to Account Control Agreements
and Borrower shall provide Bank with a means of real-time access to Borrower’s
Accounts held outside of Bank which amounts Bank may confirm at any time.  Such means of real-time access to Borrower’s
Accounts shall be satisfactory to Bank in its sole reasonable discretion.

 

(c)                                  As
soon as possible and in any event within three (3) calendar days after
becoming aware of the occurrence or existence of an Event of Default hereunder,
a written statement of a Responsible Officer setting forth details of the Event
of Default, and the action which Borrower has taken or proposes to take with respect
thereto.

 

(d)                                 Bank
shall have a right from time to time hereafter to appraise Borrower’s fixed
assets at Bank’s expense, provided that such audits will be conducted no more
often than once every two (2) years unless an Event of Default has
occurred and is continuing.

 

Borrower may deliver to
Bank on an electronic basis any certificates, reports or information required
pursuant to this Section 6.2, and Bank shall be entitled to rely on the
information contained in the electronic files, provided that Bank in good faith
believes that the files were delivered by a Responsible Officer.  If Borrower delivers this information
electronically, it shall also deliver to Bank by U.S. Mail, reputable overnight
courier service, hand delivery, facsimile or .pdf file within five (5) Business
Days of submission of the unsigned electronic copy the certification of monthly
financial statements and the Compliance Certificate, each bearing the physical
signature of the Responsible Officer.

 

6.3                                 Inventory;
Returns.  Borrower shall keep all
Inventory in good and merchantable condition except for Inventory for which
adequate reserves have been made. 
Returns and allowances, if any, as between Borrower and its account
debtors shall be on the same basis and in accordance with the usual customary
practices of Borrower, as they exist on the Closing Date.  Borrower shall promptly notify Bank of all
returns and recoveries and of all disputes and claims involving more than One
Million Dollars ($1,000,000).

 

6.4                                 Taxes.  Borrower shall make, and  cause each Subsidiary to make, due and timely
payment or deposit of all material federal, state, and local taxes,
assessments, or contributions required of it by law, including, but not limited
to, those laws concerning income taxes, F.I.C.A., F.U.T.A. and state
disability, and will execute and deliver to Bank, on demand, proof satisfactory
to Bank indicating that Borrower or a Subsidiary has made such payments or
deposits and any appropriate certificates attesting to the payment or deposit
thereof; provided that Borrower or a Subsidiary need not make any payment if
the amount or validity of such payment is contested in good faith by
appropriate proceedings and is reserved against (to the extent required by
GAAP) by Borrower.

 

6.5                                 Insurance.

 

(a)                                  Borrower,
at its expense, shall keep the Collateral, as applicable, insured against loss
or damage by fire, theft, explosion, sprinklers, and all other hazards and
risks, and in such amounts, as ordinarily insured against by other owners in
similar businesses conducted in the locations where Borrower’s business is
conducted on the date hereof.  Borrower
shall also maintain liability and other insurance in amounts and of a type that
are customary to businesses similar to Borrower’s.

 

13

 

(b)                                 All
such policies of insurance shall be in such form, with such companies, and in
such amounts as are reasonably satisfactory to Bank.  All policies of property insurance shall
contain a lender’s loss payable endorsement, in a form reasonably satisfactory
to Bank, showing Bank as an additional loss payee, and all liability insurance
policies shall show the Bank as an additional insured and shall specify that
the insurer must give at least 20 days notice to Bank before canceling its
policy for any reason.  Upon Bank’s
request, Borrower shall deliver to Bank certified copies of the policies of
insurance and evidence of all premium payments. 
If no Event of Default has occurred and is continuing, proceeds payable
under any casualty policy will, at Borrower’s option, be payable to Borrower to
replace the property subject to the claim, provided that any such replacement
property shall be deemed Collateral in which Bank has been granted a first
priority security interest.  If an Event
of Default has occurred and is continuing, all proceeds payable under any such
policy shall, at Bank’s option, be payable to Bank to be applied on account of
the Obligations.

 

6.6                                 Minimum
Cash at Bank.  Borrower shall at all
times, measured on a daily basis, (A) maintain a balance of unrestricted
Cash at Bank of not less than: (i) Beginning on the date thirty (30) days
after the Closing Date, Two Million Dollars ($2,000,000) if Borrower’s total
Cash at Bank plus Cash covered by Account Control Agreements is not less than
Thirty Million Dollars ($30,000,000), (ii) At all times after the Closing
Date, Eight Million Five Hundred Thousand Dollars ($8,500,000) if Borrower’s
total Cash at Bank plus Cash covered by Account Control Agreements is at least
Twenty Five Million Dollars ($25,000,000) but less than Thirty Million Dollars
($30,000,000) and (iii) At all times after the Closing Date, Seventeen
Million Dollars ($17,000,000) if Borrower’s total Cash at Bank plus Cash
covered by Account Control Agreements is less than Twenty Five Million Dollars
($25,000,000) and (B) maintain a balance of Cash at Bank plus Cash covered
by Account Control Agreements of not less than Twenty Million Dollars
($20,000,000).   Notwithstanding the
foregoing, if Borrower fails to comply with any of the provisions of this Section 6.7
at any time, Borrower shall have two (2) Business Days from the date of
such failure to deposit additional funds in accounts at Bank or other accounts
covered by Account Control Agreements so that Borrower is in compliance with
this Section 6.7.

 

6.7                                 Creation/Acquisition
of Subsidiaries.  In the event
Borrower or any Subsidiary creates or acquires any Subsidiary, Borrower and
such Subsidiary shall promptly notify Bank of the creation or acquisition of
such new Subsidiary and take all such action as may be reasonably required by
Bank to cause such Subsidiary to guarantee the Obligations of Borrower under
the Loan Documents and grant a continuing pledge and security interest in and
to the collateral of such Subsidiary (substantially as described on Exhibit A
hereto).

 

6.8                                 Further
Assurances.  At any time and from
time to time Borrower shall execute and deliver such further instruments and
take such further action as may reasonably be requested by Bank to effect the
purposes of this Agreement.

 

7.                                       NEGATIVE
COVENANTS.

 

Borrower
covenants and agrees that, so long as any credit hereunder shall be available
and until the outstanding Obligations are paid in full or for so long as Bank
may have any commitment to make any Credit Extensions, Borrower will not do any
of the following without Bank’s prior written consent, which shall not be
unreasonably withheld or delayed:

 

7.1                                 Dispositions.  Convey, sell, lease, license, transfer or
otherwise dispose of (collectively, to “Transfer”) all or any part of the
Collateral.

 

7.2                                 Change
in Name, Location, Executive Office, or Executive Management; Change in
Business; Change in Fiscal Year; Change in Control.  Change its name or the Borrower State or
relocate its chief executive office without thirty(30) days prior written
notification to Bank; replace its chief executive officer or chief financial
officer without thirty (30) days prior written notification to Bank; engage in
any business, or permit any of its Subsidiaries to engage in any business,
other than or reasonably related or incidental to the businesses currently
engaged in by Borrower; change its fiscal year end; suffer or permit a Change
in Control.

 

7.3                                 Mergers
or Acquisitions.  Merge or
consolidate, or permit any of its Subsidiaries to merge or consolidate, with or
into any other business organization (other than mergers or consolidations of a
Subsidiary into another Subsidiary or into Borrower), or acquire, or permit any
of its Subsidiaries to acquire, all or

 

14

 

substantially all of the
capital stock or property of another Person except where (i) no Event of
Default has occurred, is continuing or would exist after giving effect to such
transactions, (ii) such transactions do not result in a Change in Control,
and (iii) Borrower is the surviving entity.

 

7.4                                 Indebtedness.  Create, incur, assume, guarantee or be or
remain liable with respect to any Indebtedness other than Permitted
Indebtedness or take any actions which impose on Borrower an obligation to
prepay any Indebtedness, except Indebtedness to Bank.

 

7.5                                 Encumbrances.  Create, incur, assume or allow any Lien with
respect to any of the Collateral, or assign or otherwise convey any right to
receive income, including the sale of any Accounts except for Permitted Liens.

 

7.6                                 Distributions.  Pay any dividends or make any other
distribution or payment on account of or in redemption, retirement or purchase
of any capital stock, except that Borrower may (i) repurchase the stock of
former employees pursuant to stock repurchase agreements as long as an Event of
Default does not exist prior to such repurchase or would not exist after giving
effect to such repurchase, and (ii) repurchase the stock of former
employees pursuant to stock repurchase agreements by the cancellation of
indebtedness owed by such former employees to Borrower regardless of whether an
Event of Default exists.

 

7.7                                 Investments.  Directly or indirectly acquire or own, or
make any Investment in or to any Person other than Permitted Investments or
suffer or permit any Subsidiary to be a party to, or be bound by, an agreement
that restricts such Subsidiary from paying dividends or otherwise distributing
property to Borrower.

 

7.8                                 Transactions
with Affiliates.  Directly or
indirectly enter into or permit to exist any material transaction with any
Affiliate of Borrower except for transactions upon fair and reasonable terms
that are no less favorable to Borrower than would be obtained in an arm’s
length transaction with a non-affiliated Person.

 

7.9                                 Subordinated
Debt.  Make any payment in respect of
any Subordinated Debt, or permit any of its Subsidiaries to make any such
payment, except in compliance with the terms of such Subordinated Debt, or
amend any provision affecting Bank’s rights contained in any documentation
relating to the Subordinated Debt without Bank’s prior written consent.

 

7.10                           Inventory
and Equipment.  Store the Inventory
or the Equipment with a bailee, warehouseman, or similar third party unless the
third party has been notified of Bank’s security interest and Bank (a) has
received an acknowledgment from the third party that it is holding or will hold
the Inventory or Equipment for Bank’s benefit or (b) is in possession of
the warehouse receipt, where negotiable, covering such Inventory or
Equipment.  Except for Inventory sold in
the ordinary course of business and except for such other locations as Bank may
approve in writing, Borrower shall keep the Inventory and Equipment only at the
location set forth in Section 10 and such other locations of which
Borrower gives Bank prior written notice and as to which Bank files a financing
statement, or takes other action, where needed to perfect its security
interest.

 

7.11                           No
Investment Company; Margin Regulation. 
Become or be controlled by an “investment company,” within the meaning
of the Investment Company Act of 1940, or become principally engaged in, or
undertake as one of its important activities, the business of extending credit
for the purpose of purchasing or carrying margin stock, or use the proceeds of
any Credit Extension for such purpose.

 

8.                                       EVENTS
OF DEFAULT.

 

Any
one or more of the following events shall constitute an Event of Default by
Borrower under this Agreement:

 

8.1                                 Payment
Default.  If Borrower fails to pay
any of the Obligations when due;

 

15

 

8.2                                 Covenant
Default.

 

(a)                                  If
Borrower fails to perform any obligation under Article 6 or violates any
of the covenants contained in Article 7 of this Agreement; or

 

(b)                                 If
Borrower fails or neglects to perform or observe any other material term,
provision, condition, covenant contained in this Agreement, in any of the Loan
Documents, or in any other present or future agreement between Borrower and
Bank and as to any default under such other term, provision, condition or
covenant that can be cured, has failed to cure such default within ten (10) days
after Borrower receives notice thereof or any officer of Borrower becomes aware
thereof; provided, however, that if the default cannot by its nature be cured
within the ten (10) day period or cannot after diligent attempts by
Borrower be cured within such ten (10) day period, and such default is
likely to be cured within a reasonable time, then Borrower shall have an
additional reasonable period (which shall not in any case exceed thirty (30)
days) to attempt to cure such default, and within such reasonable time period
the failure to have cured such default shall not be deemed an Event of Default
but no Credit Extensions will be made;

 

8.3                                 Defective
Perfection.  If Bank shall receive at
any time following the Closing Date an SOS Report indicating that except for
Permitted Liens, Bank’s security interest in the Collateral is not prior to all
other security interests or Liens of record reflected in such SOS Report;

 

8.4                                 Material
Adverse Effect.  If there occurs any
circumstance or circumstances that could have a Material Adverse Effect;

 

8.5                                 Attachment.  If any material portion of The Collateral is
attached, seized, subjected to a writ or distress warrant, or is levied upon,
or comes into the possession of any trustee, receiver or person acting in a
similar capacity and such attachment, seizure, writ or distress warrant or levy
has not been removed, discharged or rescinded within ten (10) days, or if
Borrower is enjoined, restrained, or in any way prevented by court order from
continuing to conduct all or any material part of its business affairs, or if a
judgment or other claim becomes a lien or encumbrance upon any material portion
of The Collateral, or if a notice of lien, levy, or assessment is filed of
record with respect to any of The Collateral by the United States Government,
or any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within ten (10) days
after Borrower receives notice thereof, provided that none of the foregoing
shall constitute an Event of Default where such action or event is stayed or an
adequate bond has been posted pending a good faith contest by Borrower
(provided that no Credit Extensions will be made during such cure period);

 

8.6                                 Insolvency.  If Borrower becomes insolvent, or if an
Insolvency Proceeding is commenced by Borrower, or if an Insolvency Proceeding
is commenced against Borrower and is not dismissed or stayed within thirty (30)
days (provided that no Credit Extensions will be made prior to the dismissal of
such Insolvency Proceeding);

 

8.7                                 Other
Agreements.  If there is a default or
other failure to perform in any agreement to which Borrower is a party with a
third party or parties resulting in a right by such third party or parties,
whether or not exercised that could have a Material Adverse Effect;

 

8.8                                 Subordinated
Debt.  If Borrower makes any payment
on account of Subordinated Debt, except to the extent such payment is allowed
under any subordination agreement entered into with Bank;

 

8.9                                 Judgments.  If a judgment or judgments for the payment of
money in an amount, individually or in the aggregate, of at least One Million
Dollars ($1,000,000) shall be rendered against Borrower and shall remain
unsatisfied and unstayed (for example, pending an appeal) for a period of ten (10) days
(provided that no Credit Extensions will be made prior to the satisfaction or
stay of such judgment); or

 

8.10                           Misrepresentations.  If any material misrepresentation or material
misstatement exists now or hereafter in any warranty or representation set
forth herein or in any certificate delivered to Bank by any Responsible Officer
pursuant to this Agreement or to induce Bank to enter into this Agreement or
any other Loan Document.

 

16

 

9.                                       BANK’S
RIGHTS AND REMEDIES.

 

9.1                                 Rights
and Remedies.  Upon the occurrence
and during the continuance of an Event of Default, Bank may, at its election,
without notice of its election and without demand, do any one or more of the
following, all of which are authorized by Borrower:

 

(a)                                  Upon
written notice to Borrower, declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due
and payable (provided that upon the occurrence of an Event of Default described
in Section 8.6, all Obligations shall become immediately due and payable without
any action by Bank);

 

(b)                                 Demand
that Borrower  (i) deposit cash with
Bank in an amount equal to the amount of any Letters of Credit remaining
undrawn, as collateral security for the repayment of any future drawings under
such Letters of Credit, and (ii) pay in advance all Letter of Credit fees
scheduled to be paid or payable over the remaining term of the Letters of
Credit, and Borrower shall promptly deposit and pay such amounts;

 

(c)                                  Cease
advancing money or extending credit to or for the benefit of Borrower under
this Agreement or under any other agreement between Borrower and Bank;

 

(d)                                 Settle
or adjust disputes and claims directly with account debtors for amounts, upon
terms and in whatever order that Bank reasonably considers advisable;

 

(e)                                  Make
such payments and do such acts as Bank considers necessary or reasonable to
protect its security interest in the Collateral.  Borrower agrees to assemble the Collateral if
Bank so requires, and to make the Collateral available to Bank as Bank may
designate.  Borrower authorizes Bank to
enter the premises where the Collateral is located, to take and maintain
possession of the Collateral, or any part of it, and to pay, purchase, contest,
or compromise any encumbrance, charge, or lien which in Bank’s determination
appears to be prior or superior to its security interest and to pay all
expenses incurred in connection therewith. 
With respect to any of Borrower’s owned premises, Borrower hereby grants
Bank a license to enter into possession of such premises and to occupy the
same, without charge, in order to exercise any of Bank’s rights or remedies
provided herein, at law, in equity, or otherwise;

 

(f)                                    Set
off and apply to the Obligations any and all (i) balances and deposits of
Borrower held by Bank, and (ii) indebtedness at any time owing to or for
the credit or the account of Borrower held by Bank;

 

(g)                                 Ship,
reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise
for sale, and sell (in the manner provided for herein) the Collateral.

 

(h)                                 Sell
the Collateral at either a public or private sale to a third party, or both, by
way of one or more contracts or transactions, for cash or on terms, in such
manner and at such places (including Borrower’s premises) as Bank determines is
commercially reasonable, and apply any proceeds to the Obligations in whatever
manner or order Bank deems appropriate. 
Bank may sell the Collateral without giving any warranties as to the
Collateral.  Bank may specifically
disclaim any warranties of title or the like. 
This procedure will not be considered adversely to affect the commercial
reasonableness of any sale of the Collateral. 
If Bank sells any of the Collateral upon credit, Borrower will be
credited only with payments actually made by the purchaser, received by Bank,
and applied to the indebtedness of the purchaser.  If the purchaser fails to pay for the
Collateral, Bank may resell the Collateral and Borrower shall be credited with
the proceeds of the sale;

 

(i)                                     Bank
may credit bid and purchase at any public sale;

 

(j)                                     Apply
for the appointment of a receiver, trustee, liquidator or conservator of the
Collateral, without notice and without regard to the adequacy of the security
for the Obligations and without regard to the solvency of Borrower, any
guarantor or any other Person liable for any of the Obligations; and

 

17

 

(k)                                  Any
deficiency that exists after disposition of the Collateral as provided above
will be paid immediately by Borrower.

 

Bank
may comply with any applicable state or federal law requirements in connection
with a disposition of the Collateral and compliance will not be considered
adversely to affect the commercial reasonableness of any sale of the
Collateral.

 

9.2                                 Power
of Attorney.  Effective only upon the
occurrence and during the continuance of an Event of Default, Borrower hereby
irrevocably appoints Bank (and any of Bank’s designated officers, or employees)
as Borrower’s true and lawful attorney to: 
(a) send requests for verification of Accounts or notify account
debtors of Bank’s security interest in the Accounts; (b) endorse Borrower’s
name on any checks or other forms of payment or security that may come into
Bank’s possession; (c) sign Borrower’s name on any invoice or bill of
lading relating to any Account, drafts against account debtors, schedules and
assignments of Accounts, verifications of Accounts, and notices to account
debtors; (d) dispose of any Collateral; (e) make, settle, and adjust
all claims under and decisions with respect to Borrower’s policies of insurance
that relate to Collateral; (f) settle and adjust disputes and claims
respecting the accounts directly with account debtors, for amounts and upon
terms which Bank determines to be reasonable; and (g) to file, in its sole
discretion, one or more financing or continuation statements and amendments
thereto, relative to any of the Collateral without the signature of Borrower
where permitted by law; provided Bank may exercise such power of attorney to
sign the name of Borrower on any of the documents described in clause (g) above,
regardless of whether an Event of Default has occurred.  The appointment of Bank as Borrower’s
attorney in fact, and each and every one of Bank’s rights and powers, being
coupled with an interest, is irrevocable until all of the Obligations have been
fully repaid and performed and Bank’s obligation to provide Credit Extensions
hereunder is terminated.

 

9.3                                 Accounts
Collection.  At any time after the
occurrence and during the continuance of an Event of Default, Bank may notify
any Person owing funds to Borrower of Bank’s security interest in such funds
and verify the amount of such Account. 
Borrower shall collect all amounts owing to Borrower for Bank, receive
in trust all payments as Bank’s trustee, and immediately deliver such payments
to Bank in their original form as received from the account debtor, with proper
endorsements for deposit.

 

9.4                                 Bank
Expenses.  If Borrower fails to pay
any amounts or furnish any required proof of payment due to third persons or
entities, as required under the terms of this Agreement, then Bank may do any
or all of the following after reasonable notice to Borrower:  (a) make payment of the same or any part
thereof; (b) set up such reserves under the Revolving Line as Bank
reasonably deems necessary to protect Bank from the exposure created by such
failure; or (c) obtain and maintain insurance policies of the type
discussed in Section 6.5 of this Agreement, and take any action with
respect to such policies as Bank deems prudent. 
Any amounts so paid or deposited by Bank shall, upon written notice to
Borrower, constitute Bank Expenses, shall be immediately due and payable, and
shall bear interest at the then applicable rate hereinabove provided, and shall
be secured by the Collateral.  Any
payments made by Bank shall not constitute an agreement by Bank to make similar
payments in the future or a waiver by Bank of any Event of Default under this
Agreement.

 

9.5                                 Bank’s
Liability for Collateral.  Bank has
no obligation to clean up or otherwise prepare the Collateral for sale.  All risk of loss, damage or destruction of
the Collateral shall be borne by Borrower unless such loss damage or
destruction is caused by Bank’s negligence or willful misconduct.

 

9.6                                 No
Obligation to Pursue Others.  Bank
has no obligation to attempt to satisfy the Obligations by collecting them from
any other Person liable for them and Bank may release, modify or waive any
collateral provided by any other Person to secure any of the Obligations, all
without affecting Bank’s rights against Borrower.  Borrower waives any right it may have to
require Bank to pursue any other Person for any of the Obligations.

 

9.7                                 Remedies
Cumulative.  Bank’s rights and
remedies under this Agreement, the Loan Documents, and all other agreements
shall be cumulative.  Bank shall have all
other rights and remedies not inconsistent herewith as provided under the Code,
by law, or in equity.  No exercise by Bank
of one right or remedy shall be deemed an election, and no waiver by Bank of
any Event of Default on Borrower’s part shall be deemed a continuing
waiver.  No delay by Bank shall
constitute a waiver, election, or acquiescence by it.  No waiver by Bank

 

18

 

shall be effective unless made
in a written document signed on behalf of Bank and then shall be effective only
in the specific instance and for the specific purpose for which it was
given.  Borrower expressly agrees that
this Section may not be waived or modified by Bank by course of
performance, conduct, estoppel or otherwise.

 

9.8                                 Demand;
Protest.  Except as otherwise
provided in this Agreement, Borrower waives demand, protest, notice of protest,
notice of default or dishonor and any other notices relating to the Obligations
(except for notices of payment and nonpayment).

 

10.                                 NOTICES.

 

Unless
otherwise provided in this Agreement, all notices or demands by any party
relating to this Agreement or any other agreement entered into in connection
herewith shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by a recognized overnight delivery
service, certified mail, postage prepaid, return receipt requested, or by
telefacsimile to Borrower or to Bank, as the case may be, at its addresses set
forth below:

 

	
  If to
  Borrower:

  	
   

  	
  ARRAY
  BIOPHARMA, INC.

  
	
   

  	
   

  	
  3200 Walnut
  Street

  
	
   

  	
   

  	
  Boulder, CO
  80301

  
	
   

  	
   

  	
  Attn: Chief
  Financial Officer

  
	
   

  	
   

  	
  FAX: (303)
  381-6697

  
	
   

  	
   

  	
   

  
	
  With a copy
  to:

  	
   

  	
  ARRAY
  BIOPHARMA, INC.

  
	
   

  	
   

  	
  3200 Walnut
  Street

  
	
   

  	
   

  	
  Boulder, CO
  80301

  
	
   

  	
   

  	
  Attn:
  General Counsel

  
	
   

  	
   

  	
  FAX: (303)
  386-1290

  
	
   

  	
   

  	
   

  
	
  If to Bank:

  	
   

  	
  Comerica
  Bank

  
	
   

  	
   

  	
  2321
  Rosecrans Ave., Suite 5000

  
	
   

  	
   

  	
  El Segundo,
  CA 90245

  
	
   

  	
   

  	
  Attn:
  Manager

  
	
   

  	
   

  	
  FAX: (310)
  297-2290

  
	
   

  	
   

  	
   

  
	
  with a copy
  to:

  	
   

  	
  Comerica
  Bank

  
	
   

  	
   

  	
  10500 NE 8th
  Street, Ste 1905

  
	
   

  	
   

  	
  Bellevue, WA
  98004

  
	
   

  	
   

  	
  Attn: Jeff
  Roberts – Vice President

  
	
   

  	
   

  	
  FAX: (425)
  452-2510

  

 

The
parties hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other.

 

11.                                 CHOICE
OF LAW AND VENUE; JURY TRIAL WAIVER.

 

This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of California, without regard to principles of conflicts of
law.  Each of Borrower and Bank hereby
submits to the exclusive jurisdiction of the state and Federal courts located
in the County of Santa Clara, State of California.  BANK AND BORROWER EACH ACKNOWLEDGE THAT THE
RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE
WAIVED.  EACH OF THEM, AFTER CONSULTING
OR HAVING HAD THE OPPORTUNITY TO CONSULT, WITH COUNSEL OF THEIR CHOICE,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT ANY OF THEM MAY HAVE
TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY RELATED INSTRUMENT OR LOAN DOCUMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS
(WHETHER ORAL

 

19

 

OR WRITTEN), OR ACTION OF ANY OF THEM.  THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE
BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY BANK OR BORROWER, EXCEPT BY A
WRITTEN INSTRUMENT EXECUTED BY EACH OF THEM.

 

12.                                 REFERENCE
PROVISION.

 

The
parties prefer that any dispute between them be resolved in litigation subject
to a Jury Trial Waiver as set forth in Section 11 of this Agreement, but
the availability of that process is in doubt because of the opinion of the
California Court of Appeal in Grafton
Partners LP v. Superior Court, 9 Cal.Rptr.3d 511.   This Reference Provision will be applicable
until the California Supreme Court completes its review of that case, and will
continue to be applicable if either that court or a California Court of Appeal
publishes a decision holding that a pre-dispute Jury Trial Waiver provision
similar to that contained in the Loan Documents is invalid or
unenforceable.  Delay in requesting
appointment of a referee pending review of any such decision, or participation
in litigation pending review, will not be deemed a waiver of this Reference
Provision.

 

12.1                           Mechanics.

 

(a)                                  Other
than (i) nonjudicial foreclosure of security interests in real or personal
property,  (ii) the appointment of a
receiver or (iii) the exercise of other provisional remedies (any of which
may be initiated pursuant to applicable law), any controversy, dispute or claim
(each, a “Claim”) between the parties arising out of or relating to this
Agreement or any other document, instrument or agreement between the Bank and
the undersigned (collectively in this Section, the “Loan Documents”), will be
resolved by a reference proceeding in California in accordance with the
provisions of Section 638 et seq. of the California Code of Civil
Procedure (“CCP”), or their successor sections, which shall constitute the
exclusive remedy for the resolution of any Claim, including whether the Claim
is subject to the reference proceeding. 
Except as otherwise provided in the Loan Documents, venue for the
reference proceeding will be in the Superior Court or Federal District Court in
the County or District where venue is otherwise appropriate under applicable
law (the “Court”).

 

(b)                                 The
referee shall be a retired Judge or Justice selected by mutual written
agreement of the parties.  If the parties
do not agree, the referee shall be selected by the Presiding Judge of the Court
(or his or her representative).  A
request for appointment of a referee may be heard on an ex parte or expedited basis, and the
parties agree that irreparable harm would result if ex parte relief is not
granted.  The referee shall be appointed
to sit with all the powers provided by law. 
Each party shall have one peremptory challenge pursuant to CCP
§170.6.  Pending appointment of the
referee, the Court has power to issue temporary or provisional remedies.

 

(c)                                  The
parties agree that time is of the essence in conducting the reference
proceedings.  Accordingly, the referee
shall be requested to (a) set the matter for a status and trial-setting
conference within fifteen (15) days after the date of selection of the referee,
(b) if practicable, try all issues of law or fact within ninety (90) days
after the date of the conference and (c) report a statement of decision
within twenty (20) days after the matter has been submitted for decision.  Any decision rendered by the referee will be
final, binding and conclusive, and judgment shall be entered pursuant to CCP
§644.

 

(d)                                 The
referee will have power to expand or limit the amount and duration of
discovery.   The referee may set or
extend discovery deadlines or cutoffs for good cause, including a party’s
failure to provide requested discovery for any reason whatsoever.  Unless otherwise ordered, no party shall be
entitled to “priority” in conducting discovery, depositions may be taken by
either party upon seven (7) days written notice, and all other discovery
shall be responded to within fifteen (15) days after service.  All disputes relating to discovery which
cannot be resolved by the parties shall be submitted to the referee whose
decision shall be final and binding.

 

12.2                           Procedures.  Except as expressly set forth in this
Agreement, the referee shall determine the manner in which the reference
proceeding is conducted including the time and place of hearings, the order of
presentation of evidence, and all other questions that arise with respect to
the course of the reference proceeding. 
All proceedings and hearings conducted before the referee, except for
trial, shall be conducted without a court reporter, except that when any party
so requests, a court reporter will be used at any hearing conducted before the
referee, and the referee will be provided a courtesy copy of the
transcript.  The party making such a
request shall

 

20

 

have the obligation to arrange
for and pay the court reporter.  Subject
to the referee’s power to award costs to the prevailing party, the parties will
equally share the cost of the referee and the court reporter at trial.

 

12.3                           Application
of Law.  The referee shall be
required to determine all issues in accordance with existing case law and the
statutory laws of the State of California. 
The rules of evidence applicable to proceedings at law in the State
of California will be applicable to the reference proceeding.  The referee shall be empowered to enter
equitable as well as legal relief, provide all temporary or provisional
remedies, enter equitable orders that will be binding on the parties and rule on
any motion which would be authorized in a trial, including without limitation
motions for summary judgment or summary adjudication .  The referee shall issue a decision at the
close of the reference proceeding which disposes of all claims of the parties
that are the subject of the reference. 
The referee’s decision shall be entered by the Court as a judgment or an
order in the same manner as if the action had been tried by the Court.  The parties reserve the right to appeal from
the final judgment or order or from any appealable decision or order entered by
the referee.  The parties reserve the
right to findings of fact, conclusions of laws, a written statement of
decision, and the right to move for a new trial or a different judgment, which
new trial, if granted, is also to be a reference proceeding under this
provision.

 

12.4                           Repeal.  If the enabling legislation which provides
for appointment of a referee is repealed (and no successor statute is enacted),
any dispute between the parties that would otherwise be determined by reference
procedure will be resolved and determined by arbitration.  The arbitration will be conducted by a
retired judge or Justice, in accordance with the California Arbitration Act
§1280 through §1294.2 of the CCP as amended from time to time.  The limitations with respect to discovery set
forth above shall apply to any such arbitration proceeding.

 

12.5                           THE
PARTIES RECOGNIZE AND AGREE THAT ALL DISPUTES RESOLVED UNDER THIS REFERENCE
PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY, AND THAT THEY ARE IN
EFFECT WAIVING THEIR RIGHT TO TRIAL BY JURY IN AGREEING TO THIS REFERENCE
PROVISION.  AFTER CONSULTING (OR HAVING
HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR OWN CHOICE, EACH PARTY
KNOWINGLY AND VOLUNTARILY AND FOR THEIR MUTUAL BENEFIT AGREES THAT THIS
REFERENCE PROVISION WILL APPLY TO ANY DISPUTE BETWEEN THEM WHICH ARISES OUT OF
OR IS RELATED TO THIS AGREEMENT OR THE LOAN DOCUMENTS.

 

13.                                 GENERAL
PROVISIONS.

 

13.1                           Successors
and Assigns.  This Agreement shall
bind and inure to the benefit of the respective successors and permitted
assigns of each of the parties and shall bind all Persons who become bound as a
debtor to this Agreement; provided, however, that neither this Agreement nor
any rights hereunder may be assigned by Borrower without Bank’s prior written
consent, which consent may be granted or withheld in Bank’s sole
discretion.  Bank shall have the right
without the consent of or notice to Borrower to sell, transfer, negotiate, or
grant participation in all or any part of, or any interest in, Bank’s
obligations, rights and benefits hereunder.

 

13.2                           Indemnification.  Borrower shall defend, indemnify and hold
harmless Bank and its officers, employees, and agents against:  (a) all obligations, demands, claims,
and liabilities claimed or asserted by any other party in connection with the
transactions contemplated by this Agreement; and (b) all losses or Bank
Expenses in any way suffered, incurred, or paid by Bank, its officers,
employees and agents as a result of or in any way arising out of, following, or
consequential to transactions between Bank and Borrower whether under this
Agreement, or otherwise (including without limitation reasonable attorneys’
fees and expenses), except for losses caused by Bank’s gross negligence or
willful misconduct.

 

13.3                           Time
of Essence.  Time is of the essence
for the performance of all obligations set forth in this Agreement.

 

13.4                           Severability
of Provisions.  Each provision of
this Agreement shall be severable from every other provision of this Agreement
for the purpose of determining the legal enforceability of any specific
provision.

 

21

 

13.5                           Amendments
in Writing, Integration.  All
amendments to or terminations of this Agreement or the other Loan Documents
must be in writing.  All prior agreements,
understandings, representations, warranties, and negotiations between the
parties hereto with respect to the subject matter of this Agreement and the
other Loan Documents, if any, are merged into this Agreement and the Loan
Documents.

 

13.6                           Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties on separate counterparts, each of
which, when executed and delivered, shall be deemed to be an original, and all
of which, when taken together, shall constitute but one and the same Agreement.

 

13.7                           Survival.  All covenants, representations and warranties
made in this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding or Bank has any obligation to make any Credit
Extension to Borrower.  The obligations
of Borrower to indemnify Bank with respect to the expenses, damages, losses,
costs and liabilities described in Section 13.2 shall survive until all
applicable statute of limitations periods with respect to actions that may be
brought against Bank have run.

 

22

 

IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be executed as of the
date first above written.

 

	
   

  	
  ARRAY
  BIOPHARMA, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ R.
  Michael Carruthers

  	
   

  
	
   

  	
  Title:

  	
  CFO

  	
   

  
	
   

  	
   

  
	
   

  	
  COMERICA
  BANK

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
					

 

[Signature Page to
Loan and Security Agreement]

 

 

	
  DEBTOR

  	
  ARRAY
  BIOPHARMA, INC.

  
	
   

  	
   

  
	
  SECURED
  PARTY:

  	
  COMERICA
  BANK

  

 

EXHIBIT A

 

COLLATERAL DESCRIPTION ATTACHMENT

TO LOAN AND SECURITY AGREEMENT

 

All
personal property of Borrower (herein referred to as “Borrower” or “Debtor”)
whether presently existing or hereafter created or acquired, and wherever
located, including, but not limited to:

 

(a)                                  all
accounts (including health-care-insurance receivables), cash, deposit accounts,
documents (including negotiable documents), equipment (including all accessions
and additions thereto), fixed assets, payment intangibles, goods (including
fixtures), inventory (i.e. all goods held for sale or lease or to be furnished
under a contract of service, and including returns and repossessions),
investment property (including securities and securities entitlements), letter
of credit rights, money, and the content of all of Debtor’s books and records
with respect to any of the foregoing, and that portion of the content of all
the computers and equipment containing said books and records;

 

(b)                                 any
and all cash proceeds and/or noncash proceeds of any of the foregoing,
including, without limitation, insurance proceeds, and all supporting
obligations and the security therefor or for any right to payment.  All terms above have the meanings given to
them in the California Uniform Commercial Code, as amended or supplemented from
time to time, including revised Division 9 of the Uniform Commercial
Code-Secured Transactions, added by Stats. 1999, c.991 (S.B. 45), Section 35,
operative July 1, 2001.

 

The
Collateral shall not include any copyrights, patents, trademarks, servicemarks
and applications therefor, now owned or hereafter acquired, or any claims for
damages by way of any past, present and future infringement of any of the
foregoing (collectively, the “Intellectual Property”); provided, however, that
the Collateral shall include all accounts and general intangibles that consist
of rights to payment and proceeds from the sale, licensing or disposition of
all or any part, or rights in, the foregoing (the “Rights to Payment”).

 

 

EXHIBIT B

 

TECHNOLOGY & LIFE SCIENCES
DIVISION

 

LOAN ANALYSIS

 

LOAN ADVANCE/PAYDOWN REQUEST FORM

 

DEADLINE FOR SAME DAY PROCESSING IS [3:00* P.M.,
Pacific Time/ 3:30 P.M. Eastern Time]

 

DEADLINE FOR EQUIPMENT ADVANCES IS [3:00 P.M.,
Pacific Time/ 3:30 P.M. Eastern Time ]**

 

DEADLINE FOR WIRE TRANSFERS IS [1:30 P.M.,
Pacific Time/ 3:30 P.M. Eastern Time]

 

[*At month end and the day before a holiday, the cut
off time is 1:30 P.M., Pacific Time]

 

**Subject to 3 day advance notice.

 

	
  To: Loan Analysis

  	
  DATE:

  	
   

  	
   

  	
  TIME:

  	
   

  	
   

  
	
  FAX #: (650) 846-6840

  	
   

  	
   

  
	
   

  
	
  FROM:

  	
  ARRAY BIOPHARMA, INC.

  	
   

  	
  TELEPHONE REQUEST (For
  Bank Use Only):

  
	
   

  	
  Borrower’s Name

  	
   

  
	
  FROM:

  	
   

  	
   

  	
  The following person is
  authorized to request the loan payment

  
	
   

  	
  Authorized Signer’s
  Name

  	
  transfer/loan advance
  on the designated account and is known to me.

  
	
  FROM:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized Signer’s
  Name

  	
  Authorized
  Request & Phone #

  
	
  PHONE #:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Received by
  (Bank) & Phone #

  
	
  FROM ACCOUNT#:

  	
   

  	
   

  
	
  (please include Note
  number, if applicable)

  	
   

  
	
  TO ACCOUNT #:

  	
   

  	
  Authorized Signature
  (Bank)

  
	
  (please include Note
  number, if applicable)

  	
   

  
	
   

  	
   

  
	
  REQUESTED  TRANSACTION TYPE

  	
  REQUESTED DOLLAR AMOUNT

  	
  For Bank Use Only

  
	
   

  	
   

  	
   

  
	
  PRINCIPAL INCREASE*
  (ADVANCE)

  	
  $

  	
   

  	
   

  	
  Date Rec’d:

  
	
  PRINCIPAL PAYMENT
  (ONLY)

  	
  $

  	
   

  	
   

  	
  Time:

  
	
   

  	
   

  	
  Comp. Status:

  	
  YES

  	
  NO

  
	
  OTHER INSTRUCTIONS:

  	
   

  	
  Status Date:

  
	
   

  	
   

  	
  Time:

  
	
   

  	
   

  	
  Approval:

  
																	

 

All
representations and warranties of Borrower stated in the Loan Agreement are
true, correct and complete in all material respects as of the date of the
telephone request for and advance confirmed by this Borrowing Certificate,
including without limitation the representation that Borrower has paid for and
owns the equipment financed by the Bank; provided, however, that those
representations and warranties the date expressly referring to another date
shall be true, correct and complete in all material respects as of such date.

 

	
  *IS THERE A WIRE REQUEST TIED TO THIS LOAN
  ADVANCE?  (PLEASE CIRCLE ONE

  	
  YES

  	
  NO

  
	
  If YES, the Outgoing
  Wire Transfer Instructions must be completed below.

  	
   

  	
   

  
	
   

  
	
  OUTGOING WIRE TRANSFER INSTRUCTIONS

  	
  Fed Reference Number

  	
  Bank Transfer Number

  
	
   

  
	
  The items marked with an asterisk (*) are required
  to be completed.

  
	
   

  
	
  *Beneficiary Name

  	
   

  
	
  *Beneficiary Account
  Number

  	
   

  
	
  *Beneficiary Address

  	
   

  
	
  Currency Type

  	
  US DOLLARS ONLY

  
					

 

 

	
  *ABA Routing Number (9
  Digits)

  	
   

  
	
  *Receiving Institution
  Name

  	
   

  
	
  *Receiving Institution
  Address

  	
   

  
	
  *Wire Account

  	
  $

  

 

 

EXHIBIT C

 

COMPLIANCE
CERTIFICATE

 

	
  TO:

  	
  COMERICA
  BANK

  
	
   

  	
   

  
	
  FROM:

  	
  ARRAY
  BIOPHARMA, INC.

  

 

The
undersigned authorized officer of ARRAY BIOPHARMA, INC. hereby certifies that
in accordance with the terms and conditions of the Loan and Security Agreement
between Borrower and Bank (the “Agreement”), (i) Borrower is in complete
compliance for the period ending                                
with all required covenants except as noted below and (ii) all
representations and warranties of Borrower stated in the Agreement are true and
correct as of the date hereof.  Attached
herewith are the required documents supporting the above certification.  The Officer further certifies that these are
prepared in accordance with Generally Accepted Accounting Principles (GAAP) and
are consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.

 

Please indicate
compliance status by circling Yes/No under “Complies” column.

 

	
  Reporting Covenant

  	
   

  	
  Required

  	
   

  	
  Complies

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Monthly
  financial statements

  	
   

  	
  Monthly
  within 20 days

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Annual (CPA
  Audited)

  	
   

  	
  Within 5
  days of SEC 10-K filing requirements

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  10K and 10Q

  	
   

  	
  Within 5
  days of filing

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Cash Balance
  Certificate

  	
   

  	
  Monthly
  within 5 days plus daily real time monitoring

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Compliance
  Cert.

  	
   

  	
  Monthly
  within 20 days AND w/in 5 days of SEC 10-Q filing requirements

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  A/R Audit

  	
   

  	
  Initial and
  Semi-Annual

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Financial Covenant

  	
   

  	
  Required

  	
   

  	
  Actual

  	
   

  	
  Complies

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Measured on
  a Daily Basis:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum unrestricted Cash at Bank:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  If total Cash is at least $30,000,000

  	
   

  	
  $

  	
  2,000,000

  	
   

  	
  $

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  If total Cash is less than $30,000,000 but

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  greater than $25,000,000

  	
   

  	
  $

  	
  8,500,000

  	
   

  	
  $

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  If total Cash is less than $25,000,000

  	
   

  	
  $

  	
  17,000,000

  	
   

  	
  $

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  
	
  Minimum total Cash

  	
   

  	
  $

  	
  20,000,000

  	
   

  	
  $

  	
   

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  

 

	
  Comments Regarding
  Exceptions: See Attached.

  	
   

  	
  BANK USE ONLY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Received by:

  	
   

  	
   

  
	
  Sincerely,

  	
   

  	
   

  	
  AUTHORIZED SIGNER

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Verified:

  	
   

  	
   

  
	
   

  	
  SIGNATURE

  	
   

  	
   

  	
   

  	
  AUTHORIZED SIGNER

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
  TITLE

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Compliance Status

  	
  Yes

  	
  No

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  DATE

  	
   

  	
   

  	
   

  
											

 

 

EXHIBIT D

 

LIBOR ADDENDUM

 

 

SCHEDULE OF EXCEPTIONS

 

 

Permitted
Indebtedness 
(Section 1.1)

 

 

• Letter of
Credit #00336085 issued by Bank One in favor of Amgen: $1,873,245.82

 

• Letter of
Credit #00336083 issued by Bank One in favor of Pratt: $54,432.00

 

• Letter of
Credit #00336083 issued by Bank One in favor of Pratt: $52,000.00

 

Permitted
Investments  (Section 1.1)

 

• JP Morgan
Chase Checking Account (has a Money Market overnight sweep attached to it)

• JP Morgan
Chase Liquidity Account  (Money Market
Collateral account for current L/C’s)

• Lehman
Brothers

• Reliance
Trust Deferred Compensation Plan

• Deutsche
Bank Alex Brown Clearing account for employee stock option transactions

 

Permitted
Liens  (Section
1.1)

 

2003
Chevy Van (Model CUTA) financed through GMAC, 60 mths 0% interest,
effective4/03

 

Prior Names  (Section 5.5)

 

None.

 

Litigation  (Section 5.6)

 

None.

 

Inbound
Licenses 
(Section 5.12)

 

None.

 

 

Corporation
Resolutions and Incumbency Certification

Authority
to Procure Loans

 

I
certify that I am the duly elected and qualified Secretary of ARRAY BIOPHARMA,
INC.; that the following is a true and correct copy of resolutions duly adopted
by the Board of Directors of the Corporation in accordance with its bylaws and
applicable statutes.

 

Copy of Resolutions:

 

Be it
Resolved, That:

 

1.                                       Any
one (1) of the following                                           
(insert titles only) of the Corporation are/is authorized, for, on behalf of,
and in the name of the Corporation to:

 

(a)                                  Negotiate
and procure loans, letters of credit and other credit or financial
accommodations from Comerica Bank (“Bank”), a Michigan banking corporation,
including, without limitation, that certain Loan and Security Agreement dated
as of June    , 2005, as may subsequently be amended from
time to time.

 

(b)                                 Discount
with the Bank, commercial or other business paper belonging to the Corporation
made or drawn by or upon third parties, without limit as to amount;

 

(c)                                  Purchase,
sell, exchange, assign, endorse for transfer and/or deliver certificates and/or
instruments representing stocks, bonds, evidences of Indebtedness or other
securities owned by the Corporation, whether or not registered in the name of
the Corporation;

 

(d)                                 Give
security for any liabilities of the Corporation to the Bank by grant, security
interest, assignment, lien, deed of trust or mortgage upon any real or personal
property, tangible or intangible of the Corporation; and

 

(e)                                  Execute
and deliver in form and content as may be required by the Bank any and all
notes, evidences of Indebtedness, applications for letters of credit,
guaranties, subordination agreements, loan and security agreements, financing
statements, assignments, liens, deeds of trust, mortgages, trust receipts and
other agreements, instruments or documents to carry out the purposes of these
Resolutions, any or all of which may relate to all or to substantially all of
the Corporation’s property and assets.

 

2.                                       Said
Bank be and it is authorized and directed to pay the proceeds of any such loans
or discounts as directed by the persons so authorized to sign, whether so
payable to the order of any of said persons in their individual capacities or
not, and whether such proceeds are deposited to the individual credit of any of
said persons or not;

 

3.                                       Any
and all agreements, instruments and documents previously executed and acts and
things previously done to carry out the purposes of these Resolutions are
ratified, confirmed and approved as the act or acts of the Corporation.

 

4.                                       These
Resolutions shall continue in force, and the Bank may consider the holders of
said offices and their signatures to be and continue to be as set forth in a
certified copy of these Resolutions delivered to the Bank, until notice to the
contrary in writing is duly served on the Bank (such notice to have no effect
on any action previously taken by the Bank in reliance on these Resolutions).

 

5.                                       Any
person, corporation or other legal entity dealing with the Bank may rely upon a
certificate signed by an officer of the Bank to effect that these Resolutions
and any agreement, instrument or document executed pursuant to them are still
in full force and effect and binding upon the Corporation.

 

1

 

6.                                       The
Bank may consider the holders of the offices of the Corporation and their
signatures, respectively, to be and continue to be as set forth in the
Certificate of the Secretary of the Corporation until notice to the contrary in
writing is duly served on the Bank.

 

I
further certify that the above Resolutions are in full force and effect as of
the date of this Certificate; that these Resolutions and any borrowings or
financial accommodations under these Resolutions have been properly noted in
the corporate books and records, and have not been rescinded, annulled, revoked
or modified; that neither the foregoing Resolutions nor any actions to be taken
pursuant to them are or will be in contravention of any provision of the
articles of incorporation or bylaws of the Corporation or of any agreement,
indenture or other instrument to which the Corporation is a party or by which
it is bound; and that neither the articles of incorporation nor bylaws of the
Corporation nor any agreement, indenture or other instrument to which the
Corporation is a party or by which it is bound require the vote or consent of
shareholders of the Corporation to authorize any act, matter or thing described
in the foregoing Resolutions.

 

I
further certify that the following named persons have been duly elected to the
offices set opposite their respective names, that they continue to hold these
offices at the present time, and that the signatures which appear below are the
genuine, original signatures of each respectively:

 

(PLEASE SUPPLY GENUINE SIGNATURES OF AUTHORIZED SIGNERS
BELOW)

 

	
  NAME
  (Type or Print)

  	
   

  	
  TITLE

  	
   

  	
  SIGNATURE

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

In
Witness Whereof, I have affixed my name as Secretary and have caused the
corporate seal (where available) of said Corporation to be affixed on June    ,
2005.

 

	
   

  	
   

  
	
   

  	
  Secretary

  

 

	
  The
  Above Statements are Correct.

  	
   

  
	
   

  	
  SIGNATURE
  OF OFFICER OR DIRECTOR OR, IF NONE. A SHAREHOLDER OTHER THAN SECRETARY WHEN
  SECRETARY IS AUTHORIZED TO SIGN ALONE.

  

 

Failure to
complete the above when the Secretary is authorized to sign alone shall
constitute a certification by the Secretary that the Secretary is the sole
Shareholder, Director and Officer of the Corporation.

 

2

 

ATTN:  ARRAY
BIOPHARMA, INC.

 

USA PATRIOT ACT

NOTICE

OF

CUSTOMER IDENTIFICATION

 

IMPORTANT
INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT

 

To help the government fight the
funding of terrorism and money laundering activities, Federal law requires all
financial institutions to obtain, verify, and record information that
identifies each person who opens an account.

 

WHAT THIS MEANS FOR YOU:  when you open an account, we will ask your
name, address, date of birth, and other information that will allow us to
identify you.  We may also ask to see
your driver’s license or other identifying documents.

 

 

COMERICA BANK

Member FDIC

 

ITEMIZATION OF
AMOUNT FINANCED

DISBURSEMENT INSTRUCTIONS

(Revolver)

 

	
  Name(s): ARRAY BIOPHARMA, INC.

  	
  Date: June 28, 2005

  
	
   

  
	
   

  	
  $10,000,000.00

  	
   

  	
  credited
  to deposit account No.
                    
  when Advances are requested or disbursed to Borrower by cashiers check or by
  wire transfer

  
	
   

  
	
  Amounts
  paid to others on your behalf:

  
	
   

  
	
   

  	
  $0

  	
   

  	
  to
  Comerica Bank for Loan Fee

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  $0

  	
   

  	
  to
  Comerica Bank for Document Fee

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  $0

  	
   

  	
  to
  Comerica Bank for accounts receivable audit (estimate)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  $0

  	
   

  	
  to
  Bank counsel fees and expenses

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  $0

  	
   

  	
  to

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  $0

  	
   

  	
  to

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  $10,000,000.00

  	
   

  	
  TOTAL
  (AMOUNT FINANCED)

  
							

 

Upon
consummation of this transaction, this document will also serve as the
authorization for Comerica Bank to disburse the loan proceeds as stated above.

 

	
  /s/ R. Michael
  Carruthers

  	
   

  	
   

  
	
  Signature

  	
   

  	
  Signature

  

 

 

COMERICA BANK

Member FDIC

 

ITEMIZATION OF
AMOUNT FINANCED

DISBURSEMENT INSTRUCTIONS

(Term Loan)

 

	
  Name(s): ARRAY BIOPHARMA, INC.

  	
  Date: June 28, 2005

  
	
   

  
	
   

  	
  $10,000,000.00

  	
   

  	
  credited
  to deposit account No.                  
  when Advances are requested or disbursed to Borrower by cashiers check or by
  wire transfer

  
	
   

  	
   

  	
   

  
	
  Amounts
  paid to others on your behalf:

  
	
   

  
	
   

  	
  $0

  	
   

  	
  to
  Comerica Bank for Loan Fee

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  $0

  	
   

  	
  to
  Comerica Bank for Document Fee

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  $0

  	
   

  	
  to
  Comerica Bank for accounts receivable audit (estimate)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  $0

  	
   

  	
  to
  Bank counsel fees and expenses

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  $0

  	
   

  	
  to

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  $0

  	
   

  	
  to

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  $10,000,000.00

  	
   

  	
  TOTAL
  (AMOUNT FINANCED)

  
							

 

Upon
consummation of this transaction, this document will also serve as the
authorization for Comerica Bank to disburse the loan proceeds as stated above.

 

	
  /s/
  R. Michael Carruthers

  	
   

  	
   

  
	
  Signature

  	
   

  	
  Signature

  

 

 

AGREEMENT TO
PROVIDE INSURANCE

 

	
  TO:

  	
   

  	
  COMERICA BANK

  	
   

  	
  Date: June 28, 2005

  
	
   

  	
   

  	
  Attn: Deni M. Snider, MC 4770

  	
   

  	
   

  
	
   

  	
   

  	
  75 E. Trimble Road

  	
   

  	
   

  
	
   

  	
   

  	
  San Jose, CA 95131

  	
   

  	
  Borrower: ARRAY BIOPHARMA, INC.

  

 

In
consideration of a loan in the amount of $17,000,000, secured by all tangible
personal property including inventory and equipment.

 

I/We
agree to obtain adequate insurance coverage to remain in force during the term
of the loan.

 

I/We
also agree to advise the below named agent to add Comerica Bank as lender’s
loss payable on the new or existing insurance policy, and to furnish Bank at
above address with a copy of said policy/endorsements and any subsequent
renewal policies.

 

I/We
understand that the policy must contain:

 

1.                                       Fire
and extended coverage in an amount sufficient to cover:

 

(a)                                  The
amount of the loan, OR

 

(b)                                 All
existing encumbrances, whichever is greater,

 

But
not in excess of the replacement value of the improvements on the real
property.

 

2.                                       Lender’s
“Loss Payable” Endorsement Form 438 BFU in favor of Comerica Bank, or any
other form acceptable to Bank.

 

INSURANCE
INFORMATION

 

	
  Insurance
  Co./Agent

  	
  Telephone
  No.:

  

 

Agent’s
Address:

 

	
   

  	
  Signature of Obligor:

  	
  /s/ R. Michael Carruthers

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature of Obligor:

  	
   

  	
   

  
	
   

  
	
   

  	
  FOR BANK USE ONLY

  
	
   

  
	
  INSURANCE
  VERIFICATION: Date:

  
	
   

  
	
  Person
  Spoken to:

  
	
   

  
	
  Policy
  Number:

  
	
   

  
	
  Effective
  From:

  	
   

  	
   To:

  
	
   

  
	
  Verified
  by:

  
							

 

 

	
  COMERICA
  BANK

  	
   

  	
   

  
	
  Member FDIC

  	
   

  	
  AUTOMATIC DEBIT
  AUTHORIZATION

  

 

	
  To:

  	
  Comerica
  Bank

  
	
   

  
	
  Re:

  	
  Loan #

  	
   

  	
   

  
	
   

  
	
  You are hereby
  authorized and instructed to charge account No.
                                     
  in the name of ARRAY BIOPHARMA, INC.

  
	
  for principal, interest
  and other payments due on above referenced loan as set forth below and credit
  the loan referenced above.

  
	
   

  
	
   

  	
  ý                                    Debit
  each interest payment as it becomes due according to the terms of the Loan
  and Security Agreement and any renewals or amendments thereof.

  
	
   

  	
   

  
	
   

  	
  ý                                    Debit
  each principal payment as it becomes due according to the terms of the Loan
  and Security Agreement and any renewals or amendments thereof.

  
	
   

  	
   

  
	
   

  	
  ý                                    Debit
  each payment for Bank Expenses as it becomes due according to the terms of
  the Loan and Security Agreement and any renewals or amendments thereof.

  
	
   

  	
   

  
	
  This Authorization is
  to remain in full force and effect until revoked in writing.

  
					

 

	
   

  	
  Borrower
  Signature

  	
  Date

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/
  R. Michael Carruthers

  	
   

  	
  June 28,
  2005

  
	
   

  	
   

  
	
   

  	
  June    ,
  2005

  
				

 

 

	
  COMERICA
  BANK

  	
   

  	
   

  
	
  Member FDIC

  	
   

  	
  AUTOMATIC DEBIT
  AUTHORIZATION

  

 

	
  To:

  	
  Comerica
  Bank

  
	
   

  
	
  Re:

  	
  Loan #

  	
   

  	
   

  
	
   

  
	
  You are hereby
  authorized and instructed to charge account No.
                                     
  in the name of ARRAY BIOPHARMA, INC.

  
	
  for principal, interest
  and other payments due on above referenced loan as set forth below and credit
  the loan referenced above.

  
	
   

  
	
   

  	
  ý                                    Debit
  each interest payment as it becomes due according to the terms of the Loan
  and Security Agreement and any renewals or amendments thereof.

  
	
   

  	
   

  
	
   

  	
  ý                                    Debit
  each principal payment as it becomes due according to the terms of the Loan
  and Security Agreement and any renewals or amendments thereof.

  
	
   

  	
   

  
	
   

  	
  ý                                    Debit
  each payment for Bank Expenses as it becomes due according to the terms of
  the Loan and Security Agreement and any renewals or amendments thereof.

  
	
   

  
	
  This Authorization is
  to remain in full force and effect until revoked in writing.

  
					

 

	
   

  	
  Borrower
  Signature

  	
  Date

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/
  R. Michael Carruthers

  	
   

  	
  June 28,
  2005

  
	
   

  	
   

  
	
   

  	
  June    ,
  2005

  
				

 

 

COMERICA BANK

 

	
   

  	
  COMERICA BANK

  
	
   

  	
  CLIENT AUTHORIZATION

  
	
  Fax       (425)
  452-2510

  

 

General
Authorization

 

I
hereby authorize Comerica Bank to use my company name, logo, and information
relating to our banking relationship in its marketing and advertising campaigns
which is intended for Comerica Bank’s customers, prospects and shareholders.

 

Comerica
Bank will forward any advertising or article including client for prior
review and approval.

 

	
  /s/
  R. Michael Carruthers

  	
   

  	
   

  
	
  Signature

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  R. Michael Carruthers

  	
  CFO

  	
   

  	
   

  
	
  Printed Name

  	
  Title

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Array BioPharma Inc.

  	
   

  	
   

  
	
  Company

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  3200 Walnut St.

  	
   

  	
   

  
	
  Mailing Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Boulder, CO 80301

  	
   

  	
   

  
	
  City, State, Zip Code

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Phone Number

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Fax Number

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  E-Mail

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  June 28, 2005

  	
   

  	
   

  

 

 

	
  DEBTOR

  	
  ARRAY BIOPHARMA,
  INC.

  
	
   

  	
   

  
	
  SECURED PARTY:

  	
  COMERICA BANK

  

 

EXHIBIT A

 

COLLATERAL DESCRIPTION ATTACHMENT

TO UCC NATIONAL FORM FINANCING STATEMENT

 

All
personal property of Borrower (herein referred to as “Borrower” or “Debtor”)
whether presently existing or hereafter created or acquired, and wherever
located, including, but not limited to:

 

(a)                                  all
accounts (including health-care-insurance receivables), cash, deposit accounts,
documents (including negotiable documents), equipment (including all accessions
and additions thereto), fixed assets, payment intangibles, goods (including
fixtures), inventory (i.e. all goods held for sale or lease or to be furnished
under a contract of service, and including returns and repossessions),
investment property (including securities and securities entitlements), letter
of credit rights, money, and the content of all of Debtor’s books and records with
respect to any of the foregoing, and that portion of the content of all the
computers and equipment containing said books and records;

 

(b)                                 any
and all cash proceeds and/or noncash proceeds of any of the foregoing,
including, without limitation, insurance proceeds, and all supporting
obligations and the security therefor or for any right to payment.  All terms above have the meanings given to
them in the California Uniform Commercial Code, as amended or supplemented from
time to time, including revised Division 9 of the Uniform Commercial
Code-Secured Transactions, added by Stats. 1999, c.991 (S.B. 45), Section 35,
operative July 1, 2001.

 

The
Collateral shall not include any copyrights, patents, trademarks, servicemarks
and applications therefor, now owned or hereafter acquired, or any claims for
damages by way of any past, present and future infringement of any of the
foregoing (collectively, the “Intellectual Property”); provided, however, that
the Collateral shall include all accounts and general intangibles that consist
of rights to payment and proceeds from the sale, licensing or disposition of
all or any part, or rights in, the foregoing (the “Rights to Payment”).Exhibit 10.31

 

[ * ] = 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.

 

ADDENDUM #4 TO LEASE AGREEMENT

 

THIS
ADDENDUM #4 TO LEASE AGREEMENT, dated as of September 13,
2005, is entered into by and between CIRCLE CAPITAL LONGMONT LLC, a
Delaware limited liability company (“Landlord”) and ARRAY BIOPHARMA, INC., a
Delaware corporation  (“Tenant”).

 

Recitals:

 

A.            Landlord’s predecessor in interest and Tenant entered into a written lease
agreement, dated February 28, 2000,
as amended by Addendum to Lease Agreement #1 dated May 24, 2001 (“Addendum
#1), Addendum to Lease Agreement #2, dated February 11, 2002, and Addendum
to Lease Agreement dated November 30, 2004 (collectively, the “Lease”),
pertaining to Suites A & B of the Building located at 2620 Trade
Centre Avenue which Premises consist of approximately 43,200 rentable square
feet of space (the “Premises”). (Initially capitalized terms not
otherwise defined herein have the same meaning as in the Lease.)

 

B.            Landlord and Tenant are also parties to a
lease for space in the building located at 2600 Trade Centre Avenue (the “2600
Lease”).

 

C.            Landlord and Tenant desire to amend the Lease
in the manner and form hereinafter set forth.

 

NOW,
THEREFORE, for good and valuable consideration, Landlord and Tenant hereby
agree as follows:

 

1.             Extension Term.  The term of the Lease is extended to expire March 31, 2008 (the “Expiration
Date”), subject to the terms of the Lease as herein specifically amended.  Unless Tenant exercises its option (a) under
Section 10.C(2)b below to maintain the Expiration Date as March 31,
2008, then on the first anniversary after mutual execution of this Lease, the
term of the Lease shall automatically extend to expire May 31, 2013, which
date shall thereafter be deemed the Expiration Date (the period from June 1,
2005 through the Expiration Date is sometimes referred to as the “Extended
Term.”).

 

2.             Base Rental.  Notwithstanding anything to the contrary contained in the Lease,
commencing June 1, 2005, Tenant shall pay, in the manner set forth in the
Lease, monthly Base Rental for the Premises, calculated on the basis of the
annual per square foot rate set forth below, as follows:

 

	
   

  	
   

  	
  Monthly

  	
   

  	
  Annual Per

  	
   

  
	
  Period

  	
   

  	
  Base Rental

  	
   

  	
  Sq. Ft. Rate

  	
   

  
	
  6/1/2005 –
  5/31/2006

  	
   

  	
  $

  	
  36,000.00

  	
   

  	
  $

  	
  10.00

  	
   

  
	
  6/1/2006 –
  5/31/2007

  	
   

  	
  $

  	
  37,080.00

  	
   

  	
  $

  	
  10.30

  	
   

  
	
  6/1/2007 –
  5/31/2008

  	
   

  	
  $

  	
  38,196.00

  	
   

  	
  $

  	
  10.61

  	
   

  
	
  6/1/2008 –
  5/31/2009

  	
   

  	
  $

  	
  39,348.00

  	
   

  	
  $

  	
  10.93

  	
   

  
	
  6/1/2009 –
  5/31/2010

  	
   

  	
  $

  	
  40,536.00

  	
   

  	
  $

  	
  11.26

  	
   

  
	
  6/1/2010 –
  5/31/2011

  	
   

  	
  $

  	
  41,724.00

  	
   

  	
  $

  	
  11.59

  	
   

  
	
  6/1/2011 –
  5/31/2012

  	
   

  	
  $

  	
  42,984.00

  	
   

  	
  $

  	
  11.94

  	
   

  
	
  6/1/2012 –
  5/31/2013

  	
   

  	
  $

  	
  44,280.00

  	
   

  	
  $

  	
  12.30

  	
   

  

 

3.             Additional Rent. During the Extended Term, in addition to Base
Rent set forth above, Tenant shall pay all other amounts payable under the
Lease; provided, however, Section 4.2 of the Lease, Escalation of Base
Rental, shall not be applicable during the Extended Term.  Tenant’s payment obligations under the Lease
shall 

 

 

[ * ] = 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.

 

include (without limitation) the payment of
additional rent under Sections 4.3 (including a management fee), 4.4, 5, and
18.1.

 

4.             Improvement Allowances. Landlord has no obligation to improve or remodel
the Premises and Tenant accepts the Premises in their “as is” condition on June 1,
2005 for the Extended Term. 
Notwithstanding the foregoing, Landlord agrees to make the following
payments to Tenant: (i) within 30 days following the delivery of this
Addendum, mutually executed, Landlord will pay Tenant [ * ]
as a reimbursement to Tenant for existing improvements in the Premises (the “First
Allowance”); and (ii) promptly after June 1, 2010, Landlord will pay
Tenant [ * ] (the “Second Allowance”) as a reimbursement
to Tenant for existing improvements in the Premises; provided that, if Tenant
exercises its option under Section 10.C(2) below to maintain the
Expiration Date as March 31, 2008, the Second Allowance will no longer be
applicable.  If there is an uncured event
of default by Tenant at the time Landlord is obligated to pay the respective
allowance, Landlord shall have the right to withhold payment of the respective
allowance until such event of default is cured. 
Any amounts expended by Tenant in excess of the allowances shall be at
Tenant’s sole cost and expense.  Any
alterations and improvements to the Premises by Tenant are subject to the terms
of the Lease, including obtaining Landlord’s prior consent if required by the
terms of the Lease.

 

5.             Security. During the term of the Lease as extended,
Landlord shall hold the deposit in accordance with Section 4.6 of the
Lease.

 

6.             Maintenance. Landlord agrees during the term of this Lease
that Landlord’s obligations under Section 4.3 of the Lease shall include
painting and other changes to the exterior of the Building in which the
Premises are located and maintenance and replacement of the landscaping for the
Building in accordance with the standards and a general plan for improvement of
the overall 41 building development in Longmont, Colorado owned by Landlord
(the “Park”), as adopted by Landlord from time to time.

 

7.             Signage.  Tenant shall have the right to seek approval for the maximum permitted
signage under existing laws, codes, regulations and covenants and Landlord
shall use reasonable efforts to support any such application for approval, at
Tenant’s sole cost and expense, provided, however, that such signage meets
Landlord’s specifications, including any covenants or declarations pertaining
to the Building.  All costs associated
with installation, maintenance, operation, and removal will be at Tenant’s cost
and expense.

 

8.             Security and Improvements.  Tenant shall have the right to seek approval for the installation and
construction of a security gate, fence, additional building connections and
conversion of buildings that are part of the Premises for biotech research and
Landlord shall use reasonable efforts to support any such application for
approval, subject to Landlord’s approval of the form of any such improvements
in accordance with Section 10 of the Lease, such approval not to be
unreasonably withheld.  All costs
associated with installation, maintenance and operation of the aforementioned
capital improvements shall be at Tenant’s sole cost and expense.  Any prior requirements for Tenant to restore
the Premises upon termination of the Lease are no longer operative.  Tenant shall, at Landlord’s option, remove
all furniture, fixtures and equipment (“FF&E”), including but not limited
to, Tenant’s air handling systems, and any repairs associated with the removal
of such FF&E and to repair any roof penetrations or other damage due to
such FF&E, upon the Expiration Date or earlier termination of this Lease.

 

9.             Extension Option.  Any
options under the Lease to extend the Term or renew the Lease are no longer
available to Tenant; provided, however, Landlord hereby grants Tenant an option
(the “Option”) to extend the term of the Lease for three additional consecutive
terms of five years each (the “Option Terms”). 
The Option Terms apply only to the Premises, and are subject to the
following terms and conditions:

 

A.            Tenant shall deliver written notice of its
interest in exercising the Option (“Tenant’s Notice”) to Landlord not less than
180 days prior to the expiration of the then-existing Lease term.  If the Landlord does not receive the Tenant’s
Notice to exercise the Option in advance of the 180 days prior to expiration,
Landlord will give final notice to Tenant of expiration of the Option, and
Tenant shall have 15 days from the final notice to provide Tenant’s
Notice.  Not later than thirty (30) days
after receiving Tenant’s Notice, Landlord will notify Tenant 

 

2

 

[ * ] = 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.

 

of the Base Rental applicable during the Option
Term in accordance with subparagraph E below (“Landlord’s Notice”).

 

B.            Tenant has either (i) 15 days after
receipt of Landlord’s Notice, or (ii) in the event of a dispute over
computation of the applicable Base Rental during the Option Term, 15 days after
the conclusion of an arbitration proceeding as set forth in subparagraph D
below, to exercise the Option by delivering notice of exercise to
Landlord.  If Tenant timely exercises the
Option, the Term will be deemed extended on the terms of this Section and
the parties will execute an amendment evidencing the extension.

 

C.            Unless Landlord is timely notified by Tenant
in accordance with subparagraphs A and B above, it will be conclusively deemed
that Tenant has not exercised the Option and the Lease will expire in
accordance with its terms on the Expiration Date.

 

D.            Tenant’s rights pursuant to this Paragraph
are personal to Tenant and may not be assigned. 
Tenant’s right to exercise the Option is conditioned on no Event of
Default existing at the time of exercise or at the time of commencement of the
Option Term under this Lease or under the 2600 Lease.

 

E.             The Option granted hereunder will be upon the
terms of the Lease, except that the Base Rental during the Option Term will be [ * ]
of the fair market rate at which space in comparable flex/office buildings in
Longmont as if such space were available for leasing “as-is” without regard to
improvements performed by Tenant for a lease term paralleling the Option Term,
but in no event will the Base Rental be less than the Rent in effect
immediately prior to commencement of the Option Term.  If the Parties do not agree upon the
Base Rental for the Option Term, then such matters in issue shall be determined
by binding arbitration conducted in Boulder in accordance with the commercial
arbitration rules of the American Arbitration Association.  Such arbitration shall be conducted as a “baseball”
style arbitration, so that the only decision of the arbitration shall be to
adopt the proposed Base Rental of either Landlord or Tenant.  The arbitration shall be held before a single
arbitrator, who shall be an independent expert in the Colorado commercial real
estate industry mutually acceptable to the Parties.  If the Parties are unable to agree on an
arbitrator, the arbitrator shall be an independent expert as described in the
preceding sentence selected by the chief executive of the Denver office of the
American Arbitration Association.  The
decision rendered by the arbitrator shall be written, final and non-appealable and may be entered in any court of competent
jurisdiction.  The costs of any
arbitration, including administrative fees and fees of the arbitrators, shall
be shared equally by the Parties, unless otherwise determined by the
arbitrator.  Each Party shall bear the
cost of its own attorneys’ and expert fees; provided that the arbitrator may in
his discretion award to the prevailing Party the costs and expenses incurred by
the prevailing Party in connection with the arbitration proceeding.  THE PARTIES AND ARBITRATOR SHALL USE ALL
DILIGENT EFFORTS TO COMPLETE ANY ARBITRATION OF A CLAIM OR DISPUTE DESCRIBED IN
THIS SECTION 8(E) WITHIN THIRTY (30) DAYS OF APPOINTMENT OF THE
ARBITRATOR.

 

F.             After exercise, or failure to exercise the
Option, Tenant shall have no further rights to extend the Term.

 

10.           Expansion Option. 
Landlord hereby grants to Tenant an option to lease additional space
(the “Expansion Option”) in the buildings located at [ * ]
(the “Option Space”), which collectively comprise a total of 82,296 rentable
square feet, on the following basis:

 

A.            Tenant shall give written notice to Landlord
of its election to exercise the Expansion Option (“Tenant’s Expansion Notice”)
on or before the [ * ] day after mutual execution of this
Lease.  If Tenant does not timely give
notice to Landlord it will be conclusively presumed Tenant waives its right to
exercise the Expansion Option and Tenant shall have no further rights to the
Option Space under this Expansion Option and this Expansion Option shall
thereupon automatically be of no further force and effect.

 

B.            Tenant’s Expansion Notice shall identify the
portion of the Option Space to be leased subject to the following requirements:
(i) Tenant must lease the entirety of the rentable area in a respective
building; 

 

3

 

[ * ] = 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.

 

and (ii) Tenant must identify the space
in the order of the buildings listed above (i.e. any election must include [ * ] first, then [ * ], and last [ * ]).

 

C.            Tenant acknowledges that portions of the
Option Space are subject to leases with third parties and may continue to be
subject to the rights of such third parties at the time of delivery of Tenant’s
Expansion Notice.  Following receipt of
Tenant’s Expansion Notice, Landlord shall use commercially reasonable efforts
to reach terms for relocation of tenants having rights to the Option Space, as
is necessary to permit Landlord to lease such space to Tenant; for purposes of
this provision, Landlord’s efforts shall be deemed commercially reasonable if
Landlord offers terms consistent with the current terms approved by Landlord’s
lender and investors for leasing of such relocation space at the time as
reflected in the current leasing proforma or leasing guidelines for such
property, as dated                      ,
plus an amount attributable to moving costs, lost time or other such costs
reasonably requested by tenants (without being obligated to fund such costs in
excess of the amount attributable to such costs that will be secured by the
Letter of Credit applicable to such relocated tenant under Section 10.D(4) below).  Not later than [ * ]
following receipt of Tenant’s Expansion Notice, Landlord shall inform Tenant in
writing as to which of the Option Space buildings, in accordance with Tenant’s
Expansion Notice, can be made available for lease by Tenant.  The Option Space so identified shall
hereinafter be referred to as the “Expansion Premises.”

 

(1)           If the Expansion Premises include all of the
space identified in Tenant’s Expansion Notice, then the Expansion Option shall
be deemed exercised with respect to the Expansion Premises.

 

(2)           If the Expansion Premises do not include all
of the space identified in Tenant’s Expansion Notice, then not later than 150
days following receipt of Landlord’s identification of the Expansion Premises,
Tenant shall give written notice to Landlord either (i) of its election to
exercise the Expansion Option for the premises identified as the Expansion
Premises, (ii) of its intention to exercise the Expansion Option with
respect to different buildings within the Option Space by submitting a new
Tenant’s Expansion Notice, or (iii) that it declines to exercise the
Expansion Option with respect to any of the Option Space.

 

a.             In the event Tenant provides notice (ii) in
subparagraph (2) above, Tenant shall have the one-time option to purchase
any building identified in Tenant’s Expansion Notice that is not included in
the Expansion Premises upon the terms and conditions as specified under Section 12
below.  These terms and conditions are to
include, but not be limited to, the identified time frames and pricing as
specified under Section 12.B. 
Tenant’s exercise of the purchase option set forth in this subparagraph
shall be separate, and in addition to, the purchase option described in Section 12
below.

 

b.             In the event Tenant provides notice (iii) in
subparagraph (2) above, Tenant shall have (a) the right to maintain
the Expiration Date of the Lease and the 2600 Lease at March 31, 2008, and
(b) during the term of the Lease, the option to terminate the Lease, and
all obligations as set forth thereunder, by providing Landlord with one hundred
eighty (180) days written notice to terminate. 
If Tenant exercises option (b) under this Section 10.C(2)b,
Tenant shall reimburse Landlord the unamortized First Allowance and the
commission paid by Landlord to Tenant’s Broker (as set forth on Exhibit B),
determined by amortizing such costs on a straight-line basis over the Extended
Term.

 

(3)           Except as otherwise set forth in this
Addendum, including the right of refusal set forth in Section 11, Tenant
shall have no further rights with respect to Option Space buildings that are
not included in Tenant’s Expansion Notice or which Landlord confirms are not
available, as provided in this subsection.

 

D.            Upon Tenant’s timely exercise of the
Expansion Option, the Expansion Premises shall be deemed leased and Landlord
and Tenant shall enter into a separate lease for each building in which the
Expansion Premises are located, evidencing such leasing on the terms and conditions
of this Lease, except as follows:

 

(1)           The term of the lease or leases shall be for
a period of 65 whole calendar months commencing on January 1, 2008.

 

4

 

[ * ] = 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)           Upon commencement, Tenant’s Base Rental on
the Expansion Premises shall be in the amount of [ * ]
per rentable square foot, payable monthly in accordance with the Lease, and
commencing on the first anniversary date of each lease, and annually
thereafter, the Base Rental payable by Tenant shall be increased by [ * ].

 

(3)           Landlord shall provide an improvements
allowance of [ * ] per rentable square foot of the Expansion
Premises payable upon Landlord’s written receipt of evidence indicating that
such tenant improvements have been made to the Expansion Premises by
Tenant.  Any portion of the improvements
allowance not used within 12 months after the commencement date of the
respective lease shall be forfeited.  All
improvements shall be subject to Landlord’s prior approval as set forth in the
Lease.

 

(4)           Not more than thirty days following Landlord’s
notice to Tenant identifying actual costs incurred by Landlord associated with
the relocation of existing tenants within the Expansion Premises, Tenant shall
deliver to Landlord a clean, unconditional, irrevocable letter of credit from a
lending institution reasonably acceptable to Landlord in the form attached
hereto as Exhibit A or other form approved by Landlord (the “Letter of
Credit”) in an amount not to exceed [ * ] to be made available as financial assurance for
the performance of Tenant’s obligations under the respective lease on the
following terms and conditions:

 

(a)           The Letter of Credit, or a renewal or
substitute therefor approved by Landlord, shall be kept in effect until Tenant
takes occupancy of the Expansion Premises and commences paying Base Rent in
accordance with the terms of each respective lease (the “LC Termination Date”).  The Letter of Credit shall be in an amount
equal to Landlord’s actual expenditures for relocating the current tenants of
the Expansion Premises with respect to the applicable Expansion Space.  If the Letter of Credit would otherwise
expire prior to the LC Termination Date, Tenant shall deliver to Landlord an
extension or renewal of the Letter of Credit, or a substitute Letter of Credit
in the same form as Exhibit A or other form approved by Landlord, no later
than 30 days prior to the expiration date of such Letter of Credit, from a
lending institution subject to Landlord’s approval; such extension, renewal or
substitute Letter of Credit shall be effective no later than 10 days prior to
the expiration of, and in an amount equivalent to, the existing Letter of
Credit.  If an event of default (as
defined in the default section of the applicable lease), Landlord may
present the Letter of Credit (or the renewal, extension or substitute) for
payment one or more times up to the entire amount of the Letter of Credit, with
amounts received to be held and applied by Landlord in accordance with
subparagraph B below.  If Tenant fails to
timely provide Landlord with an extension, renewal or substitute Letter of
Credit, as required hereunder, such failure shall automatically and without
notice be deemed an Event of Default under the Lease and Landlord shall have a
right to present the Letter of Credit in accordance with the foregoing
provision.  If the Letter of Credit has
not been presented for payment on or before the LC Termination Date, Landlord
shall return the Letter of Credit to the issuer within 30 days after the LC
Termination Date.  If Landlord transfers
its interest under the Lease, Landlord shall have the right to transfer the
Letter of Credit or substitute to the transferee (and Landlord shall pay any
costs or fees charged by the issuer to permit such transfer), and if the Letter
of Credit has been transferred, Tenant shall look solely to such transferee for
the return of the Letter of Credit (or substitute).  If there is a Mortgagee, Tenant shall execute
such documents as the Mortgagee may reasonably require to secure the Mortgagee’s
interest in the letter of Credit and proceeds, subject to this Section.
Landlord shall give written notice to Tenant of transfer of Landlord’s interest
resulting in transfer of the Letter of Credit.  
Landlord shall deliver the then-current effective Letter of Credit to
the issuer marked for cancellation upon receipt of any conforming renewal or
substitute Letter of Credit provided in accordance with this Section and
cooperate with the issuing bank to effect the release of such then-current
effective Letter of Credit as soon as the renewal or substitute Letter of
Credit is in effect pursuant to its terms. 
Landlord agrees to pay all fees charged by the lending institution
issuing the Letter of Credit (or any reduction, renewal, extension, or
substitute therefor).

 

5

 

[ * ] = 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.

 

(b)          If an event of default occurs or the
respective lease is terminated, Landlord may use, apply or retain all or any
portion of the amounts received under the Letter of Credit, if any, for the
payment of any rent or other charge in default or for the payment of any other
sum to which Landlord may become obligated by reason of Tenant’s event of
default, or to compensate Landlord for any loss or damage which Landlord may
suffer thereby in accordance with the Tenant default provisions of the
respective lease.   Neither the Letter of
Credit nor the amounts received under the Letter of Credit shall be deemed a
security deposit under the respective lease.

 

E.             Landlord shall make the Expansion Premises
freely and exclusively available to Tenant on or before April 1, 2007 for
purposes of Tenant completing alterations. 
Landlord acknowledges that Tenant may alter the Expansion Premises to
accommodate biology and pharmacology activities, and Landlord does not object to
alteration of the Expansion Premises to accommodate such activities.  During the period from the date Landlord
makes the Expansion Premises available until January 1, 2008, Tenant shall
have a right to occupy the Premises solely for the purposes of completing such
alterations in accordance with the terms of the Lease and such occupancy shall
be subject to all terms and provisions of the Lease except for the payment of
Base Rent, additional rent and other monies.

 

F.             Unless expressly waived by Landlord, Tenant’s
right to exercise the Expansion Option is conditioned on:  no event of default existing under this Lease
or under the 2600 Lease at the time of exercise or as of date the Expansion
Premises is delivered by Landlord.

 

11.           Right of Refusal. 
Landlord grants Tenant a right of refusal (the “Right of Refusal”) to
lease any Option Space not leased by Tenant as Expansion Premises under Section 10
above (the “Right of Refusal Space”), that Landlord desires to lease to a third
party, subject to existing rights of other tenants and Landlord’s option to
extend or renew any existing leases, as hereafter provided, on the following
basis:

 

A.            Tenant has 5 business days after being
notified by Landlord of Landlord’s desire to lease the Right of Refusal Space (“Landlord’s
Notice”) within which to notify Landlord of its election to exercise its Right
of Refusal as to such space.  Tenant’s
Right of Refusal is subordinate to all rights of extension, expansion, or first
offer or refusal as to the Right of Refusal Space in favor of other tenants in
the Building in place as of the date of this Lease. The availability of space
and Landlord’s desire to lease the same shall be at all times determined in
Landlord’s sole discretion.  Tenant must
take all of the Right of Refusal Space offered by Landlord (the “Offered Space”)
and may not elect to lease only a portion thereof.

 

B.            If Tenant does not timely notify Landlord, it
will be conclusively presumed that Tenant has waived its Right of Refusal to
the Offered Space, Landlord shall be free to lease the Offered Space to anyone
whom it desires and Tenant will have no further rights to the Offered Space
until such time the Offered Space shall again become available for leasing in
accordance with this Right of Refusal and Landlord desires to again re-offer
such space for lease by third parties.

 

C.            Right of Refusal Space will be offered to
Tenant upon the terms and conditions, including the rental rate, at which
Landlord would offer to lease the Offered Space to third parties in an arm’s
length transaction.  Such terms and
conditions will include, among other things, lease term, tenant improvement
allowance, rent escalations and operating expense pass-throughs. Upon exercise
of the Right of Refusal, the Offered Space will be deemed leased and Tenant
will accept such space in its “as is” condition without any remodeling or
fix-up work performed by Landlord, except as may be provided in Landlord’s
Notice. After exercise of the Right of Refusal, the parties will execute
either, at Landlord’s option, an amendment to the Lease evidencing the addition
of such space or a new lease for the Offered Space.

 

D.            Tenant’s right to exercise the Right of
Refusal is conditioned on:  no Event of
Default existing at the time it exercises the Right of Refusal or on the date
that Tenant’s occupancy of the Offered Space is scheduled to commence.

 

6

 

[ * ] = 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.

 

E.             All notifications contemplated by this
Paragraph, whether from Tenant to Landlord, or from Landlord to Tenant, must be
in writing and given in the manner provided in the Lease.

 

12.           Options to Purchase.  Landlord hereby grants to Tenant the option to purchase: (i) the
Premises and the premises under the 2600 Lease (collectively the “Initial
Premises”), and (ii) at Tenant’s election, any building representing that
portion of the Option Space included within Tenant’s initial Expansion Notice,
all property represented under this option being hereinafter collectively
referred to as the “Option Property”, subject to the following conditions:

 

A.            Tenant’s right to purchase, in addition to
the Initial Premises, only a portion of the buildings representing the portion
of the Option Space included within Tenant’s initial Expansion Notice shall be
conditioned upon Tenant electing to purchase those buildings [ * ].  By way of example, if tenant were to lease,
pursuant to their Expansion Option, the two buildings located at [ * ],
and [ * ], Tenant would be required to purchase the
building located at [ * ] in order to purchase the building at [ * ].  However, notwithstanding the foregoing and as
a continuation to this example, Tenant would not be required to purchase the
building at [ * ].

 

B.            Tenant shall have three options to purchase
in accordance with the following schedule:

 

(1)           At a purchase price of [ * ]
per rentable square foot (“Purchase Option 1”) by written notice to Landlord
given not later than March 31, 2007. 
Closing shall occur on a date mutually agreed to by Landlord and Tenant
within 60 days following delivery of Tenant’s notice.

 

(2)           At a purchase price of [ * ]
per rentable square foot with a Closing on or before July 1, 2007 (“Purchase
Option 2”) by written notice to Landlord given not later than April 1,
2007.

 

(3)           At a purchase price of [ * ]
per rentable square foot with a Closing on or before July 1, 2008 (“Purchase
Option 3”) by written notice to Landlord given not later than April 1,
2008.

 

C.           Upon exercise by Tenant of a purchase option,
the following provisions shall govern the closing and transfer of the respective
properties (the properties as to which the respective purchase option is
exercised are hereinafter referred to as the “Option Property”):

 

(1)         The closing and transfer (the “Closing”) shall be conducted through an
escrow with First American Title Insurance Company (or its successor or another
title company designated by Landlord) (“Escrow Agent”) on the applicable date
of Closing as provided in subsection C above (“Closing Date”).  Tenant shall deliver the applicable purchase
price (subject to applicable prorations) to Escrow Agent, in escrow, on the
Closing Date, along with all other documents reasonably required by Escrow
Agent. Landlord shall deliver at Closing a special warranty deed conveying fee
simple title to the Option Property free and clear of all liens and
encumbrances, except deeds of trust which Landlord will pay off at the time of
Closing and except (i) a pro rata share of real property taxes and
assessments for the calendar year of the Closing and subsequent years; (ii) any
taxes, assessments, fees or charges by reason of the inclusion of the Option
Property in any statutory district of record; (iii) covenants, as amended
and supplemented, of record; (iv) utility, landscape and drainage
easements of record; (v) any covenants contained in the applicable
subdivision plat; (vi) applicable zoning and building code laws and
regulations;  (vii) liens and
encumbrances created by, through or under Tenant; (viii) all matters that
would be disclosed by a survey of the Option Property; and (viii) the lease
with Tenant for the applicable building.

 

(2)         At Closing the following shall govern prorations and expenses: (i) Landlord
shall have the right to receive the base rent, as adjusted, and all amounts of
additional rent attributable to the period prior to the Closing Date and
Landlord shall have no obligations arising thereafter under the respective
leases (including, without limitation, the obligation to pay allowances
otherwise required to be paid under the Lease, the 2600 Lease, or any lease
covering the Expansion Premises); (ii) Landlord shall provide Tenant with
Landlord’s most recent survey of the Option Property (if any) and Tenant shall
pay for fifty percent (50%) of all costs of any survey 

 

7

 

[ * ] = 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.

 

and any updates desired by Tenant in
conjunction with such purchase, as well as all recording fees that may be
applicable to such transfer, (iii) a title commitment shall be issued by
Escrow Agent, committing the Escrow Agent to insure title under a then-current
standard owner’s title insurance policy and Tenant shall pay fifty percent
(50%) of the costs of the owner’s policy of title insurance and shall cause the
Escrow Agent to issue the title policy promptly after Closing; (iv) Landlord
and Tenant shall each pay one half of an title company closing fee and each
party shall pay its respective share of other closing costs and all other items
required to be paid at Closing, except as otherwise provided herein.

 

(3)         Landlord and Tenant shall each have the right of specific performance
and additional actual damages in the event of a default by the other in the
fail to timely close under the provisions of this Section 12.  In no event shall Landlord or Tenant have a
right to terminate the respective lease as a result of such default.

 

(4)         At Closing Tenant will pay Landlord, in addition to the purchase price
specified above, an additional amount equal to the unamortized component of any
tenant improvements or lease commission costs incurred by Landlord for leasing
the respective Option Property under each respective lease, determined by
amortizing such costs on a straight-line basis beginning upon mutual execution
of this Addendum with respect to the Initial Premises and beginning with the
date that Tenant commences to pay base rent under the respective lease for any
other buildings. In addition to the foregoing, a t Closing Purchaser shall
receive a credit equal to 3% of the applicable purchase price.  This credit representing the co-operative
broker’s commission that Landlord would have otherwise have been obligated to
pay to a purchaser’s broker in connection with such purchase (it being
understood that Landlord shall have no obligation to pay a commission to a
broker representing Tenant in such purchase transaction).

 

(5)         It shall be a condition for the benefit of Landlord that there have
been no material events of default which have not been remedied by Tenant at
the time of Tenant’s notice to Landlord as provided in subparagraphs A, B or C
above, as applicable, and at the Closing Date.

 

(6)         Except for the warranties of title set forth in the special warranty
deed, the sale of the Option Property to Tenant shall be on an “as is” basis,
it being understood that Tenant will have had an opportunity to investigate the
Option Property and all matters relevant to its acquisition, development,
usage, operation or marketability, including (without limitation) environmental
assessments of the Option Property, at Tenant’s sole expense, including but not
limited to, the collection and analysis of soils, surface water and groundwater
samples.  At Closing Purchaser, Tenant,
as purchaser, for itself and, on behalf of its officers, directors,
shareholders, employees, heirs, successors, assigns, parents, subsidiaries,
affiliates, and agents representatives (hereinafter referred to as “Releasing
Parties”) unconditionally releases Landlord, its officers, directors,
shareholders, employees, heirs, successors, assigns, parents, subsidiaries,
affiliates, agents, and representatives from and against any and all liability
to the Releasing Parties, both known and unknown, past, present and future, for
any damages, costs, expenses or other liability to the Releasing Parties
arising out of any violation of environmental requirements, environmental laws
or governmental regulations, or the presence of regulated substances, hazardous
materials or hazardous substances on, under, about or migrating to or from the
Property, whether occurring before, during or after Tenant’s acquisition of the
Option Property (the “Condition of the Property”).  This release shall survive the Closing and
remain in effect indefinitely.  Tenant,
as purchaser, shall indemnify, defend with counsel reasonably acceptable to
Landlord, and hold Landlord harmless from any and all claims of any kind or
nature (including, without limitation, diminution in value), demands,
liabilities, liens, losses, damages, costs and expenses (including, without
limitation, fines, forfeitures, attorneys’ fees, disbursements and court and/or
administrative costs) asserted against Landlord or the Option Property arising
out of or resulting from the Condition of the Property.

 

D.            Any option to purchase provided in this
Paragraph is personal to Tenant and is not assignable or transferable except to
an affiliate of Tenant that is assigned all of Tenant’s interests under the
Lease and all of the leases applicable to the Option Property, or at Closing to
an entity which intends to obtain title of the Option Property to permit Tenant’s
long term leasing and/or renovation of the Option Property.

 

8

 

[ * ] = 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.

 

E.             Tenant shall have an option to exercise the
Option to Purchase only one time during the Term of the Lease and upon Tenant’s
exercise of any Purchase Options to any of the Option Property, Tenant shall
have no further rights to any remaining Purchase Options and such remaining
Purchase Options shall be deemed void and of no force and effect.  If Tenant fails to timely exercise a Purchase
Option, it will be conclusively deemed that Tenant has waived the Purchase
Option.

 

F.             If Landlord transfers its interest under this
Lease, the 2600 Lease or any lease with respect to Expansion Premises to
separate landlords, each successor landlord will be bound by the terms of this
Purchase Option as to the respective property under the respective lease.

 

13.           Additional Extension.  To
the extent that the applicable purchase option granted in accordance with Section 12
hereof has not been exercised by March 31, 2007, April 1, 2007, or April 1,
2008, respectively, the term of this Lease for the Premises and the terms of
the 2600 Lease and any leases for Expansion Premises shall be automatically
extended for one additional year (so that the scheduled expiration date shall
be extended for one additional year on each of such dates) upon the terms of
the respective lease, except that (i) the base rental during each
respective one year extension term will be equal to the base rental being paid
immediately prior thereto increased by an amount equal to [ * ]
of the base rental in effect for the previous year, and (ii) Landlord
shall fund an additional improvements allowance to the Expansion Premises for
each additional one year extension equal to [ * ]
per rentable square foot of the Expansion Premises as reimbursement for
previous tenant improvements to the Expansion Premises.

 

14.           Cross Default.  An event of default by Tenant under this Lease shall be deemed an event
of default under the 2600 Lease and any lease for the Expansion Premises; and
an event of default by Tenant under the 2600 Lease or under any lease for the
Expansion Premises shall be deemed is an event of default under this Lease.

 

15.           Broker Indemnity.  Tenant hereby represents and warrants to Landlord that it has not
engaged any broker in connection with the negotiation and/or execution of this
Addendum except CRESA Partners (“Tenant’s Broker”) and Circle Capital Property
Management, who represented Landlord. 
Tenant has no knowledge of any other broker’s involvement in this
transaction.  Tenant will indemnify
Landlord against any claim or expense (including, without limitation, attorneys’
fees) paid or incurred by Landlord as a result of any claim for commissions or
fees by any broker, finder, or agent, other than Tenant’s Broker, whether or
not meritorious, employed by Tenant or claiming by, through or under
Tenant.  Tenant acknowledges that
Landlord is not liable for any representations by Tenant’s Broker regarding the
Premises, the Building, the Expansion Premises, the Park or this Addendum.

 

16.           Non-Disclosure.  The terms of the Lease, including this Addendum, are intended to be
confidential and neither Tenant, Landlord, nor their respective agents or
employees will disclose the material terms and provisions of the Lease without
the written consent of Landlord.  Each
party acknowledges that disclosure of such terms may materially adversely
affect the other party and that the non-disclosing party may not have an
adequate remedy at law, specifically with regard to Landlord’s ability to
negotiate with third parties as may be necessary under Section 10 of this
Addendum. This provision shall not restrict Tenant from disclosing such terms
and provisions to its attorneys, accountants, lenders or any proposed purchaser
or lender or as otherwise required in performing its obligations under the
Lease or enforcing the terms and provisions of the Lease, or as required by law
(e.g., in SEC filings).

 

17.           Conflicts. If there is any conflict between the terms of
this Addendum and the terms of the Lease, the terms of this Addendum shall
govern.  The Lease as hereby amended is
in full force and effect, is hereby ratified and affirmed by the parties, and
is binding upon the parties in accordance with its terms.

 

18.           Time of Essence.  Time is of the essence herein.

 

9

 

[ * ] = 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, the parties have executed this Addendum as of the day and year
first above written and is effective upon delivery of a fully executed copy to
Tenant.

 

	
  LANDLORD:

  	
  CIRCLE
  CAPITAL LONGMONT LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Circle Capital Property Management LLC, Authorized Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Terry Fitzpatrick, Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  TENANT:

  	
  ARRAY
  BIOPHARMA, INC., a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Title

  	
   

  	
   

  
									

 

10

 

[ * ] = 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

 

FORM OF LETTER OF CREDIT

 

          , 200  

 

CIRCLE CAPITAL LONGMONT LLC

 

4600 South Ulster Street, Suite 590

 

Denver, CO 
80237

 

RE:  Letter of Credit No.               

 

Gentlemen:

 

We
hereby issue in your favor, at the request and for the account of ARRAY
BIOPHARMA, INC., a Delaware corporation, our irrevocable Letter of Credit in
the amount of $                       
which is available against presentation of your sight draft. The draft must be
accompanied by:

 

1.             This Letter of Credit No.                       ;
and

 

2.             A notarized certification signed as [“Authorized
Signatory”] on behalf of ARRAY BIOPHARMA, INC., a Delaware corporation, as                       ,
or an officer (or partner, if such entity is a partnership or member if a
limited liability company) of its transferee or assignee, stating essentially
as follows:

 

“The
undersigned Beneficiary is the owner of the property described in the Office
Lease dated                       
by and between CIRCLE CAPITAL LONGMONT LLC, a Delaware limited liability company,
as Landlord, and ARRAY BIOPHARMA, INC., a Delaware corporation, as Tenant (the “Lease”).  The amount requested by the draft
accompanying this statement is the amount to which Beneficiary is entitled
under the terms of the Lease as a result of an event of default under the Lease
and Beneficiary requests payment of the enclosed draft under the enclosed
Letter of Credit.”

 

This
Letter of Credit shall be subject to the Special Conditions set forth on Exhibit 1,
such exhibit being considered a part hereof and incorporated herein by
reference.

 

We
hereby agree that all drafts drawn under and in compliance with the terms of
this credit shall meet with honor upon presentation and delivery of documents
on or before 5:00 p.m., Denver time,                  [DATE]                      (the
“Expiry Date”), as specified to the drawee. This Letter of Credit may be
presented one or more times; partial drawings are allowed. It is a condition of
this Letter of Credit that the Expiry Date shall be automatically extended for
periods of at least one year from the initial Expiry Date and each future
Expiry Date unless, at least 60 days prior to the relevant expiration date, we
notify you, by certified mail, return receipt requested, that we elect not to
extend this Letter of Credit for any additional period.

 

[BANK]

 

	
  By:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
				

 

11

 

[ * ] = 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 1

 

To
Letter of Credit No.                       

 

The
Letter of Credit shall be governed by the following Special Conditions:

 

1.             This Letter of Credit is subject to the
International Standby Practices 1998, International Chamber of Commerce
Publication No. 590.

 

2.             Issuer agrees that it may not defer honor
beyond the close of the first banking day after presentment of a sight draft
drawn hereunder and accompanying documents.

 

3.             This Letter of Credit shall be transferable
and assignable, without charge, to any person or entity who is the successor or
assignee of Beneficiary’s interest under the Lease entered into on or about                       ,
between CIRCLE CAPITAL LONGMONT LLC, a Delaware limited liability company, and
ARRAY BIOPHARMA, INC., a Delaware corporation.  
Such transfer shall be accomplished by providing                       [BANK]                      
with the appropriate transfer form and the original letter of credit for
endorsement; provided, however, that such transfer shall not be subject to the
approval of                       [BANK]                      .

 

12

 

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

 

EXHIBIT B

 

FIRST ALLOWANCE AND TENANT’S BROKER COMMISSION

 

First
Allowance = [ * ]

CRESA
Lease Commission = [ * ]

 

13

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