Document:

EXHIBIT 10.1

 

FACILITY AGREEMENT

 

This FACILITY AGREEMENT
(this “Agreement”), dated as of April 29, 2008, is entered into by
and between Array BioPharma Inc., a Delaware corporation (the “Borrower”),
and Deerfield Private Design Fund, L.P., a Delaware limited partnership and
Deerfield Private Design International, L.P. 
a limited partnership organized under the laws of the British Virgin
Islands (individually, a “Lender” and together,  the “Lenders” and, together with the
Borrower, the “Parties”).

 

W I T N E S S E T H

 

WHEREAS, the Borrower wishes
to borrow from the Lenders Eighty Million Dollars ($80,000,000) for the purpose
described in Section 2.1; and

 

WHEREAS, the Lenders desire
to make loans to the Borrower from time to time for such purpose;

 

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

 

ARTICLE I

DEFINITIONS

 

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

 

“Additional Amounts”
has the meaning given to it in Section 2.6(b).

 

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

 

“Cash and Cash
Equivalents” means the amount of Cash and Cash Equivalents and marketable
securities shown on the Borrower’s condensed balance sheet included in reports
filed by the Borrower with the SEC under the Exchange Act or otherwise made
available to the Borrower’s stockholders.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

[***] Confidential Treatment of

Redacted Portions Has Been
Requested

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Interest Rate” means
8.5% per annum, which rate shall be bifurcated such that 2% shall be simple
interest, payable quarterly in cash, and 6.5% shall be compounded quarterly and
added to the principal amount of the Notes. 
Interest shall accrue at the applicable Interest Rate commencing on the
date of this Agreement calculated on $80 million and after the final
Disbursement under Section 2.2 is made, shall accrue on the principal
balance of the Notes outstanding from time to time hereunder. Nothwithstanding
anything to the contrary contained herein, for the purpose of calculating
simple interest payable hereunder, the amount of principal outstanding under
the Notes shall not include any interest added to the principal amount pursuant
to the foregoing.

 

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

 

“Loan” means the loan
to be made available by the Lenders to the Borrower pursuant to Section 2.2
in the maximum aggregate principal amount of Eighty Million Dollars
($80,000,000) or, as the context may
require, the principal amount thereof from time to time outstanding.

 

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

 

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

 

[***] Confidential Treatment of

Redacted
Portions Has Been Requested

 

 

“Material Adverse Effect”
means a material adverse effect on (a) the business, operations,
prospects, condition (financial or otherwise) or property of the Borrower, (b) the
validity or enforceability of any provision of any Financing Document, (c) the
ability of the Borrower to timely perform its Obligations  or (d) the rights and remedies of the
Lenders under any Financing Document.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Security Agreement”
means the Security Agreement, dated as of the date hereof, between the Borrower
and the Lender granting to the Lenders a security interest in certain assets of
the Borrower specified therein.

 

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

 

“Subordination Agreement”
means the Subordination Agreement, dated as of the date hereof, between
Comerica Bank and the Lenders.

 

“Subsidiary or
Subsidiaries means, as to the Borrower, any entity that is controlled by
Borrower.  As used in this definition,
the term “control” means the possession, directly or indirectly, of the power
to direct or

 

[***] Confidential Treatment of

Redacted
Portions Has Been Requested

 

 

cause the direction of the
management and policies of a Person, whether through ownership of voting
securities or partnership or other ownership interest, by contract, or
otherwise.

 

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

 

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

 

“Volume Weighted Average Price”
for any security as of any date or during any period means the volume weighted
average sale price on The NASDAQ Global Market (“NASDAQ”) as reported by, or
based upon data reported by, Bloomberg Financial Markets or an equivalent,
reliable reporting service mutually acceptable to and hereafter designated by
holders of a majority in interest of the Warrants and the Borrower (“Bloomberg”)
or, if NASDAQ is not the principal trading market for such security, the volume
weighted average sale price of such security on the principal securities
exchange or trading market where such security is listed or traded as reported
by Bloomberg, or, if no volume weighted average sale price is reported for such
security, then the last closing trade price of such security during such
period, as reported by Bloomberg, or, if no last closing trade price is
reported for such security by Bloomberg, the average of the bid prices of any
market makers for such security that are listed in the over the counter market
by the National Association of Securities Dealers or in the “pink sheets” by
the National Quotation Bureau, Inc. 
If the Volume Weighted Average Price cannot be calculated for such
security on such date in the manner provided above, the volume weighted average
price shall be the fair market value as mutually determined by the Borrower and
the Lenders negotiating in good faith.

 

“Warrants” means the
warrants attached hereto as part of Exhibit C issued pursuant to Section 2.10.

 

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

 

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

 

ARTICLE II

AGREEMENT FOR THE LOAN

 

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

 

Section 2.2            Disbursements.  Subject to satisfaction of the conditions contained in Article IV,
a disbursement of a portion of the Loan (each a “Disbursement”) shall be
made upon the Borrower’s request (a 

 

[***] Confidential Treatment of

Redacted
Portions Has Been Requested

 

 

“Disbursement Request”)
in the form of Schedule 1, delivered to the Lenders not less than five
Business Days prior to the  date the
Lenders shall make such Disbursement (the “Disbursement Date”).   Against each Disbursement, the Borrower
shall deliver to the Lenders a completed receipt (the “Evidence of Disbursement”)
in the form of Schedule 2, which receipt shall not be effective
until the Disbursement is actually advanced to the Borrower.  Disbursements shall be made on the
Disbursement Dates in the following amounts. The Disbursement Dates set forth
in a Disbursement Request shall only be on 
or within 30 days after the following dates:

 

	
  Amount

  	
   

  	
  Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $

  	
  40,000,000

  	
   

  	
  June 20,
  2008

  	
   

  
	
  40,000,000

  	
   

  	
  December 20,
  2008

  	
   

  
					

 

Each
Disbursement shall be allocated 61.7% to Deerfield Private Design Fund
International, L.P. and 38.3%  to
Deerfield Private Design Fund, L.P.

 

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

 

Section 2.4            Points.  The
Borrower shall pay to the Lenders points of up to $2,000,000, a pro rata
portion of which shall be paid on the date each Disbursement is made  based on the amount such Disbursement
represents of the  maximum aggregate
principal amount of the Loan. Such points so determined shall be paid by a
reduction of the funds actually transferred to the Borrower in connection with
such Disbursement. In no event shall all such payments exceed $2,000,000.

 

Section 2.5            Payments. 
Subject to the provisions of Section 2.11, payments of any amounts
due to the Lenders under this Agreement shall be made in Dollars in immediately
available funds prior to 11:00 a.m New York City time on such date that any
such payment is due, at such bank or places, as the Lenders shall from time to
time designate in writing at least five Business Days prior to the date such
payment is due.  The Borrower shall pay
all and any costs (administrative or otherwise) imposed by banks, clearing houses,
or any other financial institution, in connection with making any payments
under any of the Financing Documents, except for any costs imposed by the
Lenders’ banking institutions.

 

Section 2.6            Taxes, Duties and Fees.

 

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

 

(b)           If the Borrower is required to withhold any such amount or is prevented
by operation of law or otherwise from paying or causing to be paid such Taxes,
duties, fees or other charges as aforesaid except for Excluded Taxes, the
principal or other amounts due under this Agreement (as applicable) shall be
increased to such amount as shall be necessary to yield and remit to the Lenders
the full amount it would have received taking into account any such Taxes
(except for Excluded

 

[***] Confidential Treatment of

Redacted
Portions Has Been Requested

 

 

Taxes),
duties, fees or other charges payable on amounts payable by the Borrower under
this Section 2.6(b) had such payment been made without deduction of
such Taxes, duties, fees or other charges (all and any of such additional
amounts, herein referred to as the “Additional Amounts”).

 

(c)           If Section 2.6(b) above applies and the Lenders so require
the Borrower shall deliver to the Lenders official tax receipts evidencing
payment (or certified copies of them) of the Additional Amounts within thirty
(30) days of the date of payment.

 

(d)           If the Lenders receive a refund from a Government Authority to which
the Borrower has paid withholding Taxes pursuant to this Section 2.6, the
Lenders shall pay such refund to the Borrower.

 

Section 2.7            Costs, Expenses and Losses.  If,
as a result of any failure by the Borrower to pay any sums when due under this
Agreement (after expiration of any grace periods), or to borrow in accordance
with a Disbursement Request  made
pursuant to Section 2.2, the Lenders shall incur costs, expenses and/or
losses, by reason of the liquidation or redeployment of deposits from
third parties or in connection with obtaining funds to make or maintain any
Disbursement, the Borrower shall
pay to the Lenders upon request by the Lenders, the amount of such costs,
expenses and/or losses within fifteen (15) days after receipt by it of a
certificate from the Lenders setting forth in reasonable detail such costs,
expenses and/or losses.  For the purposes
of the preceding sentence, “costs, expenses and/or losses” shall include,
without limitation, any interest paid or payable to carry any unpaid amount and
any loss, premium, penalty or expense which may be incurred in obtaining,
liquidating or employing deposits of or borrowings from third parties in order
to make, maintain or fund the Loan or any portion thereof.

 

Section 2.8         Interest Rate.  The Notes shall bear interest at the Interest
Rate (calculated on the basis of the actual number of days elapsed in each
month).  Interest shall be paid quarterly
in arrears commencing on July 31, 2008 and on the last Business Day of
each October, January and April thereafter.

 

Section 2.9         Interest on Late Payments.  Without limiting the remedies available to the Lenders under the
Financing Documents or otherwise, to the maximum extent permitted by applicable
law, if the Borrower fails to make any payment of principal or  interest 
with respect to the Loan, the Borrower shall pay, in respect of the
outstanding principal amount and interest 
of the Loan, interest at the rate per annum equal to the Interest Rate
plus five hundred (500) basis points for so long as such payment remains
outstanding.  Such interest shall be
payable on demand.

 

Section 2.10       Delivery of Warrants.  On
the date hereof, the Borrower shall issue to the Lenders Warrants to purchase
6,000,000 shares of Common Stock
(subject to adjustment as set forth in the Warrants) at an initial Exercise
Price (as defined in the Warrants)
of $7.54.

 

Section 2.11 Payment
in Common Stock

 

(a)           In lieu of making any payment of 
principal or compound interest required or permitted to be made under
the Notes (other than as a result of acceleration pursuant to Sections 5.5 and
5.6), the Borrower may elect to satisfy any such payment by the issuance to the
Lenders of shares of Common Stock registered for issuance under the Securities
Act of 1933 (a “Share Issuance”) so long as it complies with each of the
following conditions:

 

(b)           Exercise of Right to Make Share Issuance.  The
Borrower must deliver to the Lenders notice by phone and facsimile (the “Share
Payment Notice”) of its intention to issue shares of Common Stock pursuant to
the provisions of this Section 2.11. 
Subject to such provisions, the Share Payment Notice shall be
irrevocable and shall provide for a closing of the Share Issuance at or prior
to 10:40 a.m. eastern time on the Share Payment Closing Date.

 

[***] Confidential Treatment of

Redacted
Portions Has Been Requested

 

 

(c)           Share Payment Closing.  For
purposes herein, the “Share Payment Closing Date” shall mean (i) for [***] Share Issuances, the [***]
Trading Day following the occurrence of two full Trading Days following the
receipt by the Lenders of the Share Payment Notice, and (ii) for all other
Share Issuances, a date specified in the Share Payment Notice that is, [***], the [***] Trading
Day following the occurrence of [***] Trading
Days following receipt by the Lenders of the Share Payment Notice; provided,
however, that a Share Payment Closing Date relating to a Share Payment Notice
that is made by virtue of the proviso contained in subsection (f) below
shall take place on the [***] Trading
Day following the occurrence of [***] full
Trading Days following receipt by the Lender of the Share Payment Notice. For
the avoidance of doubt, if a Share Payment Notice is received by the Lenders
prior to the commencement of trading on a Trading Day, that day shall count as
a full Trading Day for purposes of computing the time periods above. [***] At each closing of a Share Issuance, (i) the
Borrower shall cause its transfer agent to electronically transmit the number
of shares deliverable in such Share Issuance pursuant to this Section 2.11
by crediting the account of the Lenders’ prime broker with DTC through its
Deposit Withdrawal Agent Commission (DWAC) system, and (ii) the Lenders
shall execute and deliver to the Borrower a written acknowledgement of receipt
of such shares and a release of the amount of the Obligations satisfied by the
Borrower pursuant to the Share Issuance.

 

(d)           Maximum Issuance.  The
maximum number of shares which the Borrower shall be permitted to issue to the
Lender in accordance with this Section 2.11 on any Share Payment Closing
Date (the “Maximum Issuance”) shall be equal to a percentage of the total
number of shares of Common Stock [***].

 

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

 

(f)            Borrower Reporting.  The
Borrower shall file with the SEC a Current Report on Form 8-K disclosing
its delivery of a Share Payment Notice and the number of shares provided for in
such Share Payment Notice within three (3) hours of delivery of the Share
Payment Notice.

 

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

 

(h)           [***].

 

(i)            [***].

 

(j)            Valuation of Shares. 
Common Stock issued pursuant to this Section 2.11 shall be valued
at [***] on the Share Payment Closing Date
multiplied by the Applicable Percentage (reflected 

 

as
a decimal).  The “Applicable Percentage”
shall be (i) [***]% in the
case of a [***], (ii) [***]%
in the case of a [***], (iii) [***]% in the case of a [***] and (iv) [***]% in the case of a [***].

 

(k)           [***].

 

(l)            Limitations on Share Issuances. 
Notwithstanding anything herein to the contrary, no payments under the
Notes may be made in shares of Common Stock to the extent the number of shares
so issued, together with the number of other shares of Common Stock
beneficially owned by the Lenders and their affiliates and any other persons or
entities whose beneficial ownership of Common Stock would be aggregated with
the Lenders for purposes of Section 13(d) of the Exchange Act
(includes “group” members), would exceed 9.98% of the total number of shares of
Common Stock of the Borrower then outstanding.

 

[***] Confidential Treatment of

Redacted
Portions Has Been Requested

 

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(g)           Neither the entering into any of the Financing Documents nor the
compliance with any of its terms conflicts with, violates or results in a
breach of any of the terms of, or constitutes a default or event of default
(however described) or requires any consent under, any agreement to which the
Borrower is a party or by which it is bound, or violates any of the terms of
the Organizational Documents or any judgment, decree, resolution, award or
order or any statute, rule or regulation applicable to the Borrower or its
assets.

 

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

 

(i)            The Borrower (i) is capable of paying
its debts as they fall due, is not unable and has not admitted its inability to
pay debts as they fall due, (ii) is not bankrupt or insolvent and (iii) has
not taken action, and no such action has been taken by a third party, for the
Borrower’s winding up,

 

[***] Confidential Treatment of

Redacted
Portions Has Been Requested

 

 

dissolution, or liquidation
or similar executory or judicial proceeding or for the appointment of a
liquidator, custodian, receiver, trustee, administrator or other similar
officer for the Borrower or any or all of its assets or revenues.

 

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

 

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

 

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

 

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

 

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

 

(a)           It is acquiring the Warrants and the shares of Common Stock issued upon
exercise of the Warrants (the “Exercise Shares”) solely for its account for
investment and not with a view to or for sale or distribution of the Warrants
or Exercise Shares or any part thereof. 
Each of the Lenders also represents that the entire legal and beneficial
interests of the Warrants and Exercise Shares such Lender is acquiring is being
acquired for, and will be held for, its account only.

 

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

 

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

 

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

 

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

 

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

 

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

 

(iii)          Such Lender shall have notified the Borrower of the proposed
disposition and shall have furnished counsel for the Borrower with an opinion
of counsel, substantially in the form annexed as Exhibit C to the
Warrant.  The Borrower agrees that it
will not require an opinion of counsel with respect to transactions under Rule 144
of the Securities Act.

 

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

 

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

 

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

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

 

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

 

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

 

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

 

(j)            All authorizations, consents, approvals,
registrations, exemptions and licenses with or from Government Authorities or
other Persons that are necessary, for the making of Disbursements hereunder,
the execution and delivery of the Financing Documents and the performance by
such

 

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Redacted
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Lender of its obligations
thereunder, have been obtained and are, and will be on the date of such
Disbursement hereunder, in full force and effect.

 

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

 

(l)            [***].

 

ARTICLE IV

 

CONDITIONS OF DISBURSEMENTS

 

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

 

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

 

(b)           Unless otherwise notified by the Borrower and without prejudice to the
generality of this Section 4.1, the right of the Lenders to require
compliance with any condition under this Agreement which may be waived by the
Lenders in respect of any Disbursement is expressly preserved for the purpose
of any subsequent Disbursement.

 

ARTICLE V

 

PARTICULAR COVENANTS AND
EVENTS OF DEFAULT

 

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

 

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

 

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

 

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

 

(d)           The Borrower shall promptly notify the Lenders of the occurrence of (i) any
Default or Event of Default; or (ii) any claims, litigation, arbitration,
mediation or administrative or regulatory proceedings that are instituted or
threatened against the Borrower, except for matters that, individually or in
the aggregate, could not have a Material Adverse Effect; and (iii) each
event which, at the giving

 

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of notice, lapse of time,
determination of materiality or fulfillment of any other applicable condition
(or any combination of the foregoing), could constitute an event of default
(however described) under any of the Financing Documents.

 

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

 

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

 

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

 

(a)           The Borrower shall not (i) liquidate or dissolve or (ii) consolidate
with or merge into any other entity or reorganize, or (iii) enter into any
transaction whereby its income or profits are, or might be shared with any
other Person, or enter into any management contract or similar arrangement
whereby its business or operations are managed by another Person; provided,
however, that the Borrower may form, capitalize and conduct business operations
through Subsidiaries upon notice to Lenders; and provided further, however,
that the Borrower may enter into any collaborative arrangements, licensing
agreement, joint venture or partnership, or similar business arrangement
providing for the development or commercial exploitation of, or right to
develop or commercially exploit, the technology, intellectual property or
products of the Borrower and/or of the other party thereto (including
arrangements that involve the assignment or licensing of any existing or newly
developed intellectual property under such arrangements) whereby its income or
profits are or might be shared with any other Person

 

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

 

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

 

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

 

Section 5.3            Reimbursement of Taxes.  The
Borrower shall pay all Taxes, duties, fees or other charges payable on or in
connection with the execution, issue, delivery, registration, notarization or
enforcement of the Financing Documents and shall, upon notice from the Lenders,
reimburse the Lenders for

 

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any
such Taxes, duties, fees or other charges paid by the Lenders thereon;
provided, however, that notwithstanding the foregoing, under no circumstances
shall the Borrower have any obligation to reimburse the Lenders for Excluded
Taxes.

 

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

 

Section 5.5            General Acceleration
Provision upon Events of Default.  If one or more of the events
specified in this Section 5.5 (each an “Event of Default”) shall
have happened and be continuing beyond the applicable cure period, the Lenders,
by written notice to the Borrower, may cancel the Borrower’s right to request
Disbursements and declare the principal of, accrued and unpaid interest on, the
Notes or any part of any of them (together with any other amounts accrued or
payable under this Agreement) to be, and the same shall thereupon become,
immediately due and payable, without any further notice and without any
presentment, demand, or protest of any kind, all of which are hereby expressly
waived by the Borrower, and take any further action available at law or in
equity, including, without limitation, the sale of the Loan and all other
rights acquired in connection with the Loan:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(k)           Cash
and Cash Equivalents on the last day of each calendar quarter are less than
Forty Million Dollars ($40,000,000); provided, however, that if the aggregate
amount of  the Cash Extensions (as such
term is defined in the Comerica Loan Agreement) is increased,  such amount shall be increased by  the 
same percentage as the increase in such Cash Extensions.

 

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

 

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

 

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

 

[***] Confidential Treatment of

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ARTICLE VI

 

MISCELLANEOUS

 

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

 

For
the Borrower:

 

Array
BioPharma Inc.

3200
Walnut Street

Boulder,
CO 80301

Attention:  R. Michael Carruthers,

Chief
Financial Officer

Facsimile:  (303) 381-6697

 

with
a courtesy copy to each of:

 

Array
BioPharma Inc.

3200
Walnut Street

Boulder,
CO 80301

Attention:  John R. Moore

Vice
President and General Counsel

Facsimile:  (303) 386-1290

 

Hogan &
Hartson, LLP

1470
Walnut Street, Suite 200

Boulder,
CO 80302

Attention:  Carin M. Kutcipal

Facsimile:
 (702) 406-5301

 

For the Lenders c/o:

 

Deerfield
Private Design Fund, L.P.

780
Third Avenue, 37th Floor

New
York, New York  10017

Attention: 
James E. Flynn

Facsimile: 
(212) 573-8111

 

with
a courtesy copy to:

 

Katten
Muchin Rosenman LLP

575
Madison Avenue

New
York, New York 10022-2585

Facsimile:
(212) 894-5827

Attention:  Robert I. Fisher

 

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

 

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

 

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

 

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

 

(b)           The Borrower irrevocably waives, to the fullest extent permitted by
applicable law, any objection which it may now or hereafter have to the laying
of venue of any action, suit or other proceeding arising out of or relating to
any  Financing Document, brought in the
courts of the State of New York or in the United States District Court for the Southern
District of New York, and any claim that any such action, suit or other
proceeding brought in any such court has been brought in an inconvenient forum.

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 6.9            Survival.

 

(a)           This Agreement and all agreements, representations and warranties
made  in the Financing Documents, and in
any document, certificate or statement delivered pursuant thereto or in
connection therewith shall be considered to have been relied upon by the other
Parties and shall survive the execution and delivery of this Agreement and the
making of the Loan hereunder regardless of any investigation made by any such
other Party or on its behalf, and shall continue in force until all amounts
payable under the Financing Documents shall have been fully paid in accordance
with the provisions hereof and thereof, and the Lenders shall not be deemed to
have waived, by reason of making the Loan, any Event of Default that may arise
by reason of such representation or warranty proving to have been false or
misleading, notwithstanding that the Lenders may have had notice or knowledge
of any such Event of Default or may have had notice or knowledge that such
representation or warranty was false or misleading at the time any Disbursement
was made hereunder.

 

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

 

Section 6.10         Waiver. 
Neither the failure of, nor any delay on the part of, any Party in
exercising any right, power or privilege hereunder, or under any agreement,
document or instrument mentioned herein, shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege
hereunder, or under any agreement, document or instrument mentioned herein,
preclude other or further exercise thereof or the exercise of any other right,
power or privilege; nor shall any waiver of any right, power, privilege or
default hereunder, or under any agreement, document or instrument mentioned
herein, constitute a waiver of any other right, power, privilege or default or
constitute a waiver of any default of the same or of any other term or
provision.  No course of dealing and no
delay in exercising, or omission to exercise, any right, power or remedy
accruing to the Lenders upon any default under this Agreement, or any other
agreement shall impair any such right, power or remedy or be construed to be a
waiver thereof or an acquiescence therein; nor shall the action of the Lenders
in respect of any such default, or any acquiescence by it therein, affect or
impair

 

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any
right, power or remedy of the Lenders in respect of any other default.  All rights and remedies herein provided are
cumulative and not exclusive of any rights or remedies otherwise provided by
law.

 

Section 6.11         Indemnity.

 

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

 

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

 

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

 

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

 

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

 

[***] Confidential Treatment of

Redacted Portions Has Been
Requested

 

 

[SIGNATURE PAGE FOLLOWS]

 

[***] Confidential Treatment of

Redacted Portions Has Been
Requested

 

 

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

 

	
  BORROWER:

  	
   

  	
  LENDER:

  
	
  ARRAY
  BIOPHARMA INC.

  	
   

  	
  DEERFIELD
  PRIVATE DESIGN

  
	
   

  	
   

  	
  FUND,
  L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  R. Michael Carruthers

  	
   

  	
  By:

  	
  /s/
  James Flynn

  
	
   

  	
    Name:
  R. Michael Carruthers

  	
   

  	
   

  	
    Name:

  	
  James
  Flynn 

  
	
   

  	
    Title:
  Chief Financial Officer

  	
   

  	
   

  	
    Title:

  	
  General
  Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  LENDER:

  	
   

  	
   

  	
   

  
	
  DEERFIELD
  PRIVATE DESIGN

  	
   

  	
   

  	
   

  
	
  INTERNATIONAL,
  L.P.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  James Flynn

  	
   

  	
   

  	
   

  
	
   

  	
    Name:

  	
  James
  Flynn

  	
   

  	
   

  	
   

  
	
   

  	
    Title:

  	
  General
  Partner

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
								

 

[***] Confidential Treatment of

Redacted Portions Has Been
Requested

 

 

SCHEDULE 1

 

FORM OF DISBURSEMENT REQUEST

 

[LETTERHEAD OF THE BORROWER]

 

[Date]

 

Ladies
and Gentlemen:

 

Request
for Disbursement of the Loan

 

1.             Please refer to the Facility Agreement (the “Facility
Agreement”), dated as of April 29, 2008, between Array BioPharma Inc. (the “Borrower”) and Deerfield
Private Design Fund, L.P. and Deerfield Private Design International, L.P.
(together the “Lenders”).

 

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

 

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

 

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

 

5.             The Borrower hereby certifies as follows:

 

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

 

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

 

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

ARRAY BIOPHARMA INC.

 

[***] Confidential Treatment of

Redacted
Portions Has Been Requested

 

 

	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

[***] Confidential Treatment of

Redacted
Portions Has Been Requested

 

 

SCHEDULE 2

 

FORM OF EVIDENCE OF DISBURSEMENT

 

[LETTERHEAD OF THE BORROWER]

 

[Date]

 

Ladies
and Gentlemen:

 

Re:          Disbursement Receipt

 

Array
BioPharma Inc. (the “Borrower”)
hereby acknowledge receipt of the sum of [insert amount of disbursement]
disbursed to us by Deerfield Private Design Fund, L.P. and Deerfield Private
Design International, L.P. (together the “Lenders”) under the Loan provided for
in the Facility Agreement, dated as of  April 29,
2008, between the Borrower and the Lenders.

 

	
   

  	
  Yours
  faithfully,

  
	
   

  	
   

  
	
   

  	
  ARRAY BIOPHARMA INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title

  	
   

  
					

 

[***] Confidential Treatment of

Redacted
Portions Has Been Requested

 

 

EXHIBIT A-1

 

FORM OF NOTE

 

PROMISSORY NOTE

 

	
   

  	
  April 29, 2008

  

 

FOR VALUE RECEIVED, ARRAY
BIOPHARMA INC., a Delaware corporation (the “Maker”), by means of this
Promissory Note (this “Note”), hereby unconditionally promises to pay to
Deerfield Private Design International, L.P. (the “Payee”), a principal
amount equal to the lesser of (a) $49,360,000 and (b) the aggregate
amount of Disbursements allocated to the Payee pursuant to Section 2.2 of
the Facility Agreement (as defined below), as such principal amount is
increased pursuant to the Facility Agreement, in lawful money of the United
States of America and in immediately available funds, on the dates provided in
the Facility Agreement.

 

This Note is a “Note”
referred to in the Facility Agreement dated as of April 29, 2008 among the
Maker, the Payee and the other parties thereto (as modified and supplemented
and in effect from time to time, the “Facility Agreement”), with respect
to the Loan made by the Payee thereunder. 
Capitalized terms used herein and not expressly defined in this Note
shall have the respective meanings assigned to them in the Facility Agreement.

 

This Note shall bear
interest on the principal amount hereof, as such principal amount may be
increased or decreased, at the rates and pursuant to the provisions set forth
in the Facility Agreement.

 

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

 

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

 

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

 

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

 

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

 

[***] Confidential Treatment of

Redacted
Portions Has Been Requested

 

 

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

 

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

 

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

 

Whenever this Note is held
by a noteholder that is not a “United States person” within the meaning of Section 7701(a)(30)
of the Internal Revenue Code of 1986, as amended (the “Code”), then it is the
intention of the Maker and such noteholder that (x) all interest accrued
and paid on this Note will qualify for exemption from United States withholding
tax as “portfolio interest” because this Note is an obligation which is in “registered
form” within the meaning of Sections 871(h)(2)(B) and 881(c)(2)(B) of
the Code and the applicable Treasury Regulations promulgated thereunder, and (y) as
such, all interest accrued and paid on this Note will be exempt from United
States information reporting under Sections 6041 and 6049 of the Code and
United States backup withholding under Section 3406 of the Code.  The Maker and the Payee shall cooperate with
one another, and execute and file such forms or other documents, or do or
refrain from doing such other acts, as may be required, to secure such
exemptions from United States withholding tax, information reporting, and
backup withholding.  In furtherance of
the foregoing, any transferee or assignee noteholder that is not a United
States person shall represent, warrant and covenant to the Maker that (i) such
noteholder is not, and will not be as long as any amounts due under this Note
have not been paid in full, a “United States person,” within the meaning of Section 7701(a)(30)
of the Code; (ii) such noteholder is not, and will not be as long as any
amounts due under this Note have not been paid in full, a person described in Section 881(c)(3) of
the Code; (iii) on or prior to the date of transfer or assignment (and on
or prior to the date the form provided pursuant to this clause (iii) is no
longer valid) until all amounts due under this Note have been paid in full,
such noteholder shall provide the Maker with a properly executed U.S. Internal
Revenue Service (“IRS”) Form W-8BEN, Certificate of Foreign Status
of Beneficial Owner for United States Tax Withholding (or any successor form
prescribed by the IRS), certifying as to such noteholder’s status for purposes
of determining exemption from United States withholding tax, information
reporting and backup withholding with respect to all payments to be made to
such noteholder hereunder; (iv) if an event occurs that would require a
change in the exempt status of such noteholder or any of the other information
provided on the most recent IRS Form W-8BEN (or successor form) previously
submitted by such noteholder to the Maker, such noteholder will so inform the
Maker in writing (or by submitting to the Maker a new IRS Form W-8BEN or
successor form) within 30 days after the occurrence of such event; and (v) such
noteholder will not assign or otherwise transfer this Note or any of its rights
hereunder except in accordance with the provisions hereof.

 

[***] Confidential Treatment of

Redacted
Portions Has Been Requested

 

 

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

 

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

 

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

 

	
   

  	
  ARRAY BIOPHARMA INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

[***] Confidential Treatment of

Redacted
Portions Has Been Requested

 

 

EXHIBIT A-2

 

FORM OF NOTE

 

PROMISSORY NOTE

 

	
   

  	
  April 29, 2008

  

 

FOR VALUE RECEIVED, ARRAY
BIOPHARMA INC., a Delaware corporation (the “Maker”), by means of this
Promissory Note (this “Note”), hereby unconditionally promises to pay to
Deerfield Private Design Fund, L.P. (the “Payee”), a principal amount
equal to the lesser of (a) $30,640,000 and (b) the aggregate amount
of Disbursements allocated to the Payee pursuant to Section 2.2 of the
Facility Agreement (as defined below), as such principal amount is increased
under the Facility Agreement, in lawful money of the United States of America
and in immediately available funds, on the dates provided in the Facility
Agreement.

 

This Note is a “Note”
referred to in the Facility Agreement dated as of April 29, 2008 among the
Maker, the Payee and the other parties thereto (as modified and supplemented
and in effect from time to time, the “Facility Agreement”), with respect
to the Loan made by the Payee thereunder. 
Capitalized terms used herein and not expressly defined in this Note
shall have the respective meanings assigned to them in the Facility Agreement.

 

This Note shall bear
interest on the principal amount hereof, as such principal amount may be
increased or decreased, at the rates and pursuant to the provisions set forth
in the Facility Agreement.

 

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

 

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

 

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

 

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

 

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

 

[***] Confidential Treatment of

Redacted
Portions Has Been Requested

 

 

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

 

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

 

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

 

Whenever this Note is held
by a noteholder that is not a “United States person” within the meaning of Section 7701(a)(30)
of the Internal Revenue Code of 1986, as amended (the “Code”), then it is the
intention of the Maker and such noteholder that (x) all interest accrued
and paid on this Note will qualify for exemption from United States withholding
tax as “portfolio interest” because this Note is an obligation which is in “registered
form” within the meaning of Sections 871(h)(2)(B) and 881(c)(2)(B) of
the Code and the applicable Treasury Regulations promulgated thereunder, and (y) as
such, all interest accrued and paid on this Note will be exempt from United
States information reporting under Sections 6041 and 6049 of the Code and
United States backup withholding under Section 3406 of the Code.  The Maker and the Payee shall cooperate with
one another, and execute and file such forms or other documents, or do or
refrain from doing such other acts, as may be required, to secure such exemptions
from United States withholding tax, information reporting, and backup
withholding.  In furtherance of the
foregoing, any transferee or assignee noteholder that is not a United States
person shall represent, warrant and covenant to the Maker that (i) such noteholder
is not, and will not be as long as any amounts due under this Note have not
been paid in full, a “United States person,” within the meaning of Section 7701(a)(30)
of the Code; (ii) such noteholder is not, and will not be as long as any
amounts due under this Note have not been paid in full, a person described in Section 881(c)(3) of
the Code; (iii) on or prior to the date of transfer or assignment (and on
or prior to the date the form provided pursuant to this clause (iii) is no
longer valid) until all amounts due under this Note have been paid in full,
such noteholder shall provide the Maker with a properly executed U.S. Internal
Revenue Service (“IRS”) Form W-8BEN, Certificate of Foreign Status
of Beneficial Owner for United States Tax Withholding (or any successor form
prescribed by the IRS), certifying as to such noteholder’s status for purposes
of determining exemption from United States withholding tax, information
reporting and backup withholding with respect to all payments to be made to such
noteholder hereunder; (iv) if an event occurs that would require a change
in the exempt status of such noteholder or any of the other information
provided on the most recent IRS Form W-8BEN (or successor form) previously
submitted by such noteholder to the Maker, such noteholder will so inform the
Maker in writing (or by submitting to the Maker a new IRS Form W-8BEN or
successor form) within 30 days after the occurrence of such event; and (v) such
noteholder will not assign or otherwise transfer this Note or any of its rights
hereunder except in accordance with the provisions hereof.

 

[***] Confidential Treatment of

Redacted
Portions Has Been Requested

 

 

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

 

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

 

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

 

	
   

  	
  ARRAY
  BIOPHARMA INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

[***] Confidential Treatment of

Redacted
Portions Has Been Requested

 

 

EXHIBIT B

 

PERMITTED LIENS

 

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

 

[***] Confidential Treatment of

Redacted
Portions Has Been RequestedEXHIBIT
10.2

 

SECURITY AGREEMENT

 

This Security Agreement (this “Agreement”),
dated as of April  29, 2008, is entered into between Array
BioPharma Inc. (“Obligor”) in
favor of Deerfield Private Design Fund, L.P. and Deerfield
Private Design International, L.P  (together,
the “Secured Party”).

 

W I T N E S S E T H:

 

WHEREAS, Obligor has entered into a Facility Agreement,
dated as of the date hereof (the “Facility Agreement”),
with the Secured Party;

 

NOW, THEREFORE, in consideration of the mutual agreements set
forth herein, Obligor and the Secured Party agree as follows:

 

1.               Grant of Security Interest.

 

(a)                                  To secure
payment and performance of the Obligations (as defined below), Obligor hereby
grants to Secured Party a security interest in all property and interests in
property of Obligor, whether now owned or hereafter acquired or existing, and
wherever located (together with all other collateral security for the
Obligations at any time granted to or held or acquired by Secured Party,
collectively, the “Collateral”),
including, without limitation, the following:

 

(i)                                     all Accounts;

 

(ii)                                  all Receivables;

 

(iii)                               all Equipment;

 

(iv)                              all General Intangibles;

 

(v)                                 all Inventory;

 

(vi)                              all Investment Property ;
and

 

(vii)                           all proceeds and products of
(i), (ii), (iii),  (iv) (v) and
(vi).

 

The Collateral shall not include any copyrights,
patents, trademarks, service marks and applications therefor, now owned or
hereafter acquired, or any claims for damages by way of any past, present and
future infringement of nay of the foregoing, provided, however,
that the Collateral shall include all Accounts and General Intangibles that
consist of rights to payment and proceeds from the sales licensing or other
disposition of all or any part of, or rights in, the foregoing.

 

(b)                                 Notwithstanding
anything to the contrary contained in Section 1(a) above, the
types or items of Collateral described in such Section 1(a) shall
not include any right or interest in any contract, permit or application
covering real or personal property of Obligor, as such, if 

 

 

under
the terms of such contract, permit or application or applicable law with
respect thereto, the valid grant of a security interest to Secured Party is
prohibited as a matter of law or under the terms thereof and such prohibition
has not been or is not waived or the consent of the other party to such
contract, permit, or application has not been or is not otherwise obtained; provided,
however, that, the foregoing exclusion shall in no way be
construed (i) to apply if any such prohibition is unenforceable under the
UCC or other applicable law or (ii) so as to limit, impair or otherwise
affect Secured Party’s unconditional continuing security interest in or  upon any rights or interests of Obligor in or
to monies due or to become due under any such contract, permit or application.

 

(c)                                  Perfection of
Security Interests.

 

(i)                                     Obligor authorizes Secured
Party (or its agent) to file at any time and from time to time such financing
statements with respect to the Collateral naming Secured Party or its designee
as the secured party and Obligor as debtor, as Secured Party may require, and
including any other information with respect to Obligor or otherwise required
by part 5 of Article 9 of the UCC of such jurisdictions as Secured Party
may determine, together with any amendment and continuations with respect
thereto, which authorization shall apply to all financing statements filed on
or after the date hereof.  Obligor
authorizes Secured Party to adopt on behalf of Obligor any symbol required for
authenticating any electronic filing.  In
no event shall Obligor at any time file, or permit or cause to be filed, any
correction statement or termination statement with respect to any financing
statement (or amendment or continuation with respect thereto) naming Secured
Party or its designee as secured party and Obligor as debtor.

 

(ii)                                  Obligor shall take any other
actions reasonably requested by Secured Party from time to time to cause the
attachment and perfection of, and the ability of Secured Party to enforce, the
security interest of Secured Party in the Collateral.

 

2.               Covenants Relating to
Collateral; Indebtedness; Dividends. Obligor covenants that:

 

(a)                                  it shall at all
times:  (i) be the sole owner of or
have the power to transfer without restriction (other than Permitted Liens as
defined in the Facility Agreement) each and every item of Collateral and (ii) defend
the Collateral against the claims and demands of all persons, in each case
except for the security interest created hereby and for Permitted Liens as
defined in the Facility Agreement;

 

(b)                                 it will comply
in all material aspects with the requirements of all lease agreements relating
to premises where any Collateral is located;

 

(c)                                  it will give
Secured Party twenty (20) days’ prior written notice of any change to its name;

 

(d)                                 it will give
Secured Party twenty (20) days’ prior written notice of any change to its chief
executive office or its mailing address; and

 

(e)                                  it will give
Secured Party twenty (20) days’ prior written notice of any change to its type
of organization, jurisdiction of organization or other legal structure.

 

2

 

3.               Remedies.

 

(a)                                  Upon the
occurrence and after the continuance of an Event of Default (as defined in the Facility
Agreement), (i) Secured Party shall have the right to exercise any right
and remedy provided for herein, under the UCC and at law or equity generally,
including, without limitation, the right to foreclose the security interests
granted herein and to realize upon any Collateral by any available judicial
procedure and/or to take possession of and sell any or all of the Collateral
with or without judicial process; and (ii) with or without having the
Collateral at the time or place of sale, Secured Party may sell the Collateral,
or any part thereof, at public or private sale, at any time or place, in one or
more sales, at such price or prices, and upon such terms, either for cash,
credit or future delivery, as Secured Party may elect.

 

4.               Representations and  Warranties. 
Obligor
hereby represents and warrants to Secured Party that:

 

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

 

(b)                                 The exact legal
name of Obligor is as set forth on the signature page of this
Agreement.  Obligor has not, during the
past five years, been known by or used any other composite or fictitious name
or been a party to any merger or consolidation, or acquired all or
substantially all of the assets of any Person, or acquired any of its
properties or assets out of the ordinary course of business

 

(c)                                  the chief
executive office and mailing address of Obligor are located only at the address
identified as such on Schedule 4(c) and its only other places of business
and the only other locations of Collateral, if any, are at the addresses set
forth on Schedule 4(c).

 

5.               Expenses of Obligor’s
Duties; Secured Party’s Right to Perform on Obligor’s Behalf.

 

(a)                                  Obligor’s
agreements hereunder shall be performed by it at its sole cost and expense.

 

(b)                                 If Obligor
shall fail to do any act which it has agreed to do hereunder, and, unless such
failure has an adverse effect on the perfection or priority of the security
interest granted hereby, has not cured such failure within thirty (30) days
notice of the same,  Secured Party may
(but shall not be obligated to) do the same or cause it to be done, either in
its name or in the name and on behalf of Obligor, and Obligor hereby
irrevocably authorizes Secured Party so to act.

 

6.               No Waivers of Rights
hereunder; Rights Cumulative.

 

(a)                                  No delay by
Secured Party in exercising any right hereunder, or in enforcing any of the
Obligations, shall operate as a waiver thereof, nor shall any single or partial
exercise of any right preclude other or further exercises thereof or the
exercise of any other right.  No waiver
of any of the Obligations shall be enforceable against Secured Party unless in
writing and signed 

 

3

 

by
an officer of Secured Party, and unless it expressly refers to the provision
affected; any such waiver shall be limited solely to the specific event waived.

 

(b)                                 All rights
granted Secured Party hereunder shall be cumulative and shall be supplementary
of and in addition to those granted or available to Secured Party under any
other agreement with respect to the Obligations or under applicable law and
nothing herein shall be construed as limiting any such other right.

 

7.               Termination.  This Agreement shall continue in full force and effect until all Obligations
shall have been paid and satisfied in full.

 

8.               Governing Law;
Jurisdiction; Certain Waivers.

 

(a)                                  This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York applied to contracts to be performed wholly within such State.  Any judicial proceeding brought against
Obligor with respect to any of the Obligations or  this Agreement may be brought in any court of
competent jurisdiction in such State, and, by 
execution and delivery of this Agreement, Obligor accepts for itself and
in connection with its properties, generally and unconditionally, the
non-exclusive jurisdiction of such court and irrevocably agrees to be bound by
any judgment rendered thereby in connection with this Agreement.  Obligor hereby waives personal service of any
and all process upon it and consents that all such service of process may be
made by certified or registered mail (return receipt requested) directed to
Obligor at its address set forth in Section 10, and service so made
shall be deemed completed five (5) days after the same shall have been so
deposited in the mails of the United States of America.  Nothing herein shall affect the right to
serve process in any manner permitted by law or shall limit the right of Secured
Party to bring proceedings against Obligor in the courts of any other
jurisdiction. Obligor waives any objection to jurisdiction and venue of any
action instituted hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum non conveniens.  Any judicial proceeding by Obligor against
Secured Party involving, directly or indirectly, any matter or claim in any way
arising out of, related to or connected with this Agreement or any related
agreement, shall be brought only in a federal or state court located in The
City of New York, State of New York.

 

(b)                                 EACH PARTY TO
THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CAUSE
OF ACTION ARISING UNDER THIS AGREEMENT OR ANY OTHER AGREEMENT DELIVERED IN
CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR
TORT OR OTHERWISE, AND EACH PARTY HEREBY CONSENTS THAT ANY SUCH CAUSE OF ACTION
SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS
AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

4

 

9.               Additional Definitions.  As used herein:

 

(a)                                  All terms used
herein which are defined in Article 1 or Article 9 of the UCC shall
have the meanings given therein unless otherwise defined in this
Agreement.  All references to the plural
herein shall also mean the singular and to the singular shall also mean the
plural unless the context otherwise requires. 
All references to Obligor and Secured Party pursuant to the definitions
set forth in the recitals hereto, or to any other person herein, shall include
their respective successors and assigns. 
The words “hereof”, “herein”, “hereunder”, “this Agreement” and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not any particular provision of this Agreement and as this Agreement
now exists or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.  The word “including”
when used in this Agreement shall mean “including, without limitation”.

 

“Obligations”
means:

 

(1)                                  the
full and prompt payment by Obligor when due of all obligations and liabilities
to Secured Party, whether now existing or hereafter arising, under the
Financing Documents (as such term is defined the Facility Documents) and the
due performance and compliance by Obligor with the terms thereof;

 

(2)                                  any
and all sums advanced in accordance with the terms of the Financing Documents
or applicable law by Secured Party in order to preserve the Collateral or to
preserve the Secured Party’s security interest in the Collateral; and

 

(3)                                  in
the event of any proceeding for the collection or enforcement of any
obligations or liabilities of Obligor referred to in the immediately preceding
clauses (1) and (2), the reasonable expenses of re-taking, holding,
preparing for sale, selling or otherwise disposing of or realizing on the
Collateral, or of any other exercise by Secured Party of its rights hereunder,
together with reasonable attorneys’ fees and court costs.

 

“Person” or “person”
shall mean any individual, sole proprietorship, partnership, corporation,
limited liability company, limited liability partnership, business trust,
unincorporated association, joint stock corporation, trust, joint venture or
other entity or any government or any agency or instrumentality or political
subdivision thereof.

 

“UCC” shall mean the Uniform Commercial
Code as in effect in the State of New York and any successor statute, as in
effect from time to time (except that terms used herein which are defined in
the Uniform Commercial Code as in effect in the State of New York on the date
hereof shall continue to have the same meaning notwithstanding any replacement
or amendment of such statute except as Secured Party may otherwise determine);
provided, however, in the event that, by reason of mandatory provisions of law,
any or all of the attachment, perfection or priority of Secured Party’s
security interest in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than the State of New York, the term “UCC”
shall mean the Uniform Commercial Code (including the Articles thereof) as in
effect at such time in such other jurisdiction for purposes of the provisions
hereof relating to such attachment, perfection or priority and for purposes of
definitions related to such provisions.

 

5

 

The words “it” or “its” as used herein shall be deemed to refer to
individuals and to business entities.

 

10.                                 Notices. Any communication required or permitted pursuant to this Agreement
shall be deemed given (a) when personally delivered to any officer of the
party to whom it is addressed, (b) on the earlier of actual receipt
thereof or five (5) days following posting thereof by certified or
registered mail, postage prepaid, return receipt requested, or (c) upon
actual receipt thereof when sent by a recognized overnight delivery service, or
(d) upon actual receipt thereof when sent by telecopier to the number set
forth below with telephone communication confirming receipt and subsequently
confirmed by registered or certified mail, return receipt requested, or by
recognized overnight delivery service to the address set forth below, in each
case addressed to the applicable party at its address set forth below or at
such other address as has been furnished in writing by such party to the other
by like notice:

 

(A)                              If to Secured
Party:

 

c/o Deerfield Private Design
Fund, L.P. 

780 Third Avenue, 37th Floor 

New York, NY  10017

Facsimile: (212) 573-8111

Attention:  James E. Flynn

 

With a copy to (which shall not
constitute notice):

Katten Muchin Rosenman, LLP

575 Madison Avenue

New York, NY  10022

Attention: Robert I. Fisher

Facsimile:  (212) 894-5827

 

(B)                                If to Obligor:

 

Array BioPharma Inc.

3200 Walnut Street

Boulder, CO 
80301

Attention: 
R. Michael Carruthers

Facsimile: 
(303) 381-6697

 

With a copy to (which shall not constitute
notice):

 

Hogan & Hartson LLP

1470 Walnut Street, Suite 200

Boulder, CO 
80302

Attn: 
Carin M. Kutcipal

Facsimile: 
(720) 406-5301

 

6

 

Any requirement under applicable law of reasonable notice by Secured
Party to Obligor of any event shall be met if notice is given to Obligor in the
manner prescribed above at least five (5) days before (a) the date of
such event or (b) the date after which such event will occur.

 

11.         General.

 

(a)                                  This Agreement
shall be binding upon the assigns or successors of Obligor and shall inure to
the benefit of and be enforceable by Secured Party and its successors,
transferees and assigns.

 

(b)                                 Any provision
of this Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof in that jurisdiction or affecting the validity or enforceability of such
provision in any other jurisdiction.

 

 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

7

 

IN
WITNESS WHEREOF, each of the parties hereto has caused this Security Agreement
to be executed and delivered by its duly authorized officer on the date first
set forth above.

 

	
  OBLIGOR:

  	
   

  	
  SECURED PARTY:

  
	
  ARRAY BIOPHARMA INC.

  	
   

  	
  DEERFIELD PRIVATE DESIGN 

  
	
   

  	
   

  	
  FUND, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
    /s/ R. Michael Carruthers

  	
   

  	
  By:

  	
     /s/ James Flynn    

  
	
   

  	
    Name:

  	
  R. Michael Carruthers

  	
   

  	
   

  	
    Name

  	
  James Flynn

  
	
   

  	
    Title

  	
  Chief Financial Officer

  	
   

  	
   

  	
    Title

  	
  General Partner

  

 

 

	
   

  	
   

  	
  SECURED PARTY:

  
	
   

  	
   

  	
  DEERFIELD PRIVATE DESIGN

  
	
   

  	
   

  	
  INTERNATIONAL, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
     /s/
  James Flynn

  
	
   

  	
   

  	
   

  	
    Name

  	
  James Flynn

  
	
   

  	
   

  	
   

  	
    Title

  	
  General Partner

  

 

8

 

SCHEDULE 4(c)

TO

SECURITY AGREEMENT

 

CHIEF EXECUTIVE AND MAILING
OFFICE

LOCATION OF COLLATERAL

 

	
   

  	
  Array BioPharma Inc.

  
	
   

  	
  3200 Walnut Street

  
	
   

  	
  Boulder, CO 80301

  

 

9

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