Lease Agreement

AMGEN INC.
1885 33RD STREET
BOULDER, COLORADO


LEASE


THIS LEASE (this "Lease") is made as of the ___ day of July, 1998, by and between AMGEN INC., a Delaware corporation, as landlord ("Landlord"), whose address is One Amgen Center Drive, Thousand Oaks, California 91320, and the Tenant named in Section 1 below.


1. BASIC PROVISIONS.


a. TENANT NAME


b. AND CONTACT PEOPLE: Array BioPharma Inc.
1885 33rd Street Building AC-1
Boulder, Colorado 80301-2505
Attn: David Snitman


c. PREMISES: Amgen Building AC-1
1885 33rd Street
Boulder, CO 80301-2505


d. RENT: $41,173/mth., triple net


e. SECURITY DEPOSIT: 12 months rent (with
decrease after one year
pursuant to Section 6.a)


f. INITIAL TERM: Three years


g. COMMENCEMENT DATE: July 15, 1998


h. LEASE EXTENSION OPTION: One two-year option with rental
increase


i. TENANT'S SHARE OF INSURANCE, PARKING LOT MAINTENANCE, FIRE AND
SPRINKLER PROTECTION SYSTEM MONITORING AND MAINTENANCE,
LANDSCAPING CARE AND IRRIGATION: 15%


j. PERMITTED USE: Industrial laboratory and accessory
office use.


k. ADDITIONAL INFORMATION:
------------------------------------------


------------------------------------------------------------------


2


2. LEASE GRANT.


Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the Premises as described on EXHIBIT A attached hereto, which is located at 1885 33rd Street, Boulder, Colorado, in Amgen Building AC-1 of the "Amgen Complex," which consists of Amgen Buildings AC-1, AC-2, AC-3 and AC-4.


3. USE.


a. Permitted Use. The premises may be used and occupied only for industrial laboratory and accessory office use and for no other purpose whatsoever.


b. Uses Prohibited. Tenant shall not do anything which will increase the existing rate of any insurance upon the Amgen Complex, or cause a cancellation of such insurance. Tenant shall not do anything which will interfere with other tenants at the Amgen Complex. Tenant shall not use the Premises for any improper, immoral, unlawful or objectional purpose. Tenant shall not permit any nuisance about the Premises or the Amgen Complex. Tenant shall not commit any waste upon the Premises or the Amgen Complex.


c. Compliance with Law. Tenant shall have sole responsibility to ensure that its use complies with all local land use regulations and zoning laws. Moreover, Tenant shall comply with all laws, statutes, ordinances and governmental rules, regulations or requirements now in force or which may hereafter be in force (including without limitation, environmental laws) and with the requirements of any board of fire underwriters or other similar bodies now or hereafter constituted relating to the Premises.


4. ACCEPTANCE OF PREMISES.


a. Commencement Date. The "Commencement Date" of this Lease shall be July 15, 1998, or sooner, at Landlord's option.


b. Acceptance of Premises. Prior to the Commencement Date, Landlord shall notify Tenant that the Premises are available for inspection. At such time, Tenant shall have the right to walk-through inspections of the Premises. When Tenant occupies the Premises, Tenant shall be deemed to have fully accepted the Premises in "as is" condition. Landlord and Landlord's agents hereby disclaim any express or implied representations, warranties or promises with respect to the physical condition of the Amgen Complex, the land upon which it is erected, the Premises, the suitability of the Premises for Tenant's intended purpose or use, or any other matter or thing affecting or related to the Premises except as herein expressly set forth.


-2- 3


5. TERM; HOLDOVER.


a. Term. The initial term of this Lease (the "Initial Term") shall commence on the Commencement Date and terminate at midnight on July 14, 2001, unless sooner terminated hereunder. Tenant may extend the Initial Term an additional two years under the terms set forth in Section 5.b. "Term" as used herein shall refer to the Initial Term and any extension thereof.


b. Lease Extension Option. Tenant shall have the right, exercisable by delivery of written notice to Landlord not later than nine months prior to the end of the Initial Term (the "Expiration Date"), to extend the Term of this Lease for a further period of two years commencing on the first day after the Expiration Date and expiring two years thereafter ("Extension"). All terms and conditions of this Lease shall apply to the Extension which shall include all space then occupied under this Lease, except that the Rent shall be increased as set forth in EXHIBIT B, attached hereto and incorporated herein by reference, and there shall be no more extension options.


c. Holdover. After the expiration of the Term, this Lease shall continue from month to month, if Tenant retains possession of the Premises, at the rent of 150% of the Rent due during the last month before expiration and otherwise on the same terms and conditions as herein provided, unless and until either Landlord or Tenant terminates this Lease by giving the other written notice at any time.


6. RIGHT OF FIRST OPTION.


Landlord hereby grants to Tenant a right of first option (the "Option") to lease any additional space adjacent to the Premises which becomes available for lease from time to time during the Term of this Lease. Landlord shall give notice ("Option Notice") to Tenant of the terms and conditions ("Landlord's Offer"), including the rental rate, upon which such space is available for lease. Tenant shall have ten days ("Option Exercise Period") after receipt of the Option Notice to accept or reject Landlord's Offer in writing. If Tenant has not accepted or rejected Landlord's Offer by the expiration of the Option Exercise Period, Landlord's Offer shall be deemed to be rejected by Tenant.


7. SECURITY DEPOSIT.


a. Terms of Deposit. Simultaneously with the execution of this Lease, Tenant shall pay to Landlord the sum of $494,076 to be held by Landlord as a security deposit to secure Tenant's faithful performance of all terms, conditions and covenants of this Lease, including without limitation the payment of all Rent and Additional Rent due hereunder. Such security deposit shall be in the form of a letter of credit or six-month certificate of deposit with a bank designated by Tenant satisfactory to Landlord. Such certificate of deposit shall be placed in the name of Landlord and shall automatically renew for additional six-month periods. Any and all interest earned thereon shall belong to Tenant. After the first year of this Lease and on condition that no defaults have occurred hereunder, the principal amount may be reduced to six months'


-3- 4


rent or $247,038. Upon full performance of this Lease and subject to the provisions of Section 7.b, the security deposit and any uncollected interest earned thereon shall be refunded to Tenant.


b. Use of Deposit. If at any time during the Term, Tenant shall be in default in the performance of any provision of this Lease, Landlord may (but shall not be required to) use the security deposit, or as much thereof as is reasonably necessary, in payment of any Rent, Additional Rent or other sums due under this Lease in default, in reimbursement of any expense incurred by Landlord on Tenant's behalf, including but not limited to repairs to or replacements on the Premises, or in payment of any damages incurred by Landlord by reason of default. In such event, Tenant shall, on written demand of Landlord, forthwith remit to Landlord a sufficient amount in cash to restore such deposit to its original amount. If the claims of Landlord exceed the deposit provided for herein, Tenant shall remain liable for the balance of such claims.


8. RENT.


Tenant shall pay to Landlord, without offset, deduction, notice or demand, rent ("Rent") for the Premises as follows:


a. Rent. Tenant shall pay the monthly sum specified in the Rent Schedule shown on EXHIBIT B ("Rent"), in advance on or before the first day of each and every calendar month commencing as of August 1, 1998, during the Term hereof, except the first month's Rent shall be prorated and due and payable on or before July 15, 1998. Rent shall be paid to Landlord in lawful money of the United States of America at the following address:


Amgen Inc.
Attn: Candace Halloran, Accounting Operations
One Amgen Center Drive
Thousand Oaks, California 91320


or such place as Landlord may from time to time designate in writing.


b. Additional Rent. Any costs that Tenant is required to pay, if paid by Landlord, shall become "Additional Rent" due under this Lease. Additional Rent shall be due to Landlord with the next installment of Rent due, or if no such installment is due, within 15 days following receipt by Tenant of a written invoice of such costs. Additional Rent may include, but is not limited to, all real property taxes for the Premises; assessments on the Premises; modifications requested by Tenant to any system used in the Amgen Complex that affect the Premises; costs of capital improvements, major structural repairs, boiler replacement and other capital replacements, and major roof repairs, provided that any Additional Rent for such items shall be amortized over the projected life of the improvement or repair; and Tenant's share of insurance, parking lot maintenance, fire and sprinkler protection system monitoring and maintenance, and landscaping care and irrigation. For example, if a boiler serving the Premises is replaced at the beginning of the second year of the Term, at a replacement cost of $200,000.00, and the boiler has a useful life of 20 years, Tenant's amortized share of the boiler replacement would be at a rate


-4- 5


of $10,000.00 per year during the remaining Term. Landlord has disclosed to Tenant that real property taxes and assessments for the Premises for calendar year 1997 were $32,270, and the estimated real property taxes and assessments for calendar year 1998 are $32,270. For all purposes of this Lease, the term "Rent" shall be deemed to include Additional Rent.


c. Personal Property Taxes. Tenant shall pay before delinquency any taxes upon Tenant's leasehold improvements, equipment, furniture, fixtures (including without limitation the Fixtures), and any other personal property located in the Premises. In the event any such personal property shall be assessed and taxed with the real property, Tenant shall pay to Landlord its share of such taxes within ten days after timely delivery to Tenant of a statement in writing setting forth the amount of such taxes applicable to Tenant's personal property.


d. Late Charge. Tenant hereby acknowledges that late payment by Tenant to Landlord of Rent or other sums due hereunder will cause Landlord to incur costs which will be difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, attorneys' fees, and late charges which may be imposed upon Landlord by terms of any mortgage or trust deed encumbering the Amgen Complex. Accordingly, if any installment of Rent or any sum due from Tenant shall not be received by Landlord within five business days after said amount is due, Tenant shall pay to Landlord on demand a late charge of five percent of such overdue amount. Any Rent or sums due from Tenant which are more than one month delinquent shall bear interest at the rate of 18 percent per annum from the due date. Tenant shall pay any attorneys' fees incurred by Landlord by reason of Tenant's failure to pay such amounts. Tenant shall pay on demand $25 for any check returned for insufficient funds. All such charges shall also be deemed to be Rent hereunder.


9. MAINTENANCE, UTILITIES AND SECURITY.


a. Landlord's Maintenance Obligations. Landlord shall maintain the parking lot, landscaping and structural portions of the Premises, including the exterior walls and roof, unless such repairs are caused by the act or omission of any duty of Tenant, its agents, servants, employees, invitees, subtenants, licensees, assignees or trespassers, in which case Tenant shall pay to Landlord the actual cost of such maintenance and repairs. Landlord shall be responsible for replacement of boilers and mechanical, electrical, elevator and HVAC systems, subject to the provisions of Section 8(b) of this Lease. Landlord shall also be responsible for monitoring and maintenance of the fire monitoring system and sprinkler protection system, provided that Tenant shall pay as Additional Rent 15 percent of all costs associated with such monitoring and maintenance. There shall be no abatement of Rent and no liability of Landlord by reason of any reasonable injury to or reasonable interference with Tenant's business arising from the making of any necessary repairs, alterations or improvements. Tenant waives the right to make repairs at Landlord's expense under any law, statute or ordinance now or hereafter in effect. Landlord agrees to promptly and diligently perform any such maintenance and repair for which it is responsible.


-5- 6


b. Tenant's Obligations. Tenant shall establish contracts with reputable contractor(s) for scheduled preventative maintenance and repair on building-specific boilers and mechanical, electrical, elevator and HVAC systems. It shall be Tenant's obligation to keep in good order, condition and repair all portions of the Premises that are not the obligation of Landlord. In addition, Tenant is responsible for monitoring and maintenance of the fire extinguishers on the Premises, including but not limited to conducting periodic fire safety inspections to ensure that the Premises complies with all local laws, codes and regulations. Tenant shall contract and pay for all water, gas, sewer charges, electricity, telephone service, pest control, trash removal and all other services and utilities supplied to the Premises, together with any taxes thereon. All telecommunications services (voice and data) desired by Tenant shall be obtained at Tenant's sole cost and risk from providers authorized by Landlord and the appropriate governmental authorities to provide such services to the Amgen Complex. Landlord agrees to provide consultative assistance to Tenant, where necessary, in the installation of such telecommunications services, but in no event shall Landlord have any liability or obligation to Tenant in connection with the failure of such telecommunications services or any interruption therein or interference therewith (even if caused by the negligent acts or omissions of Landlord, its agents, contractors, and employees) and Tenant waives and releases all claims therefor, whether now existing or hereafter arising. Furthermore, Landlord shall have no obligation of any kind or character with respect to the maintenance or operation of any such telecommunications system, irrespective of the points of demarcation therein and will coordinate access for the appropriate telecommunications carrier to the point of demarcation which is located outside of the Premises with a minimum of one hour's notice during normal business hours and a minimum of four hours' notice outside of normal business hours. In no event shall Tenant use or install in the Premises any wireless communications equipment (other than the use of cellular telephones) without the prior written consent of Landlord. Tenant shall not alter, modify, remove or add any voice and/or data cable to the Premises or the Amgen Complex without prior written consent of Landlord. Tenant shall provide Landlord with its plan for such facilities and will secure its own telecommunication demarcation point within a reasonable time. No entrance facilities services installed, purchased or owned by Tenant shall pass through or terminate within the Amgen Complex except within the Premises.


c. Building Management System. Landlord shall have no obligation to supply utility service to the Premises. Notwithstanding the foregoing, Landlord's building management system for the Amgen Complex (the "BMS") is currently programmed to regulate and control certain utilities supplied to the Premises. Therefore, Landlord agrees, as an accommodation to Tenant, to continue to operate the BMS for the Premises so long as Landlord occupies any portion of the Amgen Complex and Tenant's needs can be reasonably accommodated through the BMS, provided that Landlord will give three months' notice to Tenant prior to discontinuing operation of the BMS and Tenant may elect to continue to operate the BMS for the Premises (at Tenant's sole cost and expense, including the cost of modifications required to make the BMS control only the Premises) or to install a new system at Tenant's cost. Tenant agrees to designate an employee who will be Landlord's contact for BMS matters. In the event Tenant desires to make substantial modifications to the BMS, or to make other arrangements for its utility


-6- 7


management, Tenant shall first obtain the written approval of Landlord, and shall make such changes at Tenant's sole cost and expense.


Because the BMS services are being provided solely as an accommodation to Tenant, and not as an obligation of Landlord, Landlord shall not be deemed to be in default under this Lease for any reason whatsoever relating to the BMS, including without limitation, breach of quiet enjoyment, damage to property or injury to persons. Moreover, Tenant hereby waives and releases all claims against Landlord for any loss, liability or injury that arises out of or is incurred in connection with the BMS or Landlord's operation thereof.


d. Security. Landlord will provide Tenant with key locks for all entry doors. Notwithstanding the foregoing, Tenant will be responsible for providing security on the Premises and adjacent areas, including but not limited to the sidewalks and parking areas.


10. TENANT REPAIRS AND ALTERATIONS.


a. Repairs; Surrender. Tenant shall, at Tenant's sole cost and expense, keep the Premises and every part thereof in good condition and repair. Subject to the provisions of EXHIBIT C, Tenant shall, upon the expiration or sooner termination of this Lease, surrender the Premises, together with all Fixtures appurtenant thereto as described in EXHIBIT A, to Landlord in good and operating condition, broom clean, ordinary wear and tear excepted. Tenant shall not be obligated to make structural repairs or repairs necessitated by fire or other casualty. Notwithstanding the foregoing, all damage to the Premises, the Fixtures or to any other part of the Amgen Complex caused by carelessness, omission, neglect or improper conduct of Tenant, its employees, agents, subtenants, assignees, invitees or trespassers shall be repaired promptly by Tenant at its sole cost and expense, to the reasonable satisfaction of Landlord.


b. Signage. Tenant shall seek the prior written consent of Landlord, such consent not to be unreasonably withheld, before installing any decals or signage on or about the Premises. All decals and signage approved under this Section 10 shall be removed from the Premises at the termination of the Lease.


c. Alterations and Modifications. Tenant shall not make any alterations, additions or improvements to the Premises without the prior written consent of Landlord. Plans and specifications for any desired building or facility modifications must be submitted to and approved by Landlord prior to implementation by Tenant. The cost of any modifications requested by Tenant to systems used in the Amgen Complex that affect the Premises, including but not limited to the fire monitoring system, sprinkler protection system and BMS, if any, shall be charged to Tenant as Additional Rent. No Fixtures shall be removed from the Premises or modified in any respect without the prior written consent of Landlord. Consent or approval of Landlord, where required for actions by Tenant in this paragraph, shall not be unreasonably withheld. Tenant shall keep posted on the Premises, and shall personally serve upon contractors and subcontractors, a notice stating that Landlord's interest in the Amgen Complex shall not be subject to any lien for Tenant's work. Tenant shall provide Landlord with certificates evidencing


-7- 8


that all contractors and subcontractors have adequate workman's compensation insurance and builder's risk insurance satisfactory to Landlord. Any such work including wall covering, paneling and built-in cabinet work, but excepting movable furniture and trade fixtures, shall at once become a part of the realty and belong to Landlord and shall be surrendered with the Premises. Upon the expiration of the Term hereof (the "Expiration Date"), Tenant shall, if requested by Landlord, within five days after the Expiration Date, at Tenant's sole cost and expense, remove any alterations, additions, or improvements made by Tenant, and Tenant shall, at its sole cost and expense, repair any damage to the Premises caused by such removal. If Tenant fails to remove any such alterations, additions or improvements, Landlord may remove same at Tenant's sole cost and expense. Tenant shall also remove all furnishings, equipment, trade fixtures and other removable equipment, except those Fixtures described on EXHIBIT A, within five days after the Expiration Date. If Tenant fails to remove such property, then Tenant hereby grants to Landlord the option, exercisable at any time thereafter without the requirements of any notice to Tenant, (i) to treat such property, or any portion thereof, as being abandoned by Tenant to Landlord, whereupon Landlord shall be deemed to have full rights of ownership thereof; (ii) to elect to remove and store such property, or any portion thereof, on Tenant's behalf (but without assuming any liability to any person) and at Tenant's sole cost and expense, with reimbursement therefor to be made to Landlord upon demand; and/or (iii) to sell, give away, donate or dispose of as trash or refuse any or all of such property without any responsibility to deliver to Tenant any proceeds therefrom.


d. Mechanics' and Materialmen's Liens. Tenant shall have no authority or power, express or implied, to create or cause any mechanic's or materialmen's lien, charge or encumbrance of any kind against the Premises or the Amgen Complex or any portion thereof. Tenant shall promptly cause any such liens which have arisen by reason of any work or materials claimed to have been provided to or undertaken by or through Tenant to be released by payment, bonding or otherwise within thirty days after request by Landlord, and Tenant shall indemnify Landlord against losses arising out of any such claim. In addition, Tenant shall give such notices and shall cause the Premises to be posted in accordance with Colorado Revised Statutes 38-22-105, as such may be amended from time to time, prior to the commencement of any work on the Premises, whether or not Landlord has consented to such work. Tenant's indemnification of Landlord contained in this Section 10(c) shall survive the expiration or earlier termination of this Lease.


11. INDEMNITY.


Tenant shall indemnify, defend (with counsel satisfactory to Landlord) and hold harmless Landlord and its partners, affiliates, officers, directors, shareholders, lenders, employees, agents, successors and assigns ("Indemnities") from and against any and all liabilities, claims, fines, penalties, costs, damages or injuries to persons, damages to property, losses, liens, causes of action, suits, judgments and expenses (including without limitation, consultants' and attorneys' fees) of any nature, kind or description of any person or entity directly or indirectly arising out of, caused by or resulting from (in whole or in part) (i) Tenant's construction of or use, occupancy or enjoyment of the Premises; (ii) any activity, work or things done, permitted or


-8- 9


suffered by Tenant and its agents or employees in or about the Premises; or (iii) any breach or default on Tenant's part under the covenants, terms and conditions of this Lease, or any act, omission, willful misconduct or negligence of Tenant, or any officer, agent, employee, guest, licensee or invitee of Tenant; even if such liabilities are caused solely or in part by the ordinary negligence of Landlord or any other Indemnitee, but not to the extent that such liabilities are caused by the gross negligence or willful misconduct of Landlord or any other Indemnitee. Tenant waives all claims in respect of any of the foregoing liabilities against Landlord. Tenant shall give prompt notice to Landlord in case of casualty or accidents in the Premises. In the event of failure by Tenant to fully perform hereunder, Landlord may at its option and without relieving Tenant of its obligations hereunder, so perform, but all costs and expenses so incurred by Landlord in such event shall be reimbursed by Tenant to Landlord.


12. HAZARDOUS MATERIALS; HYDROGEN.


a. Hazardous Material. Except as set forth on EXHIBIT C attached hereto and incorporated herein by reference, Tenant shall not use, generate, manufacture, produce, store, release, discharge, or dispose of, on, in, under or about the Premises, or transport to or from the Premises, any Hazardous Material (as defined in EXHIBIT C) or allow its agents, employees, contractors, licensees, invitees or any other person or entity (collectively, "Tenant's Agents") to do so. The schedule of Hazardous Materials attached to EXHIBIT C may be amended from time to time as evidenced by the initials of both Landlord and Tenant, showing the date of the amended schedule.


b. Use of Hydrogen. Tenant shall not cause or permit hydrogen to be used in any location on the Premises except for the room now designated as Room 223 (the "Hydrogen Lab").


c. Disposal of Waste. Tenant shall comply with all federal, state and local laws, orders, rules and regulations in disposing of its waste products. Notwithstanding the foregoing, no Hazardous Materials may be released, discharged or disposed of at the Premises, including into the water or sanitary sewer system servicing the Premises. Tenant shall cause any and all Hazardous Materials to be removed from the Premises, and to be removed and transported solely by duly licensed handlers to duly licensed facilities for final disposal of such materials and wastes.


13. INSURANCE.


Tenant shall, at Tenant's expense, maintain during the Term of this Lease the following insurance:


a. Commercial general liability, bodily injury and property damage comprehensive coverage insuring against injury, death or property damage, with a combined single limit coverage of not less than $3,000,000.00, and with a maximum deductible of not more than


-9- 10


$10,000.00, which shall include a provision for contractual liability coverage insuring Tenant for the performance of its indemnity obligations set forth in this Lease.


b. All risk personal property insurance for the full replacement value of all fixtures, equipment, furniture and inventory on the Premises.


c. All risk property insurance covering Building AC-1 for the full replacement value of Building AC-1 and all fixtures at ...