exv10w51



 





Exhibit 10.51




	 	 	 	 	 	 	 	 	 
	Warrant	 	 	 	# of	 	Section 1(e)
	No.	 	Record Holder	 	Shares	 	excluded
	1

	 	David I.J. Wang
	 	 	285,713	 	 	 
	2

	 	Quest Diagnostics Incorporated
	 	 	1,904,761	 	 	ü
	3

	 	Falcon Technology Partners LP
	 	 	1,428,571	 	 	 
	4

	 	Phronesis Partners LP
	 	 	3,895,428	 	 	ü
	5

	 	Kane & Co.
	 	 	6,320	 	 	 
	6

	 	OFI Institutional Global Opportunities Fund
	 	 	25,040	 	 	 
	7

	 	IFT Co.
	 	 	20,080	 	 	 
	8

	 	IFT Co.
	 	 	283,283	 	 	 
	9

	 	Oppenheimer Global Opportunities Fund
	 	 	3,474,800	 	 	 
	10

	 	Highbridge International LLC
	 	 	4,380,952	 	 	 
	11

	 	Fort Mason Master LP
	 	 	1,788,762	 	 	 
	12

	 	Fort Mason Partners LP
	 	 	116,000	 	 	 
	13

	 	Rockmore Investment Master Fund Ltd.
	 	 	952,380	 	 	 
	14

	 	Iroquois Master Fund Limited
	 	 	952,380	 	 	 
	15

	 	Kee Colen
	 	 	96,000	 	 	 
	16

	 	Oppenheimer & Co.
	 	 	921,000	 	 	ü






 









 






THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON ITS

EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON

TRANSFER SET FORTH IN SECTION 5 OF THIS WARRANT



 




	 	 	 
	Warrant No. [   ] 

	 	Number of Shares: [          ]

(subject to adjustment)
	Date of Issuance: August 29, 2007

	 	 
	 
	 	 
	Original Issue Date (as defined in

subsection 2(a)): August 29, 2007
	 	 






Vermillion, Inc.




Common Stock Purchase Warrant




(Void after August 29, 2012)




     Vermillion, Inc., a Delaware corporation (the “Company”), for value received, hereby certifies
that [                    ], or his registered assigns (the “Registered Holder”), is entitled,
subject to the terms and conditions set forth below, to purchase from the Company, at any time or
from time to time on or after August 29, 2007, and on or before 5:00 p.m. (New York City time) on
August 29, 2012 (the “Exercise Period”), [          ] shares of Common Stock, $0.001 par value per
share, of the Company (“Common Stock”), at a purchase price of $0.925 per share. The shares
purchasable upon exercise of this Warrant, and the purchase price per share, each as adjusted from
time to time pursuant to the provisions of this Warrant, are hereinafter referred to as the
“Warrant Shares” and the “Purchase Price,” respectively. This Warrant is one of a series of
Warrants issued by the Company in connection with a private placement of Common Stock and of like
tenor, except as to the number of shares of Common Stock subject thereto (collectively, the
“Company Warrants”).



     1. Exercise.




        (a) Exercise for Cash. The Registered Holder may, at its option, elect to exercise
this Warrant, in whole or in part and at any time or from time to time during the Exercise Period,
by surrendering the purchase form appended hereto as Exhibit I duly executed by or on behalf of the
Registered Holder, at the principal office of the Company, or at such other office or agency as the
Company may designate, accompanied by payment in full, in lawful money of the United States, of the
Purchase Price payable in respect of the number of Warrant Shares purchased upon such exercise. A
facsimile signature of the Registered Holder on the purchase form shall be sufficient for purposes
of exercising this Warrant, provided that the Company receives the Registered Holder’s original
signature with three (3) business days thereafter.



        (b) Cashless Exercise.



   
             (i) At any time during the Exercise Period when the resale of the Warrant Shares by the
Registered Holder is not registered pursuant to an effective registration statement filed with the
Securities and Exchange Commission under the Securities Act of 1933,



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as amended (the “Securities Act”), the Registered Holder may, at its option, elect to exercise
this Warrant, in whole or in part, on a cashless basis, by surrendering this Warrant, with the
purchase form appended hereto as Exhibit I duly executed by or on behalf of the Registered
Holder, at the principal office of the Company, or at such other office or agency as the Company
may designate, by canceling a portion of this Warrant in payment of the Purchase Price payable in
respect of the number of Warrant Shares purchased upon such exercise. In the event of an exercise
pursuant to this subsection 1(b), the number of Warrant Shares issued to the Registered Holder
shall be determined according to the following formula:



	 	 	 
	X =Y(A-B)

A
	 	 
	 
	 	 
	Where: X =

	 	the number of Warrant Shares that shall be issued to the Registered Holder;
	 
	 	 
	Y =

	 	the number of Warrant Shares for which this Warrant is being exercised (which shall include both the
number of Warrant Shares issued to the Registered Holder and the number of Warrant Shares subject to the
portion of the Warrant being cancelled in payment of the Purchase Price);
	 
	 	 
	A =

	 	the Fair Market Value (as defined below) of one share of Common Stock, as of the date prior to the
Exercise Date; and
	 
	 	 
	B =

	 	the Purchase Price then in effect.






               (ii) “Fair Market Value” means, for any security as of any date, the closing sale price for
such security on the Nasdaq Capital Market, as reported by Bloomberg, or, if the Nasdaq Capital
Market begins to operate on an extended hours basis and does not designate the closing sale price
then the last sale price of such security prior to 4:00:00 p.m., New York City time, as reported by
Bloomberg, or, if the Nasdaq Capital Market is not the principal securities exchange or trading
market for such security, the last 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 the
foregoing do not apply, the last sale price of such security in an over-the-counter market on the
electronic bulletin board for such security as reported by Bloomberg, or, if no last sale price is
reported for such security by Bloomberg, the average of the ask prices of any market makers for
such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation
Bureau, Inc.). If the Fair Market Value cannot be calculated for a security on a particular date
on any of the foregoing bases, the Fair Market Value of such security on such date shall be the
fair market value as mutually determined by the Company and the Registered Holder. If the Company
and the Registered Holder are unable to agree upon the Fair Market Value of such security, then
such dispute shall be resolved pursuant to Section 13 hereof. All such determinations shall be
appropriately adjusted for any stock dividend, stock split, stock combination or other similar
transaction during the applicable calculation period.



        (c) Exercise Date. Each exercise of this Warrant shall be deemed to have been
effected immediately prior to the close of business on the day on which the applicable



3









 







purchase form shall have been surrendered to the Company as provided in subsection 1(a) or
1(b) above (the “Exercise Date”). At such time, the person or persons in whose name or names any
certificates for Warrant Shares shall be issuable upon such exercise as provided in subsection 1(d)
below shall be deemed to have become the holder or holders of record of the Warrant Shares
represented by such certificates.



        (d) Issuance of Certificates. As soon as practicable after the exercise of this
Warrant in whole or in part, and in any event within three (3) trading days thereafter, the
Company, at its expense, will cause to be issued in the name of, and delivered to, the Registered
Holder, or as the Registered Holder (upon payment by the Registered Holder of any applicable
transfer taxes) may direct:



               (i) a certificate or certificates for the number of full Warrant Shares to which the
Registered Holder shall be entitled upon such exercise plus, in lieu of any fractional share to
which the Registered Holder would otherwise be entitled, cash in an amount determined pursuant to
Section 3 hereof; provided that in the event the Company’s transfer agent is participating
in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program, upon the
request of the Registered Holder in connection with the Registered Holder’s sale of such Warrant
Shares pursuant to an effective registration statement under the Securities Act or an exemption
from the registration requirements of the Securities Act, the Company shall credit such aggregate
number of shares of Common Stock to which the Registered Holder is entitled pursuant to such
exercise to the Registered Holder’s or its designee’s balance account with DTC through its Deposit
Withdrawal Agent Commission system; and



               (ii) in case such exercise is in part only, a new warrant or warrants (dated the date hereof)
of like tenor, calling in the aggregate on the face or faces thereof for the number of Warrant
Shares equal (without giving effect to any adjustment therein) to the number of such shares called
for on the face of this Warrant minus the number of Warrant Shares for which this Warrant was so
exercised (which, in the case of an exercise pursuant to subsection 1(b), shall include both the
number of Warrant Shares issued to the Registered Holder pursuant to such partial exercise and the
number of Warrant Shares subject to the portion of the Warrant being cancelled in payment of the
Purchase Price).



     If the Company shall fail to deliver or cause to be delivered for any reason or no reason the
shares of Common Stock as provided for above (the “Delivery Deadline”), then, in addition to all
other remedies available to the Registered Holder, if on or after the trading day immediately
following the Delivery Deadline the Registered Holder purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Registered Holder of
shares of Common Stock that were to be represented by the shares of Common Stock to be issued as
provided for above (a “Buy-In”), then, provided as of such purchase date the Registered Holder had
not received such shares of Common Stock, the Company shall, within three (3) business days after
written request by the Registered Holder and in the Registered Holder’s discretion, either (i) pay
cash to the Registered Holder in an amount equal to the purchase price (including brokerage
commissions, if any) paid by the Registered Holder for the shares of Common Stock so purchased (the
“Buy-In Price”), at which point the Company’s obligation to issue such shares of Common Stock shall
terminate, or (ii) promptly honor its obligation to deliver to the Registered Holder a certificate
or certificates representing



4









 







such shares of Common Stock and pay cash to the Registered Holder in an amount equal to the excess
(if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times
(B) the Fair Market Value on the Delivery Deadline.



        (e) Beneficial Ownership. The Company shall not effect the exercise of this
Warrant, and the Registered Holder shall not have the right to exercise this Warrant, to the extent
that after giving effect to such exercise, the Registered Holder (together with the Registered
Holder’s affiliates) would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the
shares of Common Stock outstanding immediately after giving effect to such exercise. For purposes
of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by the
Registered Holder and its affiliates shall include the number of shares of Common Stock issuable
upon exercise of this Warrant with respect to which the determination of such sentence is being
made, but shall exclude shares of Common Stock which would be issuable upon (i) exercise of the
remaining, unexercised portion of this Warrant beneficially owned by the Registered Holder and its
affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other
securities of the Company beneficially owned by the Registered Holder and its affiliates
(including, without limitation, any convertible notes or convertible preferred stock or warrants)
subject to a limitation on conversion or exercise analogous to the limitation contained herein.
Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership
shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended. For purposes of this Warrant, in determining the number of outstanding shares of Common
Stock, the Registered Holder may rely on the number of outstanding shares of Common Stock as
reflected in (1) the Company’s most recent Form 10-K, Form 10-Q, Current Report on Form 8-K or
other public filing with the Securities and Exchange Commission, as the case may be, (2) a more
recent public announcement by the Company or (3) any other notice by the Company or the Company’s
transfer agent setting forth the number of shares of Common Stock outstanding. For any reason at
any time, upon the written or oral request of the Registered Holder, the Company shall within one
business day confirm orally and in writing to the Registered Holder the number of shares of Common
Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be
determined after giving effect to the conversion or exercise of securities of the Company,
including the Company Warrants, by the Registered Holder and its affiliates since the date as of
which such number of outstanding shares of Common Stock was reported. By written notice to the
Company, the Registered Holder may from time to time increase or decrease the Maximum Percentage to
any other percentage not in excess of 9.99% specified in such notice; provided that (i) any such
increase will not be effective until the sixty-first (61st) day after such notice is
delivered to the Company, and (ii) any such increase or decrease will apply only to the Registered
Holder and not to any other holder of Company Warrants.



      2. Adjustments.




             (a) Adjustment for Stock Splits and Combinations. If the Company shall at any time or
from time to time after the date on which this Warrant was first issued (or, if this Warrant was
issued upon partial exercise of, or in replacement of, another warrant of like tenor, then the date
on which such original warrant was first issued) (the “Original Issue Date”) effect a subdivision
of the outstanding Common Stock, the Purchase Price then in effect immediately before that
subdivision shall be proportionately decreased. If the Company shall at any time or



5









 







from time to time after the Original Issue Date combine the outstanding shares of Common Stock, the
Purchase Price then in effect immediately before the combination shall be proportionately
increased. Any adjustment under this paragraph shall become effective at the close of business on
the date the subdivision or combination becomes effective.



        (b) Adjustment for Certain Dividends and Distributions. In the event the Company at
any time, or from time to time after the Original Issue Date shall make or issue, or fix a record
date for the determination of holders of Common Stock entitled to receive, a dividend or other
distribution payable in additional shares of Common Stock, then and in each such event the Purchase
Price then in effect immediately before such event shall be decreased as of the time of such
issuance or, in the event such a record date shall have been fixed, as of the close of business on
such record date, by multiplying the Purchase Price then in effect by a fraction:



                    (1) the numerator of which shall be the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance or the close of business on such record
date, and



                    (2) the denominator of which shall be the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance or the close of business on such record
date plus the number of shares of Common Stock issuable in payment of such dividend or
distribution; provided, however, that if such record date shall have been fixed and such dividend
is not fully paid or if such distribution is not fully made on the date fixed therefore, the
Purchase Price shall be recomputed accordingly as of the close of business on such record date and
thereafter the Purchase Price shall be adjusted pursuant to this paragraph as of the time of actual
payment of such dividends or distributions; and provided further that in no event shall the
Purchase Price be reduced pursuant to this Section 2(b)(2) below the Fair Market Value of the
Common Stock on the Original Issue Date.



        (c) Adjustments for Other Dividends and Distributions. In the event the Company at
any time or from time to time after the Original Issue Date shall make or issue, or fix a record
date for the determination of holders of Common Stock entitled to receive, a dividend or other
distribution payable in securities of the Company (other than shares of Common Stock) or in cash or
other property (other than regular cash dividends paid out of earnings or earned surplus,
determined in accordance with generally accepted accounting principles), then and in each such
event provision shall be made so that the Registered Holder shall receive upon exercise hereof, in
addition to the number of shares of Common Stock issuable hereunder, the kind and amount of
securities of the Company, cash or other property which the Registered Holder would have been
entitled to receive had this Warrant been exercised on the date of such event and had the
Registered Holder thereafter, during the period from the date of such event to and including the
Exercise Date, retained any such securities receivable during such period, giving application to
all adjustments called for during such period under this Section 2 with respect to the rights of
the Registered Holder.



6









 





        (d) Adjustment for Reorganization.



               (i) If there shall occur any reorganization, recapitalization, reclassification, consolidation
or merger involving the Company in which the Common Stock is converted into or exchanged for
securities, cash or other property (collectively, a “Reorganization”), then, following
such Reorganization, the Registered Holder shall receive upon exercise hereof the kind and amount
of securities, cash or other property which the Registered Holder would have been entitled to
receive pursuant to such Reorganization if such exercise had taken place immediately prior to such
Reorganization.



               (ii) Notwithstanding the foregoing, in the event of a Reorganization that is (1) a transaction
where the consideration paid to the holders of the Common Stock consists solely of cash, (2) a
“Rule 13e-3 transaction” as defined in Rule 13e-3 under the Securities Exchange Act of 1934, as
amended, or (3) a Reorganization involving a person or entity not traded on a national securities
exchange, the NASDAQ Global Select Market, the NASDAQ Global Market or the NASDAQ Capital Market
(any of the events described in clauses (1), (2) or (3) above, each a “Cash
Reorganization”), at the request of the Holder delivered before the 90th day after
such Reorganization, the Company (or the successor entity to the Company) at the Holder’s request
shall purchase this Warrant from the Holder by paying to the Holder, within five (5) Business Days
after such request (or, if later, on the effective date of the Reorganization), cash in an amount
equal to the value of the remaining unexercised portion of this Warrant on the date of such
Reorganization, which value shall be determined by use of the Black Scholes Option Pricing Model
obtained from the “OV” function on Bloomberg using (i) a price per share of Common Stock equal to
the VWAP of the Common Stock for the Trading Day immediately preceding the date of consummation of
the applicable Reorganization, (ii) a risk-free interest rate corresponding to the U.S. Treasury
rate for a period equal to the remaining term of this Warrant as of such as of the date of
consummation of the applicable Reorganization and (iii) an expected volatility equal to the greater
of (A) 40% and (B) the 100 day volatility obtained from the HVT function on Bloomberg determined as
of the Trading Day immediately following the announcement of the Reorganization, not to exceed 85%.



               (iii) Notwithstanding the foregoing, in the event of a Reorganization, other than a Cash
Reorganization, that is (x) a transaction in which the Common Stock is converted into or exchanged
for anything other than solely equity securities, and (y) the common stock of the acquiring or
surviving company is publicly traded, then, as part of such Reorganization, (i) the Registered
Holder shall have the right thereafter to receive upon the exercise hereof such number of shares of
common stock of the acquiring or surviving company as is determined by multiplying (A) the number
of shares of Common Stock subject to this Warrant immediately prior to such Reorganization by (B) a
fraction, the numerator of which is the Fair Market Value (as defined in subsection 1(b)(ii) above)
per share of Common Stock as of the effective date of such Reorganization, and the denominator of
which is the fair market value per share of common stock of the acquiring or surviving company as
of the effective date of such transaction, as determined in good faith by the Board, and (ii) the
exercise price per share of common stock of the acquiring or surviving company shall be the
Purchase Price divided by the fraction referred to in clause (B) above.



7









 





               (iv) The provisions of this paragraph (d) shall similarly apply to subsequent transactions
analogous to a Reorganization. In any such case, appropriate adjustment (as determined in good
faith by the Board) shall be made in the application of the provisions set forth herein with
respect to the rights and interests thereafter of the Registered Holder, to the end that the
provisions set forth in this Section 2 (including provisions with respect to changes in and other
adjustments of the Purchase Price) shall thereafter be applicable, as nearly as reasonably may be,
in relation to any securities, cash or other property thereafter deliverable upon the exercise of
this Warrant.



        (e) Adjustment for Certain Subsequent Offerings.



               (i) In the event the Company, at any time after the Original Issue Date, shall issue shares of
Additional Stock (as defined below) for consideration per share less than the Purchase Price in
effect immediately prior to such issuance, then the Purchase Price in effect immediately prior to
such issuance shall be adjusted in accordance with the following formula, provided, however, that
in no event shall the Purchase Price be reduced pursuant to this Section 2(e) below the Fair Market
Value of the Common Stock on the Original Issue Date:



	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	C	 
	 

	 	 	 	 	 	 	 
	 	 

	AP = P x
	 	O +
	 	P	 
	 	 	 	 	 	 
	 	 	 	 	A
	 






     where:




AP
= the adjusted Purchase Price.




P
= the then current Purchase Price.




O
= the number of shares outstanding (on a fully-diluted basis, assuming the full
conversion, exercise or exchange of all convertible securities then outstanding)
immediately prior to the issuance of such additional shares.




C
= the aggregate consideration received for the issuance of such additional shares.




A
= the number of shares outstanding (on a fully-diluted basis, assuming the full
conversion, exercise or exchange of all convertible securities then outstanding)
immediately after the issuance of such additional shares.



               (ii) As used in this Section 2(e), “Additional Stock” shall mean any shares of Common Stock
issued by the Company or deemed to be issued pursuant to this Section 2(e) after the Original Issue
Date, except shares of Common Stock issued (A) by reason of a stock split, combination, dividend,
or other distribution or issuance of shares of Common Stock that is covered by Sections 2(a), 2(b),
2(c) or 2(d); (B) to employees or directors of, or consultants or advisors to, the Company or any
of its subsidiaries pursuant to a plan, agreement



8









 







or arrangement approved by the Board of Directors of the Company; (C) upon exercise of the Company
Warrants or any other warrants or convertible securities issued by the Company and outstanding as
of the Original Issue Date; (D) to banks, equipment lessors or other financial institutions in
connection with loans or other extensions of credit made to the Company; (E) to suppliers or third
party service providers in connection with the provision of goods or services (the primary purpose
of which is not to raise equity capital); or (F) in connection with sponsored research,
collaborations, technology license, development, marketing or other similar agreements or mergers,
acquisitions or strategic partnerships (the primary purpose of which is not to raise equity
capital).



               (iii) For the purpose of the adjustment required under this Section 2(e), if the Company
issues or sells (i) stock or other securities convertible into, shares of Additional Stock (such
convertible stock or securities being herein referred to as “Convertible Securities”) or (ii)
rights or options for the purchase of shares of Additional Stock or Convertible Securities and if
the Effective Price of such shares of Additional Stock is less than the Purchase Price in each case
the Company shall be deemed to have issued at the time of the issuance of such rights or options or
Convertible Securities the maximum number of shares of Additional Stock issuable upon exercise or
conversion thereof and to have received as consideration for the issuance of such shares an amount
equal to the total amount of the consideration, if any, received by the Company for the issuance of
such rights or options or Convertible Securities, plus, in the case of such rights or options, the
minimum amounts of consideration, if any, payable to the Company upon the exercise of such rights
or options, plus, in the case of Convertible Securities, the minimum amounts of consideration, if
any, payable to the Company (other than by cancellation of liabilities or obligations evidenced by
such Convertible Securities) upon the conversion thereof; provided that if in the case of
Convertible Securities the minimum amounts of such consideration cannot be ascertained, but are a
function of antidilution or similar protective clauses, the Company shall be deemed to have
received the minimum amounts of consideration without reference to such clauses; provided further
that if the minimum amount of consideration payable to the Company upon the exercise or conversion
of rights, options or Convertible Securities is reduced over time or on the occurrence or
non-occurrence of specified events other than by reason of antidilution adjustments, the Effective
Price shall be recalculated using the figure to which such minimum amount of consideration is
reduced; provided further that if the minimum amount of consideration payable to the Company upon
the exercise or conversion of such rights, options or Convertible Securities is subsequently
increased, the Effective Price shall be again recalculated using the increased minimum amount of
consideration payable to the Company upon the exercise or conversion of such rights, options or
Convertible Securities. No further adjustment of the Purchase Price, as adjusted upon the issuance
of such rights, options or Convertible Securities, shall be made as a result of the actual issuance
of shares of Additional Stock on the exercise of any such rights or options or the conversion of
any such Convertible Securities. If any such rights or options or the conversion privilege
represented by any such Convertible Securities shall expire without having been exercised, the
Purchase Price as adjusted upon the issuance of such rights, options or Convertible Securities
shall be readjusted to the Purchase Price which would have been in effect had an adjustment been
made on the basis that the only shares of Additional Stock so issued were the shares of Additional
Stock, if any, actually issued or sold on the exercise of such rights or options or rights of
conversion of such Convertible Securities, and such shares of Additional Stock, if any, were issued
or sold for the consideration actually received by the Company upon such exercise, plus the
consideration, if




9












 




any, actually received by the Company for the granting of all such rights or
options, whether or not exercised, plus the consideration received for issuing or selling the
Convertible Securities, whether or not converted, plus the consideration, if any, actually received
by the Company (other than by cancellation of liabilities or obligations evidenced by such
Convertible Securities) on the conversion of such Convertible Securities. As used herein, the
“Effective Price” of the shares of Additional Stock shall mean the quotient determined by dividing
the total number of shares of Additional Stock issued or sold, or deemed to have been issued or
sold by the Company under this Section 2(e), into the aggregate consideration received, or deemed
to have been received by the Company for such issue under this Section 2(e), for such shares of
Additional Stock.




          (f) Certificate as to Adjustments. Upon the occurrence of each adjustment or
readjustment of the Purchase Price pursuant to this Section 2, the Company at its expense shall, as
promptly as reasonably practicable but in any event not later than 10 days thereafter, compute such
adjustment or readjustment in accordance with the terms hereof and furnish to the Registered Holder
a certificate setting forth such adjustment or readjustment (including the kind and amount of
securities, cash or other property for which this Warrant shall be exercisable and the Purchase
Price) and showing in detail the facts upon which such adjustment or readjustment is based. The
Company shall, as promptly as reasonably practicable after the written request at any time of the
Registered Holder (but in any event not later than 10 days thereafter), furnish or cause to be
furnished to the Registered Holder a certificate setting forth (i) the Purchase Price then in
effect and (ii) the number of shares of Common Stock and the amount, if any, of other securities,
cash or property which then would be received upon the exercise of this Warrant.




     3. Fractional Shares. The Company shall not be required upon the exercise of this
Warrant to issue any fractional shares, but shall pay the value thereof to the Registered Holder in
cash on the basis of the Fair Market Value per share of Common Stock, as determined pursuant to
subsection 1(b) above.



     4. Transfers,
etc.



          (a) Notwithstanding anything to the contrary contained herein, this Warrant and the Warrant
Shares shall not be sold or transferred unless either (i) they first shall have been registered
under the Securities Act of 1933, as amended (the “Act”), or (ii) such sale or transfer shall be
exempt from the registration requirements of the Act and the Company shall have been furnished with
an opinion of legal counsel, reasonably satisfactory to the Company, to the effect that such sale
or transfer is exempt from the registration requirements of the Act. Notwithstanding the
foregoing, no registration or opinion of counsel shall be required for (i) a transfer by a
Registered Holder which is an entity to a wholly owned subsidiary or affiliate of such entity, a
transfer by a Registered Holder which is a partnership to a partner of such partnership or a
retired partner of such partnership or to the estate of any such partner or retired partner, or a
transfer by a Registered Holder which is a limited liability company to a member of such limited
liability company or a retired member or to the estate of any such member or retired member,
provided that the transferee in each case agrees in writing to be subject to the terms of this
Section 4, or (ii) a transfer made in accordance with Rule 144 under the Act.




          (b) Each certificate representing Warrant Shares shall bear a legend substantially in the
following form:




10









 





“The securities represented hereby have not been registered under
the Securities Act of 1933, as amended, or any state securities laws
and neither the securities nor any interest therein may be offered,
sold, transferred, pledged or otherwise disposed of except pursuant
to an effective registration under such act or an exemption from
registration, which, in the opinion of counsel reasonably
satisfactory to counsel for this corporation, is available.”



     The foregoing legend shall be removed from the certificates representing any Warrant Shares,
at the request of the holder thereof, at such time as they become eligible for resale pursuant to
Rule 144(k) under the Act or at such time as the Warrant Shares are sold or transferred in
accordance with the requirements of a registration statement of the Company on Form S-1, or such
other form as may then be in effect.



          (c) The Company will maintain a register containing the name and address of the Registered
Holder of this Warrant. The Registered Holder may change its address as shown on the warrant
register by written notice to the Company requesting such change.




          (d) Subject to the provisions of this Section 4, this Warrant and all rights hereunder are
transferable, in whole or in part, upon surrender of this Warrant with a properly executed
assignment (in the form of Exhibit II hereto) at the principal office of the Company (or, if
another office or agency has been designated by the Company for such purpose, then at such other
office or agency).




     5. No Impairment. The Company will not, by amendment of its charter or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities
or any other voluntary action, avoid or seek to avoid the observance or performance of any of the
terms of this Warrant, but will at all times in good faith assist in the carrying out of all such
terms and in the taking of all such action as may be necessary or appropriate in order to protect
the rights of the Registered Holder against impairment.



     6. Notices of Record Date, etc. In the event:



          (a) the Company shall take a record of the holders of its Common Stock (or other stock or
securities at the time deliverable upon the exercise of this Warrant) for the purpose of entitling
or enabling them to receive any dividend or other distribution, or to receive any right to
subscribe for or purchase any shares of stock of any class or any other securities, or to receive
any other right; or




          (b) of any capital reorganization of the Company, any reclassification of the Common Stock of
the Company, any consolidation or merger of the Company with or into another corporation, or any
transfer of all or substantially all of the assets of the Company; or




          (c) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company,
then, and in each such case, the Company will send or cause to be sent to the Registered Holder a
notice specifying, as the case may be, (i) the record date for such dividend, distribution or
right, and the amount and character of such dividend, distribution or right, or (ii) the effective
date on which such reorganization, reclassification, consolidation, merger, transfer,




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dissolution,
liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the
holders of record of Common Stock (or such other stock or securities at the time deliverable upon
the exercise of this Warrant) shall be entitled to exchange their shares of Common Stock (or such
other stock or securities) for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up. Such
notice shall be sent at least five (5) days prior to the record date or effective date for the
event specified in such notice.




     7. Reservation of Stock. The Company will at all times reserve and keep available,
solely for issuance and delivery upon the exercise of this Warrant, such number of Warrant Shares
and other securities, cash and/or property, as from time to time shall be issuable upon the
exercise of this Warrant.



     8. Exchange or Replacement of Warrants. 



          (a) Upon the surrender by the Registered Holder, properly endorsed, to the Company at the
principal office of the Company, the Company will, subject to the provisions of Section 5 hereof,
issue and deliver to or upon the order of the Registered Holder, at the Company’s expense, a new
Warrant or Warrants of like tenor, in the name of the Registered Holder or as the Registered Holder
(upon payment by the Registered Holder of any applicable transfer taxes) may direct, calling in the
aggregate on the face or faces thereof for the number of shares of Common Stock (or other
securities, cash and/or property) then issuable upon exercise of this Warrant.




          (b) Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon
delivery of an indemnity agreement (with surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and cancellation of this
Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor.




     9. Notices. All notices and other communications from the Company to the Registered
Holder in connection herewith shall be mailed by certified or registered mail, postage prepaid, or
sent via a reputable nationwide overnight courier service guaranteeing next business day delivery,
to the address last furnished to the Company in writing by the Registered Holder. All notices and
other communications from the Registered Holder to the Company in connection herewith shall be
mailed by certified or registered mail, postage prepaid, or sent via a reputable nationwide
overnight courier service guaranteeing next business day delivery, to the Company at its principal
office set forth below. If the Company should at any time change the location of its principal
office to a place other than as set forth below, it shall give prompt written notice to the
Registered Holder and thereafter all references in this Warrant to the location of its principal
office at the particular time shall be as so specified in such notice. All such notices and
communications shall be deemed delivered one business day after being sent via a reputable
international overnight courier service guaranteeing next business day delivery.



     10. No Rights as Stockholder. Until the exercise of this Warrant, the Registered
Holder shall not have or exercise any rights by virtue hereof as a stockholder of the Company.
Notwithstanding the foregoing, in the event (i) the Company effects a split of the Common Stock



12









 




by means of a stock dividend and the Purchase Price of and the number of Warrant Shares are adjusted
as of the date of the distribution of the dividend (rather than as of the record date for such
dividend), and (ii) the Registered Holder exercises this Warrant between the record date and the
distribution date for such stock dividend, the Registered Holder shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon
such exercise, notwithstanding the fact that such shares were not outstanding as of the close of
business on the record date for such stock dividend.




     11. Amendment or Waiver. Any term of this Warrant may be amended or waived (either
generally or in a particular instance and either retroactively or prospectively) with the written
consent of the Company and the holders of Company Warrants representing at least two-thirds of the
number of shares of Common Stock then subject to outstanding Company Warrants. Notwithstanding the
foregoing, (a) this Warrant may be amended and the observance of any term hereunder may be waived
without the written consent of the Registered Holder only in a manner which applies to all Company
Warrants in the same fashion and (b) the number of Warrant Shares subject to this Warrant and the
Purchase Price of this Warrant may not be amended, and the right to exercise this Warrant may not
be waived, without the written consent of the Registered Holder (it being agreed that an amendment
to or waiver under any of the provisions of Section 2 of this Warrant shall not be considered an
amendment of the number of Warrant Shares or the Purchase Price). The Company shall give prompt
written notice to the Registered Holder of any amendment hereof or waiver hereunder that was
effected without the Registered Holder’s written consent. No waivers of any term, condition or
provision of this Warrant, in any one or more instances, shall be deemed to be, or construed as, a
further or continuing waiver of any such term, condition or provision.



     12. Dispute Resolution. In the case of a dispute as to the determination of the
Purchase Price or the arithmetic calculation of the Warrant Shares, the Company shall submit the
disputed determinations or arithmetic calculations via facsimile within two business days of
receipt of the Purchase Form giving rise to such dispute, as the case may be, to the Registered
Holder. If the Holder and the Company are unable to agree upon such determination or calculation
of the Purchase Price or the Warrant Shares within three business days of such disputed
determination or arithmetic calculation being submitted to the Registered Holder, then the Company
shall, within two business days submit via facsimile (a) the disputed determination of the Purchase
Price to an independent, reputable investment bank selected by the Company and approved by the
Registered Holder or (b) the disputed arithmetic calculation of the Warrant Shares to the Company’s
independent, outside accountant. The Company, at the Company’s expense, shall use reasonable best
efforts to cause at its expense the investment bank or the accountant, as the case may be, to
perform the determinations or calculations and notify the Company and the Registered Holder of the
results no later than ten business days from the time it receives the disputed determinations or
calculations. Such investment bank’s or accountant’s determination or calculation, as the case may
be, shall be binding upon all parties absent demonstrable error.



     13. Section Headings. The section headings in this Warrant are for the convenience of
the parties and in no way alter, modify, amend, limit or restrict the contractual obligations of
the parties.



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     14. Governing Law. This Warrant will be governed by and construed in accordance with
the internal laws of the State of New York (without reference to the conflicts of law provisions
thereof).



     15. Facsimile Signatures. This Warrant may be executed by facsimile signature or
electronic document in PDF format.



* * * * * * *




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EXECUTED as of the Date of Issuance indicated above.




	 	 	 	 	 
	 	 	VERMILLION, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:
	ATTEST:
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 





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EXHIBIT I




PURCHASE FORM




	 	 	 	 	 	 	 	 	 
	To: Vermillion, Inc.
	 	 	 	Dated:  	 
	 

	 	 	 	 	 	 	 	 





     The undersigned, pursuant to the provisions set forth in the attached Warrant (No. [ ]),
hereby elects to purchase (check applicable box):



     o ___shares of the Common Stock of Vermillion, Inc. covered by such Warrant; or



     o ___the maximum number of shares of Common Stock covered by such Warrant pursuant to the
cashless exercise procedure set forth in subsection 1(b).



     The undersigned herewith makes payment of the full purchase price for such shares at the price
per share provided for in such Warrant. Such payment takes the form of (check applicable box or
boxes):




	 	o	 	$___in lawful money of the United States; and/or
	 
	 	o	 	o the cancellation of such number of Warrant Shares as is necessary, in
accordance with the formula set forth in subsection 1(b), to exercise this Warrant with
respect to the maximum number of Warrant Shares purchasable pursuant to the cashless
exercise procedure set forth in subsection 1(b).





     Notwithstanding anything to the contrary contained herein, this Purchase Form shall constitute
a representation by the holder of the Warrant submitting this Purchase Form that, after giving
effect to the exercise provided for in this Purchase Form, such holder (together with its
affiliates) will not have beneficial ownership (together with the beneficial ownership of such
Person’s affiliates) of a number of shares of Common Stock which exceeds the Maximum Percentage of
the total outstanding shares of Common Stock as determined pursuant to the provisions of Section
1(e) of this Warrant.



	 	 	 	 	 
	 

	 	 	 	 
	 

	 	Signature:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Address:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
 






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EXHIBIT II




ASSIGNMENT FORM




     FOR VALUE RECEIVED, [                    ] hereby sells, assigns and transfers all of the
rights of the undersigned under the attached Warrant (No. [ ]) with respect to the number of shares
of Common Stock of Vermillion, Inc. covered thereby set forth below, unto:



	 	 	 	 	 
	Name of Assignee

	 	Address
	 	No. of Shares







Dated:     
                 
                  
                 
                
        




Signature:    
                
  
                  
                
                
         




Signature Guaranteed:




By:    
                
               
               
               
    
            



     The signature should be guaranteed by an eligible guarantor institution (banks, stockbrokers,
savings and loan associations and credit unions with membership in an approved signature guarantee
medallion program) pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended.




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