exv10w49






Exhibit 10.49





THE OFFER AND SALE OF THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN EACH CASE IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION
OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER AGENT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES; PROVIDED THAT IN CONNECTION WITH ANY
FORECLOSURE OR TRANSFER OF THE SECURITIES, THE TRANSFEROR SHALL COMPLY WITH THE PROVISIONS HEREIN,
IN THE SECURITIES PURCHASE AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT, AND UPON FORECLOSURE OR
TRANSFER OF THE SECURITIES, SUCH FORECLOSING PERSON OR TRANSFEREE SHALL COMPLY WITH ALL PROVISIONS
CONTAINED HEREIN, IN THE SECURITIES PURCHASE AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT.




ONCOTHYREON INC.




WARRANT TO PURCHASE COMMON STOCK



			
	Warrant No. 2010-[_______]
	 	Original Issue Date: September __, 2010





Oncothyreon Inc., a Delaware corporation (the “Company”), hereby certifies that, for value
received, ___________ or its permitted registered assigns (the “Holder”), is entitled to purchase
from the Company up to a total of __________ shares of common stock, $0.0001 par value per share
(the “Common Stock”), of the Company (each such share, a “Warrant Share” and all such shares, the
“Warrant Shares”) at an exercise price per share
equal to $4.24 per share (as adjusted from time to
time as provided in Section 9 herein, the “Exercise Price”), at any time and from time to
time on or after the six-month anniversary of the date hereof (the “Original Issue Date”) and
through and including 5:30 P.M., New York City time, on the five (5) year anniversary of the
earlier of (a) the Effective Date whereby all Registrable Securities (as defined in the
Registration Rights Agreement) may be freely resold pursuant to a resale registration statement,
and (b) the date when all Registrable Securities (as defined in the Registration Rights Agreement)
can be sold under Rule 144 without any restriction or limitation and without the requirement to be
in compliance with Rule 144(c)(1) (the “Expiration Date”), and subject to the following terms and
conditions:



This Warrant (this “Warrant”) is one of a series of similar warrants issued pursuant to that
certain Securities Purchase Agreement, dated September 23, 2010 by and among the Company and the
Purchasers identified therein (the “Purchase Agreement”). All such Warrants are referred to
herein, collectively, as the “Warrants.”






 









 







1. Definitions. In addition to the terms defined elsewhere in this Warrant, capitalized
terms that are not otherwise defined herein have the meanings given to such terms in the Purchase
Agreement.



2. Registration of Warrants. The Company shall register this Warrant, upon records to be
maintained by the Company for that purpose (the “Warrant Register”), in the name of the record
Holder (which shall include the initial Holder or, as the case may be, any registered assignee to
which this Warrant is permissibly assigned hereunder) from time to time. The Company may deem and
treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any
exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice
to the contrary.



3. Registration of Transfers. Subject to the restrictions on transfer set forth in Section
4.1 of the Purchase Agreement and compliance with all applicable securities laws, the Company shall
register the transfer of all or any portion of this Warrant in the Warrant Register, upon surrender
of this Warrant, with the Form of Assignment attached as Schedule 2 hereto duly completed
and signed, to the Company at its address specified in the Purchase Agreement and (x) delivery, at
the request of the Company, of an opinion of counsel reasonably satisfactory to the Company to the
effect that the transfer of such portion of this Warrant may be made pursuant to an available
exemption from the registration requirements of the Securities Act and all applicable state
securities or blue sky laws and (y) delivery by the transferee of a written statement to the
Company certifying that the transferee is an “accredited investor” as defined in Rule 501(a) under
the Securities Act and making the representations and certifications set forth in Sections 3.2 of
the Purchase Agreement, to the Company at its address specified in the Purchase Agreement. Upon
any such registration or transfer, a new warrant to purchase Common Stock in substantially the form
of this Warrant (any such new warrant, a “New Warrant”) evidencing the portion of this Warrant so
transferred shall be issued to the transferee, and a New Warrant evidencing the remaining portion
of this Warrant not so transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such
transferee of all of the rights and obligations in respect of the New Warrant that the Holder has
in respect of this Warrant. The Company shall prepare, issue and deliver at its own expense any New
Warrant under this Section 3.



4. Exercise and Duration of Warrants.




     (a) All or any part of this Warrant shall be exercisable by the registered Holder in any
manner permitted by Section 10 of this Warrant at any time and from time to time on or
after the six-month anniversary of the Original Issue Date and through and including 5:30 P.M., New
York City time, on the Expiration Date, subject to the conditions and restrictions contained in
this Warrant. At 5:30 P.M., New York City time, on the Expiration Date, the portion of this
Warrant not exercised prior thereto shall be and become void and of no value and this Warrant shall
be terminated and no longer outstanding.



     (b) The Holder may exercise this Warrant by delivering to the Company (i) an exercise notice,
in the form attached as Schedule 1 hereto (the “Exercise Notice”), completed and duly
signed, and (ii) payment of the Exercise Price for the number of Warrant Shares as to which this
Warrant is being exercised (which may take the form of a “cashless exercise” if so indicated in the
Exercise Notice and if a “cashless exercise” may occur at such time pursuant to Section 10
below). The date on which the Exercise Notice is delivered to the Company (as determined in
accordance with the notice provisions hereof) is an “Exercise Date.” Within two (2) days
following the delivery of the Exercise Notice (the “Payment Deadline”), the Holder shall make



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payment with respect to the Exercise Price for the number of Warrant Shares as to which this
Warrant is being exercised; provided that the Company’s obligations to deliver such Warrant Shares
shall be delayed on a day-for-day basis each day after the Payment Deadline such payment of the
Exercise Price is not paid. The delivery by (or on behalf of) the Holder of the Exercise Notice and
the applicable Exercise Price, except to the extent this Warrant is exercised by a “cashless”
exercise pursuant to Section 10 hereto, as provided above shall constitute the Holder’s
certification to the Company that its representations contained in Sections 3.2(a), (b), (d), (f),
(g), (k), (l) and (q) of the Purchase Agreement are true and correct as of the Exercise Date as if
remade in their entirety (or, in the case of any transferee Holder that is not a party to the
Purchase Agreement, such transferee Holder’s certification to the Company that such representations
are true and correct as to such transferee Holder as of the Exercise Date). The Holder shall not
be required to physically surrender this Warrant to the Company until the Holder has purchased all
of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which
case, the Holder shall surrender this Warrant to the Company for cancellation within three (3)
Trading Days of the date the final Exercise Notice is delivered to the Company. Execution and
delivery of the Exercise Notice shall have the same effect as cancellation of the original Warrant
and issuance of a New Warrant evidencing the right to purchase the remaining number of Warrant
Shares, if any.


5. Delivery of Warrant Shares.




     (a) Subject to Section 4(b), upon exercise of this Warrant, the Company shall promptly
(but in no event later than 5:30 P.M., New York City time, on the third (3rd) Trading
Day after the Exercise Date (or the fourth (4th) Trading Day if the last of the Exercise
Notice, the Exercise Price (if applicable) and opinion of counsel referred to below in this
Section 5(a) (if applicable) is delivered after 5:00 P.M., New York City time, on the
Exercise Date) (such time, the “Delivery Deadline”) issue or cause to be issued and cause to be
delivered to or upon the written order of the Holder and in such name or names as the Holder may
designate (provided that, if the Registration Statement is not effective and the Holder directs the
Company to deliver a certificate for the Warrant Shares in a name other than that of the Holder or
an Affiliate of the Holder, it shall deliver to the Company on the Exercise Date an opinion of
counsel reasonably satisfactory to the Company to the effect that the issuance of such Warrant
Shares in such other name may be made pursuant to an available exemption from the registration
requirements of the Securities Act and all applicable state securities or blue sky laws), (i) a
certificate for the Warrant Shares issuable upon such exercise, free of restrictive legends, or
(ii) an electronic delivery of the Warrant Shares to the Holder’s account at the Depository Trust
Company (“DTC”) or a similar organization, unless in the case of clause (i) and (ii) a registration
statement covering the resale of the Warrant Shares and naming the Holder as a selling stockholder
thereunder is not then effective or the Warrant Shares are not freely transferable without volume
and manner of sale restrictions pursuant to Rule 144 under the Securities Act, in which case such
Holder shall receive a certificate for the Warrant Shares issuable upon such exercise with
appropriate restrictive legends. The Holder, or any Person permissibly so designated by the Holder
to receive Warrant Shares, shall be deemed to have become the holder of record of such Warrant
Shares as of the Exercise Date with respect thereto. If the Warrant Shares can be issued without
restrictive legends, the Company shall, upon the written request of the Holder, use its
commercially reasonable efforts to deliver, or cause to be delivered, Warrant Shares hereunder
electronically through DTC or another established clearing corporation performing similar
functions, if available.



     (b) If by the Delivery Deadline, the Company has failed to comply with Section 5(a),
and if after such Delivery Deadline and prior to the receipt of such Warrant Shares, the Holder



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purchases (in an open market transaction) shares of Common Stock to deliver in satisfaction of a
sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise
(a “Buy-In”), then the Company shall, within three (3) Trading Days after the Company receives the
Holder’s written request and in the Holder’s sole discretion, either (1) pay in cash to the Holder
an amount equal to the Holder’s total purchase price (including brokerage commissions, if any, that
are reasonably documented in Holder’s written request) for the shares of Common Stock so purchased,
at which point the Company’s obligation to deliver and issue such Warrant Shares shall terminate or
(2) promptly honor its obligation to deliver to the Holder such Warrant Shares and pay cash to the
Holder in an amount equal to the excess (if any) of Holder’s total purchase price (including
brokerage commissions, if any, that are reasonably documented in Holder’s written request) for the
shares of Common Stock so purchased in the Buy-In over the product of (A) the number of shares of
Common Stock purchased in the Buy-In, times (B) the Closing Bid Price of a share of Common Stock on
the Exercise Date.



     (c) To the extent permitted by law, the Company’s obligations to issue and deliver Warrant
Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any
action or inaction by the Holder to enforce the same, any waiver or consent with respect to any
provision hereof, the recovery of any judgment against any Person or any action to enforce the
same. Nothing herein shall limit the Holder’s right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a decree of specific performance
and/or injunctive relief with respect to the Company’s failure to timely deliver the Warrant Shares
upon exercise of the Warrant as required pursuant to the terms hereof.


6. Charges, Taxes and Expenses. Issuance and delivery of the Warrant Shares upon exercise
of this Warrant shall be made without charge to the Holder for any issue or transfer tax, transfer
agent fee or other incidental tax or expense in respect of the issuance of the Warrant Shares, all
of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall
not be required to pay any tax that may be payable in respect of any transfer involved in the
registration of Warrant Shares or the Warrants in a name other than that of the Holder or an
Affiliate thereof. The Holder shall be responsible for all other tax liabilities that may arise as
a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof.



7. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or destroyed, the
Company shall issue or cause to be issued in exchange and substitution for and upon cancellation
hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or destruction (in such case)
and, in each case, a customary and reasonable indemnity and surety bond, if requested by the
Company. Applicants for a New Warrant under such circumstances shall also comply with such other
reasonable regulations and procedures and pay such other reasonable third-party costs as the
Company may prescribe. If a New Warrant is requested as a result of a mutilation of this Warrant,
then the Holder shall deliver such mutilated Warrant to the Company as a condition precedent to the
Company’s obligation to issue the New Warrant.



8. Reservation of Warrant Shares. The Company covenants that it will at all times reserve
and keep available out of the aggregate of its authorized but unissued and otherwise unreserved
Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon exercise of this
Warrant as herein provided, the number of Warrant Shares that are initially issuable and
deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other
contingent purchase rights of persons other than the Holder (taking into account the adjustments
and restrictions of Section 9). The Company covenants that all Warrant Shares so issuable
and deliverable shall, upon issuance and the payment of the applicable Exercise Price (or upon a


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“cashless exercise” pursuant to Section 10) in accordance with the terms hereof, be duly
and validly authorized, issued and fully paid and nonassessable. The Company will take all
commercially reasonable actions as may be necessary to assure that such shares of Common Stock may
be issued as provided herein without violation of any applicable law or regulation, or of any
requirements of any securities exchange or automated quotation system upon which the Common Stock
may be listed.



9. Certain Adjustments. The Exercise Price and number of Warrant Shares issuable upon
exercise of this Warrant are subject to adjustment from time to time as set forth in this
Section 9.




     (a) Stock Dividends and Splits. If the Company, at any time while this Warrant is
outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes a distribution on any
class of capital stock that is payable in shares of Common Stock, (ii) subdivides its outstanding
shares of Common Stock into a larger number of shares, or (iii) combines its outstanding shares of
Common Stock into a smaller number of shares, then in each such case, the Exercise Price shall be
multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately before such event and the denominator of which shall be the number of
shares of Common Stock outstanding immediately after such event. Any adjustments made pursuant to
clause (i) of this paragraph shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution, and any adjustment
pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the
effective date of such subdivision or combination.



     (b) Pro Rata Distributions. If the Company, at any time while this Warrant is
outstanding, distributes to all holders of Common Stock for no consideration (i) evidences of its
indebtedness, (ii) any security (other than a distribution of Common Stock covered by the preceding
paragraph) or (iii) rights or warrants to subscribe for or purchase any security, or (iv) any other
asset, including cash dividends (in each case, “Distributed Property”), then, upon any exercise of
this Warrant that occurs after the record date fixed for determination of stockholders entitled to
receive such distribution, the Holder shall be entitled to receive, in addition to the Warrant
Shares otherwise issuable upon such exercise (if applicable), the Distributed Property that such
Holder would have been entitled to receive in respect of such number of Warrant Shares had the
Holder been the record holder of such Warrant Shares immediately prior to such record date without
regard to any limitation on exercise contained therein. Notwithstanding anything herein to the
contrary, the foregoing provisions in this Section 9(b) shall not apply to, or be triggered
by, any rights issued by the Company (either separately or that attach to any securities of the
Company) in connection with any stockholders rights agreement, poison pill or other similar
anti-takeover provision under the Company’s certificate of incorporation, bylaws or other
documents.



     (c) Fundamental Transactions.




     (i) It shall be a condition to the Company’s entry into a Fundamental Transaction that
(i) if the Successor Entity (or the Successor Entity’s Parent Entity) is a publicly traded
entity whose common stock is quoted on or listed for trading on an U.S. national securities
exchange, the Successor Entity (or Parent Entity, if applicable) assumes in writing (or
remains bound by) all of the obligations of the Company under this Warrant in accordance
with the provisions of this Section 9(c), including agreements (if necessary) to deliver to
each holder of the Warrants in exchange for such Warrants a
security of the Successor Entity (or Parent Entity, if applicable) evidenced by a
written instrument substantially similar in form and substance to this Warrant, including,
without



5









 







limitation, an adjusted (if necessary) exercise price equal to the value for the
shares of Common Stock reflected by the terms of such Fundamental Transaction, and
exercisable for a corresponding number of shares of capital stock equivalent to the shares
of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to
any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and
(ii) if the Successor Entity is not a publicly traded entity whose common stock is quoted
on or listed for trading on an U.S. national securities exchange, the Successor assumes in
writing (or remains bound by) all of the obligations of the Company under this Warrant
pursuant to written agreements, including (if necessary) agreements to deliver to each
holder of Warrants in exchange for such Warrants a security of the Successor Entity
evidenced by a written instrument substantially similar in form and substance to this
Warrant exercisable for the consideration that would have been issuable in the Fundamental
Transaction in respect of the Warrant Shares had this Warrant been exercised immediately
prior to the consummation of the Fundamental Transaction. Upon the occurrence of any such
Fundamental Transaction, the Successor Entity (or Parent Entity, if applicable) shall
succeed to, and be substituted for (so that from and after the date of such Fundamental
Transaction, the provisions of this Warrant referring to the “Company” shall refer instead
to the Successor Entity (or Parent Entity, if applicable)), and may exercise every right
and power of the Company and shall assume all of the obligations of the Company under this
Warrant with the same effect as if such Successor Entity (or Parent Entity, if applicable)
had been named as the Company herein. The provisions of this paragraph (c) shall
similarly apply to subsequent Fundamental Transactions.




     (ii) Notwithstanding the foregoing, in the event of a Fundamental Transaction (other
than a merger, consolidation or other transaction effected solely to change the Company’s
jurisdiction of organization), at the written request of the Holder delivered before the
30th day after the consummation of such Fundamental Transaction, the Company (or
the Successor Entity) shall purchase this Warrant from the Holder by paying to the Holder
on the effective date of the Fundamental Transaction (or within five (5) Business Days
after such request if delivered after the effective date), cash in an amount equal to the
Black Scholes Value of the remaining unexercised portion of this Warrant on the date of
such Fundamental Transaction.




     (iii) For purposes of this Section 9(c), the following definitions shall apply:




     “Black Scholes Value” means the value of this Warrant based on the Black and Scholes
Option Pricing Model obtained from the “OV” function on Bloomberg determined as of the day
of the closing of the applicable Fundamental Transaction for pricing purposes and
reflecting (i) 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 date of request, (ii) an
expected volatility equal to the greater of (A) 100% and (B) the 100 day volatility
obtained from the HVT function on Bloomberg as of the day immediately following the public
announcement of the applicable Fundamental Transaction, and (iii) the underlying price per
share used in such calculation shall be the sum of the price per share being offered in
cash, if any, plus the value of any non cash consideration, if any, being offered in the
Fundamental Transaction.




     “Business Day” means any day other than Saturday, Sunday or other day on which
commercial banks in The City of New York are authorized or required by law to remain
closed.



6









 






     “Fundamental Transaction” means that (A) the Company shall, directly or indirectly, in
one or more related transactions, (i) consolidate or merge with or into (whether or not the
Company is the surviving corporation) another Person, or (ii) sell, assign, transfer,
convey or otherwise dispose of all or substantially all of the properties or assets of the
Company to another Person, or (iii) another Person completes a purchase, tender or exchange
offer that is accepted by the holders of more than the 50% of the outstanding shares of
Common Stock (not including any shares of Common Stock held by the Person or Persons making
or party to, or associated or affiliated with the Persons making or party to, such
purchase, tender or exchange offer), or (iv) consummate a stock purchase agreement or other
business combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with another Person whereby such other Person acquires
more than the 50% of the outstanding shares of Common Stock (not including any shares of
Common Stock held by the other Person or other Persons making or party to, or associated or
affiliated with the other Persons making or party to, such stock purchase agreement or
other business combination), or (v) reorganize, recapitalize or reclassify its Common Stock
(other than as a result of a subdivision or combination of shares of Common Stock covered
by Section 9(a) above) or (B) any “person” or “group” (as these terms are used for
purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 50% of the aggregate ordinary voting power represented by issued and
outstanding shares of Common Stock.




     “Parent Entity” of a Person means an entity that, directly or indirectly, controls the
applicable Person and whose common shares or common stock or equivalent equity security is
quoted or listed on a Trading Market (as defined in the Purchase Agreement), or, if there
is more than one such Person or Parent Entity, the Person or Parent Entity with the largest
public market capitalization as of the date of consummation of the Fundamental Transaction.




     “Person” means an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization, any other entity and a
government or any department or agency thereof.




     “Successor Entity” means, if applicable, the Person formed by, resulting from or
surviving any Fundamental Transaction or, for the purposes of Section 9(c)(ii), the Person
with which such Fundamental Transaction shall have been entered into.



     (d) Number of Warrant Shares. Simultaneously with any adjustment to the Exercise Price
pursuant to paragraph (a) of this Section 9, the number of Warrant Shares that may be
purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that
after such adjustment the aggregate Exercise Price payable hereunder for the increased or decreased
number of Warrant Shares shall be the same as the aggregate Exercise Price in effect immediately
prior to such adjustment.



     (e) Calculations. All calculations under this Section 9 shall be rounded down
to the nearest whole cent or the nearest whole share, as applicable.



     (f) Notice of Adjustments. Upon the occurrence of each adjustment pursuant to this
Section 9, the Company at its expense will, at the written request of the Holder, promptly
compute such adjustment, in good faith, in accordance with the terms of this Warrant and prepare



7









 







a
certificate setting forth such adjustment, including a statement of the adjusted Exercise Price and
adjusted number or type of Warrant Shares or other securities issuable upon exercise of this
Warrant (as applicable), describing the transactions giving rise to such adjustments and showing in
detail the facts upon which such adjustment is based. Upon written request, the Company will
promptly deliver a copy of each such certificate to the Holder and to the Company’s transfer agent.



     (g) Notice of Corporate Events. If, while this Warrant is outstanding, the Company (i)
declares a dividend or any other distribution of cash, securities or other property in respect of
its Common Stock, including, without limitation, any granting of rights or warrants to subscribe
for or purchase any capital stock of the Company, (ii) enters into any agreement contemplating or
solicits stockholder approval for any Fundamental Transaction or (iii) authorizes the voluntary
dissolution, liquidation or winding up of the affairs of the Company, then, except if such notice
and the contents thereof shall be deemed to constitute material non-public information, the Company
shall deliver to the Holder a notice of such transaction at least five (5) Trading Days prior to
the applicable record or effective date on which a Person would need to hold Common Stock in order
to participate in or vote with respect to such transaction; provided, however, that the failure to
deliver such notice or any defect therein shall not affect the validity of the corporate action
required to be described in such notice. To the extent that any notice provided hereunder
constitutes, or contains, material, non-public information regarding the Company or any of its
subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K.


10. Payment of Exercise Price. The Holder shall pay the Exercise Price in immediately
available funds by wire transfer to an account designated by the Company; provided, however, that
if, on any Exercise Date there is not an effective Registration Statement (as defined in that
certain Registration Rights Agreement, of even date herewith, by and among the Company and the
several Purchasers signatory thereto) registering, or no current prospectus available for, the
resale of the Warrant Shares by the Holder, then the Holder may, in its sole discretion, satisfy
its obligation to pay the Exercise Price through a “cashless exercise”, in which event the Company
shall issue to the Holder the number of Warrant Shares determined as follows:




          X = Y [(A-B)/A]




               where:



               “X” equals the number of Warrant Shares to be issued to the Holder;



               “Y” equals the total number of Warrant Shares with respect to which this Warrant is being
exercised;



               “A” equals the arithmetic average of the Closing Sale Prices of the shares of Common Stock (as
reported by Bloomberg Financial Markets) for the five (5) consecutive Trading Days ending on the
date immediately preceding the Exercise Date (the “Fair Market Value”); and



               “B” equals the Exercise Price then in effect for the applicable Warrant Shares at the time of
such exercise.


For purposes of this Warrant, “Closing Sale Price” means, for any security as of any date, the last
trade price for such security on the Principal Trading Market for such security, as reported by


8









 






Bloomberg Financial Markets, or, if such Principal Trading Market begins to operate on an extended
hours basis and does not designate the last trade price, then the last trade price of such security
prior to 4:00 P.M., New York City time, as reported by Bloomberg Financial Markets, or if the
foregoing do not apply, the last trade price of such security in the over-the-counter market on the
electronic bulletin board for such security as reported by Bloomberg Financial Markets, or, if no
last trade price is reported for such security by Bloomberg Financial Markets, the average of the
bid prices, or the ask prices, respectively, of any market makers for such security as reported in
the “pink sheets” by Pink Sheets LLC. If the Closing Sale Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Closing Sale Price of such
security on such date shall be the fair market value as determined in good faith by the Board of
Directors of the Company. The Board of Directors’ determination shall be binding upon all parties
absent demonstrable error. All such determinations shall be appropriately adjusted for any stock
dividend, stock split, stock combination or other similar transaction during the applicable
calculation period.



11. Company-Elected Conversion. The Company shall provide to the Holder prompt written
notice if after the Original Issue Date the Company is unable to issue the Warrant Shares without
restrictive legend, because the Commission has issued a stop order with respect to, or the
Commission or Company has otherwise suspended or withdrawn, a Registration Statement covering the
resale of the Warrant Shares, either temporarily or permanently, or otherwise (each a “Restrictive
Legend Event”). To the extent that (A) a Restrictive Legend Event occurs, (B) at such time the
Warrant Shares would be saleable under Rule 144 without compliance with the manner of sale or
volume restrictions, (C) the Company has delivered the notice described in the immediately
preceding sentence, and (D) the Holder attempts to exercise the Warrant after receipt of such
notice by paying cash, the Company shall (i) if the Fair Market Value (as calculated above) of the
Warrant Shares is greater than the Exercise Price, provide written notice to the Holder that the
Company will deliver that number of Warrant Shares to the Holder as should be delivered in a
cashless exercise in accordance with Section 10, and return to the Holder all consideration
paid to the Company in connection with the Holder’s attempted exercise of this Warrant (a
“Company-Elected Conversion”), or (ii) at the election of the Holder to be given within five (5)
days of receipt of notice of a Company-Elected Conversion, the Holder shall be entitled to rescind
the previously submitted Exercise Notice and the Company shall return all consideration paid by
Holder for such shares upon such rescission.



12. Rule 144. For purposes of Rule 144 promulgated under the Securities Act, it is
intended, understood and acknowledged that the Warrant Shares issued in a “cashless exercise”
transaction shall be deemed to have been acquired by the Holder, and the holding period for the
Warrant Shares shall be deemed to have commenced, on the date this Warrant was originally issued
pursuant to the Purchase Agreement (provided that the Commission continues to take the position
that such treatment is proper at the time of such exercise).



13. Limitations on Exercise. Notwithstanding anything to the contrary contained herein, the
number of Warrant Shares that may be acquired by the Holder upon any exercise of this Warrant (or
otherwise in respect hereof) shall be limited to the extent necessary to ensure that, following
such exercise (or other issuance), the total number of shares of Common Stock then beneficially
owned by the Holder and its Affiliates and any other Persons whose beneficial ownership of Common
Stock would be aggregated with the Holder’s for purposes of Section 13(d) of the Exchange Act, does
not exceed 4.99% (the “Maximum Percentage”) of the total number of then
issued and outstanding shares of Common Stock (including for such purpose the shares of Common
Stock issuable upon such exercise). For purposes of the foregoing sentence, the aggregate number of
shares of Common Stock beneficially owned by the Holder and its affiliates


9









 






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 such Person 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 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; provided that in no event shall the aggregate number of shares beneficially owned by the
Holder and its affiliates, calculated in accordance with Section 13(d) of the Exchange Act, exceed
9.99%). Except as set forth in the preceding sentence (other than the proviso thereto), for
purposes of this paragraph (including the proviso in the immediately preceding sentence),
beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act; it
being acknowledged by the Holder that the Company is not representing to such Holder that such
calculation is in compliance with Section 13(d) of the Exchange Act and such Holder is solely
responsible for any schedules required to be filed in accordance therewith. To the extent that the
limitation contained in this Section 13 applies, the determination of whether this Warrant
is exercisable (in relation to other securities owned by such Holder) and of which a portion of
this Warrant is exercisable shall be in the sole discretion of a Holder, and the submission of a
Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is
exercisable (in relation to other securities owned by such Holder) and of which portion of this
Warrant is exercisable, in each case subject to such aggregate percentage limitation, and the
Company shall have no obligation to verify or confirm the accuracy of such determination. In
addition, a determination as to any group status as contemplated above shall be determined in
accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. For purposes of this Section 13, in determining the number of outstanding
shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as
reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, (y) a more
recent public announcement by the Company or (z) any other notice by the Company or the Transfer
Agent setting forth the number of shares of Common Stock outstanding. Upon the written request of
the Holder, the Company shall within one (1) Trading Day confirm in writing to such Holder the
number of shares of Common Stock then outstanding. In any case, the number of outstanding shares
Common Stock shall be determined after giving effect to the conversion or exercise of securities of
the Company, including the Warrants, by the 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 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 Holder and not to any
other holder of Warrants. The provisions of this paragraph shall be construed and implemented in a
manner otherwise than in strict conformity with the terms of this Section 13 to correct this
paragraph (or any portion hereof) which may be defective or inconsistent with the intended
beneficial ownership limitation herein contained or to make changes or supplements necessary or
desirable to properly give effect to such limitation.



14. No Fractional Shares. No fractional Warrant Shares will be issued in connection with
any exercise of this Warrant. In lieu of any fractional shares that would otherwise be issuable,
the number of Warrant Shares to be issued shall be rounded down to the next whole number and the
Company shall pay the Holder in cash the fair market value (based on the Closing Sale Price) for
any such fractional shares.




10









 







15. Notices. Any and all notices or other communications or deliveries hereunder
(including, without limitation, any Exercise Notice) shall be in writing and shall be deemed given
and effective on the earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number specified in the Purchase Agreement prior to 5:30
P.M., New York City time, on a Trading Day, (ii) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the facsimile number
specified in the Purchase Agreement on a day that is not a Trading Day or later than 5:30 P.M., New
York City time, on any Trading Day, (iii) the Trading Day following the date of mailing, if sent by
nationally recognized overnight courier service specifying next business day delivery, and (iv)
upon actual receipt by the Person to whom such notice is required to be given, if by hand delivery.
The address and facsimile number of a Person for such notices or communications shall be as set
forth in the Purchase Agreement unless changed by such Person by three (3) Trading Days’ prior
written notice to the other Persons in accordance with this Section 15.



16. Warrant Agent. The Company shall serve as warrant agent under this Warrant. Upon
fifteen (15) days’ notice to the Holder, the Company may appoint a new warrant agent. Any
corporation into which the Company or any new warrant agent may be merged or any corporation
resulting from any consolidation to which the Company or any new warrant agent shall be a party or
any corporation to which the Company or any new warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor warrant agent under this
Warrant without any further act. Any such successor warrant agent shall promptly cause notice of
its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder
at the Holder’s last address as shown on the Warrant Register.



17. Miscellaneous.




     (a) No Rights as a Stockholder. The Holder, solely in such Person’s
capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be
deemed the holder of share capital of the Company for any purpose, nor shall anything contained in
this Warrant be construed to confer upon the Holder, solely in such Person’s capacity as the Holder
of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or
withhold consent to any corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, amalgamation, conveyance or otherwise), receive
notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance
to the Holder of the Warrant Shares which such Person is then entitled to receive upon the due
exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as
imposing any liabilities on the Holder to purchase any securities (except upon exercise of this
Warrant) or as a stockholder of the Company, whether such liabilities are asserted by the Company
or by creditors of the Company.



     (b) Authorized Shares. (i) The Company covenants that during the period the
Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient
number of shares to provide for the issuance of the Warrant Shares upon the exercise of any
purchase rights under this Warrant. The Company further covenants that its issuance of this
Warrant shall constitute full authority to its officers who are charged with the duty of executing
stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant. The Company will take all commercially
reasonable actions as may be necessary to assure that such Warrant Shares may be issued as
provided herein without violation of any applicable law or regulation, or of any requirements
of the Trading Market upon which the Common Stock may be listed. The Company covenants that all
Warrant Shares which may be issued upon the exercise of the purchase rights represented by



11









 







this
Warrant will, upon exercise of the purchase rights represented by this Warrant in accordance
herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes,
liens and charges created by the Company in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue).



          (ii) Except and to the extent as waived or consented to by the Holder, the Company shall not
by any action, including, without limitation, amending its certificate or articles of incorporation
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 actions as may be necessary or
appropriate to protect the rights of Holder as set forth in this Warrant against impairment.
Without limiting the generality of the foregoing, the Company will (a) not increase the par value
of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to
such increase in par value, (b) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the
exercise of this Warrant, and (c) use commercially reasonable efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof
as may be necessary to enable the Company to perform its obligations under this Warrant.




     (c) Successors and Assigns. Subject to the restrictions on transfer set
forth in this Warrant and in Section 4.1 of the Purchase Agreement, and compliance with applicable
securities laws, this Warrant may be assigned by the Holder. This Warrant may not be assigned by
the Company without the written consent of the Holder except to a Successor Entity in the event of
a Fundamental Transaction. This Warrant shall be binding on and inure to the benefit of the Company
and the Holder and their respective successors and permitted assigns. Subject to the preceding
sentence, nothing in this Warrant shall be construed to give to any Person other than the Company
and the Holder any legal or equitable right, remedy or cause of action under this Warrant.



     (d) Amendment and Waiver. Except as otherwise provided herein and subject
the restrictions sent forth in the last sentence of Section 6.4 of the Purchase Agreement, the
provisions of the Warrants may be amended and the Company may take any action herein prohibited, or
omit to perform any act herein required to be performed by it, only if the Company has obtained the
written consent of the Holder of this Warrant.



     (e) Acceptance. Receipt of this Warrant by the Holder shall constitute
acceptance of and agreement to all of the terms and conditions contained herein.



     (f) Governing Law; Jurisdiction. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICTS OF LAW THEREOF. EACH OF THE COMPANY AND THE HOLDER HEREBY IRREVOCABLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE BOROUGH OF MANHATTAN, NEW
YORK, FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED
HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY



12









 







IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT
IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT. EACH OF THE COMPANY AND THE HOLDER
HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY
SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR
OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PERSON AT THE ADDRESS IN EFFECT FOR NOTICES
TO IT UNDER THE PURCHASE AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND
SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT
IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. EACH OF THE COMPANY AND THE
HOLDER HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY.



     (g) Headings. The headings herein are for convenience only, do not constitute a part
of this Warrant and shall not be deemed to limit or affect any of the provisions hereof.



     (h) Severability. In case any one or more of the provisions of this Warrant shall be
invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and
provisions of this Warrant shall not in any way be affected or impaired thereby, and the Company
and the Holder will attempt in good faith to agree upon a valid and enforceable provision which
shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate
such substitute provision in this Warrant.



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]









13









 







IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized
officer as of the date first indicated above.




	 	 	 	 	 
	 	ONCOTHYREON INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Robert L. Kirkman 	 
	 	 	Title:  	President and Chief Executive Officer 	 



 









 






	 	 	 	 	 



SCHEDULE 1




FORM OF EXERCISE NOTICE



[To be executed by the Holder to purchase shares of Common Stock under the Warrant]


Ladies and Gentlemen:



(1) The undersigned is the Holder of Warrant No. __________ (the “Warrant”) issued by Oncothyreon
Inc., a Delaware corporation (the “Company”). Capitalized terms used herein and not otherwise
defined herein have the respective meanings set forth in the Warrant.



(2) The undersigned hereby exercises its right to purchase __________ Warrant Shares pursuant to
the Warrant.



(3) The Holder intends that payment of the Exercise Price shall be made as (check one):





	 	o 	 	 Cash Exercise
	 
	 	o  	 	“Cashless Exercise” under Section 10 of the Warrant




(4) If the Holder has elected a Cash Exercise, the Holder shall pay the sum of $___________ in
immediately available funds to the Company in accordance with the terms of the Warrant.



(5) Pursuant to this Exercise Notice, the Company shall deliver to the Holder Warrant Shares
determined in accordance with the terms of the Warrant.



(6) By its delivery of this Exercise Notice, the undersigned represents and warrants to the Company
that in giving effect to the exercise evidenced hereby the Holder will not beneficially own in
excess of the number of shares of Common Stock (as determined in accordance with Section 13(d) of
the Securities Exchange Act of 1934) permitted to be owned under Section 13 of the Warrant
to which this notice relates.




Dated: _______________________________________



Name of Holder: ________________________________




	 	 	 	 	 
	By:  	 	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 	(Signature must conform in all respects to name of Holder as specified on the face of the Warrant) 	 



 









 






	 	 	 	 	 



SCHEDULE 2




FORM OF ASSIGNMENT



[To be completed and executed by the Holder only upon transfer of the Warrant]


FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
____________ (the “Transferee”) the right represented by the
within Warrant to purchase _______ shares of Common Stock of Oncothyreon Inc. (the “Company”) to which the within Warrant
relates and appoints __________ attorney to transfer said right on the
books of the Company with full power of substitution in the premises. In connection therewith, the
undersigned represents, warrants, covenants and agrees to and with the Company that:





	(a)	 	the offer and sale of the Warrant contemplated hereby is being made in compliance with
Section 4(1) of the United States Securities Act of 1933, as amended (the “Securities Act”) or
another valid exemption from the registration requirements of Section 5 of the Securities Act
and in compliance with all applicable securities laws of the states of the United States;






	(b)	 	the undersigned has not offered to sell the Warrant by any form of general solicitation or
general advertising, including, but not limited to, any advertisement, article, notice or
other communication published in any newspaper, magazine or similar media or broadcast over
television or radio, and any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising;






	(c)	 	the undersigned has read the Transferee’s investment letter included herewith, and to its
actual knowledge, the statements made therein are true and correct; and






	(d)	 	the undersigned understands that the Company may condition the transfer of the Warrant
contemplated hereby upon the delivery to the Company by the undersigned or the Transferee, as
the case may be, of a written opinion of counsel (which opinion shall be in form, substance
and scope customary for opinions of counsel in comparable transactions) to the effect that
such transfer may be made without registration under the Securities Act and under applicable
securities laws of the states of the United States.





	 	 	 

	Dated: _________________________________________
	 	 
	 
	 	 
	 

	 	(Signature must conform in all respects to name of
holder as specified on the face of the Warrant)
	 
	 	 
	 
	 

	 	Address of Transferee
	 
	 

	 	 
	 
	 

	 	 
	In the presence of: