EXHIBIT 4.2


 


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


 


AN INVESTMENT IN THESE
SECURITIES INVOLVES A HIGH DEGREE OF RISK. HOLDERS MUST RELY ON THEIR OWN
ANALYSIS OF THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED.


 




	
   

  	
   

  	
   

  
	
  Warrant
  to Purchase

  	
   

  	
   

  
	
  Shares

  	
   

  	
  Warrant
  Number    

  
	
   

  	
   

  	
   

  






 


Warrant to Purchase Common Stock


of


ARRAY BIOPHARMA INC.


 


THIS CERTIFIES that
                                    
or any subsequent holder hereof (“Holder”) has the right to purchase
from ARRAY BIOPHARMA INC., a Delaware corporation, (the “Company”),
                              
(              )
fully paid and nonassessable shares, of the Company’s common stock, $0.001 par
value per share (“Common Stock”), subject to adjustment as provided
herein, at a price equal to the Exercise Price (as defined in Section 3
below), at any time during the Term (as defined below).


 


Holder agrees with the
Company that this Warrant to Purchase Common Stock of the Company (this “Warrant”
or this “Agreement”) is issued and all rights hereunder shall be held
subject to all of the conditions, limitations and provisions set forth herein.


 


1. Date of Issuance and
Term.


 


This Warrant shall be deemed
to be issued on [        ], 2009 (“Date
of Issuance”). The term of this Warrant begins on the Date of Issuance and
ends at 5:00 p.m., New York City time on April 29, 2014 (the “Term”).
This Warrant was issued in conjunction with that certain Facility Agreement
(the “Facility Agreement”) by and between the Company and Deerfield
Private Design Fund, L.P., a Delaware limited partnership, and Deerfield
Private Design International, L.P., a limited partnership organized under the
laws of the British Virgin Islands (individually, a “Lender” and
together, the “Lenders”), that certain Registration Rights Agreement (“Registration
Rights Agreement”) by and between the Company and the Lenders, each dated May 15,
2009, entered into in conjunction herewith.


 


Notwithstanding anything
herein to the contrary, the Company shall not issue to the Holder, and the
Holder may not acquire, a number of shares of Common Stock upon exercise of
this Warrant to the extent that, upon such exercise, the number of shares of
Common Stock then beneficially owned by the Holder


 


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


 





















 


and its Affiliates and any
other persons or entities whose beneficial ownership of Common Stock would be
aggregated with the Holder’s for purposes of Section 13(d) of the
Securities Exchange Act of 1934 (the “Exchange Act”) (including shares
held by any “group” of which the Holder is a member, but excluding shares
beneficially owned by virtue of the ownership of securities or rights to
acquire securities that have limitations on the right to convert, exercise or
purchase similar to the limitation set forth herein) would exceed 9.98% of the
total number of shares of Common Stock then issued and outstanding (the “9.98%
Cap”), provided, however, that the 9.98% Cap shall not apply with respect
to the issuance of shares of Common Stock pursuant to a Redemption Upon Major
Transaction (as defined below) in connection with a Major Transaction (as
defined below) covered by the provisions of Section 5(c)(i)(A)(1) below
in which the Company is not the surviving entity (a “Qualified Change of
Control Transaction”) to the extent that the number of shares beneficially
owned by the Holder and its affiliates in the successor entity immediately
following consummation of such Qualified Change of Control Transaction does not
exceed 9.98% of the outstanding common stock of such successor entity and
provided, further, that the 9.98% Cap shall only apply to the extent that the
Common Stock is deemed to constitute an “equity security” pursuant to Rule 13d-1(i)
promulgated under the Exchange Act.  For
purposes hereof, “group” has the meaning set forth in Section 13(d) of the
Exchange Act and applicable regulations of the Securities and Exchange
Commission (the “SEC”), and the percentage held by the Holder shall be
determined in a manner consistent with the provisions of Section 13(d) of
the Exchange Act. Upon the written request of the Holder, the Company shall,
within two (2) Trading Days confirm orally and in writing to the Holder
the number of shares of Common Stock then outstanding.


 


“Affiliate” means any
person or entity that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
person or entity, as such terms are used in and construed under Rule 144
under the Securities Act of 1933, as amended (the “Securities Act”).
With respect to a Holder of Warrants, any investment fund or managed account
that is managed on a discretionary basis by the same investment manager as such
Holder will be deemed to be an Affiliate of such Holder.


 


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


 


“Holder” means
Deerfield Private Design International, L.P. and any transferee or assignee pursuant
to the terms of this Warrant.


 


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


 


2. Exercise.


 


(a)  Manner of Exercise. During the period beginning
on the earlier of (x) the six-month anniversary of the date a
“Disbursement” is made pursuant to Section 2.2 of the Facility Agreement
and (y) September 9, 2009 if a “Disbursement Request” shall not have
been received pursuant to the terms of the Facility Agreement between the date
hereof and the close of business on September 9, 2009, and ending at 5:00 p.m.,
New York City time on April 29, 2014, this Warrant may be Exercised as to
all or any lesser number of full shares of Common Stock covered hereby (the “Warrant
Shares” or the “Shares”) upon surrender of this Warrant, with the
Exercise Form attached hereto as Exhibit A (the “Exercise
Form”) duly completed and executed, together with the full Exercise Price
(as defined below, which may be satisfied by a Cash Exercise or a Cashless
Exercise, as each is defined below) for each share of Common Stock as to which
this Warrant is Exercised, at the office of the Company, Array BioPharma Inc.,
3200 Walnut Street, Boulder, CO 80301; Attention: Chief Financial Officer
Phone: (303) 381-6663, Fax: (303) 381-6697, or at such other office or agency
as the Company may designate in writing, by overnight mail,


 


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


 


2





















 


with an advance copy of the
Exercise Form sent to the Company and its transfer agent (“Transfer
Agent”) by facsimile (such surrender and payment of the Exercise Price
hereinafter called the “Exercise” of this Warrant).


 


(b) Date of Exercise. The “Date of Exercise”
of the Warrant shall be defined as the date that the Exercise Form attached
hereto as Exhibit A, completed and executed, and the original
Warrant are received by the Company and the Exercise Price is satisfied
pursuant to Section 3 below.  Upon
receipt of the properly completed and executed Exercise Form, the original
Warrant and the Exercise Price by the Company, the Holder shall be deemed for
all corporate purposes to have become the holder of record of the Warrant
Shares with respect to which this Warrant has been Exercised, irrespective of
the date such Warrant Shares are credited to the Holder’s Depository Trust
Company (“DTC”) account or the date of delivery of the certificates
evidencing such Warrant Shares as the case may be.


 


(c) Delivery of Common Stock Upon Exercise. Within three (3) Business
Days after any Date of Exercise (the “Delivery Period”), the Company
shall issue and deliver (or cause its Transfer Agent so to issue and deliver)
in accordance with the terms hereof to or upon the order of the Holder that
number of shares of Common Stock (“Exercise Shares”) for the portion of
this Warrant Exercised as shall be determined in accordance herewith. Upon the
Exercise of this Warrant or any part thereof, the Company shall, at its own
cost and expense, take all reasonable steps, including obtaining and delivering
an opinion of counsel, to assure that the Transfer Agent shall issue stock
certificates in the name of Holder (or its nominee) or such other persons as
designated by Holder and in such denominations to be specified at Exercise
representing the number of shares of Common Stock issuable upon such Exercise.
The Company warrants that no instructions contrary to these instructions have
been or will be given to the Transfer Agent and that, unless waived by the
Holder, the Exercise Shares will be free-trading, and freely transferable, and
will not contain a legend restricting the resale or transferability of the
Exercise Shares if the Unrestricted Conditions (as defined in paragraph 2(e)(ii) below)
are met.


 


(d) Delivery Failure. In addition to any other
remedies which may be available to the Holder, in the event that the Company
fails for any reason to effect delivery of the Exercise Shares by the end of
the Delivery Period (a “Delivery Failure”), the Holder will be entitled
to revoke all or part of the relevant Exercise Form by delivery of a
notice to such effect to the Company whereupon the Company and the Holder shall
each be restored to their respective positions immediately prior to the
delivery of such notice, except that the liquidated damages described herein
shall be payable through the date notice of revocation or rescission is given
to the Company.


 


(e) Legends.


 


(i) Restrictive
Legend. The Holder understands that until such time as this Warrant, the
Exercise Shares and the Redemption Shares have been registered under the
Securities Act as contemplated by the Registration Rights Agreement or
otherwise may be sold pursuant to Rule 144 under the Securities Act or an
exemption from registration under the Securities Act without any restriction as
to the number of securities as of a particular date that can then be
immediately sold, this Warrant, the Exercise Shares and the Redemption Shares,
as applicable, shall bear a restrictive legend in substantially the following
form (and a stop-transfer order may be placed against transfer of the
certificates for such securities):


 


“THE SECURITIES REPRESENTED
BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAW, AND MAY NOT
BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
OR EXERCISED UNLESS (I) A REGISTRATION STATEMENT REGISTERING SUCH
SECURITIES UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE, OR 


 


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


 


3





















 


(II) THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT THAT SUCH TRANSFER MAY LAWFULLY
BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OR QUALIFICATION UNDER
APPLICABLE STATE SECURITIES LAWS, OR (III) SUCH SECURITIES ARE SOLD
PURSUANT TO RULE 144 OR RULE 144A.”


 


“THE SALE, TRANSFER OR
ASSIGNMENT OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERMS AND CONDITIONS OF A CERTAIN REGISTRATION RIGHTS AGREEMENT DATED AS OF MAY 15,
2009, AS AMENDED FROM TIME TO TIME, AMONG THE COMPANY AND CERTAIN HOLDERS OF
ITS OUTSTANDING SECURITIES. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO
COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE COMPANY.”


 


(ii) Removal
of Restrictive Legends. This Warrant, the certificates evidencing the
Exercise Shares and any Redemption Shares, as applicable, shall not contain any
legend restricting the transfer thereof (including the legend set forth above
in subsection 2(e)(i)): (A) while a registration statement (including a
Registration Statement, as defined in the Registration Rights Agreement, or any
Shelf Registration Statement with respect to Redemption Shares, as defined in Section 4(c) below)
covering the resale of such security is effective under the Securities Act, or (B) following
any sale of such Warrant, Exercise Shares and/or Redemption Shares pursuant to Rule 144,
or (C) if such Warrant, Exercise Shares and/or Redemption Shares are
eligible for sale under Rule 144(b)(1)(i), or (D) if such legend is
not required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the staff of the SEC) and
the Company shall have received an opinion of counsel of Holder to such effect
(collectively, the “Unrestricted Conditions”).  The Company shall cause its counsel to issue
a legal opinion to the Transfer Agent promptly after the Effective Date (as
defined below) if required by the Company’s transfer agent to effect the
issuance of the Exercise Shares or any Redemption Shares without a restrictive
legend or removal of the legend hereunder. If the Unrestricted Conditions are
met at the time of issuance of this Warrant, Exercise Shares and/or Redemption
Shares, then such Warrant, Exercise Shares and/or Redemption Shares shall be
issued free of all legends.  The Company
agrees that following the Effective Date or at such time as the Unrestricted
Conditions are met or such legend is otherwise no longer required under this Section 2(e),
it will, no later than three (3) Trading Days following the delivery (the
“Unlegended Shares Delivery Deadline”) by the Holder to the Company or
the Transfer Agent of this Warrant and a certificate representing Exercise
Shares or Redemption Shares, as applicable, issued with a restrictive legend
(such third Trading Day, the “Legend Removal Date”), deliver or cause to
be delivered to such Holder this Warrant and/or a certificate (or electronic
transfer) representing such shares that is free from all restrictive and other
legends. For purposes hereof, “Effective Date” shall mean the date that
the Registration Statement that the Company is required to file pursuant to the
Registration Rights Agreement or any Shelf Registration Statement pursuant to Section 4(c) below
has been declared effective by the SEC.


 


(iii) Sale
of Unlegended Shares. Holder agrees that the removal of the restrictive
legend from this Warrant and any certificates representing securities as set
forth in this Section 2(e)(ii) above is predicated upon the Company’s
reliance that the Holder will sell this Warrant, Exercise Shares and/or
Redemption Shares pursuant to either the registration requirements of the
Securities Act, including any applicable prospectus delivery requirements, or
an exemption therefrom, and that if such securities are sold pursuant to a
Registration Statement, they will be sold in compliance with the plan of
distribution set forth therein.


 


(f) Cancellation of Warrant. This Warrant
shall be canceled upon the full Exercise of this Warrant or upon full
redemption of this Warrant. As soon as practical after the Date of Exercise,
Holder shall be entitled to receive Common Stock for the number of shares
purchased upon Exercise of this Warrant, and if this Warrant is not Exercised
in full, Holder shall be entitled to receive a new Warrant (containing 


 


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


 


4





















 


terms identical to this
Warrant) representing any unexercised portion of this Warrant in addition to
such Common Stock.


 


(g) Holder of Record. Each person in whose name
any Warrant for shares of Common Stock is issued shall, for all purposes, be
deemed to be the Holder of record of such shares on the Date of Exercise of
this Warrant, irrespective of the date of delivery of the Common Stock
purchased upon the Exercise of this Warrant. Nothing in this Warrant shall be
construed as conferring upon Holder any rights as a stockholder of the Company.


 


(h) Delivery of Electronic Shares. In lieu of
delivering physical certificates representing the Common Stock issuable upon
Exercise or legend removal or representing Redemption Shares, provided the
Company’s Transfer Agent is participating in the DTC Fast Automated Securities
Transfer (“FAST”) program, upon written request of the Holder, the
Company shall use commercially reasonable efforts to cause its Transfer Agent
to electronically transmit the Common Stock issuable to the Holder by crediting
the account of the Holder’s prime broker with DTC through its Deposit
Withdrawal Agent Commission (DWAC) system. The time periods for delivery and
penalties described herein shall apply to the electronic transmittals described
herein.  Any delivery not effected by
electronic transmission shall be effected by delivery of physical certificates.


 


(i) Buy-In. In addition to any other
rights available to the Holder, if the Company fails to cause its Transfer
Agent to transmit to the Holder a certificate or certificates representing the
Exercise Shares pursuant to an Exercise on or before the Delivery Period (other
than a failure caused by any incorrect or incomplete information provided by
Holder to the Company hereunder or the negligence or any act or failure to act
of the Transfer Agent), and if after such date the Holder is required by its
broker to purchase (in an open market transaction or otherwise) or the Holder’s
brokerage firm otherwise purchases shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Exercise Shares which the Holder
anticipated receiving upon such Exercise (a “Buy-In”), then the Company
shall (1) pay in cash to the Holder the amount by which (x) the
Holder’s total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (y) the amount obtained by
multiplying (A) the number of Exercise Shares that the Company was
required to deliver to the Holder in connection with the Exercise at issue
times and (B) the price at which the sell order giving rise to such purchase
obligation was executed, and (2) at the option of the Holder, either
reinstate the portion of the Warrant and equivalent number of Exercise Shares
for which such Exercise was not honored or deliver to the Holder certificate(s) representing
the number of shares of Common Stock that would have been issued had the
Company timely complied with its Exercise and delivery obligations hereunder.
For example, if the Holder purchases Common Stock having a total purchase price
of $11,000 to cover a Buy-In with respect to an attempted Exercise to cover the
sale of Common Stock with an aggregate sale price giving rise to such purchase
obligation of $10,000, under subsection (1) of the immediately preceding
sentence, the Company shall be required to pay the Holder $1,000. The Holder
shall provide the Company written notice indicating the amounts payable to the
Holder in respect of the Buy-In, together with applicable confirmations and
other evidence reasonably requested by the Company. Nothing herein shall limit
a 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 certificates representing shares of Common Stock upon Exercise of the
Warrant as required pursuant to the terms hereof.


 


3. Payment of Warrant
Exercise Price.


 


(a) Exercise Price. The Exercise Price (“Exercise
Price”) shall initially equal $[      ] per
share subject to adjustment pursuant to the terms hereof, including but not
limited to Section 5 below.


 


Payment of the Exercise
Price may be made by either of the following, or a combination thereof, at the 


 


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


 


5





















 


election of Holder:


 


(i) Cash Exercise: The Holder may exercise this
Warrant in cash, bank or cashier’s check or wire transfer (a “Cash Exercise”);
or


 


(ii) Cashless Exercise:  The
Holder, at its option, may exercise this Warrant in a cashless exercise
transaction. In order to effect a Cashless Exercise, the Holder shall surrender
this Warrant at the principal office of the Company together with notice of
cashless election, in which event the Company shall issue Holder a number of
shares of Common Stock computed using the following formula (a “Cashless
Exercise”):


 


X = Y (A-B)/A


 


where:    X = the number of shares of Common Stock to
be issued to Holder.


 


Y
= the number of shares of Common Stock for which this Warrant is being
Exercised.


 


A
= the Market Price of one (1) share of Common Stock (for purposes of this Section 3(a)(ii),
where “Market Price,” as of any date, means the average Volume Weighted
Average Price (as defined below) of the Company’s Common Stock over the five (5) consecutive
Trading Day period immediately preceding the date in question.


 


B
= the Exercise Price.


 


As used herein, the “Volume
Weighted Average Price” for any security as of any date means the volume
weighted average sale price on The NASDAQ Global Market (“NASDAQ”) as
reported by, or based upon data reported by, Bloomberg Financial Markets or an
equivalent, reliable reporting service mutually acceptable to and hereafter
designated by holders of a majority in interest of the Warrants and the Company
(“Bloomberg”) or, if NASDAQ is not the principal trading market for such
security, the volume weighted average sale price of such security on the
principal securities exchange or trading market where such security is listed
or traded as reported by Bloomberg, or, if no volume weighted average sale
price is reported for such security, then the last closing trade price of such
security as reported by Bloomberg, or, if no last closing trade price is
reported for such security by Bloomberg, the average of the bid prices of any
market makers for such security that are listed in the over the counter market
by the Financial Industry Regulatory Authority, Inc. or in the “pink
sheets” by the National Quotation Bureau, Inc. If the Volume Weighted
Average Price cannot be calculated for such security on such date in the manner
provided above, the volume weighted average price shall be the fair market
value as mutually determined by the Company and the Holders of a majority in
interest of the Warrants being Exercised for which the calculation of the
volume weighted average price is required in order to determine the Exercise
Price of such Warrants.


 


For purposes of Rule 144
and sub-section (d)(3)(ii) thereof, it is intended, understood and
acknowledged that the Common Stock issuable upon Exercise of this Warrant in a
Cashless Exercise shall be deemed to have been acquired at the time this
Warrant was issued. Moreover, it is intended, understood and acknowledged that
the holding period for the Common Stock issuable upon Exercise of this Warrant
in a Cashless Exercise shall be deemed to have commenced on the date this
Warrant was issued.


 


(b) Dispute
Resolution. In the case of a dispute as to the determination of
the closing price or the Volume Weighted Average Price of the Company’s Common
Stock or the arithmetic calculation of the Exercise Price, Market Price or any
Redemption Price, the Company shall submit the disputed determinations or
arithmetic calculations via facsimile within two (2) Business Days of
receipt, or deemed receipt, of the Exercise Notice or Redemption Notice, or
other event giving rise to such dispute, as the case may be, to the Holder. If
the Holder and the Company are unable to agree upon such determination or
calculation within two (2) Business Days of such disputed determination or
arithmetic calculation being submitted to the Holder, then the Company shall,
within two (2) Business Days submit via facsimile (i) the disputed


 


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


 


6





















 


determination of the closing
price or the Volume Weighted Average Price of the Company’s Common Stock to an
independent, reputable investment bank selected by the Company and approved by
the Holder, which approval shall not be unreasonably withheld or (ii) the
disputed arithmetic calculation of the Exercise Price, Market Price or any
Major Transaction Warrant Redemption Price to the Company’s independent,
outside accountant.  The Company shall
use commercially reasonable efforts to cause the investment bank or the
accountant, as the case may be, to perform the determinations or calculations
and notify the Company and the Holder of the results no later than five (5) 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, and
the Company and the Holder shall each pay one-half of the fees and costs of
such investment bank or accountant.


 


4. Transfer and
Registration.


 


(a) Transfer
Rights. Subject to the provisions of Section 8 of this
Warrant, this Warrant may be transferred on the books of the Company, in whole
or in part, in person or by attorney, upon surrender of this Warrant properly
completed and endorsed. This Warrant shall be canceled upon such surrender and,
as soon as practicable thereafter, the person to whom such transfer is made
shall be entitled to receive a new Warrant or Warrants as to the portion of
this Warrant transferred, and Holder shall be entitled to receive a new Warrant
as to the portion hereof retained.


 


(b) Registrable
Securities. The Common Stock
issuable upon the Exercise of this Warrant has registration rights pursuant to
the Registration Rights Agreement.


 


(c) Registration of
Redemption Shares.  The Company
agrees to prepare and file with the SEC one or more “shelf” registration
statement(s) on Form S-3 (the “Shelf Registration Statement”)
for an offering to be made on a continuous basis pursuant to Rule 415 of
the Securities Act promptly following issuance of this Warrant, and to use its
commercially reasonable efforts to cause any such Shelf Registration Statement
to become effective as soon as possible after such filing, covering the
issuance of a sufficient number of shares of Common Stock that may be
deliverable by it upon a redemption of this Warrant under Sections 5(c)(iii) or
11 or in satisfaction of any Failure Payments (as defined in Section 10
below) under Section 10. For so long as all or any portion of this Warrant
is outstanding, the Company agrees to use its commercially reasonable efforts
to ensure that any Shelf Registration Statement shall continuously be effective
and contain a sufficient number of shares of Common Stock available to be
issued pursuant to any such Shelf Registration Statement to cover shares
estimated by the Company in good faith that may be issuable by it upon a
redemption of this Warrant under Sections 5(c)(iii) or 11 or in
satisfaction of any Failure Payments under Section 10, including by
preparing and filing such amendments (including post-effective amendments) and
supplements to any such Shelf Registration Statement and preparing and filing a
subsequent Shelf Registration Statement if a previously filed and effective
Shelf Registration Statement will no longer deemed current and effective or
such Shelf Registration Statement does not cover a sufficient number of shares
that may be issuable by the Company upon a redemption of this Warrant under
Sections 5(c)(iii) or 11 or in satisfaction of any Failure Payments under Section 10
; provided, however, in no event shall the Shelf Registration Statement(s) be
required to register in the aggregate more than [***]
shares of Common Stock.  To the extent
the Shelf Registration Statement provided for under this paragraph is
effective, at any time that shares of Common Stock are issuable to the Holder
upon a redemption of the Warrant under Sections 5(c)(iii) or 11 or in
satisfaction of any Failure Payments under Section 10, such shares
delivered to the Holder shall be registered pursuant to such Shelf Registration
Statement. Notwithstanding anything to the contrary herein (i) the Company
may delay or suspend the effectiveness of a Shelf Registration Statement or the
use of any prospectus forming a part of a Shelf Registration Statement due to
the non-disclosure of material, non-public information concerning Company the
disclosure of which at the time is not in its best interest, in the good faith


 


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


 


7





















 


opinion of the Company;
provided that no such periods shall individually exceed 90 days or in the
aggregate exceed 90 days during any 12-month period and (ii) a delay in
the effectiveness of a Shelf Registration Statement caused solely by the filing
of a request for confidential treatment shall not be deemed an Event of Failure
or an Event of Default herein.


 


5.  Adjustments Upon Certain Events.


 


(a) Participation.
The Holder, as the holder of this Warrant, shall be entitled to receive such
dividends paid and distributions of any kind made to the holders of Common
Stock of the Company to the same extent as if the Holder had Exercised this
Warrant into Common Stock (without regard to any limitations on exercise herein
or elsewhere and without regard to whether or not a sufficient number of shares
are authorized and reserved to effect any such exercise and issuance) and had
held such shares of Common Stock on the record date for such dividends and
distributions. Payments under the preceding sentence shall be made concurrently
with the dividend or distribution to the holders of Common Stock.


 


(b) Recapitalization
or Reclassification. If the Company shall at any time effect a
recapitalization, reclassification or other similar transaction of such
character that the shares of Common Stock shall be changed into or become
exchangeable for a larger or smaller number of shares, then upon the effective
date thereof, the number of shares of Common Stock which Holder shall be
entitled to purchase upon Exercise of this Warrant shall be increased or
decreased, as the case may be, in direct proportion to the increase or decrease
in the number of shares of Common Stock by reason of such recapitalization,
reclassification or similar transaction, and the Exercise Price shall be, in
the case of an increase in the number of shares, proportionally decreased and,
in the case of decrease in the number of shares, proportionally increased. The
Company shall give Holder the same notice it provides to holders of Common
Stock of any transaction described in this Section 5(b).


 


(c) Rights
Upon Major Transaction.
Certain capitalized terms used in this Section and not defined elsewhere
have the meanings given to them below.


 


(i) Major Transaction.  [***]
then the Holder shall have the right to require the Company to redeem all or a
portion of the Holder’s outstanding Warrants [***]
in accordance with Section 5(c)(iii) below.  In addition, in the event of a Qualified
Change of Control Transaction, to the extent the Holder shall not have
exercised its right to require the Company to redeem the Holder’s Warrants
within the applicable time periods set forth herein, then the Major Transaction
shall be treated as an Assumption (as defined below) in accordance with Section 5(c)(ii).  Notwithstanding anything herein to the
contrary, the Holder shall have the right to waive its rights under this Section 5(c) with
respect to all or any portion of any Major Transaction in which event none of
the provisions of this Section 5(c)(i) shall apply.


 


[***]


 


Each of the following
events shall constitute a “Major Transaction”:


 


(A) a consolidation,
merger, exchange of shares, recapitalization, reorganization, business
combination or other similar event, (1) following which the holders of
Common Stock immediately preceding such consolidation, merger, exchange,
recapitalization, reorganization, combination or event either (a) no
longer hold a majority of the shares of Common Stock or (b) no longer have
the ability to elect a majority of the board of directors of the Company or (2) as
a result of which shares of Common Stock shall be changed into (or the shares
of Common Stock become entitled to receive) the same or a different number of
shares of the same or another class or classes of stock or securities of the
Company or another entity (collectively, a “Change of Control Transaction”);


 


(B) the sale or
transfer in one transaction or in a series of related transactions (i) of
all or 


 


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


 


8





















 


substantially all of the assets of the
Company, (ii) of assets for a purchase price equal to more
than [***], or (iii) of assets
that represent 50% or more of the assets [***];


 


(C) a purchase,
tender or exchange offer made to the holders of outstanding shares of Common
Stock, such that following such purchase, tender or exchange offer a Change of
Control Transaction shall have occurred and is consummated;


 


(D) the liquidation,
bankruptcy, insolvency, dissolution or winding-up (or the occurrence of any
analogous proceeding) of the Company; or


 


(E) the shares of
Common Stock cease to be listed, traded or publicly quoted on NASDAQ and are
not promptly re-listed or requoted on either the New York Stock Exchange, the
NYSE Afternext U.S., or the NASDAQ Global Select Market; or the NASDAQ Capital
Market; or


 


(F) the Common Stock
ceases to be registered under Section 12 of the Exchange Act.


 


For
purposes hereof, the following terms have the definitions set forth below:


 


A
“Cash-Out Major Transaction” means a Major Transaction in which the
consideration payable to holders of Common Stock in connection with the Major
Transaction consists solely of cash.


 


An
“Eligible Market” means the over the counter Bulletin Board, the New
York Stock Exchange, Inc., the NYSE Arca, the NASDAQ Capital Market, the
NASDAQ Global Market, the NASDAQ Global Select Market or the American Stock
Exchange.


 


A
“Mixed Major Transaction” means a Major Transaction in which the
consideration payable to the shareholders of the Company consists partially of
cash and partially of securities of a Successor Entity.  If the Successor Entity is a Publicly Traded
Successor Entity, the percentage of consideration represented by securities of
such Successor Entity shall be equal to the percentage that the value of the
aggregate anticipated number of shares of the Publicly Traded Successor Entity
to be issued to holders of Common Stock of the Company represents in comparison
to the aggregate value of all consideration, including cash consideration, in
such Mixed Major Transaction, as such values are set forth in any definitive
agreement for the Mixed Major Transaction that has been executed at the time of
the first public announcement of the Major Transaction or, if no such value is
determinable from such definitive agreement, based on the closing market price
for shares of the Publicly Traded Successor Entity on its principal securities
exchange on the Trading Day preceding the first public announcement of the
Mixed Major Transaction. If the Successor Entity is a Private Successor Entity,
the percentage of consideration represented by securities of such Successor
Entity shall be determined in good-faith by the Company’s Board of Directors


 


[***]


 


A
“Parent Entity” of a Person means an entity that, directly or
indirectly, controls the applicable Person and whose common stock or equivalent
equity security is quoted or listed on an Eligible Market, 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 a Major
Transaction.


 


A
“Person” means a limited liability company, a partnership, a joint
venture, a corporation or a trust.


 


A
“Publicly Traded Successor Entity” means a Successor Entity that is a publicly traded
corporation whose common stock is quoted on or listed for trading on an
Eligible Market (as defined below).


 


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


 


9





















 


[***]


 


“Redemption
Shares” means shares of Common Stock of the Company that may be issuable
from time to time pursuant to Section 5(c)(iii), 10 and/or 11 hereof and
that are registered for resale under the Securities Act pursuant to an
effective registration statement filed by the Company as contemplated by Section 4(c) or,
if such a registration statement is not then effective, shares of Common Stock
of the Company that are not so registered.


 


A
“Successor Entity” shall be a Person as defined in Section 5(c)(ii) below.


 


(ii) Assumption.  The Company shall not enter into or be party
to a Major Transaction that is to be treated as an Assumption pursuant to Section 5(c)(i) above
unless any Person purchasing the Company’s assets or Common Stock, or any
successor entity resulting from such Major Transaction, or if the Warrant is to
be exercisable for shares of its Parent Entity (as defined above), its Parent
Entity (in each case, a “Successor Entity”), shall have assumed in
writing all of the obligations of the Company under this Warrant and the
Registration Rights Agreement in accordance with the provisions of this
subsection (ii) pursuant to written agreements in form and substance
reasonably satisfactory to the Holder and approved by the Holder prior to such
Major Transaction (not to be unreasonably withheld or delayed), including
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 the Warrants, including, without
limitation, an instrument representing the appropriate number of shares of the
Successor Entity, having similar exercise rights as the Warrants (including but
not limited to a similar Exercise Price and similar Exercise Price adjustment
provisions based on the price per share or conversion ratio to be received by
the holders of Common Stock in the Major Transaction), and similar registration
rights as provided herein and under the Registration Rights Agreement. Upon the
occurrence of any Major Transaction treated as an Assumption hereunder, any
Successor Entity shall succeed to, and be substituted for (so that from and
after the date of such Major Transaction, the provisions of this Warrant and
the Registration Rights Agreement (or substantially similar instruments, if
applicable) referring to the “Company” shall refer instead to the Successor
Entity), 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 had been named as the Company herein. Upon
consummation of the Major Transaction, the Successor Entity shall deliver to
the Holder confirmation that there shall be issued upon exercise or redemption
of this Warrant at any time after the consummation of the Major Transaction, in
lieu of the shares of Common Stock (or other securities, cash, assets or other
property) issuable upon the exercise of the Warrants prior to such Major
Transaction, such shares of common stock (or their equivalent) of the Successor
Entity (or such shares of publicly traded common stock (or their equivalent) if
the Successor Entity is a Publicly Traded Successor Entity), as adjusted in
accordance with the provisions of this Warrant. The provisions of this Section shall
apply similarly and equally to successive Major Transactions and shall be
applied without regard to any limitations on the exercise of this Warrant other
than any applicable beneficial ownership limitations.  Any assumption of Company obligations under
this paragraph shall be referred to herein as an “Assumption”.


 


(iii) Notice;
Major Transaction Redemption Right.
At least thirty (30) days prior to the consummation of any Major Transaction,
but, in any event, no later than two (2) Business Days following the
public announcement of such Major Transaction, the Company shall deliver
written notice thereof via facsimile and overnight courier to the Holder (a “Major
Transaction Notice”) [***].


 


[***], at any time during the period beginning
after the Holder’s receipt of a Major Transaction Notice and ending five (5) Trading
Days prior to the scheduled consummation of such Major Transaction, the Holder
may require the Company to redeem (a “Redemption Upon Major Transaction”)
all or any portion of this Warrant by delivering written notice thereof (“Major
Transaction Redemption Notice”) to the Company, which Major Transaction
Redemption Notice shall indicate the portion of the principal amount 


 


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


 


10


















 


(the “Redemption Principal Amount”) of the
Warrant that the Holder is electing to have redeemed. The outstanding portion
of this Warrant to the extent subject to redemption pursuant to this Section 5(c)(iii) (the
“Redeemable Shares”) shall be redeemed by the Company at a price (the “Major
Transaction Warrant Redemption Price”) payable:


 


(x) in the case of a
Cash-Out Major Transaction, or in the case of a Mixed Major Transaction to the
extent of the percentage of the cash consideration in the Mixed Major Transaction
(determined in accordance with the definition of Mixed Major Transaction
below), in cash equal to the “Black Scholes value” of the Redeemable Shares,
and


 


(y) in the case of a
Major Transaction not described in the foregoing proviso (x) and, in the
case of a Mixed Major Transaction to the extent of the percentage of the
consideration to be paid in the Major Transaction represented by the securities
of a Successor Entity, in a number of shares of Redemption Shares equal to the
“Black Scholes value” of the Redeemable Shares divided by [***]%
of the closing price of the Common Stock on the principal securities exchange
or other securities market on which the Common Stock is then being traded on
the Trading Day immediately preceding the date on which the Major Transaction
is consummated; provided, however, that, other than in the instances described
in the provisos contained in the second paragraph of Section 1 hereof, the
Holder shall only receive up to such amount of shares of Common Stock such that
Holder and its Affiliates and any other persons or entities whose beneficial
ownership of Common Stock would be aggregated with the Holder’s for purposes of
Section 13(d) of the Exchange Act (including shares held by any
“group” of which the Holder is a member, but excluding shares beneficially
owned by virtue of the ownership of securities or rights to acquire securities
that have limitations on the right to convert, exercise or purchase similar to
the limitation set forth herein) shall not collectively beneficially own
greater than 9.98% of the total number of shares of Common Stock of the Company
then issued and outstanding; and, provided further, that the foregoing proviso
shall not be construed to require any cash payment by the Company of the
remaining amount of the Major Transaction Warrant Redemption Price.


 


The “Black Scholes value” of the Redeemable Shares
shall be determined by use of the Black Scholes Option Pricing Model using the
criteria set forth on Schedule I hereto.


 


[***]


 


(iv) Escrow;
Payment of Major Transaction Warrant Redemption Price. Following the
receipt of a Major Transaction Redemption Notice from the Holder, the Company
shall not effect a Major Transaction that is being treated as a redemption in
accordance with subsection (iii) above, unless either it obtains the
written agreement of the Successor Entity that payment of the Major Transaction
Warrant Redemption Price shall be made to the Holder upon consummation of such
Major Transaction or it shall first place into an escrow account with an
independent escrow agent, at least three (3) Business Days prior to the
closing date of the Major Transaction (the “Major Transaction Escrow
Deadline”), an amount in cash or shares of Common Stock, as applicable,
equal to the Major Transaction Warrant Redemption Price. Concurrently upon
closing of such Major Transaction, the Company shall pay or shall instruct the
escrow agent to pay the Major Transaction Warrant Redemption Price to the
Holder.  For purposes of determining the
amount required to be placed in escrow pursuant to the provisions of this
subsection (iv) and without affecting the amount of the actual Major
Transaction Warrant Redemption Price, the calculation of the price referred to
in clause (1) of the first column of Schedule 1 hereto with respect to
Stock Price shall be determined based on the Closing Market Price (as defined
herein) of the Common Stock on the Trading Day immediately preceding the date
that the funds are deposited with the escrow agent.


 


(v) Injunction.
Following the receipt of a Major Transaction Redemption Notice from the Holder,
in the event that the Company attempts to consummate a Major Transaction
without either placing the Major Transaction Warrant Redemption Price in escrow
in accordance with subsection (iv) above or obtaining 


 


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


 


11

















 


the written agreement of the Successor Entity that
payment of the Major Transaction Warrant Redemption Price will be made to the
Holder upon consummation of such Major Transaction, the Holder shall have the
right to apply for an injunction in any state or federal courts sitting in the
City of New York, borough of Manhattan to prevent the closing of such Major
Transaction until the Major Transaction Warrant Redemption Price is paid to the
Holder, in full.


 


Redemptions required by this Section 5(c) shall
be made in accordance with the provisions of Section 12 and shall have
priority to payments to holders of Common Stock in connection with a Major
Transaction. To the extent redemptions required by this Section 5(c)(iii) are
deemed or determined by a court of competent jurisdiction to be prepayments of
the Warrant by the Company, such redemptions shall be deemed to be voluntary
prepayments. Notwithstanding anything to the contrary in this Section 5, until
the Major Transaction Warrant Redemption Price is paid in full, this Warrant
may be exercised, in whole or in part, by the Holder into shares of Common
Stock, or in the event the Exercise Date is after the consummation of the Major
Transaction, shares of publicly traded common stock (or their equivalent) of
the Successor Entity pursuant to Section 5(c). The parties hereto agree
that in the event of the Company’s redemption of any portion of the Warrant
under this Section 5(c), the Holder’s damages would be uncertain and
difficult to estimate because of the parties’ inability to predict future
interest rates and the uncertainty of the availability of a suitable substitute
investment opportunity for the Holder. Accordingly, any redemption premium due
under this Section 5(c) is intended by the parties to be, and shall
be deemed, a reasonable estimate of the Holder’s actual loss of its investment
opportunity and not as a penalty.


 


(d) Exercise
Price Adjusted. As used in this Warrant, the term “Exercise Price”
shall mean the purchase price per share specified in Section 3 of this
Warrant, until the occurrence of an event stated in this Section 5 or
otherwise set forth in this Warrant, and thereafter shall mean said price as
adjusted from time to time in accordance with the provisions of said
subsection.  No adjustment made pursuant
to any provision of this Section 5 shall have the net effect of increasing
or decreasing the Exercise Price in relation to the split adjusted and
distribution adjusted price of the Common Stock.


 


(e) Adjustments:
Additional Shares, Securities or Assets. In the event that at any
time, as a result of an adjustment made pursuant to this Section 5 or
otherwise, Holder shall, upon Exercise of this Warrant, become entitled to
receive shares and/or other securities or assets (other than Common Stock)
then, wherever appropriate, all references herein to shares of Common Stock
shall be deemed to refer to and include such shares and/or other securities or
assets; and thereafter the number of such shares and/or other securities or
assets shall be subject to adjustment from time to time in a manner and upon
terms as nearly equivalent as practicable to the provisions of this Section 5.


 


(f) Notice
of Adjustments. Whenever the Exercise Price is adjusted pursuant to
the terms of this Warrant, the Company shall promptly mail to the Holder a
notice (an “Exercise Price Adjustment Notice”) setting forth the
Exercise Price after such adjustment and setting forth a statement of the facts
requiring such adjustment. The Company shall, upon the written request at any
time of the Holder, furnish to such Holder a like Warrant setting forth (i) such
adjustment or readjustment, (ii) the Exercise Price at the time in effect
and (iii) the number of shares of Common Stock and the amount, if any, of
other securities or property which at the time would be received upon Exercise
of the Warrant. For purposes of clarification, whether or not the Company
provides an Exercise Price Adjustment Notice pursuant to this Section 5(f),
upon the occurrence of any event that leads to an adjustment of the Exercise
Price, the Holder would be entitled to receive a number of Exercise Shares
based upon the new Exercise Price, as adjusted, for exercises occurring on or
after the date of such adjustment, regardless of whether a Holder accurately
refers to the adjusted Exercise Price in the Exercise Form.


 


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


 


12

















 


6. Fractional Interests.


 


No fractional shares or
scrip representing fractional shares shall be issuable upon the Exercise of
this Warrant, but on Exercise of this Warrant, Holder may purchase only a whole
number of shares of Common Stock. If, on Exercise of this Warrant, Holder would
be entitled to a fractional share of Common Stock or a right to acquire a
fractional share of Common Stock, such fractional share shall be disregarded
and the number of shares of Common Stock issuable upon Exercise shall be the
next higher whole number of shares.


 


7. Reservation of Shares.


 


From and after the date
hereof, the Company shall at all times reserve for issuance such number of
authorized and unissued shares of Common Stock (or other securities substituted
therefor as herein above provided) as shall be sufficient for the Exercise of
this Warrant and payment of the Exercise Price. If at any time the number of
shares of Common Stock authorized and reserved for issuance is below the number
of shares sufficient for the Exercise of this Warrant (a “Share
Authorization Failure”) (based on the Exercise Price in effect from time to
time), the Company will promptly take all corporate action necessary to
authorize and reserve a sufficient number of shares, including, without
limitation, calling a special meeting of stockholders to authorize additional
shares to meet the Company’s obligations under this Section 7, in the case
of an insufficient number of authorized shares, and using commercially
reasonable efforts to obtain stockholder approval of an increase in such
authorized number of shares. The Company covenants and agrees that upon the
Exercise of this Warrant, all shares of Common Stock issuable upon such
Exercise shall be duly and validly issued, fully paid and nonassessable and not
subject to preemptive rights, rights of first refusal or similar rights of any
person or entity.


 


8. Restrictions on
Transfer.


 


(a) Registration
or Exemption Required. This Warrant has been issued in a transaction
exempt from the registration requirements of the Securities Act by virtue of
Regulation D and exempt from state registration under applicable state laws.
The Warrant, the Common Stock issuable upon the Exercise of this Warrant and
any Redemption Shares issued pursuant hereto may not be pledged, transferred,
sold or assigned except pursuant to an effective registration statement, pursuant
to Rule 144 or after receipt by the Company of an opinion of counsel for
the Holder that any such pledge, transfer, sale or assignment shall be exempt
from the registration requirements of the Securities Act and applicable state
laws including, without limitation, a so-called “4(1) and a half”
transaction.  The Holder agrees to comply
with any reporting obligations applicable to it under Section 16 of the
Exchange Act with respect to this Warrant, the Warrant Shares, the Redemption
Shares and any other shares of Common Stock beneficially owned by it, and to
furnish the Company with copies of all reports filed by it with the SEC
pursuant to Section 16.


 


(b) Assignment.
Subject to compliance with the second sentence of Section 8(a),
the Holder may sell, transfer, assign, pledge or otherwise dispose of this
Warrant, in whole or in part. Holder shall deliver a written notice to Company,
substantially in the form of the Assignment attached hereto as Exhibit B,
indicating the person or persons to whom the Warrant shall be assigned and the
respective number of warrants to be assigned to each assignee. The Company
shall effect the assignment within three (3) Business Days of its receipt
of a properly completed and executed form of Assignment and, if required by this
Warrant, receipt by the Company of an opinion of counsel (the “Transfer
Delivery Period”), and shall deliver to the assignee(s) designated by
Holder a Warrant or Warrants of like tenor and terms for the appropriate number
of shares.  This Warrant and the rights
evidenced hereby shall inure to the benefit of and be binding upon the
successors and assigns of the Holder. The provisions of this Warrant are
intended to be for the benefit of all Holders from time to time of this
Warrant, and shall be enforceable by any such Holder.  For avoidance of doubt, in the event Holder
notifies the Company that such sale or transfer is a so called “4(1) and
half” transaction, the parties hereto agree that a legal opinion from outside
counsel for the Holder delivered to counsel for the Company substantially in
the form attached hereto as Exhibit C, 


 


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


 


13

















 


shall be the only
requirement to satisfy an exemption from registration under the Securities Act
to effectuate such “4(1) and half” transaction.


 


9. Noncircumvention.
The Company hereby covenants and agrees that the Company will not, by amendment
of its certificate of incorporation, bylaws or through any reorganization,
transfer of assets, consolidation, merger, scheme of arrangement, 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, and
will at all times in good faith carry out all the provisions of this Warrant
and take all action as may be reasonably required to protect the rights of the
Holder. Without limiting the generality of the foregoing, the Company (i) shall
not increase the par value of any shares of Common Stock receivable upon the
exercise of this Warrant above the Exercise Price then in effect, and (ii) shall
take all such actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant.


 


10. Events of Failure;
Definition of Black Scholes Value.


 


(a) Definitions.


 


The occurrence of each of
the following shall be considered to be an “Event of Failure.”


 


(i) A
Delivery Failure occurs, where a “Delivery Failure” shall be deemed to
have occurred if the Company fails to use reasonable best efforts to deliver
Exercise Shares to the Holder within any applicable Delivery Period (other than
due to the limitation contained in the proviso in the second paragraph of Section 1);


 


(ii) A
Legend Removal Failure occurs, where a “Legend Removal Failure” shall be
deemed to have occurred if the Company fails to use reasonable best efforts to
issue this Warrant and/or Exercise Shares without a restrictive legend, or
fails to use reasonable best efforts to remove a restrictive legend, when and
as required under Section 2(e) hereof;


 


(iii) a
Transfer Delivery Failure occurs, where a “Transfer Delivery Failure”
shall be deemed to have occurred if the Company fails to use reasonable best
efforts to deliver a Warrant within any applicable Transfer Delivery Period;
and


 


(iv) a
Registration Failure (as defined below) (subject to any Grace Periods).


 


For purpose hereof, “Registration
Failure” means that (A) the Company fails to file with the SEC on or
before the Filing Deadline (as defined in the Registration Rights Agreement)
any Registration Statement required to be filed pursuant to Section 2(a) of
the Registration Rights Agreement, or (B) the Company fails to use
reasonable best efforts to obtain effectiveness with the SEC, prior to the
Registration Deadline (as defined in the Registration Rights Agreement), and if
such Registration Statement is not so filed prior to the Registration Deadline,
as soon as possible thereafter, of any Registration Statement (as defined in
the Registration Rights Agreement) that are required to be filed pursuant to Section 2(a) of
the Registration Rights Agreement, or fails to use reasonable best efforts to
keep such Registration Statement current and effective as required in Section 3
of the Registration Rights Agreement, (C) the Company fails to file any
amendment to the Registration Statement, or any additional Registration
Statement required to be filed pursuant to Section 3(b) of the
Registration Rights Agreement within thirty (30) days of the applicable
Registration Trigger Date (as defined in the Registration Rights Agreement), or
fails to use reasonable best efforts to cause such amendment and/or new
Registration Statement to become effective within sixty (60) days of the
applicable Registration Trigger Date, and, if such effectiveness does not occur
within such period, as soon as possible thereafter, or (iv) any
Registration Statement required to be filed under the Registration Rights
Agreement, after its initial effectiveness and during the Registration Period
(as defined in the Registration Rights Agreement), lapses in effect or sales of
all of the Registrable Securities (as defined in the Registration Rights
Agreement) cannot otherwise be made thereunder (whether by reason of the
Company’s failure to amend or supplement the prospectus included 


 


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


 


14

















 


therein in accordance with
the Registration Rights Agreement, the Company’s failure to file and use
reasonable best efforts to obtain effectiveness with the SEC of an additional
Registration Statement or amended Registration Statement required pursuant to Section 3
of the Registration Rights Agreement or otherwise, but subject to Section 3(q) of
the Registration Rights Agreement), (D) the Company fails to provide a
commercially reasonable written response to any comments to any Registration
Statement submitted by the SEC within thirty (30) days of the date that
such SEC comments are received by the Company, in each case other than as a
result of the failure of any Buyer (as defined in the Registration Rights
Agreement) to provide such information or otherwise comply with its obligations
under the Registration Rights Agreement or (E) the Company fails to file
with the SEC the Shelf Registration Statement(s) as required under Section 4(c) hereof
and to use commercially reasonable  efforts to cause any such Registration
Statement(s) to become effective as soon as possible after such filing and
to use commercially reasonable efforts to ensure that any such Shelf Registration
Statement shall continuously be effective, in each case, in accordance with Section 4(c) hereof.


 


(b) Failure Payments; Black-Scholes Determination. The Company
understands that any Event of Failure (as defined above) could result in
economic loss to the Holder. In the event that any Event of Failure occurs
(other than an Event of Failure caused by the submission of any incomplete or
inaccurate information required to be furnished by the Holder or the negligence
or failure to act or action of the Company’s transfer agent), as compensation
to the Holder for such loss, the Company agrees to pay (as liquidated damages
and not as a penalty) to the Holder an amount payable in Redemption Shares that
are valued for these purposes [***]% of  the Volume Weighted Average Price on the date
of such calculation (“Failure Payments”) equal to 18% per annum (or
the maximum rate permitted by applicable law, whichever is less) of the
Black-Scholes value (as determined below) of the remaining unexercised portion
of this Warrant on the date of such Event of Failure (as recalculated on the
first Business Day of each month thereafter for as long as Failure Payments
shall continue to accrue), which shall accrue daily from the date of such Event
of Failure until the Event of Failure is cured, accruing daily and compounded
monthly, provided, however, other than in the instance described in the second
proviso contained in the second paragraph of Section 1 hereof, the Holder
shall only receive up to such amount of Redemption Shares such that Holder and
any other persons or entities whose beneficial ownership of Common Stock would
be aggregated with the Holder’s for purposes of Section 13(d) of the
Exchange Act (including shares held by any “group” of which the Holder is a
member, but excluding shares beneficially owned by virtue of the ownership of
securities or rights to acquire securities that have limitations on the right
to convert, exercise or purchase similar to the limitation set forth herein)
shall not collectively beneficially own greater than 9.98% of the total number
of shares of Common Stock of the Company then issued and outstanding; and, provided further, that the
foregoing proviso shall not be construed to require any cash payment by the
Company of the remaining amount of the Failure Payment.  For purposes of clarification, it is agreed
and understood that Failure Payments shall continue to accrue following any
Event of Default until the applicable Default Amount is paid in full.


 


Notwithstanding the above,
in the event that the Company (i) has, by the Filing Deadline (as defined
the Registration Rights Agreement) filed a Registration Statement (as defined
in the Registration Rights Agreement) covering the number of shares required by
the Registration Rights Agreement, and (ii) has responded in writing to
any comments to the Registration Statement that the Company has received from
the SEC, within seven (7) Business Days of such receipt, and nevertheless
the SEC has not declared effective a Registration Statement covering the full
number of Warrant Shares issuable upon exercise of the Warrants by the
Registration Deadline (as defined in the Registration Rights Agreement) then,
the Failure Payments attributable to such late Registration Effectiveness shall
be reduced from 18% to 15% (calculated as set forth above). The Company shall
satisfy any Failure Payments incurred under this Section pursuant to Section 10(c) below.


 


For purposes hereof, the “Black-Scholes”
value of a Warrant shall be determined by use of the Black 


 


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


 


15

















 


 


Scholes Option Pricing Model
and using the criteria set forth on Schedule 1 hereto.


 


(c) Payment of Accrued Failure Payments.  The shares representing accrued Failure
Payments for each Event of Failure shall be issued and delivered on or before
the fifth (5th) Trading Day of each month following a month in which Failure
Payments accrued. Nothing herein shall limit the Holder’s right to pursue
actual damages (to the extent in excess of the Failure Payments) for the Company’s
Event of Failure, and the Holder shall have the right to pursue all remedies
available at law or in equity (including a decree of specific performance
and/or injunctive relief). Notwithstanding the above, if a particular Event of
Failure results in an Event of Default pursuant to Section 11 hereof, then
the Failure Payment, for that Event of Failure only, shall be considered to
have been satisfied upon payment to the Holder of an amount equal to the
greater of (i) the Failure Payment, or (ii) the Default Amount,
payable in accordance with Section 11.


 


(d) Maximum Interest Rate. Nothing
contained herein or in any document referred to herein or delivered in
connection herewith shall be deemed to establish or require the payment of a
rate of interest or other charges in excess of the maximum permitted by
applicable law. In the event that the rate of interest or dividends required to
be paid or other charges hereunder exceed the maximum permitted by such law,
any payments in excess of such maximum shall be credited against amounts owed
by the Company to the Holder and thus refunded to the Company.


 


11. Default and
Redemption.


 


(a) Events
Of Default. Each of the following events, after expiration of
any applicable cure periods, shall be considered to be an “Event of Default,”
unless waived by the Holder:


 


(i) Failure To Effect Registration.  With respect to all Registration Failures
other than as provided in clause (E) of the definition of “Registration
Failure,” a Registration Failure occurs and remains uncured for a period of
more than forty-five (45) days (or sixty (60) days in the case where the
Company (i) has, by the Filing Deadline (as defined the Registration
Rights Agreement) filed a Registration Statement (as defined in the
Registration Rights Agreement) covering this Warrant and the number of shares
required by the Registration Rights Agreement, and (ii) has responded in
writing to any comments to the Registration Statement that the Company has
received from the SEC, within seven (7) Business Days of such receipt, and
nevertheless the SEC has not declared effective a Registration Statement
covering the this Warrant and the Shares by the Registration Deadline (as
defined in the Registration Rights Agreement)), and such Registration
Failure relates solely to the Company’s failure to have the Registration
Statement declared effective by the Registration Deadline (as defined in the
Registration Rights Agreement) and with respect to the Registration Failure
provided in clause (E) of the definition of “Registration Failure,” such
Registration Failure occurs and remains uncured for a period of more than
forty-five (45) days;


 


(ii) Failure To Deliver Common Stock. A Delivery
Failure (as defined above) occurs and remains uncured for a period of more than
[***] days; or at any time, the
Company announces or states in writing that it will not honor its obligations
to issue shares of Common Stock to the Holder upon Exercise by the Holder of
the Exercise rights of the Holder in accordance with the terms of this Warrant.


 


(iii) Legend Removal Failure.  A Legend Removal Failure (as defined above) occurs and remains uncured
for a period of thirty (30) days; and


 


(iv) Major Transaction. The Company
has effected a Major Transaction without paying the Major Transaction Warrant
Redemption Price, if applicable, to the Holder pursuant to Section 5(c)(iii) (other
than due to the limitation contained in the proviso in Section 5(c)(iii)(y))
or, with respect to a Major Transaction that is to be treated as an Assumption
under the terms hereof, the Company has failed to meet the Assumption
requirements of Section 5(c)(iii) prior to effecting the Major
Transaction.


 


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


 


16

















 


(b) Mandatory
Redemption.


 


(i) Mandatory Redemption Amount. If any Events
of Default shall occur then, unless waived by the Holder, upon the occurrence
and during the continuation of any Event of Default after expiration of any
applicable cure periods, at the option of the Holder, such option exercisable
through the delivery of written notice to the Company by such Holder (the “Default
Notice”), the outstanding amount of this Warrant shall be immediately
redeemed by the Company and the Company shall pay to the Holder (a “Mandatory
Redemption”), in full satisfaction of its obligations hereunder, an amount
in Redemption Shares (the “Mandatory Redemption Amount” or the “Default
Amount”) equal to the greater of (1) the Black-Scholes value (as
determined in accordance with Section 10(b)) of the remaining unexercised
portion of this Warrant on the date of such Default Notice and (2) the
Black-Scholes value (also as determined in accordance with Section 10(b))
of the remaining unexercised portion of this Warrant on the Trading Day
immediately preceding the date that the Mandatory Redemption Amount is paid to
the Holder, provided, however, other than in the instance described in the
second proviso contained in the second paragraph of Section 1 hereof,
Holder shall receive up to such amount of Redemption Shares such that Holder
and its Affiliates and any other persons or entities whose beneficial ownership
of Common Stock would be aggregated with the Holder’s for purposes of Section 13(d) of
the Exchange Act (including shares held by any “group” of which the Holder is a
member, but excluding shares beneficially owned by virtue of the ownership of
securities or rights to acquire securities that have limitations on the right
to convert, exercise or purchase similar to the limitation set forth herein)
shall not collectively beneficially own greater than 9.98% of the total number
of shares of Common Stock of the Company then issued and outstanding; and, provided further, that the
foregoing proviso shall not be construed to require any cash payment by the
Company of the remaining amount of the Mandatory Redemption Amount.


 


The
Mandatory Redemption Amount shall be payable in Redemption Shares that are
valued for these purposes at [***] of the
Volume Weighted Average Price for the five (5) Business Days prior to the
Date of the applicable Default Notice.


 


(ii) Liquidated Damages. The parties
hereto acknowledge and agree that the sums payable as Failure Payments or
pursuant to a Mandatory Redemption shall give rise to liquidated damages and
not penalties. The parties further acknowledge that (i) the amount of loss
or damages likely to be incurred by the Holder is incapable or is difficult to
precisely estimate, (ii) the amounts specified bear a reasonable
proportion and are not plainly or grossly disproportionate to the probable loss
likely to be incurred by the Holder, and (iii) the parties are
sophisticated business parties and have been represented by sophisticated and
able legal and financial counsel and negotiated this Agreement at arm’s length.


 


The
Default Amount, together with all other amounts payable hereunder, shall
immediately become due and payable, all without demand, presentment or notice,
all of which hereby are expressly waived, together with all costs, including,
without limitation, legal fees and expenses, of collection, and the Holder
shall be entitled to exercise all other rights and remedies available at law or
in equity.


 


(c) Posting
Of Bond.  In the event that any
Event of Default occurs hereunder, the Company may not raise as a legal defense
(in any Lawsuit, as defined below, or otherwise) or justification to such Event
of Default any claim that such Holder or any one associated or affiliated with
such Holder has been engaged in any violation of law, unless the Company has
posted a surety bond (a “Surety Bond”) for the benefit of such Holder in
the amount of 130% of the aggregate Surety Bond Value (as defined below) of all
of the Holder’s Warrants (the “Bond Amount”), which Surety Bond shall
remain in effect until the completion of litigation of the dispute and the
proceeds of which shall be payable to such Holder to the extent Holder obtains
judgment.


 


For purposes hereof, a “Lawsuit”
shall mean any lawsuit, arbitration or other dispute resolution filed by either
party herein pertaining to any of this Warrant, the Facility Agreement and the
Registration Rights 


 


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


 


17

















 


Agreement.


 


“Surety Bond Value,”
for the Warrants shall mean 130% of the of the Black-Scholes value of the
remaining unexercised portion of this Warrant on the Trading Day immediately
preceding the date that such bond goes into effect).


 


(d) Injunction And Posting Of Bond. In the event
that the Event of Default referred to in subsection (c) above pertains to
the Company’s failure to deliver unlegended shares of Common Stock to the
Holder pursuant to a Warrant Exercise, legend removal request, or otherwise,
the Company may not refuse such unlegended share delivery based on any claim
that such Holder or any one associated or affiliated with such Holder has been
engaged in any violation of law, unless an injunction from a court, on prior
notice to Holder, restraining and or enjoining Exercise of all or part of said
Warrant shall have been sought and obtained by the Company and the Company has
posted a Surety Bond for the benefit of such Holder in the amount of the Bond
Amount, which Surety Bond shall remain in effect until the completion of
litigation of the dispute and the proceeds of which shall be payable to such
Holder to the extent Holder obtains judgment.


 


(e) Remedies,
Other Obligations, Breaches And Injunctive Relief. The remedies
provided in this Warrant shall be cumulative and in addition to all other
remedies available under this Warrant, the Facility  Agreement and the Registration Rights
Agreement, at law or in equity (including a decree of specific performance
and/or other injunctive relief), and nothing herein shall limit the right of
the Holder to pursue actual damages for any failure by the Company to comply
with the terms of this Warrant. The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to the Holder and that
the remedy at law for any such breach may be inadequate. The Company therefore
agrees that, in the event of any such breach or threatened breach, the holder
of this Warrant shall be entitled, in addition to all other available remedies,
to an injunction restraining any breach, without the necessity of showing
economic loss and without any bond or other security being required.


 


12.  Mechanics of Holder’s Redemptions.


 


In the event that the Holder
has sent a Default Notice or a Major Transaction Redemption Notice to the
Company pursuant to Section 5(c) or a Default Notice pursuant to Section 11(b)(i),
respectively (each, a “Redemption Notice”), the Holder shall promptly
submit this Warrant to the Company. If the Holder has submitted a Redemption
Notice, the Company shall deliver the applicable Major Transaction Warrant
Redemption Price or Default Amount, as applicable, to the Holder within the
time period set forth herein.  In the
event that the Company does not pay the applicable Major Transaction Warrant
Redemption Price or Default Amount, as applicable, to the Holder within the
time period required pursuant to the terms hereof, at any time thereafter and
until the Company pays such unpaid Major Transaction Warrant Redemption Price
or Default Amount, as applicable, in full, the Holder shall have the option, in
lieu of redemption, to require the Company to promptly return to the Holder all
or any portion of this Warrant that was submitted for redemption and for which
the applicable Major Transaction Warrant Redemption Price or Default Amount, as
applicable (together with any late charges thereon) has not been paid. Upon the
Company’s receipt of such notice, (x) the applicable Redemption Notice
shall be null and void with respect to such Redemption Principal Amount, (y) the
Company shall immediately return this Warrant, or issue a new Warrant to the
Holder representing the portion of this Warrant that was submitted for
redemption and (z) the Exercise Price of this Warrant or such new Warrant
shall be adjusted to the lesser of (A) the Exercise Price as in effect on
the date on which the applicable Redemption Notice is voided and (B) the
lowest closing price for the Common Stock on NASDAQ, or, if NASDAQ is not the
principal trading market for the Common Stock, the principal securities
exchange or other securities market on which the Common Stock is then being
traded, during the period beginning on and including the date on which the
applicable Redemption Notice is delivered to the Company and ending on and
including the date on which the applicable Redemption Notice is voided. The
Holder’s delivery of a notice voiding a 


 


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


 


18

















 


Redemption Notice and
exercise of its rights following such notice shall not affect the Company’s
obligations to make any payments of Failure Payments which have accrued prior
to the date of such notice with respect to the Warrant subject to such notice.


 


13. Benefits of this
Warrant.


 


Nothing in this Warrant
shall be construed to confer upon any person other than the Company and Holder
any legal or equitable right, remedy or claim under this Warrant and this
Warrant shall be for the sole and exclusive benefit of the Company and Holder.


 


14. Governing Law.


 


All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by and construed and enforced in accordance with the internal laws
of the State of New York, without regard to the principles of conflicts of law
thereof. Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement (whether brought against a party hereto or its respective affiliates,
directors, officers, shareholders, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New York.
Each party hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the City of New York, borough of Manhattan
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby 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, that
such suit, action or proceeding is improper or is an inconvenient venue for
such proceeding. Each party 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 party at the address in
effect for notices to it under this 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 other manner permitted by law. The parties hereby waive all
rights to a trial by jury. If either party shall commence an action or
proceeding to enforce any provisions of this Agreement, then the prevailing
party in such action or proceeding shall be reimbursed by the other party for its
reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.


 


15. Loss of Warrant.


 


Upon receipt by the Company
of evidence of the loss, theft, destruction or mutilation of this Warrant, and
(in the case of loss, theft or destruction) of indemnity or security reasonably
satisfactory to the Company, and upon surrender and cancellation of this
Warrant, if mutilated, the Company shall execute and deliver a new Warrant of like
tenor and date.


 


16. Notice or Demands.


 


Notices or demands pursuant
to this Warrant to be given or made by Holder to or on the Company shall be
sufficiently given or made if sent by overnight delivery with a nationally
recognized overnight courier service or by certified or registered mail, return
receipt requested, postage prepaid, and addressed, until another address is
designated in writing by the Company, to the address set forth in Section 2(a) above.
Notices or demands pursuant to this Warrant to be given or made by the Company
to or on Holder shall be sufficiently given or made if sent by overnight
delivery with a nationally recognized overnight courier service or by certified
or registered mail, return receipt requested, postage prepaid, and addressed,
to the address of Holder set forth in the Company’s records, until another
address is designated in writing by Holder.


 


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


 


19

















 


[Remainder of page intentionally left blank.]


 


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


 


20

















 


IN WITNESS WHEREOF, the
undersigned has executed this Warrant as of the [    ] day
of [          ] 2009.


 


	
   

  	
  ARRAY BIOPHARMA INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ R. Michael Carruthers

  
	
   

  	
   

  	
  Print Name: R. Michael
  Carruthers

  
	
   

  	
   

  	
  Title: Chief Financial
  Officer

  



 


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


 


21














 


EXHIBIT A


 


EXERCISE FORM FOR WARRANT


 


TO: ARRAY BIOPHARMA INC.


 


The undersigned hereby
irrevocably Exercises the right to purchase                     
of the shares of Common Stock (the “Common Stock”) of ARRAY BIOPHARMA INC., a Delaware
corporation (the “Company”), evidenced by the attached warrant (the “Warrant”),
and herewith makes payment of the Exercise Price with respect to such shares in
full, all in accordance with the conditions and provisions of said Warrant.


 


1. The undersigned agrees
not to offer, sell, transfer or otherwise dispose of any of the Common Stock
obtained on Exercise of the Warrant, except in accordance with the provisions
of Section 8(a) of the Warrant.


 


2. The number of shares of
Common Stock beneficially owned by the Holder and its Affiliates (as defined in
the Warrant) and any other persons or entities whose beneficial ownership of
Common Stock would be aggregated with the Holder’s for purposes of Section 13(d) of
the Securities Exchange Act of 1934 (the “Exchange Act”) (including shares held
by any “group” of which the Holder is a member, but excluding shares
beneficially owned by virtue of the ownership of securities or rights to
acquire securities that have limitations on the right to convert, exercise or
purchase similar to the limitation set forth herein) is
                .  For purposes hereof, “group” has the meaning
set forth in Section 13(d) of the Exchange Act and applicable
regulations of the Securities and Exchange Commission, and the number of shares
beneficially owned has been determined in a manner consistent with Section 13(d) of
the Exchange Act and the rules and regulations promulgated thereunder.


 


3. The undersigned requests
that any stock certificates for such shares be issued free of any restrictive
legend, if appropriate, and a warrant representing any unexercised portion
hereof be issued, pursuant to the Warrant in the name of the undersigned and
delivered to the undersigned at the address set forth below.


 


4.  The undersigned is exercising the attached
Warrant pursuant to:


 


	
  o Cash
  Exercise

  	
  o Cashless
  Exercise

  



 


The
undersigned hereby irrevocably directs that the said Exercised shares be issued
and delivered as follows:


 


	
  Name(s) in Full

  	
   

  	
  Address(es) (include
  Postal/Zip Code)

  	
   

  	
  Numbers(s) of

  Shares of Common

  Stock

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


(Please print in full the name
in which certificates are to be issued. 
If any of the securities are to be issued to a person or persons other
than the undersigned, then the Transfer of Warrants form must be completed and
the transferee and the undersigned must pay to the Company all eligible
transfer taxes or other government charges.)


 


	
  DATED

  	
   

  	
   

  



 


 


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


 

















 


	
   

  	
   

  	
   

  
	
  Witness
  or Signature Guarantee*

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Print
  Name

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address

  



 






*  If the
underlying securities are to be issued to a person other than the Warrant
holder then the
signature must be guaranteed by a guarantee under the North American STAMP,
SEMP or MSP Medallion Programs.


 


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


 


23

















 


EXHIBIT B


 


ASSIGNMENT


 


(To be executed by the registered holder


desiring to transfer the Warrant)


 


FOR VALUE RECEIVED, the
undersigned holder of the attached warrant (the “Warrant”) hereby sells,
assigns and transfers unto the person or persons below named the right to
purchase
                    
shares of the Common Stock of ARRAY BIOPHARMA
INC., a Delaware corporation, evidenced by the attached Warrant and
does hereby irrevocably constitute and appoint                     
attorney to transfer the said Warrant on the books of the Company, with full
power of substitution in the premises.


 


The undersigned hereby certifies that the Warrant is being
sold, assigned or transferred in accordance with all applicable securities
laws.


 


	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  



 


Fill in for new registration
of Warrant:


 


 


	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Please print name and
  address of assignee

  	
   

  	
   

  
	
  (including zip code
  number)

  	
   

  	
   

  



 


NOTICE


 


The signature to the
foregoing Assignment must correspond to the name as written upon the face of
the attached Warrant in every particular, without alteration or enlargement or
any change whatsoever.


 


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


 

















 


EXHIBIT C


 


FORM OF OPINION


 


,
20


 


[                      ]


 


Re:                               Array BioPharma
Inc. (the “Company”)


 


Dear
Sir:


 


[                      ]
(“[                    ]”)
intends to transfer
              
Warrants (the “Warrants”) of the Company to
                    
(“                ”)
without registration under the Securities Act of 1933, as amended (the
“Securities Act”).  In connection
therewith, we have examined and relied upon the truth of representations
contained in an Investor Representation Letter attached hereto and have
examined such other documents and issues of law as we have deemed relevant.


 


Based on and subject to the foregoing, we are
of the opinion that the transfer of the Warrants by
              
to              may
be effected without registration under the Securities Act, provided, however,
that the Warrants to be transferred to
              
contain a legend restricting its transferability pursuant to the Securities Act
and that transfer of the Warrants is subject to a stop order.


 


The foregoing opinion is furnished only to
                        
and may not be used, circulated, quoted or otherwise referred to or relied upon
by you for any purposes other than the purpose for which furnished or by any
other person for any purpose, without our prior written consent.


 


Very truly yours,


 


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


 

















 


[FORM OF
INVESTOR REPRESENTATION LETTER]


 


, 20


 


[                                  ]


 


Gentlemen:


 


(“      ”)
has agreed to purchase
                  
Warrants (the “Warrants”) of Array BioPharma Inc. (the “Company”) from
[                      ]
(“[                  ]”).  We understand that the Warrants are
“restricted securities.” We represent and warrant that
             is a
sophisticated institutional investor that qualifies as an “Accredited Investor”
as defined in Rule 501 of Regulation D under the Securities Act of 1933,
as amended (the “Securities Act”).


 


represents and warrants as
of the date hereof as follows:


 


1.  That it is acquiring the Warrants and the
shares of common stock, $0.001 par value per share underlying such Warrants
(the “Exercise Shares”) solely for its account for investment and not with a
view to or for sale or distribution of said Warrants or Exercise Shares or any
part thereof.                 
also represents that the entire legal and beneficial interests of the Warrants
and Exercise Shares
                  
is acquiring is being acquired for, and will be held for, its account only;


 


2.  That the Warrants and the Exercise Shares
have not been registered under the Securities Act on the basis that no
distribution or public offering of the stock of the Company is to be effected.
              
realizes that the basis for the exemption may not be present if,
notwithstanding its representations,
              
has a present intention of acquiring the securities for a fixed or determinable
period in the future, selling (in connection with a distribution or otherwise),
granting any participation in, or otherwise distributing the securities.
              
has no such present intention;


 


3.  That the Warrants and the Exercise Shares
must be held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available.
                
recognizes that the Company has no obligation to register the Warrants, or to
comply with any exemption from such registration;


 


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


 


5.  That it will not make any disposition of all
or any part of the Warrants or Exercise Shares in any event unless and until:


 


(i)            The Company shall have received a
letter secured by
                  
from the Securities and Exchange Commission stating that no action will be
recommended to the Securities and Exchange Commission with respect to the
proposed disposition, in the case  of a sale or
transfer, including a so-called “4(1) and a half” transaction;


 


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


 


26

















 


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


 


(iii)                          shall
have notified the Company of the proposed disposition and shall have furnished
counsel to the Company with an opinion of counsel, reasonably satisfactory to
counsel to the Company, that no registration under the Securities Act or
qualification under any state securities laws is required for the proposed
disposition.


 


We acknowledge that the Company will place
stop orders with respect to the Warrants and the Exercise Shares, and if a
registration statement is not effective, the Exercise Shares shall bear
substantially the following restrictive legend:


 


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


 


“THE SALE, TRANSFER OR
ASSIGNMENT OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERMS AND CONDITIONS OF A CERTAIN REGISTRATION RIGHTS AGREEMENT DATED AS OF
                ,
2009, AS AMENDED FROM TIME TO TIME, AMONG THE COMPANY AND CERTAIN HOLDERS OF
ITS OUTSTANDING SECURITIES. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO
COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE COMPANY.”


 


At any time and from time to time after the
date hereof,
                  
shall, without further consideration, execute and deliver to
[                ]
or the Company such other instruments or documents and shall take such other
actions as they may reasonably request to carry out the transactions
contemplated hereby.


 


Very truly yours,


 


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


 


27

















 


Schedule
1


 


Black-Scholes Value


 


	
   

  	
   

  	
  Calculation Under Section 5(c)(iii)

  	
   

  	
  Calculation Under Section 10(b) or 11(b)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Remaining Term

  	
   

  	
  Number of calendar days from date of public
  announcement of the Major Transaction until the last date on which the
  Warrant may be exercised.

  	
   

  	
  Number of calendar days from date of the Event of
  Failure until the last date on which the Warrant may be exercised.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Interest Rate

  	
   

  	
  A risk-free interest rate corresponding to the US$ LIBOR/Swap rate for a period equal to the Remaining Term.

  	
   

  	
  A risk-free interest rate corresponding to the US$ LIBOR/Swap rate for a period equal to the Remaining Term.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Volatility

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Stock Price

  	
   

  	
  The greater of (1) closing price of the Common
  Stock on NASDAQ, or, if that is not the principal trading market for the
  Common Stock, such principal market on which the Common Stock is traded or
  listed (the “Closing Market Price”) on the trading day immediately preceding
  the date on which a Major Transaction is consummated, (2) the first
  Closing Market Price following the first public announcement of a Major
  Transaction, or (3) the Volume Weighted Average Price as of the date
  immediately preceding the first public announcement of the Major Transaction.

  	
   

  	
  The Volume Weighted Average Price on the date of
  such calculation.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dividends

  	
   

  	
  Zero.

  	
   

  	
  Zero.

  



 


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


 

















 


Schedule 1 to Exhibit 4.2


 


Array
BioPharma Inc. (the “Registrant”) issued warrants to the following holders on July 31,
2009 and on May 15, 2009. The terms of each Warrant do not differ from the
Warrant filed as Exhibit 4.2 except for the Date of Issuance specified in Section 1
of each Warrant and the Exercise Price specified in Section 3(a) of
each Warrant, as set forth opposite each holder’s name below:


 


	
  Holder

  	
   

  	
  Number of

  Warrant Shares

  	
   

  	
  Date of

  Issuance

  	
   

  	
  Exercise

  Price

  	
   

  
	
  Deerfield Partners, L.P.

  	
   

  	
  383,000

  	
   

  	
  May 15, 2009

  	
   

  	
  $

  	
  3.65

  	
   

  
	
  Deerfield International Limited

  	
   

  	
  617,000

  	
   

  	
  May 15, 2009

  	
   

  	
  $

  	
  3.65

  	
   

  
	
  Deerfield Private Design Fund, L.P.

  	
   

  	
  1,915,000

  	
   

  	
  May 15, 2009

  	
   

  	
  $

  	
  3.65

  	
   

  
	
  Deerfield Private Design International,
  L.P.

  	
   

  	
  3,085,000

  	
   

  	
  May 15, 2009

  	
   

  	
  $

  	
  3.65

  	
   

  
	
  Deerfield Partners, L.P.

  	
   

  	
  383,000

  	
   

  	
  July 31, 2009

  	
   

  	
  $

  	
  4.19

  	
   

  
	
  Deerfield International Limited

  	
   

  	
  617,000

  	
   

  	
  July 31, 2009

  	
   

  	
  $

  	
  4.19

  	
   

  
	
  Deerfield Private Design Fund, L.P.

  	
   

  	
  1,915,000

  	
   

  	
  July 31, 2009

  	
   

  	
  $

  	
  4.19

  	
   

  
	
  Deerfield Private Design International,
  L.P.

  	
   

  	
  3,085,000

  	
   

  	
  July 31, 2009

  	
   

  	
  $

  	
  4.19

  	
   

  



 


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