Document:

Form of Warrant to Purchase Common Stock of ZymoGenetics, Inc.

 “[*]” = omitted, confidential material, which material has been separately filed with the
Securities and Exchange Commission pursuant to a request for confidential treatment. 
 EXHIBIT 10.6 
 EXHIBIT C 
 FORM OF DEERFIELD
WARRANT 
 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, (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 COMPANY
SHALL NOT ISSUE PURSUANT TO THIS CERTIFICATE AND ANY OTHER WARRANT CERTIFICATES OR OTHER SECURITIES OF THE COMPANY ISSUED PURSUANT TO THE FACILITY AGREEMENT DATED AS OF JUNE 26, 2008 (THE “FACILITY AGREEMENT”), AS AMENDED FROM TIME TO
TIME, AND THE HOLDER SHALL HAVE NO RIGHT TO ACQUIRE PURSUANT TO THIS CERTIFICATE AND ANY OTHER WARRANT CERTIFICATES OR OTHER SECURITIES OF THE COMPANY ISSUED PURSUANT TO THE FACILITY AGREEMENT, ANY SHARES OF COMMON STOCK UPON EXERCISE AND/OR
CONVERSION OF THIS CERTIFICATE AND ANY OTHER WARRANT CERTIFICATES OR OTHER SECURITIES OF THE COMPANY ISSUED PURSUANT TO THE FACILITY AGREEMENT, THAT WOULD IN THE AGGREGATE EXCEED 13,675,091 SHARES OF COMMON STOCK. COPIES OF THE FACILITY 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. 
 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 
 ZYMOGENETICS, INC. 
 THIS CERTIFIES that [DEERFIELD PRIVATE DESIGN INTERNATIONAL, L.P. /DEERFIELD PRIVATE DESIGN FUND, L.P.] or any subsequent holder(s) hereof (“Holder”) has the
right to purchase from ZYMOGENETICS, INC., a Washington corporation, (the “Company”),
[                                        ]
([            ]) fully paid and nonassessable shares, of the Company’s common stock, no 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                      (the “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                      [FOR FIRST WARRANTS, SIX YEARS FROM DATE FACILITY AGREEMENT IS EXECUTED; FOR
OTHER WARRANTS, SIX YEARS FROM DISTRIBUTION DATE] (the “Term”). This Warrant was issued in conjunction with that certain Facility Agreement (the 

 
“Facility Agreement”) and the Registration Rights Agreement (“Registration Rights Agreement”) by and among the Company, Deerfield Private
Design Fund, L.P. and Deerfield Private Design International, L.P., each dated June 26, 2008, 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 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. 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.

 Further, notwithstanding anything to the contrary, the Company shall not issue pursuant to this Warrant and any other Warrants or other securities of the
Company issued pursuant to the Facility Agreement, and the Holder shall have no right to acquire pursuant to this Warrant and any other Warrants or other securities of the Company issued pursuant to the Facility Agreement, any shares of Common Stock
upon exercise and/or conversion of this Warrant and any other Warrants or other securities of the Company issued pursuant to the Facility Agreement, that would in the aggregate exceed 13,675,091 shares of Common Stock; and, provided further, that
the foregoing limitation shall not be construed to require any other issuance or other payment, distribution or otherwise by the Company of any additional securities, payments or otherwise. 
 “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 New York, New York, United States of America. 
 “Holder” means [Deerfield Private Design
International, L.P./Deerfield Private Design Fund, L.P.] and any transferee or assignee pursuant to the terms of this Warrant. 
  

	2.	Exercise. 

 (a) Manner of Exercise. During the Term, 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, at the office of the Company, Zymogenetics, Inc., 1201 Eastlake Avenue East, Seattle, WA 98102, Attn: Chief Financial Officer, Phone: (206) 442-6600, Fax:
(206) 442-6580, or at such other office or agency as the Company may designate in writing, by overnight mail, with an advance copy of the Exercise Form sent to the Company and its transfer agent (“Transfer Agent”) by facsimile (such
surrender 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 pursuant to Section 3 below. Upon receipt of the properly completed and
executed Exercise Form and the original Warrant 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 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 (plus any additional days caused by any incorrect or incomplete information provided by Holder to the
Company hereunder (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 converted 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
action, including, as necessary, obtaining 

  

					
		 	-2-	 	[  *  ] Confidential Treatment Requested

 
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, this Warrant and 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 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, as applicable, 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 or as otherwise may be appropriate, this Warrant,
the Exercise Shares and the Redemption Shares, as applicable, shall bear any or all of the restrictive legends in substantially the following forms (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, (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, INCLUDING PURSUANT TO A SO-CALLED “4(1) AND A HALF” SALE, 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 IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN REGISTRATION
RIGHTS AGREEMENT DATED AS OF JUNE 26, 2008, AS AMENDED FROM TIME TO TIME, AMONG THE COMPANY AND CERTAIN HOLDERS OF ITS OUTSTANDING SECURITIES. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD
OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY.” 
 “THE COMPANY SHALL NOT ISSUE PURSUANT TO THIS CERTIFICATE AND ANY OTHER
WARRANT CERTIFICATES OR OTHER SECURITIES OF THE COMPANY ISSUED PURSUANT TO THE FACILITY AGREEMENT DATED AS OF JUNE 26, 2008 (THE “FACILITY AGREEMENT”), AS AMENDED FROM TIME TO TIME, AND THE HOLDER SHALL HAVE NO RIGHT TO ACQUIRE
PURSUANT TO THIS CERTIFICATE AND ANY OTHER WARRANT CERTIFICATES OR OTHER SECURITIES OF THE COMPANY ISSUED PURSUANT TO THE FACILITY AGREEMENT, ANY SHARES OF COMMON STOCK UPON EXERCISE AND/OR CONVERSION OF THIS CERTIFICATE AND ANY OTHER WARRANT
CERTIFICATES OR OTHER SECURITIES OF THE COMPANY ISSUED PURSUANT TO THE FACILITY AGREEMENT, THAT WOULD IN THE AGGREGATE EXCEED 13,675,091 SHARES OF COMMON STOCK. COPIES OF THE FACILITY 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 defined below), as applicable, shall not contain any legend restricting the transfer thereof (including the applicable legend set forth above in Section 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 

  

					
		 	-3-	 	[  *  ] Confidential Treatment Requested

 
Section 4(c) below) covering the sale or 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 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
such Exercise of this Warrant, and if this Warrant is not Exercised in full, Holder shall be entitled to receive a new Warrant (containing 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 shareholder 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 Depository Trust Company (“DTC”) Fast Automated Securities Transfer
(“FAST”) program, upon written request of the Holder, the Company shall use 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, 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 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 

  

					
		 	-4-	 	[  *  ] Confidential Treatment Requested

 
Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (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. 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. 
 The Holder may only 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 exercise, 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(ii), where “Market
Price,” as of any date, means the average Volume Weighted Average Price (as defined herein) of the Company’s Common Stock during the ten (10) 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 (based on a Trading Day from 9:30 a.m. to 4:00 p.m. (New York time))) 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 or in the “pink sheets” by the National Quotation Bureau, Inc. If the Volume Weighted Average
Price cannot be calculated for such security for 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. “Trading Day” shall mean any day on which the Common Sock is traded for any period on
NASDAQ, or on the principal securities exchange or other securities market on which the Common Stock is then being traded. 
 For purposes of Rule 144
and Section (d)(3)(ii) thereof, it is intended, understood and acknowledged that the Common Stock issuable upon Exercise shall be deemed to have been acquired at the time this Warrant was issued and moreover, it is intended, understood and
acknowledged that the holding period for the Common Stock issuable upon Exercise of this Warrant shall be deemed to have commenced on the date this Warrant was issued, as provided for under applicable law. 
 (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 determination of the 

  

					
		 	-5-	 	[  *  ] Confidential Treatment Requested

 
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 Holders of a Majority in interest of the Warrants, 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 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; provided, however, that any
transfer of this Warrant or any portion hereof shall be for a portion of the Warrant representing the right to purchase at least 100,000 shares of Common Stock (as such amount may be adjusted from time to time pursuant to Section 5(b) hereof)
unless such transfer is for the entire remaining portion of this Warrant then held by the Holder. 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 for
an offering to be made on a continuous basis pursuant to Rule 415 of the Securities Act following issuance of this Warrant, and to use reasonable best 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 delivered 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 (the “Shelf Registration Statement”). For so long as all or any portion of this Warrant is outstanding, the Company agrees to use its reasonable best 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 be 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. 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 the Company, the disclosure of which at the time
is not in its best interest of the Company in the good faith opinion of the Company; provided that no such periods shall individually exceed 45 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. 
 “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 sale under the
Securities Act pursuant to a Shelf Registration Statement as contemplated by this 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. 
  

	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 

  

					
		 	-6-	 	[  *  ] Confidential Treatment Requested

 
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. 

 (i) Major Transaction. In
the event that a Major Transaction (as defined below) occurs, and unless the Holder waives its rights under this Section with respect to such Major Transaction, the Holder, at its option, may require the Company to either (A) redeem the
Holder’s outstanding Warrants in accordance with Section 5(c)(iii) below or (B) if the conditions set forth in Section 5(c)(ii) below are satisfied, elect to have the Major Transaction treated as an Assumption. 
 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)(x) 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 another entity and
(y) the holders of equity interests in the Company immediately preceding such consolidation, merger, exchange, recapitalization, reorganization, combination or event do not hold a substantially equivalent percentage of equity interest of the
other entity immediately following such consolidation, merger, exchange, recapitalization, reorganization, combination or event (collectively, a “Change of Control Transaction”); 
 (B) the sale or transfer (excluding the grant of a security interest or lien or similar rights) in one transaction or in a series of related transactions (i) of all
or substantially all of the assets of the Company or (ii) of assets for a purchase price equal to more than [  *  ]; 
 (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 completed; 
 (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 the NASDAQ Global Market and are not promptly re-listed or requoted on the New York Stock
Exchange, the American Stock Exchange, the NASDAQ Global Select Market or the NASDAQ Capital Market. 
 (ii) Assumption.
[  *  ]. 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 

  

					
		 	-7-	 	[  *  ] Confidential Treatment Requested

 
provisions of this Section 5.2(c)(ii) 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 limitations. Any assumption of Company obligations under this Section 5.2(c)(ii) 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 three (3) 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 not to be so assumed pursuant to the provisions of Section 5(c)(ii) 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 (the “Redemption Principal Amount”) of the Warrant that the Holder is electing to have
redeemed. The portion of this Warrant to be redeemed pursuant to this Section 5(c)(iii) 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 (as defined below) or in the case of a Mixed Major Transaction (as defined below) to the extent of the percentage of the cash consideration in such Mixed Major Transaction (determined in accordance with the definition of a Mixed Major
Transaction below), in cash equal to the “Black Scholes Value” determined by use of the Black Scholes Option Pricing Model using the criteria set forth in Schedule 1 hereto (the “Black Scholes Value”), and (y) in the case of
a Major Transaction not described in the foregoing proviso (x) or to the extent of the percentage of the consideration represented by securities of the Successor Entity in a Mixed Major Transaction (as determined in accordance with the
definition of Mixed Major Transaction below), in a number of shares of Redemption Shares equal to the Black Scholes Value of the portion of this Warrant subject to redemption under this clause (y) 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 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 any remaining amount of any Major Transaction Warrant Redemption Price. 
 For purposes hereof, the “Black-Scholes” value of a Warrant (or a portion thereof) shall be determined by use of the Black Scholes Option Pricing Model using
the criteria set forth on Schedule 1 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 consummate a Major Transaction that is being treated as a redemption in accordance with Section 5(c)(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 shares of Common Stock or cash, as applicable, equal to the Major Transaction Warrant Redemption Price.
Concurrently upon closing of such Major Transaction, the Company shall have paid 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 Section (5)(c)(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 therein) of the Common Stock using 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 Section 5(c)(iv) above or obtaining 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. 
  

					
		 	-8-	 	[  *  ] Confidential Treatment Requested

 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 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. 
 For
purposes hereof: 
 “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. 
 “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. 
 “Mixed Major Transaction” means a Major Transaction where the consideration payable to 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 quotient of (x) the product of the aggregate anticipated number of shares of the Publicly Traded Successor Entity
to be issued (based on the Trading Day preceding the first public announcement of the Mixed Major Transaction) to holders of Common Stock of the Company multiplied by the closing market price for such 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, divided by (y) the sum of the amount determined in subclause (x) plus the aggregate value of other
consideration, including cash consideration, in such 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. 
 “Parent Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person,
or, if there is more than one such Person or Parent Entity, the Person or Parent Entity with the largest fair market value as of the date of consummation of a Major Transaction (as determined in good-faith by the Company’s Board of Directors).

 “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated
organization, any other entity and a government or any department or agency thereof. 
 “Private Successor Entity” means a Successor Entity that is
not a Publicly Traded Successor Entity. 
 “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 above). 
 (d) Exercise Price Adjusted. As used in this Warrant, the
term “Exercise Price” shall mean the purchase price per share specified in Section 3(a) 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. 
  

					
		 	-9-	 	[  *  ] Confidential Treatment Requested

 (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 Holders 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. 
  

	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 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 as estimated by the Company in good faith. 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) as estimated by the Company in good faith, 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 shareholders 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
reasonable best efforts to obtain shareholder 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 the 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. 
 (b) Assignment. Subject to Section 8(a), the Holder may sell, transfer, assign, pledge or
otherwise dispose of this Warrant, in whole or in part; provided, however, that any sale, transfer, assignment, pledge or other disposition of this Warrant of any portion hereof shall relate to a portion of the Warrant representing the right to
purchase at least 100,000 shares of Common Stock (as such amount may be adjusted from time to time pursuant to Section 5(b) hereof) unless such disposition relates to the entire remaining outstanding portion of this Warrant then held by such
Holder. 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 Warrant Shares 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 

  

					
		 	-10-	 	[  *  ] Confidential Treatment Requested

 
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 shall be the only opinion 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 articles 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 limitations set forth in 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) 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 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 reasonable written response to any comments to any Registration Statement submitted by the
SEC within twenty-five (25) days of the date that such SEC comments are received by the Company or (E) the Company fails to file with the SEC the Shelf Registration Statement(s) as required under 

  

					
		 	-11-	 	[  *  ] Confidential Treatment Requested

 
Section 4(c) hereof and to use reasonable best efforts to cause any such Registration Statement(s) to become effective as soon as possible after such
filing and to use reasonable best efforts to ensure that any such Shelf Registration Statement shall continuously be effective, in each case, in accordance with Section 4(c) hereof, in each case other than as a result of the failure of any
Holder or Buyer (as defined in the Registration Rights Agreement) to provide applicable information or otherwise comply with its obligations under the Registration Rights Agreement). 
 (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, 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 at [ * ]% of the Volume Weighted Average Price on the date of such calculation (“Failure Payments”) at a rate of 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, the Holder shall 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 any remaining amount of any 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, (ii) has
responded in writing to any comments to the Registration Statement that the Company has received from the SEC, within ten (10) 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) and (iii) any Failure Payments are required, 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. Failure Payments are in addition to
any Shares that the Holder is entitled to receive upon Exercise of this Warrant. 
 For purposes hereof, the “Black-Scholes” value of a Warrant
shall be determined by use of the Black-Scholes Option Pricing Model 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 tenth (10th) Business 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 shall be considered to be an “Event of Default,” unless waived by the Holder: 
  

					
		 	-12-	 	[  *  ] Confidential Treatment Requested

 (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 thirty (30) (or ninety (90) 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 ten (10) Business Days of such receipt, and nevertheless the SEC has not declared effective a Registration Statement covering
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 a 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 thirty (30) 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) Corporate Existence; Major
Transaction. The Company has consummated a Major Transaction without paying the Major Transaction Warrant Redemption Price, as required, to the Holder pursuant to Section 5(c)(iii) or, if the Holder elected an Assumption pursuant to
Section 5(c)(ii), the Company has failed to meet the Assumption requirements of Section 5(c)(ii) prior to consummating a Major Transaction, as required. 
  

	(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, 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 that are valued for these purposes at [ * ]% of the average Volume Weighted Average Price for the five (5) Business Days prior to the date of the applicable Default Notice
(the “Mandatory Redemption Amount” or the “Default Amount”) equal to the greater of (i) 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, 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 any remaining amount of any Mandatory Redemption Amount. 
 The shares representing the Mandatory Redemption Amount shall be issued within seven (7) Business Days following the date of the applicable Default Notice, if
provided pursuant to the terms of this Warrant. 
 (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. 
 (c) 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 

  

					
		 	-13-	 	[  *  ] Confidential Treatment Requested

 
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. 
  

	Section	12. 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 Major Transaction Redemption Notice in accordance with Section 5(c)(iii), the Company shall deliver the applicable Major Transaction Warrant Redemption Price to the Holder concurrently
with or prior to the consummation of such Major Transaction pursuant to the payment terms of such transaction. In the event that the Company does not pay the applicable Major Transaction Warrant Redemption Price to the Holder within the time period
required, at any time thereafter and until the Company pays such unpaid Major Transaction Warrant Redemption Price 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 (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 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. 
  

					
		 	-14-	 	[  *  ] Confidential Treatment Requested

	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. 
 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 
  

					
		 	-15-	 	[  *  ] Confidential Treatment Requested

 IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the _____ day of _______________, ____. 

 

			
	ZYMOGENETICS, INC.
		
	By:	 	 
		 	 Print Name:
 Title:

  

					
		 	-16-	 	[  *  ] Confidential Treatment Requested

 EXHIBIT A 
 EXERCISE FORM FOR WARRANT 
 TO: ZYMOGENETICS, INC. 
 The undersigned hereby irrevocably Exercises the right to purchase
                     of the shares of Common Stock (the “Common Stock”) of ZYMOGENETICS, INC., a Washington 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 of the Warrant. 
 2.     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. 
 3.     The undersigned is exercising the attached Warrant pursuant to Cashless Exercise as set forth in
the Warrant. 
 Dated:                                      
                       
  
  
  
 Signature 
  
  
  
 Print Name 
  
  
  
 Address 
 NOTICE 
 The signature to the foregoing Exercise Form 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. 
  

					
		 	A-1	 	[  *  ] Confidential Treatment Requested

 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 ZYMOGENETICS, INC., a Washington 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
Section 8 of the Warrant and 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. 
  

					
		 	B-1	 	[  *  ] Confidential Treatment Requested

 EXHIBIT C 
 FORM OF OPINION 
                     , 20     
 [                    ] 
  

	Re:	Zymogenetics, 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, 
  

					
		 	C-1	 	[  *  ] Confidential Treatment Requested

 [FORM OF INVESTOR REPRESENTATION LETTER] 
                     , 20         
 [                    ] 
 Gentlemen: 
                      (“            ”) has agreed to
purchase                      Warrants (the “Warrants”) of Zymogenetics, 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, no 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) 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 
 (ii) _________ shall have notified the Company of the proposed
disposition and, in the case of a sale or transfer in a so-called “4(1) and a half” transaction, 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 if a
registration statement is not effective, the Warrant and the Exercise Shares shall bear in substantially similar form any or all of the following restrictive legends: 
 “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 

  

					
		 		 	[  *  ] Confidential Treatment Requested

 
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 INCLUDING PURSUANT TO A SO-CALLED “4(1) AND A HALF” TRANSACTION, 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 IS SUBJECT TO THE TERMS AND
CONDITIONS OF A CERTAIN REGISTRATION RIGHTS AGREEMENT DATED AS OF JUNE 26, 2008, AS AMENDED FROM TIME TO TIME, AMONG THE COMPANY AND CERTAIN HOLDERS OF ITS OUTSTANDING SECURITIES. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY.” 
 “THE COMPANY SHALL NOT ISSUE PURSUANT
TO THIS CERTIFICATE AND ANY OTHER WARRANT CERTIFICATES OR OTHER SECURITIES OF THE COMPANY ISSUED PURSUANT TO THE FACILITY AGREEMENT DATED AS OF JUNE 26, 2008 (THE “FACILITY AGREEMENT”), AS AMENDED FROM TIME TO TIME, AND THE HOLDER
SHALL HAVE NO RIGHT TO ACQUIRE PURSUANT TO THIS CERTIFICATE AND ANY OTHER WARRANT CERTIFICATES OR OTHER SECURITIES OF THE COMPANY ISSUED PURSUANT TO THE FACILITY AGREEMENT, ANY SHARES OF COMMON STOCK UPON EXERCISE AND/OR CONVERSION OF THIS
CERTIFICATE AND ANY OTHER WARRANT CERTIFICATES OR OTHER SECURITIES OF THE COMPANY ISSUED PURSUANT TO THE FACILITY AGREEMENT, THAT WOULD IN THE AGGREGATE EXCEED 13,675,091 SHARES OF COMMON STOCK. COPIES OF THE FACILITY 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, 
  

					
		 	-2-	 	[  *  ] Confidential Treatment Requested

 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	  	[ * ]	  		  	[ * ]
				
	Dividends	  	Zero.	  		  	Zero.

  

					
		 	S-1	 	[  *  ] Confidential Treatment RequestedForm of Employment Agreement

 EXHIBIT 10.7 
 [AMENDED AND RESTATED] 
 EMPLOYMENT AGREEMENT 
 This [AMENDED AND RESTATED] EMPLOYMENT AGREEMENT (“Agreement”), dated as of
                    , 20     (the “Effective Date”), is between ZymoGenetics, Inc., a
Washington corporation (as supplemented by Section 13, the “Company”), and                     
(“Executive”). 
 [RECITALS 
 A. The Company and Executive previously entered into the Original Agreement (as defined below) detailing compensation and benefit arrangements for Executive in the event of termination of Executive’s
employment by the Company under certain circumstances. 
 B. The Company and Executive desire to update the terms of Executive’s
employment.] 
 [Accordingly, in/In] consideration of the promises and mutual covenants contained herein, the Company and Executive agree as
follows: 
 AGREEMENT 
  

	1.	Certain Definitions 

 1.1 “Accrued
Obligations” has the meaning set forth in Section 7.1. 
 1.2 “Annual Performance Bonus” has
the meaning set forth in Section 5.5(b). 
 1.3 “Cause” shall have the meaning set forth in Section 7.6.

 1.4 “Change in Control” shall have the meaning set forth in Section 7.7. 
 1.5 “Change in Control Date” shall mean the first date during the Term (as defined in Section 4.1 on which a Change
in Control occurs. 
 1.6 “Change in Control Period” shall mean the two (2) year period commencing on the
Change in Control Date and ending on the second anniversary of such date. 
 1.7 “COBRA” shall mean the health
care continuation requirements set forth in Code Section 4980B. 
 1.8 “Code” shall mean the Internal
Revenue Code of 1986 and any regulations, rulings or other official guidance issued pursuant thereto, all as amended and in effect from time to time. 

 1.9 “Company Transaction” shall mean the consummation of either (i) a
merger or consolidation of the Company with or into any other company, entity or person or (ii) a sale, lease, exchange or other transfer of all or substantially all of the Company’s then outstanding securities or all or substantially all
of the Company’s assets in one transaction or a series of related transactions undertaken with a common purpose; provided, however, that a Company Transaction shall not include a Related Party Transaction. 
 1.10 “Compensation Committee” means the Compensation Committee of the Board of Directors. 
 1.11 “Fiscal Year” shall mean the fiscal year of the Company. 
 1.12 “Good Reason” shall have the meaning set forth in Section 7.5. 
 1.13 “Inventions Agreement” shall mean the Employee Inventions and Proprietary Information Agreement, dated as of
______________, between the parties. 
 1.14 “Notice of Termination” shall have the meaning set forth in
Section 4.4. 
 [1.15 “Original Agreement” shall mean the Employment Agreement, dated as of
                    , between the parties.] 
 1.16 “Position” shall have the meaning set forth in Section 2. 
 1.17
“Related Party Transaction” shall mean (i) a merger or consolidation of the Company in which the holders of the outstanding voting securities of the Company immediately prior to the merger or consolidation hold at
least a majority of the outstanding voting securities of the successor company immediately after the merger or consolidation; (ii) a sale, lease, exchange or other transfer of the Company’s assets to a majority-owned subsidiary company;
(iii) a transaction undertaken for the principal purpose of restructuring the capital of the Company, including but not limited to, reincorporating the Company in a different jurisdiction or creating a holding company; or (iv) a corporate
dissolution or liquidation. 
 1.18 “Successor Company” shall mean the surviving company, the successor
company or its parent, as applicable, in connection with a Company Transaction. 
 1.19 “Term” shall have the
meaning set forth in Section 4.1. 
 1.20 “Termination Date” shall have the meaning set forth in
Section 4.5. 
  

	2.	Employment 

 The Company employs Executive and
Executive accepts employment as                      of the Company (the “Position”), unless terminated earlier as
provided upon the terms and conditions contained in this Agreement. Executive and the Company acknowledge that, except as otherwise may be provided under any other written agreement between Executive and the Company, the employment of Executive by
the Company or its affiliated companies is “at will” and may be terminated by either Executive or the Company or its affiliated companies at any time with or without cause. 
  

 -2- 

	3.	Duties 

 During the Term, Executive shall serve the
Company under the direction of the [Chief Executive Officer][President] of the Company. Executive shall perform the duties of the Position faithfully, diligently and competently and to the best of Executive’s ability, and, except as provided in
this Section 3, shall devote Executive’s full business time to Executive’s employment. Executive shall perform such other duties as are assigned to Executive by the [Chief Executive Officer][President] or the Board of Directors of the
Company. Executive may devote reasonable periods of time to (a) engaging in personal investment activities, (b) serving on the Board of Directors or Scientific Advisory Boards of other corporations with the consent of the Compensation
Committee of the Board of Directors, if such service would not otherwise be prohibited by Section 8 hereof [(it is understood and agreed that Executive may continue to serve as a member of the Board of Directors of
                     and as a member of the Scientific Advisory Board of
                    )], and (c) engaging in charitable or community service activities, so long as none of the foregoing additional
activities materially interfere with Executive’s duties under this Agreement. 
  

	4.	Term; Termination 

 4.1 Term 
 The “Term” of this Agreement initially shall be for a period of two (2) years from the Effective Date; provided, however,
that this Agreement shall renew automatically for successive additional one (1) year periods unless notice of non-renewal is given by either party to the other at least ninety (90) days prior to the end of the then current term; and
provided further that if a Change in Control occurs during the Term, the Term shall automatically extend at least for the duration of the Change in Control Period. 
 4.2 Termination by the Company or Executive 
 The Company may terminate the employment of Executive,
with or without Cause, at any time upon giving Notice of Termination (as defined below). Executive may terminate Executive’s employment at any time, for any reason, upon giving Notice of Termination. 
 4.3 Automatic Termination 
 This
Agreement and Executive’s employment hereunder shall terminate automatically upon the death or Total Disability (as defined below) of Executive. The term “Total Disability” as used herein shall mean Executive’s
inability to perform the duties set forth in Section 3 hereof for a period or periods aggregating ninety (90) calendar days in any twelve (12) month period as a result of physical or mental illness, loss of legal capacity or any other
cause beyond Executive’s control, unless Executive is granted a leave of absence by the Board of Directors of the Company. Executive and the Company hereby acknowledge that Executive’s ability to perform the duties specified in
Section 3 hereof is of the essence to this Agreement. 
  

 -3- 

 4.4 Notice of Termination 
 The term “Notice of Termination” shall mean at least thirty (30) days’ written notice of termination, by either party,
of Executive’s employment and of this Agreement, during which period Executive’s employment and performance of services shall continue; provided, however, that the Company may, upon notice to Executive and without reducing Executive’s
compensation during such period, excuse Executive from any or all of Executive’s duties during such period. Such a reduction in duties shall not constitute Good Reason for termination so as to trigger termination payments in accordance with
Sections 7.2 or 7.3. 
 4.5 Termination Date 
 The effective date of the termination (the “Termination Date”) means (a) if Executive’s employment is terminated by reason of death, at the end of the calendar month in which
Executive’s death occurs, (b) if Executive’s employment is terminated by reason of Total Disability, immediately upon a determination by the Company of Executive’s Total Disability, and (c) in all other cases, the later
of (i) thirty (30) days after the date on which the Company or Executive, as applicable, receives the Notice of Termination from the other party or (ii) the date specified in the Notice of Termination. 
 4.6 Survival 
 Sections 4, 7, 8, 9,
10, 14, 15, 16, 17, 18, 19, 20, 21, and 22 shall survive the termination of Executive’s employment and of this Agreement. 
  

	5.	Compensation and Benefits 

 5.1 Salary

 During the Term, the Company shall pay to Executive as compensation for the performance of Executive’s duties and obligations a
salary of $             per annum. This compensation is subject to annual review and adjustment, as appropriate in the judgment of the Company. The compensation payable pursuant to
this Section 5.1 shall be payable in equal semi-monthly installments on the last day of each such pay period. 
 5.2 Standard
Benefits 
 Executive shall be enrolled and participate in any retirement, group insurance and other fringe benefit plans and arrangements
which are applicable to the similarly situated personnel of the Company and in effect from time to time, if Executive is eligible therefor, in each case in accordance with and subject to the provisions thereof. 
 5.3 Stock Options 
 (a) Executive has
been granted stock options under the Company’s 2001 Stock Incentive Plan which allows Executive to purchase shares of the Company’s common stock; and 
  

 -4- 

 (b) Executive shall be eligible to receive future periodic grants under the Company’s stock
incentive programs. 
 5.4 Other Benefits 
 Executive also shall receive the following executive perquisites for the duration of this contract: 
 (a)
Company-paid term life insurance policy in the amount of $            ; 
 (b) Company-paid use of either a laptop computer or personal computer, to be upgraded biennially at the time this contract is renewed; 
 (c) Company-paid annual executive health physical, to be administered by a physician selected by the Company; and 
 (d)
Company-paid expenses for a residential phone and cellular phone. 
 5.5 Change in Control Period 
 As long as Executive remains employed by the Company or a Successor Company during the Change in Control Period, the Company agrees to pay or cause to be
paid to Executive, and Executive agrees to accept in exchange for the services rendered hereunder by Executive during the Change in Control Period, the following compensation: 
 (a) Executive shall receive an annual base salary at least equal to Executive’s annual base salary for the Fiscal Year in which the Change in Control
Date occurs (as in effect immediately prior to the Change in Control Date). Executive’s annual base salary shall be paid in substantially equal installments and at the same intervals as the salaries of other executives of the Company are paid.
During the Change in Control Period, the Board of Directors, the Compensation Committee or the Chief Executive Officer (as applicable) shall review Executive’s annual base salary at least annually and shall determine in good faith and
consistent with any generally applicable Company policy any increases for future years. 
 (b) In addition to an annual base salary, for each
Fiscal Year ending during the Change in Control Period, Executive shall be awarded an annual performance bonus (the “Annual Performance Bonus”) in cash at least equal to Executive’s target annual bonus for
the Fiscal Year containing the Change in Control Date or, if such target annual bonus has not been set as of the Change in Control Date, Executive’s target annual bonus for the immediately preceding Fiscal Year [Omit for
President - (annualized if Executive was employed by the Company for less than the entire preceding Fiscal Year)]; provided, however, that except as provided in Section 7.3(b), an Annual Performance Bonus shall be awarded for a
Fiscal Year only if Executive is employed by the Company or a Successor Company on the last day of such Fiscal Year. Each Annual Performance Bonus shall be paid in the Fiscal Year following the Fiscal Year for which the Annual Performance Bonus is
awarded, but no later than the fifteenth (15th) day of the third (3rd) month of such subsequent Fiscal Year, unless Executive elects to defer the receipt of the Annual Performance Bonus in accordance with the terms of the Company’s
deferred compensation program. 
  

 -5- 

 (c) Executive shall be entitled to participate in, subject to and in accordance with the eligibility and
other terms and requirements thereof, such fringe benefit programs as generally are made available to other executives of the Company and its affiliated companies from time to time during the Change in Control Period, including, without limitation,
paid vacations; any stock purchase, savings or retirement plan, practice, policy or program; and welfare benefit plans, practices, policies or programs (including, without limitation, medical, prescription, dental, disability, salary continuance,
employee life, group life, accidental death and travel accident insurance plans or programs). 
  

	6.	Expenses 

 During the Term, all travel and other reasonable expenses incident to the rendering of service by Executive hereunder shall be paid by the Company subject to Company policy. If such expenses are paid in the first
instance by Executive, the Company shall reimburse Executive upon presentation of proper expense accounts and supporting documentation. Reimbursement requests, along with supporting documentation, must be submitted within sixty (60) days after
the date on which the expense for which reimbursement is being requested was incurred. Reimbursement shall be made no later than the date that is two and one-half months (2 1/2) months after the end of the Fiscal Year in which the expense was incurred. 
  

	7.	Termination Payments 

 In the event of termination
of the employment of Executive, all compensation and benefits set forth in this Agreement shall terminate except as specifically provided in this Section 7. 
 7.1 Termination for Cause or Other than for Good Reason 
 If during the Term Executive’s
employment is terminated by the Company for Cause or by Executive for other than Good Reason, this Agreement shall terminate without further obligation on the part of the Company to Executive, other than the Company’s obligation to pay (as
provided in Section 7.8(a)) Executive the following accrued obligations (the “Accrued Obligations”): 
 (a)
Executive’s then current annual base salary through the Termination Date; 
 (b) any Annual Performance Bonus to which Executive is
entitled pursuant to Section 5.5(b) (i.e., a bonus paid for a Fiscal Year ending during the Change in Control Period if Executive was employed by the Company or a Successor Company on the last day of such Fiscal Year); 
 (c) any compensation previously deferred by Executive (together with accrued interest or earnings thereon, if any); and 
 (d) any accrued vacation pay that would be payable under the Company’s standard policy; 
 in each case, to the extent not theretofore paid. 
  

 -6- 

 7.2 Termination Other than for Cause or for Good Reason NOT During Change in Control Period

 Subject to Section 9, if at any time during the Term, except during the Change in Control Period, the Company terminates
Executive’s employment other than for Cause or Executive terminates Executive’s employment for Good Reason, Executive shall be entitled to: 
 (a) any Accrued Obligations to the extent theretofore unpaid; 
 (b) if, as a result of the termination of
Executive’s employment, Executive and Executive’s spouse and dependent children are eligible for and timely (and properly) elect COBRA continuation coverage under the Company’s group health plan(s), the Company shall pay the premium
for such coverage for a period of twelve (12) months following the Termination Date, until Executive becomes covered under a comparable group health plan, or until Executive is no longer entitled to COBRA continuation coverage under the
Company’s group health plan(s), whichever period is the shortest, but only to the extent that the Company would have paid such premiums had Executive remained employed by the Company; 
 (c) severance payments equal, in the aggregate, to one (1) times Executive’s annual base salary as of the date of the Notice of Termination,
payable as provided in Section 7.8(b). 
 7.3 Termination Other than for Cause or for Good Reason During Change in Control Period

 Subject to Section 9, if during the Change in Control Period, the Company terminates Executive’s employment other than for
Cause or Executive terminates Executive’s employment for Good Reason, Executive shall be entitled to: 
 (a) any Accrued Obligations to
the extent theretofore unpaid; 
 (b) a bonus for the Fiscal Year that contains the Termination Date, which bonus shall not be less than the
Annual Performance Bonus multiplied by a fraction, the numerator of which is the number of days in such Fiscal Year up to and including the Termination Date and the denominator of which is three hundred sixty-five (365), payable as provided in
Section 7.8(c). This Section 7.3(b) shall not apply if Executive is entitled to an Annual Performance Bonus pursuant to Section 5.5(b) for the Fiscal Year containing the Termination Date; 
 (c) if, as a result of the termination of Executive’s employment, Executive and Executive’s spouse and dependent children are eligible for and
timely (and properly) elect COBRA continuation coverage under the Company’s group health plan(s) pursuant to COBRA, the Company shall pay the premium for such coverage for a period of twelve (12) months following the Termination Date,
until Executive becomes covered under a comparable group health plan, or until Executive is no longer entitled to COBRA continuation coverage under the Company’s group health plan(s), whichever period is the shortest, but only to the extent
that the Company would have paid such premiums had Executive remained employed by the Company; 
 (d) immediate vesting of all outstanding
stock options previously granted to Executive by the Company; 
  

 -7- 

 (e) an amount as severance pay equal to the sum of (i) [For SVP - one (1)/ For
EVP - one and one-half (1.5)/ For President – two (2)] times the Annual Performance Bonus and (ii) [For SVP - one (1)/ For EVP - one and one-half (1.5)/ For President –
two (2)] times Executive’s annual base salary as of the date of the Notice of Termination, payable as provided in Section 7.8(c). 
 7.4 Termination as a Result of Death or Total Disability 
 In the event of termination of Executive’s employment
pursuant to Section 4.3, Executive or Executive’s estate shall be paid the compensation set forth in Section 7.1. 
 7.5
Good Reason 
 (a) “Good Reason” shall mean the occurrence of any of the following conditions, without the consent
of Executive: 
 Alt 1: If the Executive is an SVP or EVP: 
  

	 	(i)	a material reduction in Executive’s base compensation; 

  

	 	(ii)	a material reduction in Executive’s authority, duties or responsibilities; provided, however, that a change in the person or office to which Executive reports, without a
corresponding reduction in authority, duties or responsibilities, shall not constitute Good Reason; 

  

	 	(iii)	a material reduction in the budget over which Executive retains authority; 

  

	 	(iv)	requirement by a Successor Company that Executive relocate Executive’s principal place of employment to a location that is more than fifty (50) miles from the principal
place of employment where Executive was employed immediately prior to such relocation; or 

  

	 	(v)	any other action or inaction that constitutes a material breach by the Company or a Successor Company of this Agreement. 

 Alt 2: If the Executive is the President: 
  

	 	(i)	a demotion or other material reduction in the nature or status of Executive’s responsibilities; provided, however, that a change in the person or office to which Executive
reports, without a corresponding reduction in duties, status and responsibilities, shall not constitute “good reason;” 

  

	 	(ii)	a reduction in the Executive’s annual base salary; 

  

	 	(iii)	requirement by a Successor Company that the Executive relocate his principal place of employment to a location that is more than fifty (50) miles from the principal place of
employment where Executive was employed; 

  

 -8- 

	 	(iv)	the failure of Company to obtain a satisfactory agreement from any Successor Company to assume and perform the obligations under this Agreement within thirty (30) calendar days
after the consummation of a merger, consolidation, sale or similar transaction; 

  

	 	(v)	following a Change in Control (as defined in Section 7.6 ), the Executive ceases to hold the positions of President and Chief Scientific Officer of the parent or combined
entity resulting from such Change in Control; or 

  

	 	(vi)	even if there is no Change in Control, but the Company enters into a merger, partnership or similar transaction, which results in a person other than the Executive becoming
President and Chief Scientific Officer of the new combined entity. 

 (b) Notwithstanding any provision in this Agreement to
the contrary, termination of employment by Executive will not be for Good Reason unless (i) Executive notifies the Company or the Successor Company in writing of the existence of the condition which Executive believes constitutes Good Reason
within ninety (90) days of the initial existence of such condition (which notice specifically identifies such condition), (ii) the Company or the Successor Company fails to remedy such condition within thirty (30) days after the date
on which it receives such notice (the “Remedial Period”), and (iii) Executive actually terminates employment within thirty (30) days after the expiration of the Remedial Period and before the Company or the
Successor Company remedies such condition. If Executive terminates employment before the expiration of the Remedial Period or after the Company or the Successor Company remedies the condition (even if after the end of the Remedial Period), then
Executive’s termination will not be considered to be for Good Reason. Executive may combine the notice required by this Section 7.5(b) with the Notice of Termination. 
 7.6 Cause 
 Wherever reference is made
in this Agreement to termination being with or without Cause, “Cause” shall include, without limitation, the occurrence of one or more of the following events: 
 (a) willful misconduct or insubordination in the performance of Executive’s duties or other knowing and material violation of the Company’s
policies and procedures in effect from time to time which results in a material adverse effect on the Company; 
 (b) willful actions in bad
faith (or intentional failures to act) by Executive with respect to the Company that materially impair the Company’s business, goodwill or reputation; 
 (c) current abuse by Executive of controlled substances; deception, fraud, misrepresentation or dishonesty by Executive; or any incident materially compromising Executive’s reputation or ability to represent the
Company with investors, customers or the public; 
  

 -9- 

 (d) conviction of Executive of a felony involving an act of dishonesty, moral turpitude, deceit or fraud,
or the commission or omission of acts that could reasonably be expected to result in such a conviction; or 
 (e) any material violation by
Executive of this Agreement or the Inventions Agreement with the Company, subject to the notice and opportunity-to-cure requirements of Section 11 hereof. 
 7.7 Change in Control 
 As used herein, a “Change in Control” shall mean any
of the following events or occurrences, provided such event or occurrence also constitutes a change in ownership or effective control of the Company, or in the ownership of a substantial portion of the Company’s assets, within the meaning of
Code Section 409A(a)(2)(A)(v): 
 (a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”), either directly or indirectly through one or more affiliated entities (collectively “Series B
Purchasers”), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either (x) the then outstanding shares of common stock of the Company (the “Outstanding
Company Common Stock”) or (y) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that for purposes of this Section 7.7(a), the following acquisitions shall not constitute a Change in Control: (A) any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or (B) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of Section 7.7(b); or 
 (b) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a
“Business Combination”), in each case, unless, following such Business Combination: (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation
which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries), (B) no Person (excluding (1) any one or more Series B Purchasers,
(2) any corporation resulting from such Business Combination, or (3) any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, fifty
percent (50%) or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business Combination 

  

 -10- 

 
and (C) at least a majority of the members of the Board of Directors of the corporation resulting from such Business Combination were members of the
incumbent Board of Directors of the Company at the time of the execution of the initial agreement, or of the action of the Board of Directors, providing for such Business Combination; 
 (c) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company; or 
 (d) A “Board Change” that, for purposes of this Agreement, shall have occurred if, during any twelve (12) month period, a
majority of the members of the Company’s Board of Directors is replaced by directors whose appointment or election is not endorsed by a majority of the members of the Company’s Board of Directors before the date of the appointment or
election. 
 7.8 Payment Schedule 
 (a) All payments of Accrued Obligations, or any portion thereof payable pursuant to this Section 7, other than deferred compensation, shall be made to Executive within ten (10) working days of the Termination Date. Deferred
compensation pursuant to Section 7.1(b) shall be payable pursuant to the terms of the deferred compensation plan, program or arrangement pursuant to which it was deferred. 
 (b) Subject to Section 21, the payments payable to Executive pursuant to Section 7.2(c) shall be paid to Executive in equal installments on
each of the Company’s semi-monthly pay days during the twelve (12) month period immediately following the Termination Date, subject to the following: 
  

	 	(i)	If Code Section 409A does not apply to the payments that would be made during the first sixty (60) days following the Termination Date, then payments shall begin as of the
first semi-monthly pay day following the date on which Executive’s release under Section 9(a) becomes effective. The initial payment shall include any such installments that would have been paid prior to such pay day had payments commenced
on the first semi-monthly pay day following the Termination Date; and 

  

	 	(ii)	If Code Section 409A applies to the payments that would be made during the first sixty (60) days following the Termination Date, then payments shall begin as of the first
semi-monthly pay day following the sixtieth (60th) day after the Termination Date. The initial payment shall include any such installments that would have been paid prior to such pay day had payments commenced on the first semi-monthly pay day
following the Termination Date. 

 For purposes of Code Section 409A, each installment payable pursuant to Section 7.2(c) and this
Section 7.8(b) shall be treated as a separate payment. 
 (c) Subject to Section 21, any payments payable to Executive pursuant to
Sections 7.3(b) and (e) shall be made to Executive in a lump sum on the first business day following the date on which Executive’s release under Section 9(a) becomes effective, unless any portion of such payments is subject to
Code Section 409A, in which case they shall be made on the first business day that is at least sixty-one (61) days following the Termination Date. 
  

 -11- 

 7.9 Parachute Payments. 
 (a) Notwithstanding any other provision in this Agreement, in the event any payments or benefits Executive receives or would become entitled to receive
from the Company, any person whose actions result in a Change in Control or any person affiliated with the Company or such person (in the aggregate, the “Payments”) would (i) constitute a “parachute payment”
within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code or any similar or successor provision (the “Excise Tax”), then
the amount of the Payments shall be equal to either (x) the largest portion of the Payments that would result in no portion of the Payments being subject to the Excise Tax (the “Reduced Amount”), or (y) the full
amount of the Payments, whichever of the foregoing amounts, after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest marginal rate applicable to individuals in
the year in which the Payments are to be made), results in Executive’s receipt, on an after-tax basis, of the greatest amount of the Payments notwithstanding that all or some portion of the Payments may be subject to the Excise Tax. If a
reduction in the Payments is required so that the amount of the Payments equals the Reduced Amount, the Payments shall be reduced in the following order: (1) reduction of cash Payments otherwise payable to Executive that are exempt from
Section 409A of the Code; (2) cancellation of accelerated vesting of equity awards (other than stock options) that are exempt from Section 409A of the Code; (3) cancellation of accelerated vesting of stock options that are exempt
from Section 409A of the Code; (4) reduction of any other payments and benefits otherwise payable to Executive that are exempt from Section 409A of the Code; and (5) reduction of any other benefits and payments otherwise payable
to Executive on a pro-rata basis or such other manner that complies with Section 409A of the Code, as determined by the Company. If acceleration of vesting of Executive’s stock options or other equity awards is to be reduced pursuant to
clauses (2) or (3) of the immediately preceding sentence, such acceleration of vesting shall be cancelled by first canceling such acceleration for the vesting installment that will vest last and continuing by canceling as a first priority
such acceleration for the vesting installment with the latest vesting. 
 (b) All computations and determinations called for by this
Section 7.9 shall be made and reported in writing to the Company and Executive by an independent accounting firm or independent tax counsel appointed by the Company (the “Tax Advisor”), and all such computations and
determinations shall be conclusive and binding on the Company and Executive. For purposes of such calculations and determinations, the Tax Advisor may rely on reasonable, good faith interpretations concerning the application of Sections 280G and
4999 of the Code. The Company and Executive shall furnish to the Tax Advisor such information and documents as the Tax Advisor may reasonably request in order to make their required calculations and determinations. The Company shall bear all fees
and expenses charged by the Tax Advisor in connection with its services. 
  

 -12- 

 7.10 Withholding 
 The Company may deduct from any amounts payable under this Agreement, any amounts that it is required by law to withhold, including, without limitation, social security taxes, federal and state income taxes, and state
disability insurance; provided, however, that any and all such obligations shall be Executive’s responsibility. 
  

	8	Non-competition and Non-solicitation 

 8.1
Non-competition 
 During the Term and for a period of twelve (12) months after the Termination Date, Executive shall not directly or
indirectly work or otherwise engage in research, development, manufacture, sale or distribution of any product, method or matter: 
 (a) For
any business, whose commercial efforts are in competition with the products manufactured or marketed by the Company during Executive’s employment with the Company or under research or development by the Company during Executive’s
employment with the Company (and on which the Company has expended at least $500,000); or 
 (b) For any research institution whose research
efforts pertain to the same products manufactured or marketed by the Company during Executive’s employment with the Company or under research or development by the Company during Executive’s employment with the Company (and on which the
Company has expended at least $500,000), unless Executive is not involved in any manner in the design, conduct or supervision of such research efforts, or unless such research is being conducted solely for scientific and not for commercial purposes.

 Executive shall be deemed to be engaged in a business if such business is carried on by partnership in which Executive is a general or
limited partner, consultant or employee, or a corporation or association of which Executive is a shareholder, officer, director, employee, member, consultant or agent; provided, that nothing herein shall prevent the purchase or ownership by
Executive of shares of less than one percent (1%) of the outstanding shares in a publicly or privately held corporation. 
 Said twelve
(12) months’ period shall commence on the day on which Executive actually leaves Executive’s employment with the Company, even if this date is prior to the expiration of any given Notice of Termination. 
 8.2 Waiver of Non-competition 
 The
Company’s Board of Directors may, at its own discretion, by express or written consent, release Executive from the restriction in Section 8.1. 
 8.3 Non-solicitation 
 During the Term and for a period of one (1) year after the Termination
Date, Executive shall not personally or through others (a) recruit, solicit or induce in any way any employee, advisor or consultant of the Company to terminate his, her or its relationship with the Company or to engage in activities
competitive with the Company, (b) hire or attempt to hire for any purpose, as an employee, agent, consultant or contractor, any person who then is an employee of 

  

 -13- 

 
the Company, or (c) solicit, induce or encourage in any way any customers (that Executive sold to, serviced or solicited on behalf of the Company),
strategic partners, contractors, suppliers, or vendors to terminate or reduce their relationships with the Company or to refrain from entering or expanding any business or relationship with the Company. 
  

	9.	General Release of Claims and Compliance by Executive 

 (a) As a condition to the payments and benefits contemplated by Section 7 (other than Accrued Obligations), Executive must execute (and not later revoke) a general release and waiver of claims against the Company in a form satisfactory
to the Company in its sole discretion. By way of example and not limitation, the general release and waiver of claims will include any claims for wages, bonuses, employment benefits, or damages of any kind whatsoever, arising out of any contracts,
express or implied, any covenant of good faith and fair dealing, express or implied, any theory of wrongful discharge, any legal restriction on the Company’s right to terminate employment, or any federal, state or other governmental statute or
ordinance, including, without limitation, Title VII of the Civil Rights Act of 1964, the federal Age Discrimination in Employment Act, the Americans with Disabilities Act, the Family and Medical Leave Act, the Washington Law Against Discrimination,
or any other legal limitation on the employment relationship. Such release and waiver must be executed and effective (and the applicable revocation period must have expired without the release and waiver being revoked) not more than sixty
(60) days after the Termination Date or Executive shall not be entitled to any such payments or benefits. 
 (b) In addition, the
payments and benefits contemplated by Section 7 (other than Accrued Obligations) are expressly contingent upon Executive’s full compliance with Executive’s obligations towards the Company, including, without limitation, the terms of
the Inventions Agreement and the non-competition provision of Section 8.1. In the event Executive materially breaches the Inventions Agreement or Section 8.1, Executive’s right to any payments or benefits under Section 7
(including those that have already been made or provided), other than Accrued Obligations, shall be forfeited and extinguished, regardless of whether the Company takes legal action or otherwise tries to enforce its rights. In such event, the Company
shall cease payments, and Executive shall immediately return to the Company any payments already made. The Company reserves all rights it may have under contract or law to relief or damages in addition to termination of the above-described payments.

  

	10.	Return of Materials 

 All documents, records,
notebooks, notes, memoranda, drawings or other documents made or compiled by Executive at any time while employed by the Company, or in Executive’s possession, including any and all copies thereof, shall be the property of the Company and shall
be held by Executive in trust and solely for the benefit of the Company, and shall be delivered to the Company by Executive upon termination of employment or at any other time upon request by the Company. 
  

	11.	Notice and Cure of Breach 

 Except as provided
otherwise in Section 7.5(b), whenever a breach of this Agreement by either party is relied upon as justification for any action taken by the other party pursuant to any 

  

 -14- 

 
provision of this Agreement, other than clauses (a), (b), or (c) of Section 7.6, before such action is taken, the party asserting the breach of
this Agreement shall give the other party at least twenty (20) days’ prior written notice of the existence and the nature of such breach before taking further action hereunder and shall give the party purportedly in breach of this
Agreement the opportunity to correct such breach during the twenty (20) day period. 
  

	12.	No Violation of Other Agreements 

 In order to
induce the Company to enter into this Agreement, Executive represents and warrants to the Company that neither the execution nor the performance of this Agreement by Executive shall violate or conflict in any way with any other agreement or
obligations by which Executive may be bound. 
  

	13.	Rights of Assignment or Delegation 

 This Agreement
is personal to Executive and shall not be assignable by Executive. The Company may assign its rights hereunder to (a) any corporation resulting from any merger, consolidation, or other reorganization to which the Company is a party or
(b) any corporation, partnership, association, or other person to which the Company may transfer all or substantially all of the assets in business of the Company existing at such time. As used in this Agreement, “Company” shall mean
ZymoGenetics, Inc. and any successor to its business and/or assets that assumes and agrees to perform this Agreement by operation of law, or otherwise. All the terms and provisions of this Agreement shall be binding upon and shall inure to the
benefit and be enforceable by the parties hereto and their respective heirs, legal or personal representatives, successors and permitted assigns. 
  

	14.	Waiver 

 No delay or failure by any party in
exercising, protecting or enforcing any of its rights, titles, interests, or remedies hereunder and no course of dealing or performance with respect thereto, shall constitute a waiver. The express waiver by a party of any right, title, interest, or
remedy in a particular instance or circumstance shall not constitute a waiver in any other instance or circumstance. All rights and remedies shall be cumulative and not exclusive of any rights or remedies. 
  

	15.	Arbitration 

 Any controversies or claims arising
out of or relating to this Agreement shall be settled finally and fully by arbitration in Seattle, Washington in accordance with the Employment Arbitration Rules of the American Arbitration Association then in effect (the “AAA Rules”),
conducted by one arbitrator, mutually agreed upon by the Company and Executive or chosen in accordance with the AAA Rules, except the parties thereto shall have any right to discovery that would be permitted by the Federal Rules of Civil Procedure
for a period of ninety (90) days following the commencement of such arbitration and the arbitrator shall resolve any dispute which arises in connection with such discovery. The prevailing parties shall be entitled to costs, expenses, reasonable
attorneys’ fees, and judgment upon the award rendered by the arbitrator. The award may be entered in any court having jurisdiction. To the extent necessary to prevent Executive from being subject to any additional tax pursuant to Code
Section 409A(a)(1)(B), any amounts payable to Executive pursuant to this paragraph shall be paid in no event later than the year following the year during which such costs and fees were incurred. 
  

 -15- 

	16.	Amendments in Writing 

 No amendment, modification,
waiver, termination or discharge of any provision of this Agreement, nor consent to any departure by either party, shall in any event be effective unless the same shall be in writing, specifically identifying this Agreement and the provision
intended to be amended, modified, waived, terminated, or discharged and assigned by the Company and Executive. Each such amendment, modification, waiver, termination, or discharge shall be effective only in the specific instance and for the specific
purpose for which given. No provision of this Agreement shall be varied, contradicted, or explained by any oral agreement, course of dealing or performance or any other matter not set forth in agreement in writing and signed by the Company and
Executive. 
  

	17.	Notices 

 Any notice required or desired to be given
hereunder shall be in writing and shall be deemed sufficiently given when delivered or when mailed by first class certified or registered mail, postage prepaid, to the party for whom intended at the following address: 
  

					
	To the Company:	 		 	
		 	[Chief Executive Officer/President]	 	
		 	ZymoGenetics, Inc.	 	
		 	1201 Eastlake Avenue East	 	
		 	Seattle, WA 98102	 	
			
	To Executive:	 		 	
		 	  
	 	
		 	  
	 	
		 	  
	 	
		 	  
	 	

 or to such other address, as to either party, as such party shall from time to time designate by like notice to
the other. 
  

	18.	Entire Agreement 

 This Agreement [supersedes and
replaces the Original Agreement and] constitutes the entire agreement between the Company and Executive with respect to the subject matter hereof, and all prior or contemporaneous oral or written communications, understandings or agreements between
the Company and Executive with respect to such subject matter, are hereby superseded and nullified in their entireties, except that the Inventions Agreement shall continue in full force and effect. 
  

 -16- 

	19.	Governing Law 

 This Agreement is made under and
shall be governed by and construed in accordance with the laws of the State of Washington (without regard to any rules governing conflict of laws), except to the extent preempted by Federal law. 
  

	20.	Severability 

 If any provision of this Agreement
shall be held invalid, illegal or unenforceable in any jurisdiction, for any reason, including without limitation, the duration of such provision, its geographical scope or the extent of the activities prohibited or required by it, then, to the full
extent permitted by law (a) all other provisions hereof shall remain in full force and effect and such provision shall be liberally construed in order to carry out the intent of the parties as nearly as may be possible, (b) such
invalidity, illegality, or unenforceability shall not affect the validity, legality or enforceability of any other provision, and (c) any court or arbitrator having jurisdiction thereover shall have the power to reform such provision to the
extent necessary for such provision to be enforceable under applicable law. 
  

	21.	409A Interpretation Provision 

 The parties intend
that this Agreement and the benefits provided hereunder be exempt from the requirements of Code Section 409A to the maximum extent possible, whether pursuant to the short-term deferral exception described in Treasury Regulation
Section 1.409A-1(b)(4), the involuntary separation pay plan exception described in Treasury Regulation Section 1.409A-1(b)(9)(iii), or otherwise. To the extent Code Section 409A is applicable to this Agreement, the parties intend that
this Agreement comply with the deferral, payout and other limitations and restrictions imposed under Code Section 409A. Notwithstanding any other provision of this Agreement to the contrary, this Agreement shall be interpreted, operated and
administered in a manner consistent with such intentions. Without limiting the generality of the foregoing, and notwithstanding any other provision of this Agreement to the contrary, with respect to any payments and benefits under this Agreement to
which Code Section 409A applies, all references in this Agreement to the termination of Executive’s employment are intended to mean Executive’s “separation from service,” within the meaning of Code
Section 409A(a)(2)(A)(i). In addition, if Executive is a “specified employee,” within the meaning of Code Section 409A, then to the extent necessary to avoid subjecting Executive to the imposition of any additional tax under Code
Section 409A, amounts that would otherwise be payable under this Agreement during the six (6) month period immediately following Executive’s “separation from service,” within the meaning of Code
Section 409A(a)(2)(A)(i), shall not be paid to Executive during such period, but shall instead be accumulated and paid to Executive (or, in the event of Executive’s death, Executive’s estate) in a lump sum on the first business day
after the earlier of the date that is six (6) months following Executive’s separation from service or Executive’s death. If the Company or Executive determines that any provision of this Agreement is or might be inconsistent with the
requirements of Code Section 409A, the parties shall attempt in good faith to agree on such amendments to this Agreement as may be necessary or appropriate to avoid subjecting Executive to the imposition of any additional tax under Code
Section 409A. Notwithstanding the foregoing, no provision of this Agreement shall be interpreted or construed to transfer any liability for failure to comply with Code Section 409A from Executive or any other individual to the Company or
any of its affiliates. 
  

 -17- 

	22.	Multiple Copies 

 This Agreement may be executed in
two (2) or more counterparts of like tenor and effect, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 
 IN WITNESS WHEREOF, the parties have executed and entered into this Agreement as of the Effective Date. 
  

			
	ZYMOGENETICS, INC.
		
	By:	 	  

	
	EXECUTIVE
	
	  

	Name:

  

 -18-

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