background image
ARRAY BIOPHARMA, INC.
Notes to the Financial Statements
For the Fiscal Years Ended June 30, 2012, 2011 and 2010
Reserved Shares
As of June 30, 2012, common stock reserved for future issuance is:
Common stock reserved for the Warrants
12,000,000
Common stock reserved for the Series B Preferred Stock
2,721,000
Outstanding common stock options under the Stock Option
and Incentive Plan
8,742,486
Common stock reserved and available for grant under the
Stock Option and Incentive Plan
3,072,236
Common stock reserved and available for grant under the
Employee Stock Purchase Plan
725,232
Total
27,260,954
Public Offering of Common Stock
On February 14, 2012, the Company sold 23 million shares of its common stock at a public offering price
of $2.60 per share. The Company received net proceeds from the sale of the shares, after underwriting
discounts and commissions and related offering expenses, of approximately $56.1 million. The Company
intends to use the net proceeds from this offering to fund research and development efforts, including
clinical trials for Array's proprietary candidates, and for general corporate purposes.
NOTE 13 EMPLOYEE COMPENSATION PLANS
Employee Savings Plan
The Company has a 401(k) plan that allows participants to contribute from 1% to 60% of their salary,
subject to eligibility requirements and annual IRS limits. The Company matches up to 4% of employee
contributions on a discretionary basis as determined by the Company's Board of Directors. Company
contributions are fully vested after four years of employment. The Company paid matching contributions
of approximately $1.0 million, $1.3 million and $1.2 million during the years ended June 30, 2012, 2011
and 2010, respectively.
Employee Stock Purchase Plan
The ESPP, as amended, was adopted effective upon the closing of the Company's initial public offering in
November 2000. The ESPP allows qualified employees (as defined in the ESPP) to purchase shares of
the Company's common stock at a price equal to 85% of the lower of the closing price at the beginning of
the offering period or of the closing price at the end of the offering period. Effective each January 1, a new
12 month offering period begins ending on December 31 of that year. However, if the closing stock price
on July 1 is lower than the closing stock price on the preceding January 1, then the original 12 month
offering period terminates and the purchase rights under the original offering period roll forward into a new
six month offering period that begins July 1 and ends on December 31.
As of June 30, 2012, the Company had 725,232 shares available for issuance under the Plan.
F-42
ARRAY BIOPHARMA, INC.
Notes to the Financial Statements
For the Fiscal Years Ended June 30, 2012, 2011 and 2010
A summary of the ESPP activity follows:
Years Ended June 30,
2012
2011
2010
Number of shares issued
443,651
529,307
525,695
Average purchase price
$
1.84
$
2.38
$
2.39
Compensation expense (in thousands)
$
252
$
538
$
783
Stock Option and Incentive Plan
Overview
In September 2000, the Company's Board of Directors approved the Amended and Restated Stock
Option and Incentive Plan (the ``Option Plan'') As of June 30, 2012, 3,072,236 shares of common stock
are reserved for future issuance under the Option Plan to eligible employees, consultants and directors of
the Company. Of the shares available for future issuance, 1,852,795 are available for issuance as
incentive stock options. The remaining shares can be used for other awards under the Option Plan. In
addition, the Option Plan provides for the reservation of additional authorized shares on any given day in
an amount equal to the difference between:
(i)
25% of the Company's issued and outstanding shares of common stock, on a fully diluted and
as-converted basis; and
(ii) The number of outstanding shares relating to awards under the Option Plan plus the number of
shares available for future grants of awards under the Option Plan on that date.
However, in no event shall the number of additional authorized shares determined pursuant to this
formula exceed, when added to the number of shares of Common Stock outstanding and reserved for
issuance under the Option Plan other than pursuant to this formula, under the ESPP and upon conversion
or exercise of outstanding warrants or convertible securities, the total number of shares of Common Stock
authorized for issuance under the Company's Amended and Restated Certificate of Incorporation.
The Option Plan provides for awards of both non-statutory stock options and incentive stock options
within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended restricted stock
and other incentive awards and rights to purchase shares of the Company's common stock.
The Option Plan is administered by the Compensation Committee of the Board of Directors, which has
the authority to select the individuals to whom awards will be granted, the number of shares, vesting
terms, exercise price and term of each option grant. Generally, options have a four-year annual vesting
term, an exercise price equal to the market value of the underlying shares at the grant date and a ten-year
life from the date of grant.
The Company has entered into employment agreements with the Company's executive officers. Under
these agreements, if a participating executive's employment is terminated without cause or upon a
change in control, then the executive is entitled to accelerated vesting of all or a portion of his unvested
stock options as provided in the executive's agreement.
F-43