EX-10.42 STOCK PURCHASE AGREEMENT



 






Exhibit 10.42


EXECUTION COPY


STOCK PURCHASE AGREEMENT




     This Stock Purchase Agreement (this “Agreement”) is made and entered into as of
November 5, 2007, by and among GTx, Inc., a Delaware corporation (the “Company”), and
Merck & Co., Inc., a New Jersey corporation (the “Investor”).



     Whereas:



     A. The Company and the Investor are executing and delivering this Agreement in reliance upon
the exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933,
as amended (the “Securities Act”).



     B. The Investor wishes to purchase, and the Company wishes to sell, upon the terms and
conditions stated in this Agreement, shares of the common stock, par value $.001 per share, of the
Company (“Common Stock”).



     Now, Therefore, in consideration of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and adequacy of which are hereby
acknowledged, the Company and the Investor agree as follows:



ARTICLE I




DEFINITIONS




     1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, the following
terms have the meanings indicated:



    “Affiliate” of a Person means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with such Person, as such
terms are used in and construed under Rule 144 under the Securities Act.



    “Applicable Laws” has the meaning set forth in Section 3.1(j).



    “Authorizations” has the meaning set forth in Section 3.1(j).



    “Bylaws” has the meaning set forth in Section 3.1(b).



    “Certificate of Incorporation” has the meaning set forth in Section 3.1(b).



    “Closing” has the meaning set forth in Section 2.1.



    “Closing Conditions” shall have the meaning set forth in Section 13.3 of the Collaboration
Agreement.



    “Closing Date” means the date of the Closing.



    “Collaboration Agreement” means the Exclusive License and Collaboration Agreement, dated as of
the date hereof, by and between the Company and the Investor.



    “Commission” means the Securities and Exchange Commission.



    “Common Stock” has the meaning set forth in the Preamble.



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    “Company Counsel” means Cooley Godward Kronish LLP, counsel to the Company.



    “Company Specified Representations” has the meaning set forth in Section 5.1(a).



    “Disclosure Materials” has the meaning set forth in Section 3.1(g).



    “Disclosure Schedule” has the meaning set forth in Section 3.1.



    “Eligible Market” means any of the New York Stock Exchange, the American Stock Exchange, The
NASDAQ Global Select Market, The NASDAQ Global Market or The NASDAQ Capital Market.



    “Exchange Act” means the Securities Exchange Act of 1934, as amended.



    “Exchange Act Documents” has the meaning set forth in Section 3.1(r).



    “FDA” has the meaning set forth in Section 3.1(j).



    “GAAP” has the meaning set forth in Section 3.1(h).



    “Governmental Entity” means any court, department, body, board, bureau, administrative agency
or commission or other governmental authority or instrumentality, whether federal, state, local or
foreign.



    “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.



    “Intellectual Property” has the meaning set forth in Section 3.1(s).



    “Investor” has the meaning set forth in the Preamble.



    “Investor Specified Representations” has the meaning set forth in Section 5.2(a).



    “Knowledge” of the Company (or similar phrases) means the actual knowledge, after reasonable
consideration, of each officer (as such term is defined in Rule 16a-1(f) of the Exchange Act) of
the Company, including but not limited to the Company’s Chief Executive Officer, President, Chief
Financial Officer and General Counsel.



    “Lien” means any lien, charge, claim, security interest, encumbrance, right of first refusal
or other restriction.



    “Losses” means any and all losses, claims, damages, liabilities, settlement costs and expenses
of any kind or nature whatsoever (less any insurance proceeds actually recovered with respect
thereto) owed by a party to this Agreement to a third-party and including, without limitation, any
losses or liabilities incurred in connection with any actions, suits, proceedings (including any
investigations, litigation or inquiries) demands, or causes of action, and costs of preparation and
reasonable attorneys’ fees associated therewith.



    “Material Adverse Effect,” with respect to the Company, means (i) a material adverse effect on
the financial condition, properties, business or results of operations of the Company or (ii) a
material adverse effect on the ability of the Company to perform its material obligations under the
Transaction Documents; provided that none of the following shall be deemed either alone or in
combination to constitute, and none of the following shall be taken into account in determining
whether there has been or would be, a Material Adverse Effect on the Company: (A) any adverse
effect resulting from or arising out of general economic conditions to the extent that such
conditions do not disproportionately affect the



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Company, (B) any adverse effect resulting from or arising out of general conditions in the
industries in which the Company operates to the extent that such conditions do not
disproportionately affect the Company, (C) any adverse effect resulting from or arising out of any
natural disaster or any acts of terrorism, sabotage, military action or war or any escalation or
worsening thereof to the extent they do not disproportionately affect the Company, (D) any adverse
change in reported financial results to the extent such change results from or arises out of
changes (after the date of this Agreement) in GAAP or Applicable Laws, or (E) a reduction in market
price of the Company’s Common Stock on the Trading Market to the extent such reduction is not
related to factors that individually or in the aggregate would reasonably be expected to have a
Material Adverse Effect.



    “Material Agreement” means any agreement filed as an exhibit to the Exchange Act Documents.



    “Per Share Price” means $23.34.



    “Person” means any individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, or joint stock company.



    “Proceeding” means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition), whether commenced or
threatened in writing.



    “Purchase Price” means the dollar amount obtained by multiplying the Shares by the Per Share
Price, rounded to the nearest whole cent.



    “Registration Rights Agreement” means the Registration Rights Agreement by and between the
Company and the Investor in substantially the form of Exhibit A hereto.



    “Registration Rights Waivers” has the meaning set forth in Section 4.1.



    “Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as may
be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission
having substantially the same effect as Rule 144.



    “SEC Reports” has the meaning set forth in Section 3.1(g).



    “Securities Act” means the Securities Act of 1933, as amended.



    “Shares” means 1,285,347 shares of Common Stock.



    “Shelf Registration Statement” has the meaning set forth in Section 2.01(a) of the
Registration Rights Agreement.



    “Stock Acquisition Rights” has the meaning set forth in Section 3.1(f).



    “Subsidiary” means any corporation or other organization, whether incorporated or
unincorporated, of which (i) 50% or more of the securities (or other interests having by their
terms ordinary voting power to elect a majority of the board of directors or equivalent governing
body of such corporation or other organization) is directly or indirectly owned or controlled by
the relevant Person or (ii) the relevant Person (or any other subsidiary of the relevant Person) is
a general partner.



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    “Trading Day” means (a) any day on which the Common Stock is listed or quoted and traded on
its primary Trading Market, (b) if the Common Stock is not then listed or quoted and traded on any
Eligible Market, then a day on which trading occurs on The NASDAQ Global Market (or any successor
thereto), or (c) if trading ceases to occur on The NASDAQ Global Market (or any successor thereto),
any day other than Saturday, Sunday or other day on which commercial banks in The City of New York
are authorized or required by law to remain closed.



    “Trading Market” means The NASDAQ Global Market or any other Eligible Market, or any national
securities exchange, market or trading or quotation facility on which the Common Stock is then
listed or quoted.



    “Transactions” shall mean the activities contemplated under this Agreement and the
Registration Rights Agreement.



    “Transaction Documents” means this Agreement and the Registration Rights Agreement.



ARTICLE II




PURCHASE AND SALE




     2.1 Closing. Subject to the satisfaction or waiver of all of the conditions set forth in
Article V, the closing of the sale and purchase of the Shares (the “Closing”), shall occur at the
offices of Company Counsel, 3175 Hanover Street, Palo Alto, California, 94304 (or at such other
place as agreed between the parties) at 10:00 a.m., New York City Time, on or prior to the third
Trading Day after the conditions to closing set forth in Article V are satisfied or waived (other
than those conditions that by their nature are to be satisfied or waived at the Closing), or such
other date and time as is mutually agreed to by the Company and the Investor. At the Closing, the
Company shall issue and sell to the Investor, and the Investor shall purchase from the Company, the
Shares for the Purchase Price.



     2.2 Closing Deliveries.



          (a) At the Closing, the Company shall deliver or cause to be delivered to the Investor the
following:




               (i) evidence reasonably satisfactory to the Investor that the Company has provided irrevocable
instructions to the Company’s transfer agent to deliver to the Investor one or more stock
certificates evidencing the Shares, containing only the legend expressly provided in Section 4.2(b)
hereof;



               (ii) a certificate of the Company signed by its Chief Executive Officer and dated the Closing
Date stating that the conditions in Section 5.1(a) and 5.1(b) have been satisfied; and



               (iii) an opinion of Company Counsel, in the form of Exhibit B hereto, executed by Company
Counsel and delivered to the Investor.



          (b) At the Closing, the Investor shall deliver or cause to be delivered to the Company the
Purchase Price in United States dollars and in immediately available funds, by wire transfer to an
account designated in writing to the Investor by the Company for such purpose.




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ARTICLE III




REPRESENTATIONS AND WARRANTIES




     3.1 Representations and Warranties of the Company. The Company represents and warrants to the
Investor that, except as set forth in the SEC Reports and the Disclosure Schedule delivered to the
Investor as of the date hereof (the “Disclosure Schedule”), the following are true and correct:



          (a) No Interest in Any Person. The Company does not own, directly or indirectly, any capital
stock, membership interests, partnership interest, joint venture interest or other equity interest
(or interest that is convertible into, or exchangeable or executable for, any of the foregoing) in
any Person.




          (b) Organization and Qualification. The Company is an entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation, with the requisite
corporate power and authority to own and use its properties and assets and to carry on its business
as currently conducted. The Company has made available to the Investor a true and correct copy of
its certificate of incorporation, as amended to date (the “Certificate of Incorporation”), and
bylaws, as amended to date (the “Bylaws”). The Company is not in material violation of any of the
provisions of the Certificate of Incorporation or Bylaws. The Company is duly qualified to do
business and is in good standing as a foreign corporation in each jurisdiction in which the nature
of the business conducted or property owned by it makes such qualification necessary, except where
the failure to be so qualified or in good standing, as the case may be, would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.




          (c) Authorization; Enforcement. The Company has the requisite corporate power and authority
to enter into and to consummate the Transactions and otherwise to carry out its obligations under
the Transaction Documents. The execution and delivery of each of the Transaction Documents by the
Company and the consummation by it of the Transactions have been duly authorized by all necessary
action on the part of the Company, and no further consent or action is required by the Company, the
Company’s Board of Directors or its stockholders. Each of the Transaction Documents has been (or
upon delivery will be) duly executed by the Company and is, or when delivered in accordance with
the terms hereof, will constitute, the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as may be limited by (i) applicable
bankruptcy, insolvency, reorganization or other laws of general application relating to or
affecting the enforcement of creditors rights generally, and (ii) the effect of rules of law
governing the availability of specific performance and other equitable remedies.




          (d) No Conflicts. The execution, delivery and performance of the Transaction Documents by the
Company and the consummation by the Company of the Transactions do not, and will not, (i) conflict
with or violate any provision of the Certificate of Incorporation or Bylaws, (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or cancellation (with
or without notice, lapse of time or both) of, any Material Agreement, or (iii) to the Company’s
Knowledge, result in a material violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any Governmental Entity to which the Company is subject
(including federal and state securities laws and regulations and the rules and regulations of any
self-regulatory organization to which the Company or its securities are subject), or by which any
property or asset of the Company is bound or affected, except with respect to clause (ii) as would
not reasonably be expected to have a Material Adverse Effect.




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          (e) Issuance of the Shares. The Shares are duly authorized and, when issued and paid for in
accordance with this Agreement, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens and will not be subject to preemptive or similar rights of stockholders.




          (f) Capitalization. The Company’s authorized capital stock consists of (i) 60,000,000 shares
of Common Stock, of which as of September 30, 2007 (A) 34,922,124 shares of Common Stock were
issued and outstanding, (B) 1,793,786 shares of Common Stock were available for future grant under
the Company’s equity compensation plans, (C) 1,869,194 shares were subject to outstanding options
granted under the Company’s equity compensation plans and (D) 39,862 shares of Common Stock had
been credited to individual director stock accounts under the Company’s Directors’ Deferred
Compensation Plan; and (ii) 5,000,000 shares of Preferred Stock, none of which are issued and
outstanding. Other than as described in the foregoing sentence, as of September 30, 2007, the
Company did not have outstanding any options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or obligations
convertible into or exercisable or exchangeable for, or any agreement giving any Person any right
to subscribe for or acquire, any shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock (collectively, “Stock Acquisition Rights”). Since
September 30, 2007, the Company has not issued any shares of Common Stock or issued any Stock
Acquisition Rights, in each case other than options granted, and shares of Common Stock issued upon
the exercise of options granted, under the Company’s equity compensation plans and 2,304 shares of
Common Stock issued under the Company’s Directors’ Deferred Compensation Plan. All outstanding
shares of capital stock are duly authorized, validly issued, fully paid and nonassessable and have
been issued in compliance with all applicable securities laws. Except for customary adjustments as
a result of stock dividends, stock splits, combinations of shares, reorganizations,
recapitalizations, reclassifications or other similar events, there are no anti-dilution or price
adjustment provisions contained in any of the Company’s outstanding securities (or in any agreement
providing rights to security holders), and the issuance and sale of the Common Stock will not
obligate the Company to issue shares of Common Stock or other securities to any Person and will not
result in a right of any holder of securities to adjust the exercise, conversion, exchange or reset
price under such securities. There are no agreements that require the Company to purchase any
Company capital stock or Stock Acquisition Rights.




          (g) SEC Reports; Financial Statements. The Company has filed all reports required to be filed
by it under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the
twenty-four months preceding the date hereof (the foregoing materials (together with any materials
filed by the Company under the Exchange Act, whether or not required) being collectively referred
to herein as the “SEC Reports” and, together with this Agreement and the schedules to this
Agreement, the “Disclosure Materials”) on a timely basis or has properly filed a notice on Form
12b-25 with respect to an extension of such time of filing as described in Schedule 3.1(g) of the
Disclosure Schedule, and has filed any such SEC Reports prior to the expiration of any such
extension. As of each of their respective dates of filing, the SEC Reports complied in all material
respects with the requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a material fact required to
be stated therein or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The financial statements of the Company
included in the SEC Reports comply in all material respects with applicable accounting requirements
and the rules and regulations of the Commission with respect thereto as in effect at the time of
filing.




          (h) Material Changes. Since the date of the latest quarterly financial statements included
within the SEC Reports, (i) the Company has operated its business in the ordinary course,
consistent with past practice, (ii) there has not been any amendment or change to the Certificate
of




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Incorporation or Bylaws of the Company, (iii) there has been no event, occurrence or
development that, individually or in the aggregate, would reasonably be expected to have a Material
Adverse Effect, (iv) the Company has not incurred any material liabilities other than (A) trade
payables and accrued expenses incurred in the ordinary course of business consistent with past
practice and (B) liabilities not required to be reflected in the Company’s financial statements
pursuant to United States generally accepted accounting principles (“GAAP”) applied on a consistent
basis during the periods involved or required to be disclosed in filings made with the Commission,
(v) the Company has not altered any significant accounting policies or the identity of its
auditors, (vi) the Company has not declared, set aside, or made any dividend or other distribution
of cash or other property to its stockholders, in their capacities as such, or purchased, redeemed
or made any agreements to purchase or redeem any shares of its capital stock (other than with
respect to agreements that permit but do not require the Company to repurchase unvested shares of
stock upon termination of service to the Company), and (vii) the Company has not issued any equity
securities to any executive officer, director or Affiliate.




          (i) Absence of Litigation. There is no Proceeding, or, to the Company’s Knowledge, inquiry or
investigation, before or by any court, public board, government agency, self-regulatory
organization or body pending or, to the Knowledge of the Company, threatened against or affecting
the Company that would, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.




          (j) Compliance. The Company is not (i) in default under or in violation of (and no event has
occurred that has not been waived that, with notice or lapse of time or both, would result in a
default by the Company under), nor has the Company received written notice of a claim that it is in
default under or that it is in violation of, any Material Agreement (whether or not such default or
violation has been waived), (ii) in violation of any order of any court, arbitrator or governmental
body, or (iii) in violation of any statute, rule or regulation of any federal, state, local or
foreign governmental authority (“Applicable Laws”), or any license, certificate, approval,
clearance, authorization, permit, supplement or amendment required by any Applicable Laws
(“Authorizations”), except where such violation, individually or in the aggregate, has not had, and
would not reasonably be expected to have, a Material Adverse Effect. The Company possesses all
material Authorizations, and such material Authorizations are in full force and effect. The
Company is in compliance in all material respects with all Authorizations, including, but not
limited to, all laws, statutes, rules, regulations, or orders administered, issued or enforced by
the United States Food and Drug Administration (the “FDA”) or any other federal, state, local or
foreign governmental authority having authority over the Company. The Company has not received
from the FDA or any other Governmental Entity any written notice of adverse findings, regulatory
letters, notices of violations, warning letters, criminal proceeding notices under Section 305 of
the Federal Food, Drug, and Cosmetic Act alleging or asserting material noncompliance with
Applicable Laws or any Authorizations. The Company has not received written notice of any
Proceeding alleging that any activity is in material violation of any Applicable Laws or
Authorizations and has no Knowledge that any Governmental Entity or other Person is considering any
such Proceeding.




          (k) Filings, Consents and Approvals. The Company is not required to obtain any consent,
waiver, authorization or order from, give notice to, or make any filing or registration with, any
Governmental Entity or any other Person in connection with the execution, delivery and performance
by the Company of the Transaction Documents, other than (i) the Registration Rights Waivers, (ii)
the filing with the Commission of the Shelf Registration Statement in accordance with the
requirements of the Registration Rights Agreement, (iii) filings required by applicable state
securities laws, (iv) the filing of a Notice of Sale of Securities on Form D with the Commission
under Regulation D of the Securities Act, (v) the filing of any requisite notices and/or
application(s) to the Trading Market for the issuance and sale of the Shares and the listing of the
Shares for trading or quotation, as the case may be, thereon in the time




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and manner required thereby, (vi) filings required under the HSR Act, and (vii) those that
have been made or obtained prior to the date of this Agreement.




          (l) No General Solicitation. Neither the Company, nor any of its Affiliates, nor any Person
acting on its or their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Rule 506 of Regulation D as promulgated by the Commission) in
connection with the offer or sale of the Shares. The Company is not obligated to pay any placement
agent’s fees, financial advisory fees, or brokers’ commissions relating to or arising out of the
issuance of the Shares pursuant to this Agreement. The Company shall pay, and hold the Investor
harmless against, any liability, loss or expense (including, without limitation, reasonable
attorney’s fees and out-of-pocket expenses) arising in connection with any such claim for fees
arising out of the issuance of the Shares pursuant to this Agreement.




          (m) Private Placement. The offer and sale of the Shares to the Investor as contemplated
hereunder is exempt from the registration requirements of the Securities Act.




          (n) Form S-3 Eligibility. As of the date hereof, the Company is eligible to register the
Shares for resale by the Investor using Form S-3 promulgated under the Securities Act.




          (o) Listing and Maintenance Requirements. The Company has not, in the twenty-four months
preceding the date hereof, received notice (written or oral) from any Trading Market on which the
Common Stock is or has been listed or quoted to the effect that the Company is not in compliance
with the listing or maintenance requirements of such Trading Market. The Company is in compliance
in all material respects with all such listing and maintenance requirements.




          (p) Registration Rights. The Company has not granted or agreed to grant to any Person any
rights (including “piggy-back” registration rights) to have any securities of the Company
registered with the Commission or any other governmental authority that have not been fully
satisfied or irrevocably waived as to the Registration Rights Agreement and the transactions
contemplated thereby.




          (q) Application of Takeover Protections. Other than Section 203 of the Delaware General
Corporation Law, there is no control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar anti-takeover provision
under the Certificate of Incorporation or Bylaws, or the laws of its state of incorporation, that
is or could become applicable to the Investor as a result of the Investor and the Company
fulfilling their obligations or exercising their rights under the Transaction Documents, including,
without limitation, as a result of the Company’s issuance of the Shares and the Investor’s
ownership of the Shares.




          (r) Disclosure. The information contained in the Exchange Act Documents as of the date hereof
(each such Exchange Act Document as amended, supplemented or superseded as of the date hereof),
does not contain an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. For purposes of this Agreement, “Exchange Act
Documents” are the documents filed by the Company under the Section 13 or 15(d) of the Exchange Act
since the end of its most recently completed fiscal year through the date hereof, including,
without limitation, its most recent report on Form 10-K.




          (s) Patents and Trademarks. To the Company’s Knowledge, the Company owns, possesses, licenses
or has other rights to use, all patents, patent applications, trade and service marks, trade and
service mark registrations, trade names, copyrights, licenses, inventions, trade secrets,
technology and other proprietary rights and processes (collectively, the “Intellectual Property”)
necessary




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for the conduct of its business as now conducted. Except where such violations or
infringements would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, to the Company’s Knowledge (i) there are no rights of third parties to any
such Intellectual Property, (ii) there is no infringement by third parties of any such Intellectual
Property, (iii) there is no pending or threatened action, suit, proceeding or claim by others
challenging the Company’s rights in or to any such Intellectual Property, (iv) there is no pending
or threatened action, suit, proceeding or claim by others challenging the validity or scope of any
such Intellectual Property and (iv) there is no pending or threatened action, suit, proceeding or
claim by others that the Company infringes or otherwise violates any patent, trademark, copyright,
trade secret or other proprietary rights of others.




          (t) Insurance. The Company is insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as are prudent and customary in the businesses
and location in which the Company is engaged. The Company has no Knowledge that it will not be
able to renew its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its business without a
significant increase in cost.




          (u) Transactions With Affiliates and Employees. None of the officers, directors or employees
of the Company is presently a party to any transaction with the Company that would be required to
be reported on Form 10-K (other than for ordinary course services as employees, officers or
directors), including any contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any such officer, director or employee or, to the Company’s
Knowledge, any corporation, partnership, trust or other entity in which any such officer, director,
or employee has a substantial interest or is an officer, director, trustee or partner.




          (v) Internal Accounting Controls. The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are executed in
accordance with management’s general or specific authorization, (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity with GAAP and to maintain
accountability for assets, (iii) access to assets is permitted only in accordance with management’s
general or specific authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with respect to any
differences.




          (w) Sarbanes-Oxley Act. The Company is in compliance in all material respects with the
applicable provisions of the Sarbanes-Oxley Act of 2002 and applicable rules and regulations
promulgated by the Commission thereunder.




     3.2 Representations and Warranties of the Investor. The Investor represents and warrants to
the Company that the following are true and correct:



          (a) Organization; Authority. The Investor is an entity duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization with the requisite
corporate power and authority to enter into and to consummate the Transactions and otherwise to
carry out its obligations under the Transaction Documents. The purchase by the Investor of the
Shares hereunder has been duly authorized by all necessary action on the part of the Investor,
including approval by the Board of Directors of the Investor. This Agreement has been duly
executed and delivered by the Investor and constitutes the valid and binding obligation of the
Investor, enforceable against it in accordance with its terms, except as may be limited by
(i) applicable bankruptcy, insolvency, reorganization or other laws of general application relating
to or affecting the enforcement of creditors




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rights generally and (ii) the effect of rules of law governing the availability of specific
performance and other equitable remedies.




          (b) No Public Sale or Distribution; Investment Intent. The Investor is acquiring the Shares
in the ordinary course of business for its own account and not with a view towards, or for resale
in connection with, the public sale or distribution thereof, except pursuant to sales registered
under the Securities Act or under an exemption from such registration and in compliance with
Applicable Laws, and the Investor does not have a present arrangement to effect any distribution of
the Shares to or through any person or entity; provided, however, that by making the
representations herein, the Investor does not agree to hold any of the Shares for any minimum or
other specific term, except as expressly required by this Agreement, and reserves the right to
dispose of the Shares in accordance with or pursuant to a registration statement or an exemption
under the Securities Act.




          (c) Investor Status. At the time the Investor was offered the Shares, it was, and at the date
hereof it is, an “accredited investor” as defined in Rule 501(a) under the Securities Act.




          (d) Experience of the Investor. The Investor has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating the merits and risks
of the prospective investment in the Shares, and has so evaluated the merits and risks of such
investment. The Investor is able to bear the economic risk of an investment in the Shares and, at
the present time, is able to afford a complete loss of such investment.




          (e) Access to Information. The Investor acknowledges that it has reviewed the Disclosure
Materials and has been afforded: (i) the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of the Company concerning the terms and
conditions of the offering of the Common Stock and the merits and risks of investing in the Common
Stock; (ii) access to information (other than material non-public information) about the Company
and its financial condition, results of operations, business, properties, management and prospects
sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such
additional information that the Company possesses or can acquire without unreasonable effort or
expense that is necessary to make an informed investment decision with respect to the investment.
Neither such inquiries nor any other investigation conducted by or on behalf of the Investor or its
representatives or counsel shall modify, amend or affect the Investor’s right to rely on the truth,
accuracy and completeness of the Disclosure Materials and the Company’s representations and
warranties contained in the Transaction Documents.




          (f) No Governmental Review. The Investor understands that no United States federal or state
agency or any other government or governmental agency has passed on or made any recommendation or
endorsement of the Common Stock or the fairness or suitability of the investment in the Common
Stock nor have such authorities passed upon or endorsed the merits of the offering of the Common
Stock.




          (g) No Legal, Tax or Investment Advice. The Investor understands that nothing in this
Agreement or any other materials presented by or on behalf of the Company to the Investor in
connection with the Shares constitutes legal, tax or investment advice. The Investor has consulted
such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its purchase of the Shares.




10









 








ARTICLE IV




COVENANTS




     4.1 Taking of Necessary Action. Each of the Company and the Investor shall use its reasonable
efforts promptly to take or cause to be taken all action and promptly to do or cause to be done all
things necessary, proper or advisable under Applicable Laws and regulations to consummate and make
effective the Transactions. Without limiting the foregoing, the Company will use its reasonable
efforts to obtain all waivers from existing stockholders that may be necessary for the consummation
of the transactions contemplated by the Registration Rights Agreement, which such waivers shall be
in form and substance reasonably satisfactory to the Investor (the “Registration Rights Waivers”).



     4.2 Transfer Restrictions.



          (a) Legal Opinion. In connection with any permitted transfer of Shares other than pursuant to
an effective registration statement or to the Company, or pursuant to Rule 144(k), the Company may
require the transferor to provide to the Company an opinion of counsel, including in house counsel
with requisite securities law expertise, selected by the transferor and reasonably acceptable to
the Company, the form and substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration under the Securities Act.
Notwithstanding the foregoing, the Company hereby consents to and agrees to register on the books
of the Company and with its transfer agent, without any such legal opinion, except to the extent
that the transfer agent requests such legal opinion, any transfer of Shares by the Investor to an
Affiliate of the Investor, provided that the transferee certifies to the Company that it is an
“accredited investor” as defined in Rule 501(a) under the Securities Act and provided that such
Affiliate does not request any removal of any existing legends on any certificate evidencing the
Shares and provided that such Affiliate agrees to be bound by this Agreement and the Registration
Rights Agreement.




          (b) Legend. The Investor agrees to the imprinting, so long as is required by this
Section 4.2(b), of the following legend on any certificate evidencing the Shares:





THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE
SKY LAWS.


Certificates evidencing the Shares shall not be required to contain such legend or any other legend
(i) after a transfer pursuant to a registration statement that is effective under the Securities
Act covering the resale of such Shares, (ii) following any sale of such Shares pursuant to Rule 144
or (iii) if such Shares are eligible for sale under Rule 144(k). At such time as a legend is no
longer required for the Shares, the Company will as soon as reasonably practicable following the
delivery by the Investor to the Company of a legended certificate representing such Common Stock
and an opinion of counsel to the extent required by Section 4.2(b), deliver or cause to be
delivered to the Investor a certificate representing such Shares that is free from all restrictive
and other legends. The Company may not make any notation on its records that enlarge the
restrictions on transfer set forth in this Section.




11









 








     4.3 Integration. The Company shall not, and shall use its best efforts to ensure that no
Affiliate thereof shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in
respect of any security (as defined in Section 2 of the Securities Act) that would be integrated
with the offer or sale of the Shares in a manner that would require the registration under the
Securities Act of the sale of the Shares to the Investor or that would be integrated with the offer
or sale of the Shares for purposes of the rules and regulations of any Trading Market.



ARTICLE V




CONDITIONS




     5.1 Conditions Precedent to the Obligations of the Investor. The obligation of the Investor
to acquire the Shares at the Closing is subject to the satisfaction or waiver by the Investor, at
or before the Closing, of each of the following conditions:



          (a) Representations and Warranties. (i) The representations and warranties of the Company
(other than those set forth in Section 3.1(a) (No Interest in Any Person), the first three
sentences of Section 3.1(b) (Organization and Qualification), Section 3.1(c) (Authorization;
Enforcement), clause (i) of Section 3.1(d) (No Conflicts), Section 3.1(e) (Issuance of the
Shares), Section 3.1(f) (Capitalization), Section 3.1(m) (Private Placement), Section 3.1(n) (Form
S-3 Eligibility), the last sentence of Section 3.1(o) (Listing and Maintenance Requirements),
Section 3.1(p) (Registration Rights) and Section 3.1(q) (Application of Takeover Protections)
(collectively, the “Company Specified Representations”)) contained in this Agreement shall be true
and correct as of the date of this Agreement (except to the extent expressly made as of an earlier
date, in which case as of such earlier date), except where the failure of such representations and
warranties to be so true and correct has not had and would not be reasonably likely to have,
individually or in the aggregate with any other failures of such representations and warranties to
be true and correct, a Material Adverse Effect and (ii) the Company Specified Representations
(considered without regard to any reference to materiality qualifiers such as “material,” “in all
material respects” and “Material Adverse Effect” set forth therein) shall be true and correct in
all material respects as of the date of this Agreement and as of the Closing Date (except to the
extent expressly made as of an earlier date, in which case as of such earlier date); provided,
however, that in the case of (i) and (ii) above, any failure to be true and correct as of the date
of this Agreement that has been cured as of the Closing Date without breach by the Company of any
of its covenants in this Agreement shall be deemed to have been true and correct as of the date of
this Agreement;




          (b) Covenants. The Company shall have performed, satisfied and complied in all material
respects with all covenants, agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by it at or prior to the Closing;




          (c) Collaboration Agreement. (i) All of the Closing Conditions set forth in Section 13.3 of
the Collaboration Agreement shall have been satisfied or waived and (ii) the Collaboration
Agreement shall remain in full force and effect;




          (d) Consents. The Company shall have obtained in a timely fashion any and all consents,
permits, approvals, registrations and waivers necessary for the consummation of the Transactions
(including the Registration Rights Waivers);




          (e) Registration Rights Agreement. The Company shall have duly executed and delivered the
Registration Right Agreement; and




12









 








          (f) No Injunction. There shall not be in effect any statute, rule, order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or prohibits consummation
of the Transactions.




     5.2 Conditions Precedent to the Obligations of the Company. The obligation of the Company to
sell the Shares at the Closing is subject to the satisfaction or waiver by the Company, at or
before the Closing, of each of the following conditions:



          (a) Representations and Warranties. The representations and warranties of the Investor (other
than those set forth in Section 3.2(a) (Organization; Authority) (collectively, the “Investor
Specified Representations”)) contained in this Agreement shall be true and correct as of the date
of this Agreement (except to the extent expressly made as of an earlier date, in which case as of
such earlier date), except where the failure of such representations and warranties to be so true
and correct has not had and would not be reasonably likely to have, individually or in the
aggregate with any other failures of such representations and warranties to be true and correct, a
material adverse effect on the ability of the Investor to perform its material obligations under
the Transaction Documents and (ii) the Investor Specified Representations (considered without
regard to any reference to materiality qualifiers such as “material” and “in all material respects”
set forth therein) shall be true and correct in all material respects as of the date of this
Agreement and as of the Closing Date (except to the extent expressly made as of an earlier date, in
which case as of such earlier date); provided, however, that in the case of (i) and (ii) above, any
failure to be true and correct as of the date of this Agreement that has been cured as of the
Closing Date without breach by the Investor of any of its covenants in this Agreement shall be
deemed to have been true and correct as of the date of this Agreement;




          (b) Covenants. The Investor shall have performed, satisfied and complied in all material
respects with all covenants, agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by the Investor at or prior to the Closing;




          (c) Consents. The Company shall have obtained in a timely fashion any and all consents,
permits, approvals, registrations and waivers necessary for the consummation of the Transactions
(including the Registration Rights Waivers);




          (d) Collaboration Agreement. (i) All of the Closing Conditions set forth in Section 13.3 of
the Collaboration Agreement shall have been satisfied or waived and (ii) the Collaboration
Agreement shall remain in full force and effect;




          (e) Registration Rights Agreement. The Investor shall have duly executed and delivered the
Registration Right Agreement; and




          (f) No Injunction. There shall not be in effect any statute, rule, order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or prohibits consummation
of the Transactions.




ARTICLE VI




TERMINATION




     6.1 Termination. This Agreement may be terminated prior to the Closing:



          (a) by mutual written consent of the Investor and the Company; or




13









 








          (b) by either the Company or the Investor upon the valid termination of the Collaboration
Agreement in its entirety in accordance with its terms or by operation of law; or




          (c) by the Investor or the Company if the Closing shall not have occurred on or prior to
January 31, 2008 (the “Reference Date”) unless the failure of such occurrence shall be due to the
failure of such party to perform or observe any agreement set forth herein required to be performed
or observed by it on or before the Closing; provided, however, that if the Closing shall not have
occurred on or prior to the Reference Date as a result of the failure to satisfy the Closing
Condition set forth in Section 13.3(a) of the Collaboration Agreement, but all other conditions set
forth in Article V hereof shall have been fulfilled or shall be capable of being fulfilled, then
the Reference Date shall be extended to April 30, 2008; or




          (d) by either the Company or the Investor if a Governmental Entity shall have issued a
nonappealable final order, decree or ruling or taken any other action having the effect or
permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this
Agreement.




     6.2 Effect of Termination. In the event of the termination of the Agreement as provided in
Section 6.1 above, all obligations and agreements of the parties set forth in this Agreement shall
forthwith become void and there shall be no liability or obligation on the part of the parties
hereto except as otherwise provided in this Agreement. Notwithstanding the foregoing, the
termination of this Agreement shall not affect (a) any rights that have accrued to the benefit of
either party prior to the date of such termination, including damages arising from any breach of
this Agreement and (b) either party’s liability for any breach of this Agreement such party may
have committed prior to the date of such termination. The provisions of this Section 6.2 and
Article VII (Miscellaneous) shall survive any termination hereof pursuant to Section 6.1 hereof.



ARTICLE VII




MISCELLANEOUS




     7.1 No Survival. The representations and warranties made in this Agreement shall terminate as
of the Closing. All covenants and agreements contained herein shall survive until, by their
respective terms, they are fully performed and no longer operative.



     7.2 Fees and Expenses. Each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such party incident to
the negotiation, preparation, execution, delivery and performance of this Agreement.



     7.3 Entire Agreement. The Transaction Documents, together with the exhibits and schedules
thereto, contain the entire understanding of the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings, oral or written, with respect to such
matters, which the parties acknowledge have been merged into such documents, exhibits and
schedules. At or after the Closing, and without further consideration, each party will execute and
deliver to the other party such further documents as may be reasonably requested in order to give
practical effect to the intention of the parties under the Transaction Documents.



     7.4 Notices. Any and all notices or other communications or deliveries required or permitted
to be provided hereunder shall be in writing and shall be deemed given and effective on the
earliest of (a) the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number specified in this Section prior to 6:30 p.m. (New York City time)
on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at



14









 







the facsimile number specified in this Section on a day that is not a Trading Day or later
than 6:30 p.m. (New York City time) on any Trading Day, (c) the Trading Day following the date of
deposit with a nationally recognized overnight courier service, or (d) upon actual receipt by the
party to whom such notice is required to be given. The addresses and facsimile numbers for such
notices and communications are those set forth on the signature pages hereof, or such other address
or facsimile number as may be designated in writing hereafter, in the same manner, by any such
Person.



     7.5 Amendments; Waivers. No provision of this Agreement may be waived or amended except in a
written instrument signed, in the case of an amendment, by the Company and the Investor or, in the
case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of
any default with respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of
any other provision, condition or requirement hereof, nor shall any delay or omission of either
party to exercise any right hereunder in any manner impair the exercise of any such right.



     7.6 Construction. The headings herein are for convenience only, do not constitute a part of
this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The
language used in this Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against any party.



     7.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of
the parties and their successors and permitted assigns. The Company may not assign this Agreement
or any rights or obligations hereunder without the prior written consent of the Investor. The
Investor may assign its rights under this Agreement to any Affiliate of the Investor to whom the
Investor assigns or transfers any Shares, provided such Affiliate-transferee agrees in writing to
be bound, with respect to the transferred Shares, by the provisions hereof that apply to the
“Investor.”



     7.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties
hereto and their respective successors and permitted assigns and is not for the benefit of, nor may
any provision hereof be enforced by, any other Person.



     7.9 Governing Law. This Agreement shall be governed in all respects by the internal laws of
the State of Delaware as applied to agreements entered into among Delaware residents to be
performed entirely within Delaware, without regard to principles of conflicts of law.



     7.10 Execution. This Agreement may be executed in two or more counterparts, all of which when
taken together shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party, it being understood
that both parties need not sign the same counterpart. In the event that any signature is delivered
by facsimile transmission, such signature shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) with the same force and effect as if such
facsimile signature page were an original thereof.



     7.11 Severability. If any provision of this Agreement is held to be invalid or unenforceable
in any respect, the validity and enforceability of the remaining terms and provisions of this
Agreement shall not in any way be affected or impaired thereby and the parties will attempt to
agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.



     7.12 Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in
(and without limiting any similar provisions of) the Transaction Documents, whenever the Investor



15









 







exercises a right, election, demand or option owed to the Investor by the Company under a
Transaction Document and the Company does not timely perform its related obligations within the
periods therein provided, then, prior to the performance by the Company of the Company’s related
obligation, the Investor may rescind or withdraw, in its sole discretion from time to time upon
written notice to such seller, any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights.



     7.13 Replacement of Common Stock. If any certificate or instrument evidencing the Shares is
mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new
certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company
and its transfer agent of such loss, theft or destruction and the execution by the holder thereof
of a customary lost certificate affidavit of that fact and an agreement to indemnify and hold
harmless the Company for any losses in connection therewith. The applicants (and not the Company)
for a new certificate or instrument under such circumstances shall also pay any reasonable
third-party costs associated with the issuance of such replacement Common Stock, including the
payment of any bond or other fee required for such replacement certificate.



     7.14 Remedies. In addition to being entitled to exercise all rights provided herein or
granted by law, including recovery of damages, the Investor and the Company will be entitled to
seek specific performance under the Transaction Documents. The parties agree that monetary damages
may not be adequate compensation for any loss incurred by reason of any breach of obligations
described in the foregoing sentence and hereby agrees to waive in any action for specific
performance of any such obligation (other than in connection with any action for temporary
restraining order) the defense that a remedy at law would be adequate.



     7.15 Adjustments in Share Numbers and Prices. In the event of any stock split, subdivision,
dividend or distribution payable in share of Common Stock (or other securities or rights
convertible into, or entitling the holder thereof to receive directly or indirectly share of Common
Stock), combination or other similar recapitalization or event occurring after the date hereof,
each reference in any Transaction Document to a number of shares or a price per share shall be
amended to appropriately account for such event.



[SIGNATURE PAGE TO FOLLOW]




16









 








     In Witness Whereof, the parties hereto have caused this Stock Purchase Agreement to
be duly executed by their respective authorized signatories as of the date first indicated above.



	 	 	 	 	 
	 	 	GTx, Inc.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Mitchell S. Steiner, M.D.
	 

	 	 	 	 
	 

	 	Name:
	 	Mitchell S. Steiner, M.D.
	 

	 	Title:
	 	Chief Executive Officer
	 
	 	 	 	 
	 	 	Address for Notice:
	 
	 	 	 	 
	 	 	GTx, Inc.
	 	 	3 North Dunlap St.
	 	 	Memphis, Tennessee 38163
	 	 	Attention: Chief Executive Officer or President
	 	 	Facsimile No.: (901) 523-9772
	 
	 	 	 	 
	 	 	with a copy to:
	 
	 	 	 	 
	 	 	GTx, Inc.
	 	 	3 North Dunlap St.
	 	 	Memphis, Tennessee 38163
	 	 	Attention: Vice President, General Counsel
	 	 	Facsimile No.: (901) 844-8075
	 
	 	 	 	 
	 	 	Merck & Co. Inc.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Peter N. Kellogg
	 

	 	 	 	 
	 

	 	Name:
	 	Peter N. Kellogg
	 

	 	Title:
	 	Executive Vice President and Chief Financial Officer
	 
	 	 	 	 
	 	 	Address for Notice:
	 
	 	 	 	 
	 	 	Merck & Co., Inc.
	 	 	One Merck Drive
	 	 	P.O. Box 100, WS3A-65
	 	 	Whitehouse Station, NJ 08889-0100
	 	 	Attention: Office of Secretary
	 	 	Facsimile No.: (908)735-1246
	 
	 	 	 	 
	 	 	with a copy to:
	 
	 	 	 	 
	 	 	Merck & Co., Inc.
	 	 	One Merck Drive
	 	 	P.O. Box 100, WS2A-30
	 	 	Whitehouse Station, NJ 08889-0100
	 	 	Attention: Vice President Business Development
	 	 	Facsimile: (908)735-1214






17









 






EXHIBIT A

REGISTRATION RIGHTS AGREEMENT




18









 








REGISTRATION RIGHTS AGREEMENT




     This Registration Rights Agreement (this “Agreement”) is made and entered into as of
[                    ], 20[07], by and among GTx, Inc., a Delaware corporation (the “Company”), and
Merck & Co., Inc., a New Jersey corporation (the “Investor”).



     Whereas: 



     A. This Agreement is made in connection with the Closing of the issuance and sale of the
Shares pursuant to the Stock Purchase Agreement, dated as of November 5, 2007, by and among the
Company and the Investor (the “Purchase Agreement”);



     B. The Company has agreed to provide the registration and other rights set forth in this
Agreement for the benefit of the Investor pursuant to the Purchase Agreement; and



     C. It is a condition to the obligations of the Investor and the Company under the Purchase
Agreement that this Agreement be executed and delivered.



     Now Therefore, in consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by each party hereto, the parties hereby agree as follows:



ARTICLE I




DEFINITIONS




     Section 1.01 Definitions.



     Capitalized terms used herein without definition shall have the meanings given to them in the
Purchase Agreement. The terms set forth below are used herein as so defined:



    “Advice” has the meaning specified therefor in Section 2.04 of this Agreement.



    “Corporate Transaction” means the occurrence (in a single transaction or in a series of
related transactions) of any of the following: (a) the sale or other disposition of all or
substantially all of the assets of the Company or (b) the Company consolidates with, or merges with
or into, any Person, or any Person consolidates with, or merges with or into the Company, in any
such event pursuant to a transaction in which any of the outstanding voting stock of the Company or
such other Person is converted into or exchanged for cash, securities or other property, other than
any such transaction where the voting stock of the Company outstanding immediately prior to such
transaction is converted into or exchanged for voting stock of the surviving or transferee Person
constituting a majority of the outstanding shares of such voting stock of such surviving or
transferee Person (immediately after giving effect to such issuance).



    “Effectiveness Period” has the meaning specified therefor in Section 2.01(a) of this
Agreement.



    “Holder” means the record holder of any Registrable Securities.



    “Inspector” has the meaning specified therefor in Section 2.03(i) of this Agreement.



    “Investor” has the meaning specified therefor in the introductory paragraph of this Agreement.



    “Losses” has the meaning specified therefor in Section 2.06(a) of this Agreement.



1









 





     “Managing Underwriter” means, with respect to any Underwritten Offering, the book-running lead
manager of such Underwritten Offering.



     “Prospectus” means the prospectus included in the Shelf Registration Statement (including,
without limitation, a prospectus that includes any information previously omitted from a prospectus
filed as part of the Shelf Registration Statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by the Shelf Registration
Statement, and all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.



     “Purchase Agreement” has the meaning specified therefor in the Recitals of this Agreement.



     “Registrable Securities” means the Shares; provided, however, that notwithstanding anything to
the contrary herein, no Shares shall be deemed Registrable Securities for purposes of this
Agreement to the extent that such Shares (a) have been sold to the public pursuant to a
registration statement that has been declared effective by the Commission or pursuant to Rule 144,
(b) have been sold, transferred or otherwise disposed of by a Holder in a transaction in which its
rights under this Agreement were not assigned in accordance with the provisions of Section 2.08 of
this Agreement or (c) are held by a Holder during any such period that all Registrable Securities
held by such Holder may be sold pursuant to Rule 144 during any ninety (90) day period.



     “Registration Expenses” has the meaning specified therefor in Section 2.05(a) of this
Agreement.



     “Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as may
be amended from time to time.



     “Rule 145” means Rule 145 promulgated by the Commission pursuant to the Securities Act, as may
be amended from time to time.



     “Selling Expenses” has the meaning specified therefor in Section 2.05(a) of this Agreement.



     “Selling Holder” means a Holder who is selling Registrable Securities pursuant to the Shelf
Registration Statement.



     “Shares” means the Common Stock purchased by the Investor pursuant to the Purchase Agreement.



     “Shelf Registration Statement” has the meaning specified therefor in Section 2.01(a) of this
Agreement.



     “Suspension Certificate” has the meaning specified therefor in Section 2.01(b) of this
Agreement.



     “Underwritten Offering” means an offering (including an offering pursuant to the Shelf
Registration Statement) in which Common Stock is sold to an underwriter on a firm commitment basis
for reoffering to the public or an offering that is a “bought deal” with one or more investment
banks.



ARTICLE II




REGISTRATION RIGHTS




2









 





     Section 2.01 Shelf Registration



          (a) General Procedures. As soon as practicable following the Closing Date, but in any event
within 90 days of the Closing Date, the Company shall prepare and file a registration statement
under the Securities Act for an offering to be made on a delayed or continuous basis pursuant to
Rule 415 of the Securities Act (or any similar provision then in force under the Securities Act)
registering the resale from time to time by Holders thereof of all of the Registrable Securities
(the “Shelf Registration Statement”). The Company shall use its commercially reasonable efforts to
cause the Shelf Registration Statement to become effective as soon as practicable. The Shelf
Registration Statement filed pursuant to this Section 2.01(a) shall be on Form S-3 (except if the
Company is then ineligible to register for resale the Registrable Securities on Form S-3, in which
case such registration shall be on Form S-1). The Company will cause the Shelf Registration
Statement filed pursuant to this Section 2.01(a) to be continuously effective under the Securities
Act until there are no longer any Registrable Securities outstanding, but in any event for no
longer than the period ending on the later of (i) two years following the Closing and (ii) the end
of the first 90 day period following the Closing during which all Registrable Securities then
outstanding may be sold pursuant to Rule 144 (such period, the “Effectiveness Period”). The Shelf
Registration Statement when declared effective (including the documents incorporated therein by
reference) will comply as to form with all applicable requirements of the Securities Act and the
Exchange Act and will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein not
misleading.




          (b) Suspension of Trading. At any time after the Registrable Securities are covered by the
Shelf Registration Statement, the Company may deliver to the Selling Holders a certificate (the
“Suspension Certificate”) signed by an officer of the Company stating that the effectiveness of and
sales of Registrable Securities under the Shelf Registration Statement would (i) materially
interfere with any transaction that would require the Company to prepare financial statements under
the Securities Act that the Company would otherwise not be required to prepare in order to comply
with its obligations under the Exchange Act or (ii) require public disclosure of a material
transaction or event prior to the time such disclosure might otherwise be required. Upon receipt of
a Suspension Certificate by the Selling Holders, such Selling Holders shall refrain from selling or
otherwise transferring or disposing of any Registrable Securities then held by such Selling Holders
for a specified period of time that is customary under the circumstances. Notwithstanding the
foregoing sentence, in no event shall any Selling Holder be required to refrain from selling or
otherwise transferring or disposing of any Registrable Securities under this Section 2.01(b) for a
period exceeding an aggregate of 90 days (exclusive of any days covered by any lock-up agreement
executed by such Selling Holder in connection with any Underwritten Offering by the Company or any
Selling Holders) in any 365-day period. The Company may impose stop transfer instructions to
enforce any required agreement of the Holders under this Section 2.01(b).




     Section 2.02 Underwritten Offering.



          (a) Shelf Registration. If a Selling Holder elects to dispose of Registrable Securities under
the Shelf Registration Statement pursuant to an Underwritten Offering and reasonably anticipates
gross proceeds of greater than $20.0 million from such Underwritten Offering, the Company shall, at
the request of such Selling Holder, enter into an underwriting agreement in customary form with the
Managing Underwriter, which shall include, among other provisions, indemnities to the effect and to
the extent provided in Section 2.06, and shall take all such other reasonable actions as are
requested by the Managing Underwriter to expedite or facilitate the disposition of the Registrable
Securities. In furtherance of the foregoing, if a supplement to the Prospectus will be used in
connection with the marketing of an Underwritten Offering from the Shelf Registration Statement and
the Managing Underwriter shall notify the Company in writing that, in the sole judgment of such
Managing Underwriter, inclusion of detailed information to be used in such supplement is of
material importance to




3









 







the success of the Underwritten Offering of such Registrable Securities, the Company shall use
its commercially reasonable efforts to include such information in such supplement.




          (b) General Procedures. In connection with any Underwritten Offering pursuant to this
Agreement, the Company shall, at its sole discretion, be entitled to select the Managing
Underwriter and other underwriters. In connection with an Underwritten Offering pursuant to this
Agreement, each Selling Holder and the Company shall be obligated to enter into an underwriting
agreement that contains such representations, covenants, indemnities and other rights and
obligations as are customary in underwriting agreements for firm commitment underwritten public
offerings of securities. No Selling Holder may participate in such Underwritten Offering unless
such Selling Holder agrees to sell its Registrable Securities on the basis provided in such
underwriting agreement and completes and executes all questionnaires, powers of attorney,
indemnities and other documents reasonably required under the terms of such underwriting agreement.
No Selling Holder shall be required to make any representations or warranties to or agreements with
the Company or the underwriters other than representations, warranties or agreements regarding such
Selling Holder and its ownership of the securities being registered on its behalf and its intended
method of distribution and any other representations required by law. If any Selling Holder
disapproves of the terms of an underwriting, such Selling Holder may elect to withdraw therefrom by
notice to the Company and the Managing Underwriter; provided that such withdrawal must be made
prior to the time of pricing of such Underwritten Offering to be effective; and provided further,
that such withdrawing Selling Holder shall be obligated to pay its pro rata share (based on its pro
rata share of the aggregate Registrable Securities requested to be included in such Underwritten
Offering by all Selling Holders) of the Registration Expenses incurred in connection with such
underwriting as of the date of such withdrawal.




     Section 2.03 Sale Procedures. In connection with its obligations contained in Section 2.01
and Section 2.02, the Company will:



          (a) Prepare and file with the Commission such amendments and supplements to the Shelf
Registration Statement and the Prospectus used in connection therewith as may be necessary to keep
the Shelf Registration Statement effective and as may be necessary to comply with the provisions of
the Securities Act with respect to the disposition of all securities covered by the Shelf
Registration Statement.




          (b) Permit a single firm of legal counsel, designated by the Selling Holders who hold a
majority-in-interest of the Registrable Securities being sold pursuant to the Shelf Registration
Statement (“Holders’ Counsel”), to review the Shelf Registration Statement and all amendments and
supplements thereto (except for Annual Reports on Form 10-K, and Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K and any similar or successor reports) within a reasonable amount of
time (not to exceed three (3) business days) prior to their filing with the Commission, and will
not file any document in a form to which such Holders’ Counsel reasonably objects, unless otherwise
required by law in the opinion of the Company’s General Counsel. The sections of the Shelf
Registration Statement including information with respect to the Selling Holders, the Selling
Holders’ beneficial ownership of securities of the Company or the Selling Holders’ intended method
of disposition of Registrable Securities must conform to the information provided to the Company by
each of the Selling Holders or Holders’ Counsel.




          (c) Furnish to each Selling Holder such number of copies of the Shelf Registration Statement
and the Prospectus included therein and any supplements and amendments thereto as such Selling
Holder may reasonably request in order to facilitate the public sale or other disposition of the
Registrable Securities covered by such Shelf Registration Statement.




4









 








          (d) If applicable, use its commercially reasonable efforts to register or qualify the
Registrable Securities covered by the Shelf Registration Statement under the securities or blue sky
laws of such jurisdictions as the Selling Holders or, in the case of an Underwritten Offering, the
Managing Underwriter, shall reasonably request, provided, however, that the Company will not be
required to qualify generally to transact business in any jurisdiction where it is not then
required to so qualify or to take any action which would subject it to general service of process
in any such jurisdiction where it is not then so subject.




          (e) Promptly notify each Selling Holder, at any time when a Prospectus relating thereto is
required to be delivered under the Securities Act, of (i) the filing of the Shelf Registration
Statement or any Prospectus to be used in connection therewith, or any amendment or supplement
thereto (except for Annual Reports on Form 10-K, and Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K and any similar or successor reports), and, with respect to such Shelf
Registration Statement or any post-effective amendment thereto, when the same has become effective
(except with respect to Annual Reports on Form 10-K), and (ii) the receipt of any written comments
from the Commission with respect to any filing referred to in clause (i) and any written request by
the Commission for amendments or supplements to the Shelf Registration Statement or any Prospectus
or supplement thereto.




          (f) Immediately notify each Selling Holder, at any time when a Prospectus relating thereto is
required to be delivered under the Securities Act, of (i) the occurrence of any event or passage of
time that makes the financial statements included in the Shelf Registration Statement ineligible
for inclusion therein or any statement made in the Shelf Registration Statement or the Prospectus,
or any document incorporated or deemed to be incorporated therein by reference, untrue in any
material respect or that requires any revisions to the Shelf Registration Statement, Prospectus or
other documents so that, in the case of the Registration Statement or the Prospectus, as the case
may be, it will not contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein (in the case of any
Prospectus, form of prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading, (ii) the occurrence or existence of any pending development with
respect to the Company that the Company believes may be material and that, in the determination of
the Company, makes it not in the best interest of the Company to allow continued availability of
the Shelf Registration Statement or the Prospectus, provided that any and all of such information
shall remain confidential to each Selling Holder until such information otherwise becomes public,
unless disclosure by a Selling Holder is required by law; provided, further, that notwithstanding
each Selling Holder’s agreement to keep such information confidential, the Selling Holders make no
acknowledgement that any such information is material, non-public information, (iii) the issuance
or threat of issuance by the Commission of any stop order suspending the effectiveness of the Shelf
Registration Statement, or the initiation of any proceedings for that purpose, or (iv) the receipt
by the Company of any notification with respect to the suspension of the qualification of any
Registrable Securities for sale under the applicable securities or blue sky laws of any
jurisdiction. Following the provision of such notice, the Company agrees to as promptly as
practicable amend or supplement the Shelf Registration Statement or Prospectus or take other
appropriate action so that neither the Shelf Registration Statement nor the Prospectus contains an
untrue statement of a material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein (in the case of any Prospectus, form of prospectus or
supplement thereto, in light of the circumstances under which they were made) not misleading, and
to take such other action as is necessary to remove a stop order, suspension, threat thereof or
proceedings related thereto.




          (g) Upon request and subject to appropriate confidentiality obligations, furnish to Holders’
Counsel copies of any and all transmittal letters or other correspondence with the Commission or
any other governmental agency or self-regulatory body or other body having jurisdiction (including
any domestic or foreign securities exchange) relating to such offering of Registrable Securities.




5









 








          (h) In the case of an Underwritten Offering, furnish upon request, (i) an opinion of counsel
for the Company, dated the date of the closing under the underwriting agreement, and (ii) a
“comfort letter,” dated the date of the underwriting agreement and a letter of like kind dated the
date of the closing under the underwriting agreement, in each case, signed by the independent
public accountants who have certified the Company’s financial statements included or incorporated
by reference into the Shelf Registration Statement, and each of the opinion of counsel for the
Company and the “comfort letters” shall be in customary form and covering substantially the same
matters with respect to such Shelf Registration Statement (and the Prospectus included therein) as
are customarily covered in opinions of issuer’s counsel and in accountants’ letters delivered to
the underwriters in Underwritten Offerings of securities, and such other matters as such
underwriters may reasonably request.




          (i) Make available to the appropriate representatives of the Managing Underwriter and Selling
Holders (each, an “Inspector”) such information and Company personnel during normal business hours
and on reasonable notice as is reasonable and customary to enable such parties to establish a due
diligence defense under the Securities Act; provided, however, that the Company need not disclose
any information to any such Inspector unless and until such Inspector has entered into a
confidentiality agreement with the Company in form and substance satisfactory to the Company.




          (j) Cause all such Registrable Securities registered pursuant to this Agreement to be listed
on the Trading Market.




          (k) Use its commercially reasonable efforts to cause the Registrable Securities to be
registered with or approved by such other governmental agencies or authorities as may be necessary
by virtue of the business and operations of the Company to enable the Selling Holders to consummate
the disposition of such Registrable Securities.




          (l) Provide a transfer agent and registrar for all Registrable Securities covered by the Shelf
Registration Statement not later than the effective date of the Shelf Registration Statement.




     Section 2.04 Discontinued Disposition. Each Selling Holder agrees by its acquisition of
Registrable Securities that, upon receipt of a notice from the Company of the occurrence of any
event of the kind described in Section 2.03(f), such Selling Holder will forthwith discontinue
disposition of such Registrable Securities under the Shelf Registration Statement until it is
advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus (as it
may have been supplemented or amended) may be resumed, and, if so directed by the Company, such
Selling Holder will, or will request the Managing Underwriter, if any, to deliver to the Company
(at the Company’s expense) all copies in their possession or control, other than permanent file
copies then in such Selling Holder’s possession, of the Prospectus covering such Registrable
Securities current at the time of receipt of such notice. The Company may provide appropriate stop
orders to enforce the provisions of this Section 2.04.



     Section 2.05 Expenses.



          (a) Certain Definitions. “Registration Expenses” means all expenses incident to the Company’s
performance under or compliance with this Agreement to effect the registration of Registrable
Securities under the Shelf Registration Statement pursuant to Section 2.01, an Underwritten
Offering pursuant to Section 2.02 and the disposition of such securities, including, without
limitation, all registration, filing, securities exchange listing and NASDAQ Global Market fees,
all registration, filing, qualification and other fees and expenses of complying with securities or
blue sky laws, fees of the Financial Industry Regulatory Authority, Inc., transfer taxes and fees
of transfer agents and registrars, all word processing, duplicating and printing expenses, the fees
and disbursements of counsel and independent public accountants for the Company, including the
expenses of any special audits or




6









 







“comfort letters” required by or incident to such performance and compliance. Except as
otherwise provided in Section 2.06 hereof, the Company shall not be responsible for legal fees
incurred by Holders in connection with the exercise of such Holders’ rights hereunder. In
addition, the Company shall not be responsible for any “Selling Expenses,” which means all
underwriting fees, discounts and selling commissions allocable to the sale of the Registrable
Securities under the Shelf Registration Statement.




          (b) Expenses. Except for any Registration Expenses payable by a withdrawing Selling Holder
pursuant to Section 2.02(b), the Company will pay all reasonable Registration Expenses as
determined in good faith, including, in the case of an Underwritten Offering, whether or not any
sale is made pursuant to such Underwritten Offering. Each Selling Holder shall pay all Selling
Expenses in connection with any sale of its Registrable Securities hereunder.




     Section 2.06 Indemnification.



          (a) By the Company. In the event of a registration of any Registrable Securities under the
Securities Act pursuant to this Agreement, the Company will indemnify and hold harmless each
Selling Holder, its directors and officers, and each underwriter, pursuant to the applicable
underwriting agreement with such underwriter, of Registrable Securities thereunder and each Person,
if any, who controls such Selling Holder or underwriter within the meaning of the Securities Act or
the Exchange Act, against any losses, claims, damages, expenses or liabilities (including
reasonable attorneys’ fees and expenses) (collectively, “Losses”), joint or several, to which such
Selling Holder or underwriter or controlling Person may become subject under the Securities Act,
the Exchange Act or otherwise, insofar as such Losses (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Shelf Registration Statement, any Prospectus
or any form of prospectus, or in any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein (in the case of any Prospectus or form of
prospectus or supplement thereto, in light of the circumstances under which they were made) not
misleading, and will reimburse each such Selling Holder, its directors and officers, each such
underwriter and each such controlling Person for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such Loss or actions or proceedings;
provided, however, that the Company will not be liable in any such case if and to the extent that
(i) any such Loss arises out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission so made in conformity with information furnished by such Selling
Holder, such underwriter or such controlling Person in writing specifically for use therein, (ii)
in the case of an occurrence of an event of the type specified in Section 2.03(f) related to the
use by a Selling Holder of an outdated or defective Prospectus after the Company has notified such
Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such
Holder of the Advice contemplated in Section 2.04, but only if and to the extent that following the
receipt of the Advice the misstatement or omission giving rise to such Loss would have been
corrected or (iii) any such Loss arises out of the Selling Holder’s (or any other indemnified
party’s) failure to send or give a copy of the Prospectus or supplement (as then amended or
supplemented) to the Persons asserting an untrue statement or alleged untrue statement or omission
or alleged omission at or prior to the written confirmation of the sale of Registrable Securities
to such Person if such statement or omission was corrected in such Prospectus or supplement. Such
indemnity shall remain in full force and effect regardless of any investigation made by or on
behalf of such Selling Holder or any such director, officer or controlling Person, and shall
survive the transfer of such securities by such Selling Holder.




          (b) By Each Selling Holder. Each Selling Holder agrees severally and not jointly to indemnify
and hold harmless the Company, its directors and officers, and each underwriter, pursuant to the
applicable underwriting agreement with such underwriter, of Registrable Securities thereunder and




7









 







each Person, if any, who controls the Company or underwriter within the meaning of the
Securities Act or of the Exchange Act to the same extent as the foregoing indemnity from the
Company to the Selling Holders (i) if and to the extent that such untrue statement or alleged
untrue statement or omission or alleged omission is based solely upon information regarding such
Selling Holder furnished in writing by or on behalf of such Selling Holder expressly for inclusion
in the Shelf Registration Statement or Prospectus relating to the Registrable Securities, or any
amendment or supplement thereto or (ii) in the case of an occurrence of an event of the type
specified in Section 2.03(f), to the extent related to the use by such Selling Holder of an
outdated or defective Prospectus after the Company has notified such Selling Holder in writing that
the Prospectus is outdated or defective and prior to the receipt by such Selling Holder of the
Advice contemplated in Section 2.04; provided, however, that the liability of each Selling Holder
shall not be greater in amount than the dollar amount of the proceeds (net of any Selling Expenses)
received by such Selling Holder from the sale of the Registrable Securities giving rise to such
indemnification (except in the case of fraud or willful misconduct by such Selling Holder).




          (c) Notice. Promptly after receipt by an indemnified party hereunder of notice of the
commencement of any action, such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party hereunder, notify the indemnifying party in writing thereof,
but the omission so to notify the indemnifying party shall not relieve it from any liability which
it may have to any indemnified party other than under this Section 2.06, except to the extent such
failure is materially prejudicial. In any action brought against any indemnified party, it shall
notify the indemnifying party of the commencement thereof. The indemnifying party shall be
entitled to participate in and, to the extent it shall wish, to assume and undertake the defense
thereof with counsel reasonably satisfactory to such indemnified party and, after notice from the
indemnifying party to such indemnified party of its election so to assume and undertake the defense
thereof, the indemnifying party shall not be liable to such indemnified party under this
Section 2.06 for any legal expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation and of liaison with counsel
so selected; provided, however, that, (i) if the indemnifying party has failed to assume the
defense and employ counsel or (ii) if the defendants in any such action include both the
indemnified party and the indemnifying party and counsel to the indemnified party shall have
concluded that there may be reasonable defenses available to the indemnified party that are
different from or additional to those available to the indemnifying party, or if the interests of
the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying
party, then the indemnified party shall have the right to select a separate counsel and to assume
such legal defense and otherwise to participate in the defense of such action, with the reasonable
expenses and fees of such separate counsel and other reasonable expenses related to such
participation to be reimbursed by the indemnifying party as incurred. Notwithstanding any other
provision of this Agreement, no indemnified party shall settle any action brought against it with
respect to which it is entitled to indemnification hereunder without the consent of the
indemnifying party, unless the settlement thereof imposes no liability or obligation on, and
includes a complete and unconditional release from all liability of, the indemnifying party.




          (d) Contribution. If the indemnification provided for in this Section 2.06 is held by a court
or government agency of competent jurisdiction to be unavailable to any indemnified party or is
insufficient to hold them harmless in respect of any Losses, then each such indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such Loss in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of such indemnified party on the other
in connection with the statements or omissions which resulted in such Losses, as well as any other
relevant equitable considerations; provided, however, that in no event shall such Selling Holder be
required to contribute an aggregate amount in excess of the dollar amount of proceeds (net of
Selling Expenses) received by such Selling Holder from the sale of Registrable Securities giving
rise to such indemnification. The relative fault of the indemnifying party on the one hand and the
indemnified party on the other shall be




8









 







determined by reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact has been made by,
or relates to, information supplied by such party, and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or omission. The
parties hereto agree that it would not be just and equitable if contributions pursuant to this
paragraph were to be determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to herein. The amount paid by an
indemnified party as a result of the Losses referred to in the first sentence of this paragraph
shall be deemed to include any legal and other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any Loss which is the subject of this
paragraph. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any Person who is not guilty of such
fraudulent misrepresentation.




          (e) Other Indemnification. The provisions of this Section 2.06 shall be in addition to any
other rights to indemnification or contribution which an indemnified party may have pursuant to
law, equity, contract or otherwise.




          Section 2.07 Rule 144 Reporting. With a view to making available the benefits of certain
rules and regulations of the Commission that may permit the sale of the Registrable Securities to
the public without registration, the Company agrees to use its commercially reasonable efforts to:




          (a) Make and keep public information regarding the Company available, as those terms are
understood and defined in Rule 144, at all times from and after the date hereof;




          (b) File with the Commission in a timely manner all reports and other documents required of
the Company under the Securities Act and the Exchange Act at all times from and after the date
hereof; and




          (c) So long as a Holder owns of record any Registrable Securities, furnish to such Holder
forthwith upon request a copy of the most recent annual or quarterly report of the Company, and
such other reports and documents so filed as such Holder may reasonably request in availing itself
of any rule or regulation of the Commission allowing such Holder to sell any such securities
without registration; provided that the Company’s obligations pursuant to this Section 2.07(c)
shall be deemed satisfied with respect to any document that is publicly available, free of charge,
on the Commission’s EDGAR website.




     Section 2.08 Transfer or Assignment of Registration Rights. The rights to cause the Company
to register Registrable Securities granted to the Investor by the Company under this Article II may
be transferred or assigned by the Investor only to an Affiliate of the Investor. The Company shall
be given written notice prior to any said transfer or assignment, stating the name and address of
each such transferee and identifying the Registrable Securities with respect to which such
registration rights are being transferred or assigned. Each such transferee shall assume in
writing responsibility for its portion of the obligations of the Investor under this Agreement.



ARTICLE III




MISCELLANEOUS




     Section 3.01 Effectiveness. This Agreement shall be effective automatically and without
further action on the part of any party hereto on the Closing Date.



     Section 3.02 Termination. This Agreement and the obligations of the parties hereunder shall



9









 







terminate on the earlier to occur of (i) the end of the Effectiveness Period or (ii) a
Corporate Transaction; provided, however, that in the case of clause (ii), only as long as all
Registrable Securities (or any securities for which such Registrable Securities are exchanged in
such transaction) may be sold by the Holder or Holders thereof without restriction pursuant to
Rule 144 or Rule 145 immediately following the closing of such Corporate Transaction.
Notwithstanding the foregoing sentence, the termination of this Agreement shall not affect any
liabilities or obligations of the parties hereto under Section 2.06 hereof, which such Section 2.06
shall remain in effect in accordance with its terms.



     Section 3.03 Communications. All notices and other communications provided for or permitted
hereunder shall be made in writing by facsimile, courier service or personal delivery:



          (a) if to the Investor, to the address set forth under the Investor’s signature block in
accordance with the provisions of this Section 3.03,




          (b) if to a transferee of the Investor, to such Holder at the address provided pursuant to
Section 2.08 above, and




          (c) if to the Company, to the address set forth under the Company’s signature block in
accordance with the provisions of this Section 3.03.




     All such notices and communications shall be deemed given and effective on the earliest of
(i) the date of transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section prior to 6:30 p.m. (New York City time) on a Trading
Day, (ii) the next Trading Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number specified in this Section 3.03 on a day that is not
a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (iii) the Trading
Day following the date of deposit with a nationally recognized overnight courier service, or
(iv) upon actual receipt by the party to whom such notice is required to be given.



     Section 3.04 Successor and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties, including subsequent Holders of
Registrable Securities to the extent permitted herein.



     Section 3.05 Assignment of Rights. All or any portion of the rights and obligations of the
Investor under this Agreement may be transferred or assigned by the Investor to its Affiliates in
accordance with Section 2.08 hereof.



     Section 3.06 Aggregation of Purchased Common Stock. All Purchased Common Stock held or
acquired by Persons who are Affiliates of one another shall be aggregated together for the purpose
of determining the availability of any rights under this Agreement.



     Section 3.07 Recapitalization, Exchanges, etc. Affecting the Common Stock. The provisions of
this Agreement shall apply to the full extent set forth herein with respect to any and all
securities of the Company or any successor, assign or acquirer of the Company (whether by merger,
consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for or
in substitution of, the Registrable Securities, and shall be appropriately adjusted for
combinations, recapitalizations and the like occurring after the date of this Agreement.



     Section 3.08 Specific Performance. Damages in the event of breach of this Agreement by a
party hereto may be difficult, if not impossible, to ascertain, and it is therefore agreed that
each such Person, in addition to and without limiting any other remedy or right it may have, will
have the right to an



10









 







injunction or other equitable relief in any court of competent jurisdiction, enjoining any
such breach, and enforcing specifically the terms and provisions hereof, and each of the parties
hereto hereby waives any and all defenses it may have on the ground of lack of jurisdiction or
competence of the court to grant such an injunction or other equitable relief. The existence of
this right will not preclude any such Person from pursuing any other rights and remedies at law or
in equity which such Person may have.



     Section 3.09 Execution. This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart. In the event that any signature
is delivered by facsimile transmission, such signature shall create a valid and binding obligation
of the party executing (or on whose behalf such signature is executed) with the same force and
effect as if such facsimile signature page were an original thereof.



     Section 3.10 Construction. The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.
The language used in this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied against any party.



     Section 3.11 Governing Law. This Agreement shall be governed in all respects by the internal
laws of the State of Delaware as applied to agreements entered into among Delaware residents to be
performed entirely within Delaware, without regard to principles of conflicts of law.



     Section 3.12 Severability. If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt
to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon
so agreeing, shall incorporate such substitute provision in this Agreement.



     Section 3.13 Entire Agreement. The Transaction Documents, together with the exhibits and
schedules thereto, contain the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such documents, exhibits and
schedules.



     Section 3.14 Amendment; Waiver. With the written consent of (i) the Company and (ii) the
Holders of a majority-in-interest of the then-outstanding Registrable Securities, the obligations
of the Company and the rights of the Holders under this Agreement may be waived or amended (either
generally or in a particular instance, either retroactively or prospectively and either for a
specified period of time or indefinitely).



     Section 3.15 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is not for the benefit of,
nor may any provision hereof be enforced by, any other Person.



[SIGNATURE PAGE TO FOLLOW]




11









 








     In Witness Whereof, the parties hereto have caused this Registration Rights Agreement
to be duly executed by their respective authorized signatories as of the date first indicated
above.



	 	 	 	 	 
	 	 	GTx, Inc.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	Mitchell S. Steiner, M.D.
	 

	 	Title:
	 	Chief Executive Officer
	 
	 	 	 	 
	 	 	Address for Notice:
	 
	 	 	 	 
	 	 	GTx, Inc.
	 	 	3 North Dunlap St.
	 	 	Memphis, Tennessee 38163
	 	 	Attention: Chief Executive Officer or President
	 	 	Facsimile No.: (901) 523-9772
	 
	 	 	 	 
	 	 	with a copy to:
	 
	 	 	 	 
	 	 	GTx, Inc.
	 	 	3 North Dunlap St.
	 	 	Memphis, Tennessee 38163
	 	 	Attention: Vice President, General Counsel
	 	 	Facsimile No.: (901) 844-8075
	 
	 	 	 	 
	 	 	Merck & Co. Inc.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	Address for Notice:
	 
	 	 	 	 
	 	 	Merck & Co., Inc.
	 	 	One Merck Drive
	 	 	P.O. Box 100, WS3A-65
	 	 	Whitehouse Station, NJ 08889-0100
	 	 	Attention: Office of Secretary
	 	 	Facsimile No.: (908)735-1246
	 
	 	 	 	 
	 	 	with a copy to:
	 
	 	 	 	 
	 	 	Merck & Co., Inc.
	 	 	One Merck Drive
	 	 	P.O. Box 100, WS2A-30
	 	 	Whitehouse Station, NJ 08889-0100
	 	 	Attention: Vice President Business
	 	 	Development
	 	 	Facsimile: (908)735-1214






12









 






EXHIBIT B

OPINION OF COMPANY COUNSEL




     The Company shall furnish to the Investor at the Closing an opinion of Company Counsel,
addressed to the Investor and dated the Closing Date, with respect to the matters set forth below.
All capitalized terms used but not defined below have the respective meanings assigned to them in
the Agreement.



     1. The Company has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the State of Delaware with requisite corporate power to own or lease, as
the case may be, and to operate its properties and conduct its business is presently conducted.



     2. The Company is duly qualified to do business as a foreign corporation and is in good
standing under the laws of the State of Tennessee.



     3. The Shares have been duly authorized and, when issued and paid for by the Investor pursuant
to the Agreement, will be validly issued, fully paid and nonassessable.



     4. The Company has the requisite corporate power to execute, deliver and perform its
obligations under the Transaction Documents. The Transaction Documents have been duly authorized by
all necessary corporate action on the part of the Company and have been duly executed and delivered
by the Company.



     5. All consents, approvals, authorizations, or orders of, and filings, registrations and
qualifications with any U.S. Federal regulatory authority or governmental body required for the
issuance of the Shares have been made or obtained, except for the filing of a Form D pursuant to
Securities and Exchange Commission Regulation D.



     6. The offer and sale of the Shares are exempt from the registration requirements of the
Securities Act, subject to the timely filing of a Form D pursuant to Securities and Exchange
Commission Regulation D.




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