Exhibit 4.1


 


NEITHER THESE SECURITIES NOR THE SECURITIES
FOR WHICH THESE SECURITIES ARE EXERCISABLE HAVE 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 ACCORDANCE WITH
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.


 


THIS WARRANT IS SUBJECT TO THE TERMS AND
CONDITIONS OF A CERTAIN SECURITIES PURCHASE AGREEMENT DATED AS OF FEBRUARY 20,
2004, AS AMENDED FROM TIME TO TIME AMONG THE COMPANY AND CERTAIN HOLDERS OF
OUTSTANDING SECURITIES.  THE TERMS OF
SUCH AGREEMENT INCLUDES, AMONG OTHER THINGS, RESTRICTIONS ON TRANSFERS.  A COPY OF THE AGREEMENT MAY BE OBTAINED AT
NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS WARRANT TO THE
SECRETARY OF THE COMPANY.


 


NEORX CORPORATION


 


WARRANT


 


	
  Warrant No.
  [   ]

  	
   

  	
  Dated:
  February 23, 2004

  



 


NeoRx
Corporation, a Washington corporation (the “Company”), hereby certifies
that, for value received, [Name of Purchaser] or its registered assigns (the “Holder”),
is entitled to purchase from the Company up to a total of
[     ](1) shares of common stock, $0.02 par value per
share (the “Common Stock”), of the Company (each such share, a “Warrant Share”
and all such shares, the “Warrant Shares”) at an exercise price equal
to $7.00 per share (as adjusted from time to time as provided in Section 9,
the “Exercise
Price”), at any time and from time to time from and after the date
hereof and through and including the five (5) year anniversary of the date
hereof (the “Expiration Date”), and subject to the following terms and
conditions.  This Warrant (this “Warrant”)
is one of a series of similar warrants issued pursuant to that certain
Securities Purchase Agreement, dated as of the date hereof, by and among the
Company and the Purchasers identified therein (the “Purchase Agreement”).  All such warrants are referred to herein,
collectively, as the “Warrants.”


 












(1) 50% warrant coverage.


 

















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


 


2.             Registration of
Warrant.  The Company shall register
this Warrant, upon records to be maintained by the Company for that purpose
(the “Warrant
Register”), in the name of the record Holder hereof from time to
time.  The Company may deem and treat
the registered Holder of this Warrant as the absolute owner hereof for the
purpose of any exercise hereof or any distribution to the Holder, and for all
other purposes, and the Company shall not be affected by notice to the
contrary.


 


3.             Registration of
Transfers.  The Company shall
register the transfer, subject to compliance with applicable federal and state
securities laws, of any portion of this Warrant in the Warrant Register, upon
surrender of this Warrant, with the Form of Assignment attached hereto duly
completed and signed, to the Company at its address specified herein (or such
other office or agency of the Company as it may designate by notice to the
holder hereof).  Upon any such
registration or transfer, a new warrant to purchase Common Stock, in
substantially the form of this Warrant (any such new warrant, a “New Warrant”),
evidencing the portion of this Warrant so transferred shall be issued to the
transferee and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring Holder.  The acceptance of the New Warrant by the
transferee thereof shall be deemed the acceptance by such transferee of all of
the rights and obligations of a holder of a Warrant.


 


4.             Exercise
and Duration of Warrant.


 


(a)           This Warrant shall
be exercisable by the registered Holder during normal business hours on any
Business Day from time to time on or after the date hereof to and including the
Expiration Date.  At 6:30 P.M., New York
City time on the Expiration Date, the portion of this Warrant not exercised
prior thereto shall expire and be and become void and of no value; provided
that, if the average of the Closing Prices for the five Trading Days
immediately prior to (but not including) the Expiration Date exceeds the
Exercise Price on the Expiration Date, then this Warrant shall be deemed to
have been exercised in full (to the extent not previously exercised) on a
“cashless exercise” basis at 6:30 P.M. New York City time on the Expiration
Date.


 


(b)           A Holder may
exercise this Warrant by delivering to the Company (i) an exercise notice, in
the form attached hereto (the “Exercise Notice”), appropriately completed
and duly signed, and (ii) payment of the Exercise Price for the number of
Warrant Shares as to which this Warrant is being exercised (which may take the
form of a “cashless exercise” if so indicated in the Exercise Notice), and the
date such items are delivered to the Company (as determined in accordance with
the notice provisions hereof) is an “Exercise Date.”  The Holder shall not be required to deliver the Warrant for the
Warrant Shares being exercised in order to effect an exercise hereunder;
provided, however, that the Holder shall deliver such Warrant (or an affidavit
of loss relating thereto) within 7 Business Days following delivery of the
Exercise Notice.  If this Warrant shall
have been exercised in part, the Company shall, at the time of delivery of the
Warrant certificates representing the Warrant Shares being exercised, deliver
to the Holder a new Warrant evidencing the rights of the Holder to purchase the
unpurchased shares


 


2

















 


of Common
Stock called for by this Warrant, or at the request of the Holder, appropriate
notation may be made on this Warrant and the same returned to the Holder.


 


5.             Delivery
of Warrant Shares.


 


(a)           Upon exercise of
this Warrant, the Company shall promptly (but in no event later than three
Business Days after the Exercise Date) issue or cause to be issued and cause to
be delivered to or upon the written order of the Holder and in such name or
names as the Holder may designate, a certificate for the aggregate number of
full Warrant Shares issuable upon such exercise, together with cash in lieu of
any fraction of a share, as hereinafter provided.   The Holder, or any Person so designated by the Holder to receive
Warrant Shares, shall be deemed to have become holder of record of such Warrant
Shares as of the close of business on the Exercise Date. The Company shall,
upon request of the Holder, use its best efforts to deliver Warrant Shares
hereunder electronically through the Depository Trust Corporation or another
established clearing corporation performing similar functions.


 


(b)           Each certificate for
Warrant Shares issued to any subsequent transferee of any such certificate
shall be stamped or otherwise imprinted with legends in the form substantially
set forth in the Purchase Agreement, unless counsel for the Company is of the
opinion that such legend is unnecessary.


 


(c)           In addition to any
other rights available to a Holder, if the Company fails to deliver to the
Holder a certificate representing Warrant Shares by the third Business Day
following the Exercise Date, and if after such third Business Day and prior to
receipt of the Warrant Shares, the Holder purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of
a sale by the Holder of the Warrant Shares that the Holder anticipated
receiving from the Company (a “Buy-In”),
then in the Holder’s sole discretion, the Company shall within three Trading
Days after the Holder’s request, either (i) pay cash to the Holder in an amount
equal to the Holder’s total purchase price (including brokerage commissions, if
any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the
Company’s obligation to deliver such certificate (and to issue such Common
Stock) shall terminate, or (ii) promptly honor its obligation to deliver to the
Holder a certificate or certificates representing such Common Stock and pay
cash to the Holder in an amount equal to the excess (if any) of the Buy-In
Price over the product of (A) such number of shares of Common Stock, times (B)
the Closing Price on the date of the event giving rise to the Company’s
obligation to deliver such certificate.


 


(d)           The Company’s
obligations to issue and deliver Warrant Shares in accordance with the terms
hereof are absolute and unconditional, irrespective of any action or inaction
by the Holder to enforce the same, any waiver or consent with respect to any
provision hereof, the recovery of any judgment against any Person or any action
to enforce the same, or any setoff, counterclaim, recoupment, limitation or
termination, or any breach or alleged breach by the Holder or any other Person
of any obligation to the Company or any violation or alleged violation of law
by the Holder or any other Person, and irrespective of any other circumstance
which might otherwise limit such obligation of the Company to the Holder in
connection with the issuance of Warrant Shares.  Nothing herein shall limit a Holder’s right to pursue any other
remedies available to it hereunder, at law or in equity including, without
limitation, a decree of


 


3

















 


specific
performance and/or injunctive relief with respect to the Company’s failure to
timely deliver certificates representing shares of Common Stock upon exercise
of this Warrant as required pursuant to the terms hereof.


 


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


 


7.             Replacement
of Warrant.  If this Warrant is
mutilated, lost, stolen or destroyed, the Company shall issue or cause to be
issued in exchange and substitution for and upon cancellation hereof, or in
lieu of and substitution for this Warrant, a New Warrant of like tenor and for
the purchase of a like number of Warrant Shares, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or
destruction and customary and reasonable indemnity, if requested.  Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable third-party costs as the Company may
prescribe.


 


8.             Reservation
of Warrant Shares.  The Company
covenants that it will at all times reserve and keep available out of the
aggregate of its authorized but unissued and otherwise unreserved Common Stock,
solely for the purpose of enabling it to issue Warrant Shares upon exercise of
this Warrant as herein provided, the number of Warrant Shares which are then
issuable and deliverable upon the exercise of this entire Warrant, free from
preemptive rights or any other actual contingent purchase rights of persons
other than the Holder arising by or through the Company (taking into account
the adjustments and restrictions of Section 9 ). The Company covenants
that all Warrant Shares so issuable and deliverable shall, upon issuance and
receipt of payment of the applicable Exercise Price in accordance with the
terms hereof, be duly authorized, validly issued and fully paid and nonassessable.


 


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


 


(a)           Stock Dividends
and Splits.  If the Company, at any
time while this Warrant is outstanding, (i) pays a dividend or makes a
distribution on its outstanding shares of Common Stock in shares of Common
Stock, (ii) subdivides outstanding shares of Common Stock into a larger number
of shares, or (iii) combines outstanding shares of Common Stock into a smaller
number of shares, then in each such case (x) the Exercise Price shall be
multiplied by a fraction of which the numerator shall be the number of shares
of Common Stock outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately after such event and (y) the number of Warrant Shares acquirable
upon exercise of this Warrant immediately after the occurrence of any such
event 


 


4

















 


shall be
adjusted to equal the number of shares of Common Stock which a record holder of
the same number of shares of Common Stock that would have been acquirable under
this Warrant immediately prior to the record date for such dividend or
distribution or the effective date of such subdivision or combination would own
or be entitled to receive after such record date or the effective date of such
subdivision or combination, as applicable. 
Any adjustment made pursuant to clause (i) of this paragraph shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution, and any
adjustment pursuant to clause (ii) or (iii) of this paragraph shall become
effective immediately after the effective date of such subdivision or
combination.


 


(b)           Pro Rata
Distributions.  If the Company, at
any time while this Warrant is outstanding, distributes to all holders of
Common Stock (i) evidences of its indebtedness, (ii) any security (other than a
distribution of Common Stock covered by the preceding paragraph),
(iii) rights or warrants to subscribe for or purchase any security, or
(iv) any other asset (other than cash dividends or cash distributions payable
out of consolidated earnings or earned surplus) (in each case, “Distributed Property”), then in each such
case the Exercise Price in effect immediately prior to the record date fixed
for determination of stockholders entitled to receive such distribution shall
be adjusted (effective on such record date) to equal the product of such
Exercise Price times a fraction of which the denominator shall be the average
of the Closing Prices for the five Trading Days immediately prior to (but not
including) such record date and of which the numerator shall be such average
less the then fair market value at such record date of the portion of the
Distributed Property so distributed in respect of one outstanding share of
Common Stock, as determined by the Company’s independent certified public
accountants that regularly examine the financial statements of the Company (an
“Appraiser”).  In such event, the Holder, after receipt of
the determination by the Appraiser, shall have the right to select an
additional appraiser (which shall be a nationally recognized accounting firm),
the cost of which appraiser shall be borne by the Holder, in which case such
fair market value shall be deemed to equal the average of the values determined
by each of the Appraiser and such appraiser. 
As an alternative to the foregoing adjustment to the Exercise Price, at
the request of the Holder delivered before the 60th day after such record date,
the Company will deliver to such Holder, within five Trading Days after such
request (or, if later, on the effective date of such distribution), the
Distributed Property that such Holder would have been entitled to receive in
respect of the Warrant Shares for which this Warrant could have been exercised
immediately prior to such record date. 
If such Distributed Property is not delivered to a Holder pursuant to
the preceding sentence, then upon expiration of or any exercise of this Warrant
that occurs after such record date, such Holder shall remain entitled to
receive, in addition to the Warrant Shares otherwise issuable upon such
exercise (if applicable), such Distributed Property.


 


(c)           Fundamental
Transactions.  If, at any time prior
to the exercise in full of this Warrant, (i) the Company effects any merger or
consolidation of the Company with or into another Person, (ii) the Company
effects any sale of all or substantially all of its assets in one or a series
of related transactions, (iii) any tender offer or exchange offer (whether by
the Company or another Person) is completed pursuant to which holders of Common
Stock are permitted to tender or exchange their shares for other securities,
cash or property, or (iv) the Company effects any reclassification of the
Common Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other securities, cash or
property (other than as a result of a subdivision or combination of shares of
Common Stock


 


5

















 


covered by
Section 9(a) above) (in any such case, a “Fundamental
Transaction”), then the Holder shall have the right thereafter to
receive, upon exercise of this Warrant, the same amount and kind of securities,
cash or property as it would have been entitled to receive upon the occurrence
of such Fundamental Transaction if it had been, immediately prior to such
Fundamental Transaction, the holder of the number of Warrant Shares then
issuable upon exercise in full of this Warrant (the “Alternate Consideration”). 
The aggregate Exercise Price for this Warrant will not be affected by
any such Fundamental Transaction, but the Company shall apportion such
aggregate Exercise Price among the Alternate Consideration in a reasonable
manner reflecting the relative value of any different components of the
Alternate Consideration.  If holders of
Common Stock are given any choice as to the securities, cash or property to be
received in a Fundamental Transaction, then the Holder shall be given the same
choice as to the Alternate Consideration it receives upon any exercise of this
Warrant following such Fundamental Transaction.  At the Holder’s request, any successor to the Company or
surviving entity in such Fundamental Transaction shall issue to the Holder a
new warrant consistent with the foregoing provisions and evidencing the Holder’s
right to purchase the Alternate Consideration for the aggregate Exercise Price
upon exercise thereof.  The terms of any
agreement pursuant to which a Fundamental Transaction is effected shall include
terms requiring any such successor or surviving entity to comply with the
provisions of this paragraph (c) and insuring that this Warrant (or any such
replacement security) will be similarly adjusted upon any subsequent
transaction analogous to a Fundamental Transaction.  If any Fundamental Transaction or other transaction constitutes
or results in a Change of Control, then at the request of the Holder delivered
before the 60th day after the record date fixed for determination of
stockholders entitled to receive such Alternate Consideration, the Company (or
any such successor or surviving entity) will purchase this Warrant from the
Holder for a purchase price, payable in cash within five Trading Days after
such request (or, if later, on the effective date of the Fundamental
Transaction), equal to the Black Scholes value of the remaining unexercised
portion of this Warrant on the date of such request.


 


(d)           Subsequent Equity
Sales.


 


(i)            If, at any time while this Warrant
is outstanding, the Company or any Subsidiary issues additional shares of
Common Stock or rights, warrants, options or other securities or debt
convertible, exercisable or exchangeable for shares of Common Stock or
otherwise entitling any Person to acquire shares of Common Stock (collectively,
“Common Stock Equivalents”) at an
effective price to the Company per share of Common Stock (the “Effective Price”) less than the Exercise
Price (as adjusted hereunder to such date), then the Exercise Price shall be
reduced to equal the product of (A) the Exercise Price in effect immediately
prior to such issuance of Common Stock or Common Stock Equivalents times (B) a
fraction, the numerator of which is the sum of (1) the number of shares of
Common Stock outstanding immediately prior to such issuance, plus (2) the
number of shares of Common Stock which the aggregate Effective Price of the
Common Stock issued (or deemed to be issued) would purchase at the Exercise
Price, and the denominator of which is the aggregate number of shares of Common
Stock outstanding or deemed to be outstanding immediately after such
issuance.  For purposes of this
paragraph, in connection with any issuance of any Common Stock Equivalents, (A)
the maximum number of shares of Common Stock issuable upon conversion, exercise
or exchange of such Common Stock Equivalents (the “Deemed Number”) shall


 


6

















 


be deemed to be outstanding
upon issuance of such Common Stock Equivalents, (B) the Effective Price
applicable to such Common Stock shall equal the minimum dollar value of
consideration payable to the Company to purchase such Common Stock Equivalents
and to convert, exercise or exchange them into Common Stock (before deduction
of any discounts, fees, commissions and other expenses), divided by the Deemed
Number, and (C) no further adjustment shall be made to the Exercise Price upon
the actual issuance of Common Stock upon conversion, exercise or exchange of
such Common Stock Equivalents.


(ii)           If, at any time while this Warrant is
outstanding, the Company or any Subsidiary issues Common Stock Equivalents with
an Effective Price or a number of underlying shares that floats or resets or
otherwise varies or is subject to adjustment based (directly or indirectly) on
market prices of the Common Stock (a “Floating
Price Security”), then for purposes of applying the preceding
paragraph in connection with any subsequent exercise, the Effective Price will
be determined separately on each Exercise Date and will be deemed to equal the
lowest Effective Price at which any holder of such Floating Price Security is
entitled to acquire Common Stock on such Exercise Date (regardless of whether
any such holder actually acquires any shares on such date).


 


(iii)          Notwithstanding the foregoing, no
adjustment will be made under this paragraph (d) in respect of any Excluded
Stock.


 


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


(f)            Calculations.  All calculations under this Section 9
shall be made to the nearest cent or the nearest 1/100th of a share, as
applicable.  The number of shares of
Common Stock outstanding at any given time shall not include shares owned or
held by or for the account of the Company, and the disposition of any such
shares shall be considered an issue or sale of Common Stock.


(g)           Notice of
Adjustments.  Upon the occurrence of
each adjustment pursuant to this Section 9, the Company at its expense
will promptly compute such adjustment in accordance with the terms of this
Warrant and prepare a certificate setting forth such adjustment, including a
statement of the adjusted Exercise Price and adjusted number or type of Warrant
Shares or other securities issuable upon exercise of this Warrant (as
applicable), describing the transactions giving rise to such adjustments and
showing in detail the facts upon which such adjustment is based.  Upon written request, the Company will
promptly deliver a copy of each such certificate to the Holder and to the
Company’s Transfer Agent.


 


(h)           Notice of Corporate Events.  If the Company (i) takes a record of the
holders of its Common Stock for the purpose of entitling them to a dividend or
any other distribution of cash, securities or other property in respect of its
Common Stock, including


 


7

















 


without
limitation any granting of rights or warrants to subscribe for or purchase any
capital stock of the Company or any Subsidiary, (ii) authorizes or approves,
enters into a binding written agreement contemplating or solicits stockholder
approval for any Fundamental Transaction, or (iii) authorizes the voluntary
dissolution, liquidation or winding up of the affairs of the Company, then the
Company shall deliver to the Holder a notice describing the material terms and
conditions of such transaction, at least 20 calendar days prior to the
applicable record or effective date on which a Person would need to hold Common
Stock in order to participate in or vote with respect to such transaction, and
the Company will take all steps reasonably necessary in order to insure that
the Holder is given the practical opportunity to exercise this Warrant prior to
such time so as to participate in or vote with respect to such transaction;
provided, however, that the failure to deliver such notice or any defect
therein shall not affect the validity of the corporate action required to be
described in such notice.


 


10.           Payment
of Exercise Price.  The Holder shall
pay the Exercise Price in immediately available funds or the Holder may satisfy
its obligation to pay the Exercise Price through a “cashless exercise,” in
which event the Company shall issue to the Holder the number of Warrant Shares
determined as follows:


 


	
   

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

  
	
  where:

  	
   

  
	
   

  	
  X = the
  number of Warrant Shares to be issued to the Holder.

  
	
   

  	
   

  
	
   

  	
  Y = the
  number of Warrant Shares with respect to which this Warrant is being
  exercised (including both shares to be issued to the Holder and shares to be canceled
  as payment therefor).

  
	
   

  	
   

  
	
   

  	
  A = the
  average of the Closing Prices for the five Trading Days immediately prior to
  (but not including) the Exercise Date.

  
	
   

  	
   

  
	
   

  	
  B = the
  Exercise Price.

  



 


For purposes
of Rule 144 promulgated under the Securities Act, it is intended, understood
and acknowledged that the Warrant Shares issued in a cashless exercise
transaction shall be deemed to have been acquired by the Holder, and the
holding period for the Warrant Shares shall be deemed to have commenced, on the
date this Warrant was originally issued pursuant to the Purchase Agreement.


 


11.           Limitation on
Exercise.  (a)  Notwithstanding anything
to the contrary contained herein, the number of shares of Common Stock that may
be acquired by the Holder upon any exercise of this Warrant (or otherwise in
respect hereof) shall be limited to the extent necessary to insure that,
following such exercise (or other issuance), the total number of shares of
Common Stock then beneficially owned by such Holder and its Affiliates and any other
Persons whose beneficial ownership of Common Stock would be aggregated with the
Holder’s for purposes of Section 13(d) of the Exchange Act, does not exceed
9.999% (the “Maximum Percentage”)
of the total number of issued and outstanding shares of Common Stock (including
for such purpose the shares of Common Stock issuable upon such exercise).  For such purposes, beneficial


 


8

















 


ownership shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder.  Each delivery of an Exercise Notice
hereunder will constitute a representation by the Holder that it has evaluated
the limitation set forth in this paragraph and determined that issuance of the
full number of Warrant Shares requested in such Exercise Notice is permitted
under this paragraph.  The Company’s
obligation to issue shares of Common Stock in excess of the limitation referred
to in this Section shall be suspended (and shall not terminate or expire
notwithstanding any contrary provisions hereof) until such time, if any, as
such shares of Common Stock may be issued in compliance with such limitation.


 


(b)           Overall Cap on Common Stock
Issuable.  Notwithstanding anything
contained herein to the contrary, if the rules of Nasdaq require, the aggregate
number of shares of Common Stock issued and issuable by the Company under the
Transaction Documents shall not exceed 19.99% of the number of shares of Common
Stock or 19.99% of the voting power outstanding on the original date of
issuance of the Common Stock and Warrants issued pursuant to the Closing of the
transactions contemplated by the Purchase Agreement, subject to appropriate
adjustment for stock splits, stock dividends, or other similar recapitalizations
affecting the Common Stock (the “Issuable Minimum”), unless the issuance of
shares hereunder in excess of the Maximum Common Stock Issuance shall first be
approved by the Company’s shareholders in accordance with applicable law and
the By-laws and Articles of Incorporation of the Company.  If, at the time any Holder requests an
exercise of any of the Warrants, the Actual Minimum exceeds the Issuable
Maximum (and if the Company has not previously obtained the required
shareholder approval), then the Company shall issue to the Holder requesting
such exercise a number of shares of Common Stock not exceeding such Holder’s
pro-rata portion of the Issuable Maximum (based on such Holder’s share
(vis-à-vis other Holders) of the aggregate purchase price paid under the
Purchase Agreement and taking into account any Warrant Shares previously issued
to such Holder), and the remainder of the Warrant Shares issuable in connection
with such exercise or conversion (if any) shall constitute “Excess Shares”
pursuant to Section 11(c) below.  For
the purposes hereof, “Actual Minimum” shall mean, as of any date,
the maximum aggregate number of shares of Common Stock then issued or
potentially issuable in the future pursuant to the Transaction Documents,
including any Underlying Shares issuable upon exercise in full of all Warrants,
ignoring any limits on the number of shares of Common Stock that may be owned
by a Holder at any one time.


 


(c)           In the event that any Holder’s
receipt of shares of Common Stock upon exercise of this Warrant is restricted
based on the Issuable Maximum, the Company shall either: (i) promptly call
a shareholders meeting to obtain the required shareholder approval necessary to
permit the issuance of such Excess Shares; provided, however, that the Company
shall not be required to call a special meeting for such purpose if the
Company’s annual meeting is to take place within three months of the date on
which the Company becomes aware that such approval will be required and the
Company includes such approval for action at the annual meeting, or (ii) within
five Trading Days after such event, pay cash to such Holder, as liquidated
damages and not as a penalty, in an amount equal to the Black Scholes value of
this Warrant with respect to the portion of this Warrant which is unexercisable
due to the Issuable Maximum after giving effect to the limitations in Section
11(b), measured as of the date of such event (such difference, the “Cash Amount”).  No shares of Common Stock that were issued
pursuant to the Transaction Documents may be entitled to vote to approve the
issuance of such Excess Shares.  If the
Company elects the first option under the first sentence of this Section 11(c)
and the Company


 


9

















 


fails to obtain the required shareholder approval as set forth above in
this Section 11(c), then within five Trading Days after the Company’s failure
to obtain the required shareholder approval, the Company shall pay the Cash
Amount to such Holder, as liquidated damages and not as a penalty.  The portion of this Warrant in respect of
which the Cash Amount has been paid shall be cancelled and retired and the
Company shall have no further obligation with respect thereto.


 


12.           Call
Right.


 


(a)           Subject to the
provisions of this Section 12, if at any time after the Effective Date,
the VWAP of the Common Stock on the Company’s Trading Market is equal to or
above $10.50 (as adjusted for any stock splits, stock combinations, stock
dividends and other similar events) (the “Threshold
Price”) for each of any twenty consecutive Trading Days occurring
after the second anniversary of the Effective Date, then the Company at any
time thereafter shall have the right, but not the obligation (the “Call Right”), on 20 Trading Days prior
written notice to the Holder, to cancel any unexercised portion of this Warrant
for which an Exercise Notice has not yet been delivered prior to the
Cancellation Date (the “Call Amount”).


 


(b)           To exercise the Call
Right, the Company shall deliver to the Holder an irrevocable written notice (a
“Call Notice”) indicating the Call
Amount.  The date that the Company
delivers the Call Notice to the Holder shall be referred to as the “Call Date.”  Within 20 Trading Days of receipt of the Call Notice, and
provided that the Holder is permitted to exercise this Warrant pursuant to Section
4 above, the Holder may exercise this Warrant in whole or in part be
delivering to the Company an Exercise Notice in accordance with Section 4
above.  Any portion of the Call Amount
that is not exercised by 6:30 p.m. (New York City time) on the 20th Trading Day
following the date of receipt of the Call Notice (the “Cancellation Date”) shall be
cancelled.  Any unexercised portion of
this Warrant to which the Call Notice does not pertain (the “Remaining Portion”) will be unaffected by
such Call Notice.  The Company covenants
and agrees that it will honor any Exercise Notice with respect to the Call
Amount, provided that such Exercise Notice is in proper form, duly signed and
delivered accompanied by full payment of the Exercise Price for the number of
Warrant Shares as to which this Warrant is being exercised (which may take the
form of a “cashless exercise” if so indicated in the Exercise Notice) in
accordance with Section 4 above and is received by the Company prior to 6:30
p.m. (New York City time) on the Cancellation Date.


 


(c)           Notwithstanding
anything to the contrary set forth in this Warrant, unless waived in writing by
the Holder, the Company may not deliver a Call Notice or require the
cancellation of any unexercised Call Amount (and any Call Notice will be void)
unless from the beginning of the twenty (20) consecutive Trading Days used to
determine whether the Common Stock has achieved the Threshold Price through the
Cancellation Date (the “Call Period”)
(i) the Company shall have honored in accordance with the terms of this Warrant
any Exercise Notice delivered in accordance with Section 4 above by 6:30 p.m.
(New York City time) on the Call Date, (ii) the Registration Statement shall be
effective as to all of the Warrant Shares and the prospectus thereunder
available for use by the Holder for the resale all such Warrant Shares, or the
Warrant Shares qualify for resale without restriction under Rule 144(k), (iii)
the average of the VWAP for the Trading Days during the Call Period is equal to
or greater than the Threshold Price, and (iv) the Company has not breached any
of its material obligations under the Transaction Documents.


 


10

















 


13.           Fractional
Shares.  The Company shall not be
required to issue or cause to be issued fractional Warrant Shares on the
exercise of this Warrant.  If any
fraction of a Warrant Share would, except for the provisions of this Section,
be issuable upon exercise of this Warrant, the Company will issue cash in lieu
of such fractional share.


 


14.           Notices.  Any and all notices or other communications
or deliveries hereunder (including without limitation any Exercise Notice)
shall be in writing and shall be deemed given and effective on the earliest of
(i) the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number specified in 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 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 mailing, if sent by nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom
such notice is required to be given. 
The address for such notices or communications shall be as set forth in
the Purchase Agreement.


 


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


 


16.           Miscellaneous.


 


(a)           Subject to the
restrictions on transfer set forth on the first page hereof and in Section 4.1
of the Purchase Agreement, this Warrant may be assigned by the Holder.  This Warrant may not be assigned by the
Company except to a successor in the event of a Fundamental Transaction.  This Warrant shall be binding on and inure
to the benefit of the parties hereto and their respective successors and
assigns.  Subject to the preceding
sentence, nothing in this Warrant shall be construed to give to any Person
other than the Company and the Holder any legal or equitable right, remedy or
cause of action under this Warrant. 
This Warrant may be modified or amended or the provisions of this
Warrant waived with the written consent of both the Company and the
Holder.  The Company (i) will not
increase the par value of any Warrant Shares above the amount payable therefor
on such exercise, and (ii) will take all such action as may be reasonably
necessary in order that the Company may validly and legally issue fully paid
and nonassessable Warrant Shares on the exercise of this Warrant.


 


(b)           Governing Law; Venue; Waiver Of Jury Trial.  all
questions concerning the construction, validity, enforcement and interpretation
of this warrant shall be governed by and construed and enforced in accordance
with the laws of the state of new york. 
each party hereby irrevocably submits to the jurisdiction of the state
and federal courts sitting in the city of new york, borough


 


11

















 


of manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of any of the transaction
documents), and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is
improper.  each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.  the company hereby waives all rights to a trial by jury.


 


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


 


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


 


(e)            Subject to
compliance with the provisions of Section 16(a), this Warrant and the rights
evidenced hereby shall inure to the benefit of and be binding upon the
successors of the Company and the successors and assigns of the Holder. The
provisions of this Warrant are intended to be for the benefit of all Holders
from time to time of this Warrant, and shall be enforceable by any such Holder.


 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,

SIGNATURE PAGE FOLLOWS]


 


12

















 


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


 


	
   

  	
  NEORX CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


13

















 


FORM OF
EXERCISE NOTICE


 


(To be
executed by the Holder to exercise the right to purchase shares of Common Stock
under the foregoing Warrant)


 


To:  NeoRx Corporation


 


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


 


1.                                       The
Warrant is currently exercisable to purchase a total of
                    
Warrant Shares.


 


2.                                       The
undersigned Holder hereby exercises its right to
purchase                         
Warrant Shares pursuant to the Warrant.


 


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


 


	
   

  	
  o

  	
   

  	
  “Cash Exercise”

  
	
   

  	
   

  	
   

  
	
   

  	
  o

  	
   

  	
  “Cashless
  Exercise”

  



 


4.                                       If
the holder has elected a Cash Exercise, the holder shall pay the sum of
$                         
to the Company in accordance with the terms of the Warrant.


 


5.                                       Pursuant
to this exercise, the Company shall deliver to the holder
                         
Warrant Shares in accordance with the terms of the Warrant.


 


6.                                       Following
this exercise, the Warrant shall be exercisable to purchase a total of
                         
Warrant Shares.


 


7.                                       The
Holder hereby undertakes to deliver the original Warrant certificate within 7
Business Days following delivery of this Exercise Notice, as required by
Section 4 of the Warrant, and the Holder hereby agrees to indemnify the Company
and its Affiliates for any losses, claims, damages, liabilities, settlement
costs and expenses (including without limitation reasonably attorneys’ fees)
resulting from or arising out of the Holder’s failure to so deliver the
original Warrant certificate.


 


 


	
  Dated:

  	
   

  	
  ,

  	
   

  	
  Name of
  Holder:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Print)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature
  must conform in all respects to

  name of holder as specified on the face of the

  Warrant)

  



 

















 


FORM OF
ASSIGNMENT


 


[To be
completed and signed only upon transfer of Warrant]


 


FOR VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto
                                the
right represented by the within Warrant to purchase
                         
shares of Common Stock of NeoRx Corporation to which the within Warrant relates
and appoints                          
attorney to transfer said right on the books of NeoRx Corporation with full
power of substitution in the premises.


 


	
  Dated:

  	
   

  	
  ,

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address of
  Transferee

  
	
   

  	
   

  
	
   

  	
   

  
	
  In the
  presence of: