Exhibit
10.2


 


INVESTOR RIGHTS
AGREEMENT


 


This Investor
Rights Agreement (this “Agreement”) is made and entered into as of
December 3, 2003 among NeoRx Corporation, a Washington corporation (the “Company”),
and BayStar Capital II, L.P. and each of the other persons listed on Schedule
1 hereto (collectively, the “Purchasers”).


 


This Agreement
is being entered into pursuant to the Preferred Stock and Warrant Purchase
Agreement, dated as of the date hereof, by and among the Company and the
Purchasers (the “Purchase Agreement”).


 


The Company
and the Purchasers hereby agree as follows:


 


1.             Definitions.


 


Capitalized
terms used and not otherwise defined herein shall have the meanings given such
terms in the Purchase Agreement. As used in this Areement, the following terms
shall have the following meanings:


 


“Advice”
shall have the meaning set forth in Section 3(m).


 


“Affiliate”
means, with respect to any Person, any other Person that directly or indirectly
controls or is controlled by or under common control with such Person. For the
purposes of this definition, “control,” when used with respect to any Person,
means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise; and the terms of
“affiliated,” “controlling” and “controlled” have meanings correlative to the
foregoing.


 


“Blackout
Period” shall have the meaning set forth in Section 3(n).


 


“Board”
shall have the meaning set forth in Section 3(n).


 


“Business
Day” means any day except Saturday, Sunday and any day which shall be a
legal holiday or a day on which banking institutions in the State of Washington
generally are authorized or required by law or other government actions to
close.


 

















 


“Commission”
means the Securities and Exchange Commission.


 


“Common
Stock” means the Company’s Common Stock, par value $0.02 per share.


 


“Conversion
Shares” means the shares of Common Stock issuable upon conversion of the
Preferred Stock issued or to be issued to the Purchasers or their assignees or
designees in connection with the offering consummated under the Purchase
Agreement.


 


“Effectiveness
Period” shall have the meaning set forth in Section 2.


 


“Event”
shall have the meaning set forth in Section 7(e).


 


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


 


“Filing
Date” means the 20th day following the Closing Date.


 


“Holder”
or “Holders” means the holder or holders, as the case may be, from time
to time of Registrable Securities, including without limitation the Purchasers
and their valid assignees.


 


“Indemnified
Party” shall have the meaning set forth in Section 5(c).


 


“Indemnifying
Party” shall have the meaning set forth in Section 5(c).


 


“Losses”
shall have the meaning set forth in Section 5(a).


 


“Nasdaq”
shall mean The Nasdaq Stock Market.


 


“Person”
means an individual or a corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or political subdivision thereof) or
other entity of any kind.


 


“Preferred
Stock” means the Company’s Series B Convertible Preferred Stock, $0.02 par
value.


 


“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.


 


“Prospectus”
means the prospectus included in any Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a prospectus filed as part of an effective 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 such
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference in such Prospectus.


 


“Registrable
Securities” means (a) the Conversion Shares and the Warrant Shares (without
regard to any limitations on beneficial ownership contained in the Certificate
of Designation or the Warrants) or other securities issued or issuable to each
Purchaser or its valid transferee or designee (i) upon conversion of the
Preferred Stock and/or upon exercise of the Warrants, or (ii) upon any dividend
or distribution with respect to, any exchange for or any replacement of such
Preferred Stock or Warrants or (iii) upon any conversion, exercise or exchange
of any securities issued in connection with any such distribution, exchange or
replacement; (b) the Common Stock or other securities issued or issuable upon
any stock split, stock dividend, recapitalization or similar event with respect
to the foregoing; and (c) (i) any Common Stock issued or (ii) any Common Stock
received upon exercise, conversion or exchange of any other security issued, in
each case, as a dividend or other distribution with respect to, in exchange
for, in replacement or redemption of, or in reduction of the liquidation value
of, any of the securities referred to in the preceding clauses; provided,
however, that such securities shall cease to be Registrable Securities when such
securities have been sold to or through a broker or dealer or underwriter in a
public distribution or a public securities transaction, when such securities
have been sold in a private transaction in which the transferor’s rights are
not properly assigned pursuant to Section 7(k) of this Agreement, or when such
securities may be sold without any restriction pursuant to Rule 144(k) as
determined by the counsel to the Company pursuant to a written opinion letter,
addressed to the Company’s transfer agent to such effect as described in
Section 2 of this Agreement.


 


“Registration
Statement” means the registration statements and any additional
registration statements contemplated by Section 2, including (in each case) the
Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference in such registration statement.


 


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


 

















 


Rule.


 


“Rule 158”
means Rule 158 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such Rule.


 


“Rule 415”
means Rule 415 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such Rule.


 


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


 


“Special
Counsel” means Wiggin & Dana LLP or one special counsel to the Holders
otherwise selected by a majority in interest of the Holders with notice of such
selection given to the Company.


 


“Warrants”
means the Common Stock Purchase Warrants issued or to be issued to the
Purchasers or their assignees or designees in connection with the offering
consummated under the Purchase Agreement.


 


“Warrant
Shares” means the shares of Common Stock issuable upon the exercise of the
Warrants.


 


2.             Registration. As soon as
practicable following the Closing Date (but not later than the Filing Date),
the Company shall prepare and file with the Commission a “shelf” Registration
Statement covering all Registrable Securities for a secondary or resale
offering to be made on a continuous basis pursuant to Rule 415. The
Registration Statement shall be on Form S-3 (or if such form is not available
to the Company on another form appropriate for such registration in accordance
herewith) and the Company represents that it is currently eligible to use Form
S-3 with respect to such Registration Statement. The Company shall use its best
efforts to cause the Registration Statement to be declared effective under the
Securities Act not later than ninety (90) days after the Closing Date (including
filing with the Commission a request for acceleration of effectiveness in
accordance with Rule 461 promulgated under the Securities Act within five (5)
Business Days of the date that the Company is notified (orally or in writing,
whichever is earlier) by the Commission that a Registration Statement will not
be “reviewed,” or not be subject to further review) and to keep such
Registration Statement continuously effective under the Securities Act until
such date as is the earlier of (x) the date when all Registrable Securities
covered by such Registration Statement have been sold or (y) the date on which
the Registrable Securities


 

















 


may be sold without any restriction pursuant
to Rule 144(k) as determined by the counsel to the Company pursuant to a
written opinion letter, addressed to the Company’s transfer agent to such
effect (the “Effectiveness Period”). Upon the initial filing thereof,
the Registration Statement shall cover at least 100% of the shares of Common
Stock for issuance upon the conversion of the Preferred Stock and upon exercise
of the Warrants.  Such Registration
Statement also shall cover, to the extent allowable under the Securities Act
and the Rules promulgated thereunder (including Securities Act Rule 416), such
indeterminate number of additional shares of Common Stock resulting from stock
splits, stock dividends or similar transactions with respect to the Registrable
Securities.


 


3.             Registration Procedures.


 


In connection
with the Company’s registration obligations hereunder, the Company shall:


 


(a)  Prepare and file with the Commission on or
prior to the Filing Date, a Registration Statement on Form S-3 (or if such form
is not available to the Company on another form appropriate for such
registration in accordance herewith) (which shall include a Plan of
Distribution substantially in the form of Exhibit A attached hereto),
and cause the Registration Statement to become effective and remain effective
as provided herein; provided, however, that not less than three (3) Business
Days prior to the filing of the Registration Statement or any related
Prospectus or any amendment or supplement thereto, the Company shall (i)
furnish to the Special Counsel, copies of all such documents proposed to be
filed, which documents (other than those incorporated by reference) will be
subject to the review of such Special Counsel, and (ii) at the request of any
Holder cause its officers and directors, counsel and independent certified
public accountants to respond to such inquiries as shall be necessary, in the
reasonable opinion of counsel to such Holders, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company shall not
file the Registration Statement or any such Prospectus or any amendments or
supplements thereto to which the Holders of a majority of the Registrable
Securities or the Special Counsel shall reasonably object in writing within
three (3) Business Days after their receipt thereof.


 


(b)           (i) Prepare and file with the
Commission such amendments, including post-effective amendments, to the
Registration Statement as may be necessary to keep the Registration Statement
continuously effective as to the applicable Registrable Securities for the
Effectiveness Period and to the extent any Registrable Securities are not
included in such Registration Statement for reasons other than the failure of
the Holder to comply with Section 3(m) hereof, shall prepare and file with the
Commission such additional Registration Statements in order to register for
resale under the Securities Act all Registrable Securities; (ii) cause the
related Prospectus to be amended or supplemented by any required Prospectus
supplement, and as so supplemented or amended to be filed pursuant to Rule 424
(or any similar provisions then in force) promulgated under the Securities Act;
(iii) respond as


 

















 


promptly as possible, and in no event later
than ten (10) Business Days, to any comments received from the Commission with
respect to the Registration Statement or any amendment thereto and as promptly
as possible provide the Holders true and complete copies of all correspondence
from and to the Commission relating to the Registration Statement; and (iv)
comply in all material respects with the provisions of the Securities Act and
the Exchange Act with respect to the disposition of all Registrable Securities
covered by the Registration Statement during the applicable period in
accordance with the intended methods of disposition by the Holders thereof set
forth in the Registration Statement as so amended or in such Prospectus as so
supplemented.


 


(c)           Notify the Holders of Registrable
Securities to be sold and the Special Counsel as promptly as possible (A) when
a Prospectus or any Prospectus supplement or post-effective amendment to the
Registration Statement is proposed to be filed (but in no event in the case of
this subparagraph (A), less than three (3) Business Days prior to date of such
filing); (B) when the Commission notifies the Company whether there will be a
“review” of such Registration Statement and whenever the Commission comments in
writing on such Registration Statement; and (C) with respect to the
Registration Statement or any post-effective amendment, when the same has
become effective, and after the effectiveness thereof: (i) of any request by
the Commission or any other Federal or state governmental authority for
amendments or supplements to the Registration Statement or Prospectus or for
additional information; (ii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement covering any
or all of the Registrable Securities or the initiation of any Proceedings for
that purpose; (iii) if at any time any of the representations and warranties of
the Company contained in any agreement contemplated hereby ceases to be true
and correct in all material respects; (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (v) if the financial statements included in the Registration
Statement become ineligible for inclusion therein or of the occurrence of any
event that makes any statement made in the Registration Statement or 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
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 light of the circumstances under which they were made, not misleading.


 


(d)           Use its best efforts to avoid the
issuance of, or, if issued, use best efforts to obtain the withdrawal of, (i)
any order suspending the effectiveness of the Registration Statement or (ii)
any suspension of the qualification (or exemption from qualification) of any of
the Registrable Securities for sale in any jurisdiction, at the earliest
practicable moment.


 

















 


(e)           If requested by the Holders of a
majority in interest of the Registrable Securities, (i) promptly incorporate in
a Prospectus supplement or post-effective amendment to the Registration
Statement such information as the Company reasonably agrees should be included
therein and (ii) make all required filings of such Prospectus supplement or
such post-effective amendment as soon as practicable after the Company has
received notification of the matters to be incorporated in such Prospectus
supplement or post-effective amendment; provided, however, that the Company shall
not be required to take any action pursuant to this Section 3(e) that would, in
the written opinion of counsel for the Company (addressed to the Holder’s
Special Counsel), violate applicable law.


 


(f)            Furnish to each Holder and the
Special Counsel, without charge, at least one conformed copy of each
Registration Statement and each amendment thereto, including financial
statements and schedules, and all exhibits to the extent requested by such
Person (including those previously furnished or incorporated by reference)
promptly after the filing of such documents with the Commission.


 


(g)           Promptly deliver to each Holder and
the Special Counsel, without charge, as many copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request; and the Company
hereby consents to the use, in accordance with applicable laws, of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto.


 


(h)           Prior to any public offering of
Registrable Securities, use its best efforts to register or qualify or
cooperate with the selling Holders and the Special Counsel in connection with
the registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any Holder requests in writing, to keep each such registration or qualification
(or exemption therefrom) effective during the Effectiveness Period and to do
any and all other acts or things necessary or advisable to enable the disposition
in such jurisdictions of the Registrable Securities covered by a Registration
Statement; provided, however, that the Company shall not be required to qualify
generally to do business in any jurisdiction where it is not then so qualified
or to take any action that would subject it to general service of process in
any jurisdiction where it is not then so subject or subject the Company to any
material tax in any such jurisdiction where it is not then so subject.


 


(i)            Cooperate with the Holders to facilitate
the timely preparation and delivery of certificates representing Registrable
Securities to be sold pursuant to a Registration Statement, which certificates
shall be free, to the extent permitted by applicable law and the Purchase
Agreement, of all restrictive legends, and to enable such Registrable
Securities to be in such denominations and registered in such names as any
Holder may request at least


 

















 


two (2) Business Days prior to any sale of
Registrable Securities. In connection therewith, the Company shall promptly
after the effectiveness of the Registration Statement cause an opinion of
counsel to be delivered to and maintained with its transfer agent, together
with any other authorizations, certificates and directions required by the
transfer agent, which authorize and direct the transfer agent to issue such
Registrable Securities without legend upon sale by the Holder of such shares of
Registrable Securities under the Registration Statement.


 


(j)            Upon the occurrence of any event
contemplated by Section 3(c)(v), as promptly as possible, prepare a supplement
or amendment, including a post-effective amendment, to the Registration
Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file any
other required document so that, as thereafter delivered, neither the
Registration Statement nor such Prospectus will 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 the light of the circumstances
under which they were made, not misleading.


 


(k)           Cause all Registrable Securities
relating to such Registration Statement to be listed on Nasdaq and any other
United States securities exchange, quotation system, market or over-the-counter
bulletin board, if any, on which similar securities issued by the Company are
then listed as and when required pursuant to the Purchase Agreement.


 


(l)            Comply in all material respects with
all applicable rules and regulations of the Commission and make generally
available to its security holders earnings statements satisfying the provisions
of Section 11(a) of the Securities Act and Rule 158 not later than 45 days
after the end of any 3-month period (or 90 days after the end of any 12-month
period if such period is a fiscal year) commencing on the first day of the
first fiscal quarter of the Company after the effective date of the
Registration Statement, which statement shall conform to the requirements of
Rule 158.


 


(m)          Request each selling Holder to furnish
to the Company information regarding such Holder and the distribution of such
Registrable Securities as is required by law or the Commission to be disclosed
in the Registration Statement, and the Company may exclude from such
registration (including from registration pursuant to Section 7(d)) the
Registrable Securities of any such Holder who fails to furnish such information
within a reasonable time prior to the filing of each Registration Statement,
supplemented Prospectus and/or amended Registration Statement.


 


If the
Registration Statement refers to any Holder by name or otherwise as the holder
of any securities of the Company, then such Holder shall have the right to
require (if such reference to such Holder by name or otherwise is not required
by the Securities Act or any similar federal statute then in force) the
deletion of the reference to such Holder in any


 

















 


amendment or supplement to the Registration
Statement filed or prepared subsequent to the time that such reference ceases
to be required.


 


Each Holder
agrees by its acquisition of such Registrable Securities that, upon receipt of
a notice from the Company of the occurrence of any event of the kind described
in Section 3(c)(i), 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v) or 3(n), such Holder
will forthwith discontinue disposition of such Registrable Securities under the
Registration Statement until such Holder’s receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement contemplated by
Section 3(j), or until it is advised in writing (the “Advice”) by the
Company that the use of the applicable Prospectus may be resumed, and, in
either case, has received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in such Prospectus
or Registration Statement.


 


(n)           If (i) there is material non-public
information regarding the Company which the Company’s Board of Directors (the “Board”)
determines, in its good faith judgment in reliance on the advice of counsel,
not to be in the Company’s best interest to disclose and which the Company is
not otherwise required to disclose, or (ii) there is a significant business
opportunity (including, but not limited to, the acquisition or disposition of
assets (other than in the ordinary course of business) or any merger,
consolidation, tender offer or other similar transaction) available to the
Company that would require disclosure under the Exchange Act and with respect
to which the Board has determined in good faith that compliance with this
Agreement may reasonably be expected to either materially interfere with the
Company’s ability to consummate such transaction in a timely fashion or require
the Company to disclose material, non-public information prior to such time as
it would be required to be disclosed, then the Company may:


 


(i)            postpone or delay the filing or
effectiveness of a registration statement for a period not to exceed 45
consecutive days (each, a “Blackout Period”), or


 


(ii)           by notice in writing to each Holder
of Registrable Securities to which a Prospectus relates, require such Holder to
suspend, for up to 45 days (the “Suspension Period”), the use of any
Prospectus included in a Registration Statement filed with the Commission
pursuant to this Agreement;


 


; provided
that the Company may not postpone, delay or suspend its obligation under this
Section 3(n) for more than 60 days in the aggregate during any 12 month period.


 


4.             Registration Expenses.


 


All fees and expenses
incident to the performance of or compliance with this Agreement by the Company
shall be borne by the Company whether or not the Registration


 

















 


Statement is filed or becomes effective and
whether or not any Registrable Securities are sold pursuant to the Registration
Statement. The fees and expenses referred to in the foregoing sentence shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required to
be made with Nasdaq and each other securities exchange, quotation system,
market or over-the-counter bulletin board on which Registrable Securities are
required hereunder to be listed, (B) with respect to filings required to be
made with the Commission, and (C) in compliance with state securities or Blue
Sky laws (including, without limitation, fees and disbursements of Special
Counsel in connection with Blue Sky qualifications of the Registrable
Securities and determination of the eligibility of the Registrable Securities
for investment under the laws of such jurisdictions as the Holders of a
majority of Registrable Securities may designate)), (ii) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities and of printing or photocopying prospectuses), (iii)
messenger, telephone and delivery expenses, (iv) Securities Act liability
insurance, if the Company so desires such insurance, (v) fees and expenses of
all other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement, including, without
limitation, the Company’s independent public accountants (including, in the
case of an underwritten offering, the expenses of any comfort letters or costs
associated with the delivery by independent public accountants of a comfort
letter or comfort letters) and legal counsel, and (vi) reasonable fees and
expenses of the Special Counsel in connection with any Registration Statement
hereunder. In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit, the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. 
The Purchasers shall be responsible for their pro rata share of any
underwriting discounts or commissions in connection with the sale of the
Registrable Securities and all fees and expenses for any counsel for a
Purchaser or the Purchasers other than the Special Counsel.


 


5.             Indemnification.


 


(a)           Indemnification by the Company.
The Company shall, notwithstanding any termination of this Agreement, indemnify
and hold harmless each Holder, the officers, directors, agents, brokers
(including brokers who offer and sell Registrable Securities as principal as a
result of a pledge or any failure to perform under a margin call of Common
Stock), investment advisors and employees of each of them, each Person who
controls any such Holder (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) and the officers, directors, agents and
employees of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, costs of preparation and
reasonable attorneys’ fees) and expenses (collectively, “Losses”), as
incurred, arising out of or relating to any untrue or alleged untrue statement
of a material fact contained or


 

















 


incorporated by reference in the Registration
Statement, any Prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of 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 amendment or supplement thereto, in the
light of the circumstances under which they were made) not misleading, except
to the extent, but only to the extent, that (i) such untrue statements or
omissions are based solely upon information regarding such Holder furnished in
writing to the Company by such Holder expressly for use therein, which
information was reasonably relied on by the Company for use therein or to the
extent that such information relates to (x) such Holder and was reviewed and
expressly approved in writing by such Holder expressly for use in the
Registration Statement, such Prospectus or such form of prospectus or in any
amendment or supplement thereto or (y) such Holder’s proposed method of
distribution of Registrable Securities as set forth in Exhibit A (or as such
Holder otherwise informs the Company in writing); or (ii) in the case of an
occurrence of an event of the type described in Section 3(c)(ii), 3(c)(iii),
3(c)(iv), 3(c)(v) or 3(n), the use by a Holder of an outdated or defective
Prospectus after the delivery to the Holder of written notice from the Company
that the Prospectus is outdated or defective and prior to the receipt by such
Holder of the Advice contemplated in Section 3(m). The Company shall notify the
Holders promptly of the institution, threat or assertion of any Proceeding of
which the Company is aware in connection with the transactions contemplated by
this Agreement. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of an Indemnified Party (as defined
in Section 5(c) to this Agreement) and shall survive the transfer of the
Registrable Securities by the Holders.


 


(b)           Indemnification by Holders.
Each Holder shall, notwithstanding the termination of this Agreement, severally
and not jointly, indemnify and hold harmless the Company, its directors,
officers, agents and employees, each Person who controls the Company (within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange
Act), and the directors, officers, agents and employees of such controlling
Persons, to the fullest extent permitted by applicable law, from and against
all Losses, as incurred, arising solely out of or based solely upon any untrue
statement of a material fact contained in the Registration Statement, any
Prospectus, or any form of prospectus, or in any amendment or supplement
thereto, or arising solely out of or based solely upon any omission of 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
the light of the circumstances under which they were made) not misleading, to
the extent, but only to the extent, that (i) such untrue statement or omission
is contained in or omitted from any information so furnished in writing by such
Holder to the Company specifically for inclusion in the Registration Statement
or such Prospectus and that such information was reasonably relied upon by the
Company for use therein, or to the extent that such information relates to (x)
such Holder and was reviewed and expressly approved in writing by such Holder
expressly for use in the Registration Statement, such Prospectus, or such form
of prospectus or in any amendment or supplement thereto or (y) such Holder’s
proposed method of distribution of Registrable Securities as set forth in
Exhibit A (or as such Holder otherwise informs the Company in writing) or (ii)
in the case of an occurrence of an event of the type


 

















 


described in Section 3(c)(ii), 3(c)(iii),
3(c)(iv), 3(c)(v) or 3(n), the use by a Holder of an outdated or defective
Prospectus after the delivery to the Holder of written notice from the Company
that the Prospectus is outdated or defective and prior to the receipt by such
Holder of the Advice contemplated in Section 3(m); provided, however, that the
indemnity agreement contained in this Section 5(b) shall not apply to amounts
paid in settlement of any Losses if such settlement is effected without the
prior written consent of the Holder, which consent shall not be unreasonably
withheld. Notwithstanding anything to the contrary contained herein, the Holder
shall be liable under this Section 5(b) for only that amount as does not exceed
the net proceeds to such Holder as a result of the sale of Registrable
Securities pursuant to such Registration Statement.


 


(c)           Conduct of Indemnification
Proceedings. If any Proceeding shall be brought or asserted against any
Person entitled to indemnity hereunder (an “Indemnified Party”), such
Indemnified Party promptly shall notify the Person from whom indemnity is
sought (the “Indemnifying Party”) in writing, and the Indemnifying Party
shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to the Indemnified Party and the payment of all
reasonable fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant
to this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately
and materially adversely prejudiced the Indemnifying Party.


 


An Indemnified
Party shall have the right to employ separate counsel in any such Proceeding
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party or Parties unless:
(1) the Indemnifying Party has agreed in writing to pay such fees and expenses;
or (2) the Indemnifying Party shall have failed promptly to assume the defense
of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified
Party and the Indemnifying Party, and such Indemnified Party shall have been
advised by counsel in writing (with a copy to the Indemnifying Party) that a
conflict of interest is likely to exist if the same counsel were to represent
such Indemnified Party and the Indemnifying Party (in which case, if such
Indemnified Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
such counsel shall be at the reasonable expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such
Proceeding effected without its written consent, which consent shall not be
unreasonably withheld. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from all
liability on claims that are the subject matter of such Proceeding and does not
impose any monetary or other obligation or restriction on the Indemnified
Party.


 

















 


All reasonable
fees and expenses of the Indemnified Party (including reasonable fees and
expenses to the extent incurred in connection with investigating or preparing
to defend such Proceeding in a manner not inconsistent with this Section) shall
be paid to the Indemnified Party, as incurred, within ten (10) Business Days of
written notice thereof to the Indemnifying Party, which notice shall be
delivered no more frequently than on a monthly basis (regardless of whether it
is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses to
the extent it is finally judicially determined that such Indemnified Party is
not entitled to indemnification hereunder).


 


(d)           Contribution. If a claim for
indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified
Party because of a failure or refusal of a governmental authority to enforce
such indemnification in accordance with its terms (by reason of public policy
or otherwise), then each 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 Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include,
subject to the limitations set forth in Section 5(c), any reasonable attorneys’
or other reasonable fees or expenses incurred by such party in connection with
any Proceeding to the extent such party would have been indemnified for such
fees or expenses if the indemnification provided for in this Section was
available to such party in accordance with its terms. Notwithstanding anything
to the contrary contained herein, the Holder shall be required to contribute
under this Section 5(d) for only that amount as does not exceed the net
proceeds to such Holder as a result of the sale of Registrable Securities
pursuant to such Registration Statement.


 


The parties
hereto agree that it would not be just and equitable if contribution pursuant
to this Section 5(d) were determined by pro rata allocation or by any other
method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding 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 was
not guilty of such fraudulent misrepresentation.


 


The indemnity
and contribution agreements contained in this Section are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties.
The


 

















 


indemnity and contribution
agreements herein are in addition to and not in diminution or limitation of any
indemnification provisions under the Purchase Agreement.


 


6.             Rule 144.


 


As long as any
Holder owns Preferred Stock, Conversion Shares, Warrants or Warrant Shares, the
Company covenants to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to Section 13(a) or 15(d) of the
Exchange Act. As long as any Holder owns Preferred Stock, Conversion Shares,
Warrants or Warrant Shares, if the Company is not required to file reports
pursuant to Section 13(a) or 15(d) of the Exchange Act, it will prepare and
furnish to the Holders and make publicly available in accordance with Rule
144(c) promulgated under the Securities Act annual and quarterly financial
statements, together with a discussion and analysis of such financial
statements in form and substance substantially similar to those that would
otherwise be required to be included in reports required by Section 13(a) or
15(d) of the Exchange Act, as well as any other information required thereby,
in the time period that such filings would have been required to have been made
under the Exchange Act. The Company further covenants that it will take such
further action as any Holder may reasonably request, all to the extent required
from time to time to enable such Person to sell Conversion Shares and Warrant
Shares without registration under the Securities Act within the limitation of
the exemptions provided by Rule 144 promulgated under the Securities Act,
including compliance with the provisions of the Purchase Agreement relating to
the transfer of the Conversion Shares and Warrant Shares. Upon the request of
any Holder, the Company shall deliver to such Holder a written certification of
a duly authorized officer as to whether it has complied with such requirements.


 


7.             Miscellaneous.


 


(a)           Remedies. In the event of a
breach by the Company or by a Holder, of any of their obligations under this
Agreement, each Holder or the Company, as the case may be, in addition to being
entitled to exercise all rights granted by law and under this Agreement,
including recovery of damages, will be entitled to specific performance of its
rights under this Agreement. The Company and each Holder agree that monetary
damages would not provide adequate compensation for any losses incurred by
reason of a breach by it of any of the provisions of this Agreement and hereby
further agrees that, in the event of any action for specific performance in
respect of such breach, it shall waive the defense that a remedy at law would
be adequate.


 


(b)           No Inconsistent Agreements.
Except as otherwise disclosed in the Purchase Agreement, neither the Company
nor any of its subsidiaries is a party to an agreement currently in effect, nor
shall the Company or any of its subsidiaries, on or after the date of


 

















 


this Agreement, enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. Without limiting the generality of the foregoing, without
the written consent of the Holders of a majority of the then outstanding
Registrable Securities, the Company shall not grant to any Person the right to
request the Company to register any securities of the Company under the
Securities Act unless the rights so granted are subject in all respects to the
prior rights in full of the Holders set forth herein, and are not otherwise in
conflict with the provisions of this Agreement.


 


(c)           Notice of Effectiveness.
Within two (2) Business Days after the Registration Statement which includes
the Registrable Securities is ordered effective by the Commission, the Company
shall deliver, and shall cause legal counsel for the Company to deliver, to the
transfer agent for such Registrable Securities (with copies to the Holders
whose Registrable Securities are included in such Registration Statement)
confirmation that the Registration Statement has been declared effective by the
Commission in the form attached hereto as Exhibit B.


 


(d)           Piggy-Back Registrations. If
at any time when there is not an effective Registration Statement covering all
of the Registrable Securities, the Company shall determine to prepare and file
with the Commission a registration statement relating to an offering for its
own account or the account of others under the Securities Act of any of its
equity securities, other than on Form S-4 or Form S-8 (each as promulgated
under the Securities Act) or its then equivalents relating to equity securities
to be issued solely in connection with any acquisition of any entity or
business or equity securities issuable in connection with stock option or other
employee benefit plans, the Company shall send to each Holder of Registrable
Securities written notice of such determination and, if within seven (7)
Business Days after receipt of such notice, any such Holder shall so request in
writing (which request shall specify the Registrable Securities intended to be
disposed of by the Holder), the Company will cause the registration under the
Securities Act of all Registrable Securities which the Company has been so
requested to register by the Holder, to the extent required to permit the
disposition of the Registrable Securities so to be registered, provided that if
at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any
reason not to register or to delay registration of such securities, the Company
may, at its election, give written notice of such determination to such Holder
and, thereupon, (i) in the case of a determination not to register, shall be
relieved of its obligation to register any Registrable Securities in connection
with such registration (but not from its obligation to pay expenses in
accordance with Section 4 hereof), and (ii) in the case of a determination to
delay registering, shall be permitted to delay registering any Registrable
Securities being registered pursuant to this Section 7(d) for the same period
as the delay in registering such other securities. The Company shall include in
such registration statement all or any part of such Registrable Securities such
Holder requests to be registered; provided, however, that the Company shall not
be required to register any Registrable Securities pursuant to this Section
7(d) that are eligible for sale


 

















 


pursuant to Rule 144(k) of the
Securities Act. In the case of an underwritten public offering, if the managing
underwriter(s) or underwriter(s) should reasonably object to the inclusion of
the Registrable Securities in such registration statement, then if the Company
after consultation with the managing underwriter should reasonably determine
that the inclusion of such Registrable Securities, would materially adversely
affect the offering contemplated in such registration statement, and based on
such determination recommends inclusion in such registration statement of fewer
or none of the Registrable Securities of the Holders, then (x) the number of
Registrable Securities of the Holders included in such registration statement
shall be reduced pro-rata among such Holders (based upon the number of
Registrable Securities requested to be included in the registration), if the
Company after consultation with the underwriter(s) recommends the inclusion of
fewer Registrable Securities, or (y) none of the Registrable Securities of the
Holders shall be included in such registration statement, if the Company after
consultation with the underwriter(s) recommends the inclusion of none of such
Registrable Securities; provided, however, that if securities are being offered
for the account of other persons or entities as well as the Company, such
reduction shall not represent a greater fraction of the number of Registrable
Securities intended to be offered by the Holders than the fraction of similar
reductions imposed on such other persons or entities (other than the Company).


 


(e)           Failure to File Registration
Statement and Other Events. The Company and the Holders agree that the
Holders will suffer damages if the Registration Statement is not filed on or
prior to the twentieth (20th) day following the Closing Date and maintained in
the manner contemplated herein during the Effectiveness Period. The Company and
the Holders further agree that it would not be feasible to ascertain the extent
of such damages with precision. Accordingly, if (i) the Registration Statement
is not filed on or prior to the twentieth (20th) day following the Closing
Date, or (ii) the Company fails to file with the Commission a request for
acceleration in accordance with Rule 461 promulgated under the Securities Act
within five (5) Business Days of the date that the Company is notified (orally
or in writing, whichever is earlier) by the Commission that a Registration
Statement will not be “reviewed,” or not subject to further review, or (iii)
the Registration Statement is filed with and declared effective by the
Commission but thereafter ceases to be effective as to all Registrable
Securities at any time prior to the expiration of the Effectiveness Period,
without being succeeded immediately by a subsequent Registration Statement
filed with the Commission, except as otherwise permitted by this Agreement, including
pursuant to Section 3(n), or (iv) trading in the Common Stock shall be
suspended or if the Common Stock is delisted from Nasdaq or any other
securities exchange, quotation system, market or over-the-counter bulletin
board on which Registrable Securities are required hereunder to be listed (each
an “Exchange”), without immediately being listed on any other Exchange,
for any reason for more than one (1) Business Day, other than pursuant to
Section 3(n), or (v) the conversion rights of the Holders are suspended for any
reason without the consent of the particular Holder other than as set forth in
the Certificate of Designation, or (vi) the Company has breached Section 3(n)
of this Agreement (any such failure or breach being referred to as an “Event”),
the Company shall pay in cash as liquidated damages for such failure and not as
a penalty to each Holder an amount equal to one and one-half percent (1.5%) of
such Holder’s pro rata share of the purchase price paid by all Holders for
Preferred


 

















 


Stock purchased and then
outstanding pursuant to the Purchase Agreement for each subsequent thirty (30)
day period thereafter until the applicable Event has been cured or until there
are no longer any Registrable Securities issuable or outstanding (whichever is
earlier) which shall be pro rated for such periods less than thirty days (the “Periodic
Amount”). Payments to be made pursuant to this Section 7(e) shall be due
and payable immediately upon demand in immediately available cash funds. The
parties agree that the Periodic Amount represents a reasonable estimate on the
part of the parties, as of the date of this Agreement, of the amount of damages
that may be incurred by the Holders if the Registration Statement is not filed
on or prior to the twentieth (20th) day following the Closing Date and
maintained in the manner contemplated herein during the Effectiveness Period or
if any other Event as described herein has occurred.


 


(f)            Failure of Registration Statement
to Become Effective.  The Company
and the Holders agree that the Holders will suffer damages if the Registration
Statement is not declared effective on or prior to the ninetieth (90th) day
following the Closing Date.  The Company
and the Holders further agree that it would not be feasible to ascertain the extent
of such damages with precision. Accordingly, if the Registration Statement is
not declared effective within ninety (90) days after the Closing Date, the
Company shall pay in cash as liquidated damages for such failure and not as a
penalty to each Holder an amount equal to one and one-half percent (1.5%) of
such Holder’s pro rata share of the purchase price paid by all Holders for
Preferred Stock purchased and then outstanding pursuant to the Purchase
Agreement for each thirty (30) day period thereafter (which shall be pro rated
for such periods less than thirty (30) days) until either (x) the Registration
Statement is declared effective or (y) until there are no longer any
Registrable Securities issuable or outstanding. Payments to be made pursuant to
this Section 7(f) shall be due and payable immediately upon demand in
immediately available cash funds. The parties agree that the amounts set forth
in this Section 7(f) represent a reasonable estimate on the part of the
parties, as of the date of this Agreement, of the amount of damages that may be
incurred by the Holders if the Registration Statement is not declared effective
on or prior to the ninetieth (90th) day following the Closing Date.


 


(g)           Specific Enforcement, Consent to
Jurisdiction.


 


(i)            The Company and the Holders
acknowledge and agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof, this being in addition to any other remedy to
which any of them may be entitled by law or equity.


 


(ii)           Each of the Company and the Holders
(i) hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts located in New York City,


 

















 


New York for
the purposes of any suit, action or proceeding arising out of or relating to
this Agreement and (ii) hereby waives, and agrees not to assert in any such
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is brought in
an inconvenient forum or that the venue of the suit, action or proceeding is
improper. Each of the Company and the Holders consents to process being served
in any such suit, action or proceeding by mailing a copy thereof 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 in this Section 7(g) shall affect or limit any right to serve
process in any other manner permitted by law.


 


(h)           Amendments and Waivers. The
provisions of this Agreement, including the provisions of this sentence, may
not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given, unless the same shall be in
writing and signed by the Company and the Holders of at least a majority of the
Registrable Securities. Notwithstanding the foregoing, a waiver or consent to
depart from the provisions hereof with respect to a matter that relates exclusively
to the rights of Holders and that does not directly or indirectly affect the
rights of other Holders may be given by Holders of the Registrable Securities
to which such waiver or consent relates; provided, however, that the provisions
of this sentence may not be amended, modified, or supplemented except in
accordance with the provisions of the immediately preceding sentence.


 


(i)            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
earlier of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified for notice
prior to 5:00 p.m., New York City time, on a Business Day, (ii) the next
Business 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 Business Day or later than 5:00 p.m., New York City time, on
any date and earlier than 11:59 p.m., New York City time, on such date, (iii)
the Business Day following the date of mailing, if sent by nationally
recognized overnight courier service such as Federal Express or (iv) actual
receipt by the party to whom such notice is required to be given. The addresses
for such communications shall be with respect to each Holder at its address set
forth under its name on Schedule 1 attached hereto, or with respect to
the Company, addressed to:


 


NeoRx
Corporation


 


300 Elliott
Avenue West, Suite 500


 


Seattle,
Washington 98119


 


Attention:  President


 


Facsimile
No.:  (206) 286-2537


 

















 


or to such
other address or addresses or facsimile number or numbers as any such party may
most recently have designated in writing to the other parties hereto by such
notice. Copies of notices to the Company shall be sent to Perkins Coie, LLP,
1201 Third Avenue, Suite 4800, Seattle, Washington 98101, Attention:  Faith M. Wilson, Esq., Facsimile No. (206)
359-4237. Copies of notices to any Holder shall be sent to the addresses, if
any, listed on Schedule 1 attached hereto.


 


(j)            Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns and shall inure to the benefit of each
Holder and its successors and assigns; provided, that the Company may not
assign this Agreement or any of its rights or obligations hereunder without the
prior written consent of each Holder; and provided, further, that each Holder may
assign its rights hereunder in the manner and to the Persons as permitted under
the Purchase Agreement.


 


(k)           Assignment of Registration Rights.
The rights of each Holder hereunder, including the right to have the Company
register for resale Registrable Securities in accordance with the terms of this
Agreement, shall be automatically assignable by each Holder to any transferee
of such Holder of all or a portion of the Preferred Stock, the Warrants or the
Registrable Securities if: (i) the Holder agrees in writing with the transferee
or assignee to assign such rights, and a copy of such agreement is furnished to
the Company within a reasonable time after such assignment, (ii) the Company
is, within a reasonable time after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or assignee, and
(b) the securities with respect to which such registration rights are being
transferred or assigned, (iii) following such transfer or assignment the
further disposition of such securities by the transferee or assignees is
restricted under the Securities Act and applicable state securities laws, (iv)
at or before the time the Company receives the written notice contemplated by
clause (ii) of this Section 7(k), the transferee or assignee agrees in writing
with the Company to be bound by all of the provisions of this Agreement, and
(v) such transfer shall have been made in accordance with the applicable
requirements of the Purchase Agreement. The rights to assignment shall apply to
the Holders (and to subsequent) successors and assigns.


 


The Company
may require, as a condition of allowing such assignment in connection with a
transfer of Preferred Stock, Warrants or Registrable Securities (i) that the
Holder or transferee of all or a portion of the Preferred Stock, the Warrants
or the Registrable Securities as the case may be, furnish to the Company a
written opinion of counsel that is reasonably acceptable to the Company to the
effect that such transfer may be made without registration under the Securities
Act, (ii) that the Holder or transferee execute and deliver to the Company an
investment letter in form and substance acceptable to the Company and (iii)
that the transferee be an “accredited investor” as defined in Rule 501(a)
promulgated under the Securities Act.


 

















 


(l)            Counterparts; Facsimile. This
Agreement may be executed in any number of counterparts, each of which when so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile
signature were the original thereof.


 


(m)          Governing Law. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York, without regard to principles of conflicts of law thereof.


 


(n)           Cumulative Remedies. The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.


 


(o)           Severability. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable in any
respect, the remainder of the terms, provisions, covenants and restrictions set
forth herein shall remain in full force and effect and shall in no way be
affected, impaired or invalidated, and the parties hereto shall use their
reasonable efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be hereafter declared invalid, illegal, void or unenforceable.


 


(p)           Headings. 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.


 


(q)           Registrable Securities Held by the
Company and its Affiliates. Whenever the consent or approval of Holders of
a specified percentage of Registrable Securities is required hereunder,
Registrable Securities held by the Company or its Affiliates (other than any
Holder or transferees or successors or assigns thereof if such Holder is deemed
to be an Affiliate solely by reason of its holdings of such Registrable
Securities) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.


 


[signature page follows]


 

















 


IN WITNESS
WHEREOF, the parties hereto have caused this Investor Rights Agreement to be
duly executed by their respective authorized persons as of the date first
indicated above.


 


	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  NEORX CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jack L.
  Bowman

  	
   

  
	
   

  	
  Name: Jack L. Bowman

  
	
   

  	
  Title: President and Chief Executive
  Officer

  



 

















 


	
   

  	
  PURCHASERS:

  
	
   

  	
   

  
	
   

  	
  Print Exact
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
   

  
	
   

  	
  Title:

  
					



 


[See attached
list of Purchaser signatories]


 


 


[Omnibus Investor Rights Agreement Signature Page]


 

















 


PURCHASERS


 


	
  Name,
  Address and Fax Number of 

  Purchaser

  	
   

  	
  Copies of Notices to

  
	
  BayStar Capital II, LLC

  53 Forest Avenue, Suite 203

  Old Greenwich, CT 06870

  Attn: Steve Derby

  Tel: (203) 967-5875

  Fax: (203) 967-5851

  	
   

  	
  Wiggin & Dana LLP

  400 Atlantic Street

  Stamford, CT 06901

  Telephone: (203) 363-7630

  Facsimile:  (203) 363-7676

  Attn: Michael Grundei, Esq

  
	
   

  	
   

  	
   

  
	
  Royal Bank
  of Canada

  1 Liberty Plaza, 2nd Floor

  165 Broadway

  New York, NY 10006

  Attn: Richard Tavoso

  Attn: Steven Milke

  Tel: (212) 858-7200

  	
   

  	
   

  



 

















 


	
  Name,
  Address and Fax Number of 

  Purchaser

  	
   

  	
  Copies of Notices to

  
	
  T. Rowe
  Price Health Sciences Fund, Inc.

  Nominee Name: Lobstercrew & Co.

  Delivery Instructions:

  State Street Bank

  New York Settlements

  DTC/NY Window

  55 Water Street

  New York, NY 10041

  Attn: Robert Mendez

  	
   

  	
  Darrell N.
  Braman

  Vice President

  T. Rowe Price Associates, Inc.

  100 E. Pratt Street

  Baltimore, MD 21202

  Tel: (410) 345-2013

  Fax: (410) 345-6575

  
	
   

  	
   

  	
   

  
	
  TD Mutual
  Funds -TD Health Sciences Fund

  Nominee name: Mac & Co.

  Delivery Instructions:

  Physical Deliveries New York

  Mellon Securities Trust Co.

  120 Broadway, 13th Floor

  New York, NY 10271

  	
   

  	
  Darrell N.
  Braman

  Vice President

  T. Rowe Price Associates, Inc.

  100 E. Pratt Street

  Baltimore, MD 21202

  Tel: (410) 345-2013

  Fax: (410) 345-6575

  



 

















 


	
  Name,
  Address and Fax Number of 

  Purchaser

  	
   

  	
  Copies of Notices to

  
	
  Valic
  Company I -Health Sciences Fund

  Nominee name: Squidrig & Co.

  Delivery Instructions:

  State Street Bank

  2 Avenue de Lafayette, 5 Northwest

  Boston, MA 02110

  	
   

  	
  Darrell N.
  Braman

  Vice President

  T. Rowe Price Associates, Inc.

  100 E. Pratt Street

  Baltimore, MD 21202

  Tel: (410) 345-2013

  Fax: (410) 345-6575

  
	
   

  	
   

  	
   

  
	
  Manufacturers
  Investment Trust -Health Sciences Trust

  Nominee name: Lamppost & Co.

  Delivery Instructions:

  State Street Bank

  2 Avenue de Lafayette, 5 Northwest

  Boston, MA 02110



  	
   

  	
  Darrell N.
  Braman

  Vice President

  T. Rowe Price Associates, Inc.

  100 E. Pratt Street

  Baltimore, MD 21202

  Tel: (410) 345-2013

  Fax: (410) 345-6575

  
	
   

  	
   

  	
   

  
	
  IDEX Mutual
  Funds -IDEX T. Rowe Price Health Sciences

  Nominee name: Hare & Co.

  Delivery Instructions:

  Bank of New York

  One Wall Street

  Window A

  New York, NY 10286

  	
   

  	
  Darrell N.
  Braman

  Vice President

  T. Rowe Price Associates, Inc.

  100 E. Pratt Street

  Baltimore, MD 21202

  Tel: (410) 345-2013

  Fax: (410) 345-6575

  



 

















 


	
  Name,
  Address and Fax Number of 

  Purchaser

  	
   

  	
  Copies of Notices to

  
	
  Raytheon Company Combined DB/DC Master Trust -Health Sciences

  Nominee
  name: BOST & Co.

  Delivery
  Instructions:

  Mellon
  Securities Trust Co.

  120
  Broadway, 13th Floor

  New York, NY
  10271 

  	
   

  	
  Darrell N.
  Braman

  Vice President

  T. Rowe Price Associates, Inc.

  100 E. Pratt Street

  Baltimore, MD 21202

  Tel: (410) 345-2013

  Fax: (410) 345-6575

  
	
   

  	
   

  	
   

  
	
  Raytheon
  Master Pension Trust -Health Sciences

  Nominee name: BOST & Co.

  Delivery Instructions:

  Mellon Securities Trust Co.

  120 Broadway, 13th Floor

  New York, NY 10271 

  	
   

  	
  Darrell N.
  Brama

  Vice President

  T. Rowe Price Associates, Inc.

  100 E. Pratt Street

  Baltimore, MD 21202

  Tel: (410) 345-2013

  Fax: (410) 345-6575

  



 

















 


EXHIBIT A


 


PLAN OF DISTRIBUTION


 


We are
registering the shares of common stock on behalf of the selling security
holders. Sales of shares may be made by selling security holders, including
their respective donees, transferees, pledgees or other successors-in-interest
directly to purchasers or to or through underwriters, broker-dealers or through
agents. Sales may be made from time to time on the Nasdaq SmallCap Market, any
other exchange or market upon which our shares may trade in the future, in the
over-the-counter market or otherwise, at market prices prevailing at the time
of sale, at prices related to market prices, or at negotiated or fixed prices.
The shares may be sold by one or more of, or a combination of, the following:


 


•                                          a
block trade in which the broker-dealer so engaged will attempt to sell the
shares as agent but may position and resell a portion of the block as principal
to facilitate the transaction (including crosses in which the same broker acts
as agent for both sides of the transaction);


 


•                                          purchases
by a broker-dealer as principal and resale by such broker-dealer, including
resales for its account, pursuant to this prospectus;


 


•                                          ordinary
brokerage transactions and transactions in which the broker solicits purchases;


 


•                                          through
options, swaps or derivatives;


 


•                                          in
privately negotiated transactions;


 


•                                          in
making short sales or in transactions to cover short sales; and


 


•                                          put
or call option transactions relating to the shares.


 


The selling
security holders may effect these transactions by selling shares directly to
purchasers or to or through broker-dealers, which may act as agents or
principals. These broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the selling security holders and/or
the purchasers of shares for whom such broker-dealers may act as agents or to
whom they sell as principals, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions).


 

















 


The selling security holders have advised us
that they have not entered into any agreements, understandings or arrangements
with any underwriters or broker-dealers regarding the sale of their securities.


 


The selling
security holders may enter into hedging transactions with broker-dealers or
other financial institutions. In connection with those transactions, the
broker-dealers or other financial institutions may engage in short sales of the
shares or of securities convertible into or exchangeable for the shares in the
course of hedging positions they assume with the selling security holders. The
selling security holders may also enter into options or other transactions with
broker-dealers or other financial institutions which require the delivery of
shares offered by this prospectus to those broker-dealers or other financial
institutions. The broker-dealer or other financial institution may then resell
the shares pursuant to this prospectus (as amended or supplemented, if required
by applicable law, to reflect those transactions).


 


The selling
security holders and any broker-dealers that act in connection with the sale of
shares may be deemed to be “underwriters” within the meaning of Section 2(11)
of the Securities Act of 1933, and any commissions received by broker-dealers
or any profit on the resale of the shares sold by them while acting as
principals may be deemed to be underwriting discounts or commissions under the
Securities Act. The selling security holders may agree to indemnify any agent,
dealer or broker-dealer that participates in transactions involving sales of
the shares against liabilities, including liabilities arising under the
Securities Act. We have agreed to indemnify each of the selling security
holders and each selling security holder has agreed, severally and not jointly,
to indemnify us against some liabilities in connection with the offering of the
shares, including liabilities arising under the Securities Act.


 


The selling
security holders will be subject to the prospectus delivery requirements of the
Securities Act. We have informed the selling security holders that the
anti-manipulative provisions of Regulation M promulgated under the Securities
Exchange Act of 1934 may apply to their sales in the market.


 


Selling
security holders also may resell all or a portion of the shares in open market
transactions in reliance upon Rule 144 under the Securities Act, provided they
meet the criteria and conform to the requirements of Rule 144.


 


Upon being
notified by a selling security holder that a material arrangement has been
entered into with a broker-dealer for the sale of shares through a block trade,
special offering, exchange distribution or secondary distribution or a purchase
by a broker or dealer, we will file a supplement to this prospectus, if
required pursuant to Rule 424(b) under the Securities


 

















 


Act, disclosing:


 


•                                          the
name of each such selling security holder and of the participating
broker-dealer(s);


 


•                                          the
number of shares involved;


 


•                                          the
initial price at which the shares were sold;


 


•                                          the
commissions paid or discounts or concessions allowed to the broker-dealer(s),
where applicable;


 


•                                          that
such broker-dealer(s) did not conduct any investigation to verify the
information set out or incorporated by reference in this prospectus; and


 


•                                          other
facts material to the transactions.


 


In addition,
if required under applicable law or the rules or regulations of the Commission,
we will file a supplement to this prospectus when a selling security holder
notifies us that a donee or pledgee intends to sell more than 500 shares of
common stock.


 


We are paying
all expenses and fees in connection with the registration of the shares. The
selling security holders will bear all brokerage or underwriting discounts or
commissions paid to broker-dealers in connection with the sale of the shares.


 

















 


EXHIBIT B


 


FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT


[Name and
Address of Transfer Agent]


 


Re:  NeoRx Corporation


 


Dear
[           ]:


 


We are counsel
to NeoRx Corporation, a Washington corporation (the “Company”), and have
represented the Company in connection with that certain Preferred Stock and
Warrant Purchase Agreement (the “Purchase Agreement”) dated as of December 3,
2003 by and among the Company and the buyers named therein (collectively, the
“Holders”) pursuant to which the Company issued to the Holders its Series B
Convertible Preferred Stock, par value $0.02 per share, (the “Preferred Stock”)
convertible into shares of the Company’s common stock, par value $0.02 per
share (the “Common Stock”), and warrants to purchase shares of the Common Stock
(the “Warrants”). Pursuant to the Purchase Agreement, the Company has also
entered into an Investor Rights Agreement with the Holders (the “Investor
Rights Agreement”) pursuant to which the Company agreed, among other things, to
register the shares of Common Stock issuable upon conversion of the Preferred
Stock and exercise of the Warrants, under the Securities Act of 1933, as
amended (the “1933 Act”). In connection with the Company’s obligations under
the Investor Rights Agreement, on
                ,
2003, the Company filed a Registration Statement on Form S-3 (File No.
333-                  )
(the “Registration Statement”) with the Securities and Exchange Commission (the
“SEC”) relating to the Registrable Securities which names each of the Holders
as a selling securityholder thereunder.


 


In connection
with the foregoing, we advise you that a member of the SEC’s staff has advised
us by telephone that the SEC has entered an order declaring the Registration
Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS] on
[ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after telephonic
inquiry of a member of the SEC’s staff, that any stop order suspending its
effectiveness has been issued or that any proceedings for that purpose are
pending before, or threatened by, the SEC and the Registrable Securities are
available for resale under the 1933 Act pursuant to the Registration Statement.


 


 


	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  cc:  [LIST NAMES OF HOLDERS]