Document:

EX-4.2

Exhibit 4.2

THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON
EXERCISE HEREOF HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, OR OTHERWISE DISPOSED OF, AND NO TRANSFER OF THE SECURITIES WILL BE MADE BY
THE COMPANY OR ITS TRANSFER AGENT, IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

			
	 	 	 
	Date: February 25, 2009
	 	Warrant No. W2009PM-[     ]

WARRANT

TO PURCHASE [NUMBER OF SHARES] SHARES OF COMMON STOCK OF

CARDIOVASCULAR SYSTEMS, INC.

     FOR VALUE RECEIVED, [NAME] or registered assigns (the “Holder”), is entitled to purchase from
Cardiovascular Systems, Inc., a Minnesota corporation (the “Company”), [NUMBER OF SHARES] ( [NUMBER
OF SHARES]) fully paid and nonassessable shares of the Company’s Common Stock (such shares of
Common Stock as may be acquired upon exercise hereof being hereinafter referred to as the “Warrant
Shares”), at an exercise price of $5.71 per share (the “Warrant Exercise Price”), which Warrant is
immediately exercisable. This Warrant shall expire on February 24, 2014.

     This Warrant is subject to the following provisions, terms, and conditions:

     1. The rights represented by this Warrant may be exercised by the Holder, in whole or in part
(but not as to a fractional share of Common Stock), by written notice of exercise substantially in
the form attached hereto, which notice shall be delivered to the Company accompanied by the
surrender of this Warrant (properly endorsed if required) at the principal office of the Company
and upon payment to the Company, by cash, certified check or bank draft, of the Warrant Exercise
Price for each such Warrant Share subject to the exercise. The Company agrees that the Warrant
Shares so purchased shall be and are deemed to be issued as of the close of business on the date on
which this Warrant shall have been surrendered and payment made for such Warrant Shares as
aforesaid. Certificates for the Warrant Shares so purchased shall be delivered to the Holder
within thirty (30) days after the rights represented by this Warrant shall have been so exercised,
and, unless this Warrant has expired, a new Warrant representing the number of Warrant Shares, if
any, with respect to which this Warrant has not been exercised shall also be delivered to the
Holder within such time. Notwithstanding the foregoing, however, the Company shall not be required
to deliver any certificates for Warrant Shares, except in accordance with the provisions and
subject to the limitations of Section 4 below.

 

 

     2. The Company covenants and agrees that all Warrant Shares that may be issued upon the
exercise of this Warrant will, upon issuance, be duly authorized and issued, fully paid and
nonassessable and free from all taxes, liens, and charges with respect to the issuance thereof.
The Company further covenants and agrees that until expiration of this Warrant, the Company will at
all times have authorized, and reserved for the purpose of issuance upon exercise of this Warrant,
a sufficient number of shares of Common Stock to provide for the exercise of this Warrant.

     3. This Warrant shall not entitle the Holder to any voting rights or other rights as a
shareholder of the Company.

     4. The Holder, by acceptance hereof, represents and warrants that (a) it is acquiring this
Warrant for its own account for investment purposes only and not with a view to its resale or
distribution and (b) it has no present intention to resell or otherwise dispose of all or any part
of this Warrant. Other than pursuant to registration under federal and applicable state securities
laws or an exemption from such registration, the availability of which the Company shall determine
in its reasonable discretion, neither this Warrant nor any Warrant Shares may be sold, pledged,
assigned, or otherwise disposed of (whether voluntarily or involuntarily). The Company may
condition such sale, pledge, assignment, or other disposition on the receipt from the party to whom
this Warrant is to be so transferred or to whom Warrant Shares are to be issued or so transferred
of any representations and agreements requested by the Company in order to permit such issuance or
transfer to be made pursuant to exemptions from registration under federal and applicable state
securities laws. Each certificate representing the Warrant (or any part thereof) and any Warrant
Shares shall bear appropriate legends setting forth these restrictions on transferability. The
Holder, by acceptance hereof, agrees to give written notice to the Company before transferring this
Warrant or any Warrant Shares of the Holder’s intention to do so, describing briefly the manner of
any proposed transfer. Within a reasonable period after receiving such written notice, the Company
shall notify the Holder as to whether such transfer may be effected and of the conditions to any
such transfer.

     5. This Warrant shall be transferable only on the books of the Company by the Holder in
person, or by duly authorized attorney, on surrender of the Warrant, properly assigned.
Notwithstanding the foregoing, this Warrant shall also be assigned in accordance with Section 8
hereof.

     6. Neither this Warrant nor any terms hereof may be changed, waived, discharged, or terminated
orally but only by an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge, or termination is sought.

     7. Net Exercise Rights.

     (a) In addition to and without limiting the rights of the Holder of this Warrant with
respect to other terms of this Warrant, the Holder of this Warrant shall have the right (the
“Conversion Right”) to convert this Warrant or any portion thereof into Warrant Shares as
provided in this Section 7 at any time or from time to time prior to its expiration, subject
to the restrictions set forth in paragraph (c) below. Upon exercise of the Conversion Right
with respect to a particular number of shares subject to this Warrant (the “Converted
Warrant Shares”), the Company shall deliver to the Holder of this

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Warrant, without payment by the Holder of any exercise price or any cash or other
consideration, that number of Converted Warrant Shares equal to the quotient obtained by
dividing the Net Value (as hereinafter defined) of the Converted Warrant Shares by the fair
market value (as defined in paragraph (d) below) of a single Warrant Share, determined in
each case as of the close of business on the Conversion Date (as hereinafter defined). The
“Net Value” of the Converted Warrant Shares shall be determined by subtracting the aggregate
warrant purchase price of the Converted Warrant Shares from the aggregate fair market value
of the Converted Warrant Shares. Notwithstanding anything in this Section 7 to the
contrary, the Conversion Right cannot be exercised with respect to a number of Converted
Warrant Shares having a Net Value below $100. No fractional shares shall be issuable upon
exercise of the Conversion Right, and if the number of shares to be issued in accordance
with the foregoing formula is other than a whole number, the Company shall pay to the Holder
of this Warrant an amount in cash equal to the fair market value of the resulting fractional
share.

     (b) The Conversion Right may be exercised by the Holder of this Warrant by the
surrender of this Warrant at the principal office of the Company together with a notice in
the form attached hereto, specifying that the Holder thereby intends to exercise the
Conversion Right and indicating the number of shares subject to this Warrant which are being
surrendered (referred to in paragraph (a) above as the Converted Warrant Shares) in exercise
of the Conversion Right. Such conversion shall be effective upon receipt by the Company of
this Warrant together with the aforesaid written statement, or on such later date as is
specified therein (the “Conversion Date”), but not later than the expiration date of this
Warrant. Certificates for the Converted Warrant Shares issuable upon exercise of the
Conversion Right, together with a check in payment of any fractional share and, in the case
of a partial exercise, a new warrant evidencing the shares remaining subject to this
Warrant, shall be issued as of the Conversion Date and shall be delivered to the Holder of
this Warrant within 15 days following the Conversion Date.

     (c) For purposes of this Section 7, the “fair market value” of a Warrant Share as of a
particular date shall be its “market price”, calculated as of the Conversion Date, as
follows:

     (i) if the capital stock into which the Warrants are exercisable is traded on
an exchange or is quoted on the Nasdaq Global Select Market or Nasdaq Global Market,
then the average closing or last sale prices, respectively, reported for the ten
(10) business days immediately preceding the Conversion Date, or

     (ii) if the capital stock into which the Warrants are exercisable is not traded
on an exchange or on the Nasdaq Global Select Market or Nasdaq Global Market but is
traded on Nasdaq Capital Market or other over-the-counter market, then the average
closing bid and asked prices reported for the ten (10) business days immediately
preceding the Conversion Date, or

     (iii) if the capital stock into which the Warrants are exercisable is not
traded on an exchange or on the Nasdaq Global Select Market, Nasdaq Global

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Market, Nasdaq Capital Market or other over-the counter market, then the price
per share established by the Board of Directors of the Company.

     8. Antidilution Provisions. The rights granted hereunder are subject to the
following:

     (a) Stock Dividends. In case the Company shall declare a dividend or make any
other distribution upon the Common Stock of the Company payable in shares of Common Stock or
other securities, upon exercise of this Warrant, the Holder shall be entitled to receive,
for each share of Common Stock purchased pursuant to this Warrant, the number of shares of
Common Stock or other securities, as the case may be, issued per share of Common Stock in
payment of such dividend or distribution.

     (b) Stock Splits and Reverse Splits. In case at any time the Company shall
subdivide its outstanding shares of Common Stock into a greater number of shares, the
Warrant Exercise Price in effect immediately prior to such subdivision shall be
proportionately reduced and the number of Warrant Shares purchasable pursuant to this
Warrant immediately prior to such subdivision shall be proportionately increased, and
conversely, in case at any time the Company shall combine its outstanding shares of Common
Stock into a smaller number of shares, the Warrant Exercise Price in effect immediately
prior to such combination shall be proportionately increased and the number of Warrant
Shares purchasable upon the exercise of this Warrant immediately prior to such combination
shall be proportionately reduced. Except as provided in this paragraph (b), no adjustment
in the Warrant Exercise Price and no change in the number of Warrant Shares so purchasable
shall be made pursuant to this Section 8 as a result of or by reason of any such subdivision
or combination.

     (c) Replidyne Merger. Upon the consummation of the transactions contemplated
by that certain Agreement and Plan of Merger and Reorganization, dated as of November 3,
2008, among the Company, Replidyne, Inc., a Delaware corporation (“Replidyne”), and
Responder Merger Sub, Inc., a Minnesota corporation (the “Merger Agreement”), this Warrant
shall be assumed by Replidyne and converted into a warrant to purchase shares of Common
Stock of Replidyne, and the number of Warrant Shares and the Warrant Exercise Price shall
each be adjusted, in accordance with the Merger Agreement. No other changes shall be made
to the number of Warrant Shares issuable upon exercise of this Warrant or the Warrant
Exercise Price solely as a result of or by reason of the consummation of the transactions
contemplated by the Merger Agreement other than the adjustments, as set forth in the
preceding sentence of this paragraph (c), to the number of Warrant Shares and the Warrant
Exercise Price to be made in accordance with Section 5.5 of the Merger Agreement, after
giving effect to the combination of Replidyne’s Common Stock immediately prior to the
Effective Time (as defined in the Merger Agreement) of the transactions contemplated by the
Merger Agreement as set forth in Section 1.5 thereof.

     (d) Other Events. If any event occurs as to which, in the sole opinion of the
Board of Directors of the Company, the other provisions of this Warrant are not strictly
applicable or if strictly applicable would not fairly protect the rights of the holder of
this Warrant in accordance with the essential intent and principles of such provisions, then
the

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Board of Directors of the Company shall make such adjustment in the application of such
provisions as may be necessary, in the sole judgment of the Board, in accordance with such
essential intent and principles, to protect such rights as aforesaid.

     9. Governing Law. This Warrant shall be construed and interpreted in accordance with
the laws of the State of Minnesota without regard to its choice of law provisions.

     10. Agreement to Convert. This Warrant is being issued to the Holder pursuant to that
certain Agreement to Convert and Amendment to the Investor’s Rights Agreement between the Company
and certain holders of the Company’s Series A Convertible Preferred Stock, Series A-1 Convertible
Preferred Stock and Series B Convertible Preferred Stock, dated November 3, 2008.

[Remainder of page intentionally left blank; signature page follows]

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     IN WITNESS WHEREOF, the undersigned has executed this Warrant effective as of the date first
written above.

	 	 	 	 	 
	 	CARDIOVASCULAR SYSTEMS, INC.

 	 
	 	By:  	 	 
	 	 	Laurence L. Betterley 	 
	 	 	Chief Financial Officer 	 
	 

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To:      CARDIOVASCULAR SYSTEMS, INC.

NOTICE OF EXERCISE OF WARRANT —

To Be Executed by the Registered Holder in

Order to Exercise the Warrant

Subscriber hereby irrevocably elects to exercise the attached Warrant to purchase for cash,
                                         of the shares issuable upon the exercise of such Warrant, and requests that certificates for
such shares (together with a new Warrant to purchase the number of shares, if any, with respect to
which this Warrant is not exercised) shall be issued in the name of:

	 	 	 	 	 
	 
	 	 	 	 
	 

	 	 

(Print Name)
	 	 
	 
	 	 	 	 
	Please insert social security
	 	 	 	 
	or other identifying number
	 	 	 	 
	of registered holder of
	 	 	 	 
	certificate (                    )

	 	Address:	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Dated:                                        
	 	 	 	 
	 

	 	 	 	 
	 

	 	(Signature)*	 	 

 

			
	*	 	The signature on the Notice of Exercise of Warrant must correspond to the name as written upon the
face of the Warrant in every particular without alteration or enlargement or any change whatsoever.
When signing on behalf of a corporation, partnership, trust or other entity, PLEASE indicate your
position(s) and title(s) with such entity.

 

 

ASSIGNMENT FORM

To be signed only upon authorized transfer of Warrants.

     FOR VALUE RECEIVED, Subscriber hereby sells, assigns, and transfers unto
                                         the right to purchase the securities of Cardiovascular Systems, Inc.,
to which the within Warrant relates and appoints                     , attorney, to transfer said
right on the books of Cardiovascular Systems, Inc., with full power of substitution in the
premises.

	 	 	 	 	 
	Dated:                                        
	 	 	 	 
	 

	 	 

(Signature)
	 	 
	 
	 	 	 	 
	 

	 	Address:EX-10.1

Exhibit 10.1

GENOTHERAPEUTICS, INC.

STOCK OPTION PLAN

     1. PURPOSE.

     (a) The purpose of the Genotherapeutics, Inc. Stock Option Plan (the “Plan”) is to provide a
means by which selected key employees and directors (if declared eligible under paragraph 4) of
Genotherapeutics, Inc. (the “Company”), and its Affiliates, as defined in subparagraph 1(b), may be
given an opportunity to benefit from increases in value of the stock of the Company. The Plan will
be effected solely through the granting of nonstatutory stock options.

     (b) The word “Affiliate” as used in the Plan means any parent corporation or subsidiary
corporation of the Company, as those terms are defined in Sections 424 (e) and (f), respectively,
of the Internal Revenue Code of 1986, as amended from time to time (the “Code”).

     (c) The Company, by means of the Plan, seeks to retain and reward the services of persons now
or later employed by or serving as directors of the Company, to secure and retain the services of
persons capable of filling such positions, and to provide incentives for such persons to exert
maximum efforts for the success of the Company.

     2. ADMINISTRATION.

     (a) The Plan shall be administered by a Committee appointed by the Board of Directors of the
Company composed of not fewer than 3 members, (the “Committee”).

     (b) The Committee shall have the power, subject to, and within the limitations of, the express
provisions of the Plan and to such resolutions, not inconsistent with the provisions of the Plan,
as may be adopted from time to time by the Board of Directors:

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(i) To determine from time to time which of the persons eligible under the Plan
shall be granted nonqualified stock options (“Option Awards”) and the number of shares with respect to which Option Awards shall be granted to each such person.

(ii) To construe and interpret the Plan and Option Awards granted under it, and to
establish, amend and revoke rules and regulations for its administration. The
Committee, in the exercise of this power, may correct any defect, omission or
inconsistency in the Plan or in any Option Award, in a manner and to the extent it
shall deem necessary or expedient to make the Plan fully effective.

(iii) To amend the Plan as provided in paragraph 11.

(iv) Generally, to exercise such powers and to perform such acts as the Committee
deems necessary or expedient to promote the best interests of the Company.

     (c) The Board of Directors may abolish the Committee at any time and revest in the Board of
Directors the administration of the Plan.

     3. SHARES SUBJECT TO THE PLAN.

     (a) Subject to the provisions of paragraph 9 relating to adjustments upon changes in stock,
the stock that may be issued pursuant to Option Awards granted under the Plan shall not exceed in
the aggregate Three Thousand (3,000) shares of the Company’s common stock. If any option or right
granted under the Plan shall for any reason expire or otherwise terminate without having been exercised in full or which is settled in cash, the stock not issued under such
option or right shall again become available to the Plan.

Page 2 of 13

 

     (b) The stock subject to the Plan may be unissued shares or reacquired shares, bought on the
market or otherwise.

     4. ELIGIBILITY.

Option Awards may be granted only to directors, officers or employees of the Company or its
Affiliates.

     5. TERMS OF OPTION AWARDS.

     Each Option Award shall be in such form and shall contain such terms and conditions as the
Committee shall deem appropriate. The provisions of separate options need not be identical, but
each option shall include (through incorporation of provisions hereof by reference in the option or
otherwise) the substance of each of the following provisions:

     (a) The term of any option shall be ten (10) years from the date it was granted.

     (b) The exercise price of each Option Award shall be not less than one hundred percent (100%)
of the fair market value of the stock subject to the option on the date the option is granted;
provided, however, that the Committee shall have the discretion to grant options to one or more
persons and in such proportions and at such higher exercise price as the Committee may determine.
Fair market value shall be determined by the Committee on such basis as it deems appropriate.

     (c) The purchase price of stock acquired pursuant to an option shall be paid, to the extent
permitted by applicable statutes and regulations, either (i) in cash at the time the option is
exercised, or (ii) at the discretion of the Committee, determined either at the time of the grant
or exercise of the option, (A) by delivery to the Company of
other common stock of the Company, (B) according to a deferred payment or other arrangement (which may include, without limiting
the generality of the foregoing, the use of other common stock of the Company) with the person

Page 3 of 13

 

to whom the option is granted or to whom the option is transferred pursuant to subparagraph 5(d), or
(C) in any other form of legal consideration that may be acceptable to the Committee.

     (d) Unless otherwise expressly stated in the option, an Option Award shall not be transferable
except by will or by the laws of descent and distribution, and shall be exercisable during the
lifetime of the person to whom the option is granted only by such person, nor shall an Option
Holder have the right or power to anticipate, accelerate, convey, assign or otherwise alienate,
hypothecate, pledge or otherwise encumber any Option Award or the shares subject to the Option
Award.

     (e) Shares of stock subject to any Option Award shall vest as follows: (i) one-third (1/3) of
such shares shall vest on the third anniversary of the date of grant of such Option Award; (ii) an
additional one-third (1/3) of such shares shall vest on the fourth anniversary of the date of grant
of such Option Award; and (iii) the final one-third (1/3) of such shares shall vest on the fifth
anniversary of the date of grant of such Option Award. In the case of any Option Award granted to
a person using different exercise prices, this paragraph shall be applied separately to the shares
granted at each option price.

     (f) Shares sold to a third party shall be subject to a thirty day right of first refusal by
the Company at the same price and terms as offered by any third party pursuant to a bona fide
offer, and may not be sold prior to an offer of sale to the Company on such terms. Further, shares
acquired through exercise of an Option Award shall be subject to the terms and conditions of the
Voting and Shareholder Agreement dated May 13, 1999, between the Company and its stockholders, as
amended from time to time (the “Stockholders Agreement”).

     (g) In the event of a participant’s termination of employment or service as a director, as
applicable, by reason of voluntary retirement (at or after age sixty-five (65) or after age
fifty-

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five with no fewer than ten (10) years of service), death, permanent and total disability,
involuntary termination (other than a termination for cause but including any involuntary
termination as the result of a Change in Control, as addressed in paragraph (h) below), with
respect to such participant’s Option Award(s) (i) the Committee may in its sole, absolute and final
discretion elect to vest any or all shares not otherwise vested under the terms of the Plan, and
(ii) any vested shares subject to an Option Award may be exercised within ten (10) years following
the date of grant of such Option Award. In the event of an Option Award holder’s employment or
status as a director, as applicable, is terminated under any other circumstances, (i) any nonvested
Option Award shall be forfeited immediately, and (ii) the date of such termination of employment
shall be the last day on which any vested Option Award may be exercised.

     For purposes of this section, a permanent and total disability shall mean the occurrence of
the following conditions: (i) the Option Award holder’s physical or mental incapacity (excluding
infrequent and temporary absences due to ordinary illness) of properly performing the principal
functions which had been typically assigned to him by the Company, (ii) such incapacity shall exist
or be expected to exist with a reasonable degree of medical certainty for more than ninety (90)
days in the aggregate during any consecutive twelve (12) month period, and (iii) either the Option
Award holder or the Company shall have given the other thirty (30) days written notice of intent to
terminate employment or service as a director because of disability. In the event the Company and
Option Award holder are in material disagreement regarding the Participant’s physical or mental
condition, the Company shall authorize a panel of three (3) physicians selected by the Company to examine the Participant to determine conclusively, by a majority,
whether the Participant is disabled for purposes of the Plan.

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     For purposes of this section, a termination for cause shall mean the termination of an
individual’s status as an employee or director of the Company, as applicable, as the result of (i)
fraud or dishonesty in connection with the business of the Company; (ii) gross negligence in the
performance of duties for the Company; (iii) willful failure in carrying out duties as an employee
or director; or (iv) arrest and conviction of a felony involving moral turpitude, whether or not in
connection with the business of the Company; provided that (iii) above shall not apply if the
Option Award holder has been assigned by the Company to duties which are not comparable to such
holder’s function and compensation at the Company, or which are non-executive or demeaning
assignments, or if the Company has given such participant demeaning and unreasonable pay cuts.

     (h) In the event of a Change in Control of the Company, all shares subject to all Option
Awards shall become one hundred percent (100%) vested and shall be converted to cash, options or
stock of equivalent value in the surviving organization under terms and condition which
substantially preserve the economic status of the participants, as determined by the Committee.
For purposes of this paragraph, a Change in Control shall mean:

(i) a sale or other disposition of more than fifty percent (50%) of the issued and
outstanding voting stock of the Company, in a single transaction or in a series of
transactions. For such purposes, “Voting Stock” shall mean capital stock of the
Company of any class or classes, the holders of which are ordinarily, in the absence
of contingencies, entitled to vote for the election of members of the Board of
Directors (or Persons performing similar functions) of the Company.

(ii) a merger or consolidation of the Company with or into any other entity, if
immediately after giving effect to such transaction more than fifty percent (50%)

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of the issued and outstanding Voting Stock of the surviving entity of such transaction
is held by persons who are not holders of the Voting Stock immediately prior to
giving effect to such transaction;

(iii) a sale or other disposition of all or substantially all of the Company’s
assets in a single transaction or in a series of transactions (including, without
limitation, any liquidation or dissolution of the Company).

A Change of Control shall not include any of the following events:

(i) any transfer or issuance of stock of the Company to one or more of the Company’s
lenders (or to any agents or representatives thereof) in exchange for debt of the
Company owed to any such lenders;

(ii) any transfer of stock of the Company to or by any person or entity, including
but not limited to one or more of the Company’s lenders (or to any agents or
representatives thereof), pursuant to the terms of any pledge of said stock as
collateral for any loans or financial accommodations to the Company and/or its
subsidiaries; or

(iii) any transfer or issuance to any person or entity, including but not limited to
one or more of the Company’s lenders (or to any agents or representatives thereof),
in connection with the workout or restructuring of the Company’s debts to any one of
the Company’s lenders, including but not limited to the issuance of new stock in
exchange for any equity contribution to the Company in connection with the workout
or restructuring of such debt.

(iv) any transfer of stock by a stockholder of the Company which is a partnership or
corporation to the partners or stockholders in such stockholder.

Page 7 of 13

 

     (i) In the event of an initial public offering of the Company, Option Awards shall be
convertible to options in shares of the newly public company, under terms and conditions which
substantially preserve the rights and options of the participant. Any resulting registration of
options or shares shall be effected at Company expense.

     (j) If provided in the Option Award, each Option Award shall carry the right to receive any
dividend or dividend equivalent on vested shares, under such terms and conditions as may be
specified in the Option Award.

     (k) Notwithstanding any other provisions of the Plan, any vested but unexercised Option Award
shares shall be forfeited upon the Option Award holder’s “Competition” with the Company. For this
purpose, Competition shall be determined by the Committee, and shall exist if the Option Award
holder directly or indirectly (i) engages or has a financial interest in, (ii) becomes an officer,
employee, director, partner, advisor or consultant of or to, (iii) has an equity interest in, or
(iv) in any way materially assists any person, corporation, entity or business whose existing or
planned products or activities compete in whole or in part with the existing or planned products or
activities of the Company. The sole fact of ownership by an Option Award holder of less than two
percent (2%) of the stock of a publicly traded company which may have product lines which compete
with product lines of this Company shall not be treated as Competition. Any determination by the
Committee under this section shall be final and conclusive, unless overruled by the Board.

     (l) Notwithstanding any other provision of the Plan or any Option Award to the contrary, any
and all sales of shares to the Company or any Affiliate are contingent upon and subject to the
terms and conditions of any bank loan covenants by the Company or any Affiliate.

     6. COVENANTS OF THE COMPANY.

Page 8 of 13

 

     (a) During the term of any Option Award granted under the Plan, the Company shall keep
available at all times for issuance or sale the number of shares of stock required to satisfy such
Option Award.

     (b) The Company shall seek to obtain from each regulatory commission or agency having
jurisdiction over the Plan such authority, if any, as may be required to issue and sell shares of
stock upon grant or exercise of Option Awards under the Plan; provided, however, that this
undertaking shall not require the Company to register under the Securities Act of 1933, as amended
(the “Securities Act”), either the Plan, any Option Award granted under the Plan or any stock
issued or issuable pursuant to any such Option Awards. If, after reasonable efforts, the Company
is unable to obtain from any such regulatory commission or agency the authority which counsel for
the Company deems necessary for the lawful issuance and sale of stock under the Plan, the Company
shall be relieved from any liability for failure to issue and sell stock upon exercise of such
Option Awards unless and until such authority is obtained.

     7. USE OF PROCEEDS FROM STOCK.

     Proceeds from the sale of stock pursuant to Option Awards granted under the Plan shall
constitute general funds of the Company.

     8. MISCELLANEOUS.

     (a) The Committee shall have the power to accelerate the time during which an Option Award may
be exercised or the time during which an option or stock acquired pursuant to an Option Award will
vest, notwithstanding the provisions in the Option Award stating the time during which it may be
exercised or the time during which stock acquired pursuant thereto will vest.

Page 9 of 13

 

     (b) Neither a recipient of an Option Award nor any person to whom an Option Award is
transferred under subparagraph 5(d) shall be deemed to be the holder of, or to have any of the
rights of a holder with respect to, any shares subject to such Option Award unless and until such
person has satisfied all requirements for exercise of the Option Award pursuant to its terms and is
thereby entitled to receive shares of stock.

     (c) Throughout the term of any Option Award granted pursuant to the Plan, the Company shall
make available to the holder of such Option Award upon request, not later than one hundred twenty
(120) days after the close of each fiscal year of the Company during the option term, upon request,
such financial and other information regarding the Company as comprises the annual report to the
shareholders of the Company provided for in the bylaws of the Company.

     (d) Nothing in the Plan or any instrument executed or Option Award granted pursuant thereto
shall confer upon any recipient any right to continue in the employ of the Company or any Affiliate
or to limit the Company’s right to terminate the employment or directorship of any participant with
or without cause. In the event that an Option Award recipient is permitted or otherwise entitled
to take a leave of absence, the Company shall have the unilateral right to (i) determine whether
such leave of absence will be treated as a termination of employment for purposes of his or her Option Award, and (ii) suspend or otherwise delay the time or times at
which the shares subject to the Option Award would otherwise vest.

     (e) To the extent provided by the terms of any Option Award, the recipient may satisfy any
federal, state or local tax withholding obligation relating to the exercise or receipt of such
Option Award by any of the following means or by a combination of such means: (i) tendering a cash
payment: (ii) authorizing the Company to withhold from the shares of the

Page 10 of 13

 

common stock otherwise
issuable to the participant as a result of the exercise or receipt of the Option Award cash or a
number of shares having a fair market value less than or equal to the amount of the withholding tax
obligation; or (iii) delivering to the Company owned and unencumbered shares of the common stock
having a fair market value less than or equal to the amount of the withholding tax obligation.

     (f) In connection with each Option Award made pursuant to the Plan, the Company may require as
a condition precedent to its obligation to issue or transfer shares to an eligible participant, or
to evidence the removal of any restrictions on transfers or lapse of any repurchase right, that
such participant make arrangements satisfactory to the Company to insure that the amount of any
federal or other withholding tax required to be withheld with respect to such sale or transfer, or
such removal or lapse, is made available to the Company for timely payment of such tax.

     (g) The Company may, as a condition of transferring any stock pursuant to the Plan, require
any person who is to acquire such stock (i) to give written assurances satisfactory to the Company
as to the optionee’s knowledge and experience in financial and business matters, and that he or she
is capable of evaluating, alone or together with the purchaser representative, the merits and risks
of acquiring the stock; and (ii) to give written assurances satisfactory to the Company stating that such person is acquiring the stock for such person’s own account and not
with any present intention of selling or otherwise distributing the stock. These requirements, and
any assurances given pursuant to such requirements, shall be inoperative if (i) the issuance of the
shares has been registered under a then currently effective registration statement under the
Securities Act, or (ii) as to any particular requirement, a determination is made by counsel for
the

Page 11 of 13

 

Company that such requirement need not be met in the circumstances under the then applicable
securities laws.

     (h) The Committee shall determine or cause to be determined the fair market value of the stock
of the Company from time to time, as required for purposes of this Plan.

     9. ADJUSTMENTS UPON CHANGES IN STOCK.

     If any change is made in the stock subject to the Plan, or subject to any Option Award granted
under the Plan (through merger, consolidation, reorganization, recapitalization, stock dividend,
dividend in property other than cash, stock split, liquidating dividend, combination of shares,
exchange of shares, change in corporate structure or otherwise), the Plan and outstanding Option
Awards will be appropriately adjusted in the class(es) and maximum number of shares subject to the
Plan and the class(es) and number of shares and price per share of stock subject to outstanding
Option Awards.

     10. AMENDMENT OF THE PLAN.

     (a) The Committee at any time, and from time to time, may amend the Plan subject to and within
the limitations of any resolutions approved by the Board of Directors.

     (b) The Committee in its discretion shall determine at the time of each amendment of the Plan
whether or not to submit such amendment to the Board of Directors of the Company for approval.

     (c) Rights and obligations under any Option Award granted before amendment of the Plan shall
not be altered or impaired by any amendment of the Plan unless (i) the Company requests the consent
of the person to whom the Option Award was granted and (ii) such person consents in writing.

Page 12 of 13

 

     11. TERMINATION OR SUSPENSION OF THE PLAN.

     (a) The Committee may suspend or terminate the Plan at any time. No Option Awards may be
granted under the Plan while the Plan is suspended or after it is terminated. Upon the termination
of the Plan, all Option Awards shall become fully vested.

     (b) Rights and obligations under any Option Award granted while the Plan is in effect shall
not be altered or impaired by suspension or termination of the Plan, except with the consent of the
person to whom the Option Award was granted.

     12. EFFECTIVE DATE OF PLAN.

     The Plan shall be effective as of November 18, 1999 upon execution by the President of the
Company, following approval by the Plan Committee.

     IN
WITNESS WHEREOF, the President of the Company has executed this Plan
as of the 26th day of
August, 1999.

	 	 	 	 	 
	 	GENOTHERAPEUTICS, INC.

 	 
	 	BY:  	/s/ Marc S. Hanover
 	 
	 	 	Title: CFO / Secretary 	 
	 

	 	 	 	 	 
	 	APPROVED:

PLAN COMMITTEE

 	 
	 	/s/ John H. Pontius
 	 
	 
	 	/s/ Marc S. Hanover
 	 
	 
	 	/s/ Mitchell S. Steiner
 	 
	 

Page 13 of 13

 

First Amendment 

 GTx, Inc.

1999 Stock Option Plan

     Whereas, GTx, Inc. (the “Company”) adopted the Genotherapeutics, Inc. Stock Option
Plan (the “1999 Plan”) effective August 26, 1999;

     Whereas, Section 5(f) of the 1999 Plan contains a provision that subjects any shares
acquired pursuant to the exercise of an option to a 30 day right of first refusal in favor of the
Company (the “Right of First Refusal”);

     Whereas, it was the intent of the Company that the Right of First Refusal would end
at such time as the Company completed its initial public offering of common stock;

     Whereas, the Compensation Committee believes it to be in the best interests of the
Company to amend Section 5(f) of the Company’s 1999 Plan to reflect the Company’s intent; and

     Whereas, the Compensation Committee of the Company has approved such amendment.

     Now, Therefore, Be it Resolved, the 1999 Plan is hereby amended, effective as of the
date hereof, as follows:

	1.	 	That Section 5(f) of the 1999 Plan is hereby deleted in its entirety and replaced with the
following:

          (f) Prior to such time as the Company’s shares of common stock are
first sold to the public in an offering registered pursuant to Section 5 of
the Securities Act of 1933, as amended (the “Initial Public Offering”), any
such shares of stock acquired though the exercise of an option shall be
subject to a thirty (30) day right of first refusal by the Company at the
same price and terms as offered by any third party pursuant to a bona fide
offer, and may not be sold prior to an offer to sell to the Company on such
terms. Further, shares acquired through exercise of an Option Award shall be
subject to the terms and conditions of the Voting and Shareholder Agreement
dated April 15, 1999, between the Company and its stockholders, as amended
from time to time (the “Stockholders Agreement”).

     In Witness Whereof, the Company has caused this First Amendment to the 1999 Plan to
be executed on October 2, 2003.

	 	 	 	 	 
	 	GTx, Inc.

 	 
	 	By:  	/s/ Henry P. Doggrell
 	 
	 	 	Name:  	Henry P. Doggrell 	 
	 	 	Title:  	General Counsel/Secretary 	 

 

 

Second Amendment 

 to the GTx, Inc.

1999 Stock Option Plan

     Whereas, GTx, Inc. (the “Company”) adopted the Genotherapeutics, Inc. Stock Option
Plan (the “1999 Plan”) effective August 26, 1999;

     Whereas, the Compensation Committee believes it to be in the best interests of the
Company to amend Section 5(g) of the Company’s 1999 Plan;

     Whereas, the Compensation Committee of the Company has approved such amendments; and

     Whereas, the contemplated amendments are not “material amendments” as contemplated by
Nasdaq Marketplace Rule 4350(i)(1)(A).

     Now, Therefore, Be it Resolved, the 1999 Plan is hereby amended, effective as of the
date hereof, as follows:

	1.	 	That the last sentence of the first paragraph in Section 5(g) of the 1999 Plan is hereby
deleted in its entirety and replaced with the following:

          (g) In the event an Option Award holder’s employment or status as a
director, as applicable, is terminated under any other circumstances, (i)
any nonvested Option Award shall be forfeited immediately, and (ii) the
Option Award holder shall have until the earlier to occur of (A) a period of
ninety (90) days from the date of termination or (B) the expiration of the
term of the Option Award to exercise such Option Award.

     In Witness Whereof, the Company has caused this Second Amendment to the 1999 Plan to
be executed on March 18, 2004.

	 	 	 	 	 
	 	GTx, Inc.

 	 
	 	By:  	/s/ Henry P. Doggrell
 	 
	 	 	Name:  	Henry P. Doggrell 	 
	 	 	Title:  	General Counsel/Secretary 	 
	 

 

 

Third Amendment to the 

GTx, Inc.

1999 Stock Option Plan

     Whereas, GTx, Inc. (the “Company”) adopted the Genotherapeutics, Inc. Stock Option
Plan (the “1999 Plan”) effective August 26, 1999;

     Whereas, the Compensation Committee believes it to be in the best interests of the
Company to amend the Company’s 1999 Plan to clarify certain existing provisions in light of final
regulations issued under Section 409A of the Internal Revenue Code of 1986, as amended;

     Whereas, the Compensation Committee of the Company has approved such amendments; and

     Whereas, the contemplated amendments are not “material amendments” as contemplated by
Nasdaq Marketplace Rule 4350(i)(1)(A).

     Now, Therefore, Be it Resolved, the 1999 Plan is hereby amended, effective as of the
date hereof, as follows:

	1.	 	That Section 1(b) of the 1999 Plan is hereby deleted in its entirety and replaced with the
following:

     (b) The word “Affiliate” as used in the Plan means any subsidiary
corporation of the Company, as such term is defined in Section 424(f) of the
Internal Revenue Code of 1986, as amended from time to time (the “Code”).

	2.	 	That Section 5(b) of the 1999 Plan is hereby deleted in its entirety and replaced
with the following:

     (b) The exercise price of each Option Award shall be not less than one
hundred percent (100%) of the fair market value of the stock subject to the
option on the date the option is granted; provided, however, that the
Committee shall have the discretion to grant options to one or more persons
in such proportions and at such higher exercise price as the Committee may
determine. Notwithstanding the foregoing, an Option Award may be granted
with an exercise price lower than one hundred percent (100%) of the fair
market value of the stock subject to the option on the date the option is
granted if such Option Award is granted pursuant to an assumption of or
substitution for another option pursuant to a Change in Control (as defined
in section 5(h) of the Plan) and in a manner consistent with the provisions
of Sections 409A and 424(a) of the Code. F Fair market value means, as of
any date, the value of the Company’s common stock determined as follows:

 

 

     i) If the common stock is listed on any established stock
exchange or traded on the Nasdaq Global Market or any other
established market, the fair market value of a share of common
stock shall be the closing sales price for such stock as quoted
on such exchange or market (or the exchange or market with the
greatest volume of trading in the common stock) on the date of
determination, as reported in The Wall Street Journal or such
other source as the Committee deems reliable.

     ii) Unless otherwise provided by the Committee, if there is
no closing sales price for the common stock on the date of
determination, then the fair market value shall be the closing
sales price on the last preceding date for which such quotation
exists.

     iii) In the absence of such markets for the common stock,
the fair market value shall be determined by the Committee in
good faith and in a manner that complies with Section 409A of the
Code.

	3.	 	That the following will be added to the 1999 Plan as Section 8(i):

     (i) To the extent permitted by applicable law, the Committee, in its
sole discretion, may determine that the delivery of common stock upon the
exercise of all or a portion of any Option Award may be deferred and may
establish programs and procedures for deferral elections to be made by
persons receiving options. Deferrals by persons will be made in accordance
with Section 409A of the Code.

	4.	 	That the following will be added to the 1999 Plan as Section 8(j):

     (j) To the extent that the Committee determines that any Option Award
granted hereunder is subject to Section 409A of the Code, the agreement
evidencing such Option Award shall incorporate the terms and conditions
necessary to avoid the consequences specified in Section 409A(a)(1) of the
Code. To the extent applicable, this Plan and the agreements evidencing
Option Awards shall be interpreted in accordance with Section 409A of the
Code, including without limitation any applicable guidance that may be
issued or amended in the future.

	5.	 	That Section 10(c) of the 1999 Plan is hereby deleted in its entirety and replaced
with the following:

     (b) Rights and obligations under any Option Award granted before
amendment of the Plan shall not be altered or impaired by any amendment of
the Plan unless (i) the Company requests the consent of the person to whom
the Option Award was granted and (ii) such person

2.

 

consents in writing. Notwithstanding the foregoing, subject to the
limitations of applicable law, if any, the Committee may amend the terms of
any one or more Option Awards without the consent of the person to whom the
Option Award was granted if necessary to bring the Option Award into
compliance with Section 409A of the Code.

     In Witness Whereof, the Company has caused this Third Amendment to the 1999 Plan to
be executed on November 4, 2008.

	 	 	 	 	 
	 	GTx, Inc.

 	 
	 	By:  	/s/ Henry P. Doggrell
 	 
	 	 	Name:  	Henry P. Doggrell 	 
	 	 	Title:  	Vice President, General Counsel 	 
	 

3.

 

NONQUALIFIED STOCK OPTION SUBSCRIPTION AGREEMENT

     This Nonqualified Stock Option Subscription Agreement (this “Agreement”), dated as of the
___ day of _______, ___, is made by and between GTx, Inc. (the “Company”), a Delaware
corporation, and the Employee of the Company whose name appears on the signature page hereof
(hereinafter referred to as the “Optionee”).

     WHEREAS, pursuant to the 1999 Stock Option Plan, as amended (the “Plan”), the terms of which
are hereby incorporated by reference, the Company intends to provide incentives to certain key
Employees of the Company by providing them with opportunities for ownership of shares of Common
Stock; and

     WHEREAS, a duly constituted committee of the Board of Directors of the Company (hereinafter
referred to as the “Committee”) appointed to administer the Plan has determined that it would be to
the advantage and best interest of the Company and its stockholders to grant the Option provided
for herein to the Optionee under the Plan and has advised the Company thereof and instructed the
undersigned officers to issue said Option;

     NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties hereto do hereby agree
as follows:

ARTICLE I

DEFINITIONS

     Whenever the following terms are used in this Agreement, they shall have the meaning specified
in the Plan below unless the Plan indicates to the contrary.

     1.1  —  Cause. “Cause” used in connection with the termination of employment of the
Optionee shall mean a termination of employment of the Optionee by the Company or any of its
Subsidiaries due to (i) fraud or dishonesty of the Optionee in connection with the business of the
Company; (ii) gross negligence of the Optionee in the performance of duties for the Company; (iii)
willful failure by the Optionee in carrying out duties as an employee; or (iv) arrest and
conviction of the Optionee for a felony involving moral turpitude, whether or not in connection
with the business of the Company; provided that (iii) above shall not apply if the Optionee has
been assigned by the Company to duties which are not comparable to such Optionee’s function and
compensation at the Company, or which are non-executive or demeaning assignments, or if the Company
has given such Optionee demeaning and unreasonable pay cuts.

     1.2  —  Change in Control. “Change in Control” shall have the meaning given in
Section 3.3.

     1.3  —  Code. “Code” shall mean the Internal Revenue Code of 1986, as amended.

     1.4  —  Common Stock. “Common Stock” shall mean the common capital stock of the
Company.

 

 

     1.5  —  Exchange Act. “Exchange Act” shall mean the Securities Exchange Act of
1934, as amended, and all rules and regulations promulgated thereunder.

     1.6  —  Exercise Price. “Exercise Price” shall mean the price per Option Share as
set forth on the signature page hereof.

     1.7  —  Grant Date. “Grant Date” shall mean the date on which the Option provided
for in this Agreement was granted.

     1.8  —  IPO. “IPO” shall mean the date on which the Company’s shares of Common
Stock are first sold to the public in an offering registered pursuant to Section 5 of the
Securities Act of 1933, as amended.

     1.9  —  Option. “Option” shall mean any stock option to purchase Common Stock of
the Company granted under this Agreement.

     1.10  —  Option Shares. “Option Shares” shall mean the number of shares of Common
Stock for which this Option is granted as set forth upon the signature page hereof.

     1.11  —  Permanent Disability. “Permanent Disability” of the Optionee shall mean
the occurrence of the following conditions: (i) the Optionee’s physical or mental incapacity
(excluding infrequent and temporary absences due to ordinary illness) of properly performing the
principal functions which had been typically assigned to him by the Company, (ii) such incapacity
shall exist or be expected to exist with a reasonable degree of medical certainty for more than
ninety (90) days in the aggregate during any consecutive twelve (12) month period, and (iii) either
the Optionee or the Company shall have given the other thirty (30) days written notice of intent to
terminate employment or service because of disability.

     1.12  —  Permitted Transferee. “Permitted Transferee” shall have the meaning given
in Section 5.2(b).

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

     1.14  —  Plan. “Plan” shall mean the 1999 Stock Option Plan of GTx, Inc.

     1.15  —  Retirement. “Retirement” shall mean any voluntary termination of
employment by the Optionee after having reached the age of sixty-five (65) years (or after having
reached the age of fifty-five (55) years if the Optionee has no fewer than ten (10) years of
service with the Company).

ARTICLE II

GRANT OF OPTION

     2.1  —  Grant of Option. For good and valuable consideration, on and as of the date
hereof, the Company irrevocably grants to the Optionee the Option to purchase any part or all of

2

 

an aggregate of the number of Option Shares set forth on the signature page hereof upon the
terms and conditions set forth in this Agreement.

     2.2  —  Consideration to the Company. In consideration of the granting of this
Option by the Company, the Optionee agrees to render faithful and efficient services to the Company
with such duties and responsibilities as the Company shall from time to time prescribe. Nothing in
this Agreement or in the Plan shall confer upon the Optionee any right to continue in the employ or
service of the Company or shall interfere with or restrict in any way the rights of the Company,
which are hereby expressly reserved, to discharge the Optionee at any time for any reason
whatsoever, with or without Cause.

     2.3  —  Adjustments in Option. Subject to Section 9 of the Plan, in the event that
the outstanding shares of the Common Stock subject to the Option are changed into or exchanged for
a different number or kind of shares of capital stock or other securities of the Company, or of
another corporation, by reason of a reorganization, merger, consolidation, recapitalization,
reclassification, stock split, stock dividend, combination of shares or otherwise, the Committee
shall make an appropriate adjustment in the number and kind of shares of Option Shares. Such
adjustment in the Option shall be made without change in the total price applicable to the
unexercised portion of the Option (except for any change in the aggregate price resulting from
rounding-off of shares, quantities or prices) and with any necessary corresponding adjustment in
the Exercise Price. No fractional shares shall be issued, and any fractional shares resulting from
computations pursuant to Section 9 of the Plan shall be eliminated from the respective Options.
Any such adjustment made by the Committee shall be final and binding upon the Optionee, the Company
and all other interested persons.

     2.4  —  Tax Treatment. The Option hereby granted is intended to be a Supplemental
Stock Option as defined in the Plan (hereinafter referred to as a “Nonqualified Stock Option”) and
not an Incentive Stock Option as described in Section 422 of the Code.

ARTICLE III

PERIOD OF EXERCISABILITY

     3.1  —  General Rule. The Option will become exercisable as to the following
percentages of the Option Shares on the following anniversaries of the Grant Date provided that the
Optionee is then employed by the Company on such anniversary:

	 	 	 	 	 
	Third anniversary
	 	 	33	%
	Fourth anniversary
	 	 	67	%
	Fifth anniversary
	 	 	100	%

     3.2  —  Termination of Employment and Nonvested Options. In the event the
Optionee’s employment or service with the Company is terminated (other than a termination for Cause
but including any involuntary termination as the result of a Change in Control, as described
below), by reason of Retirement, death, or Permanent Disability, the Committee may in its sole,
absolute and final discretion elect to vest any or all shares subject to the Option, that are not
otherwise vested pursuant to the terms of the Plan. In the event the Optionee’s

3

 

employment or service is terminated under any other circumstances, any portion of the Option
that is has not vested shall be forfeited immediately.

     3.3  —  Change in Control. Notwithstanding Section 3.1, unless the Optionee is
terminated for Cause, the Option will become exercisable in full in the event of any voluntary or
involuntary termination of the Optionee’s employment or service occurring simultaneously with or at
any time after any of the following events (a “Change in Control”):

	 	(a)	 	the sale or other disposition of all or substantially all of the assets of the
Company in a single transaction or in a series of transactions (including, without
limitation, any liquidation or dissolution of the Company);
	 
	 	(b)	 	the sale or other disposition of more than fifty percent (50%) of the issued
and outstanding voting stock of the Company, in a single transaction or in a series of
transactions. For such purposes, “voting stock” shall mean the capital stock of the
Company of any class or classes, the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of members of the Board of Directors
(or Persons performing similar functions) of the Company; or
	 
	 	(c)	 	a merger or consolidation of the Company with or into any other entity, if
immediately after giving effect to such transaction more than fifty percent (50%) of
the issued and outstanding voting stock of the surviving entity of such transaction is
held by persons who were not holders (taking into account their individual and
affiliated holdings) as of the date of the grant of this Option of at least 20% of the
voting stock of the Company.

A Change in Control shall not include:

     (1) any transfer or issuance of stock of the Company to one or more of the
Company’s lenders (or to any agents or representatives thereof) in exchange for debt
of the Company owed to any such lenders;

     (2) any transfer of stock of the Company to or by any person or entity,
including but not limited to one or more of the Company’s lenders (or to any agents
or representatives thereof), pursuant to the terms of any pledge of said stock as
collateral for any loans or financial accommodations to the Company and/or its
subsidiaries;

     (3) any transfer or issuance to any person or entity, including but not limited
to one or more of the Company’s lenders (or to any agents or representatives
thereof), in connection with the workout or restructuring of the Company’s debts to
any one of the Company’s lenders, including but not limited to the issuance of new
stock in exchange for any equity contribution to the Company in connection with the
workout or restructuring of such debt; or

     (4) any transfer of stock by a stockholder of the Company, which is a
partnership or corporation to the partners, or stockholders in such stockholder.

4

 

     3.4  —  Optional Vesting/Accelerated Exercise in connection with a Change of
Control. In the event a Change in Control appears likely to occur, the Committee may, in its
sole and absolute discretion, send written notice to the Optionee at least ten (10) days prior to
the contemplated date of any Change in Control specifying (a) that the Option will become
exercisable in full on the date of the Change in Control, (b) that any portion or all of the Option
which thereby becomes exercisable and any portion or all of the Option which was already
exercisable will immediately thereafter expire on the same date and (c) that to prevent the lapse
of the Option, the Optionee must exercise the Option no later than such date. Except as may
otherwise be expressly provided in such written notice, any acceleration of the exercisability of
the Option and any attempted exercise of the Option by the Optionee shall be null and void if the
Change in Control does not occur within thirty (30) days of the date contemplated in the notice.

     3.5  —  Expiration of Option. Any portion of the Option, which has become
exercisable will nevertheless expire and will no longer be exercisable to any extent by anyone on
the earliest to occur of the following events:

	 	(a)	 	the tenth anniversary of the Grant Date;
	 
	 	(b)	 	the earlier of (A) three (3) months after termination of employment
(specifically including a termination of employment after a Change in Control), unless
such termination is for Cause or results from Retirement, death, Permanent Disability
or (B) the term of the Option as set forth in the Plan;
	 
	 	(c)	 	twelve (12) months after termination of employment on account of Permanent
Disability, provided that if Optionee shall die within such time without having fully
exercised all vested Options, Optionee’s estate shall have an additional twelve (12)
months from Optionee’s date of death to exercise such Options;
	 
	 	(d)	 	eighteen (18) months after termination of employment on account of Optionee’s
death or within eighteen (18) months after Optionee’s termination of employment if
Optionee qualifies under clause (b) but dies within three (3) months after his or
termination of employment without having exercised all of his or her vested Options;
	 
	 	(e)	 	the earlier of five (5) years after the date of the Retirement of Optionee, or
the term of the Option as set forth in the Plan;
	 
	 	(f)	 	at the close of business on the date of the termination of the Optionee’s
employment by the Company for Cause; and
	 
	 	(e)	 	if the Committee so determines and gives written notice as provided in Section
3.4, upon the Effective Date of any Change in Control.

     3.6  —  Non-competition. Notwithstanding any other provisions of this Agreement,
any Option outstanding, including any vested but unexercised Option, shall be forfeited upon the
Optionee’s “Competition” with the Company. For this purpose, Competition shall be determined by
the Committee and shall exist if the Optionee, directly or indirectly (i) engages or has a
financial interest in, (ii) becomes an officer, employee, director, partner, advisor or consultant
of

5

 

or to, (iii) has an equity interest in, or (iv) in any way materially assists any person,
corporation, entity or business whose existing or planned products or activities compete in whole
or in part with the existing or planned products or activities of the Company. The sole fact of
ownership by an Optionee of less than two percent (2%) of the stock of a publicly traded company
which may have product lines which compete with product lines of the Company shall not be treated
as Competition. Any determination by the Committee under this section shall be final and
conclusive, unless overruled by the Board.

ARTICLE IV

EXERCISE OF OPTION

     4.1  —  Person Eligible to Exercise. During the lifetime of the Optionee, only the
Optionee or the Optionee’s guardian or conservator may exercise the Option or any portion thereof,
and after the death of the Optionee, any portion of the Option may, prior to the time when the
Option becomes unexercisable under Section 3.5, be exercised by the Optionee’s personal
representative or by any person empowered to do so under the Optionee’s will or under the then
applicable laws of descent and distribution; provided, however, at any time after the transfer of
the Option or any portion thereof pursuant to Section 5.2, the transferred portion of the Option
may be exercised only by the transferee.

     4.2  —  Partial Exercise. Any exercisable portion of the Option or the entire
Option, if then wholly exercisable, may be exercised in whole or in part at any time prior to the
time when the Option or portion thereof becomes unexercisable under Section 3.5; provided, however,
that any partial exercise shall be for whole shares only.

     4.3  —  Manner of Exercise. The Option, or any exercisable portion thereof, may be
exercised solely by delivery to the Secretary of the Company or his or her office all of the
following prior to the time when the Option or such portion becomes unexercisable under Section
3.5:

	 	(a)	 	Notice in writing signed by the Optionee or the other person then entitled to
exercise the Option or portion thereof, stating that the Option or portion thereof is
thereby exercised, such notice complying with all applicable rules established by the
Committee; and
	 
	 	(b)	 	Full payment of the Exercise Price (as provided in Section 4.4), for the
shares with respect to which such Option or portion thereof is exercised; and
	 
	 	(c)	 	Such representations and documents as the Committee deems reasonably necessary
or advisable to effect compliance with all applicable laws, including provisions of the
Securities Act of 1933, as amended, and any other federal, state or foreign securities
laws or regulations following an IPO; and
	 
	 	(d)	 	Full payment to the Company (as provided in Section 4.4) of all amounts, if
any, which, under federal, state or local law, it is required to withhold upon exercise
of the Option; and

6

 

	 	(e)	 	If the Option or portion thereof shall be exercised pursuant to Section 4.1 by
any person or persons other than the Optionee, appropriate proof of the right of such
person or persons to exercise the Option.

Notwithstanding the foregoing, the Optionee may give notice exercising the Option subject to the
condition or conditions that any then contemplated Change in Control will actually occur and that
the Option will become exercisable because of the Change in Control with respect to the Option
Shares for which notice of exercise is given. In such an event, full payment of the Exercise Price
with respect to all Option Shares need not be made until the date of the Change in Control.

     4.4  —  Payment. The Exercise Price and any tax withholding shall be payable in
cash, by check, or by any combination thereof. Except as otherwise provided by the Committee
before the Option is exercised: (i) all or a portion of the Exercise Price or any tax withholding
may be paid by delivery of shares of Common Stock acceptable to the Committee and having an
aggregate Fair Market Value (valued as of the date of exercise) that is equal to the amount of cash
that would otherwise be required; and (ii) the Exercise Price or any tax withholding may be paid by
authorizing a third party to sell shares of Common Stock (or a sufficient portion of the shares) to
be acquired upon the exercise of the Option and remit to the Company a sufficient portion of the
sale proceeds to pay the entire Exercise Price and any tax withholding resulting from such
exercise.

     4.5  —  Conditions to Issuance of Stock Certificates. The shares of Common Stock
deliverable upon the exercise of the Option, or any portion thereof, may be either previously
authorized but unissued shares or issued shares that have then been reacquired by the Company.
Such shares shall be fully paid and nonassessable. The Company shall not be required to issue or
deliver any certificate or certificates for shares of Common Stock purchased upon the exercise of
the Option or portion thereof prior to fulfillment of all of the following conditions:

	 	(a)	 	The admission of such shares to listing on all stock exchanges, if any, on
which such class of Common Stock is then listed;
	 
	 	(b)	 	The completion of any registration or other qualification of such shares under
any state or federal law or under rulings or regulations of the SEC or of any other
governmental regulatory body, which the Committee shall, in its absolute discretion
deem necessary or advisable;
	 
	 	(c)	 	The obtaining of approval or other clearance from any state or federal
governmental agency which the Committee shall determine to be necessary or advisable;
and
	 
	 	(d)	 	The payment to the Company of all amounts, if any, which, under federal, state
or local law, it is required to withhold upon exercise of the Option.

     4.6  —  Rights as Stockholder. The holder of the Option shall not be, nor have any
of the rights or privileges of, a stockholder of the Company in respect of any shares purchasable
upon the exercise of the Option or any portion thereof unless and until certificates representing
such shares shall have been issued by the Company in the name of such holder. No adjustment

7

 

shall be made for cash dividends for which the record date is prior to the date such stock
certificate is issued.

     4.7  —  Issuance of Certificate; Legend. The stock certificate or certificates
deliverable to the Optionee upon the exercise of the Option may, at the request of the Optionee at
the time of exercise, be issued in his or her name alone or in his or her name and the name of
another person as joint tenants with right of survivorship. The Committee may, in its absolute
discretion, also take whatever additional actions it deems appropriate to effect compliance with
all applicable provisions of the Securities Act of 1933, as amended, and any other federal, state
or foreign securities laws or regulations including, without limitation, placing legends on share
certificates and issuing stock-transfer orders to transfer agents and registrars.

ARTICLE V

MISCELLANEOUS

     5.1  —  Administration. The Committee shall have the power to interpret the Plan
and this Agreement and to adopt such rules for the administration, interpretation and application
of the Plan as are consistent therewith and to interpret or revoke any such rules. No member of
the Committee shall be personally liable for any action, determination or interpretation made in
good faith with respect to the Plan or the Option. The Board of Directors of the Company in its
absolute discretion may at any time and from time to time exercise any and all rights and duties of
the Committee under the Plan and this Agreement.

     5.2  —  Transferability of Option . (a) Except as provided in subsection (b),
neither the Option nor any interest or right therein or part thereof shall be subject to
disposition by transfer, alienation, anticipation, encumbrance or any other means whether such
disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted
disposition thereof shall be null and void and of no effect; provided, however, that this Section
5.2 shall not prevent transfers by will or by the applicable laws of descent and distribution.

     (b) The Committee may, in its discretion, establish forms and procedures for the transfer of
all or any portion of such Option by the Optionee to (i) Immediate Family Members (as defined
hereinafter), (ii) a trust or trusts for the exclusive benefit of the Optionee and such Immediate
Family Members, or (iii) a partnership or limited liability company in which the Optionee and such
Immediate Family Members are the only partners or members (collectively such Optionee’s “Permitted
Transferees”), provided that subsequent transfers shall be prohibited except in accordance with the
laws of descent and distribution, or by will. Notification and approval of all such transfers
shall be in the form specified by the Committee. Following transfer, any such Option shall
continue to be subject to the same terms and conditions as were applicable immediately prior to
transfer, provided that for purposes of Articles IV and V hereof (other than this Section 5.2), the
term “Optionee” shall be deemed to refer to the Permitted Transferee. Notwithstanding the
foregoing, the Committee and the Company shall have no obligation to inform any Permitted
Transferee of any expiration, termination, lapse or acceleration of any such Option and may give
notices required hereunder, if any, to the Optionee. The events of termination of employment of
Article III hereof shall continue to be applied with

8

 

respect to the original Optionee, following which the Option shall be exercisable by the
Permitted Transferee only to the extent, and for the periods specified at Article III hereof. As
used in this Section 5.2(b) “Immediate Family Member” shall mean, with respect to the Optionee, his
or her spouse, child, stepchild, grandchildren or other descendants, and shall include
relationships arising from legal adoption.

     5.3  —  Shares of Common Stock to be Reserved. The Company shall at all times
during the term of the Option reserve and keep available such number of shares of Common Stock as
will be sufficient to satisfy the requirements of this Agreement.

     5.4  —  Notices. Any notice to be given under the terms of this Agreement to the
Company shall be addressed to the Company in care of its Secretary, and any notice to be given to
the Optionee shall be addressed to him or her at the address given beneath his or her signature
hereto. By a notice given pursuant to this Section 5.4, either party may hereafter designate a
different address for notices to be given to him or her. Any notice which is required to be given
to the Optionee shall, if the Optionee is then deceased, be given to the Optionee’s personal
representative if such representative has previously informed the Company of his or her status and
address by written notice under this Section 5.4. Any notice shall have been deemed duly given
when enclosed in a properly sealed envelope or wrapper addressed as aforesaid, deposited (with
postage prepaid) in a post office or branch post office regularly maintained by the United States
Postal Service or when delivered by hand (whether by overnight courier or otherwise).

     5.5  —  Titles. Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.

     5.6  —  No Right to Employment. Nothing in the Plan or this Agreement shall confer
upon the Optionee any right to continue in the employ of the Company or any Affiliate or to limit
the Company’s right to terminate the employment relationship of any eligible employee with or
without Cause. In the event that an Optionee is permitted or otherwise entitled to take a leave of
absence, the Company shall have the unilateral right to (i) determine whether such leave of absence
will be treated as a termination of employment for purposes of his or her Option, or (ii) suspend
or otherwise delay the time or times at which the shares subject to the Option would otherwise
vest.

     5.7  —  Amendment. This Agreement may be amended only by a writing executed by the
parties hereto, which specifically states that it is amending this Agreement.

     5.8  —  Governing Law. The laws of the State of Tennessee shall govern the
interpretation, validity and performance of the terms of this Agreement, regardless of the law that
might be applied under principles of conflicts of laws.

     5.9  —  Jurisdiction. Any suit, action or proceeding against the Optionee with
respect to this Agreement, or any judgment entered by any court in respect of any thereof, may be
brought in any court of competent jurisdiction in the State of Tennessee, and the Optionee hereby
submits to the non-exclusive jurisdiction of such courts for the purpose of any such suit, action,
proceeding or judgment. Nothing herein shall in any way be deemed to limit the ability of the
Company to serve any such writs, process or summonses in any other manner permitted by

9

 

applicable law or to obtain jurisdiction over the Optionee, in such other jurisdictions, and
in such manner, as may be permitted by applicable law. The Optionee hereby irrevocably waives any
objections which he or she may now or hereafter have to the laying of the venue of any suit, action
or proceeding arising out of or relating to this Agreement brought in any court of competent
jurisdiction in the State of Tennessee, and hereby further irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in any inconvenient
forum. No suit, action or proceeding against the Company with respect to this Agreement may be
brought in any court, domestic or foreign, or before any similar domestic or foreign authority
other than in a court of competent jurisdiction in the State of Tennessee, and the Optionee hereby
irrevocably waives any right which he or she may otherwise have had to bring such an action in any
other court, domestic or foreign, or before any similar domestic or foreign authority. The Company
hereby submits to the jurisdiction of such courts for the purpose of any such suit, action or
proceeding.

     IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto.

	 	 	 	 	 
	 	GTx, INC.

 	 
	 	By:  	 	 
	 	 	Title:  
	 
	 	 	No. of Option Shares:  

 	 
	 	 	Exercise Price:  

 	 
	 	 	 

 	 
	 	 	
___________________, Optionee

Address: 	 
	 

10

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