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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): June 24, 2008
RXI PHARMACEUTICALS CORPORATION
(Exact name of registrant as specified in its charter)
 	 	 	 	 	
Delaware	 	001-33958	 	20-8099512	
 	 	 	 	 	
(State or other jurisdiction of	 	(Commission	 	(I.R.S. Employer	
of incorporation or organization)	 	File Number)	 	Identification No.)	
60 Prescott Street, Worcester, MA 01605
 
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (508) 767-3861
     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

   

TABLE OF CONTENTS

									
Item 3.02 Unregistered Sale of Equity Securities	
Item 9.01 Financial Statements and Exhibits	
Signature	
Index to Exhibits	
Ex-4.1 Form of Securities Purchase Agreement	
Ex-10.1 Placement Agency Agreement, dated June 24, 2008	
Ex-99.1 Press Release issued by RXi Pharmaceuticals Corporation on June 24, 2008	

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Item 3.02 Unregistered Sale of Equity Securities
     On June 24, 2008, RXi Pharmaceuticals Corporation (the “Company”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) pursuant to which the Company issued and sold to certain investors an aggregate of 1,073,299 shares of the Company’s common stock in a private placement at a price of $8.12 per share, resulting in aggregate gross proceeds to the Company of approximately $8.7 million. A copy of the form of Purchase Agreement is attached as Exhibit 4.1 to this report and is incorporated herein by reference.
     The Company has agreed to file a registration statement covering the resale of all shares issued in the private placement. The securities were issued in reliance upon the exemptions from the registration under the Securities Act provided by Regulation D and Section 4(2). The securities were issued directly by the registrant and did not involve a public offering or general solicitation. The investors in the private placement are “Accredited Investors” as that term is defined in Rule 501 of Regulation D.
     In connection with the private placement, on June 24, 2008, the Company entered into a Placement Agency Agreement (the “Placement Agency Agreement”) with Jeffries & Company, Inc., Natixis Bleichroeder Inc., Broadpoint Securities Group, Inc. and Griffin Securities, Inc. (collectively, the “Placement Agents”) pursuant to which the Company engaged the Placement Agents to act as its excusive agents. As compensation for the Placement Agents’ services, the Placement Agents received an aggregate of $522,911 in commissions. A copy of the Placement Agency Agreement is attached as Exhibit 10.1 to this report and is incorporated herein by reference.
     A copy of the press release issued in connection with the private placement is being filed as Exhibit 99.1 to this report and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits

4.1	 	Form of Securities Purchase Agreement	
 		
10.1	 	Placement Agency Agreement, dated June 24, 2008.	
 		
99.1	 	Press Release issued by RXi Pharmaceuticals Corporation on June 24, 2008.	

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Signature
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 	 	RXI PHARMACEUTICALS CORPORATION	 	 	
 	 	 	 	 	 	 	
Date: June 26, 2008	 	By:	 	/s/ Stephen J. DiPalma	 	 	
 	 	 	 	 	 	 	
 	 	Name: Stephen J. DiPalma	 	 	
 	 	Title: Chief Financial Officer	 	 	

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Index to Exhibits

4.1	 	Form of Securities Purchase Agreement	
 		
10.1	 	Placement Agency Agreement, dated June 24, 2008.	
 		
99.1	 	Press Release issued by RXi Pharmaceuticals Corporation on June 24, 2008.	

Exhibit 4.1
SECURITIES PURCHASE AGREEMENT
      THIS SECURITIES PURCHASE AGREEMENT (this “ Agreement ”), dated as of June 24, 2008, by and among RXi Pharmaceuticals Corporation, a Delaware corporation with headquarters located at 60 Prescott Street, Worcester, Massachusetts 01605 (the “ Company ”), and each investor identified on the signature pages hereto (individually, an “ Investor ” and collectively, the “ Investors ”).
BACKGROUND
     A. The Company and each Investor are executing and delivering this Agreement in reliance upon the exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “ Securities Act ”), and Rule 506 of Regulation D (“ Regulation D ”) as promulgated by the United States Securities and Exchange Commission (the “ SEC ”) under the Securities Act.
     B. Each Investor, severally and not jointly, wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, (i) that aggregate number of shares of the common stock, par value $0.0001 per share, of the Company (the “ Common Stock ”), set forth on such Investor’s signature page to this Agreement (which aggregate amount for all Investors together shall be 1,073,299 shares of Common Stock and shall collectively be referred to herein as the “ Common Shares ”).
     C. The Common Shares issued or issuable pursuant to this Agreement are collectively are referred to herein as the “ Securities .”
     NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and the Investors agree as follows:
ARTICLE I
DEFINITIONS
     1.1 Definitions . In addition to the terms defined elsewhere in this Agreement, the following terms have the meanings indicated:
     “ Affiliate ” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 144 under the Securities Act.
     “ Agent ” has the meaning set forth in Section 3.1(l) .
     “ Agreement ” has the meaning set forth in the Preamble.

 

     “ Best Efforts ” means the efforts that a prudent person desirous of achieving a result would use in similar circumstances to ensure that such result is achieved as expeditiously as practical; provided, however , that an obligation to use Best Efforts under this Agreement does not require the Company to dispose of or make any change to its business, expend any material funds or incur any other material burden.
     “ Business Day ” means any day other than Saturday, Sunday, any day which shall be a federal legal holiday in the United States or any day on which banking institutions in The State of New York are authorized or required by law or other governmental action to close.
     “ Certificates ” has the meaning set forth in Section 2.2(i) .
     “ Closing ” means the closing of the purchase and sale of the Securities pursuant to Section 2.1 .
     “ Closing Date ” means the date and time of the Closing and shall be on such date and time as is mutually agreed to by the Company and each Investor.
     “ Closing Price ” means, for any date, the closing price per share of the Common Stock for such date (or, if not a Trading Day, the nearest preceding date that is a Trading Day) on the primary Eligible Market or exchange or quotation system on which the Common Stock is then listed or quoted.
      “Company” has the meaning set forth in the Preamble.
     “ Company Counsel ” means Ropes & Gray, LLP, counsel to the Company.
     “ Common Shares ” has the meaning set forth in the Preamble.
     “ Common Stock ” has the meaning set forth in the Preamble.
     “ Contingent Obligation ” has the meaning set forth in Section 3.1(aa) .
     “ Convertible Securities ” means any stock or securities (other than Options) convertible into or exercisable or exchangeable for Common Stock.
     “ Disclosure Materials ” has the meaning set forth in Section 3.1(g) .
     “ Effective Date ” means the date that the Registration Statement is first declared effective by the SEC.
     “ Effectiveness Period ” has the meaning set forth in Section 6.1(b) .
     “ 8-K Filing ” has the meaning set forth in Section 4.5 .
     “ Eligible Market ” means any of the New York Stock Exchange, the American Stock Exchange, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or OTC Bulletin Board.
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     “ Environmental Laws ” has the meaning set forth in Section 3.1(dd) .
     “ Event ” has the meaning set forth in Section 6.1(d) .
     “ Event Payments ” has the meaning set forth in Section 6.1(d) .
     “ Exchange Act ” means the Securities Exchange Act of 1934, as amended.
     “ Excluded Events ” has the meaning set forth in Section 6.1(d)(ii) .
     “ Excluded Investors ” means Jefferies & Company, Inc. and its Affiliates.
     “ Filing Date ” means the date that is thirty (30) days after the Closing Date or, if such date is not a Business Day, the next date that is a Business Day.
     “ GAAP ” has the meaning set forth in Section 3.1(g) .
     “ Hazardous Materials ” has the meaning set forth in Section 3.1(dd) .
     “ Indebtedness ” has the meaning set forth in Section 3.1(aa) .
     “ Indemnified Party ” has the meaning set forth in Section 6.4(c) .
     “ Indemnifying Party ” has the meaning set forth in Section 6.4(c) .
     “ Insolvent ” has the meaning set forth in Section 3.1(h) .
     “ Intellectual Property Rights ” has the meaning set forth in Section 3.1(t) .
     “ Investor ” has the meaning set forth in the Preamble.
     “ Lien ” means any lien, charge, claim, security interest, encumbrance, right of first refusal or other restriction.
     “ Losses ” means any and all losses, claims, damages, liabilities, settlement costs and expenses, including, without limitation, reasonable attorneys’ fees.
     “ Material Adverse Effect ” means (i) a material adverse effect on the results of operations, assets, business, prospects or financial condition of the Company or (ii) material and adverse impairment of the Company’s ability to perform its obligations under any of the Transaction Documents, provided, that none of the following alone shall be deemed, in and of itself, to constitute a Material Adverse Effect: (i) a change in the market price or trading volume of the Common Stock or (ii) changes in general economic conditions or changes affecting the industry in which the Company operates generally (as opposed to Company-specific changes) so long as such changes do not have a materially disproportionate effect on the Company.
     “ Material Permits ” has the meaning set forth in Section 3.1(v) .
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     “ Options ” means any outstanding rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities.
      “Person ” has the meaning set forth in Section 3.1(aa).
     “ Proceeding ” means an action, claim, suit, investigation or proceeding (including, without limitation, a partial proceeding, such as a deposition), whether commenced or threatened in writing.
     “ Prospectus ” means the prospectus included in the 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 the Registration Statement, and all other amendments and supplements to the Prospectus including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.
     “ Registrable Securities ” means the Common Shares issued or issuable pursuant to the Transaction Documents, together with any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing.
     “ Registration Statement ” means each registration statement required to be filed under Article VI, 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 or deemed to be incorporated by reference in such registration statement.
     “ Regulation D ” has the meaning set forth in the Preamble.
     “ Required Effectiveness Date ” means (i) if the Registration Statement does not become subject to review by the SEC, the date which is the earliest of (a) ninety (90) days after the Closing Date or (b) two (2) Trading Days after the Company receives notification from the SEC that the Registration Statement will not become subject to review, or (ii) if the Registration Statement becomes subject to review by the SEC, the date which is the earliest of (a) one hundred and twenty (120) days after the Closing Date or (b) five (5) Trading Days after the Company receives notification from the SEC that the SEC has no further comment to the Registration Statement.
     “ Rule 144 ,” “ Rule 415 ,” and “ Rule 424 ” means Rule 144, Rule 415 and Rule 424, respectively, promulgated by the SEC pursuant to the Securities Act, as such Rules may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same effect as such Rule.
      “SEC” has the meaning set forth in the Preamble.
     “ SEC Reports ” has the meaning set forth in Section 3.1(g) .
     “ Securities ” has the meaning set forth in the Preamble.
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     “ Securities Act ” has the meaning set forth in the Preamble.
     “ Shares ” means shares of the Company’s Common Stock.
     “ Short Sales ” has the meaning set forth in Section 3.2(h) .
     “ Trading Day ” means (i) a day on which the Common Stock is traded on a Trading Market (other than the OTC Bulletin Board), or (ii) if the Common Stock is not listed or quoted on a Trading Market (other than the OTC Bulletin Board), a day on which the Common Stock is traded in the over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock is not listed or quoted on any Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported by the Pink Sheets LLC (or any similar organization or agency succeeding to its functions of reporting prices); provided, that in the event that the Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day.
     “ Trading Market ” means whichever of the New York Stock Exchange, the American Stock Exchange, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or OTC Bulletin Board on which the Common Stock is listed or quoted for trading on the date in question.
     “ Transaction ” has the meaning set forth in Section 3.2(h) .
      “Transaction Documents ” means this Agreement, the schedules and exhibits attached hereto and the Transfer Agent Instructions.
     “ Transfer Agent ” means Computershare Investor Services, or any successor transfer agent for the Company.
     “ Transfer Agent Instructions ” means, with respect to the Company, the Irrevocable Transfer Agent Instructions, in the form of Exhibit E , executed by the Company and delivered to and acknowledged in writing by the Transfer Agent.
ARTICLE II
PURCHASE AND SALE
     2.1 Closing . Subject to the terms and conditions set forth in this Agreement, at the Closing the Company shall issue and sell to each Investor, and each Investor shall, severally and not jointly, purchase from the Company, such number of Common Shares for the price set forth on such Investor’s signature page to this Agreement. The date and time of the Closing and shall be 11:00 a.m., New York City Time, on the Closing Date. The Closing shall take place at the offices of the Company’s Counsel.
     2.2 Closing Deliveries .
          (a) At the Closing, the Company shall deliver or cause to be delivered to each Investor the following:
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               (i) a copy of the Company’s irrevocable instructions to the Transfer Agent instructing the Transfer Agent to deliver, on an expedited basis, one or more stock certificates (the “ Certificates ”), free and clear of all restrictive and other legends (except as expressly provided in Section 4.1(b ) hereof), evidencing such number of Common Shares set forth on such Investor’s signature page to this Agreement, registered in the name of such Investor;
               (ii) duly executed Transfer Agent Instructions acknowledged by the Company’s transfer agent;
               (iii) a legal opinion of Company Counsel, in the form of Exhibit C , executed by such counsel and delivered to the Investors;
               (v) a certificate of the Secretary of the Company, dated as of the Closing Date, (a) certifying the resolutions adopted by the Board of Directors of the Company approving the transactions contemplated by this Agreement and the other Transaction Documents and the issuance of the Securities, (b) certifying the current versions of the certificate of incorporation, as amended and by-laws of the Company and (c) certifying as to the signatures and authority of persons signing the Transaction Documents and related documents on behalf of the Company; and
               (vi) a certificate of the Chief Executive Officer or Chief Financial Officer of the Company, dated as of the Closing Date, certifying to the fulfillment of the conditions specified in Section 5.1(a) and (b).
          (b) At the Closing, each Investor shall deliver or cause to be delivered to the Company the purchase price set forth on such Investor’s signature page to this Agreement in United States dollars and in immediately available funds, by wire transfer to an account designated in writing to such Investor by the Company for such purpose. Notwithstanding the foregoing, payment of the purchase price may be made promptly after receipt by the Investor’s custodian of the Certificates, provided that such order of transmission is required by such Investor’s established internal policy or procedure.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
     3.1 Representations and Warranties of the Company . The Company hereby represents and warrants to the Investors on and as of the date hereof as follows, except as disclosed in the SEC Reports:
          (a) Organization and Qualification . The Company is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, with the requisite legal authority to own and use its properties and assets and to carry on its business as currently conducted. The Company is not in violation of any of the provisions of its certificate or articles of incorporation, bylaws or other organizational or charter documents. The Company is duly qualified to do business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good
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standing, as the case may be, would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect.
          (b) Authorization; Enforcement . The Company has the requisite corporate authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents to which it is a party and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of each of the Transaction Documents to which it is a party by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of the Company and no further consent or action is required by the Company, its Board of Directors or its stockholders. Each of the Transaction Documents to which it is a party has been (or upon delivery will be) duly executed by the Company and is, or when delivered in accordance with the terms hereof, will constitute, the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application relating to or affecting the enforcement of creditors’ rights generally, (ii) as limited by laws or rules of law relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
          (c) No Conflicts . The execution, delivery and performance of the Transaction Documents to which it is a party by the Company and the consummation by the Company of the transactions contemplated hereby and thereby do not, and will not, (i) conflict with or violate any provision of the Company’s certificate or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company debt or otherwise) or other understanding to which the Company is a party or by which any property or asset of the Company is bound, or affected, except to the extent that such conflict, default, termination, amendment, acceleration or cancellation right would not reasonably be expected to have a Material Adverse Effect, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject (including, assuming the accuracy of the representations and warranties of the Investors set forth in Section 3.2 hereof, federal and state securities laws and regulations and the rules and regulations of any self-regulatory organization to which the Company or its securities are subject, including all applicable Trading Markets), or by which any property or asset of the Company is bound or affected, except to the extent that such violation would not reasonably be expected to have a Material Adverse Effect.
          (d) The Securities . The Securities are duly authorized and, when issued and paid for in accordance with the Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens and will not be subject to preemptive or similar rights of stockholders (other than those imposed by the Investors). The Company has reserved from its duly authorized capital stock the maximum number of shares of Common Stock issuable as of the Closing Date.
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          (e) Capitalization . The aggregate number of shares and type of all authorized, issued and outstanding classes of capital stock, options and other securities of the Company (whether or not presently convertible into or exercisable or exchangeable for shares of capital stock of the Company) is set forth in Schedule 3.1(e ) hereto. All outstanding shares of capital stock are duly authorized, validly issued, fully paid and nonassessable and have been issued in compliance in all material respects with all applicable securities laws. Except as disclosed in Schedule 3.1(e ) hereto, the Company did not have outstanding at June 23, 2008 any other Options, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or entered into any agreement giving any Person any right to subscribe for or acquire, any shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock. Except as set forth on Schedule 3.1(e ) hereto, and except for customary adjustments as a result of stock dividends, stock splits, combinations of shares, reorganizations, recapitalizations, reclassifications or other similar events, there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) and the issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Investors) and will not result in a right of any holder of securities to adjust the exercise, conversion, exchange or reset price under such securities. To the knowledge of the Company, except as disclosed in the SEC Reports and any Schedules 13D or 13G filed with the SEC pursuant to Rule 13d-1 of the Exchange Act by reporting persons or in Schedule 3.1(e ) hereto, no Person or group of related Persons beneficially owns (as determined pursuant to Rule 13d-3 under the Exchange Act), or has the right to acquire, by agreement with or by obligation binding upon the Company, beneficial ownership of in excess of 5% of the outstanding Common Stock.
          (f) SEC Reports; Financial Statements . Except as set forth on Schedule 3.1(f), the Company has filed all reports required to be filed by it under Exchange Act Sections Section 13(a) or 15(d), for the 12 months preceding the date hereof on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension and has filed all reports required to be filed by it under the Exchange Act Sections 13(a) or 15(d) thereof, for the two years preceding the date hereof. Such reports required to be filed by the Company under the Exchange Act Sections 13(a) or 15(d) thereof, together with any materials filed or furnished by the Company under the Exchange Act, whether or not any such reports were required being collectively referred to herein as the “ SEC Reports ” and, together with this Agreement and the Schedules to this Agreement, the “ Disclosure Materials ”. As of their respective dates (or, if amended or superseded by a filing prior to the Closing Date, then on the date of such filing), the SEC Reports filed by the Company complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC promulgated thereunder, and none of the SEC Reports, when filed (or, if amended or superseded by a filing prior to the Closing Date, then on the date of such filing) by the Company, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply as to form in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing (or, if amended or superseded by a filing prior to the Closing Date,
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then on the date of such filing). Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“ GAAP ”), except as may be otherwise specified in such financial statements, the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP or may be condensed or summary statements, and fairly present in all material respects the financial position of the Company as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, year-end audit adjustments. All material agreements to which the Company is a party or to which the property or assets of the Company are subject are included as part of or identified in the SEC Reports, to the extent such agreements are required to be included or identified pursuant to the rules and regulations of the SEC.
          (g) Material Changes; Undisclosed Events, Liabilities or Developments; Solvency. Since the date of the latest audited financial statements included within the SEC Reports, except as disclosed in the SEC Reports or in Schedule 3.1(g) hereto, (i) there has been no event, occurrence or development that, individually or in the aggregate, has had or that would reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any material liabilities other than (A) trade payables, accrued expenses and other liabilities incurred in the ordinary course of business consistent with past practice, (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or required to be disclosed in filings made with the SEC and (C) other liabilities that would not, individually or in the aggregate, have a Material Adverse Effect, (iii) the Company has not altered its method of accounting or changed its auditors, except as disclosed in its SEC Reports, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders, in their capacities as such, or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock (except for repurchases by the Company of shares of capital stock held by employees, officers, directors, or consultants pursuant to an option of the Company to repurchase such shares upon the termination of employment or services), and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock-based plans. The Company has not taken any steps to seek protection pursuant to any bankruptcy law nor does the Company have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so. The Company is not as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at the applicable Closing, will not be Insolvent (as defined below). For purposes of this Section 3.1(h), “Insolvent” means (i) the present fair saleable value of the Company’s assets is less than the amount required to pay the Company’s total Indebtedness (as defined in Section 3.1(aa)), (ii) the Company is unable to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured or (iii) the Company has unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted.
          (h) Absence of Litigation . Except as disclosed in the SEC Reports, there is no action, suit, claim, or Proceeding, or, to the Company’s knowledge, inquiry or investigation, before or by any court, public board, government agency, self-regulatory organization or body
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pending or, to the knowledge of the Company, threatened against or affecting the Company that could, individually or in the aggregate, to have a Material Adverse Effect.
          (i) Compliance . Except as would not, individually or in the aggregate, reasonably be expected to have or result in a Material Adverse Effect, (i)  the Company is not in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company under), nor has the Company received written notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) the Company is not in violation of any order of any court, arbitrator or governmental body, or (iii)  the Company is not and has not been in violation of any statute, rule or regulation of any governmental authority.
          (j) Title to Assets . The Company owns no real property. The Company has good and marketable title in all personal property owned by it that is material to the business of the Company, in each case free and clear of all Liens, except for Liens that do not, individually or in the aggregate, have or result in a Material Adverse Effect. Any real property and facilities held under lease by the Company is held by it under valid, subsisting and enforceable leases of which the Company is in material compliance.
          (k) No General Solicitation; Placement Agent’s Fees . Neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or brokers’ commission (other than for persons engaged by any Investor or its investment advisor) relating to or arising out of the issuance of the Securities pursuant to this Agreement. The Company shall pay, and hold each Investor harmless against, any liability, loss or expense (including, without limitation, reasonable attorney’s fees and out-of-pocket expenses) arising in connection with any such claim for fees arising out of the issuance of the Securities pursuant to this Agreement. The Company acknowledges that is has engaged Jefferies & Company, Inc. as its exclusive placement agent (the “ Agent ”) in connection with the sale of the Securities. Other than the Agent, the Company has not engaged any placement agent or other agent in connection with the sale of the Securities.
          (l) Private Placement; Investment Company; U.S. Real Property Holding Corporation . Neither the Company nor any of its Affiliates nor, any Person acting on the Company’s behalf has, directly or indirectly, at any time within the past six months, made any offer or sale of any security or solicitation of any offer to buy any security under circumstances that would (i) eliminate the availability of the exemption from registration under Regulation D under the Securities Act in connection with the offer and sale by the Company of the Securities as contemplated hereby or (ii) cause the offering of the Securities pursuant to the Transaction Documents to be integrated with prior offerings by the Company for purposes of any applicable law, regulation or stockholder approval provisions, including, without limitation, under the rules and regulations of any Trading Market. Assuming the accuracy of the representations and warranties of the Investors set forth in Section 3.2 , no registration under the Securities Act is
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required for the offer and sale of the Securities by the Company to the Investors as contemplated hereby. The sale and issuance of the Securities hereunder does not contravene the rules and regulations of any Trading Market on which the Common Stock is listed or quoted. The Company is not, and after receipt of payment for the Securities will not be, required to be registered as, and is not an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The Company is not required to be registered as a United States real property holding corporation within the meaning of the Foreign Investment in Real Property Tax Act of 1980.
          (m) Form S-1 Eligibility . The Company is eligible to register the Common Stock for resale by the Investors using Form S-1 promulgated under the Securities Act.
          (n) Listing and Maintenance Requirements . The Company has not, in the twelve months preceding the date hereof, received notice (written or oral) from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company is in compliance with all such listing and maintenance requirements.
          (o) Registration Rights . Except as described in Schedule 3.1(o) , the Company has not granted or agreed to grant to any Person any rights (including “piggy-back” registration rights) to have any securities of the Company registered with the SEC or any other governmental authority that have not expired or been satisfied or waived.
          (p) Application of Takeover Protections . The Company and its Board of Directors have taken all necessary action, if any, to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s charter documents or the laws of its state of incorporation that is or could become applicable to any of the Investors as a result of the Investors and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including, without limitation, as a result of the Company’s issuance of the Securities and the Investors’ ownership of the Securities.
          (q) Disclosure . The Company confirms that neither it nor any officers, directors or Affiliates, has provided any of the Investors (other than Excluded Investors or those certain investors who signed a confidentiality agreement with the Company) or their agents or counsel with any information that constitutes material, nonpublic information (other than the existence and terms of the issuance of Securities, as contemplated by this Agreement). The Company understands and confirms that each of the Investors (other than Excluded Investors or those certain investors who signed a confidentiality agreement with the Company) will rely on the foregoing representations in effecting transactions in securities of the Company. All disclosure provided by the Company to the Investors regarding the Company, its business and the transactions contemplated hereby, including the Schedules to this Agreement furnished by or on behalf of the Company, are true and correct in all material respects and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. To the Company’s knowledge, except for the transactions contemplated by this
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Agreement, no event or circumstance has occurred or information exists with respect to the Company or its business, properties, operations or financial condition, which, under applicable law, rule or regulation, required public disclosure or announcement by the Company prior to the date hereof but which has not been so publicly announced or disclosed. The Company acknowledges and agrees that no Investor (other than Excluded Investors) makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those set forth in the Transaction Documents.
          (r) Acknowledgment Regarding Investors’ Purchase of Securities . Based upon the assumption that the transactions contemplated by this Agreement are consummated in all material respects in conformity with the Transaction Documents, the Company acknowledges and agrees that each of the Investors (other than Excluded Investors) is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby. The Company further acknowledges that no Investor (other than Excluded Investors) is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any advice given by any Investor (other than Excluded Investors) or any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to the Investors’ purchase of the Securities. The Company further represents to each Investor that the Company’s decision to enter into this Agreement has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its advisors and representatives.
          (s) Patents and Trademarks . To the Company’s knowledge, the Company owns, or possesses adequate rights or licenses to use, all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights (“ Intellectual Property Rights ”) necessary to conduct its business as now conducted. Except as disclosed in the SEC Reports, none of the Company’s Intellectual Property Rights have expired or terminated, or are expected to expire or terminate within three years from the date of this Agreement. The Company does not have any knowledge of any infringement by the Company of Intellectual Property Rights of others. Except as disclosed in the SEC Reports, there is no claim, action or proceeding being made or brought, or to the knowledge of the Company, being threatened, against the Company regarding its Intellectual Property Rights.
          (t) Insurance . The Company is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as, in the judgment of the Company’s management, are prudent and customary in the businesses and locations in which the Company is engaged.
          (u) Regulatory Permits . The Company possesses all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct its respective business as presently conducted and described in the SEC Reports (“ Material Permits” ), except where the failure to possess such permits does not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse
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Effect, and the Company has not received any written notice of proceedings relating to the revocation or modification of any Material Permit.
          (v) Transactions With Affiliates and Employees . Except as set forth or incorporated by reference in the Company’s SEC Reports, none of the officers, directors or employees of the Company is presently a party to any transaction with the Company that would be required to be reported on Form 10-KSB by Item 12 thereof pursuant to Regulation SB Item 404(a) (other than for ordinary course services as employees, officers or directors).
          (w) Internal Accounting Controls . The Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
          (x) Sarbanes-Oxley Act . The Company is in compliance in all material respects with applicable requirements of the Sarbanes-Oxley Act of 2002 and applicable rules and regulations promulgated by the SEC thereunder, except where such noncompliance would not have, individually or in the aggregate, a Material Adverse Effect.
          (y) Foreign Corrupt Practices . Neither the Company nor, to the knowledge of the Company, any director, officer, agent, employee or other Person acting on behalf of the Company has, in the course of its actions for, or on behalf of, the Company (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee or to any foreign or domestic political parties or campaigns from corporate funds; (iii) violated or is in violation in any material respect of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.
          (z) Indebtedness . Except as disclosed in the SEC Reports, the Company (i) has no outstanding Indebtedness (as defined below), (ii) is not in violation of any term of and is not in default under any contract, agreement or instrument relating to any Indebtedness, except where such violations and defaults would not result, individually or in the aggregate, in a Material Adverse Effect, and (iii) is not a party to any contract, agreement or instrument relating to any Indebtedness, the performance of which, in the judgment of the Company’s officers, has or is reasonably expected to have a Material Adverse Effect. For purposes of this Agreement: (x) “Indebtedness” of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (other than trade payables entered into in the ordinary course of business), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar
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instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations under any leasing or similar arrangement which, in connection with generally accepted accounting principles, consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above, provided that for the indebtedness referred to in clauses (A) through (H), the indebtedness is in each case in excess of $1 million; (y) “Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto; and (z) “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.
          (aa) Employee Relations . The Company is not a party to any collective bargaining agreement or does not employ any member of a union. Except as disclosed in the SEC Reports, during the period covered by the SEC Reports, no executive officer of the Company has notified the Company that such officer intends to leave the Company or otherwise terminate such officer’s employment with the Company. To the knowledge of the Company, (i) no executive officer of the Company is in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement with any other party or any restrictive covenant reasonably likely to have an Material Adverse Effect on the Company, and (ii) the continued employment of each such executive officer does not subject the Company to any liability with respect to any of the foregoing matters.
          (bb) Labor Matters . The Company is in compliance in all material respects with all federal, state, local and foreign laws and regulations respecting labor, employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
          (cc) Environmental Laws . The Company (i) is in compliance in all material respects with any and all Environmental Laws (as hereinafter defined), (ii) has received
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all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) is in compliance in all material respects with all terms and conditions of any such permit, license or approval where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so comply would be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. The term “Environmental Laws” means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials” ) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.
          (dd) Tax Status. The Company (i) has made or filed all foreign, federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, to the extent the final deadlines for which were on or before the date hereof, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim.
     3.2 Representations, Warranties and Covenants of the Investors . Each Investor hereby, as to itself only and for no other Investor, represents, warrants and covenants to the Company as follows:
          (a) Organization; Authority . Such Investor is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite corporate, partnership or other power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The purchase by such Investor of the Securities hereunder has been duly authorized by all necessary corporate, partnership or other action on the part of such Investor. This Agreement has been duly executed and delivered by such Investor and constitutes the valid and binding obligation of such Investor, enforceable against it in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application relating to or affecting the enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
          (b) No Public Sale or Distribution . Such Investor is acquiring the Common Shares in the ordinary course of business for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales
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registered under the Securities Act or under an exemption from such registration and in compliance with applicable federal and state securities laws, and such Investor does not have a present arrangement to effect any distribution of the Securities to or through any person or entity; provided , however , that by making the representations herein, such Investor does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the Securities Act. Each Investor has completed or caused to be completed the Registration Statement Questionnaire attached hereto as Exhibit B-2 for use in preparation of the Registration Statement, and the responses provided therein shall be true and correct in all material respects as of the Closing Date and, unless such Registration Statement Questionnaire has been otherwise amended and/or supplemented, will be true and correct as of the effective date of the Registration Statement.
          (c) Investor Status . At the time such Investor was offered the Securities, it was, at the date hereof it is, an “accredited investor” as defined in Rule 501(a) under the Securities Act or a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such Investor is not a registered broker dealer registered under Section 15(a) of the Exchange Act, or a member of the Financial Industry Regulatory Authority (“FINRA”) or an entity engaged in the business of being a broker dealer. Except as otherwise disclosed in writing to the Company on Exhibit B-2 (attached hereto) on or prior to the date of this Agreement, such Investor is not affiliated with any broker dealer registered under Section 15(a) of the Exchange Act, or a member of FINRA or an entity engaged in the business of being a broker dealer.
          (d) General Solicitation . Such Investor is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media, broadcast over television or radio, disseminated over the Internet or presented at any seminar or any other general solicitation or general advertisement.
          (e) Experience of Such Investor . Such Investor, either alone or together with its representatives has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. Such Investor understands that it must bear the economic risk of this investment in the Securities indefinitely, and is able to bear such risk and is able to afford a complete loss of such investment.
          (f) Access to Information . Such Investor acknowledges that it has reviewed the Disclosure Materials and has been afforded: (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information (other than material non-public information for those certain investors who did not enter into a confidentiality agreement with the Company) about the Company and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the
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investment. Neither such inquiries nor any other investigation conducted by or on behalf of such Investor or its representatives or counsel shall modify, amend or affect such Investor’s right to rely on the truth, accuracy and completeness of the Disclosure Materials and the Company’s representations and warranties contained in the Transaction Documents. Such Investor acknowledges receipt of copies of the SEC Reports.
          (g) No Governmental Review . Such Investor understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.
          (h) No Conflicts . The execution, delivery and performance by such Investor of this Agreement and the consummation by such Investor of the transactions contemplated hereby will not (i) result in a violation of the organizational documents of such Investor or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such Investor is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to such Investor, except in the case of clauses (ii) and (iii) above, for such that are not material and do not otherwise affect the ability of such Investor to consummate the transactions contemplated hereby.
          (i) Prohibited Transactions; Confidentiality . No Investor, directly or indirectly, and no Person acting on behalf of or pursuant to any understanding with any Investor, has engaged in any purchases or sales in the securities, including derivatives, of the Company (including, without limitation, any Short Sales (a “ Transaction ”) involving any of the Company’s securities) since the time that such Investor was first contacted by the Company, the Agent or any other Person regarding the sale of Securities as contemplated under the Transaction Documents. Such Investor covenants that neither it nor any Person acting on its behalf or pursuant to any understanding with such Investor will engage, directly or indirectly, in any Transactions in the securities of the Company (including Short Sales) prior to the time the transactions contemplated by this Agreement are publicly disclosed. “Short Sales” include, without limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act and all types of direct and indirect stock pledges, forward sale contracts, options, puts, calls, short sales, swaps, derivatives and similar arrangements (including on a total return basis), and sales and other transactions through non-U.S. broker-dealers or foreign regulated brokers.
          (j) Restricted Securities . The Investors understand that the Securities are characterized as “restricted securities” under the U.S. federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act only in certain limited circumstances.
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          (k) Legends . It is understood that, except as provided in Section 4.1(b) of this Agreement, certificates evidencing such Securities may bear the legend set forth in Section 4.1(b) .
          (l) No Legal, Tax or Investment Advice . Such Investor understands that nothing in this Agreement or any other materials presented by or on behalf of the Company to the Investor in connection with the purchase of the Securities constitutes legal, tax or investment advice. Such Investor has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Securities. Such Investor understands that the Agent has acted solely as the agent of the Company in this placement of the Securities, and that the Agent makes no representation or warranty with regard to the merits of this transaction or as to the accuracy of any information such Investor may have received in connection therewith. Such Investor acknowledges that he has not relied on any information or advice furnished by or on behalf of the Agent.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
     4.1 Transfer Restrictions .
          (a) The Investors covenant that the Securities will only be disposed of pursuant to an effective registration statement under, and in compliance with the requirements of, the Securities Act or pursuant to an available exemption from the registration requirements of the Securities Act, and in compliance with any applicable state securities laws. In connection with any transfer of Securities other than pursuant to an effective registration statement or to the Company, or pursuant to Rule 144, the Company may require the transferor to provide to the Company an opinion of counsel selected by the transferor, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration under the Securities Act. Notwithstanding the foregoing, the Company hereby consents to and agrees to register on the books of the Company and with its Transfer Agent, without any such legal opinion, except to the extent that the Transfer Agent requests such legal opinion, any transfer of Securities by an Investor to an Affiliate of such Investor, provided that the transferee certifies to the Company that it is an “accredited investor” as defined in Rule 501(a) under the Securities Act and provided that such Affiliate does not request any removal of any existing legends on any certificate evidencing the Securities.
          (b) The Investors agree to the imprinting, so long as it is required by this Section 4.1(b ), of the following legend on any certificate evidencing any of the Securities:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), OR ANY APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
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SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
     Certificates evidencing the Common Shares shall not be required to contain such legend or any other legend (i) while a registration statement (including the Registration Statement) covering the resale of the Common Shares is effective under the Securities Act, (ii) following any sale of such Securities pursuant to Rule 144 if the holder provides the Company with a legal opinion (and the documents upon which the legal opinion is based) reasonably acceptable to the Company to the effect that the Securities can be sold under Rule 144, (iii) if the holder provides the Company with a legal opinion (and the documents upon which the legal opinion is based) reasonably acceptable to the Company to the effect that the Securities are eligible for sale under Rule 144(b)(i), or (iv) if the holder provides the Company with a legal opinion (and the documents upon which the legal opinion is based) reasonably acceptable to the Company to the effect that the legend is not required under applicable requirements of the Securities Act (including controlling judicial interpretations and pronouncements issued by the Staff of the SEC). Subject to receipt of the undertakings referred to above, the Company shall use its Best Efforts to cause its counsel to issue the legal opinion included in the Transfer Agent Instructions to the Transfer Agent on the Effective Date. Following the Effective Date and provided the registration statement referred to in clause (i) above is then in effect, or at such earlier time as a legend is no longer required for certain Securities, the Company will no later than three Trading Days following the delivery by an Investor to the Company or the Transfer Agent (if delivery is made to the Transfer Agent a copy shall be contemporaneously delivered to the Company) of (i) a legended certificate representing such Securities (and, in the case of a requested transfer, endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect transfer), and (ii) an opinion of counsel to the extent required by Section 4.1(a) , deliver or cause to be delivered to such Investor a certificate representing such Securities that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section.
     If within three Trading Days after the Company’s receipt of a legended certificate and the other documents as specified in Clauses (i) and (ii) of the paragraph immediately above, the Company shall fail to cause to be issued and delivered to such Investor a certificate representing such Securities that is free from the legend referred to above, and if on or after such Trading Day the Investor purchases (in an open market transaction) shares of Common Stock to deliver in satisfaction of a sale by the Investor of shares of Common Stock that the Investor anticipated receiving from the Company without any restrictive legend (the “ Covering Shares ”), then the Company shall, within three Trading Days after the Investor’s request, pay cash to the Investor in an amount equal to the excess (if any) of the Investor’s total purchase price (including
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reasonable brokerage commissions, if any) for the Covering Shares, over the product of (A) the number of Covering Shares, times (B) the closing sale price on the date of delivery of such certificate and the other documents as specified in Clauses (i) and (ii) of the paragraph immediately above.
          (c) The Company will not object to and shall permit (except as prohibited by law) an Investor to pledge or grant a security interest in some or all of the Securities in connection with a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement, and if required under the terms of such arrangement, the Company will not object to and shall permit (except as prohibited by law) such Investor to transfer pledged or secured Securities to the pledgees or secured parties. Except as required by law, such a pledge or transfer would not be subject to approval of the Company, no legal opinion of the pledgee, secured party or pledgor shall be required in connection therewith (but such legal opinion shall be required in connection with a subsequent transfer or foreclosure following default by the Purchaser transferee of the pledge), and no notice shall be required of such pledge. Each Investor acknowledges that the Company shall not be responsible for any pledges relating to, or the grant of any security interest in, any of the Securities or for any agreement, understanding or arrangement between any Investor and its pledgee or secured party. At the appropriate Investor’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities, including the preparation and filing of any required prospectus supplement under Rule 424(b)(3) of the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of Selling Stockholders thereunder. Provided that the Company is in compliance with the terms of this Section 4.1(c) , the Company’s indemnification obligations pursuant to Section 6.4 shall not extend to any Proceeding or Losses arising out of or related to this Section 4.1(c) .
     4.2 Furnishing of Information . During the time that the Registration Statement is required to be effective, the Company covenants to use its commercially reasonable efforts 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 the Exchange Act.
     4.3 Integration . The Company shall not, and shall use its commercially reasonable efforts to ensure that no Affiliate thereof shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities to the Investors or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market.
     4.4 Reservation of Securities . The Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance pursuant to the Transaction Documents in such amount as may be required to fulfill its obligations to issue such Shares under the Transaction Documents. In the event that at any time the then authorized shares of Common Stock are insufficient for the Company to satisfy its obligations to issue such Shares under the Transaction Documents, the Company shall promptly take such actions as may be required to increase the number of authorized shares.
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     4.5 Securities Laws Disclosure; Publicity . The Company shall, at or before 9:00 a.m., New York time, on the first Trading Day following execution of this Agreement, issue a press release disclosing all material terms of the transactions contemplated hereby. On the Closing Date, the Company shall file a Current Report on Form 8-K with the SEC (the “ 8-K Filing ”) describing the terms of the transactions contemplated by the Transaction Documents and including as exhibits to such Current Report on Form 8-K the Transaction Documents (including the names, and addresses of the Investors and the amount(s) of Securities respectively purchased) in the form required by the Exchange Act. Thereafter, the Company shall timely file any filings and notices required by the SEC or applicable law with respect to the transactions contemplated hereby. Except as herein provided, the Company shall not publicly disclose the name of any Investor, or include the name of any Investor in any press release without the prior written consent of such Investor (which consent shall not be unreasonably withheld or delayed), unless otherwise required by law, regulatory authority or Trading Market. The Company shall not, and shall cause each of its officers, directors, employees and agents not to, provide any Investor with any material nonpublic information regarding the Company from and after the issuance of the above referenced press release without the express written consent of such Investor.
     4.6 Use of Proceeds . The Company intends to use the net proceeds from the sale of the Securities for working capital and general corporate purposes. The Company also may use a portion of the net proceeds, currently intended for general corporate purposes, to acquire or invest in technologies, products, services or businesses that complement its business, although the Company has no present commitments with respect to these types of transactions. Pending these uses, the Company intends to invest the net proceeds from this offering in short-term, interest-bearing, investment-grade securities, or as otherwise pursuant to the Company’s customary investment policies.
ARTICLE V
CONDITIONS
     5.1 Conditions Precedent to the Obligations of the Investors . The obligation of each Investor to acquire Securities at the Closing is subject to the satisfaction or waiver by such Investor, at or before the Closing, of each of the following conditions:
          (a) Representations and Warranties . The representations and warranties of the Company contained herein shall be true and correct in all material respects as of the date when made and as of the Closing as though made on and as of such date; and
          (b) Performance . The Company and each other Investor shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by it at or prior to the Closing.
          (c) No Suspensions of Trading in Common Stock; Listing . Trading in the Common Stock shall not have been suspended by the SEC or any Trading Market (except for any suspensions of trading of not more than one Trading Day solely to permit dissemination of material information regarding the Company) at any time since the date of execution of this
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Agreement, and the Common Stock shall have been at all times since such date listed for trading on a Trading Market.
          (d) Absence of Litigation . No action, suit or proceeding by or before any court or any governmental body or authority, against the Company and pertaining to the transactions contemplated by this Agreement or their consummation, shall have been instituted on or before the Closing Date, which action, suit or proceeding would, if determined adversely, have a Material Adverse Effect.
     5.2 Conditions Precedent to the Obligations of the Company . The obligation of the Company to sell the Securities at the Closing is subject to the satisfaction or waiver by the Company, at or before the Closing, of each of the following conditions:
          (a) Receipt of Payment . The Investors shall have delivered payment of the purchase price to the Company for the Securities being issued hereunder. Notwithstanding the foregoing, payment of the purchase price may be made promptly after receipt by the Investor’s custodian of the Certificates, provided that such order of transmission is required by such Investor’s established internal policy or procedure.
          (b) Representations and Warranties . The representations and warranties of the Investors contained herein shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made on and as of such date; and
          (c) Performance . The Investors shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Investors at or prior to the Closing.
          (d) Delivery of Registration Statement Questionnaire . The Company shall have received from each Investor a fully completed Registration Statement Questionnaire in the form attached hereto as Exhibit B-2 at the Closing for the Company’s use in preparing the Registration Statement pursuant to Article VI below.
ARTICLE VI
REGISTRATION RIGHTS
     6.1 Registration Statement .
          (a) On or prior to the Filing Date, the Company shall prepare and file with the SEC a Registration Statement covering the resale of all Registrable Securities for an offering to be made on a continuous basis pursuant to Rule 415; provided that, if the Company is required by the SEC to reduce the number of Registrable Shares covered by the Registration Statement as a result of a characterization by the SEC of the transaction described by the Registration Statement as a primary offering by the Company, then (i) the Company shall use its Best Efforts to have as many Registrable Shares as possible covered by the Registration Statement, (ii) any Registrable Shares not able to be included in the Registration Statement shall reduce the number of Registrable Shares of each Investor covered by the Registration Statement on a pro rata basis
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based on the number of Registrable Shares purchased by each Investor and (iii) the Company shall have no liability to any Investor pursuant to Section 6.1(d) or otherwise as a result of the Registration Statement covering less than all of the Registrable Shares under circumstances described in this proviso. The Registration Statement shall be on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate form in accordance with the Securities Act and the Exchange Act) and shall contain (except if otherwise directed by the Investors or requested by the SEC) the “Plan of Distribution” in substantially the form attached hereto as Exhibit D .
          (b) The Company shall use its Best Efforts to cause the Registration Statement to be declared effective by the SEC as promptly as practicable after the filing thereof, but in any event prior to the Required Effectiveness Date, and shall use its Best Efforts to keep the Registration Statement continuously effective under the Securities Act until the earlier of (i) date that all Common Shares covered by such Registration Statement have been sold or can be sold publicly under Rule 144(b) or (ii) the seventh anniversary of the Closing Date (the “Effectiveness Period ”); provided that, upon notification by the SEC that a Registration Statement will not be reviewed or is no longer subject to further review and comments, the Company shall request acceleration of such Registration Statement within two (2) Trading Days after receipt of such notice and request that it become effective on 4:00 p.m. New York City time on the Effective Date and file a prospectus supplement for any Registration Statement, whether or not required under Rule 424 (or otherwise), by 9:00 a.m. New York City time the day after the Effective Date.
          (c) The Company shall notify the Investors in writing promptly (and in any event within one (1) Trading Day) after receiving notification from the SEC that the Registration Statement has been declared effective.
          (d) Should an Event (as defined below) occur, then upon the occurrence of such Event, and on every monthly anniversary thereof until the applicable Event is cured, as relief for the damages suffered therefrom by the Investors (the parties hereto agreeing that the liquidated damages provided for in this Section 6.1(d) constitute a reasonable estimate of the damages that may be incurred by the Investors by reason of the Event and that such liquidated damages represent the exclusive monetary remedy for the Investors for damages suffered due to an Event), the Company shall pay to each Investor an amount in cash, as liquidated damages and not as a penalty, equal to one percent (1.0%) of (i) the number of Common Shares held by such Investor as of the date of such Event, multiplied by (ii) the purchase price paid by such Investor for such Common Shares then held. The payments to which an Investor shall be entitled pursuant to this Section 6.1(d ) are referred to herein as “ Event Payments. ” Any Event Payments payable pursuant to the terms hereof shall apply on a pro rated basis for any portion of a month prior to the cure of an Event. In the event the Company fails to make Event Payments in a timely manner, such Event Payments shall bear interest at the rate of one percent (1.0%) per month (prorated for partial months) until paid in full. All pro rated calculations made pursuant to this paragraph shall be based upon the actual number of days in such pro rated month.
For such purposes, each of the following shall constitute an “ Event ”:
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               (i) the Registration Statement is not filed on or prior to the Filing Date;
               (ii) the Registration Statement is not declared effective on or prior to the Required Effectiveness Date;
               (iii) except (A) as provided for in Section 6.1(e ), (B) if the Company is involved in a “Rule 13e-3 transaction” as defined in Rule 
13e-3 under the Exchange Act, or (C) in the event of a merger or consolidation of the Company or a sale of more than fifty percent (50%) of the assets of the Company in one or a series of related transactions, unless following such transaction or series of transactions, the holders of the Company’s securities prior to the first such transaction continue to hold at least fifty percent (50%) of the voting rights and equity interests of the surviving entity or acquirer (clauses (B) and (C), collectively, the “ Excluded Events ”), after the Effective Date, an Investor is not permitted to sell Registrable Securities under the Registration Statement (or a subsequent Registration Statement filed in replacement thereof) for any reason (other than the fault of such Investor) for five (5) or more Trading Days (whether or not consecutive);
               (iv) except as a result of the Excluded Events, the Common Stock is not listed or quoted, or is suspended from trading, on an Eligible Market for a period of three Trading Days (which need not be consecutive Trading Days) during the Effectiveness Period;
               (v) with respect to an Investor, the Company fails for any reason to deliver a certificate evidencing any Securities to such Investor within five Trading Days after delivery of such certificate is required pursuant to any Transaction Document; or
               (vi) during the Effectiveness Period, except as a result of the Excluded Events, the Company fails to have any Shares listed or quoted on an Eligible Market.
          (e) Notwithstanding anything in this Agreement to the contrary, after 60 consecutive Trading Days of continuous effectiveness of the initial Registration Statement filed and declared effective pursuant to this Agreement, the Company may, by written notice to the Investors, suspend sales under a Registration Statement after the Effective Date thereof and/or require that the Investors immediately cease the sale of shares of Common Stock pursuant thereto and/or defer the filing of any subsequent Registration Statement if the Board of Directors of the Company determines in good faith, by appropriate resolutions, that the Company would, in the absence of such delay or suspension hereunder, be required under state or federal securities laws to disclose any corporate development, a potentially significant transaction or event involving the Company, or any negotiations, discussions, or proposals directly relating thereto, in either case the disclosure of which would reasonably be expected to have a negative effect upon the Company or its stockholders; provided further, that the Company may suspend the use of any Prospectus to the extent necessary to file any post-effective amendment to the Registration Statement in order (i) to amend the table of selling stockholders within the Registration Statement to reflect transfers of the Securities by Investors to their Affiliates as permitted under Section 4.1(a) or (ii) to amend the Registration Statement pursuant to the Company’s undertakings as set forth in the Registration Statement and in Item 512 of Regulation S-K under the Securities Act. Upon receipt of such notice, each Investor shall immediately discontinue any sales of Registrable Securities pursuant to such registration until such Investor is advised in
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writing by the Company that the current Prospectus or amended Prospectus, as applicable, may be used. In no event, however, shall this right be exercised to suspend sales beyond the period during which (in the good faith determination of the Company’s Board of Directors) the failure to require such suspension would be materially detrimental to the Company. The Company’s rights under this Section 6(e) may be exercised for a period of no more than twenty (20) Trading Days at a time and not more than three (3) times in any twelve (12) month period, without such suspension being considered as part of an Event Payment determination. Immediately after the end of any suspension period under this Section 6(e) , the Company shall take all commercially reasonable actions (including filing any required supplemental prospectus) to restore the effectiveness of the applicable Registration Statement and the ability of the Investors to publicly resell their Registrable Securities pursuant to such effective Registration Statement.
          (f) The Company shall not, from the date hereof until the Effective Date of the Registration Statement, prepare and file with the SEC 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 any registration statement or post-effective amendment to a registration statement (or supplement thereto) relating to the Company’s employee benefit plans registered on Form S-8.
     6.2 Registration Procedures . In connection with the Company’s registration obligations hereunder, the Company shall:
          (a) (i) Subject to Section 6.1(e) , prepare and file with the SEC such amendments, including post-effective amendments, to each Registration Statement and the Prospectus used in connection therewith as may be necessary to keep the Registration Statement continuously effective, as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the SEC such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities during the Effectiveness Period; (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; (iii) respond as promptly as reasonably practical, and in any event within 12 Trading Days (except to the extent that the Company reasonably requires additional time to respond to accounting comments), to any comments received from the SEC with respect to the Registration Statement or any amendment thereto; and (iv) comply in all material respects with the provisions of the Securities Act and the Exchange Act applicable to the Company 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 Investors thereof set forth in the Registration Statement as so amended or in such Prospectus as so supplemented.
          (b) Notify the Investors as promptly as reasonably practical, and (if requested by the Investors confirm such notice in writing no later than two Trading Days thereafter, of any of the following events: (i) any Registration Statement or any post-effective amendment is declared effective; (ii) the SEC issues any stop order suspending the effectiveness of any Registration Statement or initiates any Proceedings for that purpose; (iii) the Company receives notice of any suspension of the qualification or exemption from qualification of any Registrable Securities for sale in any jurisdiction, or the initiation or threat of any Proceeding for such purpose; or (iv) the
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financial statements included in any Registration Statement become ineligible for inclusion therein or any Registration Statement or Prospectus or other document contains any untrue statement of a material fact or omits 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.
          (c) Use its reasonable Best Efforts to avoid the issuance of or, if issued, obtain the withdrawal of (i) any order suspending the effectiveness of any Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, as soon as possible.
          (d) If requested by an Investor, provide such Investor 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 SEC.
          (e) Promptly deliver to each Investor, 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. The Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Investors in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto to the extent permitted by federal and state securities laws and regulations.
          (f) (i) In the time and manner required by each Trading Market, prepare and file with such Trading Market an additional shares listing application covering all of the Registrable Securities; (ii) take all steps necessary to cause such Common Shares to be approved for listing on each Trading Market as soon as possible thereafter; (iii) provide to each Investor evidence of such listing; and (iv) except as a result of the Excluded Events, during the Effectiveness Period, maintain the listing of such Common Shares on each such Trading Market or another Eligible Market.
          (g) Prior to any public offering of Registrable Securities, use its reasonable Best Efforts to register or qualify or cooperate with the selling Investors 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 Investor requests in writing, to keep each such registration or qualification (or exemption therefrom) effective for so long as required, but not to exceed the duration of the Effectiveness Period, and to do any and all other acts or things reasonably 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 obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject.
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          (h) Cooperate with the Investors to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free, to the extent permitted by this Agreement and under law, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Investors may reasonably request.
          (i) Upon the occurrence of any event described in Section 6.2(c)(vii ), as promptly as reasonably 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.
          (j) Cooperate with any reasonable due diligence investigation undertaken by the Investors in connection with the sale of Registrable Securities, including, without limitation, by making available documents and information; provided that the Company will not deliver or make available to any Investor material, nonpublic information unless such Investor requests in advance in writing to receive material, nonpublic information and agrees to keep such information confidential.
          (k) Comply with all rules and regulations of the SEC applicable to the Company in connection with the registration of the Securities.
          (l) It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of any particular Investor or to make any Event Payments set forth in Section 6.1(c) to such Investor that such Investor furnish to the Company the information specified in Exhibits B-1, B-2 and B-3 hereto and such other information regarding itself, the Registrable Securities and other shares of Common Stock held by it and the intended method of disposition of the Registrable Securities held by it (if different from the Plan of Distribution set forth on Exhibit D hereto) as shall be reasonably required to effect the registration of such Registrable Securities and shall complete and execute such documents in connection with such registration as the Company may reasonably request.
          (m) The Company shall comply with all applicable rules and regulations of the SEC under the Securities Act and the Exchange Act, including, without limitation, Rule 172 under the Securities Act, file any final Prospectus, including any supplement or amendment thereof, with the SEC pursuant to Rule 424 under the Securities Act, promptly inform the Investors in writing if, at any time during the Effectiveness Period, the Company does not satisfy the conditions specified in Rule 172 and, as a result thereof, the Investors are required to make available a Prospectus in connection with any disposition of Registrable Securities and take such other actions as may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder.
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     6.3 Registration Expenses . The Company shall pay all fees and expenses incident to the performance of or compliance with Article VI of this Agreement by the Company, including without limitation (a) all registration and filing fees and expenses, including without limitation those related to filings with the SEC, any Trading Market and in connection with applicable state securities or Blue Sky laws, (b) printing expenses (including without limitation expenses of printing certificates for Registrable Securities), (c) messenger, telephone and delivery expenses incurred by the Company, (d) fees and disbursements of counsel for the Company, (e) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement, and (f) all listing fees to be paid by the Company to the Trading Market.
     6.4 Indemnification
          (a) Indemnification by the Company . The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Investor, the officers, directors, partners, members, agents and employees of each of them, each Person who controls any such Investor (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, partners, members, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all Losses, as incurred, arising out of or relating to (i) any misrepresentation or breach of any representation or warranty made by the Company in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (ii) any breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (iii) any cause of action, suit or claim brought or made against such Indemnified Party (as defined in Section 6.4(c) below) by a third party (including for these purposes a derivative action brought on behalf of the Company), arising out of or resulting from (x) the execution, delivery, performance or enforcement of the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (y) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, or (z) the status of Indemnified Party as holder of the Securities (unless, and only to the extent that, such action, suit or claim is based, including in part, upon a breach of such Investor’s representations, warranties or covenants under the Transaction Documents or any conduct by such Investor that constitutes fraud, gross negligence or willful misconduct) or (iv) any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any Prospectus or any form of Company prospectus or in any amendment or supplement thereto or in any Company 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 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 (A) such untrue statements, alleged untrue statements, omissions or alleged omissions are based solely upon information regarding such Investor furnished in writing to the Company by such Investor for use therein, or to the extent that such information relates to such Investor or such Investor’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved by such Investor in writing expressly for use in the Registration Statement, or (B) with respect to any prospectus, if the untrue statement or omission of material fact contained in such prospectus was corrected on a timely basis in the prospectus, as then amended or supplemented,
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if such corrected prospectus was timely made available by the Company to the Investor, and the Investor seeking indemnity hereunder was advised in writing not to use the incorrect prospectus prior to the use giving rise to Losses..
          (b) 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 shall promptly 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 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 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: (i) the Indemnifying Party has agreed in writing to pay such fees and expenses; or (ii) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding; or (iii) 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 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 the reasonable fees and expenses of separate counsel shall be at the expense of the Indemnifying Party). It shall be understood, however, that the Indemnifying Party shall not, in connection with any one such Proceeding (including separate Proceedings that have been or will be consolidated before a single judge) be liable for the fees and expenses of more than one separate firm of attorneys at any time for all Indemnified Parties, which firm shall be appointed by a majority of the Indemnified Parties. 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 or delayed. 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.
     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 20 Trading Days of written notice thereof to the Indemnifying Party (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).
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          (c) Contribution . If a claim for indemnification under Section 6.4(a ) is unavailable to an Indemnified Party (by reason of public policy or otherwise), then such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such 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 6.4(b ), 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.
     The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6.4(c ) 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.
     6.5 Dispositions . Each Investor agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement and shall sell its Registrable Securities in accordance with the Plan of Distribution set forth in the Prospectus. Each Investor further agrees that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Sections 6.2(c)(v ), (vi ) or (vii ), such Investor will discontinue disposition of such Registrable Securities under the Registration Statement until such Investor is advised in writing by the Company that the use of the Prospectus, or amended Prospectus, as applicable, may be resumed. The Company may provide appropriate stop orders to enforce the provisions of this paragraph. Each Investor, severally and not jointly with the other Investors, agrees that the removal of the restrictive legend from certificates representing Securities as set forth in this Section 4.1 is predicated upon the Company’s reliance that the Investor will comply with the provisions of this subsection. Both the Company and the Transfer Agent, and their respective directors, officers, employees and agents, may rely on this subsection.
     6.6 No Piggyback on Registrations . Neither the Company nor any of its security holders (other than the Investors in such capacity pursuant hereto and the Excluded Investors) may include securities of the Company in the Registration Statement other than the Registrable Securities.
     6.7 Piggy-Back Registrations . If at any time during the Effectiveness Period there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall
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determine to prepare and file with the SEC 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 their 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, then the Company shall send to each Investor not then eligible to sell all of their Registrable Securities under Rule 144 in a three-month period, written notice of such determination and if, within ten days after receipt of such notice, any such Investor shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such Investor requests to be registered. Notwithstanding the foregoing, in the event that, in connection with any underwritten public offering, the managing underwriter(s) thereof shall impose a limitation on the number of shares of Common Stock which may be included in the Registration Statement because, in such underwriter(s)’ judgment, marketing or other factors dictate such limitation is necessary to facilitate public distribution, then the Company shall be obligated to include in such Registration Statement only such limited portion of the Registrable Securities with respect to which such Investor has requested inclusion hereunder as the underwriter shall permit; provided , however , that (i) the Company shall not exclude any Registrable Securities unless the Company has first excluded all outstanding securities, the holders of which are not contractually entitled to inclusion of such securities in such Registration Statement or are not contractually entitled to pro rata inclusion with the Registrable Securities and (ii) after giving effect to the immediately preceding proviso, any such exclusion of Registrable Securities shall be made pro rata among the Investors seeking to include Registrable Securities and the holders of other securities having the contractual right to inclusion of their securities in such Registration Statement by reason of demand registration rights, in proportion to the number of Registrable Securities or other securities, as applicable, sought to be included by each such Investor or other holder. If an offering in connection with which an Investor is entitled to registration under this Section 6.7 is an underwritten offering, then each Investor whose Registrable Securities are included in such Registration Statement shall, unless otherwise agreed by the Company, offer and sell such Registrable Securities in an underwritten offering using the same underwriter or underwriters and, subject to the provisions of this Agreement, on the same terms and conditions as other shares of Common Stock included in such underwritten offering and shall enter into an underwriting agreement in a form and substance reasonably satisfactory to the Company and the underwriter or underwriters. Upon the effectiveness the registration statement for which piggy-back registration has been provided in this Section 6.7 , any Event Payments payable to an Investor whose Securities are included in such registration statement shall terminate and no longer be payable.
ARTICLE VII
MISCELLANEOUS
     7.1 Termination . This Agreement may be terminated by the Company or any Investor, by written notice to the other parties, if the Closing has not been consummated by the third Trading Day following the date of this Agreement; provided that no such termination will affect the right of any party to sue for any breach by the other party (or parties).
     7.2 Fees and Expenses . Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation,
 -31- 

 

execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied in connection with the sale and issuance of the applicable Securities.
     7.3 Entire Agreement . The Transaction Documents, together with the Exhibits and Schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules. At or after the Closing, and without further consideration, the Company will execute and deliver to the Investors such further documents as may be reasonably requested in order to give practical effect to the intention of the parties under the Transaction Documents.
     7.4 Notices . Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile or email at the facsimile number or email address specified in this Section  prior to 6:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile or email at the facsimile number or email address specified in this Section on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (c) the Trading Day following the date of deposit with a nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The addresses, facsimile numbers and email addresses for such notices and communications are those set forth on the signature pages hereof, or such other address or facsimile number as may be designated in writing hereafter, in the same manner, by any such Person.
     7.5 Amendments; Waivers . No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and the holders of at least 80% of the Registrable Securities held on the date of such amendment or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right. 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 Investors under Article VI may be given by Investors holding at least a majority of the Registrable Securities to which such waiver or consent relates, and any such amendment shall be binding upon the Company and all holders of Registrable Securities. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of this Agreement unless the same consideration is also offered to all of the Investors.
     7.6 Construction . The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.
 -32- 

 

     7.7 Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Investors. Any Investor may assign its rights under this Agreement to any Person to whom such Investor assigns or transfers any Securities, provided (i) such transferor agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company after such assignment, (ii) the Company is furnished with written notice of (x) the name and address of such transferee or assignee and (y) the Registrable 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 assignee is restricted under the Securities Act and applicable state securities laws, (iv) such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions hereof that apply to the “Investors” and (v) such transfer shall have been made in accordance with the applicable requirements of this Agreement and with all laws applicable thereto.
     7.8 No Third-Party Beneficiaries . This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except that each Indemnified Party is an intended third party beneficiary of Section 6.4 and (in each case) may enforce the provisions of such Section directly against the parties with obligations thereunder.
     7.9 Governing Law; Venue; Waiver of Jury Trial . THE CORPORATE LAWS OF THE STATE OF DELAWARE SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS STOCKHOLDERS. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE COMPANY AND INVESTORS HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN FOR THE ADJUDICATION OF ANY DISPUTE BROUGHT BY THE COMPANY OR ANY INVESTOR HEREUNDER, IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE COMPANY OR ANY INVESTOR, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. THE COMPANY AND INVESTORS HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.
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     7.10 Survival . The representations and warranties, agreements and covenants contained herein shall survive the Closing.
     7.11 Execution . This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or email attachment, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or email-attached signature page were an original thereof.
     7.12 Severability . If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.
     7.13 Rescission and Withdrawal Right . Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents, whenever any Investor exercises a right, election, demand or option owed to such Investor by the Company under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then, prior to the performance by the Company of the Company’s related obligation, such Investor may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.
     7.14 Replacement of Securities . If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and the execution by the holder thereof of a customary lost certificate affidavit of that fact and an agreement to indemnify and hold harmless the Company for any losses in connection therewith. The applicants for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement Securities.
     7.15 Remedies . In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Investors and the Company will be entitled to seek specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described in the foregoing sentence and hereby agree to waive in any action for specific performance of any such obligation (other than in connection with any action for a temporary restraining order) the defense that a remedy at law would be adequate.
     7.16 Adjustments in Share Numbers and Prices . In the event of any stock split, subdivision, dividend or distribution payable in shares of Common Stock (or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly shares of Common
 -34- 

 

Stock), combination or other similar recapitalization or event occurring after the date hereof and prior to the Closing, each reference in any Transaction Document to a number of shares or a price per share shall be amended to appropriately account for such event.
     7.17 Independent Nature of Investors’ Obligations and Rights . The obligations of each Investor under any Transaction Document are several and not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under any Transaction Documents. The decision of each Investor to purchase Securities pursuant to this Agreement has been made by such Investor independently of any other Investor and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition (financial or otherwise) or prospects of the Company which may have been made or given by any other Investor or by any agent or employee of any other Investor, and no Investor or any of its agents or employees shall have any liability to any other Investor (or any other person) relating to or arising from any such information, materials, statements or opinions. Nothing contained herein or in any Transaction Document, and no action taken by any Investor pursuant thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Document. Each Investor acknowledges that no other Investor has acted as agent for such Investor in connection with making its investment hereunder and that no other Investor will be acting as agent of such Investor in connection with monitoring its investment hereunder. Each Investor shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Investor to be joined as an additional party in any Proceeding for such purpose.
[SIGNATURE PAGES TO FOLLOW]
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     IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
 	 	 	 	 	 	 	
 	 	RXi PHARMACEUTICALS CORPORATION	 	 	
 	 	 	 	 	 	 	
 	 	By:	 	 	 	 	
 	 	 	 	 	 	 	
 	 	Name:	 	 	 	 	
 	 	Title:	 	 	 	 	
 	 	 	 	 	 	 	
 	 	Address for Notice:	 	 	
 		
 	 	60 Prescott Street	 	 	
 	 	Worcester, Massachusetts 01605	 	 	
 	 	Facsimile No.: 508-767-3862	 	 	
 	 	Telephone No.: 508-767-3861	 	 	
 	 	Attn: Stephen J. DiPalma, CFO and Secretary	 	 	
 	 	 	 	 	 	 	
 	 	With a copy to:	 	 	
 	 	 	 	 	 	 	
 	 	Ropes & Gray LLP	 	 	
 	 	One International Place	 	 	
 	 	Boston, MA 02110-2624	 	 	
 	 	Facsimile: (617) 951-7050	 	 	
 	 	Telephone: (617) 951-7000	 	 	
 	 	Attn: Marc Rubenstein, Esq.	 	 	
COMPANY SIGNATURE PAGE

 

Investor Signature Page
     By its execution and delivery of this signature page, the undersigned Investor hereby joins in and agrees to be bound by the terms and conditions of the Securities Purchase Agreement dated as of June [___], 2008 (the “Purchase Agreement”) by and among RXi Pharmaceuticals Corporation and the Investors (as defined therein), as to the number of shares of Common Stock set forth below, and authorizes this signature page to be attached to the Purchase Agreement or counterparts thereof.
 	 	 	 	 	 	 	 	 	 	 	
 	 	Name of Investor:	

 	 	 	 	 	 	 	 	 	 	 	
 	 	By:	 	 	 	 	 	 	 	 	
 	 	 	 	 	
 	 	 	 	Name:	 	 	 	 	 	
 	 	 	 	Title:	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	
 	 	Address:	 	 	 	 	 	 	

 	 	 	

 	 	 	 	 	 	 	 	 	 	 	
 	 	Telephone No.:	 	 	 	 	
 	 	 	 	 	 	 	 	
 	 	Facsimile No.:	 	 	 	 	
 	 	 	 	 	 	 	 	
 	 	Email Address:	 	 	 	 	
 	 	 	 	 	 	 	 	
 	 	Number of Shares:	 	 	 	 	
 	 	 	 	 	 	 	 	 	
 	 	Aggregate Purchase Price: $	 	 	
 	 	 	 	 	 	 	 	 	 	 	
Delivery Instructions (if different than above):
 	 	 	 	 	 	 	
c/o:	 	 	 	 	 	 	

Address:	 	 	 	 	

 	 	 	 	 	 	 	
 	 	 	 	 	
Telephone No.:	 	 	 	 	

Facsimile No. :	 	 	 	 	

 

 	 	 	 	 	
Other Special Instructions:	 	 	 	 	

 	 	Exhibits:	
 	 	 	 	 	
 	 	A	 	Instruction Sheet for Investors	
 	 	B-1	 	Stock Certificate Questionnaire	
 	 	B-2	 	Registration Statement Questionnaire	
 	 	B-3	 	Investor Certificate	
 	 	C	 	Opinion of Company Corporate Counsel	
 	 	D	 	Plan of Distribution	
 	 	E	 	Company Transfer Agent Instructions	

 

Exhibit A
INSTRUCTION SHEET FOR INVESTOR
(to be read in conjunction with the entire Securities Purchase Agreement)

A.	 	Complete the following items in the Securities Purchase Agreement :	

 	1.	 	Complete and execute the Investor Signature Page. The Agreement must be executed by an individual authorized to bind the Investor.	
 		
 	2.	 	Exhibit B-1 — Stock Certificate Questionnaire:	
Provide the information requested by the Stock Certificate Questionnaire ;

 	3.	 	Exhibit B-2 — Registration Statement Questionnaire:	
Provide the information requested by the Registration Statement Questionnaire .

 	4.	 	Exhibit B-3 — Investor Certificate:	
Provide the information requested by the Investor Certificate.

 	5.	 	Return, via facsimile, the signed Securities Purchase Agreement including the properly completed Exhibits B-1 through B-3, to:	
Facsimile:
Telephone:
Attn:

 	6.	 	After completing instruction number five (5) above, deliver the original signed Securities Purchase Agreement including the properly completed Exhibits  B-1 through B-3 to:	
Address:

B.	 	Instructions regarding the wire transfer of funds for the purchase of the Securities will be telecopied to the Investor by the Company at a later date.	

 

Exhibit B-1
RXi PHARMACEUTICALS CORPORATION
STOCK CERTIFICATE QUESTIONNAIRE
 	 	 	 	 	
 	 	Please provide us with the following information:	 	 	
 	 	 	 	 	
1.	 	The exact name that the Securities are to be registered in (this is the name that will appear on the stock certificate(s)). You may use a nominee name if appropriate:	 	 	

2.	 	The relationship between the Investor of the Securities and the Registered Holder listed in response to item 1 above:	 	 	

3.	 	The mailing address, telephone and telecopy number and email address of the Registered Holder listed in response to item 1 above:	 	 	

 	 	 	 	 	

 	 	 	 	 	

 	 	 	 	 	
 	 	 	 	 	
4.	 	The Tax Identification Number of the Registered Holder listed in response to item 1 above:	 	 	

 

Exhibit B-2
RXi PHARMACEUTICALS CORPORATION
REGISTRATION STATEMENT QUESTIONNAIRE
[NOTE: Fidelity Funds to provide own form of questionnaire.]
     In connection with the Registration Statement, please provide us with the following information regarding the Investor.
1. Please state your organization’s name exactly as it should appear in the Registration Statement:
 
Except as set forth below, your organization does not hold any equity securities of the Company on behalf of another person or entity.
State any exceptions here:
 
If the Investor is not a natural person, please identify the natural person or persons who will have voting and investment control over the Securities owned by the Investor:
 
2. Address of your organization:

 	 	 	 	 	 	 	 	 	 	 	 	 	

 	 	Telephone:	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	
 	 	Fax:	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
 	 	Contact Person:	 	 	 	 	 	 	

 

3. Have you or your organization had any position, office or other material relationship within the past three years with the Company or its affiliates? (Include any relationships involving you or any of your affiliates, officers, directors, or principal equity holders (5% or more) that has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.)
                                Yes                                                                          No
     If yes, please indicate the nature of any such relationship below:
4. Are you the beneficial owner of any other securities of the Company? (Include any equity securities that you beneficially own or have a right to acquire within 60 days after the date hereof, and as to which you have sole voting power, shared voting power, sole investment power or shared investment power.)
                                Yes                                                                          No
     If yes, please describe the nature and amount of such ownership as of a recent date.
5. Except as set forth below, you wish that all the shares of the Company’s common stock beneficially owned by you or that you have the right to acquire from the Company be offered for your account in the Registration Statement.
State any exceptions here:
6. Have you made or are you aware of any arrangements relating to the distribution of the shares of the Company pursuant to the Registration Statement?
                                Yes                                                                          No
     If yes, please describe the nature and amount of such arrangements.

 

  7. FINRA Matters
     (a) State below whether (i) you or any associate or affiliate of yours are a member of the FINRA, a controlling shareholder of a FINRA member , a person assoc i ated with a member , a direct or indirect affiliate of a member , or an underwriter or related person with respect to the proposed offering; (ii) you or any associate or affiliate of yours owns any stock or other securities of any FINRA member not purchased in the open market; or (iii) you or any associate or affiliate of yours has made any outstanding subordinated loans to any FINRA member . If you are a general or limited partnership, a no answer asserts that no such relationship exists for you as well as for each of your general or limited partners.
 	 	 	 	 	 	 	
 	 	Yes:	 	No:	 	 	

If “yes,” please identify the FINRA member and describe your relationship, including, in the case of a general or limited partner, the name of the partner:
If you answer “no” to Question 7(a), you need not respond to Question 7(b).
          (b) State below whether you or any associate or affiliate of yours has been an underwriter, or a controlling person or member of any investment banking or brokerage firm which has been or might be an underwriter for securities of the Corporation or any affiliate thereof including, but not limited to, the common stock now being registered.
 	 	 	 	 	 	 	
 	 	Yes:	 	No:	 	 	

If “yes,” please identify the FINRA member and describe your relationship, including, in the case of a general or limited partner, the name of the partner.

 

ACKNOWLEDGEMENT
     The undersigned hereby agrees to notify the Company promptly of any changes in the foregoing information which should be made as a result of any developments, including the passage of time. The undersigned also agrees to provide the Company and the Company’s counsel any and all such further information regarding the undersigned promptly upon request in connection with the preparation, filing, amending, and supplementing of the Registration Statement (or any prospectus contained therein). The undersigned hereby consents to the use of all such information in the Registration Statement.
     The undersigned understands and acknowledges that the Company will rely on the information set forth herein for purposes of the preparation and filing of the Registration Statement.
     The undersigned understands that the undersigned may be subject to serious civil and criminal liabilities if the Registration Statement, when it becomes effective, either contains an untrue statement of a material fact or omits to state a material fact required to be stated in the Registration Statement or necessary to make the statements in the Registration Statement not misleading. The undersigned represents and warrants that all information it provides to the Company and its counsel is currently accurate and complete and will be accurate and complete at the time the Registration Statement becomes effective and at all times subsequent thereto, and agrees during the Effectiveness Period and any additional period in which the undersigned is making sales of Shares under and pursuant to the Registration Statement, and agrees during such periods to notify the Company immediately of any misstatement of a material fact in the Registration Statement, and of the omission of any material fact necessary to make the statements contained therein not misleading.
     Dated:                     

 	 	Name	 	 	

 	 	Signature	 	 	

 	 	Name and Title of Signatory	 	 	

 

Exhibit B-3
RXi PHARMACEUTICALS CORPORATION
CERTIFICATE FOR CORPORATE, PARTNERSHIP, LIMITED LIABILITY COMPANY,
TRUST, FOUNDATION AND JOINT INVESTORS
     If the Investor is a corporation, partnership, limited liability company, trust, pension plan, foundation, joint Investor (other than a married couple) or other entity, an authorized officer, partner, or trustee must complete, date and sign this Certificate.
CERTIFICATE
     The undersigned certifies that the representations and responses below are true and accurate:
     (a) The Investor has been duly formed and is validly existing and has full power and authority to invest in the Company. The person signing on behalf of the undersigned has the authority to execute and deliver the Securities Purchase Agreement on behalf of the Investor and to take other actions with respect thereto.
     (b) Indicate the form of entity of the undersigned:
                                Limited Partnership
                                General Partnership
                                Limited Liability Company
                                Corporation
                                Revocable Trust (identify each grantor and indicate under what circumstances the trust is revocable by the grantor):  
 
(Continue on a separate piece of paper, if necessary.)
                                Other type of Trust (indicate type of trust and, for trusts other than pension trusts, name the grantors and beneficiaries):

(Continue on a separate piece of paper, if necessary.)
                                Other form of organization (indicate form of organization (                                                                                                                  

  ).
     (c) Indicate the approximate date the undersigned entity was formed:                                           .

 

     (d) In order for the Company to offer and sell the Securities in conformance with state and federal securities laws, the following information must be obtained regarding your investor status. Please initial each category applicable to you as an investor in the Company.
 	 	 	
                    	 	1. A bank as defined in Section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity;	
 	 	 	
                    	 	2. A broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934;	
 	 	 	
                    	 	3. An insurance company as defined in Section 2(13) of the Securities Act;	
 	 	 	
                    	 	4. An investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section  2(a)(48) of that Act;	
 	 	 	
                    	 	5. A Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958;	
 	 	 	
                    	 	6. A plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000;	
 	 	 	
                    	 	7. An employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;	
 	 	 	
                    	 	8. A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940;	
 	 	 	
                    	 	9. Any partnership or corporation or any organization described in Section 501(c)(3) of the Internal Revenue Code or similar business trust, not formed for the specific purpose of acquiring the Shares, with total assets in excess of $5,000,000;	
 	 	 	
                    	 	10. A trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Shares, whose purchase is directed by a sophisticated person as described in Rule  506(b)(2)(ii) of the Exchange Act;	
 	 	 	
                    	 	11. An entity in which all of the equity owners qualify under any of the above subparagraphs. If the undersigned belongs to this investor category only, list the equity owners of the undersigned, and the investor category which each such equity owner satisfies:                                                                                                          	

 

 	 	 	
 	 	 	
 	 	(Continue on a separate piece of paper, if necessary.)	
     Please set forth in the space provided below the (i) states, if any, in the U.S. in which you maintained your principal office during the past two years and the dates during which you maintained your office in each state, (ii) state(s), if any, in which you are incorporated or otherwise organized and (iii) state(s), if any, in which you pay income taxes.

 	 	 	

 	 	 	
 	 	 	 	 	 	 	
Dated:	 	 	 	, 2008	 	 	

 	 	 	
Print Name of Investor	 	 	

Name:	 	 	 	 	 	 	
Title:	 	 	 	 	 	 	
(Signature and title of authorized officer, partner or trustee)	 	 	

 

Exhibit C
OPINION OF COMPANY COUNSEL

 

Exhibit D
PLAN OF DISTRIBUTION
The selling stockholders may, from time to time, sell any or all of their shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The selling stockholders may use any one or more of the following methods when selling shares:

•	 	ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;	

•	 	block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;	

•	 	purchases by a broker-dealer as principal and resale by the broker-dealer for its account;	

•	 	an exchange distribution in accordance with the rules of the applicable exchange;	

•	 	privately negotiated transactions;	

•	 	short sales;	

•	 	broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;	

•	 	a combination of any such methods of sale; and	

•	 	any other method permitted pursuant to applicable law.	
     The selling stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.
     Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The selling stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved. Any profits on the resale of shares of common stock by a broker-dealer acting as principal might be deemed to be underwriting discounts or commissions under the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any, attributable to the sale of shares will be borne by a selling stockholder. The selling stockholders may agree to indemnify any agent, dealer or broker-dealer that

 

participates in transactions involving sales of the shares if liabilities are imposed on that person under the Securities Act.
     The selling stockholders may from time to time pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time under this prospectus after we have filed a supplement to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 supplementing or amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.
     The selling stockholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus and may sell the shares of common stock from time to time under this prospectus after we have filed a supplement to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 supplementing or amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.
     The selling stockholders and any broker-dealers or agents that are involved in selling the shares of common stock may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares of common stock purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.
     We are required to pay all fees and expenses incident to the registration of the shares of common stock. We have agreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
     The selling stockholders 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 shares of common stock, nor is there an underwriter or coordinating broker acting in connection with a proposed sale of shares of common stock by any selling stockholder. If we are notified by any selling stockholder that any material arrangement has been entered into with a broker-dealer for the sale of shares of common stock, if required, we will file a supplement to this prospectus. If the selling stockholders use this prospectus for any sale of the shares of common stock, they will be subject to the prospectus delivery requirements of the Securities Act.
     The anti-manipulation rules of Regulation M under the Securities Exchange Act of 1934 may apply to sales of our common stock and activities of the selling stockholders.

 

Exhibit E
COMPANY TRANSFER AGENT INSTRUCTIONS
Computershare Investor Services
250 Royall Street
Canton, MA 02021
Attention : [                      ], Account Representative
Ladies and Gentlemen:
     Reference is made to that certain Securities Purchase Agreement, dated as of June [___], 2008 (the “ Agreement ”), by and among RXi Pharmaceuticals Corporation, a Delaware corporation (the “ Company ”), and the investors named on the Schedule of Investors attached thereto (collectively, the “ Holders ”), pursuant to which the Company is issuing to the Holders shares (the “ Common Shares ”) of Common Stock of the Company, par value $0.0001 per share (the “ Common Stock ”).
     In connection with the consummation of the transactions contemplated by the Agreement, this letter shall serve as our irrevocable authorization and direction to you:
     (i) to issue an aggregate of [___] shares of our Common Stock in the names and denominations set forth on Annex I attached hereto. The certificates should bear the legend set forth on Annex II attached hereto and “stop transfer” instructions should be placed against their subsequent transfer. Kindly deliver the certificates to the respective delivery addresses set forth on Annex I via hand delivery or overnight courier. We confirm that these shares will be validly issued, fully paid and non-assessable upon issuance; and
     (ii)  to issue (provided that you are the transfer agent of the Company at such time) certificates for shares of Common Stock upon transfer or resale of the Common Shares and receipt by you of certificate(s) for the Common Shares so transferred or sold (duly endorsed or accompanied by stock powers duly endorsed, in each case with signatures guaranteed and otherwise in form eligible for transfer).
     You acknowledge and agree that so long as you have previously received (a) written confirmation from the Company’s legal counsel that either (i) a registration statement covering resales of the Common Shares has been declared effective by the Securities and Exchange Commission (the “ SEC ”) under the Securities Act of 1933, as amended (the “ Securities Act ”), or (ii) the Common Shares are eligible for sale in conformity with Rule 144(b) (or any successor provision) under the Securities Act (“ Rule 144 ”) and (b) if applicable, a copy of such registration statement, then, unless otherwise required by law, within three (3) business days of your receipt of certificates representing the Common Shares, you shall issue the certificates representing the Common Shares to the Holders or their transferees, as the case may be, registered in the names of

 

such Holders or transferees, as the case may be, and such certificates shall not bear any legend restricting transfer of the Common Shares thereby and should not be subject to any stop-transfer restriction. Any certificates tendered for transfer shall be endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect transfer.
     A form of written confirmation from the Company’s outside legal counsel that a registration statement covering resales of the Common Shares has been declared effective by the SEC under the Securities Act is attached hereto as Annex III .
     Please be advised that the Holders are relying upon this letter as an inducement to enter into the Agreement and, accordingly, each Holder is a third party beneficiary to these instructions.
     Please execute this letter in the space indicated to acknowledge your agreement to act in accordance with these instructions. Should you have any questions concerning this matter, please contact our counsel, Marc Rubenstein, Esq., at (617) 951-7000.
 	 	 	 	 	
 	Very truly yours,

RXI PHARMACEUTICALS CORPORATION
 	 	
 	By:  	 	 	
 	 	Name:  	 	 	
 	 	Title:  	 	 	

THE FOREGOING INSTRUCTIONS ARE	 	 	
ACKNOWLEDGED AND AGREED TO	 	 	
this ___ day of June, 2008	 	 	
 	 	 	 	 	 	 	
COMPUTERSHARE INVESTOR SERVICES	 	 	
 	 	 	 	 	 	 	
By:	 	 	 	 	 	 	
 	 	 	 	 	
 	 	Name:	 	 	 	 	
 	 	 	 	 	 	 	
 	 	Title:	 	 	 	 	
 	 	 	 	 	 	 	
Enclosures
ANNEX I
SCHEDULE OF INVESTORS

 

ANNEX II
RESTRICTIVE LEGEND
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), OR ANY APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

ANNEX III
FORM OF NOTICE OF EFFECTIVENESS OF REGISTRATION STATEMENT
Computershare Investor Services
250 Royall Street
Canton, MA 02021
Attention: [                      ], Account Representative
Re: RXi Pharmaceuticals Corporation
     Ladies and Gentlemen:
     We are counsel to RXi Pharmaceuticals Corporation, a Delaware corporation (the “ Company ”), and have represented the Company in connection with that certain Securities Purchase Agreement, dated as of June [___], 2008 (the “ Securities Purchase Agreement ”), entered into by and among the Company and the buyers named therein (collectively, the “ Purchasers ”) pursuant to which the Company issued to the Purchasers shares of Common Stock of the Company, par value $0.0001 per share (the “ Common Shares ”). Pursuant to the Securities Purchase Agreement, the Company agreed to register the resale of the Common Shares (the “ Registrable Securities ”) under the Securities Act of 1933, as amended (the “ Securities Act ”). In connection with the Company’s obligations under the Securities Purchase Agreement, on [                 ] , 2008, the Company filed a Registration Statement on [Form S-3] (File No. 333-[             ] ) (the “ Registration Statement ”) with the Securities and Exchange Commission (the “ Commission ”) relating to the Registrable Securities which names each of the Purchasers as a selling shareholder 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 Securities Act at              [a.m.][p.m.] on                      , 2008, and we have no knowledge, after telephonic inquiry of a member of the 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 Commission and the Registrable Securities are available for resale under the Securities Act pursuant to the Registration Statement.
     This letter shall serve as our standing notice to you that the Common Shares may be freely transferred by the Purchasers pursuant to the Registration Statement so long as the Holders certify they will comply with the plan of distribution description in connection with sales or transfers of the Common Shares set forth in the Registration Statement and with the prospectus delivery requirements of the Securities Act, to the extent such delivery requirement are applicable. You need not require further letters from us to effect any future legend-free issuance or reissuance of shares of the Common Shares to the Purchasers or the transferees of the Purchasers, as the case may be, as contemplated by the Company’s Irrevocable Transfer Agent Instructions dated ___, 2008.

Exhibit 10.1
1,073,299 Shares
RXi Pharmaceuticals Corporation
Common Stock, par value $0.0001 per share
PLACEMENT AGENCY AGREEMENT
June 24, 2008
Jefferies & Company, Inc.
Natixis Bleichroeder Inc.
Broadpoint Securities Group, Inc.
Griffin Securities, Inc.
     c/o Jefferies & Company, Inc.
520 Madison Avenue, 12th Floor
New York, New York 10022
Ladies and Gentlemen:
      Introductory. RXi Pharmaceuticals Corporation, a Delaware corporation (the “ Company ”), proposes to issue and sell to certain purchasers (collectively, the “ Purchasers ”) up to an aggregate of 1,073,299 shares of its common stock, par value $0.0001 per share (the “ Common Stock ”), which are referred to herein as the “ Securities .” The Securities will be offered and sold to the Purchasers in a private placement (the “ Placement ”) without being registered under the Securities Act of 1933, as amended, and the rules and regulations of the Securities and Exchange Commission (the “ Commission ”) thereunder (collectively, the “ Securities Act ”), in reliance upon Section 4(2) (“ Section 4(2) ”) thereof and/or Regulation D (“ Regulation D ”) thereunder. The Company hereby confirms that Jefferies & Company, Inc. (“ Jefferies ” or the “ Representative ”), Natixis Bleichroeder Inc. (“ Natixis ”), Broadpoint Securities Group, Inc. (“ Broadpoint ”) and Griffin Securities, Inc. (“ Griffin ”) have agreed to act as Placement Agents (each of Jefferies, Natixis, Broadpoint and Griffin, a “ Placement Agent ” and, collectively, the “ Placement Agents ”) in connection with the Placement, subject to the terms, conditions and other provisions of this Agreement.
     The Securities are to be sold to the Purchasers pursuant to several Securities Purchase Agreements (collectively, the “ Securities Purchase Agreement ”, in the form attached hereto as Exhibit A ), and sometimes referred to herein as, the “ Purchase Agreements ”, to be entered into by the Company and each of the Purchasers.
     Holders of the Securities will be entitled to the benefits of those certain resale registration rights set forth in the Securities Purchase Agreement (the “ Resale Registration Rights ”) to be entered into between the Company and each of the Purchasers pursuant to which the Company will agree, among other things, to file with the Commission a shelf registration statement pursuant to Rule 415 under the Securities Act (the “ Resale Registration Statement ”) covering the resale of the Securities, and to use its reasonable best efforts to cause the Resale Registration

 

Statement to be declared effective within the time periods specified in the Securities Purchase Agreement.
     This Agreement and the Securities Purchase Agreement, which contains the Resale Registration Rights, are referred to herein collectively as the “ Transaction Documents ”, and the transactions contemplated hereby and thereby are referred to herein collectively as the “ Transactions. ”
     The Company has prepared a management presentation dated May 2008 (the “ Management Presentation ”) to be used in connection with the Placement. The information in the Management Presentation is based upon the Company’s public filings, including reports filed or furnished by the Company under the Securities Exchange Act of 1934, as amended (the “ Public Filings ”), and the rules and regulations of the Commission thereunder (collectively, the “ Exchange Act ”). The Management Presentation and the Public Filings, shall collectively be hereinafter referred to as the “ Disclosure Package .”
     The Company hereby confirms its agreement with the Placement Agents as follows:
      Section 1. Representations, Warranties and Agreements of the Company and the Placement Agents.
      A. Representations, Warranties and Agreements of the Company . In addition to the other representations, warranties and agreements contained in this Agreement and Sections 3 and 4 of the Securities Purchase Agreement, which are incorporated herein by reference and upon which each of the Placement Agents may rely as a third-party beneficiary thereof, the Company hereby represents, warrants and agrees with, the Placement Agents as follows:
          (a) No Material Misstatement or Omission . As of their respective dates (or, if amended or superseded by a filing prior to the Closing Date, then on the date of such filing), the Public Filings by the Company complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the SEC promulgated thereunder. None of the Management Presentation or the Public Filings, as of their respective dates, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
          (b) Placement Materials . The Company has delivered to the Placement Agents copies of the Management Presentation in such quantities and at such places as the Placement Agents have reasonably requested or will reasonably request. The Company has not distributed and will not distribute, prior to the Closing Date, any materials in connection with the Placement other than the Management Presentation, its Public Filings and drafts or definitive versions of the Transaction Documents.
          (c) The Transaction Documents . The Company has all necessary power and authority to execute and deliver the Transaction Documents and to perform and carry out its obligations hereunder and thereunder; each of the Transaction Documents has been duly authorized by the Company and, when executed and delivered by the Company, will constitute a

 

valid and binding agreement of the Company, enforceable against the Company in accordance with its terms.
          (d) Independent Accountants . BDO Seidman, LLP, who have expressed their opinion with respect to the financial statements (which term as used in this Agreement includes the related notes thereto) included or incorporated by reference in the Public Filings, are (i) independent public or certified public accountants as required by the Exchange Act, (ii) in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X and (iii) a registered public accounting firm as defined by the Public Company Accounting Oversight Board.
          (e) Financial Projections . The statements (including the assumptions described therein) included in the Management Presentation (i) are and will be within the coverage of Rule 175(b) under the Securities Act to the extent such data constitute forward looking statements as defined in Rule 175(c) and (ii) were and will be made by the Company with a reasonable basis and reflect the Company’s good faith estimate of the matters described therein.
          (f) Stock Exchange Listing. The Company shall cause the shares of Common Stock to be listed on the NASDAQ Capital Market prior to the effectiveness of the Resale Registration Statement and shall use its best efforts to maintain the continued listing of such shares of Common Stock.
          (g) Non-Contravention of Existing Instruments; No Further Authorizations or Approvals Required. The Company’s execution, delivery and performance of this Agreement, and each of the Transaction Documents, do not, and will not, (i) conflict with or violate any provision of the Company’s certificate or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) (a “ Default ”) under or result in the creation or imposition of any security interest, mortgage, pledge, lien, charge, encumbrance or adverse claim upon any property or assets of the Company, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, indenture, mortgage, loan or credit facility, note, contract, franchise, lease, debt or other instrument or other understanding to which the Company is a party or by which any property or asset of the Company is bound, or affected (each, an “ Existing Instrument ”) or require the consent of any other party to any Existing Instrument or other third party, except to the extent that such conflict, default, termination, amendment, acceleration or cancellation right would not reasonably be expected to have a Material Adverse Change (defined as: any development that could reasonably be expected to result in a material adverse change in the condition, financial or otherwise, or in the earnings, business, operations or prospects, whether or not arising from transactions in the ordinary course of business, any such change is called a “ Material Adverse Change ”), or (iii) result in a violation of any law, rule, administrative regulation, order, judgment, injunction, administrative or court decree or other restriction of any court or governmental authority to which the Company is subject, or by which any property or asset of the Company is bound or affected, except to the extent that such violation would not, individually or in the aggregate, result in a Material Adverse Change. No consent, approval, authorization or other order of, or registration or filing with, any court or other

 

governmental or regulatory authority or agency, is required for the Company’s execution, delivery and performance of this Agreement.
          (h) No Price Stabilization or Manipulation; Compliance with Regulation M, etc. The Company has not taken, directly or indirectly, any action designed to or that might be reasonably expected to cause or result in stabilization or manipulation of the price of any of the Securities or any other “reference security” (as defined in Rule 100 of Regulation M under the 1934 Act (“ Regulation M ”)), whether to facilitate the sale or resale of any of the Securities or otherwise, and has taken no action which would directly or indirectly violate Regulation M or facilitate any short-selling of the Securities offered or the underlying securities by Purchasers.
          (i) Brokers. Except for the Placement Agents, there is no broker, finder or other party that is entitled to receive from the Company any brokerage or finder’s fee or other fee or commission as a result of the Placement or the transactions contemplated thereby.
          (j) No Registration Required Under the Securities Act. Assuming the accuracy of the representations and warranties of the Purchasers contained in the Purchase Agreements and the compliance of such parties with the agreements set forth herein and therein, it is not necessary, in connection with the issuance and sale of the Securities under the Transaction Documents, in the manner contemplated by the Transaction Documents, to register the Securities under the Securities Act.
          (k) QIBs and Accredited Investors. The Company will not offer or sell any of the Securities to any person whom it reasonably believes is not (i) a “qualified institutional buyer” as defined in Rule 144A (“ QIBs ”) or (ii) an institutional “accredited investor” (as defined in clauses (1), (2), (3) and (7) of Rule 501(a) of Regulation D).
          (l) Purchasers; Compliance With Rule 502(d). The Company will exercise reasonable care to assure that the Purchasers are not “underwriters” within the meaning of Section 2(a)(11) of the Securities Act and, without limiting the foregoing, that such purchases will comply with Rule 502(d) under the Securities Act.
          (m) No General Solicitation . Neither the Company nor any of its Affiliates have engaged, and will engage, directly or indirectly in any form of “general solicitation” or “general advertising” in connection with the offering of the Securities (as those terms are used in Regulation D) under the Securities Act or in any manner involving a public offering within the meaning of Section 4(2); and the Company has not entered, and will not enter, into any arrangement or agreement with respect to the distribution of the Securities, except for the Transaction Documents, and the Company agrees not to enter into any such arrangement or agreement.
          (n) No Integration . Neither the Company nor any of its affiliates has directly or indirectly sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of any “security” (as defined in the Securities Act) that is, or would be, integrated with the sale of any of the Securities in a manner that would require the registration under the Securities Act of any of the Securities.

 

          (o) No Directed Selling Efforts . None of the Company, its affiliates nor any person acting on its or their behalf (other than the Placement Agents in connection with this Agreement) has engaged or will engage in any directed selling efforts (as that term is defined in Regulation S) with respect to the Securities and each of the Company, its affiliates and any person acting on its or their behalf (other than the Placement Agents in connection with this Agreement) has complied and will comply with the offering restrictions requirement of Regulation S.
          (p) No Offer and Sale Within Six Months . The Company has not sold or issued any security of the same or similar class or series as any of the Securities or any security convertible into, or exercisable for, shares of Common Stock during the six-month period preceding the earlier of the date of the Purchase Agreements and the Closing Date, including any sales pursuant to Rule 144A or Regulation D (other than shares issued pursuant to employee benefit plans, qualified stock options plans or other employee or director compensation plans or pursuant to outstanding options, rights or warrants), and has no intention of making, an offer or sale of such securities, for a period of six months after the date of the Purchase Agreements, except for (i) the offering of Securities as contemplated by the Transaction Documents and (ii) any offer or sale of securities that would not be integrated with the sale of any of the Securities in a manner that would require the registration under the Securities Act of the sale by the Company of the Securities, provided that any such offering and sale of securities (other than shares issued pursuant to employee benefit plans, qualified stock options plans or other employee or director compensation plans or pursuant to outstanding options, rights or warrants) made within six months of the date hereof shall be accompanied by an opinion addressed to or that may be relied upon by the Placement Agents, and provided further, that in no event shall the Company offer or sell any securities prior to the expiration of the Lock-up Period set forth in Section 3(h) herein, except as otherwise permitted by Section 3(h). As used in this paragraph, the terms “offer” and “sale” have the meanings specified in Section 2(a)(3) of the Securities Act.
     The Company acknowledges that each of the Placement Agents and, for purposes of the opinion to be delivered pursuant to Section 4 hereof, counsel to the Company, will rely upon the accuracy and truthfulness of the foregoing representations and hereby consents to such reliance.
      B. Representations, Warranties and Agreements of the Placement Agent. Each of the Placement Agents, severally and not jointly, hereby represents, warrants and covenants to, and agrees with, the Company as follows:
          (a) No General Solicitation . Such Placement Agent will not solicit offers for the Company for the Securities by means of any form of general solicitation or general advertising in connection with the offering of the Securities or in any manner involving a public offering within the meaning of Section 4(2).
          (b) Limitation on Offerees. Such Placement Agent will solicit offers for the Company for the Securities only from persons whom it reasonably believes to be (i) a QIB or (ii) an institutional “accredited investor.”
      Section 2. Engagement of Placement Agents; Fees; Expenses.

 

          (a) Engagement of Placement Agents . The Company agrees that it has engaged Jefferies, Natixis, Broadpoint and Griffin as the Placement Agents, and the Company hereby authorizes the Placement Agents as its exclusive agents to act as such in connection with the Placement. On the basis of the representations, warranties and agreements of the Company contained in this Agreement and subject to, and in accordance with, the terms, conditions and other provisions hereof, each of Jefferies, Natixis, Broadpoint and Griffin agrees to act as Placement Agent to place the Securities as contemplated by this Agreement. The Company acknowledges that the Placement Agents’ engagement hereunder does not constitute any firm commitment or undertaking, express or implied, on the part of any Placement Agent to purchase or place any of the Securities and does not constitute any representation, warranty or agreement that any financing will be available to the Company.
          (b) Placement Agents’ Fees and Expenses. As compensation for the Placement Agents’ services hereunder, the Company hereby agrees to pay the Representative, on behalf of the Placement Agents, on the closing date of the Placement (the “ Closing Date ”) the fee or gross spread, as applicable, in an amount equal to six percent (6%) of the aggregate gross proceeds to the Company from the placement of the Securities. In addition to any fees that may be paid to the Placement Agents hereunder, whether or not any Transaction occurs or this Agreement is otherwise terminated, the Company will reimburse the Placement Agents, promptly upon receipt of an invoice therefor, for all out-of-pocket expenses (including reasonable fees and expenses of Placement Agents’ counsel, and the reasonable fees and expenses of any other independent experts retained by the Placement Agents) incurred by the Placement Agents in connection with the Transactions and the Engagement Letter (defined below), in an amount not to exceed $50,000 (other than the fees and expenses of Placement Agents’ counsel) without the Company’s consent (not to be unreasonably withheld).
          (c) Placement Agents as Independent Contractor. The Company hereby acknowledges that, in connection with the Transactions, (i) the Placement, including the determination of the offering price of the Securities and any related discounts, commissions and fees, shall be an arm’s-length commercial transaction between the Company and the Purchasers, (ii) each Placement Agent will be acting as an independent contractor and will not be the agent or fiduciary of the Company or its stockholders, creditors, employees, the Purchasers or any other party, (iii) no Placement Agent shall assume an advisory or fiduciary responsibility in favor of the Company (irrespective of whether such Placement Agent has advised or is currently advising the Company on other matters) and no Placement Agent shall have an obligation to the Company with respect to the Transactions except as may be set forth expressly herein, (iv) any Placement Agent and its affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Company and (v) no Placement Agent shall provide any legal, accounting, regulatory or tax advice with respect to the Transactions and the Company shall consult its own legal, accounting, regulatory and tax advisors to the extent it deems appropriate.
          (d) Company Responsible for the Disclosure Package. The Company is and will be solely responsible for the contents of the Disclosure Package and any and all other written or oral communications provided to any actual or prospective purchaser of the Securities with the approval of the Company; and the Company recognizes that the Placement Agents, in acting pursuant to this Agreement, will be using information provided by the Company and its agents

 

and representatives and no Placement Agent assumes responsibility for, and each may rely, without independent verification, on the accuracy and completeness of any such information.
          (e) Notification of Potential Purchasers. In order to allow proper coordination of the proposed Placement, during the term of this engagement, the Company will promptly notify the Representative of any potential purchasers known to the Company to be interested in purchasing any of the Securities, and the Company will keep the Representative fully and promptly informed of the status of any discussions or negotiations between the Company and any such potential purchasers.
          (f) Confidentiality. The Company agrees that any information or advice rendered by any Placement Agent or any of its representatives in connection with this engagement is for the confidential use of the Company only and the Company will not, and will not permit any third party to, disclose or otherwise refer to such advice or information, or to the Placement Agents, in any manner without such Placement Agent’s prior written consent.
      Section 3. Additional Covenants and Agreements of the Company . The Company further covenants and agrees with the Placement Agents as follows:
          (a) Representative’s Review of Proposed Amendments and Supplements. During the period beginning on the date hereof and ending on the Closing Date, prior to amending or supplementing the Disclosure Package (including any amendment or supplement of any Public Filing that is incorporated or deemed incorporated by reference therein), the Company shall furnish to the Representative for review a copy of each such proposed amendment or supplement prior to its distribution or filing.
          (b) Amendments and Supplements to the Disclosure Package. If, prior to the Closing Date, any event shall occur or condition exist as a result of which it is necessary to amend or supplement the information or documents, or other information or documents incorporated or deemed incorporated by reference, in the Disclosure Package (including any amendment or supplement of any Public Filing that is incorporated or deemed incorporated by reference therein) in order to make the statements therein, in the light of the circumstances when the Management Presentation or any other document contained or incorporated or deemed incorporated by reference in the Disclosure Package is delivered to a Purchaser, not misleading, or if it is otherwise necessary to amend or supplement any portion of the Disclosure Package to comply with law, the Company agrees to promptly prepare and furnish at its own expense to the Placement Agents, amendments or supplements to the Disclosure Package so that the statements therein as so amended or supplemented will not, in the light of the circumstances when the Disclosure Package is delivered to a Purchaser, be misleading or so that the Disclosure Package, as amended or supplemented, will comply with law. Neither a Placement Agent’s consent to, or delivery of, any such amendment or supplement shall constitute a waiver of any of the Company’s obligations under this Section 3(b) .
          (c) Copies of any Amendments and Supplements to the Disclosure Package. The Company agrees to furnish the Representative and counsel to the Representative, without charge, as soon as available, as many copies of any amendments and supplements to the Disclosure

 

Package (including any documents incorporated or deemed incorporated by reference therein) as the Representative or its counsel may request.
          (d) Marketing. The Company shall participate, and cause its officers and representatives to participate, in the Placement as reasonably requested by the Representative, including in the marketing of the Securities and meeting with prospective purchasers of any of the Securities, and afford prospective purchasers the opportunity to conduct customary due diligence and make inquiries relevant to their investment decisions regarding the Securities.
          (e) Blue Sky Compliance. The Company shall cooperate with the Placement Agents and counsel for the Placement Agents to qualify or register the Securities for sale under (or obtain exemptions from the application of) the state securities or blue sky laws of those jurisdictions designated by the Placement Agents, shall comply with such laws and shall continue such qualifications, registrations and exemptions in effect so long as required for the distribution of the Securities. The Company shall not be required to qualify as a foreign corporation or to take any action that would subject it to general service of process in any such jurisdiction where it is not presently qualified or where it would be subject to taxation as a foreign corporation. The Company will advise the Placement Agents promptly of the suspension of the qualification or registration of (or any such exemption relating to) the Securities for offering, sale or trading in any jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the event of the issuance of any order suspending such qualification, registration or exemption, the Company shall use its best efforts to obtain the withdrawal thereof at the earliest possible moment.
          (f) Use of Proceeds . The Company shall apply the net proceeds from the sale of the Securities sold by it in the manner to be described under the caption “Use of Proceeds” in the Purchase Agreements.
          (g) Transfer Agent. The Company shall maintain, at its expense, a registrar and transfer agent for the Securities.
          (h) Agreement Not to Offer or Sell Additional Shares; Lock-Up Agreements for Directors and Officers; Enforcement of Existing Lock-p Agreements.
          (i) During the period commencing on the date hereof and ending on the 45 th day following the date of the Final Prospectus relating to the registration of the sale of the Securities (the “ Lock-up Period ”), the Company will not, without the prior written consent of the Placement Agents (which consent may be withheld at the sole discretion of the Representative), directly or indirectly, sell, offer, contract or grant any option to sell, pledge, transfer or establish an open “put equivalent position” within the meaning of Rule 16a-1(h) under the Exchange Act, or otherwise dispose of or transfer, or announce the offering of, or file any registration statement under the Securities Act in respect of, any shares of Common Stock, options or warrants to acquire shares of Common Stock or securities exchangeable or exerciseable for or convertible into shares of Common Stock; provided, however , that the Company may issue shares of its Common Stock, options to purchase its shares of Common Stock or shares of Common Stock upon exercise of options, pursuant to any stock option, stock bonus or other stock

 

plan or arrangement described in the Public Filings, other than (i) the registration of the Registrable Securities (as defined in the Securities Purchase Agreement), (ii) issuances of Common Stock upon the exercise of options or warrants disclosed as outstanding in all reports filed by the Company under the Exchange Act prior to the date hereof, (iii) the issuance of equity incentives to employees pursuant to an equity incentive plan, (iv) issuances of shares of Common Stock or any securities convertible into or exercisable for Common Stock in connection with a strategic licensing arrangement, corporate partnering transaction or similar collaboration; (v) agreements to issue shares of Common Stock or any securities convertible into or exercisable for Common Stock, and the issuance of shares of Common Stock, in connection with an acquisition, by merger or consolidation with, or by purchase of all or a substantial portion of the assets of, or by any other manner, of any business or corporation, partnership, association or other business organization or division thereof; (vi) any registration of securities on Form S-4 or S-8 or similar forms and (vii) any post-effective amendments to registration statements effective as of the Effective Date.
          (ii) On or prior to the date hereof, the Company shall have furnished to the Placement Agents (A) an agreement in the form of Exhibit B-1 hereto from each director and officer and (B) an agreement in the form of Exhibit B-2 hereto from CytRx Corporation, and such agreements shall be in full force and effect on the Closing Date.
          (i) Existing Lock-Up Agreement. The Company will enforce all existing agreements between the Company and any of its security holders that prohibit the sale, transfer, assignment, pledge or hypothecation of any of the Company’s securities in connection with the Placement. In addition, the Company will direct the transfer agent to place stop transfer restrictions upon any such securities of the Company that are bound by such existing “lock-up” agreements for the duration of the periods contemplated in such agreements.
          (j) Investment Limitation . The Company shall not invest, or otherwise use the proceeds received by the Company from its sale of the Securities in such a manner as would require the Company to register as an investment company under the Investment Company Act.
          (k) No Stabilization or Manipulation. The Company will not take, directly or indirectly, any action designed to or that might be reasonably expected to cause or result in stabilization or manipulation of the price of the Securities or any other reference security, whether to facilitate the sale or resale of the Securities or otherwise.
          (l) Press Release . Prior to the earlier of the Closing Date or the termination of this Agreement, not to issue any press release or other communication directly or indirectly or hold any press conference with respect to the Company, its condition, financial or otherwise, or earnings, business affairs or business prospects (except for routine communications and presentations in the ordinary course of business and consistent with the past practices of the Company and of which the Placement Agents are notified), without the prior written consent of the Representative, unless in the judgment of the Company and its counsel, and after notification to the Placement Agents, such press release or communication is required by law.
      Section 4. Conditions of the Placement Agents’ Obligations . The respective obligations of the several Placement Agents as provided herein shall be subject to the accuracy

 

of the representations, warranties and agreements of the Company set forth herein as of the date hereof and as of the Closing Date as though then made, to the timely performance by the Company of its covenants and other obligations hereunder, and to each of the following conditions:
          (a) No Material Adverse Change. For the period from and after the date of this Agreement and prior to the Closing Date, in the judgment of the Representative, there shall have not occurred any Material Adverse Change.
          (b) Opinions of Counsel for the Company . On the Closing Date, the Placement Agents shall have received the opinion of counsel to the Company, dated as of such Closing Date, substantially in the form attached as Exhibit C . The opinion required herein may be that opinion provided to the Purchasers by counsel to the Company pursuant to the Securities Purchase Agreement, provided such opinion is addressed to the Placement Agents and substantially covers the subject matter set forth in Exhibit C hereto.
          (c) Officers’ Certificate . On the Closing Date, the Placement Agents shall have received a written certificate executed by the Chairman of the Board, Chief Executive Officer or President of the Company and the Chief Financial Officer or Chief Accounting Officer of the Company, dated as of the Closing Date, to the effect that:
          (i) for the period from and after the date of this Agreement and prior to the Closing Date, there has not occurred any Material Adverse Change;
          (ii) the representations, warranties and covenants of the Company set forth in Section 1(A) of this Agreement and incorporated herein by reference from the Securities Purchase Agreement are true and correct with the same force and effect as though expressly made on and as of such Closing Date; and
          (iii) the Company has performed, satisfied and complied with all the covenants, agreements and conditions required hereunder at or prior to such Closing Date.
          (d) The Placement Agents shall not have discovered and disclosed to the Company prior to or on the Closing Date that the Disclosure Package, in the opinion of counsel to the Placement Agents, contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
          (e) All corporate proceedings and other legal matters incident to the authorization, form and validity of the Transaction Documents and Securities and all other legal matters relating to the offering, issuance and sale, as applicable, of the Securities and the other Transactions shall be reasonably satisfactory in all material respects to the Representative; and the Company shall have furnished to Proskauer Rose LLP, counsel to the Placement Agents, all documents and information that it may reasonably request to enable them to pass upon such matters, including a Secretary’s Certificate, if requested.

 

          (f) The Company has not sustained since the date of the latest audited financial statements incorporated or deemed incorporated by reference in the Disclosure Package (i) any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any strike, job action, slowdown, work stoppage, labor dispute or court or governmental action, order or decree or (ii) since such date, there shall not have been any change in the common stock, short-term debt or long-term debt of the Company or any Material Adverse Change, the effect of which, in any such case set forth in clause (i) or (ii), is, in the judgment of the Representative, so material and adverse as to make it impracticable or inadvisable to proceed with the Placement or the delivery of the Securities being delivered on the Closing Date on the terms and in the manner contemplated in this Agreement and the Purchase Agreements.
          (g) Subsequent to the execution and delivery of this Agreement, there shall not have occurred any of the following: (i) trading in securities generally on the New York Stock Exchange, the American Stock Exchange, the National Association of Securities Dealers Automated Quotation System or in the over-the-counter market, or trading in any securities of the Company on any exchange or in the over-the-counter market, shall have been suspended or the settlement of such trading generally shall have been materially disrupted or minimum prices shall have been established on any such exchange or such market by the Commission, by such exchange or by any other regulatory body or governmental authority having jurisdiction, (ii) a banking moratorium shall have been declared by Federal or state authorities of the United States, (iii) the United States shall have become engaged in hostilities, there shall have been a significant escalation in hostilities involving the United States or there shall have been a declaration of a national emergency or war by the United States or (iv) there shall have occurred any other calamity or crisis or any change in general domestic or international economic, political or financial conditions, including without limitation as a result of terrorist activities, or the effect of international conditions on the financial markets in the United States shall be such, as to make it, in the sole discretion of the Representative, impracticable or inadvisable to proceed with the Placement or delivery of the Securities being delivered on the Closing Date on the terms and in the manner contemplated in this Agreement and the Purchase Agreements.
          (h) Each of the Transaction Documents, other than this Agreement, shall be in form and substance reasonably satisfactory to the Representative and shall have been duly executed and delivered by the Company and the other parties thereto, and the Securities shall have been duly executed and delivered by the Company.
          (i) All conditions to closing of the Purchase Agreements shall be satisfied or, where applicable, waived.
          (j) The sale of the Securities shall not be enjoined (temporarily or permanently) on the Closing Date.
          (k) Additional Documents. On or before the Closing Date, the Placement Agents shall have received such information, documents and opinions as they may reasonably require in order to evidence the accuracy of any of the representations and warranties, or the satisfaction of any of the conditions or agreements, herein contained.

 

      Section 5. Indemnification.
          (a) Indemnification of the Placement Agents . The Company agrees to indemnify and hold harmless each of the Placement Agents and their respective affiliates and their respective officers, directors, managers, members, partners, employees and agents, and any other persons controlling such Placement Agent or any of its affiliates within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act (each Placement Agent and each such other person being referred to as an “ Indemnified Person ”), to the fullest extent lawful, from and against all claims, liabilities, losses, damages and expenses (or any actions, claims, suits or proceedings in respect thereof), as incurred (“ Losses ”) related to or arising out of or in connection with such Placement Agent’s services hereunder, to which such Indemnified Person may become subject under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, or the laws or regulations of foreign jurisdictions where the Securities have been offered or at common law or otherwise (including in settlement of any litigation), insofar as such Losses (or actions in respect thereof as contemplated below) arises out of or is based upon:
          (A) (i) any untrue statement or alleged untrue statement of a material fact contained in the Disclosure Package (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;
               (ii) any untrue statement or alleged untrue statement of a material fact contained in any materials or information provided to investors by, or with the approval in writing of, the Company in connection with the marketing of the Securities and the Placement, including any roadshow or investor presentations made to investors by the Company (whether in person or electronically), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; or
               (iii) any breach by the Company of any representation or warranty or failure to comply with any of the covenants and agreements contained or incorporated by reference in this Agreement; and
          (B) the violation by the Company of any applicable laws or regulations of any jurisdiction where the Securities have been offered; and to reimburse the Indemnified Person for:
               (i) all expenses (including, without limitation, reasonable fees and expenses of counsel chosen by the Representative) as such expenses are incurred by the Placement Agents in connection with investigating, preparing, defending or settling any action or claim for which indemnification has or is reasonably likely to be sought by the Indemnified Person, whether or not in connection with litigation in which any Indemnified Person is a named party; and
               (ii) any other Losses incurred by the Placement Agents.

 

The indemnity agreement set forth in this Section 5(a) shall be in addition to any liabilities that the Company may otherwise have, including without limitation under Schedule A of the Engagement Letter, dated April 28, 2008 (the “ Engagement Letter ”) between Jefferies and the Company, a copy of which is attached as Exhibit D hereto.
          (b) Notifications and Other Indemnification Procedures . Promptly after receipt by an Indemnified Person under this Section 5 of notice of the commencement of any action, such Indemnified Person will, if a claim in respect thereof is to be made against the Company under this Section 5 , notify the Company in writing of the commencement thereof, but the omission so to notify the Company will not relieve it from any liability which it may have to any Indemnified Person for indemnification, except to the extent that the Company shall have been materially prejudiced by such failure. In case any such action is brought against any Indemnified Person and such Indemnified Person seeks or intends to seek indemnity from an Company, the Company will be entitled to participate in, and, to the extent that it shall elect, jointly with all other indemnifying parties similarly notified, by written notice delivered to the Indemnified Person promptly after receiving the aforesaid notice from such Indemnified Person, to assume the defense thereof with counsel reasonably satisfactory to such Indemnified Person; provided, however, if the defendants in any such action include both the Indemnified Person and the Company and the Indemnified Person shall have reasonably concluded that a conflict may arise between the positions of the Company and the Indemnified Person in conducting the defense of any such action or that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the Company, the Indemnified Person or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such Indemnified Person or parties. Upon receipt of notice from the Company to such Indemnified Person of the Company’s election so to assume the defense of such action and approval by the Indemnified Person of counsel, the Company will not be liable to such Indemnified Person under this Section 5 for any legal or other expenses subsequently incurred by such Indemnified Person in connection with the defense thereof unless (i) the Indemnified Person shall have employed separate counsel in accordance with the proviso to the preceding sentence (it being understood, however, that the Company shall not be liable for the expenses of more than one separate counsel (together with local counsel), approved by the Company, representing the indemnified parties who are parties to such action) or (ii) the Company shall not have employed counsel satisfactory to the Indemnified Person to represent the Indemnified Person within a reasonable time after notice of commencement of the action, in each of which cases the fees and expenses of counsel shall be at the expense of the Company.
          (c) Settlements . The Company under this Section 5 shall not be liable for any settlement of any proceeding effected without its written consent, which consent shall not be unreasonably withheld, but if settled with such consent or if there be a final judgment for the plaintiff, the Company agrees to indemnify the Indemnified Person against any Losses by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified Person shall have requested the Company to reimburse the Indemnified Person for fees and expenses of counsel as contemplated by Section 5(b) hereof, the Company agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by the Company of the aforesaid request and (ii) the Company shall not have reimbursed the Indemnified Person in accordance

 

with such request prior to the date of such settlement. The Company shall not, without the prior written consent of the Indemnified Person, effect any settlement, compromise or consent to the entry of judgment in any pending or threatened action, suit or proceeding in respect of which any Indemnified Person is or could have been a party and indemnity was or could have been sought hereunder by such Indemnified Person, unless such settlement, compromise or consent includes (i) an unconditional release of such Indemnified Person from all liability on claims that are the subject matter of such action, suit or proceeding and (ii) does not include a statement as to, or an admission of, fault, culpability or a failure to act, by or on behalf of any Indemnified Person.
      Section 6. Contribution. If the indemnification provided for in Section 5 is for any reason held to be unavailable to or otherwise insufficient to hold harmless an Indemnified Person in respect of any Losses referred to therein, then the Company shall contribute to the aggregate amount paid or payable by such Indemnified Person, as incurred, as a result of any Losses referred to therein (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the Placement Agents, on the other hand, from the Placement pursuant to this Agreement or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, on the one hand, and the Placement Agents, on the other hand, in connection with the statements or omissions which resulted in such Losses, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Placement Agents, on the other hand, in connection with the Placement pursuant to this Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the Placement pursuant to this Agreement (before deducting expenses) received by the Company, and the fee received by the Placement Agents in connection with the Placement. The relative fault of the Company, on the one hand, and the Placement Agents, on the other hand, shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company, on the one hand, or the Placement Agents, on the other hand, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. Notwithstanding the provisions of this Section 6 , the Placement Agents’ obligations to contribute, if any, pursuant to this Section are several, and not joint, and the aggregate contribution of all Indemnified Persons to all Losses shall not exceed the amount of the fees actually received by such Placement Agent pursuant to this Agreement with respect to the services rendered pursuant to this Agreement.
     The Company agrees to reimburse the Indemnified Persons for all expenses (including, without limitation, reasonable fees and expenses of counsel) as they are incurred in connection with investigating, preparing, defending or settling any action or claim for which contribution has been sought by the Indemnified Person, whether or not in connection with litigation in which any Indemnified Person is a named party.
     The provisions set forth in Section 5(c) with respect to notice of commencement of any action shall apply if a claim for contribution is to be made under this Section 6 ; provided, however, that no additional notice shall be required with respect to any action for which notice has been given under Section 5(b) for purposes of indemnification.

 

     The Company and the Placement Agents agree that it would not be just and equitable if contribution pursuant to this Section 6 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 6 .
     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. For purposes of this Section 6 , each officer and employee of each of the Placement Agents and each person, if any, who controls such Placement Agent within the meaning of the Securities Act and the Exchange Act shall have the same rights to contribution as such Placement Agent.
      Section 7. Effectiveness of this Agreement; Termination; and Survival.
          (a) This Agreement shall become effective upon signing by the parties hereto .
          (b) Any Placement Agent may resign at any time and the Company may terminate such Placement Agent’s services at any time, each by giving at least ten days’ prior written notice to the other. If such Placement Agent resigns because of the failure of any condition specified in Section 4 to be satisfied when and as required (whether or not the Company’s fault directly or indirectly) or the Company terminates such Placement Agent’s services for any reason, such Placement Agent and its counsel shall be entitled to receive all of the amounts due pursuant to the Engagement Letter up to, and including, the effective date of such expiration, termination or resignation, as the case may be.
          (c) If the Placement Agents’ services hereunder are terminated by the Company, other than a termination following such Placement Agent’s gross negligence or intentional misconduct (after notice to such Placement Agent, and an opportunity to cure, if curable), and the Company completes an offering or other “Transaction” (as such defined in Section 1 of the Engagement Letter) of equity or equity-linked securities within six months of such termination with any party, the Company shall pay the Representative, on behalf of the Placement Agents concurrently with the closing of such transaction the fees set forth in the Engagement Letter and Section 2(b) of this Agreement.
          (d) The respective representations, warranties and other statements of the Company and its officers and the agreements, covenants and the indemnities set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Placement Agents or the Company or any of its or their partners, officers or directors or any controlling person, as the case may be, and will survive delivery of and payment for the Securities sold hereunder or any termination of this Agreement (for whatever reason).
      Section 8. Notices. All communications hereunder shall be in writing and shall be mailed, hand delivered or telecopied and confirmed to the parties hereto as follows:

 

If to the Placement Agents, c/o the Representative :
Jefferies & Company, Inc.
520 Madison Avenue, 12th Floor
New York, New York 10022
Facsimile: (212) 284-2280
Attention: General Counsel
with a copy to :
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Facsimile: (212) 969-2900
Attention: Stuart Bressman, Esq.
If to the Company :
RXi Pharmaceuticals Corporation
60 Prescott Street
Worcester, MA 01605
Facsimile: (508) 767-3862
with a copy to :
Ropes & Gray LLP
One International Place
Boston, MA 02110
Facsimile: (617) 235-0706
Attention: Marc A. Rubenstein, Esq.
     Any party hereto may change the address for receipt of communications by giving written notice to the others.
      Section 9. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto, and to the benefit of the employees, officers and directors and controlling persons referred to in Section 5 and Section 6 , and in each case their respective successors, and personal representatives, and no other person will have any right or obligation hereunder. The term “successors” shall not include any Purchaser.
      Section 10. Partial Unenforceability. The invalidity or unenforceability of any Section, paragraph or provision of this Agreement shall not affect the validity or enforceability of any other Section, paragraph or provision hereof. If any Section, paragraph or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable.

 

      Section 11. Governing Law Provisions. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York. Any legal suit, action or proceeding arising out of or based upon this Agreement or the Transactions (“ Related Proceedings ”) may be instituted in the federal courts of the United States of America located in the Borough of Manhattan in the City of New York or the courts of the State of New York in each case located in the Borough of Manhattan in the City of New York (collectively, the “ Specified Courts ”), and each party irrevocably submits to the exclusive jurisdiction (except for proceedings instituted in regard to the enforcement of a judgment of any such court (a “ Related Judgment ”), as to which such jurisdiction is non-exclusive) of such courts in any such suit, action or proceeding.
      Section 12. General Provisions. This Agreement and the Engagement Letter constitute the entire agreement of the parties to this Agreement with respect to the subject matter hereof and thereof and supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof and thereof, except for those certain terms incorporated into this Placement Agent Agreement from the Purchase Agreements. Nothing in this Agreement should be read to limit or otherwise modify the terms and other provisions of the Engagement Letter, provided that, in the event any terms of the Engagement Letter or Indemnification Letter are inconsistent with or contradict any terms of this Agreement, this Agreement shall govern. This Agreement may be executed in two or more counterparts, each one of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement may not be amended or modified unless in writing by all of the parties hereto, and no condition herein (express or implied) may be waived unless waived in writing by each party whom the condition is meant to benefit. The failure by any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof. The Section headings herein are for the convenience of the parties only and shall not affect the construction or interpretation of this Agreement.
     Each of the parties hereto acknowledges that it is a sophisticated business person who was adequately represented by counsel during negotiations regarding the provisions hereof, including, without limitation, the indemnification provisions of Section 5 and the contribution provisions of Section 6 , and is fully informed regarding said provisions. Each of the parties hereto further acknowledges that the provisions of Sections 5 and 6 hereto fairly allocate the risks in light of the ability of the parties to investigate the Company, its affairs and its business in order to assure that adequate disclosure has been made in the Disclosure Package (and any amendments and supplements thereto), as required by the Securities Act, the Exchange Act and any other applicable law.
      Section 13. Authority of the Representative . In connection with this Agreement, Jefferies will act as the Representative for and on behalf of the Placement Agents, and any action taken under this Agreement by the Representative, will be binding on all the Placement Agents. Each of Natixis, Griffin and Broadpoint authorizes Jefferies to manage the Placement and to take such action in connection therewith as Jefferies in its sole discretion deems appropriate or desirable, consistent with the provisions of the Agreement Among Placement Agents previously entered into between Jefferies and each of Natixis, Griffin and Broadpoint.

 

     If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to the Company the enclosed copies hereof, whereupon this instrument, along with all counterparts hereof, shall become a binding agreement in accordance with its terms.
 	 	 	 	 		
 	Very truly yours,

RXi PHARMACEUTICALS CORPORATION
 	 		
 	By:  	/s/ Stephen DiPalma	 		
 	 	Name:  Stephen DiPalma	 	 	
 	 	Title:  Chief Financial Officer	 	 	

The foregoing Placement Agency	 	 	 	 	
Agreement is hereby confirmed	 	 	 	 	
and accepted by the Placement Agents	 	 	 	 	
in New York, New York as of the	 	 	 	 	
date first above written.	 	 	 	 	
 	 	 	 	 	 	 	 	 	
JEFFERIES & COMPANY, INC.	 	 	 	 	
 	 	 	 	 	 	 	 	 	
By:  	/s/ Charles E. Mather	 		
 	Name:  Charles E. Mather	 	 		
 	Title:  Managing Director	 	 		
 	 	 	 	 	 	 	 	 	
NATIXIS BLEICHROEDER INC.	 	 	 	 	
 	 	 	 	 	 	 	 	 	
By:  	/s/ Gregg Schoenberg	 		
 	Name:  Gregg Schoenberg	 	 		
 	Title:  Senior Managing Director	 	 		
 	 	 	 	 	 	 	 	 	
BROADPOINT SECURITIES GROUP, INC.	 	GRIFFIN SECURITIES, INC.	
 	 	 	 	 	 	 	 	 	
By:	 	/s/ John K. Cramer	 	 	 	By:	 	/s/ Adrian Stecyk	
 	 	Name: John K. Cramer	 	 	 	 	 	Name: Adrian Stecyk	
 	 	Title: Managing Director	 	 	 	 	 	Title: President and CEO	

 

EXHIBIT A
SECURITIES PURCHASE AGREEMENT

 

EXHIBIT B-1

FORM OF D&O LOCK-UP AGREEMENT
[                      ], 2008               
Jefferies & Company, Inc.
520 Madison Avenue, 12th floor
New York, New York 10022

RE: RXi Pharmaceuticals Corporation
Ladies & Gentlemen:
     The undersigned is an owner of record or beneficially of certain shares (“ Shares ”) of the Common Stock (the “ Common Stock ”), par value $0.0001 per share, of RXi Pharmaceuticals Corporation (the “ Company ”) or securities convertible into or exchangeable or exercisable for Shares. The Company is proposing a private placement of Common Stock (the “ Placement ”) for which you will act as the Placement Agent. The undersigned recognizes that the Placement will be of benefit to the undersigned and will benefit the Company by, among other things, raising additional capital for its operations. The undersigned acknowledges that you are relying on the representations and agreements of the undersigned contained in this letter in carrying out the Placement and in entering into a placement agency agreement (the “ Placement Agency Agreement ”) with the Company with respect to the Placement.
     In consideration of the foregoing, the undersigned hereby agrees that the undersigned will not (and will cause any spouse or immediate family member of the spouse or the undersigned living in the undersigned’s household not to), without the prior written consent of Jefferies & Company, Inc. (which consent may be withheld in its sole discretion), directly or indirectly, sell, offer, contract or grant any option to sell (including without limitation any short sale), pledge, transfer, establish an open “put equivalent position” within the meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934, as amended, or otherwise dispose of any Shares, options or warrants to acquire Shares, or securities exchangeable or exercisable for or convertible into Shares currently or hereafter owned either of record or beneficially (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) by the undersigned (or such spouse or family member), or publicly announce an intention to do any of the foregoing, for a period commencing on the date hereof and continuing through the close of trading on the date which is 45 days after the date of the Final Prospectus filed with respect to the Shares issued in the Placement, provided that such Final Prospectus is filed no later than 120 days after the Closing Date (as defined in the Placement Agency Agreement). The undersigned also agrees and consents to the entry of stop transfer instructions with the Company’s transfer agent and registrar against the transfer of Shares or securities convertible into or exchangeable or exercisable for Shares held by the undersigned except in compliance with the foregoing restrictions.
     Notwithstanding the foregoing, the undersigned may transfer any Common Stock or securities convertible into or exchangeable or exercisable for Common Stock either (i) during the
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undersigned’s lifetime to his or her immediate family or to a trust if the beneficiaries of such trust are exclusively the undersigned and/or a member or members of his or her immediate family or (ii) upon death by will or intestacy; provided, however, that prior to any such transfer each transferee shall execute an agreement substantially identical to this agreement and which shall be satisfactory to Jefferies & Company Inc., pursuant to which each transferee shall agree to receive and hold such Common Stock, or securities convertible into or exchangeable or exercisable for Common Stock, subject to the provisions hereof, and there shall be no further transfer except in accordance with the provisions hereof. For purposes of this paragraph, “immediate family” shall mean spouse, lineal descendant, father, mother, brother, sister or domestic partner of the transferor, whether by law or otherwise, or any grandparent, mother-in-law, father-in-law, daughter-in-law, brother-in-law, stepchild, grandchild or step-grandchild, uncle, aunt, niece or nephew of the transferor, and which shall include adoptive relationships.
     With respect to the Placement, the undersigned waives any registration rights relating to registration under the Securities Act of 1933, as amended, of any Shares owned either of record or beneficially by the undersigned, including any rights to receive notice of the Placement.
     This agreement is irrevocable and will be binding on the undersigned and the respective successors, heirs, personal representatives, and assigns of the undersigned. This agreement shall be governed by and construed in accordance with the internal laws of the State of New York.

 	 	Printed Name of Holder	
 	 	 	 	 	
 	 	By:	 	 	
 	 	 	 	 	
 	 	 	 	Signature	

 	 	Printed Name of Person Signing	
 	 	 	 	 	
 	 	(and indicate capacity of person signing if signing as custodian, trustee, or on behalf of an entity)	
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EXHIBIT B-2

FORM OF CYTRX LOCK-UP AGREEMENT
Jefferies & Company, Inc.
520 Madison Avenue, 12th floor
New York, New York 10022
     Re: RXi Pharmaceuticals Corporation — Lock-Up Agreement
Ladies & Gentlemen:
     The undersigned is an owner of record or beneficially of certain shares (“ Shares ”) of the Common Stock (the “ Common Stock ”), par value $0.0001 per share, of RXi Pharmaceuticals Corporation (the “ Company ”). The Company is proposing a private placement of Common Stock (the “ Placement ”) for which you will act as the Placement Agent. The undersigned recognizes that the Placement will be of benefit to the undersigned and will benefit the Company by, among other things, raising additional capital for its operations. The undersigned acknowledges that you are relying on the representations and agreements of the undersigned contained in this letter in carrying out the Placement and in entering into a placement agency agreement with the Company with respect to the Placement.
     In consideration of the foregoing, the undersigned hereby agrees that the undersigned will not, without the prior written consent of Jefferies & Company, Inc. (“ Jefferies ”) (which consent may be withheld in its sole discretion), directly or indirectly, sell, offer, contract or grant any option to sell (including without limitation any short sale), pledge, transfer, establish an open “put equivalent position” within the meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), or otherwise dispose of any Shares, options or warrants to acquire Shares, or securities exchangeable or exercisable for or convertible into Shares currently or hereafter owned either of record or beneficially (as defined in Rule 13d-3 under the Exchange Act ) by the undersigned, or publicly announce an intention to do any of the foregoing, for a period commencing on the date hereof and continuing through the close of trading on the date which is thirty (30) days after the date of the Final Prospectus filed the Securities and Exchange Commission (“ SEC ”) with respect a re-sale registration statement (the “ Registration Statemen t”) for the benefit of the purchasers of the Common Stock issued in the Placement (the “ Lock-up Period ”). The undersigned also agrees and consents to the entry of stop transfer instructions with the Company’s transfer agent and registrar against the transfer of Shares or securities convertible into or exchangeable or exercisable for Shares held by the undersigned except in compliance with the foregoing restrictions.
     The restrictions set forth in the immediately preceding paragraph shall not apply to:
     (1) any sale of Shares pursuant to Rule 144 (a “ 144 Sale ”) of the Securities Act of 1933, as amended (the “ Securities Act ”), subject to the volume limitations and other requirements of such Rule; provided, however , that such 144 Sale must be made exclusively by or through Jefferies, as broker; provided further that, if Jefferies is not
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able to identify, within five business days after being notified by the Company of its intention to make a 144 Sale, a purchaser for such Shares at a price not lower than 10% below the then-prevailing market price for such Shares, then such 144 Sale may be made by the undersigned without Jefferies acting as broker beginning after the expiration of such five business day period. In the event Jefferies acts as broker with respect to a 144 Sale, then Jefferies shall be entitled to a commission with respect to such sale. The commission charged by Jefferies shall be the lowest commission that it charges comparable customers for comparable transactions ( i.e., on a “most favored nations” basis), which currently is $0.05 per share;
     (2) any sale, transfer or other disposition of Shares by the undersigned to a strategic partner ( e.g. , a customer, supplier or joint venture partner) in connection with a licensing arrangement, corporate partnering transaction or similar strategic transaction;
     (3) any sale of Shares in a private transaction to an institutional accredited investor which takes place after the date that the Placement closes; or
     (4) any sale, transfer or other disposition of Shares to the sellers in connection with an acquisition by the undersigned, directly or indirectly, of the business or assets of another company which takes place after the date that the Placement closes;
provided, however , that it shall be a condition to the transfer that (A), in the case of any transfer described in clauses (2) and (3) above, the transferee executes and delivers to Jefferies, not later than one business day prior to such transfer, a written agreement, in substantially the form of this agreement and otherwise satisfactory in form and substance to Jefferies, and (B) if the undersigned is required to file a report under Section 16(a) of the Exchange Act, reporting a reduction in beneficial ownership of Shares, or securities exchangeable or exercisable for or convertible into Shares, currently or hereafter owned either of record or beneficially during the Lock-Up Period, the undersigned shall include a statement in such report to the effect that, in the case of any transfer pursuant to clause (1) above, such transfer is being made pursuant to Rule 144 of the Securities Act or, in the case of any transfer pursuant to clause (2) above, such transfer is being made to a strategic partner in connection with a strategic licensing arrangement, corporate partnering transaction or similar strategic transaction or, in the case of a transfer pursuant to clause (4), above, such transfer is being made to the sellers in connection with an acquisition of a business or assets.
     This Lock-Up Agreement shall lapse and become null and void (i) if the Placement shall not have occurred on or before June 30, 2008, (ii) upon written notice from an authorized officer of the Company to Jefferies that the Company has determined not to pursue or consummate the Placement or (iii) if the Registration Statement has not been declared effective by the SEC by September 30, 2008.
     This Lock-Up Agreement is irrevocable and will be binding on the undersigned and its successors and assigns. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York.
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 	CYTRX CORPORATION
 	 	
 	By:  	 	 	
 	 	Name:  	 	 	
 	 	Title:  	 	 	
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EXHIBIT C
OPINION OF COMPANY COUNSEL
     References to the Disclosure Package in this Exhibit C include any supplements thereto at the Closing Date.
     1. The Company is a corporation validly existing and in good standing under the laws of the State of Delaware, with corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Public Filings and to enter into and perform its obligations under this Agreement.
     2. The Company has all necessary corporate power and authority to execute and deliver the Transaction Documents, to perform its obligations thereunder, to issue the Common Stock and to consummate the other Transactions.
     3. Each of the Engagement Letter and the Placement Agency Agreement has been duly authorized, executed and delivered by the Company.
     4. Each of the Transaction Documents (other than the Placement Agency Agreement and the Engagement Letter) has been duly authorized, executed and delivered by the Company and constitutes a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms.
     5. The Company has all necessary power and authority to issue and deliver the shares of Common Stock; the shares of Common Stock have been duly authorized and, when duly issued and delivered to holders of the Common Stock, the shares of Common Stock will be duly and validly issued, fully paid and nonassessable and will be issued in compliance with federal and state securities laws. None of the shares of Common Stock will be issued in violation of any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase securities of the Company.
     6. The execution and delivery of the Transaction Documents by the Company, the performance by the Company of its obligations thereunder (other than performance by the Company of its obligations under the indemnification sections of such agreements, as to which no opinion need be rendered), including the issuance and sale of the Securities (i) will not result in any violation of the provisions of the charter or by-laws of the Company; (ii) will not constitute a breach of, or Default under, or result in the creation or imposition of any security interest, mortgage, pledge, lien, charge, encumbrance or adverse claim upon any property or assets of the Company, pursuant to any agreement filed by the Company as an exhibit to the Public Filings; (iii) will not result in any violation of any federal, Delaware law or, to the best knowledge of such counsel any administrative regulation or administrative or court decree, applicable to the Company; or (v) will not require any consent, approval, authorization or other order of, or registration or filing with, any court or other governmental or regulatory authority or agency, except (i) with respect to the transactions contemplated by the Securities
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Purchase Agreement as may be required under the Securities Act and the Exchange Act, (ii) as required by the state securities or “blue sky” laws and (iii) for such consents, approvals, authorizations, orders, filings or registrations which have been obtained or made.
     7. Assuming the accuracy of the representations and warranties of the Purchasers contained in the Purchase Agreements and the compliance of such parties with the agreements set forth herein and therein, it is not necessary, in connection with the issuance and sale of the Securities, in the manner contemplated by Transaction Documents, to register the Securities under the Securities Act.
     8. The Company is not, and after receipt of payment for the Securities will not be, an “investment company” within the meaning of Investment Company Act.
     9. None of the Securities will be issued in violation of any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase securities of the Company known to such counsel.
     10. To the knowledge of such counsel and other then as set forth in the Public Filings, there are no legal or governmental proceedings pending to which the Company is a party or of which any property or assets of the Company is subject which is required to be disclosed in any Public Filings.
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EXHIBIT D
ENGAGEMENT LETTER
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Exhibit 99.1
RXi Pharmaceuticals Announces $8.7 Million Private Placement
Worcester, MA — June 24, 2008 — RXi Pharmaceuticals Corporation (“RXi”) (NASDAQ: RXII), today announced that it has entered into definitive agreements with institutional investors to issue and sell an aggregate of 1,073,299 shares of its common stock in a private placement at a price of $8.12 per share, resulting in aggregate gross proceeds of approximately $8.7 million. Jefferies & Company acted as the lead placement agent and Natixis Bleichroeder Inc., Broadpoint Securities Group, Inc. and Griffin Securities, Inc. acted as the co-placement agents for the private placement. The private placement is expected to close on or around Wednesday, June 25, 2008, subject to customary closing conditions.
The Company intends to use the net proceeds from the offering for working capital and other general corporate purposes, including building its pipeline of rxRNA™ compounds for potential alliances, internal development and collaborations.
The securities issued in the private placement have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or applicable state securities laws, and accordingly may not be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and such applicable state and securities laws. The company has agreed to file a registration statement with the Securities and Exchange Commission registering for resale the shares of common stock issued in this private placement.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy securities, nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful.
About RXi Pharmaceuticals
RXi Pharmaceuticals is a discovery-stage biopharmaceutical company pursuing the development and potential commercialization of proprietary therapeutics based on RNA interference (RNAi) for the treatment of human diseases. RXi Pharmaceuticals’ rxRNA™ compounds are distinct from the siRNA compounds used by many other companies developing RNAi therapeutics and are believed by the Company, based on its internal research, to be up to 100 times more active than conventional siRNA (depending on the target site), nuclease resistant and readily manufactured. RXi Pharmaceuticals believes it is well positioned to compete successfully in the RNAi-based therapeutics market with its accomplished scientific advisors, including Dr. Craig Mello, recipient of the 2006 Nobel Prize for his co-discovery of RNAi, a management team that is experienced in developing RNAi products, and a strong early intellectual property position. www.rxipharma.com
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future expectations, plan and future development of RXi Pharmaceutical Corporation’s products and technologies. These forward-looking statements about future expectations, plans and prospects of the development of RXi Pharmaceutical Corporation’s products and technologies involve significant risks, uncertainties and assumptions, including the risk that the development of our RNAi-based therapeutics

 

may be delayed or may not proceed as planned and we may not be able to complete development of any RNAi-based product, the risk that the FDA approval process may be delayed for any drugs that we develop, and the possibility that other companies or organizations may assert patent rights that prevent us from developing our products. Actual results may differ materially from those RXi Pharmaceuticals Corporation contemplated by these forward-looking statements. RXi Pharmaceuticals Corporation does not undertake to update any of these forward-looking statements to reflect a change in its views or events or circumstances that occur after the date of this release.
 	 	 	 	 	
Contacts:	 	 	 	 	
Donna Falcetti	 	Susan Noonan (investors)	 	Eric Goldman (media)	
Rxi Pharmaceuticals	 	SAN Group	 	Rx Communications Group	
508-929-3615	 	212-966-3650	 	917-322-2563	
ir@rxipharma.com	 	susan@sanoonan.com	 	egoldman@rxir.com