CONTRIBUTION AGREEMENT between CYTRX CORPORATION and RXi PHARMACEUTICALS CORPORATION April 30, 2007
THIS CONTRIBUTION AGREEMENT (this “Agreement”) is dated as of April 30, 2007 and is
made by and between CytRx Corporation, a Delaware corporation (“CytRx”), and RXi
Pharmaceuticals Corporation, a Delaware corporation and majority-owned subsidiary of CytRx
(“RXi”). CytRx and RXi are sometimes referred to herein individually as a “Party”
and collectively as the “Parties.”
RECITALS:
A. The Parties previously entered into a Contribution Agreement, dated as of January 8, 2007 (the
“Initial Contribution Agreement”), pursuant to which CytRx assigned and contributed to RXi,
and RXi assumed from CytRx, certain technology, contractual rights and obligations, and
intellectual property rights relating to or useful for the conduct of the “RXi Business” (as
defined therein), as well as a letter agreement, dated as of January 10, 2007 (the
“Reimbursement Agreement”), under which RXi agrees to reimburse CytRx for expenses incurred
by CytRx in connection with the formation and initial operations of RXi, including an allocable
share of placement agent fees and other offering expenses relating to RXi fundraising activities.
B. RXi has entered into four License Agreements and an Invention Disclosure Agreement
(collectively, the “UMMS Agreements”)with the University of Massachusetts Medical School
(“UMMS”), each dated as of January 10, 2007, under which UMMS grants to RXi certain rights
with respect to current and future UMMS proprietary technologies.
C. The UMMS Agreements may be terminated by UMMS, or will not become effective, unless and until
RXi completes an “Initial Financing” (as defined therein) by a date specified.
D. RXi has entered into Scientific Advisory Board Agreements (the “SAB Agreements”) dated
February 26, 2007 with each of Xxxxx X. Xxxxx, Xxxxxxx X. Xxxxxx, Xxxxx X. Xxxx and Xxxxxxx X.
Czech (the “SAB Members”).
E. The SAB Agreements will not become effective unless and until RXi completes an “Equity Funding”
(as defined therein) by a date specified.
F. RXi has entered into an Employment Agreement (the “CEO Agreement”) dated February 22,
2007, with Xxx Xxxxx (“Xxxxx”)
G. CytRx now desires to assign and contribute to RXi, and RXi wishes to receive and accept, funds
sufficient to satisfy the Initial Financing requirements of the UMMS Agreements and to constitute
an Equity Financing under the SAB Agreements, on the terms and provisions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, CytRx and
RXi agree as follows:
ARTICLE 1
CONTRIBUTION OF FUNDS
1.1 Contribution of Funds. Concurrently herewith, CytRx shall contribute to RXi for use by
RXi as provided herein funds (the “Funds”) totaling Seventeen Million Dollars
($17,000,000), against RXi’s delivery to CytRx of the RXi Shares (as defined in Section 1.2). Of
the Funds, Two Million Dollars ($2,000,000) (the “Estimated Reimbursement Amount”) shall be
retained by CytRx as satisfaction, in full, of all of RXi’s current liabilities to CytRx under the
Reimbursement Agreement, subject to Section 1.3. The remainder of Fifteen Million Dollars
($15,000,000) shall be paid to RXi by wire transfer to an account of RXi or its agent designated by
RXi for this purpose.
1.2 Consideration. In consideration of CytRx’s contribution to RXi of the Funds as provided
in Section 1.1, RXi shall issue and deliver to CytRx 1,838 shares (the “RXi Shares”) of the
common stock, par value $.0001 per share (“RXi Common Stock”), of RXi, which, when
aggregated with the 4,153 shares of RXi Common Stock held by CytRx on the date hereof, shall
represent approximately 89.4% of the issued and outstanding shares of RXi Common Stock immediately
following such issuance of the RXi Shares. CytRx acknowledges that the certificates representing
the RXi Shares will contain customary legends regarding restrictions on transferability under
federal and state securities laws.
1.3 Final Reimbursement Amount. The Estimated Reimbursement Amount represents the estimated
amount owing by RXi to CytRx under the Reimbursement Agreement as of the date hereof. CytRx and
RXi shall undertake as soon as possible after the date hereof, and in any event within 60 days
after the date hereof, to determine the actual amount owing by RXi to CytRx. To the extent the
actual amount finally determined to be owing to CytRx (the “Final Reimbursement Amount”) is
less than the Estimated Reimbursement Amount, CytRx shall promptly surrender to RXi for
cancellation the number of the RXi Shares (rounded to the nearest whole number of RXi shares)
determined by dividing by $9,249.18 the excess of the Estimated Reimbursement Amount over the Final
Reimbursement Amount. To the extent that the Final Reimbursement Amount exceeds the Estimated
Reimbursement Amount, RXi shall promptly issue and deliver to CytRx the number of additional shares
of RXi Common Stock (rounded to the nearest whole number of shares) determined by dividing by
$9,249.18 the excess of the Final Reimbursement Amount over the Estimated Reimbursement Amount.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF CYTRX
As a material inducement to RXi to enter into this Agreement, CytRx hereby represents and
warrants to RXi that:
2.1 Organization and Qualification. CytRx is a corporation, validly existing and in good
standing under the laws of the State of Delaware, with all requisite corporate power and authority
to execute, deliver and perform its obligations under this Agreement.
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2.2 Authorization. The execution, delivery and performance of this Agreement by CytRx have
been duly authorized by all necessary corporate action on the part of CytRx.
2.3 Representations Regarding the RXi Shares.
(a) CytRx is acquiring the RXi Shares for its own account, for investment and not for, with a
view to, or in connection with, any distribution or public offering thereof within the meaning of
the Securities Act of 1933, as amended (the “Securities Act”); provided, however, that the
foregoing shall not be in derogation of any of CytRx’s obligations under the UMMS Agreements, or
otherwise, to reduce its ownership of RXi Common Stock following the Initial Financing.
(b) CytRx understands that the RXi Shares have not been, and will not be, registered under the
Securities Act or any state securities law, by reason of their issuance in a transaction exempt
from the registration requirements of the Securities Act and such laws, that the RXi Shares must be
held indefinitely unless they are subsequently registered under the Securities Act and such laws or
a subsequent disposition thereof is exempt from registration, that the certificates for the Shares
shall bear a legend to such effect, and that appropriate stop transfer instructions may be issued.
CytRx further understands that such exemption depends upon, among other things, the bona fide
nature of CytRx’s investment intent expressed herein.
(c) CytRx understands the meaning of the term “accredited investor” as used in Regulation D
promulgated under the Securities Act and represents and warrants to RXi that it is an “accredited
investor” for purposes of acquiring the RXi Shares hereunder.
(d) CytRx has sufficient knowledge and experience in business and financial matters and with
respect to investment in securities of privately held companies so as to enable it to analyze and
evaluate the merits and risks of the investment contemplated hereby and is capable of protecting
its interest in connection with this transaction. CytRx is able to bear the economic risk of such
investment, including a complete loss of the investment.
(e) CytRx acknowledges that it and its representatives have had the opportunity to ask
questions and receive answers from officers and representatives of RXi concerning RXi and its
business and the transactions contemplated by this Agreement and to obtain any additional
information which RXi possesses or can acquire that is necessary to verify the accuracy of the
information regarding RXi herein set forth or otherwise desired in connection with its acquisition
of the Shares hereunder.
(f) CytRx understands that the exemption from registration afforded by Rule 144 (the
provisions of which are known to CytRx) promulgated by the Securities and Exchange Commission under
the Securities Act depends upon the satisfaction of various conditions, and that such exemption is
not currently available.
2.4 Disclaimer. CytRx has not made, and shall not be deemed to have made, to RXi any
representation or warranty other than as expressly set forth in this Article 2.
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ARTICLE 3
REPRESENTATIONS, WARRANTIES AND COVENANTS OF RXi
In order to induce CytRx to enter into this Agreement, RXi hereby represents and warrants to
CytRx that:
3.1 Organization and Qualification. RXi is a corporation, validly existing and in good
standing under the laws of the State of Delaware, with all requisite corporate power and authority
to execute, deliver and perform its obligations under this Agreement.
3.2 Authorization. The execution, delivery and performance by RXi of this Agreement have been
duly authorized by all necessary corporate action on the part of RXi.
3.3 Capitalization. Immediately following the issuance and delivery hereunder of the RXi
Shares, the authorized capital stock of RXi shall consist of 1,000,000 shares of RXi Common Stock,
of which 6,703 shares, including the RXi Shares, shall be issued and outstanding and zero shares
shall be reserved for issuance upon exercise of outstanding stock options of RXi (the
“Options”) and 259 shares shall be reserved for issuance to UMMS as provided in the UMMS
Agreements. Except for the Options and the UMMS Agreements and obligations to issue stock options
pursuant to the SAB Agreements and other employment and consulting agreements entered into by RXi
in the ordinary course of business prior to the date hereof, there are no outstanding
subscriptions, option, calls, contracts, commitments, understandings, restrictions, arrangements,
rights or warrants, including any right of conversion or exchange under any outstanding security,
instrument or other agreement and also including any rights plan or other anti-takeover agreement,
obligating RXi to issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of the capital stock of RXi or obligating RXi to grant, extend or enter into any such
agreement or commitment. There are no outstanding stock appreciation rights or similar derivative
securities or rights of RXi. Other than the letter agreement, dated January 10, 2007, between
CytRx and UMMS and the letter agreement, dated February 15, 2007, among RXi, CytRx and the other
current stockholders of RXi as such letter agreements pertain to shares of RXi Common Stock held by
CytRx and its “Affiliates” (as defined), there are no voting trusts, irrevocable proxies or other
agreements or understandings to which RXi is a party or is bound with respect to the voting of any
shares of capital stock of RXi.
3.4 Issuance of the RXi Shares. The issuance and delivery of the RXi Shares in accordance
with this Agreement have been duly authorized by all necessary corporate action on the part of RXi.
The RXi Shares, when so issued and delivered against payment therefor in accordance with the
provisions of this Agreement, will be duly and validly issued, fully paid and non-assessable.
3.5 Permits. All of the approvals, authorizations, permit, licenses, waivers, filings and
consents required to be made, obtained or given by RXi to accomplish the transactions contemplated
by this Agreement have been made or obtained by RXi, unless the failure to obtain any such
approval, authorization, permit, license, waiver, filing or consent would not, individually or
collectively, reasonably be expected to materially adversely affect CytRx or
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otherwise result in a material diminution of the benefits of the transactions contemplated by
this Agreement to CytRx.
3.6 Contracts and Agreements.
(a) With respect to each UMMS Agreement (i) such UMMS Agreement has not been terminated by
RXi, nor has RXi received written notice of termination thereof by UMMS and is legal, valid,
binding, enforceable and in full force and effect with respect to RXi and, to the knowledge of RXi,
UMMS, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or in equity), (ii)
neither RXi nor, to RXi’s knowledge, UMMS is in material breach or violation of or in material
default in the performance or observance of any term or provision of such UMMS Agreement, and, to
the knowledge of RXi, no event has occurred which, with lapse of time or action by a third party,
would result in a default under such UMMS Agreement.
(b) With respect to each SAB Agreement (i) such SAB Agreement has not been terminated by RXi,
nor has RXi received written notice of termination thereof by the applicable SAB Member and is
legal, valid, binding and enforceable and in full force and effect with respect to RXi and, to the
knowledge of RXi, the applicable SAB Member, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and
subject, as to enforceability, to general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity), (ii) neither RXi nor, to RXi’s knowledge, any SAB Member is in
material breach or violation of or in material default in the performance or observance of any term
or provision of such SAB Agreement, and, to the knowledge of RXi, no event has occurred which, with
lapse of time or action by a third party, would result in a default under such SAB Agreement.
(c) Except for the UMMS Agreements, the RXi-CSHL License Agreement dated as of March 15, 2007
between RXi and Cold Spring Harbor Laboratory, the SAB Agreements, the CEO Agreement and other
agreements between RXi and its employees and contracts and agreements between CytRx and RXi, RXi is
not party to or bound by any contract, agreement, arrangement or understanding of the sort
described in Item 601(a)(10) of Reg. S-K under the Securities Act.
(d) Other than its liabilities and obligations under the UMMS Agreements, the SAB Agreements,
the CEO Agreement and other employment and consulting agreements to which RXi is a party and
contracts and agreements between CytRx and RXi, RXi has no liabilities or obligations other than
liabilities and obligations incurred in the ordinary course of the RXi Business (as defined in the
Initial Contribution Agreement), none of which is material, individually or in the aggregate.
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ARTICLE 4
CERTAIN AGREEMENTS AND COVENANTS OF THE PARTIES
4.1 Further Assurances. Each of CytRx and RXi agrees to duly execute and deliver, or cause to
be duly executed and delivered, such further instruments and do and cause to be done such further
acts and things that may be necessary, or that the other Party hereto may at any time and from time
to time reasonably request, in connection with this Agreement or to carry out more effectively the
provisions and purposes of, or to better assure and confirm unto such other Party its rights and
remedies under, this Agreement.
ARTICLE 5
MISCELLANEOUS
5.1 Registration Rights. The terms of Exhibit A hereto are incorporated into this
Agreement as if set forth fully herein. The terms of Exhibit A hereto supersede and
replace in their entirety the terms of Exhibit A to the Contribution Agreement between
CytRx and RXi dated as of January 8, 2007 (the “Old Registration Rights”), and the Old Registration
Rights shall have no force and effect after the date hereof.
5.2 Entire Agreement. This Agreement, together with Exhibit A hereto, constitutes, on
and as of the date hereof, the entire agreement of CytRx and RXi with respect to the subject matter
hereof, and all prior or contemporaneous understandings or agreements, whether written or oral,
between CytRx and RXi with respect to such subject matter are hereby superseded in their entirety.
5.3 No Implied Waivers; Rights Cumulative. No failure on the part of CytRx or RXi to exercise
and no delay in exercising any right, power, remedy or privilege under this Agreement, or provided
by statute or at law or in equity or otherwise, including, without limitation, the right or power
to terminate this Agreement, shall impair, prejudice or constitute a waiver of any such right,
power, remedy or privilege or be construed as a waiver of any breach of this Agreement or as an
acquiescence therein, nor shall any single or partial exercise of any such right, power, remedy or
privilege preclude any other or further exercise thereof or the exercise of any other right, power,
remedy or privilege.
5.4 Amendments. No amendment, modification, waiver, termination or discharge of any provision
of this Agreement, nor consent to any departure by CytRx or RXi therefrom, shall in any event be
effective unless the same shall be in writing specifically identifying this Agreement and the
provision intended to be amended, modified, waived, terminated or discharged and signed by the
Party against whom enforcement of such amendment is sought, and each such amendment, modification,
waiver, termination or discharge shall be effective only in the specific instance and for the
specific purpose for which given. No provision of this Agreement shall be varied, contradicted or
explained by any oral agreement, course of dealing or performance or any other matter not set forth
in an agreement in writing and signed by the Party against whom enforcement of such variation,
contradiction or explanation is sought.
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5.5 Successors and Assigns; Third-Party Beneficiaries. The terms and provisions of this
Agreement shall inure to the benefit of, and be binding upon, CytRx, RXi and their respective
successors and assigns. This Agreement is for the sole benefit of the parties and their permitted
successors and assignees no other provision of this Agreement will give or be construed to give any
Person, other than the parties and such successors and assignees, any legal or equitable rights
hereunder.
5.6 Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, without regard to the conflicts of laws provisions thereof.
5.7 Execution in Counterparts; Facsimile Signatures. This Agreement may be executed in any
number of counterparts, each of which counterparts, when so executed and delivered, shall be deemed
to be an original, and all of which counterparts, taken together, shall constitute one and the same
instrument. In the event that any signature is delivered by facsimile transmission, such signature
shall create a valid and binding obligation of the party executing (or on whose behalf such
signature is executed) the same with the same force and effect as if such facsimile signature page
were an original thereof.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed in their
respective corporate names by their respective authorized representatives as of the date first set
forth above.
| CYTRX CORPORATION |
||||
| By: | /s/ Xxxxxx X. Xxxxxxxxx | |||
| Xxxxxx X. Xxxxxxxxx | ||||
| Chief Executive Officer | ||||
| RXi PHARMACEUTICALS CORPORATION |
||||
| By: | /s/ Xxx Xxxxx | |||
| Xxx Xxxxx, Ph.D. | ||||
| President | ||||
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Exhibits and Schedules to Contribution Agreement dated April 30, 2007
EXHIBIT A:
|
Form of Registration Rights Terms, filed as Exhibit 4.3 to the Company’s Registration Statement. |
The Company agrees to furnish supplementally a copy of any omitted schedule to the SEC upon
request.
