SECURITIES PURCHASE AGREEMENT
Exhibit 10.2
EXECUTION VERSION
THIS SECURITIES PURCHASE AGREEMENT (as amended, modified or supplemented from time to time,
this “Agreement”) is made and entered into as of
September 24, 2011 (the “Effective
Date”) by and among Tang Capital Partners, LP, a Delaware limited partnership (“Tang”),
RTW Investments, LLC, a Delaware limited liability company (“RTW” and, together with Tang,
the “Investors”), RNCS, Inc., a Delaware corporation (the “Company”), and RXi
Pharmaceuticals Corporation, a Delaware corporation (“RXi”).
RECITALS
WHEREAS, RXi has formed the Company to accomplish the spin-off of RXi’s RNAi technology
platform and drug candidates, including all intellectual property and related assets and rights
(the “RNAi Platform”), as set forth in the Contribution Agreement, and transferred to the
Company all right, title and interest in and to the RNAi Platform pursuant to the Contribution
Agreement;
WHEREAS, between the Effective Date and the Closing Date, the Investors have agreed to lend
the Company up to $1,500,000 pursuant to the Bridge Notes for the purpose of funding the Company’s
operations in accord with the Operating Budgets; and
WHEREAS, the Investors desire to purchase from the Company and the Company desires to sell to
the Investors, at the Closing (as defined below), shares of Series A Convertible Preferred Stock of
the Company (such preferred stock being referred to herein as the “Preferred Stock” and
such outstanding preferred shares being referred to herein as the “Preferred Shares”) upon
the terms and subject to the conditions set forth in this Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the premises and mutual promises herein made, and in
consideration of the representations, warranties and covenants herein contained, the parties to
this Agreement hereby agree as follows:
ARTICLE I
DEFINITIONS; CERTAIN RULES OF CONSTRUCTION.
DEFINITIONS; CERTAIN RULES OF CONSTRUCTION.
Section 1.01 Definitions. In addition to the other terms defined throughout this
Agreement, the following terms shall have the following meanings when used in this Agreement:
“Action” means any claim, controversy, action, cause of action, suit,
litigation, arbitration, investigation, opposition, interference, audit, assessment,
hearing, complaint, demand or other legal proceeding (whether sounding in contract, tort or
otherwise, whether civil or criminal and whether brought at law or in equity) that is
commenced,
brought, conducted, tried or heard by or before, or otherwise involving, any
Governmental Authority.
“Advirna Shares” means the shares of Company Common Stock to be issued to
Advirna pursuant to the Advirna Amendment, in an amount determined in accordance with
Annex II attached hereto.
“Affiliate” means, with respect to any specified Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect common
control with such specified Person.
“Ancillary Agreements” means the Bridge Notes, the Guaranty, the Security
Agreement, the Pledge Agreement, and the Subscription Agreement, as well as any other
agreements, certificates or instruments to be entered into by the Parties pursuant to this
Agreement or the Bridge Notes, the Guaranty, the Security Agreement, the Pledge Agreement or
the Subscription Agreement.
“Audited Financial Statements” means the audited consolidated balance sheets of
RXi as of December 31, 2010, December 31, 2009 and December 31, 2008, and the related
audited consolidated statements of income, cash flow and changes in stockholders’ equity for
the fiscal years then ended, accompanied by any notes thereto and the reports of RXi’s
independent accountants with respect thereto.
“Bridge Notes” means those certain Secured Convertible Promissory Notes, in the
form attached hereto as Exhibit B, to be issued by the Company and purchased by the
Investors as provided in Section 4.06 to fund the Business between Effective Date
and the Closing.
“Business” means research and development activities relating to the
development of the RNAi Platform, as such activities are planned to be conducted by the
Company commencing on the Effective Date, and as such activities have historically been
conducted by RXi prior to the Effective Date.
“Business Day” means any day other than a Saturday or a Sunday or a weekday on
which banks in New York City are authorized or required to be closed.
“Certificate of Designations” means the Certificate of Designations,
Preferences and Rights of Series A Convertible Preferred Stock of the Company, substantially
in the form attached hereto as Exhibit C.
“Certificate of Incorporation” means the Certificate of Incorporation of the
Company, as in effect as of the Effective Date, and as it shall be amended and restated
prior to Closing as contemplated in Section 4.13(d) in the form to be provided by
the Investors.
“Closing Date” means the date on which the Closing actually occurs.
“Code” means the U.S. Internal Revenue Code of 1986, as amended, and the
Treasury Regulations thereunder.
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“Company Intellectual Property Rights” means all Intellectual Property Rights
owned by the Company, used by the Company, or historically used by, owned by or licensed to
RXi, to the extent reasonably necessary for the conduct of the Business, including all
Intellectual Property Rights in and to Company Technology.
“Company’s Knowledge,” “Knowledge of the Company,” “Knowledge”
and similar formulations mean that one or more of Xxxx X. Xxx, Xxxxxx X. Xxxxxxx, Xxxxxxxxx
Xxxxxxxx, and Xxxxxx Xxxxx (a) has actual knowledge of the fact or other matter at issue or
(b) should have had actual knowledge of such fact or other matter assuming the diligent
exercise of such individual’s duties as a director, officer or employee of the Company or
RXi and after reasonable investigation of all employees of the Company or RXi reasonably
expected to have actual knowledge of such fact or matter.
“Company Technology” means any and all Technology used or proposed to be used
in connection with the Business.
“Compensation” means, with respect to any Person, all salaries, compensation,
remuneration, bonuses or benefits of any kind or character whatsoever (including issuances
or grants of Equity Interests), made directly or indirectly by the Company to or for the
benefit of such Person or any Family Member of such Person.
“Contemplated Transactions” means the transactions contemplated by this
Agreement, including: (a) the purchase and sale of the Preferred Shares; (b) effecting the
transactions contemplated under the Subscription Agreement; (c) the execution, delivery and
performance of the Ancillary Agreements; (d) the execution and filing by the Company of the
Certificate of Designations; (e) effecting the transactions contemplated under the
Contribution Agreement; and (f) the Spin-Off.
“Contractual Obligation” means, with respect to any Person, any contract,
agreement, deed, mortgage, lease, sublease, license, sublicense or other legally
enforceable commitment, promise, undertaking, obligation, arrangement,
instrument or understanding, whether written or oral, to which or by which such Person is a
party or otherwise subject or bound or to which or by which any property, business,
operation or right of such Person is subject or bound.
“Contribution Agreement” means that certain Contribution Agreement by and
between RXi and the Company, dated September 24, 2011, pursuant to which RXi has contributed
and assigned the Assets to the Company.
“Debt” means, with respect to any Person, and without duplication, all
Liabilities, including all obligations in respect of principal, accrued interest, penalties,
fees and premiums, of such Person (a) for borrowed money (including amounts outstanding
under
overdraft facilities); (b) evidenced by notes, bonds, debentures or other similar
Contractual Obligations; (c) in respect of “earn-out” obligations and other obligations for
the deferred purchase price of property, goods or services (other than trade payables or
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accruals incurred in the Ordinary Course of Business); (d) for the capitalized liability
under all capital leases of such Person (determined in accordance with GAAP); (e) in respect
of letters of credit and bankers’ acceptances; (f) for Contractual Obligations relating to
interest rate protection, swap agreements and collar agreements, in each case, to the extent
payable if such Contractual Obligation is terminated at the Closing; and (g) in the nature
of Guarantees of the obligations described in clauses (a) through (f) above of any other
Person.
“Employee Plan” means any plan, program, policy, arrangement or Contractual
Obligation, whether or not reduced to writing, and whether covering a single individual or a
group of individuals, that is (a) a welfare plan within the meaning of Section 3(1) of
ERISA; (b) a pension benefit plan within the meaning of Section 3(2) of ERISA; (c) a stock
bonus, stock purchase, stock option, restricted stock, stock appreciation right or similar
equity-based plan; or (d) any other deferred-compensation, retirement, severance,
welfare-benefit, reimbursement, bonus, profit-sharing, incentive or fringe-benefit plan,
program or arrangement.
“Encumbrance” means any charge, claim, community or other marital property
interest, equitable or ownership interest, lien, license, option, pledge, security interest,
mortgage, deed of trust, right of way, easement, encroachment, servitude, right of first
offer or first refusal, buy/sell agreement and any other restriction or covenant with
respect to, or condition governing the use, construction, voting (in the case of any
security or Equity Interest), transfer, receipt of income or exercise of any other attribute
of ownership (other than, in the case of a security, any restriction on the transfer of such
security arising solely under federal and state securities laws). “Encumber” has the
correlative meaning.
“Enforceable” means, with respect to any Contractual Obligation stated to be
Enforceable by or against any Person, that such Contractual Obligation is a legal, valid and
binding obligation of such Person enforceable by or against such Person in accordance with
its terms, except to the extent that enforcement of the rights and remedies created thereby
is subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws of
general application affecting the rights and remedies of creditors and to general principles
of equity (regardless of whether enforceability is considered in a proceeding in equity or
at law).
“Environmental Laws” means any Legal Requirement relating to (a) releases or
threatened releases of Hazardous Substances; (b) pollution or protection of public health or
the environment or worker safety or health; or (c) the manufacture, handling, transport,
use, treatment, storage, or disposal of Hazardous Substances.
“Equity Interest” means, with respect to any Person, (a) any capital stock,
partnership or membership interest, unit of participation or other similar interest
(however designated) in such Person and (b) any option, warrant, purchase right,
conversion right, exchange right or other Contractual Obligation which would entitle any
other Person to acquire any such interest in such Person or otherwise entitle any other
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Person to share in the equity, profits, earnings, losses or gains of such Person (including
stock appreciation, phantom stock, profit participation or other similar rights).
“ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as
amended.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Family Member” means, with respect to any individual, (a) such Person’s
spouse; (b) each parent, brother, sister or child of such Person or such Person’s spouse;
(c) the spouse of any Person described in clause (b) above; (d) each child of any Person
described in clauses (a), (b) or (c) above; (e) each trust created for the benefit of one or
more of the Persons described in clauses (a) through (d) above; and (f) each custodian or
guardian of any property of one or more of the Persons described in clauses (a) through (e)
above in his or her capacity as such custodian or guardian.
“FDCA” means the Federal Food, Drug and Cosmetic Act, as amended, and the rules
and regulations promulgated thereunder.
“Financial Statements” means Audited Financial Statements and the Interim
Financial Statements.
“GAAP” means generally accepted accounting principles in the United States as
in effect from time to time.
“Government Order” means any order, writ, judgment, injunction, decree,
stipulation, ruling, decision, verdict, determination or award made, issued or entered by or
with any Governmental Authority.
“Governmental Authority” means any United States federal, state or local or any
foreign government, or political subdivision thereof, or any multinational organization or
authority, or any other authority, agency or commission entitled to exercise any
administrative, executive, judicial, legislative, police, regulatory or taxing authority or
power, any court or tribunal (or any department, bureau or division thereof), or any
arbitrator or arbitral body.
“Guarantee” means, with respect to any Person, (a) any guarantee of the payment
or performance of, or any contingent obligation in respect of, any Debt or other Liability
of any other Person; (b) any other arrangement whereby credit is extended to any obligor
(other than such Person) on the basis of any promise or undertaking of such Person (i) to
pay the Debt or other Liability of such obligor; (ii) to purchase any obligation owed by
such obligor; (iii) to purchase or lease assets under circumstances that are designed to
enable such obligor to discharge one or more of its obligations; or (iv) to maintain the
capital, working capital, solvency or general financial condition of such obligor; and
(c) any liability as a general partner of a partnership or as a venturer in a joint venture
in respect of Debt or other Liabilities of such partnership or venture.
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“Guaranty” means that certain General Continuing Guaranty, in the form attached
hereto as Exhibit E.
“Hazardous Substance” means any pollutant, petroleum, or any fraction thereof,
contaminant or toxic or hazardous material (including toxic mold), substance or waste.
“HSR Act” means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976.
“Intellectual Property Rights” means all rights, title, and interests in and to
all proprietary rights of every kind and nature however denominated, throughout the world,
including:
(a) patents, patent applications, copyrights, confidential information, trade secrets,
database rights, and all other proprietary rights in Technology;
(b) trademarks, trade names, service marks, service names, brands, trade dress and
logos, and the goodwill and activities associated therewith;
(c) domain names, rights of privacy and publicity, and moral rights;
(d) any and all registrations, applications, recordings, licenses, common-law rights,
statutory rights, and contractual rights relating to any of the foregoing; and
(e) all Actions and rights to xxx at law or in equity for any past or future
infringement or other impairment of any of the foregoing, including the right to receive all
proceeds and damages therefrom, and all rights to obtain renewals, continuations, divisions,
or other extensions of legal protections pertaining thereto.
“Interim Financial Statements” means the unaudited consolidated balance sheet
of RXi as of June 30, 2011, and the related unaudited consolidated statement of income and
cash flow of RXi for the six months then ended, accompanied by any notes thereto.
“Legal Requirement” means any United States federal, state or local or any
foreign law, statute, standard, ordinance, code, rule, regulation, resolution or
promulgation, or any Governmental Order, or any Permit granted under any of the foregoing,
or any similar provision having the force or effect of law.
“Liability” means, with respect to any Person, any liability or obligation of
such Person whether known or unknown, whether asserted or unasserted, whether determined,
determinable or otherwise, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, whether directly incurred or consequential, whether due
or to become due and whether or not required under GAAP to be accrued on the financial
statements of such Person.
“Material Adverse Effect” means any event, change, fact, condition,
circumstance or occurrence that, when considered either individually or in the aggregate
together with all other adverse events, changes, facts, conditions, circumstances or
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occurrences with respect to which such phrase is used in this Agreement, has had or would
reasonably be expected to have a material adverse effect on: (A) the business, operations,
results of operations, properties, assets, value, prospects or condition (financial or
otherwise) of the Company, taken as a whole; (B) the Company’s ability to conduct the
Business, in substantial accord with the manner in which RXi has historically conducted the
Business; (C) the projected timing, costs or likelihood of success for developing or
commercializing the Company’s lead product candidate for an anti-scarring indication, to the
extent that such event, change, fact, condition, circumstance or occurrence is caused by or
relates to: (i) the results reported to or observed by the Company with regard to the
Company’s ongoing studies of the lead candidate designated as “RXI-109”; or (ii) any adverse
development pertaining to any product candidate targeting connective tissue growth factor;
or (iii) any development regarding Intellectual Property Rights that would reasonably be
expected to have a material adverse impact on the development or commercialization of
RXI-109; (D) the making of a public market for the Company Common Stock concurrent with the
Spin-Off, including the ability of the RXi stockholders to publicly trade that portion of
the Outstanding Common Stock that is distributed as part of the Spin-Off; or (E) the ability
of the Company or RXi to consummate the Contemplated Transactions.
“Operating Budgets” means the budget attached as Annex A to the Bridge Notes,
the Second Tranche Budget (as defined in the Bridge Notes) and the Third Tranche Budget (as
defined in the Bridge Notes).
“Ordinary Course of Business” means an action taken by any Person in the
ordinary course of such Person’s business that is consistent with the past customs and
practices of such Person (including past practice with respect to quantity, amount,
magnitude and frequency, standard employment and payroll policies and past practice with
respect to management of working capital and the making of capital expenditures) and that is
taken in the ordinary course of the normal day-to-day operations of such Person.
“Organizational Documents” means, with respect to any Person (other than an
individual), (a) the certificate or articles of incorporation or organization and any joint
venture, limited liability company, operating or partnership agreement and other similar
documents adopted or filed in connection with the creation, formation or organization of
such Person and (b) all by-laws, voting agreements and similar documents, instruments or
agreements relating to the organization or governance of such Person, in each case, as
amended or supplemented.
“Permits” means, with respect to any Person, any license, franchise, permit,
consent, approval, right, privilege, certificate or other similar authorization issued by,
or otherwise granted by, any Governmental Authority to which or by which such Person is
subject or bound or to which or by which any property, business, operation or right of
such Person is subject or bound.
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“Permitted Encumbrance” means (a) statutory liens for current Taxes not yet due
and payable or the amount or validity of which is being contested in good faith by
appropriate proceedings and for which appropriate reserves have been established in
accordance with GAAP, (b) liens in favor of lessors of Assets subject to leases included in
the “Transferred Contracts” (as defined in the Contribution Agreement) and (c) mechanics’,
materialmen’s, carriers’, workers’, repairers’ and similar statutory liens arising or
incurred in the Ordinary Course of Business the existence of which would not constitute an
event of default under, or breach of, a Real Property Lease and the Liabilities of the
Company in respect of which are not overdue or otherwise in default.
“Person” means any individual or any corporation, association, partnership,
limited liability company, joint venture, joint stock or other company, business trust,
trust, organization, Governmental Authority or other entity of any kind.
“Pledge Agreement” means that certain Pledge, Assignment and Security Agreement
in the form attached hereto as Exhibit A.
“Registration Statement” means a registration statement or registration
statements of the Company filed under the Securities Act pursuant to ARTICLE VII
hereof.
“Required Approvals” means the consents and approvals described on Schedule
1.01—Required Approvals.
“Representative” means, with respect to any Person, any director, officer,
employee, agent, manager, consultant, advisor, or other representative of such Person,
including legal counsel, accountants, and financial advisors.
“Retained Shares” means the shares of Company Common Stock to be retained by
RXi after the Spin-Off and not distributed to the holders of RXi Common Stock on the Record
Date. The number of Retained Shares shall be determined in accordance with Annex II
attached hereto.
“Securities Act” means the Securities Act of 1933, as amended.
“Security Agreement” means that certain Security Agreement in the form attached
hereto as Exhibit D.
“Spin-Off” means the distribution by RXi to its stockholders, on a
share-for-share (i.e., 1:1) basis as a dividend, of a number of shares of Company Common
Stock equal to the Target Float, as determined in accordance with Annex II attached hereto.
“Tax” or “Taxes” means (a) any and all federal, state, local, or
foreign income, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties, capital stock,
franchise,
profits, withholding, social security (or similar, including FICA), unemployment,
disability, real property, personal property, sales, use, transfer, registration, value
added,
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alternative or add-on minimum, estimated, or other tax of any kind or any charge of
any kind in the nature of (or similar to) taxes whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not and (b) any liability for the payment of any
amounts of the type described in clause (a) of this definition as a result of being a member
of an affiliated, consolidated, combined or unitary group for any period, as a result of any
tax sharing or tax allocation agreement, arrangement or understanding, or as a result of
being liable for another Person’s taxes as a transferee or successor, by Contractual
Obligation or otherwise.
“Technology” means all inventions, works, discoveries, innovations, know-how,
information (including ideas, research and development, formulas, algorithms, compositions,
processes and techniques, data, designs, drawings, specifications, customer and supplier
lists, pricing and cost information, business and marketing plans and proposals, graphics,
illustrations, artwork, documentation, and manuals), gene sequences, assays, databases,
computer software, and all other forms of technology, including improvements, modifications,
works in process, derivatives, or changes, whether tangible or intangible, embodied in any
form, whether or not protectable or protected by patent, copyright, trade secret law, or
otherwise, and all documents and other materials recording any of the foregoing.
Section 1.02 Certain Matters of Construction.
(a) The parties have participated jointly in the negotiation and drafting of this Agreement.
In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the provisions of this
Agreement.
(b) Section and subsection headings are not to be considered part of this Agreement, are
included solely for convenience, are not intended to be full or accurate descriptions of the
content of the Sections or subsections of this Agreement and shall not affect the construction
hereof.
(c) Except as otherwise explicitly specified to the contrary herein, (i) the words “hereof,”
“herein,” “hereunder” and words of similar import shall refer to this Agreement as a whole and not
to any particular Section or subsection of this Agreement and reference to a particular Section of
this Agreement shall include all subsections thereof; (ii) references to an Article, Section,
Exhibit, Annex or Schedule means an Article or Section of, or Exhibit, Annex or Schedule to, this
Agreement, unless another agreement is specified; (iii) definitions shall be equally applicable to
both the singular and plural forms of the terms defined, and references to the masculine, feminine
or neuter gender shall include each other gender; (iv) the word “including” means including
without limitation; (v) any reference to “$” or “dollars” means United States dollars; and (vi)
references to a particular statute or regulation include all rules
and regulations thereunder and any successor statute, rule or regulation, in each case as
amended or otherwise modified from time to time.
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(d) Neither the listing nor description of any item, matter or document in any Schedule
hereto nor the furnishing or availability for review of any document will be construed to modify,
qualify or disclose an exception to any representation or warranty of any party made herein or in
connection herewith, except to the extent that such representation or warranty specifically refers
to such Schedule and such modification, qualification or exception is clearly described in such
Schedule.
(e) The parties intend that each representation, warranty and covenant contained herein will
have independent significance. If any party has breached or violated, or if there is an
inaccuracy in, any representation, warranty or covenant contained herein in any respect, the fact
that there exists another representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the party has not breached or violated,
or in respect of which there is not an inaccuracy, will not detract from or mitigate the fact that
the party has breached or violated, or there is an inaccuracy in, the first representation,
warranty or covenant.
(f) Unless the context clearly requires otherwise, when used herein “or” shall not be
exclusive (i.e., “or” shall mean “and/or”).
(g) Time is of the essence with regard to all dates and time periods set forth or referred to
in this Agreement.
ARTICLE II
PURCHASE AND SALE OF PREFERRED SHARES; CLOSING.
PURCHASE AND SALE OF PREFERRED SHARES; CLOSING.
Section 2.01 Purchase and Sale of Preferred Shares. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing, the Company shall issue and sell to the
Investors, and the Investors shall purchase from the Company, Preferred Shares in the respective
amounts set forth opposite such Investor’s name on Annex I hereto.
Section 2.02 Purchase Price. The aggregate purchase price (the “Purchase
Price”) of the Preferred Shares will be $9,500,000, payable as provided in Section
2.04.
Section 2.03 The Closing. The purchase and sale of the Preferred Shares (the
“Closing”) shall take place at 10:00 a.m. (Pacific Time) at the offices of Ropes & Xxxx
LLP, 0 Xxxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx, two Business Days after the satisfaction or
waiver of the closing conditions set forth in ARTICLES V and VI, or at such other
time and place as may be agreed to by the parties hereto.
Section 2.04 Closing Deliverables and Payments.
(a) Pre-Closing Deliverables and Payments. Subject to the receipt by the Investors
of certificates signed by the Secretaries of the Company and RXi certifying as to the satisfaction
of the closing conditions set forth in ARTICLES V and VI, the Investors
shall, one Business Day prior to Closing, deliver or cause to be delivered to the Company an
aggregate amount in cash equal to the Purchase Price, less the sum of the principal amount
of and the accrued
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interest under the Bridge Notes as of the Closing Date (the “Cash Portion
of the Purchase Price”), which shall be paid by the Investors as set forth opposite each such
Investor’s name on Annex I hereto by wire transfer of immediately available funds.
(b) Investors’ Closing Deliverables and Payments. Upon the terms and subject to the
conditions set forth in this Agreement, in addition to the Cash Portion of the Purchase Price, at
the Closing, the Investors shall also tender to the Company for cancellation the Bridge Notes,
which, upon cancellation, shall constitute the payment of a portion of the Purchase Price.
(c) Company’s Closing Deliverables. Upon the terms and subject to the conditions set
forth in this Agreement, the Company shall issue and deliver or cause to be delivered to the
Investors at the Closing certificates representing the Preferred Shares, in the respective amounts
set forth opposite the Investors’ names on Annex I hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES.
REPRESENTATIONS AND WARRANTIES.
Section 3.01 Representations and Warranties of the Company and RXi. In order to induce
the Investors to enter into and perform this Agreement and to consummate the Contemplated
Transactions, the Company and RXi hereby represent and warrant (for RXi, as it pertains to both RXi
and the Company, and for the Company, as it pertains to the Company alone) to the Investors as
follows:
(a) Organization, Good Standing and Power. Each of the Company and RXi is a
corporation duly incorporated, validly existing and in good standing under the laws of the State
of Delaware and each of the Company and RXi has the requisite corporate power to own, lease and
operate its properties and assets and to conduct its business as it is now being conducted (and,
in the case of RXi, had the requisite corporate power to own, lease and operate the RNAi
Platform). The Company does not have any direct or indirect subsidiaries or own securities of any
kind in any other entity. The Company is duly qualified as a foreign corporation to do business
and is in good standing in every jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the failure to do so would
not have a Material Adverse Effect.
(b) Authorization; Enforcement. The Company and RXi have the requisite corporate
power and authority to enter into and perform this Agreement and the Ancillary Agreements
(collectively, the “Transaction Documents”) and to perform their respective obligations
hereunder and thereunder. The execution and delivery of the Transaction Documents and the
performance of the Contemplated Transactions by the Company and RXi have been duly and validly
authorized by all necessary corporate action and no further consent or authorization of the
Company or RXi or their respective boards of directors or stockholders is required to consummate
the Contemplated Transactions. When executed and delivered by the Company
and RXi, each of the Transaction Documents shall constitute a valid and binding obligation of
the Company, Enforceable against the Company and RXi, as applicable.
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(c) Capitalization. As of the Effective Date, the Company has authorized (i) 1,000
shares of common stock, par value $0.0001 per share (the “Company Common Stock”), of which
100 shares are issued and outstanding (such number of shares being referred to herein as the
“Outstanding Common Stock”), and (ii) no shares of Preferred Stock. The Outstanding
Common Stock is held solely of record and beneficially by RXi. The Outstanding Common Stock
has been duly and validly authorized and, except as set forth in this Agreement or as set forth on
Schedule 3.01(c) hereto, no shares of Company Common Stock or any other security of the
Company are entitled to preemptive rights or registration rights and there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital stock of the Company.
Furthermore, except as set forth in this Agreement or the other Transaction Documents or on
Schedule 3.01(c) hereto, there are no equity plans, contracts, commitments, understandings
or arrangements by which the Company is or may become bound to issue additional shares of the
capital stock of the Company or options, securities or rights convertible into shares of capital
stock of the Company. Except as set forth herein, the Company is not a party to or bound by any
agreement or understanding granting registration or anti-dilution rights to any person with
respect to any of its equity or debt securities. Except as set forth in this Agreement or the
other Transaction Documents or on Schedule 3.01(c), the Company is not a party to, and it
has no Knowledge of, any agreement or understanding restricting the voting or transfer of any
shares of the capital stock of the Company.
(d) Issuance of Shares. The Preferred Shares to be issued at the Closing have been
duly authorized by all necessary corporate action and, when paid for and issued in accordance with
the terms hereof, such Preferred Shares shall be validly issued and outstanding, fully paid and
non-assessable, free and clear of all liens, encumbrances and rights of refusal of any kind. The
Conversion Shares (as defined below) have been duly authorized by all necessary corporate action
and, when issued upon conversion of the Preferred Shares, such Conversion Shares shall be validly
issued and outstanding, fully paid and non-assessable, free and clear of all Encumbrances. Each
share of Preferred Stock shall have the rights, preferences, privileges and restrictions set forth
in the Certificate of Designations. The certificates to be used to evidence the Preferred Stock
will comply in all material respects with all applicable legal requirements, the requirements of
the Certificate of Incorporation and the Certificate of Designations (collectively, the
“Certificate”) and the bylaws of the Company (the “Bylaws”).
(e) No Conflicts. The execution, delivery and performance by the Company of this
Agreement and the other Transaction Documents and the consummation by the Company of the
Contemplated Transactions, and the issuance of the Securities (as defined below) as contemplated
hereby and thereby, do not and will not (i) violate or conflict with any provision of the
Certificate or the Bylaws, each as amended to date; (ii) subject to obtaining the Required
Approvals, 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 Contract; (iii) result in a violation of any federal, state,
local or foreign statute, rule, regulation, order, judgment or decree (including federal and state
securities laws and regulations) applicable to the Company or by which any property or asset
of the Company is bound or affected; or (iv) create or impose any Encumbrance of any nature
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on any
property or asset of the Company under any agreement or any commitment to which the Company is a
party or by which the Company is bound or by which any of its properties or assets are bound. The
Company is not required under federal, state, foreign or local law, rule or regulation to obtain
any consent, authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its obligations under
the Transaction Documents.
(f) Authorization of Certificate of Designations. The Certificate of Designations has
been duly and validly authorized by the Company and, when filed by the Company with the Secretary
of State of the State of Delaware, will be legally valid and effective and Enforceable against the
Company.
(g) No Material Adverse Changes. Since January 1, 2010, RXi has not experienced or
suffered any Material Adverse Effect with respect to the RNAi Platform. Since formation, the
Company has not experienced or suffered any Material Adverse Effect. Except for the execution and
delivery of this Agreement and the other Transaction Documents, no event or circumstance has
occurred or exists with respect to the RNAi Platform, which, under applicable law, rule or
regulation, requires public disclosure or announcement by RXi but which has not been so publicly
announced or disclosed.
(h) Actions Pending. There is no action, suit, claim, investigation, arbitration,
alternate dispute resolution proceeding or other proceeding pending or, to the Knowledge of the
Company, threatened against the Company or RXi that questions the validity of this Agreement or
any of the other Contemplated Transactions or any of the transactions contemplated hereby or
thereby or any action taken or to be taken pursuant hereto or thereto. Except as set forth on
Schedule 3.01(h) hereto, there is no action, suit, claim, investigation, arbitration,
alternate dispute resolution proceeding or other proceeding pending or, to the Knowledge of the
Company, threatened against or involving RXi, the Company or any of its properties or assets,
which individually or in the aggregate, would reasonably be expected, if adversely determined, to
have a Material Adverse Effect. There are no outstanding orders, judgments, injunctions, awards or
decrees of any court, arbitrator or governmental or regulatory body against RXi or the Company or
any officers or directors of RXi or the Company in their capacities as such, which individually or
in the aggregate, could reasonably be expected to have a Material Adverse Effect.
(i) Compliance with Law. The Company has been and is presently conducting the
Business and, RXi has at all times conducted the Business, in accordance with all applicable
federal, state and local governmental laws, rules, regulations and ordinances, including, without
limitation, the FDCA and Environmental Laws, except such that, individually or in the aggregate,
the noncompliance therewith could not reasonably be expected to have a Material Adverse Effect.
The Company has all franchises, permits, licenses, consents and other governmental or regulatory
authorizations and approvals necessary for the conduct of the Business, as now being conducted by
it unless the failure to possess such franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals,
individually or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
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(j) Taxes. As of the Effective Date, the Company has no obligations, whether
accrued, contingent or otherwise, for unpaid Taxes, other than corporate franchise taxes arising
since the Company’s date of incorporation.
(k) Certain Fees. Except as set forth on Schedule 3.01(k), neither the
Company nor RXi has employed any broker or finder or incurred any liability for any brokerage or
investment banking fees, commissions, finders’ structuring fees, financial advisory fees or other
similar fees in connection with the Contemplated Transactions.
(l) Contracts. Set forth on Schedule 3.01(l) is a complete and accurate list
of all Contractual Obligations to which the Company is a party, or by which the Company is bound,
whether written or oral (the “Contracts”). The Company has delivered to the Investors
accurate and complete copies of all written Contacts, in each case, as amended or otherwise
modified and in effect. The Company has delivered to the Investors a written summary setting
forth all of the material terms and conditions of all oral Contracts. Each Contract is
Enforceable against the Company and, to the Knowledge of the Company, each other party to such
Contract, is in full force and effect, and subject to obtaining the Required Approvals, will
continue to be so Enforceable and in full force and effect on substantially identical terms
following the consummation of the Contemplated Transactions. Neither the Company nor, to the
Company’s Knowledge, any other party to any Contract is in material breach or violation of, or
default under, or has repudiated any material provision of, any Contract.
(m) Employees. Set forth on Schedule 3.01(m) is a complete and accurate list
of all Persons employed by the Company as of the Effective Date (each, a “Company
Employee”), as well as the job title and current and historical compensation for each Company
Employee over the past twelve (12) months, which includes, but is not limited to, salary, bonus,
vacation, incentive compensation, equity compensation, severance compensation and any other
material term to such Company Employee’s employment. No Company Employee has notified the Company
or RXi of his or her intention to resign or retire and the Company knows of no such intention to
resign or retire. Except as set forth on Schedule 3.01(m), the Company will not be
obligated to maintain or contribute to any Employee Plan after the consummation of the
Contemplated Transactions.
(n) Absence of Certain Developments. Except as contemplated by this Agreement and
the Advirna Amendment or as set forth on Schedule 3.01(n), since its formation, the
Company has not:
(i) issued any stock, bonds or other corporate securities or any right, options or
warrants with respect thereto;
(ii) incurred any Liability, other than future Liabilities arising under the Contracts
after the Effective Date;
(iii) declared or made any payment or distribution of cash or other property to
stockholders with respect to its stock, or purchased or redeemed, or made any agreements so
to purchase or redeem, any shares of its capital stock;
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(iv) sold, assigned or transferred any other tangible assets, or canceled any debts or
claims;
(v) sold, assigned or transferred any patent rights, trademarks, trade names,
copyrights, trade secrets or other intangible assets or intellectual property rights;
(vi) suffered any material losses or waived any rights of material value, or suffered
the loss of any material amount of prospective business;
(vii) made any changes in employee compensation;
(viii) made capital expenditures or commitments therefor;
(ix) suffered any material damage, destruction or casualty loss, whether or not covered
by insurance;
(x) experienced any material problems with labor or management in connection with the
terms and conditions of their employment; or
(xi) entered into an agreement, written or otherwise, to take any of the foregoing
actions.
(o) Governmental Approvals. Except as contemplated by this Agreement or the other
Transaction Documents or as set forth on Schedule 3.01(o) hereto, no authorization,
consent, approval, license, exemption of, filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or foreign, is or will
be necessary for, or in connection with, the performance by the Company or RXi of their respective
obligations under the Transaction Documents.
(p) Insurance. The Company is, and will be through the Closing Date, covered by the
insurance policies of RXi, which policies are in such amounts as management of the Company and RXi
believe to be prudent and customary in the businesses in which the Company is engaged. The
Company has not been refused any insurance coverage sought or applied for and the Company does not
have any reason to believe that it will not be able to obtain insurance coverage from similar
insurers as may be necessary to conduct the Business at a cost that would not have a Material
Adverse Effect.
(q) Related Party Transactions. Except for the matters disclosed on Schedule
3.01(q), neither the Company or RXi, nor any officer or director of the Company or RXi (or, to
the Company’s or RXi’s Knowledge, any Family Member of any such Person) has any material interest
in any material Asset owned by the Company or used in connection with the Business.
(r) Financial Matters. The Financial Statements (including any notes thereto) (i)
were prepared in accordance with the books and records of RXi; (ii) have been prepared in
accordance with GAAP, consistently applied (subject, in the case of the Interim Financial
Statements, to normal year-end audit adjustments, the effect of which will not, individually or in
the aggregate, be materially adverse, and the absence of footnote disclosure that if presented,
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would not differ materially from those included in the Audited Financial Statements); and (iii)
fairly present the consolidated financial position of RXi as of the respective dates thereof and
the consolidated results of the operations of RXi and changes in financial position for the
respective periods covered thereby.
(s) Assets. The Company owns, or, in the case of property held under a lease, license
or other Contractual Obligation, has an Enforceable interest in, or adequate rights to use, the
RNAi Platform and all of its other properties, rights and assets, whether real or personal and
whether tangible or intangible (collectively, the “Assets”). The schedules of the
Contribution Agreement set forth a complete and accurate list of all assets, properties and rights
of every type and description, whether real or personal, tangible or intangible, included in the
Assets. None of the Assets is subject to any Encumbrance, other than a Permitted Encumbrance.
The Assets comprise all of the non-cash assets, properties and rights of every type and
description, whether real or personal, tangible or intangible, used or necessary for the conduct
of the Business, as it has historically been conducted by RXi and as it will be conducted by the
Company as of the Closing. All material tangible personal property included in the Assets (A) is,
in all material respects, adequate and suitable for its present use(s); (B) is in satisfactory
working order, operating condition and state of repair (ordinary wear and tear excepted); and (C)
has been maintained in all material respects in accordance with normal industry practice.
The unaudited opening balance sheet for the Company, as of the Effective Date,
is attached hereto as Exhibit I, and sets forth the assets and liabilities
of the Company as of such date, after giving effect to the transactions contemplated
under the Contribution Agreement.
(t) Intellectual Property.
(i) Company IP. The Company owns or has adequate rights to use all Company
Technology and all Company Intellectual Property Rights, to the Company’s Knowledge, without
any conflict with, or infringement of, the Intellectual Property Rights of others. Except,
with respect to the Technology and Intellectual Property Rights licensed to the Company
under the Inbound IP Contracts (as defined below), to the extent provided in such Inbound IP
Contracts, none of the Company Technology or Company Intellectual Property Rights is in the
possession, custody, or control of any Person other than the Company. To the Company’s and
RXi’s Knowledge, and except as set forth on Schedule 3.01(t), the Company Technology and
Company Intellectual Property Rights included in the Assets comprise all of the material
Intellectual Property Rights necessary to conduct the Business.
(ii) Infringement. To the Knowledge of the Company and RXi, neither the
Company nor RXi, through the operation of the Business or otherwise, (A) has interfered
with, infringed upon, diluted, misappropriated, or violated any Intellectual Property Rights
of any Person; (B) has received any charge, complaint, claim, demand, or notice alleging
interference, infringement, dilution, misappropriation, or violation of the Intellectual
Property Rights of any Person (including any invitation to license or request or demand to
refrain from using any Intellectual Property Rights of any Person in
connection with the conduct of the Business or the use of the Company Technology); or
(C) has agreed to or has a Contractual Obligation to indemnify any Person for or against any
interference, infringement, dilution, misappropriation, or violation with respect to any
Intellectual Property Rights. To the Company’s Knowledge, no Person has interfered
-16-
with,
infringed upon, diluted, misappropriated, or violated any Company Intellectual Property
Rights.
(iii) Scheduled Intellectual Property Rights. Schedule 3.01(t)(iii)
identifies all patents, patent applications, registered trademarks and copyrights,
applications for trademark and copyright registrations, domain names, registered design
rights, and other forms of registered Intellectual Property Rights and applications
therefor, owned by or exclusively licensed to the Company (collectively, the “Company
Registrations”). Schedule 3.01(t)(iii) also identifies each trade name, each
unregistered trademark, service xxxx, or trade dress, and each unregistered copyright owned
or exclusively licensed by the Company that, in each case, is material to the Business. For
purposes of this Agreement, all items listed on Schedule 3.01(t)(iii) shall be
called “Scheduled Intellectual Property Rights”. Schedule 3.01(t)(iii)
specifically identifies those items of Scheduled Intellectual Property Rights that are
exclusively or co-exclusively licensed to the Company, including the identification of the
Contractual Obligation pursuant to which each such Intellectual Property Right is licensed.
For each of the Company Registrations, Schedule 3.01(t)(iii) includes the following
information: (A) for each patent and patent application, the title, patent number or
application serial number, jurisdiction, filing date, date issued (if applicable),
inventors, owner of record, and present status thereof; (B) for each registered trademark
and trademark application, the xxxx, application serial number or registration number,
jurisdiction, filing date, registration date (if applicable), class of goods or services
covered, description of goods or services, owner of record, and present status thereof; (C)
for each domain name, the registration date, any renewal date, owner of record, and name of
the registrar; (D) for each copyright registration and copyright application, the title of
the work, number and date of such registration or application, owner of record, and
jurisdiction; and (E) any actions that must be taken within ninety (90) days after the
Closing Date for the purposes of obtaining, maintaining, perfecting, preserving, or renewing
any Company Registrations, including the payment of any registration, maintenance, or
renewal fees or the filing of any responses to office actions, documents, applications, or
certificates. Each of the Company Registrations is valid, subsisting, and Enforceable.
(iv) IP Contracts. Schedule 3.01(t)(iv) identifies under separate
headings each Contractual Obligation, whether written or oral, (A) under which the Company
uses or licenses a material item of Company Technology or any material Company Intellectual
Property Rights that any Person besides the Company owns, in each case, other than
off-the-shelf software with a cost of $1,000 or less (the “Inbound IP Contracts”);
(B) under which the Company has granted any Person any right or interest in any material
Company Intellectual Property Rights including any right to use any material item of Company
Technology (the “Outbound IP Contracts”); and (C) that otherwise affects the
Company’s use of or rights in the material Company Technology or any material
Company Intellectual Property Rights (including settlement agreements and covenants not
to xxx) (such Contractual Obligations, together with the Inbound IP Contracts and Outbound
IP Contracts, the “IP Contracts”). Except as provided in the Inbound IP Contracts,
or as otherwise disclosed on Schedule 3.01(t)(iv), the Company does not owe
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any
royalties or other payments to any Person for the use of any Intellectual Property Rights or
Technology. The Company has delivered to the Investors accurate and complete copies of each
of the IP Contracts (or, where an IP Contract is an oral agreement, an accurate and complete
written description of such IP Contract), in each case, as amended or otherwise modified and
in effect.
(v) Title to Company Technology and Company Intellectual Property Rights.
(A) The Company owns or has adequate rights to use each material item of Company Technology
and Company Intellectual Property Rights that is not licensed to the Company pursuant to an Inbound
IP Contract identified on Schedule 3.01(t)(iv), free and clear of any Encumbrance other
than a Permitted Encumbrance, and licenses granted in the Outbound IP Contracts identified on
Schedule 3.01(t)(iv).
(B) With respect to (i) each material item of Company Technology and Company Intellectual
Property Rights that is not licensed to the Company pursuant to an Inbound IP Contract identified
on Schedule 3.01(t)(v)(B) and (ii) to the Company’s Knowledge, all material Company
Technology and Company Intellectual Property Rights licensed to the Company on an exclusive or
co-exclusive basis, such item or right is not subject to any outstanding Government Order, and no
Action (including any opposition, interference, or re-examination) is pending or, to the Company’s
Knowledge, threatened, which challenges the legality, validity, enforceability, use, or ownership
of such right or item.
(vi) Confidentiality and Invention Assignments. The Company and RXi have
maintained commercially reasonable practices to protect the confidentiality of the Company’s
confidential information and trade secrets and have required all employees and other Persons
with access to the Company’s confidential information to execute Enforceable Contractual
Obligations requiring them to maintain the confidentiality of such information and use such
information only for the benefit of the Company or RXi, as applicable. All current and
former employees and contractors of the Company and RXi who contributed to the Company
Technology have executed Enforceable Contractual Obligations that assign to the Company or
RXi, as applicable, all of such Person’s respective rights, including Intellectual Property
Rights, relating to such product or service. RXi has assigned all such rights to the
Company pursuant to the Contribution Agreement.
(u) Suppliers. None of the Company’s suppliers has cancelled, terminated or
otherwise materially altered (including any material increase in the prices charged or paid, as
the case may be) or notified the Company of any intention to do any of the foregoing or otherwise
threatened in writing to cancel, terminate or materially alter (including any material increase in
the prices charged or paid as the case may be) its relationship with the Company. As of the date
hereof, to the Company’s Knowledge, there is no reason to believe that there
will be any material change in the relationships of the Company with such suppliers as a
result of the Contemplated Transactions.
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(v) Debt; Guarantees. As of the Effective Date, the Company has no Liabilities in
respect of Debt and the Company does not have any Liability in respect of a Guarantee of any Debt
or other Liability of any other Person.
(w) Disclosure.
(i) Neither this Agreement, the Transaction Documents or the Schedules hereto or
thereto, nor any other documents, certificates or instruments or portions thereof furnished
to the Investors by or on behalf of the Company or RXi in connection with the Contemplated
Transactions (but only to the extent that such documents, certificates or instruments were
prepared by or on behalf of the Company or RXi and excluding any third-party information),
contain any untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made herein or therein, in the light of the circumstances
under which they were made herein or therein, not misleading.
(ii) To the Knowledge of RXi and the Company, no documents, certificates or instruments
or portions thereof that were: (A) furnished to the Investors by or on behalf of the Company
or RXi in connection with the Contemplated Transactions, and (B) prepared by any third party
(other than on behalf of the Company or RXi, which materials are referenced above in Section
3.01(w)(i)), contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made herein or therein, in the light of the
circumstances under which they were made herein or therein, not misleading.
Section 3.02 Representations and Warranties of the Investors. Each of the Investors
hereby represents and warrants to the Company and RXi, severally but not jointly, and with respect
solely to itself and not with respect to any other Investor, as follows as of the Effective Date
and as of the Closing Date:
(a) Organization and Standing of the Investors. Such Investor is duly organized,
validly existing and in good standing under the laws of the State of Delaware.
(b) Authorization and Power. Each Investor has the requisite power and authority to
enter into and perform the Transaction Documents and to purchase the Preferred Shares being sold
to it hereunder. The execution and delivery of the Transaction Documents and the performance of
the Contemplated Transactions by each Investor has been duly authorized. When executed and
delivered by the Investors, the Transaction Documents shall constitute valid and binding
obligations of each Investor Enforceable against such Investor.
(c) Acquisition for Investment. Each Investor is purchasing the Preferred Shares
solely for its own account and not with a view to or for sale in connection with distribution.
Each Investor does not have a present intention to sell any of the Preferred Shares or the
underlying Company Common Stock (the “Conversion Shares” and, with the Preferred Shares,
the “Securities”), nor a present arrangement (whether or not legally binding) or
intention to effect any distribution of any 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 the
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Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with federal and state securities laws
applicable to such disposition. Each Investor acknowledges that it (i) has such Knowledge and
experience in financial and business matters such that Investor is capable of evaluating the
merits and risks of Investor’s investment in the Company; (ii) is able to bear the financial risks
associated with an investment in the Securities; and (iii) has been given full access to such
records of the Company and to the officers of the Company as it has deemed necessary or
appropriate to conduct its due diligence investigation.
(d) General. Each Investor understands that the Securities are being offered and sold
in reliance on a transactional exemption from the registration requirements of federal and state
securities laws and the Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of such Investor set forth herein in
order to determine the applicability of such exemptions and the suitability of such Investor to
acquire the Securities. Each Investor understands that no United States federal or state agency or
any government or governmental agency has passed upon or made any recommendation or endorsement of
the Preferred Shares.
(e) No General Solicitation. Each Investor acknowledges that the Securities were not
offered to such Investor by means of any form of general or public solicitation or general
advertising, or publicly disseminated advertisements or sales literature, including (i) any
advertisement, article, notice or other communication published in any newspaper, magazine, or
similar media, or broadcast over television or radio, or (ii) any seminar or meeting to which such
Investor was invited by any of the foregoing means of communications. Each Investor, in making the
decision to purchase the Preferred Shares, has relied upon independent investigation made by it
and has not relied on any information or representations made by third parties.
(f) Accredited Investor. Each Investor is an “accredited investor” (as defined in
Rule 501 of Regulation D), and such Investor has such experience in business and financial matters
that it is capable of evaluating the merits and risks of an investment in the Securities. Such
Investor is not required to be registered as a broker-dealer under Section 15 of the Exchange Act
or other Legal Requirement and such Investor is not a broker-dealer. Each Investor acknowledges
that an investment in the Securities is speculative and involves a high degree of risk.
(g) Certain Fees. The Investors have not employed any broker or finder or incurred
any liability for any brokerage or investment banking fees, commissions, finders’ structuring
fees, financial advisory fees or other similar fees in connection with the Contemplated
Transactions.
(h) Independent Investment. No Investor has agreed to act with any other Investor for
the purpose of acquiring, holding, voting or disposing of the Preferred Shares purchased
hereunder for purposes of Section 13(d) under the Exchange Act, and each Investor is acting
independently with respect to its investment in the Preferred Shares.
-20-
ARTICLE IV
COVENANTS OF THE PARTIES
COVENANTS OF THE PARTIES
Section 4.01 Commercially Reasonable Efforts; Notices and Consents. Subject to the
terms and conditions of this Agreement, from the Effective Date to the Closing, or the earlier
termination of this Agreement pursuant to Article VIII, each of the parties hereto shall
use its commercially reasonable efforts to take or cause to be taken all actions, to file or cause
to be filed all documents, to give or cause to be given all notices to Governmental Authorities or
other Persons, to obtain or cause to be obtained all authorizations, consents, waivers, approvals,
permits or orders from Governmental Authorities or other Persons, and to do or cause to be done all
other things necessary, proper or advisable, in order to consummate and make effective the
Contemplated Transactions as soon as practicable following the Effective Date (including
satisfaction, but not waiver, of the closing conditions set forth in Articles V and
VI) and to allow the Business to be operated following the Closing in the same manner as it
is operated prior to the Closing and in substantially the same manner as it has been operated prior
to the Effective Date.
Section 4.02 Operation of the Business.
(a) Conduct of the Business Generally. From the Effective Date until the Closing, or
the earlier termination of this Agreement in accordance with Article VIII, without the
prior written consent of the Investors, the Company shall, and RXi shall cause the Company to:
(i) conduct the Business only in the Ordinary Course of Business and in all material
respects in accordance with all applicable Legal Requirements;
(ii) use commercially reasonable efforts to maintain the value of the Business as a
going concern;
(iii) use commercially reasonable efforts to preserve intact its business organization
and relationships with third parties (including licensors, suppliers, and employees); and
(iv) consult with the Investors prior to taking any action material to the Business or
entering into any transaction that may be of strategic importance or material to the
Company.
(b) Specific Prohibitions. Without limiting the generality or effect of Section
4.02(a), from the Effective Date until the Closing, or the earlier termination of this
Agreement in accordance with Article VIII, without the prior written consent of the
Investors, and except as specifically contemplated herein or in the other Transaction Documents or
as set forth in Schedule 4.02(b), the Company shall not take any of the following actions:
(i) amend its Organizational Documents, effect any split, combination, reclassification
or similar action with respect to its capital stock or other Equity Interests or adopt or
carry out any plan of complete or partial liquidation or dissolution;
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(ii) issue, sell, grant or otherwise dispose of any of its Equity Interests or other
securities, or amend any term of any of its outstanding Equity Interests or other
securities;
(iii) (A) make any declaration or payment of, or set aside funds for, any dividend or
other distribution with respect to any of its capital stock or other Equity Interests (other
than to effect the Spin-Off) or (B) repurchase, redeem, or otherwise acquire or cancel any
of its capital stock or other Equity Interests;
(iv) become liable in respect of any Guarantee or incur, assume or otherwise become
liable in respect of any Debt;
(v) (A) merge or consolidate with any Person; (B) acquire any material assets, except
for acquisitions of assets, equipment and raw materials in the Ordinary Course of Business;
or (C) make any loan, advance or capital contribution to, acquire any Equity Interests in,
or otherwise make any investment in, any Person;
(vi) permit any of its material Assets to become subject to an Encumbrance (other than
a Permitted Encumbrance) or sell, lease, license or otherwise dispose of any of its material
Assets;
(vii) increase any benefits under any Employee Plan or increase the Compensation
payable or paid, whether conditionally or otherwise, to any employee, officer, director or
consultant of the Company;
(viii) make any material change in its methods of accounting or accounting practices
(including with respect to reserves), payment or credit practices, fail to pay any creditor
any material amount owed to such creditor when due or grant any extensions of credit other
than in the Ordinary Course of Business;
(ix) make, change or revoke any material Tax election; elect or change any method of
accounting for Tax purposes; or enter into any Contractual Obligation in respect of Taxes
with any Governmental Authority;
(x) enter into or adopt any material Contractual Obligation or terminate, modify, renew
or amend in any material respect (including by accelerating material rights or benefits
under) any Contracts;
(xi) license or otherwise dispose of the rights to use any material patent, trademark
or other Intellectual Property Rights or disclose material trade secrets to a third party;
(xii) use the proceeds under the Bridge Notes in a manner not in accordance with the
Operating Budgets, or exceed any line-item expense under any Operating Budget by more than
five percent (5%);
(xiii) appoint or elect any officer or director of the Company;
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(xiv) enter into any Contractual Obligation to do any of the things referred to
elsewhere in this Section 4.02(b); or
(xv) take or omit to take any other action that would cause any of the representations
and warranties in Article III to be untrue at, or as of any time prior to, the
Closing Date.
Section 4.03 Access to Premises and Information. From the Effective Date until the
Closing, or the earlier termination of this Agreement in accordance with ARTICLE VIII, the
Company shall permit the Investors and their Representatives to have full access (at reasonable
times and upon reasonable notice) to all Representatives of the Company and to all premises,
properties (including for the purposes of environmental inspection), books, records (including Tax
records), contracts, financial and operating data and other information and documents of, or
pertaining to, the Company, the Assets or the Business, and to make copies of such books, records,
contracts, data, information and documents as the Investors or their Representatives may reasonably
request.
Section 4.04 Notice of Developments. From the Effective Date until the Closing, or the
earlier termination of this Agreement in accordance with ARTICLE VIII, the Company and RXi
shall promptly (and in any event prior to the Closing) notify the Investors in writing (with any
such writing to include a written update to the Schedules, to the extent applicable) upon the
Company or RXi becoming aware: (i) that any representation or warranty made by the Company or RXi
in this Agreement was when made, or has subsequently become, untrue or inaccurate in any material
respect; (ii) of the occurrence or non-occurrence of any event the occurrence or non-occurrence of
which has caused or may reasonably be expected to cause any condition to the obligations of any
party hereto to effect the Contemplated Transactions not to be satisfied; (iii) of the failure of
the Company or RXi to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by the Company or RXi pursuant to this Agreement or any Ancillary Agreement; (iv)
of any notice or other communication from any Person alleging that the consent of such Person is or
may be required in connection with the Contemplated Transactions; (v) of any notice or other
communication from any Governmental Authority in connection with the Contemplated Transactions;
(vi) of the commencement or initiation or threat of commencement or initiation of any Action
regarding the Contemplated Transactions or otherwise involving the Company, the Assets or the
Business; (vii) of any material development in any pending Action regarding the Contemplated
Transactions or otherwise involving the Company or the Business; or (viii) of any other material
development affecting the Assets, Liabilities, Business, financial condition, operations or
prospects of the Company. The delivery of any notice pursuant to this Section 4.04 shall
not cure any breach of any representation or warranty requiring disclosure of such matter or any
breach of any covenant, condition or agreement contained in this Agreement or any Ancillary
Agreement or otherwise limit or affect
the rights of, or the remedies available to, the Investors. For the avoidance of doubt, the
closing conditions set forth in Sections 5.01 and 5.02 and the indemnification
provisions of ARTICLE IX shall be read without giving effect to any update to the Schedules
or other written notices delivered pursuant to this Section 4.04.
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Section 4.05 Exclusivity. From the Effective Date until the Closing, or the earlier
termination of this Agreement in accordance with ARTICLE VIII, the Company and RXi shall
not directly or indirectly: (a) solicit, initiate or encourage the submission of any proposal or
offer from any Person relating to, or enter into or consummate any transaction relating to, the
acquisition of any Equity Interests in the Company or any merger, recapitalization, share exchange,
sale of Assets (other than sales of inventory in the Ordinary Course of Business) or any similar
transaction or any other alternative to the Contemplated Transactions (whether such alternative
would be accomplished directly with the Company or indirectly through a transaction with RXi), or
(b) participate in any discussions or negotiations regarding, furnish any information with respect
to, assist or participate in, or facilitate in any other manner, any effort or attempt by any
Person to do or seek any of the foregoing. The Company and RXi shall notify the Investors
immediately if any Person makes any proposal, offer, inquiry or contact with respect to any of the
foregoing (whether solicited or unsolicited).
Section 4.06 Bridge Notes. Concurrent with the execution and delivery of this
Agreement: (i) the Investors will purchase from the Company the Bridge Notes, with an aggregate
principal balance of up to $1,500,000, in the respective amounts set forth on Annex I; (ii)
the Company shall execute and deliver to the Investors the Security Agreement, in the form attached
hereto as Exhibit D, and (iii) RXi shall execute and deliver the Guaranty and the Pledge
Agreement, in the forms attached hereto as Exhibits E and I, respectively. On or
before the Closing (as defined in the Subscription Agreement), RXi shall deliver to the Investors
an opinion from TroyGould PC, counsel to the Company and RXi (or other counsel reasonably
acceptable to the Investors), its opinion with respect to the Bridge Note and the Subscription
Agreement to the effect set forth in Exhibit H-1 attached hereto.
Section 4.07 Expenses.
(a) Except as set forth herein, RXi shall bear all out-of-pocket fees and expenses incurred
by RXi or the Company in connection with the negotiation and execution of the Transaction
Documents and the consummation of the Contemplated Transactions, including, without limitation,
all fees and expenses relating to the Exchange Act Registration and the Securities Act
Registration; provided, however, that the Company, alone, will bear all stock
exchange listing and quotation fees arising under the Spin-Off (if any).
(b) Except as set forth herein, the Investors shall bear all out-of-pocket fees and expenses
incurred by the Investors in connection with the negotiation and execution of the Transaction
Documents and the consummation of the Contemplated Transactions.
(c) Notwithstanding the foregoing, the Company will, within 30 days after the Closing,
reimburse: (i) RXi for up to $250,000 of its out-of-pocket expenses incurred through the Closing,
plus up to $50,000 of fees and expenses incurred by RXi in obtaining valuation or
fairness opinions or other investment banking advice, if any, in connection with the
negotiation, preparation or implementation of this Agreement and the other Transaction Documents
and the consummation of the Contemplated Transactions; and (ii) the Investors in the aggregate for
up to $100,000 of their out-of-pocket expenses incurred through the Closing (collectively, the
“Transaction Costs”); provided, further, that in the event that this
Agreement
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is terminated pursuant to either Section 8.01(d) or 8.01(e), then, in
addition to other rights and remedies of the terminating party(ies), the non-terminating
party(ies) (i.e., the non-breaching party(ies)) shall pay or reimburse the terminating party(ies)
for their respective Transaction Costs.
Section 4.08 Confidentiality.
(a) RXi acknowledges that the success of the Company after the Closing depends upon the
continued preservation of the confidentiality of certain information possessed by RXi, that the
preservation of the confidentiality of such information by RXi is an essential premise of the
bargain between RXi and the Investors, and that the Investors would be unwilling to enter into
this Agreement in the absence of this Section 4.08(a). Accordingly, RXi hereby agrees
with the Investors that RXi, its Affiliates and its and its Affiliate’s Representatives shall not,
and that RXi shall cause its Affiliates and such Representatives not to, at any time on or after
the Closing Date, directly or indirectly, without the prior written consent of the Investors,
disclose or use, any information involving or relating to the Business or the Company, except as
required by applicable Legal Requirements; provided, that the information subject to this
Section 4.08(a) will not include any information generally available to, or known by, the
public (other than as a result of disclosure in violation hereof); provided,
further, that the provisions of this Section 4.08(a) will not prohibit any
retention of copies of records or disclosure (A) required by any applicable Legal Requirement so
long as reasonable prior notice is given to the Investors and the Company of such disclosure and a
reasonable opportunity is afforded the Investors and the Company to contest the same or (B) made
in connection with the enforcement of any right or remedy relating to the Transaction Documents.
RXi agrees that it shall be responsible for any breach or violation of the provisions of this
Section 4.08(a) by any of its Affiliates or its or its Affiliates’ Representatives.
Notwithstanding the foregoing, each of the parties hereto and their respective Representatives may
disclose to any and all Persons, without limitation of any kind, the tax treatment and tax
structure of the Contemplated Transactions and all materials of any kind (including opinions or
other tax analyses) that are provided to it relating to such tax treatment and tax structure, all
as contemplated by Treasury Regulation Section 1.6011-4(b)(3)(iii).
(b) Certain Confidentiality Agreements. At or prior to the Closing, RXi shall assign
to the Company any and all rights that RXi or any Affiliate thereof may have under any
confidentiality agreement (or similar Contractual Obligation) relating to the Assets or the
Business.
Section 4.09 Publicity.
(a) No public announcement or disclosure (including any general announcement to employees,
customers or suppliers) will be made by any party with respect to the subject
matter of this Agreement or the Contemplated Transactions without the prior written consent
of the Company and the Investors; provided, that the provisions of this Section
4.09 shall not prohibit (a) any disclosure required by any applicable Legal Requirements or
(b) any disclosure made in connection with the enforcement of any right or remedy relating to this
Agreement or any Ancillary Agreement or the Contemplated Transactions, provided,
further, that in the event
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of any disclosure pursuant to the foregoing clause (a), the
disclosing party shall provide the other parties with at least forty-eight (48) hours prior
written notice of the proposed disclosure and provide the other parties with the opportunity to
make changes to such disclosure, with the acceptance of such changes not to be unreasonably
withheld.
(b) Notwithstanding the foregoing, RXi shall, no later than 8:30 a.m. (Eastern Time) on the
first Business Day following the Effective Date, issue a press release describing the material
terms of the Contemplated Transactions (the “Press Release”) and file with the U.S.
Securities and Exchange Commission a Current Report on Form 8-K describing the material terms of
this Agreement, the Ancillary Agreements and the Contemplated Transactions, which Press Release
and Form 8-K (collectively, the “Required Disclosure”) shall be subject to the Investors’
prior review and approval, which will not be unreasonably withheld.
Section 4.10 Further Assurances.
(a) From and after the Closing Date, upon the request of the Investors, RXi or the Company,
each of the parties hereto shall do, execute, acknowledge and deliver all such further acts,
assurances, deeds, assignments, transfers, conveyances and other instruments and papers as may be
reasonably required or appropriate to carry out the Contemplated Transactions.
(b) Neither the Company nor RXi shall take any action that is designed or intended to have
the effect of discouraging any licensor, supplier, or employee of the Company or other Person with
whom the Company has a relationship from maintaining the same relationship with the Company after
the Effective Date as it maintained prior to the Effective Date. RXi shall refer all customer
inquiries relating to the Business to the Company.
Section 4.11 Noncompetition and Non-solicitation. For a period of five (5) years from
and after the Closing Date, RXi shall not, and shall not permit, cause or encourage any of their
Affiliates to, engage directly or indirectly, as an owner, employee, consultant or otherwise, in
all or any portion of the Business (or any business that is competitive with the Business) as it is
conducted on the Effective Date or the Closing Date; provided, that no owner of less than
two percent (2%) of the outstanding stock of any publicly-traded corporation will be deemed to be
so engaged solely by reason thereof in the Business. For a period of five (5) years from and after
the Closing Date, RXi shall not, and shall not permit, cause or encourage any of their Affiliates
to, recruit, offer employment, employ, engage as a consultant, lure or entice away, or in any other
manner persuade or attempt to persuade, any Person who is an employee of any of the Company to
leave the employ of the Company. If the final judgment of a court of competent jurisdiction
declares that any term or provision of this Section 4.11 is invalid or unenforceable, the
parties hereto agree that the court making the determination of invalidity or unenforceability will
have the power to reduce the scope, duration, or area of the term or provision, to delete specific
words or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement will be enforceable
as so modified after the expiration of the time within which the judgment may be appealed.
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Section 4.12 Filing of Registration Statement; Trading Market. As promptly as
practicable after the Effective Date, the Company shall take such actions as may be necessary to:
(a) cause the Company Common Stock to be registered as a class of securities under Section 12 of
the Exchange Act, which actions shall include the filing of a registration statement on Form 10 or,
if permitted, on Form 8-A (the “Exchange Act Registration”), and (b) list the Company
Common Stock for trading or quotation, as the case may be, on any Trading Market (as defined in the
Certificate of Designations).
Section 4.13 Spin-Off; Target Float.
(a) The Company and RXi shall take such actions as may be necessary or advisable to effect
the Spin-Off immediately prior to the Closing, subject to the completion of the Exchange Act
Registration and, if applicable, the Securities Act Registration (as defined below). The Spin-Off
shall be effected in such a way so as to ensure that the Company Common Stock that is distributed
to the RXi stockholders is not deemed “restricted stock” under the Securities Act. To the extent
necessary to comply with the foregoing requirement, the Company shall, and RXi shall cause the
Company to, file a Registration Statement on Form S-1 (or other form as applicable) to register
the Spin-Off under the Securities Act (the “Securities Act Registration”).
(b) Not later than thirty (30) days prior to the anticipated effective date of the Spin-Off,
RXi shall fix a record date for the distribution of the Company Common Stock in the Spin-Off (the
“Record Date”). Within two Business Days after the Record Date, RXi shall notify the
Investors of the total number of shares of RXi’s common stock, $0.0001 par value per share
(“RXi Common Stock”), issued and outstanding as of the Record Date (“Recorded
Shares”), as well as the number of outstanding shares of preferred stock and shares issuable
underlying outstanding options, warrants and other purchase rights where the holders thereof would
be entitled to participate in the Spin-Off (the Recorded Shares, plus the total number of such
shares potentially issuable being the “RXi Outstanding Shares”). Following the timely
receipt of a report of the total RXi Outstanding Shares, the Investors shall, within five Business
Days after the Record Date: (i) confirm with the Company the number of shares of Company Common
Stock to be distributed to the RXi stockholders in the Spin-Off (the “Target Float”),
calculated in accordance with Annex II, and (ii) notify the Company of the total number of shares
of Company Common Stock to be authorized for issuance under the Certificate of Incorporation (the
“Authorized Capital”). Following the Company’s receipt of such notice from the Investors,
the Company and RXi shall take such actions as may be necessary to adjust the number of shares of
Outstanding Common Stock, whether through a stock split, reverse stock split or otherwise, to
achieve the Target Float, and shall implement such changes to the Certificate of Incorporation as
may be directed by the Investors to the extent that such changes relate to stock splits and/or
changes in the authorized number of shares of Company Common Stock.
(c) For the avoidance of doubt, any adjustments made to the Outstanding Common Stock under
Section 4.13(b), whether by stock split, reverse stock split or otherwise (the “Target Float
Adjustments”), shall be similarly applied to the Retained Shares and the Advirna Shares, as
well as the conversion price for the Preferred Stock so that appropriate adjustments
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are made in
each case to provide that the Outstanding Common Stock will be held in the relative amounts set
forth on Annex II (determined on an as-converted basis) immediately after the Closing.
(d) The Company shall, prior to effectiveness of the Exchange Act Registration and, if
applicable, the Securities Act Registration, implement the Target Float Adjustments and designate
the Authorized Capital by filing the Certificate of Incorporation with the Delaware Secretary of
State.
Section 4.14 Board of Directors. Upon the earlier of the Closing or the Maturity Date
(as defined in the Bridge Notes), the Company and RXi shall take such actions as are necessary to
provide that the Board of Directors of the Company will consist of three members, who shall be Xxxx
Xxx, Xxxxx Xxxx and Xxxxxxxx Xxxx. Each of these directors shall also have tendered their
conditional resignations, which will become effective with respect to all three initial directors
upon the affirmative vote of two-thirds of the directors, upon the appointment of a new Board of
Directors of the Company consisting solely of independent directors, as determined in accordance
with NASDAQ Marketplace Rule 5605(a)(2); provided, however, that the Chief Executive Officer or
other senior officer of the Company may serve as one of the members of the Board of Directors of
the Company.
Section 4.15 Corporate Name of the Company. Following the Effective Date, the Company
and RXi shall take such actions as may be necessary to allow the Company to change its name on or
before the Closing to “RXi Pharmaceuticals Corporation” and to thereafter use the stock trading
symbol RXII, or any derivative thereof (e.g., RXII.OB or XXXX.XX).
Section 4.16
Corporate Name of RXi. Following the Effective Date, the Company and RXi shall take such actions as may be necessary to allow the Company to change its name on or before the
Closing to “RXi Pharmaceuticals Corporation” and, as
nearly concurrent to Closing as practicable, to cause RXi to cease
using the stock trading symbol RXII, or any derivative thereof (e.g.,
RXII.OB or XXXX.XX) and to allow the Company to thereafter commence the use of that stock trading symbol.
Section 4.17 RXi Lock-Up. RXi agrees that, without the prior approval of the Board of
Directors of the Company, it will not, during the period commencing on the Closing Date and ending
on the first anniversary of the Closing Date: (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any of the
Retained Shares or (ii) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Retained Shares, whether any
such transaction described in clause (i) or (ii) above is to be settled by delivery of Company
Common Stock or such other securities, in cash or otherwise.
Section 4.18 Advirna Amendment. Concurrent with the execution of this Agreement, the
Company shall enter into an amendment to that certain patent and technology assignment agreement by
and between Advirna, LLC, a Colorado limited liability company (“Advirna”), and
RXi, dated September 21, 2009 (“Advirna Agreement”), to be executed by Advirna and the
Company, which amendment shall be substantially in the form attached hereto as Exhibit F
(such fully executed amendment, “Advirna Amendment”).
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Section 4.19 RXi Contribution to the Company. Within five (5) Business Days following
the issuance of the Required Disclosure, RXi will contribute $1,500,000 to the Company, which shall
be recorded as additional paid in capital (the “RXi Contribution”).
Section 4.20 Subscription Agreement. Concurrently with the execution of this
Agreement on the Effective Date, RXi and the Investors shall enter into a subscription agreement
providing for the issuance and sale of $2,500,000 of common stock of RXi to the Investors, which
agreement shall be in the form attached hereto as Exhibit G (the “Subscription
Agreement”), and which offering and sale shall close on the fourth Business Day after the date
on which the Required Disclosure is made.
ARTICLE V
CONDITIONS TO THE OBLIGATIONS OF THE INVESTORS AT THE CLOSING.
CONDITIONS TO THE OBLIGATIONS OF THE INVESTORS AT THE CLOSING.
The obligations of the Investors to consummate the Spin-Off and the other Contemplated
Transactions to be consummated at the Closing are subject to the fulfillment, or, to the extent
permitted by law, waiver by the Investors, of each of the following conditions:
Section 5.01 Representations and Warranties. The representations and warranties of the
Company and RXi contained in (a) this Agreement (i) that are not qualified by materiality, Material
Adverse Effect, substantial compliance or a similar materiality qualifier will be true and correct
in all material respects both when made and at the Closing with the same force and effect as if
made as of the Closing Date, other than such representations and warranties that expressly speak
only as of a specific date or time, which will be true and correct in all material respects as of
such specified date or time and (ii) that are qualified by materiality, Material Adverse Effect,
substantial compliance or a similar materiality qualifier will be true and correct in all respects
both when made and at the Closing with the same force and effect as if made as of the Closing Date,
other than such representations and warranties that expressly speak only as of a specific date or
time, which will be true and correct as of such specified date or time.
Section 5.02 Performance; Default.
(a) The Company and RXi will have performed and complied with in all material respects, with
all agreements, obligations and covenants contained in the Transaction Documents, including those
that are required to be performed or complied with by them at or prior to the Closing (which shall
include, but not be limited to, the completion of the Spin-Off and the effectiveness of the
Exchange Act Registration).
(b) There shall not have been any Event of Default under the Bridge Notes, as such term is
defined thereto.
Section 5.03 Delivery of Shares. The Company will have delivered to each of the
Investors a duly executed stock certificate or certificates evidencing all of the Preferred Shares
to be issued to such Investor hereunder.
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Section 5.04 Filing of Certificate of Designation. The Certificate of Designations
shall have been adopted and approved by the Company’s Board of Directors as required by applicable
law (including without limitation the Delaware General Corporation Law), the Certificate and Bylaws
and any agreements to which the Company is a party or is bound, and the Company shall have filed
the Certificate of Designations with the Secretary of State of the State of Delaware who shall have
accepted the Certificate of Designations for filing, and the Certificate of Designations shall be
in full force and effect as of the Closing.
Section 5.05 Qualification Under Blue Sky Laws. The Company will have obtained
qualification of the Securities, including those required pursuant to the Spin-Off, under
applicable Blue Sky laws.
Section 5.06 Delivery of Closing Certificates. The Company and RXi shall have
delivered to the Investors the following:
(a) Secretary Certificate: Certificates, dated as of the Closing Date, signed
by the Secretaries of the Company and RXi certifying as to (i) the resolutions adopted by
the Boards of Directors of the Company and RXi in connection with the Transaction Documents
and the Contemplated Transactions, and (ii) the satisfaction of the conditions set forth in
Sections 5.01 and 5.02.
(b) Good Standing Certificate. A certificate of good standing with respect to
the Company issued by the State of Delaware, as of a recent date.
Section 5.07 Absence of Litigation. No Action will be pending or threatened which
seeks a Governmental Order, nor will there be any Governmental Order in effect, that would prevent
consummation of any of the Contemplated Transactions, or that would result in any of the
Contemplated Transactions being rescinded following consummation.
Section 5.08 Legal Opinion. The Investors shall have received from TroyGould PC,
counsel to the Company and RXi (or other counsel reasonably acceptable to the Investors), its
opinion with respect to the Contemplated Transactions to the effect set forth in Exhibit
H-2 attached hereto.
Section 5.09 Consents. All actions by (including any authorization, consent or
approval) or in respect of (including notice to), or filings with, any Governmental Authority or
other Person that are required to consummate the Contemplated Transactions, including the
effectiveness of the Exchange Act Registration and, if applicable, the Securities Act Registration,
will have been obtained or made, in a manner reasonably satisfactory in form and substance to the
Investors, and no such authorization, consent or approval will have been revoked.
Section 5.10 Proceedings and Documents. All corporate and other proceedings of RXi and
the Company in connection with the Contemplated Transactions and all documents incident thereto
will be reasonably satisfactory in form and substance to the Investors and their counsel, and they
will have received all such counterpart original and other copies of such documents as they may
reasonably request.
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Section 5.11 No Material Adverse Change. Since the Effective Date, there will not have
occurred or arisen any events, changes, facts, conditions or circumstances, nor will there exist
any events, changes, facts, conditions or circumstances, which individually or in the aggregate
have resulted in or would reasonably be expected to result in a Material Adverse Effect.
Section 5.12 Completion of Contemplated Transactions. The following actions shall
have been taken: (i) the Advirna Amendment shall have been fully executed and delivered by the
parties thereto; (ii) the Spin-Off shall have been completed and conditions set forth in Section
4.13 shall have been satisfied; (iii) the RXi Contribution shall have been completed; and (iv) the
transactions contemplated under the Subscription Agreement shall have been consummated.
Section 5.13 Required Approvals. The Company shall have obtained all Required
Approvals set forth on Schedule 1.01—Required Approvals.
ARTICLE VI
CONDITIONS TO THE COMPANY’S OBLIGATIONS AT THE CLOSING.
CONDITIONS TO THE COMPANY’S OBLIGATIONS AT THE CLOSING.
The obligations of the Company to consummate the Spin-Off and the other Contemplated
Transactions to be consummated at the Closing are subject to the fulfillment, or, to the extent
permitted by law, waiver by the Company of each of the following conditions:
Section 6.01 Representations and Warranties. The representations and warranties of the
Investors contained in this Agreement (a) that are not qualified by materiality will be true and
correct in all material respects both when made and at the Closing with the same force and effect
as if made as of the Closing Date and (b) that are qualified by materiality will be true and
correct in all respects both when made and as at the Closing with the same force and effect as if
made as of the Closing Date, in each case, other than representations and warranties that expressly
speak only as of a specific date or time, which will be true and correct (or true and correct in
all material respects, as applicable) as of such specified date or time.
Section 6.02 Performance. The Investors will have performed and complied with, in all
material respects, all agreements, obligations and covenants contained in the Transaction
Documents, including those that are required to be performed or complied with by the Investors at
or prior to the Closing.
Section 6.03 Payment of Purchase Price. Prior to Closing, the Investors will have
paid the Cash Portion of the Purchase Price of the Preferred Shares.
Section 6.04 Compliance Certificate. The Investors will have delivered to the Company
a certificate dated as of the Closing Date and signed by duly authorized representatives of the
Investors certifying as to the conditions set forth in Sections 6.01 and 6.02.
Section 6.05 Qualifications. Any applicable waiting periods (and any extensions
thereof) under the HSR Act will have expired or otherwise been terminated. No provision of any
applicable Legal Requirement and no Government Order will prohibit the consummation of any of the
Contemplated Transactions.
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Section 6.06 Absence of Litigation. No Action will be pending or threatened which
seeks a Governmental Order, nor will there be any Governmental Order in effect, that would prevent
consummation of any of the Contemplated Transactions, or that would result in any of the
Contemplated Transactions being rescinded following consummation.
Section 6.07 Consents. All actions by (including any authorization, consent or
approval) or in respect of (including notice to), or filings with, any Governmental Authority or
other Person that are required to consummate the Contemplated Transactions, including the
effectiveness of the Exchange Act Registration and, if applicable, the Securities Act Registration,
will have been obtained or made, in a manner reasonably satisfactory in form and substance to the
Investors, and no such authorization, consent or approval will have been revoked.
Section 6.08 Proceedings and Documents. All necessary company, partnership and other
proceedings of the Investors in connection with the Contemplated Transactions shall have been
completed.
Section 6.09 Ancillary Agreements. Each of the Ancillary Agreements to which the
Investors are party will have been executed and delivered to the Company by each of the other
parties thereto and the transactions contemplated by the Subscription Agreement shall have been
consummated.
ARTICLE VII
REGISTRATION RIGHTS OF THE INVESTORS.
REGISTRATION RIGHTS OF THE INVESTORS.
Section 7.01 Mandatory Registration. The Company shall prepare and file as soon as
practicable, but in no event later than thirty (30) days after the Closing Date (the “Filing
Deadline”), a Registration Statement covering the resale of twenty percent (20%) of the
Conversion Shares underlying the Preferred Shares outstanding immediately following the Closing
(collectively, the “Registrable Securities”). The Company shall use its commercially
reasonable efforts to have the Registration Statement declared effective by the Commission as soon
as practicable, but in no event later than either (i) ninety (90) days after the Closing Date, or
(ii) in the event that the Commission reviews the Registration Statement, one hundred twenty (120)
days after the Closing Date (but in any event, no later than four Business Days from the Commission
indicating that it has no further comments on the Registration Statement) (the “Effectiveness
Deadline”). By 9:30 am (Eastern Time) on the second Business Day following the Effectiveness
Deadline, the Company shall file with the Commission in accordance with
Rule 424 under the Securities Act the final prospectus to be used in connection with sales
pursuant to such Registration Statement.
Section 7.02 Legal Counsel. The Investors shall have the right to select one legal
counsel to review and oversee any registration pursuant to this Section VII, which shall be
Ropes & Xxxx LLP, or such other counsel (“Legal Counsel”) as thereafter designated by the
Investors. The Company and Legal Counsel shall reasonably cooperate with each other in performing
the Company’s obligations under this Section VII.
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Section 7.03 Effect of Failure to File and Obtain and Maintain Effectiveness of
Registration Statement. If (a) a Registration Statement covering all of the Registrable
Securities required to be covered thereby and required to be filed by the Company pursuant to this
Agreement is (i) not filed with the Commission on or before the Filing Deadline (a “Filing
Failure”) or (ii) not declared effective by the Commission on or before the Effectiveness
Deadline (an “Effectiveness Failure”) or (b) on any day after the Effectiveness Deadline,
sales of all of the Registrable Securities required to be included on such Registration Statement
cannot be made pursuant to such Registration Statement (including, without limitation, because of a
failure to keep such Registration Statement effective, to disclose such information as is necessary
for sales to be made pursuant to such Registration Statement or to register a sufficient number of
shares of common stock) or Rule 144 under the Act (a “Maintenance Failure”) then, as
partial relief for the damages to any holder by reason of any such delay in or reduction of its
ability to sell the underlying shares of common stock (which remedy shall not be exclusive of any
other remedies available at law or in equity), the Company shall pay to each holder of Registrable
Securities relating to such Registration Statement an amount in cash equal to two percent (2.0%) of
such holder’s pro rata interest in the Purchase Price, as reflected on Annex I,
attributable to the portion of the Registrable Securities so affected by the Filing Failure or
Maintenance Failure, as applicable, on each of the following dates: (i) the day of a Filing Failure
and monthly thereafter (pro rated for partial months) until such Filing Failure is cured, with a
maximum penalty of twelve months applied to such holder’s pro rata interest in the Purchase Price;
(ii) the day of an Effectiveness Failure and monthly thereafter (pro rated for partial months)
until such Effectiveness Failure is cured, with a maximum penalty of twelve months applied to such
holder’s pro rata interest in the Purchase Price; and (iii) the initial day of a Maintenance
Failure and monthly thereafter (pro rated for partial months) until such Maintenance Failure is
cured, with a maximum penalty of twelve months applied to such holder’s pro rata interest in the
Purchase Price. The payments to which a holder shall be entitled pursuant to this Section
7.03 are referred to herein as “Registration Delay Payments.” The first such
Registration Delay Payment shall be paid within three (3) Business Days after the event or failure
giving rise to such Registration Delay Payment occurred and all other Registration Delay Payments
shall be paid on the earlier of (I) the last day of the calendar month during which such
Registration Delay Payments are incurred and (II) the third Business Day after the event or failure
giving rise to the Registration Delay Payments is cured. In the event the Company fails to make
Registration Delay Payments in a timely manner, such Registration Delay Payments shall bear
interest at the rate of two percent (2.0%) per month (prorated for partial months) until paid in
full. In addition, the Investors shall, among seeking other remedies, be entitled to seek
injunctive relief compelling the Company to address the Filing Failure, Effectiveness Failure or
the Maintenance
Failure. Notwithstanding the foregoing, no Registration Delay Payments shall accrue with
regard to any portion of a Filing Failure or Maintenance Failure that occurs or continues after the
first anniversary of Closing, provided that the Investors are then eligible to sell the Registrable
Securities without limitation under Rule 144 under the Securities Act.
Section 7.04 Related Obligations. At such time as the Company is obligated to file a
Registration Statement with the Commission pursuant to ARTICLE VII, the Company will use
its best efforts to effect the registration of the Registrable Securities in accordance with the
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intended method of disposition thereof and, pursuant thereto, the Company shall have the following
obligations:
(a) The Company shall submit to the Commission, within two (2) Business Days after the
Company learns that no review of a particular Registration Statement will be made by the staff of
the Commission or that the staff has no further comments on a particular Registration Statement,
as the case may be, a request for acceleration of effectiveness of such Registration Statement to
a time and date not later than two (2) Business Days after the submission of such request. The
Company shall keep each Registration Statement effective pursuant to Rule 415 at all times until
the earlier of (i) the date as of which the Investors may sell all of the Registrable Securities
covered by such Registration Statement without restriction pursuant to Rule 144 (or any successor
thereto) promulgated under the Securities Act or (ii) the date on which the Investors shall have
sold all of the Registrable Securities covered by such Registration Statement (the
“Registration Period”). The Company shall ensure that each Registration Statement
(including any amendments or supplements thereto and prospectuses contained therein) shall not
contain any 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 case of prospectuses, in the
light of the circumstances in which they were made) not misleading.
(b) The Company shall prepare and file with the Commission such amendments (including
post-effective amendments) and supplements to a Registration Statement and the prospectus used in
connection with such Registration Statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the Securities Act, as may be necessary to keep such Registration Statement
effective at all times during the Registration Period, and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of all Registrable Securities of
the Company covered by such Registration Statement until such time as all of such Registrable
Securities shall have been disposed of in accordance with the intended methods of disposition by
the seller or sellers thereof as set forth in such Registration Statement. In the case of
amendments and supplements to a Registration Statement which are required to be filed pursuant to
this Agreement (including pursuant to this Section 7.04(b)) by reason of the Company
filing a report on Form 10-Q, Form 10-K or any analogous report under the Exchange Act, the
Company shall have incorporated such report by reference into such Registration Statement, if
applicable, or shall file such amendments or supplements with the Commission on the same day on
which the Exchange Act report is filed which created the requirement for the Company to amend or
supplement such Registration Statement.
(c) The Company shall (i) permit Legal Counsel to review and comment upon (A) a Registration
Statement at least five (5) Business Days prior to its filing with the Commission and (B) all
amendments and supplements to all Registration Statements (except for Annual Reports on Form 10-K,
and Quarterly Reports on Form 10-Q and any similar or successor reports) within a reasonable
number of days prior to their filing with the Commission and (ii) not file any Registration
Statement or amendment or supplement thereto in a form to which Legal Counsel reasonably objects.
The Company shall not submit a request for acceleration of the effectiveness of a Registration
Statement or any amendment or supplement thereto without the prior approval of Legal Counsel,
which consent shall not be unreasonably withheld. The
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Company shall furnish to Legal Counsel,
without charge, (i) copies of any correspondence from the Commission or the staff of the
Commission to the Company or its representatives relating to any Registration Statement; (ii)
promptly after the same is prepared and filed with the Commission, one copy of any Registration
Statement and any amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference, if requested by the Investors, and all exhibits; and
(iii) upon the effectiveness of any Registration Statement, one copy of the prospectus included in
such Registration Statement and all amendments and supplements thereto. The Company shall
reasonably cooperate with Legal Counsel in performing the Company’s obligations pursuant to this
ARTICLE VII.
(d) The Company shall furnish to the Investors without charge, (i) promptly after the
Registration Statement including such Investor’s Registrable Securities is prepared and filed with
the Commission, at least one copy of such Registration Statement and any amendment(s) thereto,
including financial statements and schedules, all documents incorporated therein by reference, if
requested by the Investor, all exhibits and each preliminary prospectus; (ii) upon the
effectiveness of any Registration Statement, ten (10) copies of the prospectus included in such
Registration Statement and all amendments and supplements thereto (or such other number of copies
as the Investor may reasonably request); and (iii) such other documents, including copies of any
preliminary or final prospectus, as the Investor may reasonably request from time to time in order
to facilitate the disposition of the Registrable Securities.
(e) The Company shall use its best efforts to (i) register and qualify, unless an exemption
from registration and qualification applies, the resale by the Investor of the Registrable
Securities covered by a Registration Statement under such other securities or “blue sky” laws of
all applicable jurisdictions in the United States; (ii) prepare and file in those jurisdictions,
such amendments (including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during the Registration
Period; (iii) take such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such
jurisdictions; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction
where it would not otherwise be required to qualify but for this Section 7.06(e); (y)
subject itself to general taxation in any such jurisdiction; or (z) file a general consent to
service of process in any such jurisdiction. The Company shall promptly notify Legal Counsel and
the Investors of the receipt by the Company of any notification with respect to the suspension of
the registration or qualification of any of the Registrable Securities for sale under the
securities or “blue sky” laws of any jurisdiction in the United States or its receipt of notice of
the initiation or threatening of any proceeding for such purpose.
(f) The Company shall notify Legal Counsel and the Investors in writing of the happening of
any event, as promptly as practicable after becoming aware of such event, as a result of which the
prospectus included in a Registration Statement, as then in effect, includes an untrue statement
of a material fact or omission 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 (provided that in no event shall such notice contain any
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material, nonpublic
information), and, promptly prepare a supplement or amendment to such Registration Statement to
correct such untrue statement or omission, and deliver ten (10) copies of such supplement or
amendment to Legal Counsel and the Investors (or such other number of copies as Legal Counsel or
the Investors may reasonably request). The Company shall also promptly notify Legal Counsel and
the Investors in writing (i) when a prospectus or any prospectus supplement or post-effective
amendment has been filed, and when a Registration Statement or any post-effective amendment has
become effective (notification of such effectiveness shall be delivered to Legal Counsel and the
Investors by facsimile on the same day of such effectiveness and by overnight mail); (ii) of any
request by the Commission for amendments or supplements to a Registration Statement or related
prospectus or related information; and (iii) of the Company’s reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate.
(g) The Company shall use its best efforts to prevent the issuance of any stop order or other
suspension of effectiveness of a Registration Statement, or the suspension of the qualification of
any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension
is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment
and to notify Legal Counsel and the Investor who holds Registrable Securities being sold of the
issuance of such order and the resolution thereof or its receipt of notice of the initiation or
threat of any proceeding for such purpose.
(h) If a Investor is required under applicable securities law to be described in the
Registration Statement as an underwriter, at the reasonable request of the Investor, the Company
shall furnish to the Investor, on the date of the effectiveness of the Registration Statement and
thereafter from time to time on such dates as the Investor may reasonably request (i) a letter,
dated such date, from the Company’s independent certified public accountants in form and substance
as is customarily given by independent certified public accountants to underwriters in an
underwritten public offering, addressed to the Investor and (ii) an opinion, dated as of such
date, of counsel representing the Company for purposes of such Registration Statement, in form,
scope and substance as is customarily given in an underwritten public offering, addressed to the
Investor.
(i) If an Investor is required under applicable securities law to be described in the
Registration Statement as an underwriter, upon the written request of the Investor in connection
with the Investor’s due diligence requirements, if any, the Company shall make available for
inspection by (i) the Investor; (ii) Legal Counsel and (iii) one firm of accountants
or other agents retained by the Investor (collectively, the “Inspectors”), all
pertinent financial and other records, and pertinent corporate documents and properties of the
Company (collectively, the “Records”), as shall be reasonably deemed necessary by each
Inspector, and cause the Company’s officers, directors and employees to supply all information
which any Inspector may reasonably request; provided, however, that each Inspector
shall agree to hold in strict confidence and shall not make any disclosure (except to the
Investor) or use of any Record or other information which the Company determines in good faith to
be confidential, and of which determination the Inspectors are so notified, unless (a) the
disclosure of such Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement or is otherwise required under the Securities Act; (b) the release of such
Records is
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ordered pursuant to a final, non-appealable subpoena or order from a court or
government body of competent jurisdiction; or (c) the information in such Records has been made
generally available to the public other than by disclosure in violation of this or any other
Transaction Document. The Investor agrees that it shall, upon learning that disclosure of such
Records is sought in or by a court or governmental body of competent jurisdiction or through other
means, give prompt notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order for, the Records
deemed confidential. Nothing herein (or in any other confidentiality agreement between the
Company and the Investor) shall be deemed to limit the Investor’s ability to sell Registrable
Securities in a manner which is otherwise consistent with applicable laws and regulations.
(j) The Company shall hold in confidence and not make any disclosure of information
concerning the Investors provided to the Company unless (i) disclosure of such information is
necessary to comply with federal or state securities laws; (ii) the disclosure of such information
is necessary to avoid or correct a misstatement or omission in any Registration Statement; (iii)
the release of such information is ordered pursuant to a subpoena or other final, non-appealable
order from a court or governmental body of competent jurisdiction; or (iv) such information has
been made generally available to the public other than by disclosure in violation of this
Agreement or any other agreement. The Company agrees that it shall, upon learning that disclosure
of such information concerning the Investors is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt written notice to the Investors and
allow the Investors, at each Investor’s expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.
(k) The Company shall use its best efforts to cause all of the Registrable Securities covered
by a Registration Statement to be listed on each securities exchange on which securities of the
same class or series issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange. The Company shall pay
all fees and expenses in connection with satisfying its obligation under this Section
7.06(k).
(l) The Company shall cooperate with the Investors and, to the extent applicable, facilitate
the timely preparation and delivery of certificates (not bearing any restrictive legend)
representing the Registrable Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts, as the case may be, as the
Investors may reasonably request and registered in such names as the Investors may request.
(m) If requested by an Investor, the Company shall (i) as soon as practicable incorporate in
a prospectus supplement or post-effective amendment such information as the Investor reasonably
requests to be included therein relating to the sale and distribution of Registrable Securities,
including, without limitation, information with respect to the number of Registrable Securities
being offered or sold, the purchase price being paid therefor and any other terms of the offering
of the Registrable Securities to be sold in such offering; (ii) as soon as practicable make all
required filings of such prospectus supplement or post-effective amendment after being notified of
the matters to be incorporated in such prospectus
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supplement or post-effective amendment; and
(iii) as soon as practicable, supplement or make amendments to any Registration Statement if
reasonably requested by the Investor.
(n) The Company shall use its best efforts to cause the Registrable Securities covered by a
Registration Statement to be registered with or approved by such other governmental agencies or
authorities as may be necessary to consummate the disposition of such Registrable Securities.
(o) The Company shall otherwise use its best efforts to comply with all applicable rules and
regulations of the Commission in connection with any registration hereunder.
(p) Within two (2) Business Days after a Registration Statement which covers Registrable
Securities is ordered effective by the Commission, the Company shall deliver, and shall cause
legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities
(with copies to the Investors) confirmation that such Registration Statement has been declared
effective by the Commission.
Section 7.05 Obligations of the Investors.
(a) At least five (5) Business Days prior to the first anticipated filing date of a
Registration Statement, the Company shall notify each Investor in writing of the information the
Company requires from such Investor in order to have that Investor’s Registrable Securities
included in such Registration Statement. 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 a particular Investor that the Investor shall furnish to the Company
such information regarding itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable Securities held by it as shall be reasonably required to effect
the effectiveness of the registration of such Registrable Securities and shall execute such
documents in connection with such registration as the Company may reasonably request.
(b) Each Investor, by its acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection with the
preparation and filing of any Registration Statement hereunder, unless the Investor has notified
the Company in writing of the Investor’s election to exclude all of the Investor’s Registrable
Securities from such Registration Statement.
(c) Each Investor agrees that, upon receipt of any notice from the Company of the happening
of any event of the kind described in Section 7.04(g) or the first sentence of Section
7.04(f), the Investor will immediately discontinue disposition of Registrable Securities
pursuant to any Registration Statement(s) covering such Registrable Securities until the
Investor’s receipt of the copies of the supplemented or amended prospectus contemplated by
Section 7.04(g) or the first sentence of Section 7.04(f) or receipt of notice that
no supplement or amendment is required. Notwithstanding anything to the contrary, the Company
shall cause its transfer agent to deliver unlegended shares of common stock to a transferee of the
Investor in accordance with the terms of this Agreement in connection with any sale of Registrable
Securities with respect to which the Investor has entered into a contract for sale prior to the
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Investor’s receipt of a notice from the Company of the happening of any event of the kind
described in Section 7.04(g) or the first sentence of Section 7.04(f) and for
which the Investor has not yet settled.
(d) Each Investor covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it or an exemption therefrom in connection
with sales of Registrable Securities pursuant to the Registration Statement.
Section 7.06 Expenses of Registration. All expenses incurred in connection with
registrations, filings or qualifications pursuant to this Article VII will be borne by the
respective parties.
Section 7.07 Reports under the Exchange Act. With a view to making available to the
Investors the benefits of Rule 144 promulgated under the Securities Act or any other similar rule
or regulation of the Commission that may at any time permit the Investors to sell securities of the
Company to the public without registration (“Rule 144”), the Company agrees to:
(a) make and keep public information available, as those terms are understood and defined in
Rule 144;
(b) file with the Commission in a timely manner all reports and other documents required of
the Company under the Exchange Act so long as the Company remains subject to such requirements and
the filing of such reports and other documents is required for the applicable provisions of Rule
144; and
(c) furnish to the Investors so long as any Investor owns Registrable Securities, promptly
upon request, (i) a written statement by the Company, if true, that it has complied with the
reporting requirements of Rule 144, the Securities Act and the Exchange Act; (ii) a copy of the
most recent annual or quarterly report of the Company and such other reports and documents so
filed by the Company; and (iii) such other information as may be reasonably requested to permit
the Investors to sell such securities pursuant to Rule 144 without registration.
Section 7.08 Piggyback Rights. Whenever the Company proposes to register any of its
common stock or securities convertible into common stock, whether or not for its own account,
provided such offering shall be underwritten or placed by a placement agent, the Company will
give prompt written notice to the Investors of its intention to effect such a registration
(but in no event less than fifteen (15) Business Days prior to the anticipated filing date) and
will include in such registration all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within ten (10) Business Days after the date of the
Company’s notice (a “Piggyback Registration”). Any Investor may withdraw its Registrable
Securities from such Piggyback Registration by giving written notice to the Company and the
managing underwriter, if any, on or before the fifth Business Day prior to the planned effective
date of such Piggyback Registration. The Company may terminate or withdraw any registration under
this Section 7.08 prior to the effectiveness of such registration, whether or not the
Investor has elected to include Registrable Securities in such registration. If a Piggyback
Registration
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relates to an underwritten primary offering on behalf of the Company, and the managing
underwriters advise the Company that in their reasonable opinion the number of securities requested
to be included in such registration exceeds the number which can be sold without adversely
affecting the marketability of such offering (including an adverse effect on the per share offering
price), the Company will include in such registration or prospectus only such number of securities
that in the reasonable opinion of such underwriters can be sold without adversely affecting the
marketability of the offering (including an adverse effect on the per share offering price),
provided, without the consent of the Investor, such number so included shall equal at least
thirty percent (30%) of such Investor’s Registrable Securities.
Section 7.09 Assignment of Registration Rights. The rights under this Article
VII shall be automatically assignable by an Investor to any transferee of all or any portion of
the Investor’s Registrable Securities if: (i) the Investor agrees in writing with the transferee or
assignee to assign such rights and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment; (ii) the Company is, within a reasonable time after such
transfer or assignment, furnished with written notice of (a) the name and address of such
transferee or assignee and (b) the securities with respect to which such registration rights are
being transferred or assigned; (iii) immediately following such transfer or assignment the further
disposition of such securities by the transferee or assignee is restricted under the Securities Act
or applicable state securities laws; (iv) at or before the time the Company receives the written
notice contemplated by clause (ii) of this sentence the transferee or assignee agrees in writing
with the Company to be bound by all of the provisions contained herein; and (v) such transfer shall
have been made in accordance with the applicable requirements of this Agreement.
Section 7.10 Preemptive Rights of RXi. For any offering and sale of Company securities
that are sold in a capital raising transaction within one year following the Closing (each, a
“Subsequent Offering”), RXi will be entitled to preemptive rights to participate (to the
extent permitted under the Securities Act) in each Subsequent Offering (“Preemptive
Right”). Pursuant to this Preemptive Right, RXi shall be entitled to purchase a portion of the
securities offered in each Subsequent Offering equal to RXi’s percentage ownership of the Common
Stock of the Company, determined on an as-converted, fully diluted basis, immediately prior to the
consummation of such Subsequent Offering. Prior to execution of definitive offering documents for
any such Subsequent Offering, RXi shall be provided with the details of such Subsequent Offering,
including the security being offered, the offering price and material terms and conditions of the
offering. RXi shall then have ten (10) days following receipt of such notice to
elect to participate in such Subsequent Offering. For the avoidance of doubt, the offering
and sale of Company securities in a transaction, the principal purpose of which is not to raise
capital (e.g., exercise of employee stock options, issuance of shares in a merger or acquisition or
issuance of shares to a strategic partner) shall not be deemed a “Subsequent Offering” for purposes
of this Section 7.10.
Section 7.11 Indemnification.
(a) Company Indemnification. The Company will indemnify each Investor who holds
Registrable Securities (if Registrable Securities held by such Investor are included in the
securities as to which such registration is being effected), each of its officers and directors,
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partners, members and each person controlling such Investor within the meaning of Section 15 of
the Securities Act, against all expenses, claims, losses, damages or liabilities (or actions in
respect thereof), including any of the foregoing incurred in settlement of any litigation,
commenced or threatened, arising out of or based on (i) any untrue statement (or alleged untrue
statement) of a material fact contained in any Registration Statement, prospectus, offering
circular or other document, or any amendment or supplement thereto, incident to any such
Registration Statement, or based on any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading or (ii) any violation by the Company of the
Securities Act, the Exchange Act, state securities laws or any rule or regulation promulgated
under such laws applicable to the Company in connection with any such registration, and in each
case, the Company will reimburse each such Investor, each of its officers and directors, partners,
members and each person controlling such Investor, for any legal and any other expenses reasonably
incurred, as such expenses are incurred, in connection with investigating, preparing or defending
any such claim, loss, damage, liability or action, provided that the Company will not be
liable in any such case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on (X) any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with written information furnished to the Company
by an instrument duly executed by such Investor or controlling person, and stated to be
specifically for use therein, (Y) the use by an Investor of an outdated or defective prospectus
after the Company has notified such Investor in writing that the prospectus is outdated or
defective or (Z) an Investor’s (or any other indemnified person’s) failure to send or give a copy
of the prospectus or supplement (as then amended or supplemented), if required, pursuant to Rule
172 under the Securities Act (or any successor rule) to the Persons asserting an untrue statement
or alleged untrue statement or alleged untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of Registrable Securities to such person if such
statement or omission was corrected in such prospectus or supplement; provided,
further, that the indemnity agreement contained in this Section 7.11(a) shall not
apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent shall not be unreasonably
withheld).
(b) Investor Indemnification. Each Investor holding Registrable Securities will, if
Registrable Securities held by such Investor are included in the securities as to which such
registration is being effected, severally and not jointly, indemnify the Company, each of its
directors and officers, other holders of the Company’s securities covered by such
Registration Statement, each person who controls the Company within the meaning of Section 15 of
the Securities Act, and each such holder, each of its officers and directors and each person
controlling such holder within the meaning of Section 15 of the Securities Act, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based
on: (i) any untrue statement (or alleged untrue statement) of a material fact contained in any
such Registration Statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, to the extent, and only to the extent, that such
untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in
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such
Registration Statement, prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by an instrument duly executed by
such Investor and stated to be specifically for use therein or (ii) any violation by such Investor
of the Securities Act, the Exchange Act, state securities laws or any rule or regulation
promulgated under such laws applicable to such Investor, and in each case, such Investor will
reimburse the Company, each other holder, and directors, officers, persons, underwriters or
control persons of the Company and the other holders for any legal or any other expenses
reasonably incurred, as such expenses are incurred, in connection with investigating or defending
any such claim, loss, damage, liability or action; provided, that the indemnity agreement
contained in this Section 7.11(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected without the consent
of such indemnifying Investor (which consent shall not be unreasonably withheld or delayed). The
liability of any Investor for indemnification under this Section 7.11(b) in its capacity
as a seller of Registrable Securities shall not exceed the amount of net proceeds to such Investor
of the securities sold in any such registration.
(c) Notice and Procedure. Each party entitled to indemnification under this
Section 7.11 (the “Indemnified Party”) shall give written notice to the party
required to provide indemnification (the “Indemnifying Party”) promptly after such
Indemnified Party has actual Knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting
therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense
of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such defense at such
party’s expense, and provided further that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its obligations under
this Agreement unless the failure to give such notice is materially prejudicial to an Indemnifying
Party’s ability to defend such action and provided further, that the Indemnifying
Party shall not assume the defense for matters as to which there is a conflict of interest or
there are separate and different defenses. No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent of each Indemnified Party (whose consent shall not
be unreasonably withheld), consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or litigation.
(d) Contribution. If the indemnification provided for in this Section 7.11 is
held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect
to any losses, claims, damages or liabilities referred to herein, the Indemnifying Party, in lieu
of indemnifying such Indemnified Party thereunder, shall to the extent permitted by applicable law
contribute to the amount paid or payable by such Indemnified Party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection
with the untrue statement or omission that resulted in such loss, claim, damage or liability, as
well as any other relevant equitable considerations. The relative fault of the Indemnifying Party
and of the Indemnified Party shall be determined by a court of law by reference to, among
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other
things, whether the untrue or alleged untrue statement of a material fact or the omission to state
a material fact relates to information supplied by the Indemnifying Party or by the Indemnified
Party and the parties’ relative intent, Knowledge, access to information and opportunity to
correct or prevent such statement or omission; provided, that in no event shall any
contribution by an Investor hereunder exceed the proceeds from the offering received by such
Investor. The amount paid or payable by a party as a result of any loss, claim, damage or
liability shall be deemed to include, subject to the limitations set forth in this Agreement, 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 7.11 was available to such party in
accordance with its terms.
(e) Survival. The obligations of the Company and the Investors under this Section
7.11 shall survive completion of any offering of Registrable Securities in a Registration
Statement and the termination of this Agreement. The indemnity and contribution agreements
contained in this Section 7.11 are in addition to any liability that the Indemnifying
Parties may have to the Indemnified Parties and are not in diminution or limitation of other
remedies or causes of action that the parties may have under the Transaction Documents.
ARTICLE VIII
TERMINATION
TERMINATION
Section 8.01 Termination of Agreement. This Agreement may be terminated and the
Contemplated Transactions may be abandoned at any time prior to the Closing:
(a) by mutual written consent of the Company and the Investors;
(b) by either the Company or the Investors if a final non-appealable Governmental Order
permanently enjoining or otherwise prohibiting the Contemplated Transactions has been issued
by a Governmental Authority of competent jurisdiction;
(c) by either the Company or the Investors if the Closing has not occurred on or before
5:00 p.m., Eastern Standard Time, on February 20, 2012, which date may be extended from time
to time by mutual written consent of the Company and the Investors (such date, as so
extended from time to time, the “Termination Date”); provided, that the
right to terminate this Agreement under this Section 8.01(c) shall not be available
to the
Investors if the failure of the Investors to fulfill or breach by the Investors of any
obligation under this Agreement has been the cause of, or resulted in, the failure of the
Closing to occur on or before such date and shall not be available to the Company if the
failure of the Company to fulfill or breach by the Company of any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or
before such date and time; provided, further, that if the Closing fails to
occur by reason of a breach by one party, the non-breaching party shall be entitled to
recover its Transaction Costs, as well as recover any damages available under this
Agreement, and the parties acknowledge and agree that the damages that may be eligible for
recovery by the Company and RXi in the event of a termination for breach by the Investors
shall include
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amounts incurred or expended by RXi and the Company on the development and
maintenance of the RNAi Platform after August 15, 2011 and through the Termination Date;
(d) by the Company if the Investors are in breach of this Agreement and such breach
cannot be cured or, if curable, shall continue unremedied for a period of ten (10) days
after the Investors have received written notice from the Company of the occurrence of such
failure (provided that in no event shall such ten (10) day period extend beyond the
Termination Date); or
(e) by the Investors if the Company is in breach of this Agreement and such breach
cannot be cured or, if curable, shall continue unremedied for a period of ten (10) days
after the Company has received written notice from the Investors of the occurrence of such
failure (provided that in no event shall such ten (10) day period extend beyond the
Termination Date).
Any party desiring to terminate this Agreement shall give written notice of such termination to the
other parties.
Section 8.02 Effect of Termination. In the event of a termination of this Agreement
pursuant to Section 8.01, this Agreement (other than the provisions of this Article
VIII and Section 4.07 (Expenses), Section 4.08 (Confidentiality), Section
4.09 (Publicity), Section 10.07 (Governing Law), Section 10.08 (Jurisdiction;
Venue; Service of Process) and Section 10.11 (Waiver of Jury Trial), which shall survive
such termination) shall then be null and void and have no further force and effect and all other
rights and liabilities of the parties hereunder will terminate without any liability of any party
to any other party, except for liabilities arising in respect of material breaches under this
Agreement by any party prior to such termination.
ARTICLE IX
INDEMNIFICATION.
INDEMNIFICATION.
Section 9.01 General Indemnity. Subject to Section 9.03, each of the Company
and RXi agrees to indemnify and hold harmless the Investors (and their respective directors,
officers, affiliates, members, managers, employees, agents, successors and assigns) from and
against any and all losses, liabilities, deficiencies, costs, damages and expenses (including,
without limitation, reasonable attorneys’ fees, charges and disbursements) incurred by the
Investors as a
result of claims brought by third parties arising out of or relating to any breach of the
representations, warranties or covenants made in the Transaction Documents by the Company or RXi,
respectively.
Section 9.02 Indemnification Procedure. Any party entitled to indemnification under
Section 9.01 (an “SPA Indemnified Party”) will give written notice to the
indemnifying party of any matter giving rise to a claim for indemnification; provided, that
the failure of any party entitled to indemnification hereunder to give notice as provided herein
shall not relieve the indemnifying party of its obligations under Section 9.01 except to
the extent, and then only to the extent, that the indemnifying party is actually prejudiced by such
failure to give notice. In case
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any such action, proceeding or claim is brought against an SPA
Indemnified Party in respect of which indemnification is sought hereunder, the indemnifying party
shall be entitled to participate in and, unless in the reasonable judgment of the indemnifying
party a conflict of interest between it and the SPA Indemnified Party exists with respect to such
action, proceeding or claim (in which case the indemnifying party shall be responsible for the
reasonable fees and expenses of one separate counsel for the indemnified parties), to assume the
defense thereof with counsel reasonably satisfactory to the SPA Indemnified Party. In the event
that the indemnifying party advises an SPA Indemnified Party that it will contest such a claim for
indemnification hereunder, or fails, within thirty (30) days of receipt of any indemnification
notice (the “Defense Period”) to notify, in writing, such person of its election to defend,
settle or compromise, at its sole cost and expense, any action, proceeding or claim (or
discontinues its defense at any time after it commences such defense), then the SPA Indemnified
Party may, at its option, defend, settle or otherwise compromise or pay such action or claim. In
any event, unless and until the indemnifying party elects in writing to assume and does so assume
the defense of any such claim, proceeding or action, the SPA Indemnified Party’s costs and expenses
arising out of the defense, settlement or compromise of any such action, claim or proceeding, only
to the extent incurred after the expiration of the Defense Period, shall be losses subject to
indemnification hereunder. The SPA Indemnified Party shall cooperate fully with the indemnifying
party in connection with any negotiation or defense of any such action or claim by the indemnifying
party and shall furnish to the indemnifying party all information reasonably available to the SPA
Indemnified Party which relates to such action or claim. The SPA Indemnifying Party shall keep the
SPA Indemnified Party fully apprised at all times as to the status of the defense or any settlement
negotiations with respect thereto. If the indemnifying party elects to defend any such action or
claim, then the SPA Indemnified Party shall be entitled to participate in such defense with counsel
of its choice at its sole cost and expense. The indemnifying party shall not be liable for any
settlement of any action, claim or proceeding effected without its prior written consent.
Notwithstanding anything in this ARTICLE IX to the contrary, the indemnifying party shall
not, without the SPA Indemnified Party’s prior written consent, settle or compromise any claim or
consent to entry of any judgment in respect thereof which imposes any future obligation on the SPA
Indemnified Party or which does not include, as an unconditional term thereof, the giving by the
claimant or the plaintiff to the SPA Indemnified Party of a release from all liability in respect
of such claim. The indemnification obligations to defend the SPA Indemnified Party required by this
ARTICLE IX shall be made by periodic payments of the amount thereof during the course of
investigation or defense, as and when bills are received or expense, loss, damage or liability is
incurred, so long as the SPA Indemnified Party shall refund such moneys if it is
ultimately determined by a court of competent jurisdiction that such party was not entitled to
indemnification. The indemnity agreements contained herein shall be in addition to (i) any cause of
action or similar rights of the SPA Indemnified Party against the indemnifying party or others,
including for breach of contract, fraud or otherwise and (ii) any liabilities that the indemnifying
party may be subject to pursuant to the law.
Section 9.03 Survival. The representations and warranties contained in this Agreement
shall survive the Closing, except that all such representations and warranties shall expire on the
date twenty-four (24) months after the Closing Date, except with respect to and to the extent of
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any claims of which written notice specifying in reasonable detail, the nature and amount of the
claims, has been given prior to such expiration.
ARTICLE X
MISCELLANEOUS
MISCELLANEOUS
Section 10.01 Notices. Any notice, request, demand, claim or other communication
required or permitted to be delivered, given or otherwise provided under this Agreement must be in
writing and must be delivered personally, delivered by nationally recognized overnight courier
service, sent by certified or registered mail, postage prepaid, or (if a facsimile number is
provided below) sent by facsimile (subject to electronic confirmation of good facsimile
transmission). Any such notice, request, demand, claim or other communication shall be deemed to
have been delivered and given (a) when delivered, if delivered personally; (b) the Business Day
after it is deposited with such nationally recognized overnight courier service, if sent for
overnight delivery by a nationally recognized overnight courier service; (c) the day of sending, if
sent by facsimile prior to 5:00 p.m. (Eastern time) on any Business Day or the next succeeding
Business Day if sent by facsimile after 5:00 p.m. (Eastern time) on any Business Day or on any day
other than a Business Day; or (d) five Business Days after the date of mailing, if mailed by
certified or registered mail, postage prepaid, in each case, to the following address or, if
applicable, facsimile number, or to such other address or addresses or facsimile number or numbers
as such party may subsequently designate to the other parties by notice given hereunder:
If to RXi or the Company (prior to the Closing), to:
Galena Biopharma, Inc.
000 X. Xxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxxx, Xxxxxx 00000
Facsimile number: (000) 000-0000
Attention: Xxxx X. Xxx
000 X. Xxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxxx, Xxxxxx 00000
Facsimile number: (000) 000-0000
Attention: Xxxx X. Xxx
with a copy (which shall not constitute notice) to:
TroyGould PC
0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile number: 310-201-4746
Attention: Attention: Xxxx X. Short, Esq.
0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile number: 310-201-4746
Attention: Attention: Xxxx X. Short, Esq.
If to the Investors, to:
Tang Capital Partners, LP
0000 Xxxxxxxx Xxxx
Xxx Xxxxx, XX 00000
Facsimile number: (000) 000-0000
Attention: Xxxxx Xxxx
and
0000 Xxxxxxxx Xxxx
Xxx Xxxxx, XX 00000
Facsimile number: (000) 000-0000
Attention: Xxxxx Xxxx
and
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RTW Investments, LLC
0000 Xxxxxx xx xxx Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Facsimile number: (000) 000-0000
Attention: Xxxxxxxx Xxxx
0000 Xxxxxx xx xxx Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Facsimile number: (000) 000-0000
Attention: Xxxxxxxx Xxxx
with a copy (which shall not constitute notice) to:
Ropes & Xxxx LLP
0 Xxxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Facsimile number: (000) 000-0000
Attention: Xxxx X. Xxxx, Esq.
0 Xxxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Facsimile number: (000) 000-0000
Attention: Xxxx X. Xxxx, Esq.
Each of the parties to this Agreement may specify a different address or addresses or facsimile
number or facsimile numbers by giving notice in accordance with this Section 10.01 to each
of the other parties hereto.
Section 10.02 Succession and Assignment; No Third-Party Beneficiaries. Subject to the
immediately following sentence, this Agreement will be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, each of which such successors
and permitted assigns will be deemed to be a party hereto for all purposes hereof. No party may
assign, delegate or otherwise transfer either this Agreement or any of its rights, interests or
obligations hereunder without the prior written approval of the other parties, and any attempt to
do so will be null and void ab initio; provided, that (a) either of the Investors may
assign this Agreement and any or all of its rights and interests hereunder to one or more of its
Affiliates or designate one or more of its Affiliates to perform its obligations hereunder, in each
case, so long as such Investor is not relieved of any liability or obligations hereunder, and (b)
either of the Investors may assign this Agreement and any or all of its rights and interest
hereunder to any purchaser of all or substantially all its assets or designate such purchaser to
perform its obligations hereunder; and provided further, that RXi may assign this
Agreement and any or all of its rights and interest hereunder to any purchaser of all or
substantially all its assets, provided that the assignee delivers to the Investors an undertaking
agreeing in writing to assume
RXi’s obligations under this Agreement and the Ancillary Agreements. Except as expressly
provided herein, this Agreement is for the sole benefit of the parties hereto and their successors
and permitted assignees and nothing herein expressed or implied will give or be construed to give
any Person, other than the parties hereto and such successors and permitted assignees, any other
right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. For the
avoidance of doubt, it is hereby acknowledged and agreed by the parties hereto that an SPA
Indemnified Party that is not party hereto is intended to be an express third party beneficiary of
this Agreement.
Section 10.03 Amendments and Waivers. No amendment or waiver of any provision of this
Agreement will be valid and binding unless it is in writing and signed, in the case of an
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amendment, the Company and the Investors, or in the case of a waiver, by the party against whom the
waiver is to be effective. No waiver by any party of any breach or violation of, default under or
inaccuracy in any representation, warranty or covenant hereunder, whether intentional or not, will
be deemed to extend to any prior or subsequent breach or violation of, default under, or inaccuracy
in, any such representation, warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence. No delay or omission on the part of any
party in exercising any right, power or remedy under this Agreement will operate as a waiver
thereof.
Section 10.04 Entire Agreement. This Agreement, together with the other Ancillary
Agreements and any documents, instruments and certificates explicitly referred to herein,
constitutes the entire agreement among the parties hereto with respect to the subject matter hereof
and supersedes any and all prior discussions, negotiations, proposals, undertakings, understandings
and agreements, whether written or oral, with respect thereto. There are no restrictions,
promises, warranties, covenants, or undertakings, other than those expressly provided for herein
and therein.
Section 10.05 Counterparts; Facsimile Signature. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of which together will
constitute but one and the same instrument. This Agreement will become effective when duly
executed and delivered by each party hereto. Counterpart signature pages to this Agreement may be
delivered by facsimile or electronic delivery (e.g., by email of a PDF signature page) and each
such counterpart signature page will constitute an original for all purposes.
Section 10.06 Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction will not affect the validity or enforceability
of the remaining terms and provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction. In the event that any
provision hereof would, under applicable Legal Requirements, be invalid or unenforceable in any
respect, each party hereto intends that such provision will be construed by modifying or limiting
it so as to be valid and enforceable to the maximum extent compatible with, and possible under,
applicable Legal Requirements.
Section 10.07 Governing Law. This Agreement, the rights of the parties hereunder and
all Actions arising in whole or in part under or in connection herewith, will be governed by and
construed and enforced in accordance with the domestic substantive laws of the State of California,
without giving effect to any choice or conflict of law provision or rule that would cause the
application of the laws of any other jurisdiction.
Section 10.08 Jurisdiction; Venue; Service of Process.
(a) Jurisdiction. Each of the parties to this Agreement, by its execution hereof,
(i) hereby irrevocably submits to the exclusive jurisdiction of the United States District Court
for the Northern District of California, or if such Action may not be brought in federal court,
then the Superior Court of the State of California for the purpose of any Action among any of the
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parties relating to or arising in whole or in part under or in connection with this Agreement, any
Ancillary Agreement or the Contemplated Transactions; (ii) hereby waives to the extent not
prohibited by applicable Legal Requirements, and agrees not to assert, by way of motion, as a
defense or otherwise, in any such Action, any claim that it is not subject personally to the
jurisdiction of the above-named courts, that its property is exempt or immune from attachment or
execution, that any such Action brought in one of the above-named courts should be dismissed on
grounds of forum non conveniens, should be transferred or removed to any court other than one of
the above-named courts, or should be stayed by reason of the pendency of some other Action in any
other court other than one of the above-named courts or that this Agreement, any Ancillary
Agreement or the subject matter hereof or thereof may not be enforced in or by such court; and
(iii) hereby agrees not to commence any such Action other than before one of the above-named
courts. Notwithstanding the previous sentence a party may commence any Action in a court other
than the above-named courts solely for the purpose of enforcing an order or judgment issued by one
of the above-named courts.
(b) Venue. Each of the parties to this Agreement agrees that for any Action among
any of the parties relating to or arising in whole or in part under or in connection with this
Agreement, any Ancillary Agreement or the Contemplated Transactions, such party shall bring such
Action only in a court of competent jurisdiction located in the City and County of San Francisco,
California. Notwithstanding the previous sentence a party may commence any Action in a court other
than the above-named courts solely for the purpose of enforcing an order or judgment issued by one
of the above-named courts. Each party hereto further waives any claim and will not assert that
venue should properly lie in any other location within the selected jurisdiction.
(c) Service of Process. Each of the parties to this Agreement hereby (i) consents to
service of process in any Action among any of the parties hereto relating to or arising in whole
or in part under or in connection with this Agreement, any Ancillary Agreement or the Contemplated
Transactions in any manner permitted by California law; (ii) agrees that service of process made
in accordance with clause (i) or made by registered or certified mail, return receipt requested,
at its address specified pursuant to Section 10.01, will constitute good and valid service
of process in any such Action; and (iii) waives and agrees not to assert (by way of motion, as a
defense, or otherwise) in any such Action any claim that service of process made in accordance
with clause (i) or (ii) does not constitute good and valid service of process.
Section 10.09 Specific Performance. Each of the parties acknowledges and agrees that
the other parties would be damaged irreparably in the event any of the provisions of this Agreement
are not performed in accordance with their specific terms or otherwise are breached or violated.
Accordingly, each of the parties agrees that, without posting a bond or other undertaking, the
other parties will be entitled to an injunction or injunctions to prevent breaches or violations of
the provisions of this Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any Action instituted in any court of the United States or any state thereof
having jurisdiction over the parties and the matter in addition to any other remedy to which it may
be entitled, at law or in equity. Each party further agrees that, in the event of any action for
specific performance in respect of such breach or violation, it will not assert that the defense
that a remedy at law would be adequate.
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Section 10.10 Independent Nature of Investors. The Company and RXi acknowledge that
the obligations of each Investor under the Transaction Documents 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 the Transaction Documents. The Company
acknowledges that the decision of each Investor to purchase Preferred Shares pursuant to this
Agreement has been made by such Investor independently of any other purchase 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 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
Investor (or any other person) relating to or arising from any such information, materials,
statements or opinions. The Company and RXi acknowledge that nothing contained herein, or in any of
the Contemplated Transactions, and no action taken by any Investor pursuant hereto or 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
Contemplated Transactions. The Company acknowledges that it has elected to provide all Investors
with the same terms and conditions for the convenience of the Company and not because it was
required or requested to do so by the Investors. The Company acknowledges that such procedure with
respect to any of the Contemplated Transactions in no way creates a presumption that the Investors
are in any way acting in concert or as a group with respect to any of the Contemplated
Transactions. The Company acknowledges that 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 Contemplated Transactions, and it shall not be necessary for any
other Investor to be joined as an additional party in any proceeding for such purpose.
Section 10.11 Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW
THAT CANNOT BE WAIVED, THE PARTIES HEREBY WAIVE, AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS
PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLE OR IN
PART UNDER OR IN CONNECTION WITH THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY OF THE CONTEMPLATED
TRANSACTIONS, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT,
TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY
COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES
IRREVOCABLY TO WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION WHATSOEVER BETWEEN OR
AMONG THEM RELATING TO THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY OF THE CONTEMPLATED
TRANSACTIONS AND THAT SUCH ACTIONS WILL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A
JUDGE SITTING WITHOUT A JURY.
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IN WITNESS WHEREOF, each of the undersigned has executed this Securities Purchase Agreement as
of the date first above written.
| THE COMPANY: | RNCS, INC. | |||||
| By: | /s/ Xxxx X. Xxx
|
|||||
| Title: President and CFO | ||||||
| RXI: | RXI PHARMACEUTICALS CORPORATION | |||||
| By: | /s/ Xxxx X. Xxx
|
|||||
| Title: President and CEO | ||||||
| TANG: | TANG CAPITAL PARTNERS, LP | |||||
| By: | /s/ Xxxxx Xxxx
|
|||||
| Title: Managing Director | ||||||
| RTW: | RTW INVESTMENTS, LLC | |||||
| By: | /s/ Xxxxxxxx Xxxx
|
|||||
| Title: Managing Member | ||||||
[Signature page to the Series A Securities Purchase Agreement]
Exhibit Index
Exhibit A
|
Pledge, Assignment and Security Agreement | |
Exhibit B
|
Bridge Notes | |
Exhibit C
|
Certificate of Designations | |
Exhibit D
|
Security Agreement | |
Exhibit E
|
General Continuing Guaranty | |
Exhibit F
|
Advirna Amendment | |
Exhibit G
|
Subscription Agreement | |
Exhibit H-1
|
Legal Opinion | |
Exhibit H-2
|
Legal Opinion | |
Exhibit I
|
Opening Balance Sheet |
Annex I
| Preferred Stock Purchased | Bridge Loan Amounts | ||||||||||||||
| Investor Name | Dollars | No. of Shares | Tranche 1 | Tranche 2 | Tranche 3 | ||||||||||
Tang |
$9,000,000 | $473,684.21 | $473,684.21 | $473,684.21 | |||||||||||
RTW |
$500,000 | $26,315.79 | $26,315.79 | $26,315.79 | |||||||||||
Annex II
Distribution of Shares as of Closing*
Distribution of Shares as of Closing*
The following calculations set forth, among other things, the number of shares of common stock of
the Company that will be distributed to the holders of RXi Common Stock on the Record Date, based
(1) on a one-for-one distribution with respect to each share RXi Common Stock and (2) the
distribution by RXi of two-thirds of the total shares of common stock of the Company held by RXi
immediately prior to the Spin-Off.
Determination of Target Float
|
A = B | |
Determination of Retained Shares
|
C = (B ÷ 0.08) * 0.04 | |
Determination of Advirna Shares
|
D = (B ÷ 0.08) * 0.05 | |
Determination of Conversion Shares
|
E = (B ÷ 0.08) * 0.83 | |
Series A Preferred Conversion Rate
|
F = E ÷ G |
| * | All figures calculated and reflected on an as-converted basis |
Definitions:
|
A = Target Float | |
| B = Recorded Shares | ||
| C = Retained Shares | ||
| D = Advirna Shares | ||
| E = Conversion Shares | ||
| F = Series A Preferred Conversion Rate | ||
| G = Total Shares Series A Preferred Issued and Outstanding at Closing |
