Exhibit 10.1

Confidential information has been omitted and filed separately with the
Securities and Exchange Commission. Confidential treatment has been requested
with respect to this omitted information.

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (the “Agreement”) is entered into as of March 1,
2013 by and between RXi Pharmaceuticals Corporation, a Delaware corporation
(“Buyer”), and OPKO Health, Inc., a Delaware corporation (“Seller”).

W I T N E S S E T H :

WHEREAS, Seller wishes to transfer to Buyer its right, title and interest in, to
and under the Transferred Assets (as defined herein), and Buyer desires to
purchase from Seller its right, title and interest in, to and under, and to
assume the obligations of Seller under, the Transferred Assets, upon the terms
and subject to the conditions hereinafter set forth; and

WHEREAS, following the execution and delivery of this Agreement and prior to the
Closing, the parties anticipate that Buyer and certain accredited investors (the
“Investors”) will enter into a definitive agreement providing for the sale by
Buyer to the Investors of an aggregate of at least $10,000,000 of Buyer Stock
(as defined herein) (the “Offering”).

NOW THEREFORE, in consideration of the terms and conditions and the respective
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

Section 1.01. Definitions. As used herein, the following terms have the
following meanings:

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

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

“Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with such Person.
For purposes of this definition, “control” when used with respect to any Person
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership

of voting securities, by contract or otherwise, and the terms “controlling” and
“controlled” have correlative meanings.

“Applicable Law” means, with respect to any Person, any transnational, domestic
or foreign federal, state or local law (statutory, common or otherwise),
constitution, treaty,

 

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convention, ordinance, code, rule, regulation, order, injunction, judgment,
decree, ruling or other similar requirement enacted, adopted, promulgated or
applied by a Governmental Authority that is binding upon or applicable to such
Person, as amended, unless expressly specified otherwise.

“Business Day” means a day, other than Saturday, Sunday or other day on which
commercial banks in New York, New York are authorized or required by Applicable
Law to close.

“Buyer Disclosure Schedule” means the disclosure schedule delivered concurrently
herewith by Buyer to Seller and dated as of the date hereof.

“Buyer Intellectual Property” means all Intellectual Property which is used in
connection with and is material to the business of Buyer (as currently operated
and as proposed to be operated following the Closing); provided that any
Intellectual Property that is licensed by Buyer shall be included within the
meaning of Buyer Intellectual Property only within the scope of use by Buyer or
in connection with Buyer’s business.

“Buyer Material Adverse Effect” means a material adverse effect on the financial
condition, business, assets or results of operations of Buyer, excluding any
effect resulting from: (a) changes in GAAP or the interpretation thereof;
(b) changes in the general economic or political conditions or financial markets
in the United States or elsewhere in the world; (c) changes (including changes
of Applicable Law) or conditions generally affecting the industry in which Buyer
operates and not specifically relating to or having a materially
disproportionate effect on Buyer; or (d) acts of war or terrorism or natural
disasters.

“Buyer Stock” means the common stock, par value $0.0001 per share, of Buyer.

“Change of Control” means, with respect to any Person: (a) a sale of all or
substantially all of the assets, voting stock or securities of such Person;
(b) a merger, reorganization, spin-off or consolidation involving such Person,
in which the holders of common stock or similar equity interests of such Person
immediately prior to such transaction cease to own collectively a majority of
the voting equity securities of its successor entity; or (c) the acquisition by
any other Person or group (as defined in Section 13(d) of the 1934 Act) of 50%
or more of the outstanding voting equity securities of such Person.

“Closing Date” means the date of the Closing.

“Code” means the United States Internal Revenue Code of 1986, as amended.

“Cover,” “Covered” or “Covering” means that an issued or applied for patent
claim encompasses a particular process, method, machine, article of manufacture,
or composition of matter, such that any making, using, offering to sell,
selling, supplying, importing or exporting of the process, method, machine,
article of manufacture, or composition of matter, without a license, would:
(a) in the case of any such issued patent claim, constitute infringement of such
patent claim: or (b) in the case of any such applied for patent claim,
constitute infringement of such patent claim were such patent claim to issue.

 

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“Curna” means CURNA, Inc., a wholly-owned subsidiary of Seller.

“CURNA Assets” means any and all assets, including without limitation any and
all Intellectual Property assets, owned, held, leased, licensed, developed,
under development or otherwise used by Curna or by Seller or any of its
subsidiaries in connection with the CURNA platform.

“Environmental Laws” means federal, state, local and foreign statutes, laws,
judicial decisions, regulations, ordinances, rules, judgments, orders, codes,
injunctions, permits and governmental agreements relating to human health and
the environment, including, but not limited to, Hazardous Materials.

“FDA” means the U.S. Food and Drug Administration.

“First Commercial Sale” means, with respect to any Qualified Drug, the date
following the receipt of any applicable Regulatory Approval on which such
Qualified Drug is first commercially sold by Buyer or any of its Affiliates, or
any of its or their respective agents, licensees or sublicensees, to or for the
benefit of end-users of such Qualified Drug.

“GAAP” means generally accepted accounting principles in the United States.

“Governmental Authority” means any transnational, domestic or foreign federal,
state or local governmental, regulatory or administrative authority, department,
court, agency or official, including any political subdivision thereof.

“Hazardous Material” means all substances or materials regulated as hazardous,
toxic, explosive, dangerous, flammable or radioactive under any Environmental
Law including, but not limited to: (a) petroleum, asbestos, or polychlorinated
biphenyls and (b) in the United States, all substances defined as Hazardous
Substances, Oils, Pollutants or Contaminants in the National Oil and Hazardous
Substances Pollution Contingency Plan.

“Indebtedness” means: (a) all indebtedness for borrowed money; (b) all
obligations issued, undertaken or assumed as the deferred purchase price of
property or services (including, without limitation, “capital leases” in
accordance with GAAP) (other than trade payables entered into in the ordinary
course of business); (c) all reimbursement or payment obligations with respect
to letters of credit, surety bonds and other similar instruments; (d) all
obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition
of property, assets or businesses; (e) all indebtedness created or arising under
any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to any property or assets acquired with
the proceeds of such indebtedness (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such property); (f) all monetary obligations under any
leasing or similar arrangement which, in connection with GAAP, consistently
applied for the periods covered thereby, is classified as a capital lease;
(g) all indebtedness referred to in clauses (a) through (f) above secured by (or
for which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage,

 

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lien, pledge, charge, security interest or other encumbrance upon or in any
property or assets (including accounts and contract rights) owned by any Person,
even though the Person which owns such assets or property has not assumed or
become liable for the payment of such indebtedness; and (h) all contingent
obligations in respect of indebtedness or obligations of others of the kinds
referred to in clauses (a) through (g) above.

“Intellectual Property” means any and all of the following arising under the
laws of the United States, any other jurisdiction or any treaty regime: (a) all
inventions (whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereon, and all patents, patent applications and
patent disclosures, together with all reissuances, divisionals, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof; (b) all
trademarks, service marks, trade dress, logos, trade names and corporate names,
together with all translations, adaptations, derivations and combinations
thereof and including all goodwill associated therewith, all common law rights
and all applications, registrations and renewals in connection therewith;
(c) all copyrightable works, all copyrights and all applications, registrations
and renewals in connection therewith; (d) all trade secrets and confidential
business information (including, without limitation, ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information and business and
marketing plans and proposals); (e) all computer software (including, without
limitation, data and related documentation and except for any commercial
“shrink-wrapped” software) and source codes (other than open source codes);
(f) all other proprietary rights; (g) all copies and tangible embodiments of the
foregoing (in whatever form or medium); and (h) all licenses or agreements in
connection with the foregoing.

“knowledge of Buyer,” “Buyer’s knowledge” or any other similar knowledge
qualification in this Agreement means the actual knowledge of Geert Cauwenbergh,
Dr. Med. Sc. and Pamela Pavco, Ph.D., after reasonable inquiry of the employees
of Buyer who: (a) report to such named individuals in the scope of their
employment; and (b) are responsible for the information that is the subject of
the applicable representation or warranty.

“knowledge of Seller,” “Seller’s knowledge” or any other similar knowledge
qualification or reference in this Agreement means the actual knowledge of
Phillip Frost, Jane H. Hsiao, Juan F. Rodriguez and Steven D. Rubin after
reasonable inquiry of the employees of Seller who: (a) report to such named
individuals in the scope of their employment; and (b) are responsible for the
information that is the subject of the applicable representation or warranty.

“Liability” or “Liabilities” means any liability, debt, obligation, deficiency,
Tax, penalty, assessment, fine or other loss, fee, cost or expense of any kind
or nature whatsoever that is required to be classified as a liability on the
face of a balance sheet in accordance with GAAP.

“Lien” means, with respect to any property or asset, any mortgage, lien, pledge,
charge, security interest or encumbrance in respect of such property or asset.

“Material Contract” means all written and oral contracts, agreements, deeds,
mortgages, leases, subleases, licenses, instruments, notes, commitments,
commissions,

 

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undertakings, arrangements and understandings: (a) which by their terms involve,
or would reasonably be expected to involve, aggregate payments by or to Buyer
during any twelve month period in excess of $100,000; (b) the breach of which by
Buyer would reasonably be expected to have a Buyer Material Adverse Effect; or
(c) which are required to be filed as exhibits by Buyer with the Commission
pursuant to Items 601(b)(2), 601(b)(4) or 601(b)(10) of Regulation S-K
promulgated by the Commission.

“Patent Assignment Agreement” means the patent assignment agreement
substantially in the form of Exhibit A.

“Permitted Indebtedness” means: (a) Indebtedness existing on the Closing Date
and disclosed in the Buyer SEC Documents; (b) Purchase Money Indebtedness;
(c) Indebtedness to trade creditors incurred in the ordinary course of business;
and (d) extensions, refinancings and renewals of any items of Permitted
Indebtedness in clauses (a) through (c) hereof, provided that the principal
amount is not increased, other than by their existing terms, or the terms
modified to impose more burdensome terms upon Buyer and such Indebtedness shall
not be secured by any additional collateral.

“Permitted Liens” means any Lien disclosed in a Buyer SEC Document and: (a) any
Lien for taxes not yet due or delinquent or being contested in good faith by
appropriate proceedings for which adequate reserves have been established in
accordance with GAAP; (b) any statutory Lien arising in the ordinary course of
business by operation of law with respect to a liability that is not yet due or
delinquent; (c) any Lien created by operation of law, such as materialmen’s
liens, mechanics’ liens and other similar liens, arising in the ordinary course
of business with respect to a liability that is not yet due or delinquent or
that is being contested in good faith by appropriate proceedings; (d) Liens
(i) upon or in any equipment acquired or held by Buyer to secure the purchase
price of such equipment or indebtedness incurred solely for the purpose of
financing the acquisition or lease of such equipment, or (ii) existing on such
equipment at the time of its acquisition, provided that the Lien is confined
solely to the property so acquired and improvements thereon, and the proceeds of
such equipment; (e) Liens incurred in connection with the extension, renewal or
refinancing of the indebtedness secured by Liens of the type described in
clauses (a) through (d) above, provided that any extension, renewal or
replacement Lien shall be limited to the property encumbered by the existing
Lien and the principal amount of the Indebtedness being extended, renewed or
refinanced does not increase; (f) leases, subleases, licenses and sublicenses
granted to others in the ordinary course of Buyer’s business, not interfering in
any material respect with the business of Buyer; and (g) Liens in favor of
customs and revenue authorities arising as a matter of law to secure payments of
custom duties in connection with the importation of goods.

“Person” means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
Governmental Authority.

“Purchase Money Indebtedness” means Indebtedness, incurred at the time of, or
within 30 days after, the acquisition of any fixed assets for the purpose of
financing all or any part of the acquisition cost thereof.

 

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“Qualified Drug” means a drug developed by Buyer or any of its Affiliates (but
excluding any Person that would be deemed an Affiliate solely by virtue of its
status as a controlling stockholder of Buyer and to whom neither Buyer or any of
its Affiliates or any of its or their licensees or sublicensees has assigned or
transferred any rights in, under or to, or otherwise given access to, the
Transferred Assets or any portion thereof), or any of its or their licensees or
sublicensees, utilizing patents included within the Transferred Assets,
provided, however, that in no event will Buyer’s compound known as RXI-109
(incorporating the active pharmaceutical ingredient identified in the Buyer’s
Investigational New Drug Application filed with the FDA) constitute a Qualified
Drug; provided, further, that any combination drug incorporating RXI-109 and
another active pharmaceutical ingredient other than RXI-109 that utilizes
Intellectual Property included within the Transferred Assets shall be deemed to
be a Qualified Drug.

“Regulatory Approval” means, with respect to a Qualified Drug in a given
country, the approval of the applicable Regulatory Authority necessary for the
marketing and sale of such Qualified Drug in such country.

“Regulatory Authority” means the U.S. Food and Drug Administration or other
Governmental Authorities (within or outside the United States) charged with the
authority to regulate the pricing, marketing, promotion, manufacture, testing,
distribution or sale of pharmaceutical products in a country or countries.

“Reporting Period” means the period commencing on the Closing Date and ending on
the date as of which Seller may sell all of the Registrable Securities covered
by such Registration Statement without restriction or limitation pursuant to
Rule 144 and without the requirement to be in compliance with Rule 144(c)(1) (or
any successor thereto) promulgated under the 1933 Act.

“Seller Disclosure Schedule” means the disclosure schedule delivered
concurrently herewith by Seller to Buyer and dated as of the date hereof.

“Seller Material Adverse Effect” means a material adverse effect on the
financial condition, business, assets or results of operations of Seller,
excluding any effect resulting from: (a) changes in GAAP or the interpretation
thereof; (b) changes in the general economic or political conditions or
financial markets in the United States or elsewhere in the world; (c) changes
(including changes of Applicable Law) or conditions generally affecting the
industry in which Seller operates and not specifically relating to or having a
materially disproportionate effect on Seller; or (d) acts of war, terrorism or
natural disasters.

“Subsidiary” means any Person of which securities or other ownership interests
having the power to elect a majority of the board of directors or other persons
performing similar functions of such Person, or otherwise having the power to
direct the business and policies of such Person, are directly or indirectly
owned by Buyer.

“Tax” means any tax, governmental fee or other like assessment or charge of any
kind whatsoever (including, but not limited to, all federal, state, local,
foreign, income, gross

 

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receipts, license, payroll, employment, excise, escheat, 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, alternative or add-on minimum, or estimated
tax), together with any interest, penalty, addition to tax or additional amount,
and any liability for any of the foregoing as transferee or successor, by
contract or otherwise.

“Third Party” means any Person other than Buyer, Seller or any of their
respective Affiliates.

“Trading Day” means any day on which Buyer Stock is traded on the Trading
Market.

“Trading Market” means the following markets or exchanges on which Buyer Stock
is listed or quoted for trading on the date in question: the NYSE MKT, the
NASDAQ Capital Market, the NASDAQ Global Market, the NASDAQ Global Select
Market, the New York Stock Exchange or the OTC Bulletin Board.

“Transaction Documents” means this Agreement and the Patent Assignment
Agreement.

“Transferred Assets” means, collectively, the Assigned Assets, the Assigned
Patents and the Assigned Licenses.

“Valid Claim” means, as applicable, an enumerated claim in any unexpired and
issued patent included within the Assigned Patents, in each case to the extent
that such patents have not been disclaimed, canceled, revoked or held invalid,
unenforceable, or otherwise un-patentable, by a final non-appealable decision of
a court of competent jurisdiction or other Governmental Authority; provided,
however, that a Valid Claim shall not include any claim from a patent or patent
application owned or controlled by, or licensed to, Buyer or its Affiliates
immediately prior to Closing, or a patent or patent application that claims
priority from any such patent or patent application.

Section 1.02. Other Definitional and Interpretative Provisions. The words
“hereof,” “herein” and “hereunder” and words of like import used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof. References to Articles, Sections, Exhibits and Schedules are to
Articles, Sections, Exhibits and Schedules of this Agreement unless otherwise
specified. All Exhibits and Schedules annexed hereto or referred to herein are
hereby incorporated in and made a part of this Agreement as if set forth in full
herein. Any capitalized terms used in any Exhibit or Schedule but not otherwise
defined therein, shall have the meaning as defined in this Agreement. Any
singular term in this Agreement shall be deemed to include the plural, and any
plural term the singular. Whenever the words “include,” “includes” or
“including” are used in this Agreement, they shall be deemed to be followed by
the words “without limitation,” whether or not they are in fact followed by
those words or words of like import. “Writing,” “written” and comparable terms
refer to printing, typing and other means of reproducing words (including
electronic media) in a

 

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visible form. References to any statute shall be deemed to refer to such statute
as amended from time to time and to any rules or regulations promulgated
thereunder. References to any agreement or contract are to that agreement or
contract as amended, modified or supplemented from time to time in accordance
with the terms hereof and thereof. References to any Person include the
successors and permitted assigns of that Person. References from or through any
date mean, unless otherwise specified, from and including or through and
including, respectively. References to “law,” “laws” or to a particular statute
or law shall be deemed also to include any and all Applicable Law.

ARTICLE 2

CLOSING

Section 2.01. Purchase, Sale and Transfer. Upon the terms and subject to the
conditions of this Agreement, at the Closing:

(a) Seller agrees to sell, convey, transfer, assign and deliver to Buyer, and
Buyer agrees to acquire and accept, all of Seller’s right, title and interest
in, to and under the patents and patent applications set forth on
Section 2.01(a) of the Seller Disclosure Schedule (collectively, the “Assigned
Patents”);

(b) Seller agrees to sell, convey, transfer, assign and deliver to Buyer, and
Buyer agrees to acquire and accept, all of Seller’s right, title and interest
in, to and under its RNAi- related investigational new drug applications,
regulatory filings and data (including all clinical and pre-clinical data),
excluding any new drug applications, regulatory filings and data relating solely
to the Excluded Assets (collectively, the “Assigned Assets”); and

(c) subject to Section 2.03, Seller agrees to sell, convey, transfer, assign and
deliver to Buyer, and Buyer agrees to acquire and accept, all of Seller’s right,
title and interest in and to, and Buyer agrees to assume, perform and discharge
all of the future obligations and liabilities of Seller under, all contracts,
licenses, agreements and commitments listed on Section 2.01(c)(i) of the Seller
Disclosure Schedule (collectively, the “Assigned Licenses”), which Assigned
Licenses relate to the patents and patent applications set forth on
Section 2.01(c)(ii) of the Seller Disclosure Schedule.

The purchase price for the Transferred Assets (the “Purchase Price”) is
50,000,000 shares of Buyer Stock to be issued at the Closing (the “Shares”), as
well as the royalties and milestones, to the extent payable, as described in
Article 6. The Purchase Price attributable to the Shares shall be paid as
provided in Section 2.02, and the Purchase Price attributable to the royalties
and milestones shall be paid, when, as and if required under Sections 6.01 and
6.02, respectively. Other than (i) accrued liabilities not to exceed $60,000 in
the aggregate (the “Maintenance Costs”) and (ii) obligations and liabilities
arising under or relating to the Transferred Assets after the Closing, Buyer is
not assuming any obligations or liabilities of Seller.

Section 2.02. Closing. The closing (the “Closing”) of the purchase, sale and
transfer of the Transferred Assets hereunder shall take place at the offices of
Ropes & Gray LLP, Three Embarcadero Center, Third Floor, San Francisco,
California, at 10:00 a.m. (Pacific Time) on the

 

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fourth Business Day after the pricing of the Offering, subject to the
satisfaction or waiver of the conditions to the obligations of Buyer and Seller
set forth in Sections 8.01 and 8.02, or at such other place and time mutually
agreed to by Buyer and Seller. For the avoidance of doubt, the parties agree
that the Closing shall occur simultaneously with the closing of the issuance and
sale of Buyer Stock pursuant to the Offering. At the Closing:

(a) Buyer shall deliver to Seller one or more certificates representing an
aggregate of 50,000,000 shares of Buyer Stock, registered in the name of Seller
(or such other Person as Seller may designate), with any required transfer
stamps affixed thereto and bearing the legend required pursuant to Section 2.05;
and

(b) Each of Buyer and Seller and their respective Affiliates shall deliver the
certificates and other documents and instruments required to be delivered by or
on behalf of such party under Article 8.

Section 2.03. Understanding Regarding Assignment of Licenses and Rights.
Notwithstanding anything to the contrary herein, this Agreement shall not
constitute an agreement to assign any Assigned License or any claim or right or
any benefit arising thereunder if such assignment, without the consent of a
Third Party thereto, would constitute a breach or other contravention of such
contract (an “Assignment Prohibition”); provided that the foregoing shall not
limit or affect Seller’s representations and warranties in Article 3 (as
supplemented by the Seller Disclosure Schedule). If an Assignment Prohibition
shall exist, Seller shall, and shall cause its Affiliates to, use its or their
commercially reasonable efforts to obtain the consent of the other parties to
any such Assigned License or any claim or right or any benefit arising
thereunder for the assignment thereof to Buyer, as Buyer may reasonably request
(provided that neither Seller nor any Affiliate of Seller shall be required to
expend money or grant any accommodation (financial or otherwise) to any Third
Party in connection therewith). If such consent is not obtained, or if an
attempted assignment thereof would be ineffective or would adversely affect the
rights of Seller thereunder so that Buyer would not in fact receive all such
rights, Seller and Buyer shall cooperate in a mutually agreeable arrangement
under which Buyer would obtain the benefits and assume the obligations
thereunder in accordance with this Agreement, including sub-contracting,
sub-licensing, or sub-leasing to Buyer, or under which Seller would enforce (at
the direction of Buyer) for the benefit of Buyer, with Buyer assuming Seller’s
obligations, any and all rights of Seller against a Third Party thereto
(including, if applicable, the right to elect to terminate such Assigned License
in accordance with the terms thereof upon Buyer’s request); provided that
neither Seller nor any Affiliate of Seller shall be required to expend money or
grant any accommodation (financial or otherwise) to any Third Party in
connection therewith, unless Buyer agrees to promptly reimburse Seller or its
Affiliates (as applicable) for any such expenses. Promptly after any required
consents to assignment are obtained for any such Assigned License after the
Closing, such Assigned License shall be transferred and assigned to Buyer.

Section 2.04. Excluded Assets. Other than the Transferred Assets, Buyer
expressly understands and agrees that it is not purchasing or acquiring, and
Seller is not selling or assigning, any other assets or properties of Seller or
any of its Affiliates, and all such other assets and properties (the “Excluded
Assets”) shall be excluded from the Transferred Assets. For the avoidance of
doubt, Buyer acknowledges and agrees that the CURNA Assets shall be Excluded
Assets.

 

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Section 2.05. Legends.

(a) Each certificate representing the Shares issued to Seller or any Person
designated by Seller pursuant to Section 2.02(a)(i) shall bear legends in
substantially the following form:

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAWS, AND NO SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION, GIFT, TRANSFER
OR OTHER DISPOSITION OR OFFER TO DO ANY OF THE FOREGOING MAY BE MADE UNLESS A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES
LAWS WITH RESPECT TO SUCH SECURITIES IS THEN IN EFFECT, OR IN THE OPINION OF
COUNSEL, WHICH OPINION SHALL BE ACCEPTABLE TO THE ISSUER, SUCH REGISTRATION
UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS IS NOT REQUIRED.

THE SECURITIES REPRESENTED BY THIS INSTRUMENT ARE SUBJECT TO TRANSFER
RESTRICTIONS AND MAY BE TRANSFERRED ONLY AS PERMITTED BY THE TERMS OF THAT
CERTAIN ASSET PURCHASE AGREEMENT BETWEEN THE COMPANY AND OPKO HEALTH, INC.,
DATED MARCH 1, 2013, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY AND SHALL BE PROVIDED FREE OF CHARGE UPON A REQUEST THEREFOR SUBMITTED
TO THE SECRETARY.

(b) The certificates representing the Shares shall not be required to contain
any legend: (i) following any sale of such Shares pursuant to an effective
Registration Statement or Rule 144 promulgated under the 1933 Act; (ii) if such
Shares are eligible for sale without restriction under Rule 144 and without the
requirement to be in compliance with Rule 144(c)(1) (or any successor thereto)
under the 1933 Act; or (iii) following a sale, assignment or other transfer, if
the selling, assigning or transferring holder provides Buyer with an opinion of
counsel, which opinion shall be reasonably acceptable to Buyer, to the effect
that such sale, assignment or transfer may be made without registration under
the applicable requirements of the 1933 Act and that such legend is no longer
required. Following such time as a legend is no longer required for certain
Shares, Buyer will, no later than three (3) Trading Days following the delivery
by Seller or any other holder of Shares to Buyer or Buyer’s transfer agent of a
legended certificate representing such securities and a request that such
certificates be reissued without a legend, deliver or cause to be delivered to
Seller a certificate representing such securities that is free from all
restrictive and other legends or (if requested by Seller or such other holder of
Shares) issue to such holder by electronic delivery at the applicable balance
account at The Depository Trust Company (“DTC”). The Buyer shall be responsible
for the fees of its transfer agent and all DTC fees associated with such
issuance.

 

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ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF SELLER

Except as set forth in the Seller Disclosure Schedule or any report, schedule,
form, statement, prospectus, registration statement or other document filed or
furnished by Seller with the SEC since January 1, 2012 (the “Seller SEC
Documents”), Seller represents and warrants to Buyer as of the date hereof that:

Section 3.01. Corporate Existence and Power. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of Delaware
and has all corporate powers and all governmental licenses, authorizations,
permits, consents and approvals required to carry on the operation of its
RNAi-related drug discovery and development programs, as now conducted, except
for those licenses, authorizations, permits, consents and approvals the absence
of which would not have a Seller Material Adverse Effect. Seller is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where such qualification is necessary, except for those
jurisdictions where failure to be so qualified would not, individually or in the
aggregate, have a Seller Material Adverse Effect.

Section 3.02. Corporate Authorization. The execution, delivery and performance
by Seller of the Transaction Documents and the consummation of the transactions
contemplated hereby and thereby are within Seller’s corporate powers and have
been duly authorized by all necessary corporate action on the part of Seller.
Each Transaction Document constitutes a valid and binding agreement of Seller,
except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and any other laws of general application
affecting enforcement of creditors’ rights generally, and as limited by laws
relating to the unavailability of specific performance, injunctive relief or
other equitable remedies.

Section 3.03. Governmental Authorization. The execution, delivery and
performance by Seller of the Transaction Documents and the consummation of the
transactions contemplated hereby and thereby require no action by or in respect
of, or filing with, any Governmental Authority other than: (a) compliance with
the applicable requirements of the 1933 Act, the 1934 Act and any other federal
state securities laws; and (b) any such action or filing as to which the failure
to make or obtain would not have a Seller Material Adverse Effect.

Section 3.04. Non-contravention. The execution, delivery and performance by
Seller of the Transaction Documents and the consummation of the transactions
contemplated hereby and thereby do not and will not: (a) violate the certificate
of incorporation and bylaws of Seller; (b) assuming compliance with the matters
referred to in Section 3.03, violate any Applicable Law; (c) except as set forth
in Section 3.04 of the Seller Disclosure Schedule, require any consent or other
action by any Person under, constitute a default under, or give rise to any
Assignment Prohibition or right of termination, cancellation or acceleration of
any right or obligation of Seller or to a loss of any benefit to which Seller is
entitled under any provision of any agreement

 

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or other instrument binding upon Seller; or (d) result in the creation or
imposition of any Lien on any asset of Seller, except for any Permitted Liens
and with such exceptions, in the case of each of clauses (b) through (d), as
would not have, individually or in the aggregate, a Seller Material Adverse
Effect.

Section 3.05. Ownership and Sufficiency of Assets.

(a) Seller (directly or through its Subsidiaries): (i) is the sole and exclusive
owner of all of the Assigned Patents; (ii) holds all right, title and interest
in and to such Assigned Patents free and clear of all Liens or licenses; and
(iii) will convey to Buyer at the Closing good and marketable title to and
ownership of the Assigned Patents, free and clear all Liens or licenses, except,
in each of clauses (i) through (iii), as would not reasonably be expected to
have a Seller Material Adverse Effect.

(b) Seller (directly or through its Subsidiaries): (i) is the sole and exclusive
owner of all Assigned Assets; and (ii) holds all right, title and interest in
and to such Assigned Assets free and clear of all Liens or licenses (other than
Permitted Liens or non-exclusive licenses granted in the ordinary course of
business), except, in the case of each of clauses (i) and (ii), as would not
reasonably be expected to have a Seller Material Adverse Effect.

(c) The Transferred Assets collectively constitute substantially all of the
RNAi-related assets and rights of Seller as of the date hereof, other than the
CURNA Assets, which are not being transferred hereunder.

Section 3.06. Material Contracts. Each Assigned License is a valid and binding
agreement of Seller and is in full force and effect (except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and any other laws of general application affecting enforcement of
creditors’ rights generally, and as limited by laws relating to the
unavailability of specific performance, injunctive relief or other equitable
remedies), and neither Seller nor, to the knowledge of Seller, any other party
thereto is in default or breach in any respect under the terms of any such
Assigned License, except for any such defaults or breaches which would not have
a Seller Material Adverse Effect. Seller has not received any written notice
under any of the Assigned Licenses asserting that there has been or that there
is likely to occur a breach or default under such Assigned Licenses or that any
party thereto intends to terminate or not renew any Assigned License.

Section 3.07. Litigation. There is no action, suit, investigation, claim,
arbitration or proceeding pending against, or to the knowledge of Seller,
threatened against or affecting any of the Transferred Assets.

Section 3.08. Compliance with Laws and Court Orders. Seller is not in violation
of any Applicable Law in the conduct of its RNAi-related drug discovery and
development programs, except for violations that have not had and would not
reasonably be expected to have, whether considered individually or in the
aggregate, a Seller Material Adverse Effect.

 

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Section 3.09. Intellectual Property. Except as set forth in Section 3.09 of the
Seller Disclosure Schedule:

(a) No Assigned Patent is subject to any outstanding judgment, injunction,
order, decree or agreement restricting the use thereof by Seller or restricting
the licensing thereof by Seller to any Person.

(b) To the knowledge of Seller, Seller’s use of the Assigned Patents has not
infringed, misappropriated or otherwise violated any valid and enforceable
Intellectual Property rights of any Third Party in any respect.

(c) No claims have been made or threatened in writing (including any demand,
offer or request to license) by Third Parties asserting that Seller’s use of the
Assigned Patents has infringed (or would infringe) or misappropriated the
Intellectual Property rights of any Third Party.

(d) Seller has no knowledge of the invalidity or unenforceability, in whole or
in part, of any issued claims in any Assigned Patent.

(e) Seller has not received any Third Party claims in writing asserting the
invalidity or unenforceability of any Assigned Patent.

(f) Seller has not received any Third Party claims in writing contesting the
inventorship of any of the Assigned Patents and, to the Knowledge of the Seller,
there is no failure to name any inventor required to be named in any of the
Assigned Patents.

(g) Seller has not notified any Third Party in writing that such Third Party has
or would infringe or misappropriate any of the Assigned Patents.

(h) None of the Assigned Patents set forth on the Seller Disclosure Schedule
have been abandoned, disclaimed, or allowed to expire due to the failure to pay
applicable maintenance and renewal fees as of the Closing Date, except as
otherwise indicated.

Section 3.10. Finders’ Fees. There is no investment banker, broker, finder or
other intermediary that has been retained by or is authorized to act on behalf
of Seller who would be entitled to any fee or commission in connection with the
transactions contemplated by this Agreement.

Section 3.11. Accredited Investor; Purchase for Investment. Seller is an
“accredited investor” as that term is defined in Rule 501(a) of Regulation D,
promulgated under the 1933 Act. Seller is acquiring the shares of Buyer Stock
hereunder for investment for its own account and not with a view to, or for sale
in connection with, any distribution thereof. Seller (either alone or together
with its advisors) has sufficient knowledge and experience in financial and
business matters so as to be capable of evaluating the merits and risks of such
investment in the shares of Buyer Stock and is capable of bearing the economic
risks of such investment.

Section 3.12. No Ongoing Rights to Transferred Assets. Seller, after
consummating the transactions contemplated herein, and Curna, and Seller’s and
Curna’s respective Affiliates, will

 

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not have any rights to any of the Assigned Patents listed on Schedule 2.01(a) of
the Seller Disclosure Schedule, the Assigned Assets, or the Assigned Licenses
listed on Schedule 2.01(c) of the Seller Disclosure Schedule, including any
rights arising under any license with respect to the Transferred Assets.

Section 3.13. No Outstanding Liabilities Regarding the Transferred Assets.
Except for the Maintenance Costs, there are no outstanding liabilities currently
due and payable in connection with the Transferred Assets and no such
liabilities will arise as a result of the transactions contemplated by this
Agreement.

Section 3.14 No Other Representations and Warranties. Except for the
representations and warranties contained in this Article 3 (including the
related portions of the Seller Disclosure Schedule) and in the certificate
delivered by Seller pursuant to Section 8.01(d) (the “Seller’s Officer
Certificate”), neither Seller nor any other Person has made or makes any other
express or implied representation or warranty, either written or oral, on behalf
of Seller, including any representation or warranty as to the accuracy or
completeness of any information regarding the Transferred Assets furnished or
made available to Buyer or any of its agents, attorneys or other
representatives, or any representation or warranty arising from statute or
otherwise in law.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF BUYER

Except as set forth in the Buyer Disclosure Schedule or Buyer SEC Documents (as
defined below) filed after February 14, 2012 and before the date of this
Agreement, Buyer represents and warrants to Seller as of the date hereof that:

Section 4.01. Corporate Existence and Power. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of Delaware
and has all corporate powers and all material governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted, except for those licenses, authorizations, permits,
consents and approvals the absence of which would not have a Buyer Material
Adverse Effect. The Buyer has not received any notice of proceedings relating to
the revocation or modification of any material licenses, authorizations and
permits issued by any Governmental Authority, except for any licenses,
authorizations and permits the loss of which would not reasonably be expected to
have a Buyer Material Adverse Effect. Buyer is duly qualified to do business as
a foreign corporation and is in good standing in each jurisdiction where such
qualification is necessary, except for those jurisdictions where failure to be
so qualified would not, individually or in the aggregate, have a Buyer Material
Adverse Effect.

Section 4.02. Corporate Authorization. The execution, delivery and performance
by Buyer of the Transaction Documents and the consummation of the transactions
contemplated hereby and thereby are within the corporate powers of Buyer and
have been duly authorized by all necessary corporate action on the part of
Buyer. Each Transaction Document has been duly executed and delivered by Buyer
and constitutes a valid and binding agreement of Buyer, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and any other laws of general application affecting enforcement of
creditors’ rights

 

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generally, and as limited by laws relating to the unavailability of specific
performance, injunctive relief or other equitable remedies. No vote by holders
of any of Buyer’s capital stock is necessary in connection with the consummation
of the transactions contemplated by the Transaction Documents.

Section 4.03. Governmental Authorization. The execution, delivery and
performance by Buyer of the Transaction Documents and the consummation of the
transactions contemplated hereby and thereby require no material action by or in
respect of, or material filing with, any Governmental Authority other than:
(i) compliance with the applicable requirements of the 1933 Act, the 1934 Act
and any other federal state securities laws; and (ii) any such action or filing
as to which the failure to make or obtain would not have a Buyer Material
Adverse Effect.

Section 4.04. Non-contravention. The execution, delivery and performance by
Buyer of the Transaction Documents and the consummation of the transactions
contemplated hereby and thereby (including without limitation the issuance of
the Shares) do not and will not: (a) violate the certificate of incorporation or
bylaws of Buyer; (b) assuming compliance with the matters referred to in
Section 4.03, violate any Applicable Law; (c) require any consent or other
action by any Person under, constitute a default under, or give rise to any
right of termination, cancellation or acceleration of any right or obligation of
Buyer or to a loss of any benefit to which Buyer is entitled under any provision
of any agreement or other instrument binding upon Buyer; or (d) result in the
creation or imposition of any Lien on any asset of Buyer, with such exceptions,
in the case of each of clauses (b) through (d), as would not have, individually
or in the aggregate, a Buyer Material Adverse Effect.

Section 4.05. Buyer Stock. The Shares to be delivered pursuant to
Section 2.02(a)(i) have been duly authorized and, when issued in exchange for
the assignment of the Transferred Assets hereunder, will be validly issued,
fully paid and non-assessable and free of all Liens. There are no provisions of
the certificate of incorporation or bylaws of Buyer, or any agreement to which
Buyer is a party or by which its properties or assets are bound, other than this
Agreement that: (a) may affect or restrict the voting rights of Seller with
respect to the Shares in its capacity as a stockholder of Buyer; (b) restrict
the ability of Seller, or any successor thereto or assignee or transferee
thereof, to transfer the Shares; or (c) would adversely affect Buyer’s or
Seller’s right or ability to consummate the transactions contemplated by this
Agreement. Except as set forth in Section 4.05 of the Buyer Disclosure Schedule,
no party has any right of first refusal, right of first offer, right of co-sale,
preemptive right or any registration right regarding the securities of Buyer.

Section 4.06. Capitalization.

(a) As of the date hereof, without giving effect to the Closing, the authorized
capital stock of Buyer consists of 1,500,000,000 shares of common stock, par
value $0.0001 per share, and 10,000,000 shares of preferred stock, par value
$0.0001 per share, 15,000 of which are designated as Series A Preferred Stock
(the “Series A Preferred Stock”). Without giving effect to the Closing or the
Offering, the issued and outstanding capital stock of Buyer is as set forth in
Buyer SEC Documents.

 

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(b) All outstanding shares of capital stock of Buyer have been duly authorized
and validly issued and are fully paid and non-assessable, and all shares of
capital stock of Buyer that may be issued pursuant to any compensatory stock
option or other compensation plan or arrangement will be, when issued, duly
authorized and validly issued, fully paid and non- assessable and free of
preemptive rights. Except as set forth on Section 4.06(b) of the Buyer
Disclosure Schedule and for: (i) shares potentially issuable in connection with
the Offering; (ii) the exercise of any outstanding purchase rights or the
conversion of any convertible securities, in each case as described in Buyer SEC
Documents, and (iii) changes arising since September 30, 2012 resulting from the
exercise of warrants or options to purchase shares of Buyer Stock under
compensatory stock options or compensation plans or arrangements outstanding on
such date and described in Buyer SEC Documents and the vesting of awards made in
the form of rights to receive unrestricted Buyer Stock outstanding on such date
described in Buyer SEC Documents, there are no outstanding: (A) shares of
capital stock or voting securities of Buyer; (B) securities of Buyer convertible
into or exchangeable for shares of capital stock or voting securities of Buyer;
(C) options or other rights to acquire from Buyer, or other obligation of Buyer
to issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of Buyer; or (D) restricted
shares, stock appreciation rights, performance units, contingent value rights,
“phantom” stock or similar securities or rights that are derivative of, or
provide economic benefits based, directly or indirectly, on the value or price
of, any capital stock or voting securities of, or other ownership interests in,
Seller. There are no outstanding obligations of Buyer to repurchase, redeem or
otherwise acquire any securities or other equity interests of the type referred
to in clauses (A) through (D) of the preceding sentence. As of the date hereof,
there are no outstanding bonds, debentures, notes or other indebtedness of Buyer
having the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which stockholders of Buyer may
vote. There are no stockholders agreements, voting agreements or other similar
agreements with respect to Buyer Stock to which Buyer is a party or, to the
knowledge of Buyer, between or among any of Buyer’s stockholders. The issuance
and sale of the Shares will not result in a right of any current holder of Buyer
securities to adjust the exercise, conversion, exchange or reset price under
such securities.

Section 4.07. Buyer Subsidiaries. Buyer does not have and has never had any
Subsidiaries.

Section 4.08. SEC Filings.

(a) Buyer has filed with or furnished to the Securities and Exchange Commission
(the “Commission”) all reports, schedules, forms, statements, prospectuses,
registration statements and other documents required to be filed or furnished by
Buyer under the 1933 Act or the 1934 Act, including pursuant to Section 15(d) of
the 1934 Act, since February 14, 2012 (collectively, together with any exhibits
and schedules thereto and other information incorporated therein, the “Buyer SEC
Documents”) on a timely basis or has received a valid extension of such time of
filing and has filed any such Buyer SEC Documents prior to the expiration of any
such extension.

(b) As of its filing date (and as of the date of any amendment), each Buyer SEC
Document complied as to form in all material respects with the applicable
requirements of the 1933 Act and the 1934 Act, as the case may be.

 

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(c) As of its filing date (or, if amended or superseded by a filing prior to the
date hereof, on the date of such filing), each Buyer SEC Document did not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. All agreements to
which Buyer is a party or to which the property or assets of Buyer are subject,
which are required to be described in or filed as exhibits to a Buyer SEC
Document, have been so described or filed.

Section 4.09. Financial Statements. The financial statements of Buyer included
in Buyer SEC Documents comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with GAAP, except as may be otherwise specified
in such financial statements or the notes thereto and except that unaudited
financial statements may not contain all footnotes required by GAAP, and fairly
present the financial position of Buyer as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, immaterial, year-end audit adjustments.

Section 4.10. Disclosure Controls and Procedures. The Buyer is in compliance
with all provisions of the Sarbanes-Oxley Act of 2002 that are applicable to it,
except where such non- compliance has not had and would not reasonably be
expected to have a Buyer Material Adverse Effect. The Buyer’s certifying
officers are responsible for establishing and maintaining disclosure controls
and procedures (as defined in the 1934 Act) for Buyer and they have (a) designed
such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under their supervision, to ensure that material
information relating to Buyer is made known to the certifying officers by others
within Buyer, particularly during the periods in which Buyer’s filings under the
1934 Act have been prepared; and (b) evaluated the effectiveness of Buyer’s
disclosure controls and procedures and presented in Buyer SEC Documents their
conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the periods covered by such filings under the 1934 Act based on
such evaluation.

Section 4.11. Absence of Certain Changes. Since February 14, 2012, the business
of Buyer has been conducted in the ordinary course consistent with past
practices and there has not been any event, occurrence, development or state of
circumstances or facts that has had or would reasonably be expected to have,
individually or in the aggregate, a Buyer Material Adverse Effect.

Section 4.12. No Undisclosed Material Liabilities. There are no Liabilities of
Buyer of any kind, other than:

(a) Liabilities provided for in Buyer’s most recent balance sheet included in a
Buyer SEC Document prior to the date hereof or in the notes thereto;

 

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(b) Liabilities incurred in the ordinary course of business of Buyer consistent
with past practices since the date of Buyer’s most recent balance sheet included
in a Buyer SEC Document prior to the date hereof, which Liabilities do not, in
the aggregate, exceed $1,000,000;

(c) Liabilities incurred in connection with the transactions contemplated under
this Agreement and the Securities Purchase Agreement as set forth on Schedule
4.12(c) of the Buyer Disclosure Schedule;

(d) Liabilities disclosed on Section 4.12(d) of the Buyer Disclosure Schedule;
or

(e) other undisclosed Liabilities which, individually or in the aggregate, are
not material to Buyer.

Section 4.13. Litigation. There is no claim, action, suit, arbitration
investigation or proceeding pending against or, to the knowledge of Buyer,
threatened against or affecting, Buyer or any of its properties or, to the
Knowledge of Buyer, any of its officers or directors, before any arbitrator or
any Governmental Authority.

Section 4.14. Compliance with Laws.

(a) Buyer is not: (i) in violation of its certificate of incorporation, bylaws,
or other organizational documents; (ii) in violation of any Applicable Law,
except for violations of law that have not had and would not reasonably be
expected to have, individually or in the aggregate, a Buyer Material Adverse
Effect; or (iii) in default (and no event has occurred which, with notice or
lapse of time or both, would cause Buyer to be in default) under, nor has there
occurred any event giving others (with notice or lapse of time or both) any
rights of termination, amendment, acceleration or cancellation of, any Material
Contract, indenture or instrument to which Buyer is a party.

(b) The Buyer:

(i) has not received any FDA Form 483, notice of adverse finding, warning
letter, untitled letter or other correspondence or notice from the FDA or any
other federal, state, local or foreign governmental or regulatory authority
alleging or asserting material noncompliance with any Applicable Laws or any
licenses, certificates, approvals, clearances, authorizations, permits and
supplements or amendments thereto required by any such Applicable Laws
(“Authorizations”);

(ii) possesses all material Authorizations and such Authorizations are valid and
in full force and effect and Buyer is not in material violation of any term of
any such Authorizations;

(iii) has not received notice of any claim, action, suit, proceeding, hearing,
enforcement, investigation, arbitration or other action from the FDA or any
other federal, state, local or foreign governmental or regulatory authority or
third party alleging that

 

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any product operation or activity is in material violation of any Applicable
Laws or Authorizations and has no knowledge that the FDA or any other federal,
state, local or foreign governmental or regulatory authority or third party is
considering any such claim, litigation, arbitration, action, suit, investigation
or proceeding;

(iv) has not received notice that the FDA or any other federal, state, local or
foreign governmental or regulatory authority has taken, is taking or intends to
take action to limit, suspend, modify or revoke any material Authorizations and
has no knowledge that the FDA or any other federal, state, local or foreign
governmental or regulatory authority is considering such action;

(v) has filed, obtained, maintained or submitted all material reports,
documents, forms, notices, applications, records, claims, submissions and
supplements or amendments as required by any Applicable Laws or Authorizations
and that all such reports, documents, forms, notices, applications, records,
claims, submissions and supplements or amendments were materially complete and
correct on the date filed (or were corrected or supplemented by a subsequent
submission); and

(vi) has not, either voluntarily or involuntarily, initiated, conducted, or
issued or caused to be initiated, conducted or issued, any recall, market
withdrawal or replacement, safety alert, “dear doctor” letter, or other notice
or action relating to the alleged lack of safety or efficacy of any product or
any alleged product defect or violation and, to Buyer’s knowledge, no third
party has initiated, conducted or intends to initiate any such notice or action.

(c) The studies, tests and preclinical and clinical trials conducted by or on
behalf of Buyer were and, if still pending, are being conducted in accordance
with experimental protocols, procedures and controls pursuant to accepted
professional scientific standards and all Applicable Laws and Authorizations,
including, without limitation, the Federal Food, Drug and Cosmetic Act and the
rules and regulations promulgated thereunder (collectively, “FFDCA”); the
descriptions of the results of such studies, tests and trials contained in Buyer
SEC Documents are accurate and complete and fairly present the data derived from
such studies, tests and trials; Buyer is not aware of any studies, tests or
trials, the results of which Buyer believes reasonably call into question the
study, test, or trial results described or referred to in Buyer SEC Documents
when viewed in the context in which such results are described and the clinical
state of development; and, except as set forth on Section 4.14 of the Buyer
Disclosure Schedule, Buyer has not received any notices or correspondence from
the FDA or any other federal, state, local or foreign governmental or regulatory
authority requiring the termination, suspension or material modification of any
studies, tests or preclinical or clinical trials conducted by or on behalf of
Buyer.

Section 4.15. Taxes. Buyer has not, prior to the fiscal 2012 tax year, been
required to file any federal, foreign, state, local, or other tax returns and
reports. Buyer has received an extension of time with respect to tax returns
required to be filed for the fiscal 2012 tax year. The Buyer has withheld or
collected from each payment made to its employees the amount of all taxes
required to be withheld or collected therefrom and has paid all such amounts to
the

 

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appropriate taxing authorities when due. The Buyer is not aware of any Tax
deficiency that has been or might be asserted or threatened against it that has
had or would reasonably be expected to have a Buyer Material Adverse Effect.

Section 4.16. No Manipulation of Buyer Stock. The Buyer has not taken and will
not, in violation of applicable law, take, any action designed to or that might
reasonably be expected to cause or result in stabilization or manipulation of
the price of Buyer Stock to facilitate the sale or resale of the Shares.

Section 4.17. Investment Company. The Buyer is not, and immediately following
the Closing and the consummation of the Offering will not be, an “investment
company” or an entity “controlled” by an “investment company” within the meaning
of the Investment Company Act of 1940, as amended (the “Investment Company
Act”), and shall conduct its business in a manner so that it will not become
subject to the Investment Company Act.

Section 4.18. Application of Takeover Protections. The Buyer and its Board of
Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under Buyer’s certificate of incorporation, bylaws or
other organizational documents or the laws of its state of incorporation
(including Section 203 of the Delaware General Corporation Law) that is or could
become applicable to Seller as a result of Seller and Buyer fulfilling their
obligations or exercising their rights under this Agreement, including without
limitation as a result of Buyer’s issuance of the Shares and Seller’s ownership
of the Shares.

Section 4.19. Indebtedness. Other than Permitted Indebtedness which does not as
of the date hereof, and will not as of the Closing, exceed $1,000,000 in the
aggregate, Buyer (i) has no outstanding Indebtedness; (ii) is not a party to any
contract, agreement or instrument, the violation of which, or default under
which, by any other party to such contract, agreement or instrument could
reasonably be expected to result in a Buyer Material Adverse Effect; (iii) is
not in violation of any term of or in default under any contract, agreement or
instrument relating to any Indebtedness, except where such violations and
defaults would not result, individually or in the aggregate, in a Buyer Material
Adverse Effect; or (iv) is not a party to any contract, agreement or instrument
relating to any Indebtedness, the performance of which has had or would
reasonably be expected to have a Buyer Material Adverse Effect.

Section 4.20. Material Contracts. Each Material Contract is the legal, valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms, except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and any other laws of general application
affecting enforcement of creditors’ rights generally, and as limited by laws
relating to the unavailability of specific performance, injunctive relief or
other equitable remedies. The Buyer is in compliance with all material terms of
the Material Contracts, and there has not occurred any breach, violation or
default or any event that, with the lapse of time, the giving of notice or the
election of any Person, or any combination thereof, would constitute a breach,
violation or default by Buyer under any such Material Contract or, to the
knowledge of Buyer, by any other Person to any such contract except where such
breach,

 

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violation or default would not have a Buyer Material Adverse Effect. The Buyer
has not been notified that any party to any Material Contract intends to cancel,
terminate, not renew or exercise an option under any Material Contract, whether
in connection with the transactions contemplated hereby or otherwise.

Section 4.21. Intellectual Property Matters.

(a) With respect to each item of Buyer Intellectual Property:

(i) The Buyer possesses all rights, titles and interests in and to the item if
owned by Buyer, as applicable, free and clear of any Lien, license or other
restriction, and possesses all rights necessary in the case of a licensed item
to use such item in the manner in which it presently uses the item or reasonably
contemplates using such item, and Buyer has taken or caused to be taken
reasonable and prudent steps to protect its rights in and to, and the validity
and enforceability of, the item owned by Buyer;

(ii) the item if owned by Buyer is not, and if licensed, to the knowledge of
Buyer is not, subject to any outstanding injunction, judgment, order, decree,
ruling or charge naming Buyer;

(iii) no action, suit, proceeding, hearing, investigation, charge, complaint,
claim or demand is pending, in process or, to the Knowledge of the Buyer,
threatened that challenges the legality, validity, enforceability, use or
ownership of the item;

(iv) to the knowledge of the Buyer, no item owned or licensed by the Buyer
infringes upon any valid and enforceable Intellectual Property right or other
right of any third party;

(v) to the knowledge of Buyer, no third party has infringed upon or
misappropriated Buyer’s Intellectual Property rights in the item;

(vi) Buyer is not party to any option, license, sublicense or agreement of any
kind covering the item that it is in breach or default thereunder, and to the
knowledge of Buyer no event has occurred which, with notice or lapse of time,
would constitute such a breach or default or permit termination, modification or
acceleration thereunder; and

(vii) each option, license, sublicense or agreement of any kind covering the
item is legal, valid, binding, enforceable and in full force and effect.

(b) All registered patents, copyrights, trademarks and service marks included in
Buyer Intellectual Property: (i) if owned by Buyer and (ii) if licensed, to the
knowledge of Buyer, are valid and subsisting and are not subject to any claims,
Liens, taxes or other fees except for periodic filing, annuity and maintenance
fees and Permitted Liens.

(c) No stockholder, member, director, officer or employee of Buyer has any
right, title or interest in any of Buyer Intellectual Property. To the Knowledge
of Buyer, the Buyer Intellectual Property constitutes all of the Intellectual
Property necessary for the development and commercialization of the compound
known as RXI-109.

 

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(d) It is not, nor will it be, necessary to utilize any inventions, trade
secrets or proprietary information of any of its employees made prior to their
employment by Buyer, except for valid and enforceable inventions, trade secrets
or proprietary information that have been assigned to Buyer.

(e) The Buyer maintains policies and procedures regarding data security, privacy
and data use that are commercially reasonable and, in any event, comply with
Buyer’s obligations to its customers and applicable laws, rules and regulations.
There have not been, and the transactions contemplated under this Agreement will
not result in, any security breaches of any security policy, data use
restriction or privacy breach under any such policies or any applicable laws,
rules or regulations.

(f) Except as set forth on Section 4.21(f) of the Buyer disclosure schedule, no
funding, facilities or personnel of any Governmental Authority were used,
directly or indirectly, to develop or create, in whole or in part, any Buyer
Intellectual Property.

(g) To the Knowledge of the Buyer, there does not exist any claim, allegation,
or basis for any claim or allegation, that any Intellectual Property owned by
Buyer or that any Intellectual Property otherwise used by Buyer is invalid or
unenforceable or that Buyer’s rights with respect thereto are subject to claims
or defenses that would impair or preclude enforcement of such rights, including
misuse, laches, acquiescence, statute of limitations, abandonment or fraudulent
registration.

Section 4.22. Employee Matters.

(a) The Buyer has disclosed in the Buyer SEC Documents any “employee benefit
plan” (within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended, and the rules and regulations thereunder
(“ERISA”), all employment, consulting, or personal services contracts, whether
written or oral, and all equity compensation, stock purchase, stock option,
phantom stock, deferred compensation, bonus, incentive, employee loan,
severance, employment, change-in-control, fringe benefit, medical, dental,
vision, disability, life insurance, and all other employee benefit plans,
agreements, programs, policies or other arrangements, whether or not subject to
ERISA (including any funding mechanism therefore now in effect or required in
the future as a result of the purchase of the Shares or otherwise), whether
formal or informal, oral or written, legally binding or not, under which (i) any
current or former employee, director or consultant of the Buyer or any ERISA
Affiliate (the “Buyer Employees”), has any present or future right to benefits
and which are contributed to, sponsored by or maintained by the Buyer or any
ERISA Affiliate, or (ii) the Buyer or any ERISA Affiliate has or may have any
actual or contingent present or future Liability or other obligation. All such
plans, agreements, programs, policies and arrangements shall be collectively
referred to as the “Plans.” For purposes of this Section, the term “ERISA
Affiliate” means any entity, including but not limited to any corporation,
partnership, limited liability company, sole proprietorship, or other legal
entity that, together with the Buyer is, or at any time was, treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1)
of ERISA.

 

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(b) No Plan or Law exists that, as a result of the execution of this Agreement,
the consummation of the transactions contemplated by this Agreement and/or the
consummation of the Offering (in each case, either alone or upon the occurrence
of any additional or subsequent events), could (i) result in severance pay,
termination indemnity or any similar payment or any increase in severance pay,
termination indemnity or any similar payment, (ii) accelerate the time of
payment or vesting or result in any payment or funding (through a grantor trust
or otherwise) of compensation or benefits under, increase the amount payable or
result in any other material obligation pursuant to, any of the Plans,
(iii) limit or restrict the right of the Buyer to merge, amend or terminate any
Plan, (iv) cause the Buyer to record additional compensation expense on its
income statement with respect to any outstanding stock option or other
equity-based award, (v) result in payments under any Plan which would not be
deductible under Section 280G of the Code, or (vi) impair any of the rights of
the Buyer or any ERISA Affiliate with respect to any Plan (including, without
limitation, the right to amend or terminate any Plan at any time).

(c) No Buyer Employees are, or are now reasonably expected to be, in violation
of any term of any employment contract, confidentiality, disclosure or
proprietary information agreement or non-competition agreement, or any other
contract or agreement or any restrictive covenant with Buyer, and the continued
employment of each Buyer Employee does not subject Buyer to any material
liability with respect to any of the foregoing matters.

(d) Each Plan has been established and at all times has been administered in
accordance with its terms, and in compliance with the applicable provisions of
ERISA, the Code and other applicable Laws; (ii) each Plan which is intended to
be qualified within the meaning of Section 401(a) of the Code is so qualified
and has received a favorable determination letter, or is the subject of a
favorable advisory or opinion letter as to its qualification, issued by the
Internal Revenue Service (“IRS”) upon which the Buyer is entitled to rely and no
such determination or opinion letter has been revoked; and nothing has occurred,
whether by action or failure to act, that could reasonably be expected to cause
the loss of such qualification; (iii) all material reports, returns and similar
documents required to be filed with any governmental agency or distributed to
any plan participant with respect to any Plan have been duly and timely filed or
distributed; (iv) no event has occurred and no condition exists that would
subject the Buyer, or any ERISA Affiliate to any Tax, fine, encumbrance, penalty
or other Liability imposed by ERISA, the Code or other applicable laws; (v) for
each Plan with respect to which a Form 5500 has been filed, no material change
has occurred with respect to the matters covered by the most recent Form 5500
since the date thereof; (vi) there is no present intention that any Plan be
amended, suspended or terminated, or otherwise modified to change benefits (or
the levels thereof) under any Plan at any time within the twelve months
immediately following the date hereof; (vii) no Plan is a split- dollar life
insurance program or otherwise provides for loans to executive officers (within
the meaning of the Sarbanes-Oxley Act of 2002); (viii) neither the Buyer nor any
ERISA Affiliates has incurred, and no Plan provides for any current or projected
Liability in respect of any post- employment or post-retirement health, medical
or life insurance benefits for current, former or retired employees of the
Buyer, except as required to avoid an excise tax under Section 4980B of the Code
or otherwise except as may be required pursuant to any other applicable law;
(ix) the

 

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Buyer and its ERISA Affiliates have complied with the notice and continuation
coverage requirements, and all other requirements, of Section 4980B of the Code
and Parts 6 and 7 of Title I of ERISA, and the regulations thereunder, and any
other applicable Law with respect to each Plan that is a group health plan
within the meaning of Section 5000(b)(1) of the Code; (x) no Plan that is a
group health plan is a self-insured plan; (xi) no Plan is maintained outside the
United States, and (xii) none of the Buyer, ERISA Affiliate or fiduciary of any
such Plan have engaged in any transaction or acted or failed to act in any
manner that violates the fiduciary requirements of ERISA or any other applicable
law.

(e) There are no suits, actions, disputes, claims (other than routine claims for
benefits in the ordinary course), investigations, audits or other administrative
proceedings by the Department of Labor, the IRS or other governmental agencies
pending, in process or, to the knowledge of Buyer, threatened in connection with
any Plan, but excluding any of the foregoing which would not have a Buyer
Material Adverse Effect. With respect to each Plan, no “prohibited transaction”
has occurred within the meaning of the applicable provisions of ERISA or the
Code; and no reportable event within the meaning of Section 4043 of ERISA has
occurred, other than one for which the 30-day notice requirement has been
waived.

(f) No Plan is (i) an “employee pension benefit plan” (within the meaning of
Section 3(2) of ERISA) subject to Section 412 of the Code or Title IV of ERISA,
(ii) a “multiple employer plan” within the meaning of Section 4063 or 4064 of
ERISA or Section 413(c) of the Code, or (iii) a “multiple employer welfare
arrangement” as defined in Section 3(40) of ERISA, and neither the Buyer nor any
ERISA Affiliates has any obligation to contribute, or has any actual or
contingent Liability or other obligation (including any obligation to make any
contribution), to or in respect of any of the foregoing types of plans.

Section 4.23. Environmental Matters. (a) No written notice, notification,
demand, request for information, citation, summons, complaint or order has been
received by, and no investigation, action, claim, suit, proceeding or review is
pending or, to the knowledge of Buyer, threatened by any Person against Buyer
and no penalty has been assessed against Buyer with respect to any matters
relating to or arising out of any Environmental Law; (b) Buyer is in compliance
with all Environmental Laws except where the failure to comply would not have a
Buyer Material Adverse Effect; and (c) to the knowledge of Buyer, there are no
liabilities of or relating to Buyer relating to or arising out of any
Environmental Law except such as would not have a Buyer Material Adverse Effect,
and, to the knowledge of Buyer, there is no existing condition, situation or set
of circumstances which could reasonably be expected to result in such a
liability.

Section 4.24. Title to Property and Assets. The Buyer does not own any real
property. The Buyer owns or has legally enforceable rights to use or hold for
use its personal property and assets free and clear of all Liens except:
(i) Permitted Liens; and (ii) such other Liens, if any, that individually or in
the aggregate, do not and would not detract from the value of any asset or
property of Buyer or interfere with the use or contemplated use of any personal
property of Buyer. With respect to any real property, Buyer is not in violation
in any material respect of any of its leases. All machinery, equipment,
furniture, fixtures and other personal property that is

 

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material to Buyer’s business and all buildings, structures and other facilities,
if any, including, without limitation, office or other space used by Buyer in
the conduct of its business and material to its business, are in good operating
condition and fit for operation in the ordinary course of business (subject to
normal wear and tear) except for any defects which will not interfere with the
conduct of normal operations of Buyer. The Buyer has delivered to the Purchaser
true and complete copies of any leases related to the real property used by
Buyer in the conduct of its business.

Section 4.25. Solvency. Immediately after giving effect to the transactions
contemplated hereby, Buyer shall be solvent and shall: (a) be able to pay its
debts as they become due; (b) own property that has a fair saleable value
greater than the amounts required to pay its debts (including a reasonable
estimate of the amount of all contingent liabilities); and (c) have adequate
capital to carry on its business. No transfer of property is being made and no
obligation is being incurred in connection with the transactions contemplated
hereby with the intent to hinder, delay or defraud either present or future
creditors of Buyer or Seller. In connection with the transactions contemplated
hereby, Buyer has not incurred, nor plans to incur, debts beyond its ability to
pay as they become absolute and matured.

Section 4.26. Private Offering. Assuming the correctness of the representations
and warranties of Seller set forth in Section 3.11 hereof, the offer and sale of
the Shares hereunder are exempt from registration under the 1933 Act. None of
Buyer, any of its Affiliates or any other Person acting on Buyer’s behalf has,
directly or indirectly, engaged in any form of general solicitation or general
advertising with respect to the Shares, nor have any of such Persons made any
offers or sales of any security of Buyer or its Affiliates or solicited any
offers to buy any security of Buyer or its Affiliates under circumstances that
would require registration of the Shares under the 1933 Act or any other
securities laws or cause the offer and sale of the Shares hereunder to be
integrated with any prior or contemporaneous offering of securities of Buyer or
any of its Affiliates for purposes of the 1933 Act in any manner that would
affect the validity if the private placement exemption under the 1933 Act for
the offer and sale of the Shares hereunder.

Section 4.27. Finders’ Fees. There is no investment banker, broker, finder or
other Person that has been retained by or is authorized to act on behalf of
Buyer who would be entitled to any fee or commission in connection with the
transactions contemplated by this Agreement.

Section 4.28. Independent Investigation. Buyer has conducted its own independent
investigation, review and analysis of the Transferred Assets, and acknowledges
that it has been provided adequate access to the personnel, properties, assets,
premises, books and records, and other documents and data of Seller for such
purpose. Buyer acknowledges and agrees that: (a) in making its decision to enter
into this Agreement and to consummate the transactions contemplated hereby,
Buyer has relied solely upon its own investigation and the express
representations and warranties of Seller set forth in Article 3 of this
Agreement (including the Seller SEC Documents and the Seller Disclosure
Schedules); and (b) neither Seller nor any other Person has made any
representation or warranty as to Seller, the Transferred Assets or this
Agreement, except as expressly set forth in Article 3 of this Agreement
(including the Seller SEC Documents and the Seller Disclosure Schedules).

 

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ARTICLE 5

CERTAIN COVENANTS OF BUYER AND SELLER

Buyer and Seller agree that:

Section 5.01. Commercially Reasonable Efforts; Further Assurances. Subject to
the terms and conditions of this Agreement and the other Transaction Document,
each of Buyer and Seller will use its commercially reasonable efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all things
necessary or desirable under Applicable Law to consummate the transactions
contemplated by this Agreement and the other Transaction Document.

Section 5.02. Public Announcements. The parties shall: (a) to the extent
required under the 1934 Act, file a Current Report on Form 8-K disclosing the
transactions contemplated hereunder within the time periods required under the
1934 Act and (b) issue a joint press release, approved and released by both
parties and substantially in the form agreed to by the parties, describing the
transactions contemplated by this Agreement no later than 8:30 a.m., New York
City time on the day immediately following the filing of the Form 8-K referenced
in clause (a). If the parties have entered into the Securities Purchase
Agreement as of the date of the press release referenced in the prior sentence,
on that same date Buyer and Seller shall issue a second joint press release,
approved and released by both parties and substantially in the form agreed to by
the parties, describing the transactions contemplated by the Securities Purchase
Agreement (the “Press Releases”). Subject to the foregoing, neither Buyer nor
Seller shall issue any press releases or any other public statements with
respect to the transactions contemplated hereby; provided, however, that the
parties shall be entitled, without the prior approval of the other party, to
make any other press release or other public disclosure with respect to such
transactions in substantial conformity with the Press Releases, or as may be
required by applicable law and regulations, including the 1934 Act and
applicable NYSE rules (and, in such a case, solely to the extent so required).

Section 5.03. Buyer Access to Information. Seller will deliver to Buyer: (a) at
the Closing, any laboratory books of Seller that relate exclusively to the
Transferred Assets; (b) within 45 days after the Closing, those portions of any
other laboratory books of Seller that relate primarily to the Transferred
Assets; and (c) within 10 days after the Closing, copies (in CD ROM or
comparable format) of all documents that Seller made available to Buyer during
the due diligence process; provided that Seller shall be entitled to maintain
copies of any materials referred to in each of clauses (a), (b) and (c), which
Seller will hold, and will use its best efforts to cause its officers,
directors, employees, accountants, counsel, consultants, advisors and agents to
hold, in confidence, unless compelled to disclose by judicial or administrative
process or by other requirements of Applicable Law. Notwithstanding anything to
the contrary contained herein, nothing in this Section 5.03 shall require Seller
or any of its Affiliates to violate any Applicable Law or a contract or
obligation of confidentiality owing to a Third Party or waive the protection of
an attorney-client privilege.

Section 5.04. Notices of Certain Events. Each party shall promptly notify the
other of:

(a) any notice or other communication from any Person alleging that the consent
of such Person is, was or may be required in connection with the transactions
contemplated by this Agreement or any other Transaction Document; or

 

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(b) any notice or other communication from any Governmental Authority in
connection with the transactions contemplated by this Agreement or any other
Transaction Document.

Section 5.05. Patent Service Providers. Within 45 days after the Closing, Seller
agrees to deliver a notice, with copy to Buyer, to each non-Affiliated Person
(each, a “Patent Service Provider”) engaged on the date hereof by or on behalf
of Seller or any of its Affiliates with respect to the registration or
protection of, or prosecution or defense of claims related to, any patents
included in the Assigned Patents. Such notice shall inform the Patent Service
Provider of the assignment of the Assigned Patents hereunder and shall instruct
the Patent Service Provider to cease any work relating thereto on behalf of
Seller or any of its Affiliates. For the avoidance of doubt, none of Seller or
any of its Affiliates shall have any liability or obligation hereunder with
respect to: (a) the continued engagement of any Patent Service Provider from and
after the Closing; or (b) any fees or other charges of any Patent Service
Provider incurred after the earlier of the 45-day period following the Closing
or the date of acknowledgement of receipt of the notice contemplated in this
Section by such Patent Service Provider.

Section 5.06. Covenant Not to Challenge Assigned Patents. From and after the
Closing, Seller shall not, and shall cause its Affiliates not to, challenge or
knowingly assist any Third Party in challenging the validity or enforceability
of the Assigned Patents.

Section 5.07 Purchase of Buyer Stock. Subject to the remainder of this
Section 5.07, Seller and/or its designees shall purchase an aggregate of at
least $5,000,000 of Buyer Stock in the Offering (the “PIPE Shares”), at the same
price and on the same terms and conditions as the rest of the investors in the
Offering; provided, however, that in no event shall the price per share in the
offering be greater than the average closing price per share of the Buyer Stock,
as quoted on the OTC Market under the symbol “RXII,” for the 10 Trading Day
period ending on the day prior to the date of the Securities Purchase Agreement.
Notwithstanding the foregoing, Seller shall not be required to purchase any PIPE
Shares unless the Buyer sells an aggregate of $10,000,000 of Buyer Stock in the
Offering (including the amounts to be purchased by Seller and/or its designees).
For the avoidance of doubt, the parties acknowledge and agree that the issuance
and sale of Buyer Stock to all investors in the Offering shall be consummated in
a single closing (subject to up to one additional closing, if any, in connection
with the exercise by an existing shareholder of preemptive rights outstanding on
the date of this Agreement) occurring at the same time and place and shall be
completed pursuant to the terms of a Securities Purchase Agreement in
substantially the form attached hereto as Exhibit B, together with such
additions to, deletions from or modifications thereto as may be agreed to by
Seller, in its reasonable discretion.

 

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Confidential information has been omitted and filed separately with the
Securities and Exchange Commission. Confidential treatment has been requested
with respect to this omitted information. [***] indicates that information has
been redacted.

ARTICLE 6

CONTINGENT CONSIDERATION

Section 6.01. Royalty Payments.

(a) Buyer shall pay Seller royalty payments in an amount equal to: (i) [***]
percent [***] of Net Sales with respect to each Qualified Drug sold for an
ophthalmologic use during the applicable Royalty Period; and (ii) [***] percent
[***] of Net Sales with respect to each Qualified Drug sold for a
non-ophthalmologic use during the applicable Royalty Period (items (i) and
(ii) collectively, the “Royalty Payments”).

(b) Until the termination of all applicable Royalty Periods, Buyer shall, within
90 days after the end of each fiscal quarter on or after the date of the First
Commercial Sale: (i) deliver to Seller a statement setting forth in reasonable
detail its calculation of Net Sales for the fiscal quarter then ended with
respect to each Qualified Drug in such quarter, which statements will be held in
confidence; and (ii) pay Seller any royalty amounts, as determined in accordance
with this Section 6.01, that are accrued and unpaid as of the end of the fiscal
quarter then ended.

(c) The “Royalty Period” with respect to any Qualified Drug in a given country
shall begin on the First Commercial Sale of such Qualified Drug in such country
and shall continue until the later of: (i) the expiration of the last-to-expire
Valid Claim Covering such Qualified Drug in such country; and (ii) 10 years
after the First Commercial Sale of such Qualified Drug in such country.

(d) As used herein, “Net Sales” with respect to any Qualified Drug means the
amount of gross sales of such Qualified Drug worldwide that are invoiced by
Buyer or any of its Affiliates, agents, licensees or sublicensees to any Person,
as reduced by the following deductions to the extent actually allowed or
incurred with respect to the sales of such Qualified Drug and accounted for on a
product by product basis, and in each case in accordance with GAAP:

(i) reasonable and customary charges for the shipment of Qualified Drugs
(including, without limitation, insurance costs on shipments), to the extent
actually paid by the selling party;

(ii) sales, value-added and excise taxes, customs, duties, and any other charges
of a Governmental Authority, to the extent imposed upon the sale of such
Qualified Drug and actually paid by the selling party, provided that no income
taxes shall be deducted from gross sales of such Qualified Drug to calculate Net
Sales;

(iii) reasonable and customary distributor or wholesaler fees, rebates or
allowances actually granted, allowed or incurred, including governmental and
managed care payments and rebates;

 

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Confidential information has been omitted and filed separately with the
Securities and Exchange Commission. Confidential treatment has been requested
with respect to this omitted information. [***] indicates that information has
been redacted.

 

(iv) reasonable and customary quantity discounts, cash discounts or chargebacks
actually granted, allowed or incurred; and

(v) allowances or credits to customers, not in excess of the selling price of
such Qualified Drug, on account of requirements of any Governmental Authority,
write- offs of bad debts, rejections, recalls or returns.

Section 6.02. Milestone Payments. Buyer shall pay Seller up to $50,000,000 in
one-time development and commercialization milestones for the successful
development and commercialization of each Qualified Drug, which milestone
payments shall be payable solely in cash. The milestone events and corresponding
one-time milestone payment amounts payable with respect to each Qualified Drug
are as set forth below:

(a) [***];

(b) [***];

(c) [***];

(d) [***]; and

(e) [***] (items (a) through (e) individually a “Milestone Payment” and
collectively, the “Milestone Payments”).

For the avoidance of doubt, each of the aforementioned Milestone Payments is a
one- time payment with respect to each Qualified Drug. Once a Milestone Payment
is made with respect to a particular Qualified Drug, then no further payment
will be owed by Buyer with respect to such milestone. For example, if Buyer
[***] for a Qualified Drug, and, therefore, Buyer pays Seller the Milestone
Payment described in Section 6.02(a), then, if and when Buyer [***], no
additional Milestone Payment under Section 6.02(a) will be required of the Buyer
with respect to such Qualified Drug. However, if Buyer [***] for a Qualified
Drug (the “Initial Qualified Drug”), and, therefore, Buyer pays Seller the
milestone payment described in Section 6.02(a), then, if and when Buyer [***]
another Qualified Drug (a “Subsequent Qualified Drug”), then the Buyer will be
required to make a Milestone Payment under Section 6.02(a)(i) with respect to
such Subsequent Qualified Drug, irrespective of any prior Milestone Payment with
respect to an Initial Qualified Drug.

Section 6.03 Conduct of Business. Buyer agrees that (a) Buyer or its agents,
licensees or sublicensees, shall use commercially reasonable efforts, in good
faith, to cause all of the milestones to be achieved and (b) Buyer shall not
take any actions that are intended to frustrate or prevent, or could reasonably
be expected to frustrate or prevent, the achievement of any of the milestones.
As used in this Section 6.03, “commercially reasonable efforts” means the level
of efforts and resources (measured as of the time that such efforts are required
to be exerted under this Agreement) commonly used by a company of a similar size
to that of Buyer, including, in

 

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Confidential information has been omitted and filed separately with the
Securities and Exchange Commission. Confidential treatment has been requested
with respect to this omitted information. [***] indicates that information has
been redacted.

 

the case of research, development or commercialization, the level of effort and
resources commonly used by such a company to research, develop, manufacture or
commercialize, as the case may be, a drug candidate owned by such company or to
which it has rights, which product candidate is at a similar stage in its
development or product life and is of a similar market and profitability
potential to an applicable Qualified Drug hereunder, taking into account all
relevant factors including the patent and other proprietary position of the drug
candidate, product labeling or anticipated labeling, market potential, financial
return, medical and clinical considerations, regulatory environment and
competitive market conditions, and other technical, legal, scientific, medical
or commercial factors that such a company would deem to be relevant. Seller
acknowledges that any products that may arise from the Transferred Assets are at
an early stage of development and that certain compounds described in the
Transferred Assets may require chemical modification to enhance their properties
before a development candidate can be selected. [***] In the event that Seller
has a reasonable basis to believe that Buyer has failed to use exercise
commercially reasonable efforts to cause all of the milestones to be achieved
with respect to at least one Qualified Drug, then Seller may provide written
notice of such alleged failure to the Buyer (a “Diligence Notice”) and
requesting a description of Buyer’s diligence efforts. Buyer shall then have 180
days from receipt of the Diligence Notice to either cure such failure or to
provide written notice to Seller (a “Buyer Notice”) of the basis on which it
believes that it (or its agents, licensees or sublicensees) has (or have, as
applicable) been using commercially reasonable efforts as required hereunder. In
the event that a court of competent jurisdiction finds, after the earlier of
(i) the date on which Seller receives a Buyer Notice or (ii) the expiration of
the 180-day period following Buyer’s receipt of a Diligence Notice, that Buyer
has failed to exercise commercially reasonable efforts, then, as the sole and
exclusive remedy for such breach by Buyer, Buyer shall transfer and assign to
the Seller all of the Transferred Assets no later than 30 days following the
date of such finding (and, for the avoidance of doubt, Seller shall retain all
of the Shares issued to it hereunder). The parties agree that the right to the
return of the Transferred Assets as provided in this Section 6.03 will be the
sole and exclusive remedy for a breach of the covenants, representations and
warranties contained in this Section 6.03 and that Seller shall not be entitled
to recover any monetary damages under any theory of recovery in connection with
a breach of Section 6.03, whether such damages are direct, indirect, incidental,
consequential, exemplary, special damages, lost profits, lost opportunity, or
otherwise.

Section 6.04 Enforcement Actions. Notwithstanding anything herein to the
contrary, in the event that Seller reasonably determines that a third party is
likely infringing on any valid claim contained in the Assigned Patents, and if
such Assigned Patent does not then cover a Qualified Drug that Buyer or any
licensee or sublicensee has in development or is commercializing, then Seller
shall have the right, but not the obligation, to provide written notice of the
alleged infringement to Buyer, identifying the alleged infringing party (the
“Infringer”) and the alleged infringing activity (such notice being the
“Infringement Notice”). Buyer shall then have 120 days from receipt of an
Infringement Notice to elect to provide Seller with written notice of its
intention to commence, at Buyer’s sole expense, legal proceedings against the
Infringer. If Buyer fails to provide written notice to Seller of its bona fide
intention to commence legal proceedings against the Infringer, or if Buyer fails
to file suit against the Infringer within 180 days from receipt of the
Infringement Notice and thereafter use

 

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commercially reasonable efforts to prosecute such infringement action, then the
Seller shall have the right, at its sole expense, to commence legal proceedings
against the Infringer. Any recoveries resulting from legal proceedings against
an Infringer shall accrue for the sole benefit of, and shall be payable to, the
party who prosecutes such proceedings in accordance with the provisions of this
Section 6.04, subject to any Royalties or other amounts payable by Buyer to
Seller hereunder. Any party hereto who receives a payment of any funds that
should rightly have been paid to the other party hereunder in accordance with
the prior sentence shall promptly (but in any event no later than 14 days
following the receipt thereof) pay such funds over to the appropriate party as
determined thereunder.

ARTICLE 7

REGISTRATION RIGHTS

Section 7.01. Registration Rights of Seller.

(a) Within 45 days after all of the shares of Buyer Stock issued in the Offering
pursuant to that certain Securities Purchase Agreement, among Buyer and the
investors named therein, dated as of the Closing Date (the “Securities Purchase
Agreement”), are registered for resale with the Commission (the “Filing
Deadline”), Buyer shall prepare and file a registration statement under the 1933
Act on the appropriate form (the “Registration Statement”) covering the resale
of the full amount of the Shares (the “Registrable Securities”) on a continuous
basis pursuant to Rule 415 under the 1933 Act. The Buyer shall use its
commercially reasonable efforts to have the Registration Statement declared
effective within: (i) 90 days from the Filing Deadline; or (ii) in the event
that the Commission reviews the Registration Statement, 120 days from the Filing
Deadline (the “Effectiveness Deadline”).

(b) Notwithstanding anything to the contrary herein, from the date hereof until
the effective date of the Registration Statement, except: (i) as otherwise
provided in the Securities Purchase Agreement; (ii) as required by the
Securities Purchase Agreement, dated as of September 24, 2011, by and among Tang
Capital Partners, LP, RTW Investments, LLC, RNCS, Inc. (now known as the
Company) and RXi Pharmaceuticals Corporation (now known as Galena Biopharma,
Inc.); and (iii) for any post-effective amendment to Buyer’s effective
registration statement on Form S-1 (File No. 333-181534), provided that such
post-effective amendment does not increase the number of shares registered for
resale thereunder, Buyer shall not, without the prior written consent of Seller,
prepare and file with the Commission a registration statement relating to an
offering for its own account or the account of others under the 1933 Act of any
of its equity securities, other than any registration statement or
post-effective amendment to a registration statement (or supplement thereto)
relating to Buyer’s employee benefit plans registered on Form S-8. In no event
shall Buyer include any securities other than the Shares on any Registration
Statement without the prior written consent of Seller.

Section 7.02. Limitations on Registrable Securities. In the event that the Staff
of the Commission (the “Staff”) provides Buyer a written comment that it is
inappropriate to register the full amount of the Registrable Securities on the
Registration Statement due to limitations under Rule 415 of the 1933 Act, then
Buyer shall use commercially reasonable efforts to

 

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persuade the Staff that the offering contemplated by the Registration Statement
is a valid secondary offering and not an offering “by or on behalf of the
issuer” as defined in Rule 415. In the event that, despite Buyer’s commercially
reasonable efforts and compliance with the terms of this Section 7.02, the Staff
refuses to alter its position, Buyer shall: (a) register the resale of that
portion of the Registrable Securities as the Staff may permit under its
interpretations of Rule 415; and (b) undertake to register the remaining portion
of the Registrable Securities as soon as registration would be permitted under
Rule 415, as determined by Buyer in good faith based on the guidance of the
Staff or the Staff’s publicly available interpretations of Rule 415.

Section 7.03. Effect of Failure to File and Obtain and Maintain Effectiveness of
Registration Statement. Subject to Section 7.02, if: (a) a Registration
Statement covering all of the Registrable Securities required to be covered
thereby and required to be filed by Buyer pursuant to this Agreement is not
filed with the Commission on or before the Filing Deadline (a “Filing Failure”);
(b) a Registration Statement covering all of the Registrable Securities required
to be covered thereby and required to be filed by Buyer pursuant to this
Agreement is not declared effective by the Effectiveness Deadline (an
“Effectiveness Failure”); or (c) on any day after the date on which the
Registration Statement is declared effective by the Staff (the “Effective
Date”), sales of all of the Registrable Securities required to be included on
such Registration Statement cannot be made (other than during an Allowable Grace
Period, as defined below) 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 Buyer Stock) (a “Maintenance Failure”) then, in satisfaction of the
damages to Seller by reason of any such delay in or reduction of its ability to
sell the Shares, Buyer shall pay to Seller an amount in cash equal to two
percent (2%) of the aggregate value of all of the Shares issued pursuant to this
Agreement, determined with reference to the average closing stock price of Buyer
Stock on the ten Trading Days ending one Trading Day prior to the Closing:
(i) the day of a Filing Failure and on every thirtieth day (pro rated for
periods totaling less than 30 days) thereafter until such Filing Failure is
cured; (ii) the initial day of an Effectiveness Failure and on every thirtieth
day (pro rated for periods totaling less than 30 days) thereafter until such
Effectiveness Failure is cured; and (iii) the initial day of a Maintenance
Failure and on every thirtieth day (pro rated for periods totaling less than 30
days) thereafter until such Maintenance Failure is cured, with a maximum penalty
of twelve months. The payments to which Seller 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 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 (A) the last day of the calendar month during which such Registration Delay
Payments are incurred and (B) the third Business Day after the event or failure
giving rise to the Registration Delay Payments is cured. In the event the Buyer
fails to make a Registration Delay Payment in a timely manner, such Registration
Delay Payment shall bear interest at the rate of two percent (2.0%) per month
(prorated for partial months) until paid in full. In addition, the Seller shall,
among seeking other remedies, be entitled to seek injunctive relief compelling
the Buyer to address the Filing Failure, Effectiveness Failure or the
Maintenance Failure. Notwithstanding the foregoing, no Registration

 

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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 the
Commencement Date, provided that the Seller is 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 Buyer is obligated to file a
Registration Statement with the Commission pursuant to Section 7.01 hereof,
Buyer will use commercially reasonable efforts to effect the registration of the
Registrable Securities in accordance with the intended method of disposition
thereof and, pursuant thereto, Buyer shall have the following obligations:

(a) At least five (5) Business Days prior to the filing of each Registration
Statement, amendment, supplement or prospectus, Buyer shall provide Seller a
copy of such Registration Statement, amendment, supplement or prospectus for
Seller’s review and comment. The Buyer shall not file any Registration
Statement, amendment, supplement or prospectus to which Seller objects in good
faith. If Seller so objects to the filing of any Registration Statement,
amendment, supplement or prospectus, Buyer shall make any reasonable
modifications to such Registration Statement, amendment, supplement or
prospectus as may be required by Seller (unless, upon the advice of counsel,
such modifications would cause Buyer to violate the 1933 Act or any other
applicable federal securities laws).

(b) The Buyer shall submit to the Commission, within two (2) Business Days after
Buyer learns that no review of a particular Registration Statement will be made
by the Staff 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.

(c) Buyer shall keep each Registration Statement effective pursuant to Rule 415
at all times until the earlier of: (i) the date as of which Seller may sell all
of the Registrable Securities covered by such Registration Statement without
restriction or limitation pursuant to Rule 144 and without the requirement to be
in compliance with Rule 144(c)(1) (or any successor thereto) promulgated under
the 1933 Act; (ii) the date on which Seller shall have sold all of the
Registrable Securities covered by such Registration Statement; or (iii) assuming
Buyer is not then (or within the three months preceding such date) an Affiliate
of Buyer, the first anniversary of the Closing Date (the “Registration Period”).
Buyer 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.

(d) Buyer shall prepare and file with the Commission such amendments (including
post-effective amendments) and supplements to the 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 1933 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
1933 Act with respect to the disposition of all Registrable Securities of

 

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Buyer 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 Seller as set forth in such Registration
Statement.

(e) Buyer shall furnish to Seller without charge: (i) promptly after the
Registration Statement 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 Seller, all exhibits and each preliminary prospectus;
(ii) upon the effectiveness of the Registration Statement, ten copies of the
prospectus included in such Registration Statement and all amendments and
supplements thereto (or such other number of copies as Seller may reasonably
request); and (iii) such other documents, including copies of any preliminary or
final prospectus, as Seller may reasonably request from time to time in order to
facilitate the disposition of the Registrable Securities.

(f) Buyer shall notify Seller 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 the 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 material, nonpublic
information), and, promptly prepare a supplement or amendment to such
Registration Statement to correct such untrue statement or omission, and deliver
10 copies of such supplement or amendment to Seller (or such other number of
copies as Seller may reasonably request). Buyer shall also promptly notify
Seller in writing (not later than two (2) Business Days following the date):
(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 Seller 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 Buyer’s reasonable determination that a post-effective
amendment to a Registration Statement would be appropriate.

(g) Buyer shall use commercially reasonable 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 Seller 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 Seller is required under applicable securities law to be described in the
Registration Statement as an underwriter, at the reasonable request of Seller,
Buyer shall furnish to Seller, on the date of the effectiveness of the
Registration Statement and thereafter from time to time on such dates as Seller
may reasonably request: (i) a letter, dated such date, from Buyer’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 Seller; and (ii) an opinion, dated as of such
date, of counsel representing Buyer for purposes of such Registration Statement,
in form, scope and substance as is customarily given in an underwritten public
offering, addressed to Seller.

 

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(i) If Seller is required under applicable securities law to be described in the
Registration Statement as an underwriter, upon the written request of Seller in
connection with Seller’s due diligence requirements, if any, Buyer shall make
available for inspection by: (i) Seller and its legal counsel; and (ii) one firm
of accountants or other agents retained by Seller (collectively, the
“Inspectors”), all pertinent financial and other records, and pertinent
corporate documents and properties of Buyer (collectively, the “Records”), as
shall be reasonably deemed necessary by each Inspector solely for the purpose of
establishing a due diligence defense under underwriter liability under the 1933
Act, and cause Buyer’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 Seller) or use of any Record or other information which
Buyer 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 1933 Act; (B) the release of such
Records is 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 Agreement. Seller 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 Buyer and allow Buyer, 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 Buyer and Seller) shall be deemed to limit Seller’s ability to sell
Registrable Securities in a manner which is otherwise consistent with applicable
laws and regulations

(j) Buyer shall hold in confidence and not make any disclosure of information
concerning Seller provided to Buyer 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. Buyer agrees that it shall,
upon learning that disclosure of such information concerning Seller is sought in
or by a court or governmental body of competent jurisdiction or through other
means, give prompt written notice to Seller and allow Seller, at Seller’s
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.

(k) Buyer shall cooperate with Seller 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 Seller may reasonably request and registered
in such names as Seller may request.

 

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(l) If requested by Seller, Buyer shall: (i) as soon as practicable incorporate
in a prospectus supplement or post-effective amendment such information as
Seller 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 supplement or post-effective amendment; and (iii) as soon as
practicable, supplement or make amendments to any Registration Statement if
reasonably requested by Seller.

(m) Buyer shall use commercially reasonable 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. In furtherance and
not in limitation of the foregoing, Buyer shall file such documents required of
Buyer for blue sky clearance in states specified in writing by Seller and use
its commercially reasonable efforts to maintain such blue sky qualifications
during the period Buyer is required to maintain the effectiveness of any
Registration Statement pursuant to this Agreement; provided, however, that Buyer
shall not be required to qualify to do business or consent to service of process
in any jurisdiction in which it is not now so qualified or has not so consented.

(n) Buyer shall otherwise use commercially reasonable efforts to comply with all
applicable rules and regulations of the Commission in connection with any
registration hereunder.

(o) Within five Business Days after a Registration Statement that covers
Registrable Securities is ordered effective by the Commission, Buyer shall cause
its counsel to issue an appropriate opinion or opinions to the transfer agent
substantially to the effect that the Shares are subject to an effective
registration statement and can be reissued free of restrictive legend upon
notice of a sale by the holder thereof and confirmation by such holder that it
has complied with the prospectus delivery requirements, provided that Buyer has
not advised the transfer agent orally or in writing that the opinion has been
withdrawn.

(p) Notwithstanding anything to the contrary herein, at any time after the
Effective Date, Buyer may delay the disclosure of material, non-public
information concerning Buyer the disclosure of which at the time would be, in
the good faith opinion of the Board of Directors of Buyer and Buyer’s counsel,
detrimental to Buyer and, in the opinion of counsel to Buyer, would not
otherwise be required (a “Grace Period”); provided, that Buyer shall promptly
(and in any event no later than two (2) Business Days): (i) notify Seller in
writing of the existence of material, non-public information giving rise to a
Grace Period (provided that in each notice Buyer will not disclose the content
of such material, non-public information to Seller) and the date on which the
Grace Period will begin; and (ii) notify Seller in writing of the date on which
the Grace Period ends; and, provided further, that the Grace Periods shall not
exceed an

 

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aggregate of 30 Trading Days during any 365-day period and the first day of any
Grace Period must be at least 30 days after the last day of any prior Grace
Period (each, an “Allowable Grace Period”). For purposes of determining the
length of a Grace Period above, the Grace Period shall begin on and include the
date Seller receives the notice referred to in clause (i) and shall end on and
include the later of the date Seller receives the notice referred to in clause
(ii) and the date referred to in such notice. The provisions of Section 7.04(f)
hereof shall not be applicable during the period of any Allowable Grace Period.
Upon expiration of the Grace Period, Buyer shall again be bound by the first
sentence of Section 7.04(f) with respect to the information giving rise thereto
unless such material, non-public information is no longer applicable.
Notwithstanding anything to the contrary, Buyer shall cause its transfer agent
to deliver unlegended shares of Buyer Stock to a transferee of Seller in
accordance with the terms of this Agreement in connection with any sale of
Registrable Securities with respect to which Seller has entered into a contract
for sale, and delivered a copy of the prospectus included as part of the
applicable Registration Statement (unless an exemption from such prospectus
delivery requirement exists), prior to Seller’s receipt of the notice of a Grace
Period and for which Seller has not yet settled.

(q) Neither Buyer nor any affiliate thereof shall identify Seller as an
underwriter in any public disclosure or filing with the Commission or any
applicable Trading Market and Seller being deemed an underwriter by the
Commission shall not relieve Buyer of any obligations it has under this
Agreement.

(r) The Buyer shall use commercially reasonable efforts to cause all of the
Registrable Securities covered by a Registration Statement to be listed for
trading or quotation, as applicable, on each Trading Market on which shares of
Buyer Stock are then listed or quoted, if any, if the listing or quotation of
such Registrable Securities is then permitted under the rules of such Trading
Market. The Buyer shall pay all fees and expenses in connection with satisfying
its obligation under this Section 7.04(r).

Section 7.05. Obligations of Seller.

(a) At least five Business Days prior to the anticipated filing date of the
Registration Statement, Buyer shall notify Seller in writing of the information
Buyer requires from Seller in order to have the Registrable Securities included
in such Registration Statement. It shall be a condition precedent to the
obligations of Buyer to complete the registration pursuant to this Agreement
with respect to the Registrable Securities of Seller that Seller shall furnish
to Buyer 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 Buyer may reasonably request.

(b) Seller, by its acceptance of the Registrable Securities, agrees to cooperate
with Buyer as reasonably requested by Buyer in connection with the preparation
and filing of any Registration Statement hereunder.

(c) Seller agrees that, upon receipt of any notice from Buyer of the happening
of any event of the kind described in Section 7.04(g) or the first sentence of
Section 7.04(f), Seller will

 

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immediately discontinue disposition of Registrable Securities pursuant to any
Registration Statement(s) covering such Registrable Securities until Seller’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, Buyer shall cause its transfer agent to deliver unlegended shares of
Buyer Stock to a transferee of Seller in accordance with the terms of this
Agreement in connection with any sale of Registrable Securities with respect to
which Seller has entered into a contract for sale prior to Seller’s receipt of a
notice from Buyer 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 Seller
has not yet settled.

(d) Seller covenants and agrees that it will comply with the prospectus delivery
requirements of the 1933 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 reasonable expenses, other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to this Article 7, including,
without limitation, all registration, listing and qualifications fees, printers
and accounting fees, and fees and disbursements of counsel for Buyer, shall be
paid by Buyer.

Section 7.07. Reports under the 1934 Act. With a view to making available to
Seller the benefits of Rule 144 promulgated under the 1933 Act or any other
similar rule or regulation of the Commission that may at any time permit Seller
to sell securities of Buyer to the public without registration (“Rule 144”),
Buyer agrees to:

(a) make and keep public information available, as those terms are understood
and defined in Rule 144, during the Reporting Period;

(b) file with the Commission in a timely manner all reports and other documents
required of Buyer under the 1934 Act; and

(c) furnish to Seller so long as Seller owns Registrable Securities, promptly
upon request during the Reporting Period, (i) a written statement by Buyer, if
true, that it has complied with the reporting requirements of Rule 144, the 1933
Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly report
of Buyer and such other reports and documents so filed by Buyer and (iii) such
other information as may be reasonably requested to permit Seller to sell such
securities pursuant to Rule 144 without registration.

Section 7.08. Assignment of Registration Rights. The rights under Article 7
shall be automatically assignable by Seller to any transferee of all or any
portion of Seller’s Registrable Securities if: (i) Buyer 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;
(ii) at or before the time Buyer receives the written notice contemplated by
clause (i) of this sentence the transferee or assignee agrees in writing with
Buyer to be bound by all of the provisions contained herein; and (iii) such
transfer shall have been made in accordance with the applicable requirements of
this Agreement.

 

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Section 7.09. Indemnification.

(a) Buyer Indemnification. Buyer will indemnify Seller, each of its officers and
directors, partners, members and each person controlling Seller within the
meaning of Section 15 of the 1933 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
Buyer of the 1933 Act, the 1934 Act, state securities laws or any rule or
regulation promulgated under such laws applicable to Buyer in connection with
any such registration, and in each case, Buyer will reimburse Seller, each of
its officers and directors, partners, members and each person controlling
Seller, 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 Buyer 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 (A) any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to Buyer by an instrument duly
executed by Seller or controlling person, and stated to be specifically for use
therein, (B) the use by Seller of an outdated or defective prospectus after
Buyer has notified Seller in writing that the prospectus is outdated or
defective or (C) Seller’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 1933 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 7.09(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 Buyer (which consent shall not be
unreasonably withheld, conditioned or delayed).

(b) Seller Indemnification. Seller will indemnify Buyer, each of its directors
and officers and each person who controls Buyer within the meaning of Section 15
of the 1933 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 such Registration Statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to Buyer by an instrument duly

 

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executed by Seller and stated to be specifically for use therein, or (ii) any
violation by Seller of the 1933 Act, the 1934 Act, state securities laws or any
rule or regulation promulgated under such laws applicable to Seller, and in each
case, Seller will reimburse Buyer and its directors, officers, persons,
underwriters or control persons 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 7.09(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 Seller (which consent shall not be
unreasonably withheld or delayed, conditioned or delayed). The liability of
Seller for indemnification under this Section 7.09(b) in its capacity as a
seller of Registrable Securities shall not exceed the amount of net proceeds to
Seller from the sale of the securities in such registration.

(c) Notice and Procedure. Each party entitled to indemnification under this
Section 7.09 (the “Registration Rights Indemnified Party”) shall give written
notice to the party required to provide indemnification (the “Registration
Rights Indemnifying Party”) promptly after such Registration Rights Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought, and
shall permit the Registration Rights Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom, provided that counsel for
the Registration Rights Indemnifying Party, who shall conduct the defense of
such claim or litigation, shall be approved by the Registration Rights
Indemnified Party (whose approval shall not unreasonably be withheld), and the
Registration Rights Indemnified Party may participate in such defense at such
party’s expense, and provided further that the failure of any Registration
Rights Indemnified Party to give notice as provided herein shall not relieve the
Registration Rights Indemnifying Party of its obligations under this Agreement
unless the failure to give such notice is materially prejudicial to an
Registration Rights Indemnifying Party’s ability to defend such action and,
provided further, that the Registration Rights 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 Registration Rights Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Registration Rights 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 Registration Rights 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 7.09 is
held by a court of competent jurisdiction to be unavailable to a Registration
Rights Indemnified Party with respect to any losses, claims, damages or
liabilities referred to herein, the Registration Rights Indemnifying Party, in
lieu of indemnifying such Registration Rights Indemnified Party thereunder,
shall to the extent permitted by applicable law contribute to the amount paid or
payable by such Registration Rights 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 Registration Rights Indemnifying Party on the one hand and
of the Registration Rights 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 Registration Rights Indemnifying Party and of the Registration
Rights Indemnified Party

 

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shall be determined by a court of law by reference to, among 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
Registration Rights Indemnifying Party or by the Registration Rights 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 Seller hereunder exceed the net proceeds to
Seller from the sale of the securities in such registration. 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 7.09 was available to such party in accordance with its terms.

(e) Survival. The obligations of Buyer and Seller under this Section 7.09 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 7.09 are in addition to any liability that
the Registration Rights Indemnifying Parties may have to the Registration Rights
Indemnified Parties and are not in diminution or limitation of other remedies or
causes of action that the parties may have under this Agreement.

ARTICLE 8

CONDITIONS TO CLOSING

Section 8.01. Conditions to Buyer’s Obligation. The obligation of Buyer to
consummate the transactions contemplated by this Agreement is subject to the
fulfillment or waiver of the following conditions as of the Closing Date:

(a) Representations and Warranties. The representations and warranties set forth
in Article 3 hereof shall have been true and correct on and as of the date of
this Agreement, and except for representations and warranties made as of a
particular date (which representations and warranties shall be true and correct
in all respects as of such particular date), the representations and warranties
set forth in Article 3 hereof that are not qualified by materiality or Seller
Material Adverse Effect shall be true and correct in all material respects and
the representations and warranties set forth in Article 3 that are qualified by
materiality or Seller Material Adverse Effect shall be true and correct in all
respects, in each case on and as of the Closing Date as though then made and as
though the Closing Date were substituted for the date of this Agreement
throughout such representations and warranties.

(b) Covenants. Seller shall have performed and complied in all material respects
with all of the covenants and agreements required to be performed by it under
this Agreement on or prior to the Closing.

(c) Officer’s Certificate. Seller shall have delivered to Buyer a certificate of
Seller’s Chief Executive Officer, dated as of the Closing Date, certifying to
Buyer that the statements set forth in Sections 8.01(a) and (b) are true and
correct as of the Closing Date.

 

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(d) Consents. Seller shall have obtained all consents or approvals of all
Persons required in connection with the consummation of the transactions
contemplated by this Agreement, including all of the consents and approvals set
forth on Section 3.04 of the Seller Disclosure Schedule.

(e) Patent Assignment Agreement. Seller shall have executed and delivered the
Patent Assignment Agreement with respect to the Assigned Patents, together with
such customary bills of sale and/or other agreements or instruments of transfer,
in each case as are reasonably satisfactory to Buyer and Seller, to the extent
necessary to evidence the transfer of the Assigned Licenses hereunder.

(f) No Litigation. No action, suit or proceeding shall be pending or threatened
before any court of quasi-judicial or administrative agency of any federal,
state, provincial, local or foreign jurisdiction or before any arbitrator
wherein an unfavorable judgment, decree, injunction, order or ruling would
prevent the performance of this Agreement or any of the transactions
contemplated hereby, declare unlawful the transactions contemplated by this
Agreement, cause such transactions to be rescinded or materially and adversely
affect the right of Buyer to use the Transferred Assets, or result in the
payment of Damages in a material amount, and no judgment, decree, injunction,
order or ruling shall have been entered which has any of the foregoing effects.

(g) Governmental Authorizations. All governmental and regulatory filings,
authorizations and approvals that are required for the transfer of the
Transferred Assets to Buyer and the consummation of the transactions
contemplated hereby shall have been duly made and obtained.

(h) Consummation of the Offering. The Offering, pursuant to which Buyer raises
aggregate gross proceeds of at least $10,000,000, shall be consummated
concurrent with the Closing.

(i) Other. Seller shall have delivered to Buyer such other documents as Buyer
may reasonably request to effectuate the transactions contemplated hereby.

Section 8.02. Conditions to Seller’s Obligation. The obligation of Seller to
consummate the transactions contemplated by this Agreement is subject to the
fulfillment or waiver of the following conditions as of the Closing Date:

(a) Representations and Warranties. The representations and warranties set forth
in Article 4 hereof shall have been true and correct on and as of the date of
this Agreement, and except for representations and warranties made as of a
particular date (which representations and warranties shall be true and correct
in all respects as of such particular date), the representations and warranties
set forth in Article 4 hereof that are not qualified by materiality or Buyer
Material Adverse Effect shall be true and correct in all material respects and
the representations and warranties set forth in Article 4 that are qualified by
materiality or Buyer Material Adverse Effect shall be true and correct in all
respects, in each case on and as of the Closing Date as though then made and as
though the Closing Date were substituted for the date of this Agreement
throughout such representations and warranties.

 

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(b) Covenants. Buyer shall have performed and complied in all material respects
with all of the covenants and agreements required to be performed by it under
this Agreement on or prior to the Closing (including, without limitation, the
delivery of the Shares).

(c) Material Adverse Effect. Since the date of this Agreement, there shall not
have occurred any events, occurrences, changes, effects or conditions of any
character which, individually or in the aggregate, have had or would reasonably
be expected to have a Buyer Material Adverse Effect.

(d) Officer’s Certificate. Buyer shall have delivered to Seller a certificate of
Buyer’s Chief Executive Officer, dated as of the Closing Date, certifying to
Seller that the statements set forth in Sections 8.01(a) through (c) are true
and correct as of the Closing Date.

(e) Consents. Seller shall have obtained all consents or approvals of all
Persons required in connection with the consummation of the transactions
contemplated by this Agreement, including all of the consents and approvals set
forth on Section 3.04 of the Seller Disclosure Schedule.

(f) No Litigation. No action, suit or proceeding shall be pending or threatened
before any court of quasi-judicial or administrative agency of any federal,
state, provincial, local or foreign jurisdiction or before any arbitrator
wherein an unfavorable judgment, decree, injunction, order or ruling would
prevent the performance of this Agreement or any of the transactions
contemplated hereby, declare unlawful the transactions contemplated by this
Agreement, cause such transactions to be rescinded, or result in the payment of
Damages in a material amount, and no judgment, decree, injunction, order or
ruling shall have been entered which has any of the foregoing effects.

(g) Governmental Authorizations. All governmental and regulatory filings,
authorizations and approvals that are required for the transfer of the
Transferred Assets to Buyer and the consummation of the transactions
contemplated hereby shall have been duly made and obtained.

(h) Consummation of the Offering. The Offering, pursuant to which Buyer raises
aggregate gross proceeds of at least $10,000,000, shall be consummated
concurrent with the Closing.

(i) Other. Buyer shall have delivered to Seller such other documents as Seller
may reasonably request to effectuate the transactions contemplated hereby.

ARTICLE 9

TERMINATION

Section 9.01. Termination. This Agreement may be terminated at any time prior to
the Closing:

(a) by mutual written consent of Buyer and Seller;

 

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(b) by Seller, upon written notice to Buyer, if an event occurs or a condition
exists that has made it impossible to satisfy, on or before the Termination Date
(as defined below), a condition precedent to Seller’s obligations to consummate
the transactions contemplated hereby, unless Seller’s breach of this Agreement
has caused the condition to be incapable of being satisfied;

(c) by Buyer, upon written notice to Seller, if an event occurs or a condition
exists that has made it impossible to satisfy, on or before the Termination
Date, a condition precedent to Buyer’s obligations to consummate the
transactions contemplated hereby, unless Buyer’s breach of this Agreement has
caused the condition to be incapable of being satisfied;

(d) by Buyer or Seller if the Closing has not occurred on or prior to March 15,
2013 (the “Termination Date”); provided, however, that neither Buyer nor Seller,
as the case may be, shall be entitled to terminate this Agreement pursuant to
this Section 9.01(d) if such party’s breach of this Agreement has prevented the
consummation of the transactions contemplated hereby at or prior to such time.

Section 9.02. Effect of Termination. In the event of termination of this
Agreement in accordance with Section 9.01, this Agreement shall forthwith become
void and there shall be no liability on the part of either Buyer or Seller or
their respective Affiliates, except for the provisions of Section 5.02 and
Article 11 shall continue in full force and effect and except that nothing
herein shall relieve Buyer or Seller from liability for any intentional breach
of this Agreement prior to such termination.

ARTICLE 10

INDEMNIFICATION

Section 10.01. Survival. Subject to the limitations and other provisions of this
Agreement, the representations and warranties made by Seller in Article 3 or in
the Seller’s Officer Certificate, on the one hand, and by Buyer in Article 4 or
in the Buyer’s Officer Certificate, on the other hand, shall survive the Closing
and shall remain in full force and effect until the date that is two years from
the Closing Date; provided, however, that the representations and warranties
contained in Sections 3.01, 3.02, 3.05, 3.10, 3.12, 3.13, 4.01, 4.02, 4.06 and
4.27 (the “Fundamental Representations”) shall survive indefinitely and the
representations and warranties contained in Sections 4.14, 4.22 and 4.23 shall
survive for the full period of all applicable statutes of limitations (giving
effect to any waiver, mitigation or extension thereof) plus 60 days. None of the
covenants or other agreements contained in this Agreement shall survive the
Closing Date other than those which by their terms contemplate performance after
the Closing Date, and each such surviving covenant and agreement shall survive
the Closing for the period contemplated by its terms. Notwithstanding the
foregoing, any claims asserted in

 

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good faith with reasonable specificity (to the extent known at such time) and in
writing by notice form the non-breaching party to the breaching party prior to
the expiration date of the applicable survival period shall not thereafter be
barred by the expiration of such survival period and such claims shall survive
until finally resolved.

Section 10.02. Indemnification.

(a) Effective at and after the Closing, Seller hereby indemnifies Buyer and its
Affiliates against and agrees to hold each of them harmless from any and all
damage, loss and expense (including reasonable expenses of investigation and
reasonable attorneys’ fees and expenses in connection with any action, suit or
proceeding whether involving a Third Party Claim or a claim solely between the
parties hereto) (“Damages”) actually suffered by Buyer or any of its Affiliates
arising out of (i) any inaccuracy in or breach of any of the representations or
warranties of Seller contained in this Agreement or in the Seller’s Officer
Certificate or (ii) any breach of a covenant or agreement made or to be
performed by Seller pursuant to this Agreement. Notwithstanding anything
contained herein to the contrary, the aggregate amount of Damages with respect
to which the Seller shall be liable pursuant to this Section 10.02(a) shall in
no event exceed, $2,000,000; provided that such limitation shall not apply with
respect to any amounts payable for Damages in respect of breaches of Fundamental
Representations or which result from fraud by the Seller.

(b) Effective at and after the Closing, except as set forth in Section 6.03,
Buyer hereby indemnifies Seller and its Affiliates against and agrees to hold
each of them harmless from any and all Damages actually suffered by Seller or
any of its Affiliates arising out of (i) any inaccuracy in or breach of any of
the representations or warranties of Buyer contained in this Agreement or in the
Buyer’s Officer Certificate, (ii) any breach of a covenant or agreement made or
to be performed by Buyer pursuant to this Agreement, (iii) any Transferred
Asset, or (iv) any matter relating to actions taken or omitted to be taken by
Buyer or any of its Affiliates on or after the Closing Date (other than any
matter relating to a Transferred Asset that is indemnifiable by Seller pursuant
to Section 10.02(a)).

Section 10.03. Third Party Claim Procedures.

(a) The party seeking indemnification under Section 10.02 (the “Indemnified
Party”) agrees to give prompt notice to the party against whom indemnity is
sought (the “Indemnifying Party”) of the assertion of any claim or the
commencement of any suit, action or proceeding by any Third Party (each, a
“Third Party Claim”) in respect of which indemnity may be sought under
Section 10.02. Such notice shall set forth in reasonable detail such Third Party
Claim and the basis for indemnification (taking into account the information
then available to the Indemnified Party). The failure to so notify the
Indemnifying Party shall not relieve the Indemnifying Party of its obligations
hereunder, except to the extent such failure shall have adversely prejudiced the
Indemnifying Party. Thereafter, the Indemnified Party shall deliver to the
Indemnifying Party, as promptly as reasonably practicable following the
Indemnified Party’s receipt thereof, copies of all written notices and documents
(including any court papers) received by the Indemnified Party relating to the
Third Party Claim and the Indemnified Party shall provide the Indemnifying Party
with such other information with respect to any such Third Party Claim
reasonably requested by the Indemnifying Party.

 

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(b) The Indemnifying Party shall be entitled to participate in the defense of
any Third Party Claim and may, upon written notice to the Indemnified Party,
assume control of the defense, appeal and settlement of such Third Party Claim
and appoint lead counsel for such defense, in each case at its sole cost and
expense; provided, however, that the Indemnifying Party shall not be entitled
to: (i) assume the defense, appeal or settlement of any Third Party Claim if:
(A) the Third Party Claim relates to or arises in connection with any criminal
proceeding, action, indictment, allegation or investigation; or (B) the Third
Party Claim seeks any injunction or equitable relief against the Indemnified
Party; or (ii) maintain control of the defense, appeal or settlement of any
Third Party Claim if the Indemnifying Party has failed or is failing to defend
in good faith the Third Party Claim and the Indemnified Party has provided prior
written notice and a reasonable opportunity for the Indemnifying Party to cure
such failure.

(c) If the Indemnifying Party is entitled to do so and has assumed the defense,
appeal or settlement proceedings of the Third Party Claim in accordance
herewith, the Indemnified Party may retain separate counsel at its sole cost and
expense and participate in the defense, appeal or settlement proceedings of the
Third Party Claim; provided that if the Indemnified Party shall reasonably
conclude that: (i) there is a material conflict of interest between the
Indemnifying Party and the Indemnified Party in the conduct of the defense of
such claim; or (ii) there are specific defenses or claims available to the
Indemnified Party which are different from or additional to those available to
the Indemnifying Party and which could be materially adverse to the Indemnifying
Party, then the reasonable fees and disbursements of one counsel for the
Indemnified Party shall be paid by the Indemnifying Party; provided that the
Indemnifying Party shall not be required to pay for more than one counsel for
all Indemnified Parties in connection with any Third Party Claim. The
Indemnified Party may take any actions reasonably necessary to defend such Third
Party Claim prior to the date the Indemnifying Party assumes control of the
defense of the Third Party Claim and shall be entitled to all reasonable fees
and expenses of counsel incurred in connection therewith prior to such date.

(d) If the Indemnifying Party is entitled to do so and has assumed the defense,
appeal or settlement proceedings of the Third Party Claim in accordance
herewith, the Indemnifying Party shall not enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnified Party (which consent shall not be unreasonably withheld, conditioned
or delayed); provided that consent of the Indemnified Party shall not be
required for any such settlement if: (i) the sole relief provided is monetary
damages that are paid in full by the Indemnifying Party; (ii) such settlement
does not permit any order, injunction or other equitable relief to be entered,
directly or indirectly, against the Indemnified Party; and (iii) such settlement
includes an unconditional release of such Indemnified Person from all liability
on claims that are the subject matter of such Third Party Claim and does not
include any statement as to or any admission of fault, culpability or a failure
to act by or on behalf of any Indemnified Person. Whether or not the
Indemnifying Party has assumed the defense, appeal or settlement proceedings,
the Indemnifying Party shall not be obligated to indemnify any Indemnified Party
hereunder for any settlement entered into or any judgment that was consented to
without the Indemnifying Party’s prior written consent (which consent shall not
be unreasonably withheld, conditioned or delayed).

 

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(e) Each party shall cooperate, and cause its Affiliates to cooperate, in the
defense or prosecution of any Third Party Claim and shall furnish or cause to be
furnished such records, information and testimony, and attend such conferences,
discovery proceedings, hearings, trials or appeals, as may be reasonably
requested in connection therewith.

Section 10.04. Direct Claim Procedures. In the event an Indemnified Party has a
claim for indemnity under Section 10.02 against an Indemnifying Party that does
not involve a Third Party Claim, the Indemnified Party agrees to give prompt
notice in writing of such claim to the Indemnifying Party. The notice shall set
forth: (i) that such Indemnified Party has paid, incurred or reasonably
anticipates incurring Damages, for which such Indemnified Party is entitled to
recovery under Section 10.02; (ii) a written statement describing the nature of
the claim and the basis therefor; (iii) the amount of such Damages incurred or
that such Indemnified Party reasonably estimates in good faith is likely to be
incurred in connection with such claim; and (iv) if applicable, the instructions
for payment to such Indemnified Party (taking into account, for purposes of the
foregoing clauses, the information then available to the Indemnified Party). The
failure to so notify the Indemnifying Party shall not relieve the Indemnifying
Party of its obligations hereunder, except to the extent such failure shall have
actually prejudiced the Indemnifying Party. If the Indemnifying Party disputes
its indemnity obligation for any Damages with respect to such claim, the parties
shall proceed in good faith to negotiate a resolution of such dispute and, if
not resolved through negotiations, such dispute shall be resolved by litigation
in an appropriate court of jurisdiction determined pursuant to Section 11.06.

Section 10.05. Calculation of Damages.

(a) The amount of any Damages payable under Section 10.02 by the Indemnifying
Party shall be net of any amounts recovered or recoverable by the Indemnified
Party under applicable insurance policies or from any other Person alleged to be
responsible therefor. If the Indemnified Party receives any amounts under
applicable insurance policies, or from any other Person alleged to be
responsible for any Damages, subsequent to an indemnification payment by the
Indemnifying Party, then such Indemnified Party shall promptly reimburse the
Indemnifying Party for any payment made or expense incurred by such Indemnifying
Party in connection with providing such indemnification payment up to the amount
received by the Indemnified Party, net of any expenses incurred by such
Indemnified Party in collecting such amount.

(b) For the avoidance of doubt, the Indemnifying Party shall not be liable under
Section 10.02 for: (i) special, punitive, indirect or consequential Damages;
(ii) any Damages to the extent not the probable and reasonably foreseeable
result of any breach by the Indemnifying Party of a representation and warranty
or covenant contained in this Agreement; or (iii) Damages for lost profits;
provided that this Section 10.05(b) shall not apply to any Damages that are
recovered by third parties in connection with a Third Party Claim.

(c) Each Indemnified Party must mitigate in accordance with Applicable Law any
loss for which such Indemnified Party seeks indemnification under this
Agreement. If such

 

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Indemnified Party mitigates its loss after the Indemnifying Party has paid the
Indemnified Party under any indemnification provision of this Agreement in
respect of that loss, the Indemnified Party must notify the Indemnifying Party
and pay to the Indemnifying Party the extent of the value of the benefit to the
Indemnified Party of that mitigation (less the Indemnified Party’s reasonable
costs of mitigation) within two Business Days after the benefit is received.

(d) Each Indemnified Party shall use reasonable efforts to collect any amounts
available under insurance coverage, or from any other Person alleged to be
responsible, for any Damages payable under Section 10.02.

Section 10.06. Assignment of Claims. If the Indemnified Party receives any
payment from an Indemnifying Party in respect of any Damages pursuant to
Section 10.02 and the Indemnified Party could have recovered all or a part of
such Damages from a Third Party (a “Potential Contributor”) based on the
underlying Claim asserted against the Indemnifying Party, the Indemnified Party
shall assign such of its rights to proceed against the Potential Contributor as
are necessary to permit the Indemnifying Party to recover from the Potential
Contributor the amount of such payment.

Section 10.07 Seller’s Satisfaction of Indemnification Claims. Any
indemnification payment required to be made by Seller under this Article 10
shall be payable in cash or in shares of Buyer Stock, in the sole and absolute
discretion of Buyer. In the event that Seller makes a payment in respect of an
indemnification claim brought hereunder in shares of Buyer Stock, such shares of
Buyer Stock shall be deemed to have a value equal to the average closing sales
price per share of Buyer Stock as reported by the Trading Market for the ten
(10) Trading Days immediately preceding the date of such payment.

ARTICLE 11

MISCELLANEOUS

Section 11.01. Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including facsimile transmission and
electronic mail (“e-mail”) transmission, so long as a receipt of such e-mail is
requested and received) and shall be given,

if to Buyer, to:

RXi Pharmaceuticals Corporation

1500 West Park Drive, Suite 210

Westborough, MA 01581

Attention: Geert Cauwenbergh, Dr. Med. Sc.

Facsimile No.: (508) 767-3862

E-mail: gcauwenbergh@rxipharma.com

 

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with a copy to (which shall not constitute notice):

Ropes & Gray LLP

Three Embarcadero Center, Third Floor

San Francisco, California 94111

Attention: Ryan A. Murr

Facsimile No.: (415) 315-6026

E-mail: ryan.murr@ropesgray.com

if to Seller, to:

Opko Health, Inc.

4400 Biscayne Boulevard

Miami, Florida 33137

Attention: Kate Inman, Deputy General Counsel

Facsimile No.: (305) 575-6444

E-mail: KInman@opko.com

with a copy to (which shall not constitute notice):

Greenberg Traurig, P.A.

333 Avenue of the Americas (333 Southeast 2nd Avenue)

Miami, Florida 33131

Attention: Robert L. Grossman, Esq.

Facsimile No.: (305) 579-0717

E-mail: grossmanb@gtlaw.com

or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5 p.m. in the place of
receipt and such day is a Business Day in the place of receipt. Otherwise, any
such notice, request or communication shall be deemed not to have been received
until the next succeeding Business Day in the place of receipt.

Section 11.02. Amendments and Waivers.

(a) Any provision of this Agreement may be amended or waived if, but only if,
such amendment or waiver is in writing and is signed, in the case of an
amendment, by each party to this Agreement, or in the case of a waiver, by the
party against whom the waiver is to be effective.

(b) No failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.

 

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Section 11.03. Expenses. Except as otherwise provided herein, all costs and
expenses incurred in connection with this Agreement shall be paid by the party
incurring such cost or expense.

Section 11.04. Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided that no party may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement without the
consent of the other party hereto, except that: (i) Seller may transfer or
assign its rights and obligations under this Agreement in whole or from time to
time in part to one or more of its Affiliates; and (ii) any party may transfer
or assign its rights and obligations under this Agreement, in whole or from time
to time in part, to any successor in interest by way of a Change of Control;
provided that: (A) in the case of clause (ii), such successor shall have
executed and delivered to the other party or parties, as applicable, an
acknowledgement in writing that effective as of such transfer or assignment,
such successor shall be bound by this Agreement to the identical extent
applicable the assignor or transferor, as applicable; and (B) in the case of
clauses (i) and (ii), no such transfer or assignment shall relieve the assigning
or transferring party of its obligations hereunder or enlarge, alter or change
any obligation of any other party hereto. If a Change of Control occurs with
respect to Buyer, Buyer shall cause each successor in interest and acquiring
Person (to the extent such Person would not, by the nature of the transaction,
become so bound by operation law) to execute and deliver to Seller an
acknowledgement in writing that such Person shall be bound by the terms of
Article 6 to the identical extent applicable to Buyer.

Section 11.05. Governing Law. This Agreement shall be governed by and construed
in accordance with the law of the State of Delaware, without regard to the
conflicts of law rules of such state.

Section 11.06. Jurisdiction. The parties hereto agree that any suit, action or
proceeding seeking to enforce any provision of, or based on any matter arising
out of or in connection with, this Agreement or the transactions contemplated
hereby shall be brought in the United States District Court for the District of
Delaware or the Court of Chancery of the State of Delaware, so long as one of
such courts shall have subject matter jurisdiction over such suit, action or
proceeding, and that any cause of action arising out of this Agreement shall be
deemed to have arisen from a transaction of business in the State of Delaware,
and each of the parties hereby irrevocably consents to the jurisdiction of such
courts (and of the appropriate appellate courts therefrom) in any such suit,
action or proceeding and irrevocably waives, to the fullest extent permitted by
law, any objection that it may now or hereafter have to the laying of the venue
of any such suit, action or proceeding in any such court or that any such suit,
action or proceeding brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 11.01 shall be deemed
effective service of process on such party.

Section 11.07. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.

 

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Section 11.08. Counterparts; Effectiveness; Third Party Beneficiaries. This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. This Agreement shall become effective when each party
hereto shall have received a counterpart hereof signed by the other party
hereto. Until and unless each party has received a counterpart hereof signed by
the other party hereto, this Agreement shall have no effect and no party shall
have any right or obligation hereunder (whether by virtue of any other oral or
written agreement or other communication). No provision of this Agreement is
intended to confer any rights, benefits, remedies, obligations, or liabilities
hereunder upon any Person other than the parties hereto and their respective
successors and assigns.

Section 11.09. Entire Agreement. This Agreement and the other Transaction
Documents constitute the entire agreement between the parties with respect to
the subject matter of this Agreement and supersede all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter of this Agreement and each other Transaction Document.
Notwithstanding the foregoing, this Agreement shall not supersede the Mutual
Confidential Disclosure Agreement, effective February 1, 2012, between Buyer and
Seller.

Section 11.10. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other
Governmental Authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such a determination, the parties shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner in order that the transactions
contemplated hereby be consummated as originally contemplated to the fullest
extent possible.

Section 11.11. Disclosure Schedules; SEC Documents.

(a) Seller and Buyer have set forth information on the Seller Disclosure
Schedule and the Buyer Disclosure Schedule, respectively, in a section thereof
that corresponds to the section of this Agreement to which it relates. A matter
set forth in one section of a Schedule need not be set forth in any other
section so long as its relevance to such other section of the Schedule or
section of the Agreement is reasonably apparent on the face of the information
disclosed therein to the Person to which such disclosure is being made. The
parties acknowledge and agree that (i) the Schedules to this Agreement may
include certain items and information solely for informational purposes for the
convenience of the other party and (ii) the disclosure by either party of any
matter in the Schedules shall not be deemed to constitute an acknowledgment by
such party that the matter is required to be disclosed by the terms of this
Agreement or that the matter is material.

 

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(b) The parties hereto agree that any information contained in any part of any
Seller SEC Document or any Buyer SEC Document, as applicable, shall be deemed an
exception to (or a disclosure for purposes of) a representation and warranty of
Seller or Buyer contained herein, as applicable.

Section 11.12 Specific Performance. The parties hereto agree that irreparable
damage would occur if any provision of this Agreement were not performed in
accordance with the terms hereof and that, except as set forth in Section 6.03,
the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement or to enforce specifically the performance of the
terms and provisions hereof in the United States District Court for the District
of Delaware or the Court of Chancery of the State of Delaware, in addition to
any other remedy to which they are entitled at law or in equity.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

RXi PHARMACEUTICALS CORPORATION

By:

 

/s/ Geert Cauwenbergh

  Name:  Geert Cauwenbergh, Dr. Med. Sc.   Title:    President & CEO OPKO
HEALTH, INC. By:  

/s/ Steven D. Rubin

  Name:  Steven D. Rubin   Title:    Executive Vice President

[Signature Page to Asset Purchase Agreement]

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Exhibit A

FORM OF PATENT ASSIGNMENT AGREEMENT

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FORM OF PATENT ASSIGNMENT AGREEMENT

This PATENT ASSIGNMENT AGREEMENT (the “Assignment Agreement”) is made as of
March [    ], 2013, by OPKO HEALTH, INC., a Delaware corporation, having its
principal place of business in Miami, Florida (“Assignor”), and RXi
PHARMACEUTICALS CORPORATION, a Delaware corporation, having its principal place
of business in Westborough, Massachusetts (“Assignee”). Assignor and Assignee
are referred to herein individually as a “Party” and collectively as the
“Parties.” Capitalized terms used herein but not otherwise defined shall have
the meaning set forth in the Asset Purchase Agreement, dated as of March [1],
2013, by and between Assignor and Assignee (the “Asset Purchase Agreement”).

WHEREAS, the Parties have entered into the Asset Purchase Agreement for the
purchase by Assignee of certain assets owned, leased or licensed by Assignor and
referred to in the Asset Purchase Agreement, including, without limitation, the
Assigned Patents. Exhibit A hereto sets forth the Assigned Patents.

WHEREAS, Assignor has agreed with Assignee to transfer to Assignee Assignor’s
rights under and interests in and to the Assigned Patents subject to the Asset
Purchase Agreement.

WITNESSETH that, for the consideration provided pursuant to the Asset Purchase
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Assignor hereby sells, assigns,
transfers, and delivers to Assignee all of Assignor’s right, title and interest
in and to the Assigned Patents, in all countries throughout the world, including
statutory invention registrations, reissues, divisions, continuations,
continuations-in-part, supplementary protection certificates, extensions and
re-examinations thereof, all inventions disclosed therein, all rights therein
provided by international treaties and conventions, and all rights to obtain and
file for patents and registrations thereto in any country of the world.

The interpretation and construction of this Assignment Agreement shall be
governed by the laws of the State of Delaware, excluding any conflicts or choice
of law rule or principle that might otherwise refer construction or
interpretation of this Assignment Agreement to the substantive law of another
jurisdiction. Each of the Parties hereto covenants and agrees, each at its own
expense, to do, execute, acknowledge and deliver, at the request of the other
party hereto, 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 assignments and assumptions contemplated by this
Assignment Agreement.

The Assignor authorizes and requests the Commissioner of the U.S. Patent and
Trademark Office and any other official throughout the world whose duty is to
register and record ownership information of patents, to record the Assignee as
owner of the Assigned Patents.

Should any part of this Assignment Agreement for any reason be declared invalid
by a court of competent jurisdiction, such decision or determination shall not
affect the validity of any

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remaining portion, and such remaining portion shall remain in force and effect
as if this Assignment Agreement had been executed with the invalid portion
eliminated; provided, that in the event of a declaration of invalidity, the
provision declared invalid shall not be invalidated in its entirety, but rather
shall be observed and performed by the parties to the extent such provision is
valid and enforceable.

This Assignment Agreement may be executed by the Assignor and Assignee in
separate and several counterparts, each of which shall be an original, but which
together shall constitute one and the same instrument. An executed signature
page of this Assignment Agreement delivered by facsimile or PDF transmission
shall be as effective as an original executed signature page.

This Assignment Agreement shall not be amended or otherwise modified except by a
written agreement dated subsequent to the date of this Assignment Agreement and
signed on behalf of Assignor and Assignee by their respective duly authorized
representatives.

This Assignment shall be binding upon and inure to the benefit of the Parties
and their respective successors and assigns.

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IN WITNESS WHEREOF, this Assignment Agreement is hereby executed as of the date
first set forth above.

 

OPKO HEALTH, INC. By:  

 

Name:   Title:   RXi PHARMACEUTICALS CORPORATION By:  

 

Name:   Title:  

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Exhibit B

FORM OF SECURITIES PURCHASE AGREEMENT

The form of Securities Purchase Agreement attached as an exhibit to this
agreement is substantially similar to the Securities Purchase Agreement filed by
the Company as Exhibit 10.1 to the Current Report on Form 8-K filed with the
Securities and Exchange Commission on March 7, 2013.