Exhibit 10.1
NEITHER THESE SECURITIES NOR THE SECURITIES FOR WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS.
RXI PHARMACEUTICALS CORPORATION
WARRANT

      Warrant No. A- 1   Dated: August 7, 2008

     RXi Pharmaceuticals Corporation, a Delaware corporation (the “Company”),
hereby certifies that, for value received, J.P. Turner Partners, LP or its
registered Permitted Transferees (together, the “Holder”), as registered owner
of this warrant (the “Warrant”), is entitled to purchase from the Company up to
a total of 190,000 shares (as adjusted from time to time as provided in
Section 10) of Common Stock, at an exercise price equal to $7.036 per share (as
adjusted from time to time as provided in Section 10, the “Exercise Price”),
upon such shares becoming Vested Shares, at any time and from time to time from
and after the date of this Warrant (the “Initial Exercise Date”) to and
including August 7, 2013 (the “Expiration Date” and the period starting with the
Initial Exercise Date and ending on the Expiration Date is referred to as the
“Term”), and subject to the following terms and conditions:
     1. Definitions. The capitalized terms used herein and not otherwise defined
shall have the meanings set forth below:
               “Affiliate” of any specified Person means any other person or
entity directly or indirectly controlling, controlled by or under direct or
indirect common control with such specified Person. For purposes of this
definition, “control” means the power to direct the management and policies of
such Person or firm, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise.
               “Commission” means the United States Securities and Exchange
Commission.
               “Common Stock” means the common stock of the Company, $0.0001 par
value per share.
               “Eligible Market” means any of the New York Stock Exchange, the
American

 

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Stock Exchange or Nasdaq (as defined below), and any successor markets thereto.
               “Exchange Act” means the Securities Exchange Act of 1934, as
amended
               “Market Price” shall mean (i) if the principal trading market for
such securities is an exchange, the average of the last reported sale prices per
share for the last ten previous Trading Days in which a sale was reported, as
officially reported on any consolidated tape or (ii) if clause (i) is not
applicable, the average of the closing bid price per share for the last ten
previous Trading Days as set forth in the National Quotation Bureau sheet
listing for such securities. Notwithstanding the foregoing, if there is no
reported sales price or closing bid price, as the case may be, on any of the ten
Trading Days preceding the event requiring a determination of Market Price
hereunder, then the Market Price shall be determined in good faith after
reasonable investigation by resolution of the Board of Directors of the Company.
               “Nasdaq” means the Nasdaq Global Market or Nasdaq Capital Market,
and any successor markets thereto.
               “Permitted Transferees” means only Persons who are the directors,
officers and employees of the Holder.
               “Person” means any court or other federal, state, local or other
governmental authority or other individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.
               “Trading Day” means (a) any day on which the Common Stock is
listed or quoted and traded on any Eligible Market or (b) if the Common Stock is
not then quoted and traded on any Eligible Market, then a day on which trading
occurs on the Nasdaq Global Market (or any successor thereto).
               “Vested Shares” means Warrant Shares that have become vested as
described in and pursuant to Section 4 hereunder.
               “Warrant Shares” shall initially mean shares of Common Stock and
in addition may include Other Securities and Substituted Property (as defined in
Section 10(e)(x)) issued or issuable from time to time upon exercise of this
Warrant.
     2. Registration of Warrant. The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the “Warrant
Register”), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes.

 

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     3. Registration of Transfers. The Company shall register the transfer of
any portion of this Warrant in the Warrant Register, which transfer shall only
be made to a Permitted Transferee and in accordance with applicable securities
laws, upon surrender of this Warrant, with the Form of Assignment attached
hereto as Appendix A duly completed and signed, to the Company at its address
specified herein. Upon any such registration and transfer, a new warrant in
substantially the form of a Warrant (any such new warrant, a “New Warrant”),
evidencing the portion of this Warrant so transferred shall be issued to the
Permitted Transferee and a New Warrant evidencing the remaining portion of this
Warrant not so transferred, if any, shall be issued to the transferring Holder.
The acceptance of the New Warrant by the Permitted Transferee thereof shall be
deemed the acceptance by such Permitted Transferee of all of the rights and
obligations of a holder of a Warrant.
     4. Vesting of Warrant Shares. The Warrant Shares issued hereunder shall
vest in four installments (the “Installments”) as described in this Section 4.
The first Installment in the amount of 94,000 shares shall vest on the Initial
Exercise Date, and each of the three remaining Installments, each in the amount
of 32,000 shares, shall vest on each of December 6, 2008, January 6, 2009 and
February 6, 2009 unless the letter agreement between J.P. Turner Partners, LP
and the Company dated August 7, 2008 has not been terminated prior to each such
date.
     5. Exercise and Duration of Warrant.
          (a) The Vested Shares under this Warrant shall be exercisable, either
in its entirety or for a portion of the number of Vested Shares, by the
registered Holder at any time and from time to time from and after the Initial
Exercise Date to and including the Expiration Date. At 5:00 P.M. Boston,
Massachusetts time on the Expiration Date, the portion of this Warrant not
exercised prior thereto shall be and become void and of no value, and the Holder
hereof shall have no right to purchase any additional Warrant Shares hereunder.
          (b) A Holder may exercise this Warrant by delivering to the Company,
in accordance with Section 13, this Warrant, together with (i) an exercise
notice, in the form attached hereto as Appendix B (the “Exercise Notice”),
appropriately completed and duly signed, and (ii) (A) payment of the Exercise
Price for the number of Warrant Shares as to which this Warrant is being
exercised pursuant to a Cash Exercise (as set forth in Section 5(c) below) or
(B) if available pursuant to Section 5(d) below, by notifying the Company that
this Warrant is being exercised pursuant to a Cashless Exercise (as set forth in
Section 5(d) below), and the date such items are received by the Company is an
“Exercise Date.” Execution and delivery of an Exercise Notice in respect of less
than all of the Warrant Shares issuable upon exercise of this Warrant shall
result in the cancellation of the original Warrant and issuance of a New Warrant
evidencing the right to purchase the remaining number of Warrant Shares.
          (c) Cash Exercise. In the event the Holder has elected to pay the
Exercise Price in cash, it shall pay the Exercise Price by certified bank check
payable to the order of the Company or by wire transfer of immediately available
funds in accordance with the Company’s instructions (a “Cash Exercise”).
          (d) Cashless Exercise. Notwithstanding anything contained herein to
the contrary, the Holder may, in its sole discretion, exercise this Warrant in
whole or in part and, in lieu of making

 

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the cash payment otherwise contemplated to be made to the Company upon such
exercise in payment of the Exercise Price, elect instead to receive upon such
exercise the “Net Number” of shares of Common Stock determined according to the
following formula (a “Cashless Exercise”):

             
 
  Net Number =   (A*B) — (A*C)    
 
   
 
B    

For purposes of the foregoing formula,
A = the total number of shares with respect to which this Warrant is then being
exercised.
B = the closing price per share of the Common Stock (as reported by Bloomberg)
on the Trading Day immediately preceding the date of the Exercise Notice.
C = the Exercise Price then in effect for the applicable Warrant Shares at the
time of such exercise.
          (e) Except as otherwise provided for herein, this Warrant shall not
entitle the Holder to any voting rights or other rights as a stockholder of the
Company by virtue of the ownership hereof.
     6. Delivery of Warrant Shares.
          (a) Upon exercise of this Warrant, the Company shall promptly issue or
cause to be issued and deliver or cause to be delivered to the Holder, in such
name or names as the Holder may designate, a certificate for the Warrant Shares
issuable upon such exercise (the “Certificate”) bearing no restrictive legends.
The Holder, or any Person so designated by the Holder to receive the Warrant
Shares, shall be deemed to have become holder of record of such Warrant Shares
as of the Exercise Date.
          (b) Neither these securities nor the securities for which these
securities are exercisable have been registered with the Commission or the
securities commission of any state in reliance upon an exemption from
registration under the Securities Act of 1933 (the “Securities Act”), and,
accordingly, may not be offered or sold except pursuant to an effective
registration statement under the Securities Act or pursuant to an available
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act and in accordance with applicable state
securities laws. The Holder acknowledges and agrees that the Warrant may be sold
only pursuant to an applicable exemption from the registration requirements of
the Securities Act and that the Warrant Shares may only be sold pursuant to an
effective registration statement under the Securities Act or in accordance with
any applicable exemption from the registration requirements of the Securities
Act.
          (c) This Warrant is exercisable, either in its entirety or, from time
to time, for a portion of the number of Warrant Shares. Upon surrender of this
Warrant following one or more

 

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partial exercises, the Company shall issue or cause to be issued, at its
expense, a New Warrant evidencing the right to purchase the remaining number of
Warrant Shares.
     7. Charges, Taxes and Expenses. Issuance and delivery of certificates for
shares of Common Stock upon exercise of this Warrant shall be made without
charge to the Holder for any issue or transfer tax, transfer agent fee or other
incidental tax or expense in respect of the issuance of such certificates, all
of which taxes and expenses shall be paid by the Company; provided, however,
that the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issue, delivery or registration of any
certificates for Warrant Shares or Warrant in a name other than that of the
Holder and that the Holder will be required to pay any tax with respect to cash
received in lieu of fractional shares. The Holder shall be responsible for all
other tax liability that may arise as a result of holding or transferring this
Warrant or receiving Warrant Shares upon exercise hereof.
     8. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or
destroyed, the Company, at the sole expense of the Holder (such expenses, if any
imposed by the Company to be reasonable), shall issue or cause to be issued in
exchange and substitution for and upon cancellation hereof, or in lieu of and in
substitution for this Warrant, a New Warrant, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and
customary and reasonable indemnity, if requested by the Company.
     9. Reservation of Warrant Shares. The Company covenants that it will at all
times reserve and keep available out of the aggregate of its authorized but
unissued and otherwise unreserved Common Stock, solely for the purpose of
enabling it to issue Warrant Shares upon exercise of this Warrant as herein
provided, the number of Warrant Shares which are then issuable and deliverable
upon the exercise of this entire Warrant, free from all taxes, liens, claims,
encumbrances with respect to the issuance of such Warrant Shares and will not be
subject to any pre-emptive rights or similar rights (taking into account the
adjustments and restrictions of Section 10 hereof). The Company covenants that
all Warrant Shares so issuable and deliverable shall, upon issuance and the
payment of the applicable Exercise Price in accordance with the terms hereof, be
duly and validly authorized, issued, fully paid and nonassessable. The Company
will take all such action as may be necessary to assure that such shares of
Common Stock may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of any securities exchange
or automated quotation system upon which the Common Stock may be listed or
quoted, as the case may be; provided, however, that such actions shall only
require the Company’s best efforts (or other specified standard) to the extent
specifically provided for in this Warrant.
     10. Certain Adjustments. The Exercise Price and number of Warrant Shares
issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section 10.
          (a) Stock Dividends. If the Company, at any time while this Warrant is
outstanding, pays a dividend on its Common Stock payable in additional shares of
Common Stock or otherwise makes a distribution on any class of capital stock
that is payable in shares of Common Stock, then in each such case the Exercise
Price shall be multiplied by a fraction, (A) the numerator of which shall be the
number of shares of Common Stock outstanding immediately

 

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prior to the opening of business on the day after the record date for the
determination of stockholders entitled to receive such dividend or distribution
and (B) the denominator of which shall be the number of shares of Common Stock
outstanding immediately after the distribution date of such dividend or
distribution. Any adjustment made pursuant to this Section 10(a) shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution; provided,
however, that if following such record date the Company rescinds or modifies
such dividend or distribution, the Exercise Price shall be appropriately
adjusted (as of the date that the Company effectively rescinds or modifies such
dividend or distribution) to take into account the effect of such rescinded or
modified dividend or distribution on the Exercise Price pursuant to this
Section 10(a).
          (b) Stock Splits. If the Company, at any time while this Warrant is
outstanding, (i) subdivides outstanding shares of Common Stock into a larger
number of shares, or (ii) combines outstanding shares of Common Stock into a
smaller number of shares, then in each such case the Exercise Price shall be
multiplied by a fraction, (A) the numerator of which shall be the number of
shares of Common Stock outstanding immediately before such event and (B) the
denominator of which shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment pursuant to this Section 10(b)
shall become effective immediately after the effective date of such subdivision
or combination.
          (c) Reclassifications. A reclassification of the Common Stock (other
than any such reclassification in connection with a merger or consolidation to
which Section 10(e) applies) into shares of any other class of stock shall be
deemed:
               (i) a distribution by the Company to the holders of its Common
Stock of such shares of such other class of stock for the purposes and within
the meaning of this Section 10; and
               (ii) if the outstanding shares of Common Stock shall be changed
into a larger or smaller number of shares of Common Stock as part of such
reclassification, such change shall be deemed a subdivision or combination, as
the case may be, of the outstanding shares of Common Stock for the purposes and
within the meaning of Section 10(b).
          (d) Other Distributions. If the Company, at any time while this
Warrant is outstanding, distributes to holders of Common Stock (i) evidences of
its indebtedness, (ii) shares of any class of capital stock, (iii) rights or
warrants to subscribe for or purchase any shares of any class of capital stock
or (iv) any other asset, other than a distribution of Common Stock covered by
Section 10(a), (in each case, “Distributed Property”), then in each such case
the Exercise Price in effect immediately prior to the record date fixed for
determination of stockholders entitled to receive such distribution (and the
Exercise Price thereafter applicable) shall be adjusted (effective on and after
such record date) to equal the product of such Exercise Price multiplied by a
fraction, (A) the numerator of which shall be Market Price on such record date
less the then fair market value of the Distributed Property distributed in
respect of one outstanding share of Common Stock, which, if the Distributed
Property is other than cash or marketable securities, shall be as determined in
good faith by the Board of Directors of the Company whose determination shall be
described in a board resolution, and (B) the denominator of which shall be the
Market Price on such record date; provided, however, that if following the

 

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record date for such distribution the Company rescinds or modifies such
distribution, the Exercise Price shall be appropriately adjusted (as of the date
that the Company effectively rescinds or modifies such distribution) to take
into account the effect of such rescinded or modified distribution on the
Exercise Price pursuant to this Section 10(d).
          (e) Fundamental Transactions. If, at any time following the Initial
Exercise Date, (i) the Company effects any merger or consolidation of the
Company with or into another Person, (ii) the Company effects any sale of all or
substantially all of its assets in one or a series of related transactions or
(iii) there shall occur any merger of another Person into the Company whereby
the Common Stock is cancelled, converted or reclassified into or exchanged for
other securities, cash or property (in any such case, a “Fundamental
Transaction”), then, as a condition to the consummation of such Fundamental
Transaction, the Company shall (or, in the case of any Fundamental Transaction
in which the Company is not the surviving entity, the Company shall take all
reasonable steps to cause such other Person to) shall, at its election in its
sole discretion:
               (I) execute and deliver to the Holder of this Warrant a written
instrument providing that:
                    (x) so long as this Warrant remains outstanding, upon the
exercise hereof at any time on or after the consummation of such Fundamental
Transaction and on such terms and subject to such conditions as shall be nearly
equivalent as may be practicable to the provisions set forth in this Warrant,
this Warrant shall be exercisable into, in lieu of Common Stock issuable upon
such exercise prior to such consummation, the securities or other property (the
“Substituted Property”) that would have been received in connection with such
Fundamental Transaction by a holder of the number of shares of Common Stock into
which this Warrant was exercisable immediately prior to such Fundamental
Transaction, assuming such holder of Common Stock:
                         (A) is not a Person with which the Company consolidated
or into which the Company merged or which merged into the Company or to which
such sale or transfer was made, as the case may be (a “Constituent Person”), or
an Affiliate of a Constituent Person; and
                         (B) failed to exercise such Holder’s rights of
election, if any, as to the kind or amount of securities, cash and other
property receivable in connection with such Fundamental Transaction (provided,
however, that if the kind or amount of securities, cash or other property
receivable in connection with such Fundamental Transaction is not the same for
each share of Common Stock held immediately prior to such Fundamental
Transaction by a Person other than a Constituent Person or an Affiliate thereof
and in respect of which such rights of election shall not have been exercised (a
“Non-Electing Share”), then, for the purposes of this Section 10(e), the kind
and amount of securities, cash and other property receivable in connection with
such Fundamental Transaction by each Non-Electing Share shall be deemed to be
the kind and amount so receivable per share by a plurality of the Non-Electing
Shares); and
                    (y) the rights and obligations of the Company (or, in the
event of a transaction in which the Company is not the surviving Person, such
other Person) and the Holder in respect of Substituted Property shall be as
nearly equivalent as may be practicable to the rights and obligations of the
Company and Holder in respect of Common Stock hereunder.

 

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               Such written instrument shall provide for adjustments which, for
events subsequent to the effective date of such written instrument, shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Section 10. The above provisions of this Section 10(e) shall similarly apply to
successive Fundamental Transactions, or
               (II) cause to be delivered to the Holder, as soon as practicable
following the closing of the Fundamental Transaction, the Substituted Property
less such portion of the Substituted Property with a value (determined in good
faith by the Board of Directors of the Company or the other Person in the
Fundamental Transaction) equal to the aggregate Exercise Price of this Warrant.
          (f) Adjustment of Warrant Shares. Simultaneously with any adjustment
to the Exercise Price pursuant to paragraphs (a) through (d) of this Section 10,
the number of Warrant Shares that may be purchased upon exercise of this Warrant
shall be increased or decreased proportionately, so that after such adjustment
the aggregate Exercise Price payable hereunder for the increased or decreased
number of Warrant Shares shall be the same as the aggregate Exercise Price
payable for the Warrant Shares immediately prior to such adjustment.
          (g) Calculations. All calculations under this Section 10 shall be made
to the nearest cent or the nearest 1/100th of a share, as applicable. The number
of shares of Common Stock outstanding at any given time shall not include shares
owned or held by or for the account of the Company, and the disposition of any
such shares shall be considered an issue or sale of Common Stock.
          (h) Adjustments. Notwithstanding any provision of this Section 10, no
adjustment of the Exercise Price shall be required if such adjustment is less
than $0.01; provided, however, that any adjustments which by reason of this
Section 10(h) are not required to be made shall be carried forward and taken
into account for purposes of any subsequent adjustment required to be made
hereunder.
          (i) Notice of Adjustments. Upon the occurrence of each adjustment
pursuant to this Section 10, the Company will promptly deliver to the Holder a
certificate executed by the Company’s Chief Financial Officer setting forth, in
reasonable detail, the event requiring such adjustment and the method by which
such adjustment was calculated, the adjusted Exercise Price and the adjusted
number or type of Warrant Shares or other securities issuable upon exercise of
this Warrant (as applicable). The Company will retain at its office copies of
all such certificates and cause the same to be available for inspection at said
office during normal business hours by the Holder or any prospective purchaser
of the Warrant designated by the Holder.
          (j) Notice of Corporate Events. If the Company (i) declares a dividend
or any other distribution of cash, securities or other property in respect of
its Common Stock, including, without limitation, any granting of rights or
warrants to subscribe for or purchase any capital stock of the Company or any
subsidiary of the Company, (ii) authorizes, approves, enters into any agreement
contemplating, or solicits stockholder approval for, any Fundamental Transaction
or (iii) authorizes the voluntary dissolution, liquidation or winding up of the
affairs of the Company, then the Company shall deliver to the Holder a notice
describing the material terms and conditions of such transaction at least 10
calendar days prior to the applicable record or

 

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effective date on which a Person would need to hold Common Stock in order to
participate in or vote with respect to such transaction, and the Company will
take all steps reasonably necessary in order to ensure that the Holder is given
the practical opportunity to exercise this Warrant prior to such time so as to
participate in or vote with respect to such transaction; provided, however, that
the failure to deliver such notice or any defect therein shall not affect the
validity of the corporate action required to be described in such notice.
     11. Registration Rights.
          (a) General. If at any time after the date hereof the Company proposes
to register any of its Common Stock under the Securities Act in connection with
the public offering of such securities for its own account or for the accounts
of shareholders other than Holder, solely for cash on a form that would also
permit the registration of the Warrant Shares, the Company shall, each such
time, promptly give Holder written notice of such determination. Upon the
written request of Holder given within fifteen (15) days after the giving of any
such notice by the Company, the Company shall, subject to the limitations set
forth in Section 11(e), use its best efforts to cause to be registered under the
Securities Act all of the Warrant Shares that Holder has requested be
registered; provided, that the Company shall have the right to postpone or
withdraw any registration statement relating to an offering in which the Holder
is eligible to participate under this Section 11 without any liability or
obligation to the Holder under this Section 11. For the avoidance of doubt, the
Company shall not be obligated to effect any registration of Warrant Shares
under this Section 11 incidental to the registration of any of its securities in
connection with the Company’s Registration Statement on Form S-1 filed by the
Company in connection with the private placement of the Company’s Common Stock
in June of 2008.
               (i) Other Contractual Obligations of the Company. Each exercise
of all or part of the Warrant by the Holder pursuant to Section 5 herein shall
serve as Holder’s acknowledgment and acceptance that the Holder’s rights under
this Section 11 as to the Warrant Shares received as the result of such exercise
are subject to the contractual obligations of the Company as of the Effective
Date, including the Company’s obligations to CytRx Corporation set out in the
Contribution Agreement dated as of April 30, 2007 between CytRx Corporation and
the Company, as amended on July 28, 2008.
          (b) Obligations of the Company. Whenever required under this
Section 11 to use its best efforts to effect the registration of any Warrant
Shares, the Company shall, as expeditiously as reasonably possible:
               (i) Prepare and file with the SEC a registration statement with
respect to such Warrant Shares and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holder,
keep such registration statement effective for a period of up to one (1) year
or, if earlier, until the distribution contemplated in the registration
statement has been completed; provided, however, that (i) such one (1) year
period shall be extended for a period of time equal to the period the Holder
refrains from selling any securities included in such registration at the
request of an underwriter of Common Stock (or other securities) of the Company;
and (ii) in the case of any registration of Warrant Shares on Form S-3 which are
intended to be offered on a continuous or delayed basis, subject to compliance
with applicable

 

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SEC rules, such one (1) year period shall be extended for up to ninety
(90) days, if necessary, to keep the registration statement effective until all
such Warrant Shares are sold.
               (ii) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
               (iii) Furnish to the Holder such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of such Warrant Shares
owned by it.
               (iv) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably appropriate for the
distribution of the securities covered by the registration statement, provided
that the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions, and further provided that (anything
in this Section 11 to the contrary notwithstanding with respect to the bearing
of expenses) if any jurisdiction in which the securities shall be qualified
shall require that expenses incurred in connection with the qualification of the
securities in that jurisdiction be borne by shareholders, then such expenses
shall be payable by the Holder to the extent required by such jurisdiction.
               (v) Provide a transfer agent for the Common Stock no later than
the effective date of the first registration of any Warrant Shares.
               (vi) Otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC.
               (vii) Use its best efforts to cause all such Warrant Shares to be
listed on a national securities exchange (if such securities are not already so
listed) and on each additional national securities exchange on which similar
securities issued by the Company are then listed, if the listing of such
securities is then permitted under the rules of such exchange.
               (viii) Use every reasonable effort to prevent the issuance of any
stop order suspending the effectiveness of such registration statement or of any
order preventing or suspending the use of any preliminary prospectus and, if any
such order is issued, to obtain the lifting thereof at the earliest reasonable
time.
          (c) Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 11 with
respect to the registration of any of the Holder’s Warrant Shares that the
Holder shall take such actions and furnish to the Company such information
regarding itself, the Warrant Shares held by it, and the intended method of
disposition of such securities, as the Company shall reasonably request and as
shall be required in connection with any registration, qualification or
compliance referred to in this agreement, including, without limitation (i) in
connection with an underwritten offering, enter into an appropriate underwriting
agreement containing terms and provisions then customary in

 

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agreements of that nature, (ii) enter into such custody agreements, powers of
attorney and related documents at such time and on such terms and conditions as
may then be customarily required in connection with such offering and
(iii) distribute the Warrant Shares only in accordance with and in the manner of
the distribution contemplated by the applicable registration statement and
prospectus. In addition, the Holder shall promptly notify the Company of any
request by the Commission or any state securities commission or agency for
additional information or for such registration statement or prospectus to be
amended or supplemented.
          (d) Registration Expenses. All expenses (excluding underwriters’
discounts and commissions) incurred in connection with any registration pursuant
to this Section 11 including, without limitation, any additional registration
and qualification fees and any additional fees and disbursements of counsel to
the Company that result from the inclusion of securities held by the Holder in
such registration, shall be borne by the Company whether or not the registration
statement to which such registration expenses relate becomes effective.
          (e) Underwriting Requirements.
               (i) In connection with any offering under this Section 11
involving an underwriting of shares being issued by the Company, the Company
shall not be required to include any Warrant Shares in such underwriting unless
the Holder accepts the terms of the underwriting as agreed upon between the
Company and the underwriters selected by it, and then only in such quantity as
will not, in the sole discretion of the underwriters, jeopardize the success of
the offering by the Company. If the total amount of securities that the Holder
requests to be included in an underwritten offering under this Section 11
exceeds the amount of securities that the underwriters reasonably believe
compatible with the success of the offering, the Company may exclude some or all
of the Warrant Shares from such registration and underwriting.
               (ii) With respect to any underwritings of shares to be registered
under this Section 11, the Company shall have the right to designate the
managing underwriter or underwriters.
          (f) Delay of Registration. The Holder shall not have any right to take
any action to restrain, enjoin, or otherwise delay any registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 11.
          (g) Indemnification. In the event any Warrant Shares are included in a
registration statement under this Section 11:
               (i) To the extent permitted by law, in connection with any
registration statement in which Warrant Shares are included, the Company will
indemnify and hold harmless the Holder and its officers, directors and
stockholders, legal counsel and accountants for the Holder, any underwriter (as
defined in the Securities Act) for the Holder and each person, if any, who
controls the Holder or underwriter within the meaning of the Securities Act or
the 1934 Act, against any losses, claims, damages or liabilities, joint or
several, to which they may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based on (i) any untrue or alleged untrue statement
of any material fact contained in such registration statement, including,
without

 

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limitation, any prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading or (iii) any violation by the Company
of any rule or regulation promulgated under the Securities Act applicable to the
Company and relating to action or inaction required of the Company in connection
with any such registration; and will promptly reimburse the Holder, and any
underwriter, controlling person or other aforementioned person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action, provided, however,
that the indemnity agreement contained in this Section 11g(i) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld or delayed) nor shall the Company be liable
to the Holder, or any underwriter, controlling person or other aforementioned
person in any such case for any such loss, claim, damage, liability or action to
the extent that it (i) arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in connection with
such registration statement, preliminary prospectus, final prospectus, or
amendments or supplements thereto, in reliance upon and in conformity with
written information furnished to the Company expressly for use in connection
with such registration by or on behalf of the Holder, or any underwriter,
controlling person or other aforementioned person, (ii) is caused by the failure
of the Holder to deliver a copy of the final prospectus relating to such Warrant
Shares, as then amended or supplemented, in connection with a purchase, if the
Company had previously furnished copies thereof to the Holder or (iii) is caused
by the Holder’s disposition of Warrant Shares during any period during which the
Holder is obligated to discontinue any disposition of Warrant Shares under
Section 11(j).
               (ii) To the extent permitted by law, the Holder will indemnify
and hold harmless the Company, each of its directors, each of its officers who
has signed the registration statement, each person, if any, who controls the
Company within the meaning of the Securities Act, and any underwriter (within
the meaning of the Securities Act) for the Company against any losses, claims,
damages or liabilities to which the Company or any such director, officer,
controlling person or underwriter may become subject, under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereto) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in such registration
statement, including any prospectus or final prospectus contained therein or any
amendments or supplements thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information relating to and furnished to the Company by the Holder expressly for
use in connection with such registration; and will promptly reimburse the
Company or any such director, officer, controlling person or underwriter for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this
Section 11(g)(ii) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Holder (which consent shall not be unreasonably withheld or
delayed) and provided further that the Holder shall not have any liability under
this Section 11(g)(ii) in excess of the net proceeds

 

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actually received by the Holder in the relevant public offering.
               (iii) Promptly after receipt by an indemnified party under this
Section 11(g) of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against any indemnifying
party under this Section 11(g), notify the indemnifying party in writing of the
commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties. The failure to notify
an indemnifying party promptly of the commencement of any such action, if
prejudicial to his ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this
Section 11(g), but the omission so to notify the indemnifying party will not
relieve him of any liability that he may have to any indemnified party otherwise
than under this Section 11(g).
               (iv) If the indemnification provided for in this Section 11(g) is
required by its terms but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party under
Section 11(g)(i) or Section 11(g)(ii) in respect of any losses, claims, damages,
liabilities or expenses referred to herein, then each applicable indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of any losses, claims, damages, liabilities or expenses referred to
herein in such proportion as is appropriate to reflect the relative fault of the
Company and the Holder in connection with the statements or omissions described
in such Section 11(g)(i) or Section 11(g)(ii) which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of the Company and the Holder shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the Holder and
the parties’ relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The amount paid or payable by
a party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the limitations set
forth in this Section 11(g), any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim. The provisions set forth in Section 11(g)(iii) with respect to notice
of commencement of any action shall apply if a claim for contribution is to be
made under this Section 11(g)(iv); provided, however, that no additional notice
shall be required with respect to any action for which notice has been given
under Section 11(g)(iii) for purposes of indemnification. The Company and the
Holder agree that it would not be just and equitable if contribution pursuant to
this Section 11(g) were determined solely by pro rata allocation or by any other
method of allocation which does not take account of the equitable considerations
referred to in this paragraph. Notwithstanding the provisions of this
Section 11(g)(iv), the Holder shall not be required to contribute an amount in
excess of the net proceeds actually received by the Holder in the relevant
public offering. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
          (h) Payment of Expenses. The Company shall pay all reasonable expenses
of the Holder (including the reasonable expenses of legal counsel for such
Holder) incurred in connection with each registration of Warrant Shares
requested pursuant to this Section 11, other

 

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than underwriting discount and commission, if any, and applicable transfer
taxes, if any.
          (i) No Transfer of Registration Rights. The registration rights and
obligations of the Holder under this Exhibit with respect to any Warrant Shares
may not be transferred to any third party other than any acquirer of all or
substantially all of the assets or outstanding shares of stock of the Holder or
any entity that merges with or into the Holder.
          (j) Future Events. If the Holder is at the time participating in a
registration of Warrant Shares requested pursuant to this Section 11, the
Company will notify the Holder of the occurrence of any of the following events
of which the Company is actually aware, and when so notified, the Holder will
immediately discontinue any disposition of Warrant Shares until notified by the
Company that such event is no longer applicable:
               (i) the issuance by the Commission or any state securities
commission or agency of any stop order suspending the effectiveness of the
registration statement or the initiation of any proceedings for that purpose (in
which case the Company will make reasonable efforts to obtain the withdrawal of
any such order or the cessation of any such proceedings); or
               (ii) the existence of any fact which makes untrue any material
statement made in the registration statement or prospectus or any document
incorporated therein by reference or which requires the making of any changes in
the registration statement or prospectus or any document incorporated therein by
reference in order to make the statements therein not misleading (in which case
the Company will make reasonable efforts to amend the applicable document to
correct the deficiency).
          (k) Termination of Rights. The rights of the Holder pursuant to this
Section 11 shall terminate and be of no further force and effect on the earlier
of (i) the date that all Warrant Shares have been sold by the Holder or (ii) the
date that all Warrant Shares may be sold in any three month period pursuant to
Rule 144(b) promulgated under the Securities Act of 1933, as amended.
     12. Fractional Shares. The Company shall not be required to issue or cause
to be issued fractional Warrant Shares on the exercise of this Warrant. If any
fraction of a Warrant Share would, except for the provisions of this Section 12,
be issuable upon exercise of this Warrant, the Company shall make a cash payment
to the Holder equal to (a) such fraction multiplied by (b) the Market Price on
the Exercise Date of one full Warrant Share.
     13. Remedies. The Company stipulates that the remedies at law of the Holder
of this Warrant in the event of any default or threatened default by the Company
in the performance of or compliance with any of the terms of this Warrant are
not and will not be adequate, and that such terms may be specifically enforced
by a decree for the specific performance of any agreement contained herein or by
an injunction against a violation of any of the terms hereof or otherwise.
     14. Notices. Any and all notices or other communications or deliveries
hereunder (including without limitation any Exercise Notice) shall be in writing
and shall be mailed by

 

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certified mail, return receipt requested, or by a nationally recognized courier
service or delivered (in person or by facsimile), against receipt to the party
to whom such notice or other communication is to be given. Any notice or other
communication given by means permitted by this Section 14 shall be deemed given
at the time of receipt thereof. The address for such notices or communications
shall be as set forth below:

     
If to the Company:
  Tod Woolf
 
  Chief Executive Officer
 
  RXi Pharmaceuticals Corporation
 
  60 Prescott Street
 
  Worcester, Massachusetts 01605
 
  Fax: 508-767-3862
 
   
If to the Holder:
  J.P. Turner Partners, LP
 
  Attention: Patrick J. Power
 
  3060 Peachtree Road, 11th FL
 
  Atlanta, GA 30305
 
  Phone: 404-479-8300
 
  Fax: 888-704-7512

Or such other address as is provided to such other party in accordance with this
Section 14.
     15. Warrant Agent. The Company shall serve as warrant agent under this
Warrant. Upon a prompt written notice to the Holder, the Company may appoint a
new warrant agent. Any Person into which any new warrant agent may be merged,
any Person resulting from any consolidation to which any new warrant agent shall
be a party or any Person to which any new warrant agent transfers substantially
all of its corporate trust or shareholders services business shall be a
successor warrant agent under this Warrant without any further act. Any such
successor warrant agent shall promptly cause notice of its succession as warrant
agent to be mailed (by first class mail, postage prepaid) to the Holder at the
Holder’s last address as shown on the Warrant Register.
     16. Miscellaneous.
          (a) This Warrant may not be assigned by the Holder except to a
Permitted Transferee. This Warrant may not be assigned by the Company, except to
a successor in the event of a Fundamental Transaction. This Warrant shall be
binding on and inure to the benefit of the parties hereto and their respective
permitted successors and assigns. Subject to the preceding sentence, nothing in
this Warrant shall be construed to give to any Person other than the Company and
the Holder any legal or equitable right, remedy or cause of action under this
Warrant. This Warrant may be amended only in writing signed by the Company and
the Holder and their permitted successors and assigns.
          (b) The Company will not, by amendment of its governing documents or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such

 

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terms and in the taking of all such action as may be necessary or appropriate in
order to protect the rights of the Holder against impairment. Without limiting
the generality of the foregoing, the Company (i) will not increase the par value
of any Warrant Shares above the amount payable therefor upon exercise thereof,
and (ii) will take all such action as may be reasonably necessary or appropriate
in order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares on the exercise of this Warrant, free from all
taxes, liens, claims and encumbrances and (iii) will not close its shareholder
books or records in any manner which interferes with the timely exercise of this
Warrant.
          (c) This Warrant shall be governed by and construed and enforced in
accordance with the laws of the Commonwealth of Massachusetts. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and Federal
courts sitting in the City of Boston, Massachusetts, for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding that it is not personally subject to
the jurisdiction of any such court or that such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Warrant and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law. THE PARTIES HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.
          (d) Neither party shall be deemed in default of any provision of this
Warrant, to the extent that performance of its obligations or attempts to cure a
breach hereof are delayed or prevented by any event reasonably beyond the
control of such party, including, without limitation, war, hostilities, acts of
terrorism, revolution, riot, civil commotion, national emergency, strike,
lockout, unavailability of supplies, epidemic, fire, flood, earthquake, force of
nature, explosion, embargo, or any other Act of God, or any law, proclamation,
regulation, ordinance, or other act or order of any court, government or
governmental agency, provided that such party gives the other party written
notice thereof promptly upon discovery thereof and uses reasonable efforts to
cure or mitigate the delay or failure to perform.
          (e) The headings herein are for convenience only, do not constitute a
part of this Warrant and shall not be deemed to limit or affect any of the
provisions hereof.
          (f) In case any one or more of the provisions of this Warrant shall be
deemed invalid or unenforceable in any respect, the validity and enforceability
of the remaining terms and provisions of this Warrant shall not in any way be
affected or impaired thereby and the parties will attempt in good faith to agree
upon a valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS]

 

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          IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by its authorized officer as of the date first indicated above.

            RXI PHARMACEUTICALS CORPORATION
      By:   /s/ Tod Woolf         Name:   Tod Woolf        Title:   President
and Chief Executive Officer     

 

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APPENDIX A
FORM OF ASSIGNMENT
(to be completed and signed only upon transfer of Warrant)
     FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _________________________________________________ the right represented by
the within Warrant to purchase _____________________ shares of Common Stock of
RXi Pharmaceuticals Corporation to which the within warrant relates and appoints
__________________________ attorney to transfer said right on the books of RXi
Pharmaceuticals Corporation with full power of substitution in the premises.

         
Dated:                     
       
 
       
 
  (Signature must conform in all respects to name of Holder as specified on face
of the Warrant)    
 
       
 
  Address of Transferee:
   
 
       
 
 
 
   
 
       
 
 
 
   
 
       
 
 
 
   
 
       
In the presence of:
       
 
       
                                        
       

 

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APPENDIX B
FORM OF EXERCISE NOTICE
(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)
To: RXi Pharmaceuticals Corporation
The undersigned is the Holder of Warrant No. [                    ] (the
“Warrant”) issued by RXi Pharmaceuticals Corporation, a Delaware corporation
(the “Company”). Capitalized terms used herein and not otherwise defined have
the respective meanings set forth in the Warrant.

  1.   The Warrant is currently exercisable to purchase a total of
                     Warrant Shares.     2.   The undersigned Holder hereby
exercises its right to purchase                      Warrant Shares pursuant to
the Warrant.     3.   The Holder intends that payment of the Exercise Price
shall be made as:

  a.   A “Cash Exercise” with respect to                      Warrant Shares;
and/or     b.   A “Cashless Exercise” with respect to                     
Warrant Shares.

  4.   In the event that the Holder has elected a Cash Exercise with respect to
some or all of the Warrant Shares to be issued pursuant hereto, the Holder shall
pay the sum of $                     to the Company in accordance with the terms
of the Warrant.     5.   Pursuant to this exercise, the Company shall deliver to
the Holder                      Warrant Shares in accordance with the terms of
the Warrant     6.   Following this exercise, the Warrant shall be exercisable
to purchase a total of                      Warrant Shares.

         
Dated:                     
  Name of Holder:    
 
       
 
  (Print)
 
   
 
       
 
  By:
 
   
 
       
 
  Title:
 
   
 
       
 
  (Signature must conform in all respects to name of Holder as specified on face
of the Warrant)