Document:

exv4w2

 

Exhibit 4.2

RXi PHARMACEUTICALS CORPORATION

One Innovation Drive

Worcester, Massachusetts 01605

February 23, 2007

	 	 	 
	CytRx Corporation

	 	Tariq M. Rana, Ph.D.
	11726 San Vicente Boulevard, Suite 650

	 	University of Massachusetts
	Los Angeles, California 90049

	 	364 Plantation St., LRB 827,
	 

	 	Lab 860 A-E
	Michael P. Czech, Ph.D.

	 	Worcester, MA 01605
	University of Massachusetts
	 	 
	55 Lake Avenue, Suite 100

	 	Gregory J. Hannon, Ph.D.
	Worcester, MA 01605

	 	Howard Hughes Medical Institute
	 

	 	Cold Spring Harbor Laboratory
	Craig C. Mello, Ph.D.

	 	One Bungtown Road
	Howard Hughes Medical Institute

	 	Cold Spring Harbor, NY 11724
	University of Massachusetts
	 	 
	373 Plantation St., Suite 219
	 	 
	Worcester, MA 01605
	 	 

     Re: Stockholders Agreement

Gentlemen:

     RXi Pharmaceuticals Corporation (“RXi”), CytRx Corporation (“CytRx”), and the other current
stockholders and Scientific Advisory Board members of RXi (“SAB Members”) believe it is in their
mutual best interests to enter into this letter agreement (this “Agreement”) in order to set forth
their understanding and agreement regarding their ownership and voting of shares of common stock of
RXi (“RXi Shares”), which for this purpose includes any and all additional shares of common stock
and other voting securities of RXi that they may acquire or own at any time. The parties also
believe it is mutually beneficial that, in consideration of CytRx’s willingness to enter into this
Agreement, RXi grant CytRx certain rights to purchase any “New Securities” (as defined in Annex 1)
which RXi proposes to sell or issue.

     In consideration of the mutual promises set forth herein, and other good and valuable
consideration, the parties hereby agree as follows:

     1. From the period beginning upon the closing of an equity financing of RXi in an aggregate
amount of not less than $15 million dollars from investors (including CytRx acting as an Investor)
(the “Initial Financing”), CytRx agrees that it will not vote its RXi Shares or otherwise take
steps to elect or have elected individuals who are (i) employees, officers or directors of CytRx,
(ii) employees, officers or directors of any entity that has a contractual business relationship
with CytRx, or (iii) employees, officers, directors of any entity that has a contractual business
relationship with any officer or director of CytRx (collectively, (i), (ii), and

 

 

CytRx Corporation

February 23, 2007

Page 2

(iii) are “Affiliates”) to constitute a majority of RXi’s Board of Directors, and, in the
event that Affiliates are elected to hold a majority of the seats of RXi’s Board of Directors,
CytRx shall use reasonable efforts to cause a sufficient number of its Affiliates to resign from
their position as directors of RXi or to cause a sufficient number of independent directors to be
added to RXi’s Board of Directors, so that Affiliates do not constitute a majority of RXi’s Board
of Directors. If at any time following the Initial Financing, CytRx, together with its
subsidiaries and any other entities controlled by, or under common control with, CytRx
(collectively, “CytRx Affiliates”) hold in the aggregate a majority of the outstanding voting power
of RXi, CytRx will use reasonable efforts without delay to transfer or otherwise dispose of a
sufficient number of shares of RXi’s voting stock to bring the aggregate ownership by CytRx and
CytRx Affiliates of the total outstanding shares of RXi’s voting stock below fifty percent (50%),
subject to the rules and regulations of the Securities and Exchange Commission and applicable state
securities laws.

     2. CytRx agrees that, from the period beginning at the closing of the Initial Financing it
shall vote, or provide its written consent with respect to, all RXi Shares then owned or controlled
by it and CytRx Affiliates in such manner as shall be recommended by the Board of Directors of RXi
with respect to any or all of the following matters that may be submitted by RXi for action by the
stockholders of RXi:

          (a) any proposal to amend the certificate of incorporation of RXi to increase the authorized
RXi Shares in order to facilitate obtaining additional financing needed by RXi at any time and from
time to time to fund its ongoing working capital requirements;

          (b) the sale and issuance of RXi Shares or other securities in any such working capital
financing; and

          (c) any other matter submitted for action by the RXi stockholders generally with respect to
any such financing;

provided, however, that CytRx shall have no obligation hereunder with respect to
any of the foregoing matters in which CytRx or the RXi Shares owned by it or CytRx Affiliates would
receive different treatment than the treatment afforded the other RXi stockholders generally; and
provided further, that CytRx’s obligations above shall not extend to any financing
for purposes of acquiring the business, technologies, assets, or operations of any other company.

     3. RXi hereby grants CytRx the rights set forth on Annex 1 hereto, which is incorporated
herein by reference. Such rights granted to CytRx shall become effective as of the first date as
of which the issued and outstanding RXi Shares owned in the aggregate by CytRx and CytRx Affiliates
shall constitute less than 50% of the total issued and outstanding RXi Shares, and shall terminate
upon the earlier of (a) January 8, 2012 or (b) the first date as of which CytRx and CytRx
Affiliates own in the aggregate less than ten percent (10%) of the outstanding RXi Shares.
Notwithstanding the provisions of Annex 1, the rights granted thereunder to CytRx

 

 

CytRx Corporation

February 23, 2007

Page 3

shall be suspended if, and for so long as, CytRx shall be in breach of any of its obligations
under this Agreement.

     4. Except for the provisions of paragraph 3, above, the provisions of this Agreement may be
terminated at any time by the written consent or agreement of CytRx, RXi, and a majority of the SAB
Members then serving as such. Unless sooner terminated, the provisions of this Agreement shall
terminate as to an SAB Member, at such time as he is no longer serving as a member of RXi’s
Scientific Advisory Board.

     5. This Agreement is governed by and construed in accordance with the laws of the State of
Delaware irrespective of any conflicts of law principles.

     6. This Agreement shall be binding upon CytRx, RXi, and the SAB Members and their respective
heirs and successors in interest. The obligations of each of CytRx and the SAB Members hereunder
shall terminate as to any RXi Shares sold, transferred or assigned by it or him upon such sale,
transfer or assignment, and this Agreement shall not bind or inure to the benefit of any transferee
of RXi Shares sold, assigned or transferred by any party (other than transfers to CytRx Affiliates
and other than transfers to a successor in interest of all or any substantial part of the business
or assets of a party by way of sale, exchange, merger or otherwise).

     7. This Agreement may not be modified or amended, except in a writing signed by CytRx, RXi,
and at least a majority of the SAB Members who are then serving as members of RXi’s Scientific
Advisory Board.

     8. Without limiting the rights of each party hereto to pursue any and all other legal and
equitable remedies available to such party, each party acknowledges and agrees that the remedy at
law in the event of a breach by any party of it obligations under this Agreement would be
inadequate and, therefore, that the parties shall be entitled to specific performance, injunctive
relief and other equitable remedies in such event.

     9. This Agreement, including Annex 1 hereto, contain the entire agreement among the parties
hereto with respect to the subject matter hereof and supersede all prior and contemporaneous
agreements and understandings with respect thereto.

     10. The parties hereto shall at all times act in good faith and shall not take any actions, or
fail to take actions, to circumvent or frustrate the provisions of this Agreement.

 

 

CytRx Corporation

February 23, 2007

Page 4

     11. This Agreement may be executed in counterparts, each of which when executed and delivered
shall be deemed to be an original and all of which when taken together shall constitute but one and
the same instruction.

	 	 	 	 	 
	 

	 	 	 	Very truly yours,
	 
	 	 	 	 
	 
	 	 	 	/s/ Tod Woolf
	 

	 	 	 	 
	 

	 	 	 	Tod Woolf, Ph.D., Chief Executive Officer
	 

	 	 	 	RXi Pharmaceuticals Corporation
	 
	 	 	 	 
	AGREED, ACKNOWLEDGED AND ACCEPTED:	 	 
	 
	 	 	 	 
	CYTRX CORPORATION	 	 
	 
	 	 	 	 
	By:
	 	/s/ Steven Kriegsman	 	 
	 
	 	 	 	 
	 
	 	Steven Kriegsman	 	 
	 

	 	President and Chief Executive Officer	 	 
	 
	 	 	 	 
	/s/
Craig C. Mello, Ph.D.
	 	 
	 	 	 
	Craig C. Mello, Ph.D.	 	 
	 
	 	 	 	 
	/s/ Tariq M. Rana, Ph.D.

	 	 
	 	 	 
	Tariq M. Rana, Ph.D.	 	 
	 
	 	 	 	 
	/s/
Michael P. Czech, Ph.D.

	 	 
	 	 	 
	Michael P. Czech, Ph.D.	 	 
	 
	 	 	 	 
	/s/
Gregory J. Hannon, Ph.D.

	 	 
	 	 	 
	Gregory J. Hannon, Ph.D.	 	 

 

 

ANNEX
1

Preemptive Rights

SECTION 1. General

	A.	 	CytRx shall have the right, on the terms and provisions of this Annex 1, to purchase New
Securities (as defined below in Paragraph B) that RXi may, from time to time, sell, issue or
exchange.

	B.	 	“New Securities” shall mean, subject to Section 4.B, any shares of common stock of
RXi (“RXi Common Stock”) and other equity securities of RXi, whether now authorized or
not, any rights, options, and warrants to purchase RXi Common Stock or other equity
securities, and securities of any type whatsoever that are, or may become, convertible into,
or exercisable or exchangeable for, shares of RXi Common Stock or other equity securities.

SECTION 2. Sales and Issuances of New Securities for Cash

	A.	 	RXi shall not at any time issue or sell for cash any New Securities (each, a “Cash
Sale”), unless and until RXi shall have first delivered to CytRx notice of the proposed
Cash Sale (the “Cash Offer Notice”) and otherwise complied with the provisions of this
paragraph A, as follows:

	 	(i)	 	The Cash Offer Notice shall (1) describe in reasonable detail the proposed Cash
Sale, (2) set forth the nature and dollar amount of the New Securities involved (the
“Offered Securities”), (3) describe the sale price of the Offered Securities
and other terms of the proposed Cash Sale, (4) identify the persons or entities, if
known, to which the Offered Securities are proposed to be offered, issued or sold, and
(5) include an express offer to issue and sell to CytRx a portion of such Offered
Securities determined by multiplying the total dollar amount of Offered Securities by
CytRx’s Proportionate Percentage (as hereinafter defined) as determined as of the date
of the Cash Offer Notice. CytRx’s “Proportionate Percentage” for purposes of
this Annex shall mean, as of any determination date, a fraction, expressed as a
percentage, the numerator of which is the sum of (w) the number of issued and
outstanding shares of RXi Common Stock then owned beneficially (as hereinafter defined)
by CytRx plus (x) the number of shares of RXi Common Stock that may be acquired by
CytRx upon the exercise, conversion or exchange of rights, options, warrants and other
securities of RXi owned beneficially by CytRx that are exercisable or exchangeable for,
or convertible into, shares of RXi Common Stock within 60 days of the date of
determination of such beneficial ownership, and the denominator of which is the sum of
(y) the total number of shares of RXi Common Stock then issued and outstanding plus
(z) the number of shares referred to in clause (x) above. CytRx shall be deemed to
“beneficially own” shares of RXi Common Stock and other

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ANNEX 1

	 	 	 	securities that are held of record by CytRx or held in the name of a broker or other
custodian for CytRx’s account.

	 	(ii)	 	CytRx shall have the right during the 10-business day period following delivery
of the Cash Offer Notice to elect to purchase, at the price and upon the other terms
specified therein, its Proportionate Percentage of the Offered Securities; provided,
however, that RXi may postpone or terminate the transaction described in the Cash Offer
Notice, which shall have the effect of postponing or terminating CytRx’s rights under
this paragraph A. To exercise its rights under this paragraph A, CytRx must notify RXi
on or prior to the expiration of the foregoing 10-business day period of the amount, if
any, of the Offered Securities (not to exceed its CytRx’s Proportionate Percentage
thereof) that CytRx elects to purchase (the “Notice of Acceptance”).
	 
	 	(iii)	 	RXi shall have 90 days from the date of the Cash Offer Notice to consummate
the Cash Sale in accordance with the Cash Offer Notice, which may include the issuance
or sale of all or any part of the Offered Securities which CytRx has not elected to
purchase as reflected in the Notice of Acceptance. Any of the Offered Securities not
so issued or sold by RXi within such 90-day period shall not be issued or sold by RXi,
unless and until RXi again complies with the procedures specified in this Annex.
	 
	 	(iv)	 	In the event RXi determines in good faith to issue or sell less than all the
Offered Securities pursuant to the Cash Sale, then the amount of the Offered Securities
that CytRx shall be entitled to purchase shall automatically be reduced to an amount
equal to the amount of the Offered Securities, if any, that CytRx elected to purchase
as set forth in its Notice of Acceptance multiplied by a fraction, (1) the numerator of
which shall be the amount of Offered Securities that RXi issues or sell (including the
Offered Securities to be issued or sold to CytRx pursuant to subparagraph A(ii) above
prior to such reduction) and (2) the denominator of which shall be the amount of the
Offered Securities that RXi initially proposed to issue or sell as specified in the
Cash Offer Notice.
	 
	 	(v)	 	On the date of the closing of the issuance or sale of all or less than all the
Offered Securities, CytRx shall purchase from RXi, and RXi shall sell and issue to
CytRx, the amount of Offered Securities specified in the Notice of Acceptance (as
reduced pursuant to subparagraph A(iv) above, if applicable) upon the terms and
conditions specified in the Cash Offer Notice. The purchase by CytRx of any of the
Offered Securities is subject in all cases to the preparation, execution and delivery
by RXi and CytRx of a customary purchase agreement relating to such Offered Securities
and other documents consistent with the terms of the Cash Offer Notice and reasonably
satisfactory in form and substance to CytRx, RXi and their respective counsel.

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ANNEX 1

SECTION 3. Sales and Issuances of New Securities Other than for Cash

	A.	 	If at any time or from time to time RXi shall issue or sell for consideration other than cash
any New Securities (each, a “Non-Cash Sale”), it shall comply with the provisions of
this Section 3, as follows:

	 	(i)	 	RXi shall deliver to CytRx notice of the Non-Cash Sale (the “Non-Cash Offer
Notice”). Except as provided below, the Non-Cash Offer Notice shall be delivered
within 10 days following the issuance or sale of such New Securities and (1) describe
in reasonable detail the Non-Cash Sale, (2) set forth the nature and amount of the New
Securities involved, (3) describe the price or value attributable to the New
Securities, and other terms of the Non-Cash Sale, (4) identify the persons or entities,
if known, to which such New Securities are proposed to be offered, issued or sold, and
(5) include an express offer to issue and sell to CytRx from RXi’s authorized but
unissued shares of RXi Common Stock, or from treasury shares, such number of shares of
RXi Common Stock as are necessary and sufficient to restore CytRx, after giving effect
to such award, issuance, sale or exchange, to its Proportionate Percentage as of the
time immediately preceding such Non-Cash Sale. Notwithstanding the foregoing, if the
amount of the New Securities issued or sold in a Non-Cash Sale, when added to all other
New Securities issued and sold in Non-Cash Sales of which CytRx shall not have been
notified by RXi in accordance with this subparagraph A(i), represents 5% or less of the
            shares of RXi Common Stock outstanding immediately prior to such Non-Cash Sale, then
RXi may postpone the Non-Cash Offer Notice hereunder until the date 10 days following
the earlier of (1) the end of the calendar quarter during which such Non-Cash Sale
occurred and (2) the date of the next subsequent issuance or sale of New Securities in
a Non-Cash Sale which, when added to all other New Securities issued and sold by RXi in
Non-Cash Sales as to which no Non-Cash Offer Notice shall have been given to CytRx,
exceeds 1% of the shares of RXi Common Stock outstanding immediately prior to the
earliest of all such unreported Non-Cash Sales; provided, however, that in the event
the Board of Directors of RXi shall determine to authorize or approve of a merger of
RXi with or into any other person or entity, or a sale or other disposition of all or
substantially all of RXi shares of capital stock, business or assets, RXi shall
immediately deliver to CytRx all previously postponed Non-Cash Offer Notices.
	 
	 	(ii)	 	CytRx shall have the right during the 30-day period following delivery of the
Non-Cash Offer Notice to elect in its discretion to purchase all or any portion of the
number of shares of RXi Common Stock determined as provided in subparagraph A(i) above.
To exercise its rights under this paragraph A, CytRx must notify RXi on or prior to
the expiration of the foregoing 30-day period of the number, if any, of such shares of
RXi Common Stock, up to the whole number thereof, that CytRx elects to purchase (the
“Notice of Acceptance”). The

A-3

 

ANNEX 1

	 	 	 	purchase price to CytRx of such shares of RXi Common Stock shall be the Fair Value
(as defined below) of such shares.

	 	(iii)	 	At a closing to be held on a date that is mutually agreeable to RXi and CytRx
that is not more than 20 days after the Notice of Acceptance, CytRx shall acquire from
RXi, and RXi shall sell and issue to CytRx, the number of shares of RXi Common Stock
specified in the Notice of Acceptance. The purchase by CytRx of such shares of RXi
Common Stock is subject in all cases to the preparation, execution and delivery by RXi
and CytRx of a customary purchase agreement relating to such shares of RXi Common Stock
and other documents consistent with the terms hereof and reasonably satisfactory in
form and substance to CytRx, RXi and their respective counsel.
	 
	 	(iv)	 	The “Fair Value” per share of RXi’s Common Stock shall be equal to the average
closing price of RXi Common Stock as reported on Nasdaq (or other principal exchange on
which such shares are then traded) over the 10 trading days ending on the earlier of
(1) the date of any press release or other announcement by RXi of the transaction
involving such New Securities and (2) the date that CytRx delivers its Notice of
Acceptance under subparagraph B(ii) above. If RXi Common Stock is not publicly traded
at that time, the Fair Value of a share of RXi Common Stock shall be the fair market
value per share of RXi Common Stock as determined in good faith by the Board of
Directors of RXi acting by not less than a majority of the disinterested directors of
RXi.

SECTION 4. Excluded Securities and New Option Securities

	A.	 	Notwithstanding any other provision of this Annex, this Annex shall not apply to (i) any New
Securities issued as a dividend or other distribution on or with respect to RXi Common Stock,
or (ii) any stock split, recapitalization or reclassification of RXi Common Stock.

	B.	 	Notwithstanding any other provision of this Annex, the provisions of this Annex shall not
apply to the grant, award or issuance for consideration other than cash of any New Securities
consisting solely of options, warrants or other rights to subscribe for or purchase shares of
RXi Common Stock or other equity securities (“New Option Securities”). With respect
to any New Option Securities granted, awarded or issued by RXi for consideration other than
cash, the provisions of Section 3 shall apply in all respects to the issuance or sale of any
New Securities upon the exercise or conversion of such New Option Securities. Without
limiting the generality of the preceding sentence, the purchase price to CytRx of any shares
of RXi Common Stock that it elects to purchase upon any such exercise or conversion shall be
the Fair Value of such shares as of the date of CytRx’s Notice of Acceptance delivered in
accordance with Section 3.

A-4

 

ANNEX 1

SECTION 5. Miscellaneous

	A.	 	All notices and other communications provided for or permitted to be given under this Annex
shall be in writing and shall be given by depositing the notice in the United States mail,
addressed to the party to be notified, postage paid, and registered or certified with return
receipt requested, or by such notice being delivered in person or by facsimile communication
to such party. Notices or other communications given or served pursuant hereto shall be
effective upon receipt by the party to be notified. All notices or other communications to be
sent to RXi shall be sent to One Innovation Drive, Worcester, Massachusetts 01605, or such
other address as RXi may specify by notice hereunder to CytRx. All notices or other
communications to be sent to CytRx shall be sent or made at the address of CytRx as set forth
in RXi’s books and records or such other address as CytRx may specify by notice hereunder to
RXi.

	B.	 	No delay or failure on the part of any party in exercising any rights hereunder, and no
partial or single exercise thereof, shall constitute a waiver of such rights or of any other
rights hereunder.

	C.	 	In the event that any provision of this Annex, or the application of such provision to any
person or circumstance, is determined by a court, arbitrator or other adjudicator to be
invalid or unenforceable to any extent, the remainder of this Annex, and the application of
such provision to persons or circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and such provision and each other provision of
this Annex shall be valid and enforceable to the greatest extent permitted by law.

	D.	 	In the event of any arbitration, litigation or other legal proceeding involving the
interpretation of this Annex or enforcement of the rights or obligations of the parties
hereto, the prevailing party or parties shall be entitled to recover reasonable attorneys’
fees and expenses as determined by the court, arbitrator or other adjudicator. In the event
that the arbitration, litigation or other legal proceeding is successful only in party, the
court, arbitrator or other adjudicator shall be entitled to prorate and allocate said fees and
expenses between the parties.

A-5exv4w3

 

Exhibit 4.3

Exhibit A

REGISTRATION RIGHTS TERMS

     SECTION 1. Definitions. As used in this Exhibit, the following terms shall have the
following meanings:

          (a) The term “1934 Act” means the Securities Exchange Act of 1934, as amended.

          (b) The term “Common Stock” means the RXi’s Common Stock, $.0001 par value per share.

          (c) The terms “register,” “registered,” and “registration” refer to a registration effected by
preparing and filing a registration statement in compliance with the Securities Act and the
declaration or ordering of effectiveness of such registration statement.

          (d) The term “Registrable Shares” means the Common Stock issued to CytRx pursuant to the
Contribution Agreement between RXi and CytRx dated as of January 8, 2007 and the Contribution
Agreement between RXi and CytRx dated as of April 30, 2007 and any Common Stock issued as a
dividend or other distribution with respect to, or in exchange or in replacement of, such Common
Stock.

          (e) The term “Rule 144” means Rule 144 promulgated under the Securities Act.

          (f) The term “SEC” means the Securities and Exchange Commission.

          (g) The term “Securities Act” means the Securities Act of 1933, as amended.

     SECTION 2. Request for Registration. If at any time after the Common Stock is
registered under the 1934 Act, RXi shall receive a written request (specifying that it is being
made pursuant to this Section 2 from CytRx that RXi file a registration statement under the
Securities Act, or a similar document pursuant to any other statute then in effect corresponding to
the Securities Act, covering the registration of Registrable Shares the expected price to the
public of which equals or exceeds $5,000,000 (based on the market price or fair value on the date
of such request), then RXi shall promptly use its best efforts to cause all Registrable Shares that
CytRx has requested be registered to be registered under the Securities Act on Form S-1 or any
other available form.

     Notwithstanding the foregoing, (i) RXi shall not be obligated to effect a registration
pursuant to this Section 2 during the period starting with the date sixty (60) days prior to RXi’s
estimated date of filing of, and ending on a date six (6) months following the effective date of, a
registration statement pertaining to an underwritten public offering of securities for the account
of RXi, provided that RXi is actively employing in good faith its best efforts to cause such
registration statement to become effective and that RXi’s estimate of the date of filing such

A - 1

 

registration statement is made in good faith; (ii) RXi shall not be obligated to effect a
registration pursuant to this Section 2 within six (6) months after the effective date of a prior
registration under this Section 2; and (iii) if RXi shall furnish to CytRx a certificate signed by
the President of RXi stating that in the good faith judgment of the Board of Directors it would be
seriously detrimental to RXi or its shareholders for a registration statement to be filed in the
near future, then RXi’s obligation to use its best efforts to file a registration statement shall
be deferred for a period not to exceed ninety (90) days; provided, however, that RXi shall not be
permitted to so defer its obligation more than once in any 12-month period.

     RXi shall not be obligated to effect more than two registrations on behalf of CytRx pursuant
to this Section 2.

     SECTION 3. RXi Registration. If at any time RXi 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 CytRx, solely for cash on a form
that would also permit the registration of the Registrable Shares, RXi shall, each such time,
promptly give CytRx written notice of such determination. Upon the written request of CytRx given
within thirty (30) days after giving of any such notice by RXi, RXi shall, subject to the
limitations set forth in Section 8, use its best efforts to cause to be registered under the
Securities Act all of the Registrable Shares that CytRx has requested be registered; provided, that
RXi shall have the right to postpone or withdraw any registration statement relating to an offering
in which CytRx is eligible to participate under this Section 3 without any liability or obligation
to CytRx under this Section 3.

     SECTION 4. Obligations of RXi. Whenever required under Section 2, Section 3 or
Section 11 to use its best efforts to effect the registration of any Registrable Shares, RXi shall,
as expeditiously as reasonably possible:

          (a) Prepare and file with the SEC a registration statement with respect to such Registrable
Shares and use its best efforts to cause such registration statement to become effective, and, upon
the request of CytRx, keep such registration statement effective for a period of up to one hundred
eighty (180) days or, if earlier, until the distribution contemplated in the registration statement
has been completed; provided, however, that (i) such 180-day period shall be extended for a period
of time equal to the period CytRx refrains from selling any securities included in such
registration at the request of an underwriter of Common Stock (or other securities) of RXi; and
(ii) in the case of any registration of Registrable Shares on Form S-3 which are intended to be
offered on a continuous or delayed basis, subject to compliance with applicable SEC rules, such
180-day period shall be extended for up to ninety (90) days, if necessary, to keep the registration
statement effective until all such Registrable Shares are sold.

          (b) 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.

          (c) Furnish to CytRx such numbers of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such other

A - 2

 

documents as they may reasonably request in order to facilitate the disposition of such
Registrable Shares owned by it.

          (d) 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 RXi 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 Exhibit 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 CytRx to the extent
required by such jurisdiction.

          (e) Provide a transfer agent for the Common Stock no later than the effective date of the
first registration of any Registrable Shares.

          (f) Otherwise use its best efforts to comply with all applicable rules and regulations of the
SEC.

          (g) Use its best efforts either (i) to cause all such Registrable 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 RXi are then listed, if the
listing of such securities is then permitted under the rules of such exchange, or (ii) to secure
designation of all such Registrable Shares as a Nasdaq “national market system security” within the
meaning of Rule 11Aa2-1 of the SEC or, failing that, to secure listing on Nasdaq for such
Registrable Shares and, without limiting the generality of the foregoing, to arrange for at least
two (2) market makers to register as such with respect to Registrable Shares with the National
Association of Securities Dealers.

          (h) Enter into such customary agreements (including an underwriting agreement in customary
form) and take such other actions as CytRx shall reasonably request in order to expedite or
facilitate the disposition of such Registrable Shares.

          (i) Make available for inspection by CytRx, by any underwriter participating in any
disposition to be effected pursuant to such registration statement and by any attorney, accountant
or other agent retained by CytRx or any such underwriter, all pertinent financial and other records
and pertinent corporate documents and properties of RXi, and cause all of RXi’s officers, directors
and employees to supply all information reasonably requested by CytRx, underwriter, attorney,
accountant or agent in connection with such registration statement.

          (j) 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.

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          (k) Make such representations and warranties to CytRx and the underwriters as are customarily
made by issuers to selling stockholders and underwriters, as the case may be, in primary
underwritten public offerings.

     SECTION 5. Furnish Information. It shall be a condition precedent to the obligations
of RXi to take any action pursuant to this Exhibit with respect to the registration of any CytRx’s
Registrable Shares that CytRx shall take such actions and furnish to RXi such information regarding
itself, the Registrable Shares held by it, and the intended method of disposition of such
securities, as RXi 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 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 Registrable Shares only in accordance with and in the manner of the
distribution contemplated by the applicable registration statement and prospectus. In addition,
CytRx shall promptly notify RXi 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.

     SECTION 6. Expenses of Demand Registration. All expenses incurred in connection with
any registration pursuant to Section 2 or Section 11 (excluding underwriters’ discounts and
commissions), including, without limitation, all registration and qualification fees, printers’ and
accounting fees, fees and disbursements of counsel for RXi, and the reasonable fees and
disbursements of one special counsel for CytRx, shall be borne by RXi whether or not the
registration statement to which such registration expenses relate becomes effective; provided,
however, that RXi shall not be required to pay for any expenses of any registration proceeding
begun pursuant to Section 2 if the registration request is subsequently withdrawn at the request of
CytRx (in which case CytRx shall bear such expenses), unless CytRx agrees to forfeit its right to
demand registrations pursuant to Section 2.

     SECTION 7. RXi Registration Expenses. All expenses (excluding underwriters’ discounts
and commissions) incurred in connection with any registration pursuant to Section 3, including,
without limitation, any additional registration and qualification fees and any additional fees and
disbursements of counsel to RXi that result from the inclusion of securities held by CytRx in such
registration and the reasonable fees and disbursements of one special counsel for CytRx, shall be
borne by RXi whether or not the registration statement to which such registration expenses relate
becomes effective.

     SECTION 8. Underwriting Requirements.

          (a) In connection with any offering under Section 3 involving an underwriting of shares being
issued by RXi, RXi shall not be required to include any Registrable Shares in such underwriting
unless CytRx accepts the terms of the underwriting as agreed upon between RXi and the underwriters
selected by it, and then only in such quantity as will not, in the reasonable opinion of the
underwriters, jeopardize the success of the offering by RXi. If the total amount of securities
that CytRx requests to be included in an underwritten offering under

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Section 3 exceeds the amount of securities that the underwriters reasonably believe compatible
with the success of the offering, RXi may exclude some or all of the Registrable Shares from such
registration and underwriting.

          (b) With respect to any underwriting of shares to be registered under Section 2 or Section 11,
CytRx shall have the right to designate the managing underwriter or underwriters, subject to the
consent of RXi. In connection with any underwritings of shares to be registered under Section 3,
RXi shall have the right to designate the managing underwriter or underwriters. In any such case,
such consent of RXi or CytRx shall not be unreasonably withheld or delayed.

     SECTION 9. Delay of Registration. CytRx 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 Exhibit.

     SECTION 10. Indemnification. In the event any Registrable Shares are included in a
registration statement under this Exhibit:

          (a) To the extent permitted by law, in connection with any Registration in which Registrable
Shares are included, RXi will indemnify and hold harmless CytRx and its officers, directors and
stockholders, legal counsel and accountants for CytRx, any underwriter (as defined in the
Securities Act) for CytRx and each person, if any, who controls CytRx 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 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 RXi of any rule or regulation promulgated under the
Securities Act applicable to RXi and relating to action or inaction required of RXi in connection
with any such registration; and will promptly reimburse CytRx, 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 10(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 RXi (which consent shall not be unreasonably withheld or
delayed) nor shall RXi be liable to CytRx, 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 RXi expressly for use in connection with such
registration by or on behalf of CytRx, or any underwriter, controlling person or other
aforementioned person, (ii) is caused by the failure of CytRx to deliver a copy of the final
prospectus relating to such Registrable Shares, as then amended or supplemented, in connection with
a purchase, if RXi had previously furnished copies thereof to CytRx or (iii) is caused by CytRx’s
disposition of Registrable Shares during

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any period during which CytRx is obligated to discontinue any disposition of Registrable
Shares under Section 13.

          (b) To the extent permitted by law, CytRx will indemnify and hold harmless RXi, each of its
directors, each of its officers who has signed the registration statement, each person, if any, who
controls RXi within the meaning of the Securities Act, and any underwriter (within the meaning of
the Securities Act) for RXi against any losses, claims, damages or liabilities to which RXi 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 RXi by CytRx
expressly for use in connection with such registration; and will promptly reimburse RXi 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 10(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 CytRx (which consent
shall not be unreasonably withheld or delayed) and provided further that CytRx shall not have any
liability under this Section 10(b) in excess of the net proceeds actually received by CytRx in the
relevant public offering.

          (c) Promptly after receipt by an indemnified party under this Section 10 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 10, 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 10, 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 10.

          (d) If the indemnification provided for in this Section 10 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 10(a) or Section 10(b) 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 RXi and CytRx in connection with the statements or omissions described in such
Section 10(a) or Section 10(b) which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative fault of RXi and

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CytRx 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 RXi or CytRx 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 10, 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 10(c) with respect to notice
of commencement of any action shall apply if a claim for contribution is to be made under this
Section 10(d); provided, however, that no additional notice shall be required with respect to any
action for which notice has been given under subsection Section 10(c) for purposes of
indemnification. RXi and CytRx agree that it would not be just and equitable if contribution
pursuant to this Section 10 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 10(d), CytRx shall not be required to
contribute an amount in excess of the net proceeds actually received by CytRx 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.

     SECTION 11. Registrations on Form S-3.

          (a) If (i) RXi shall receive a written request (specifying that it is being made pursuant to
this Section 11) from CytRx that RXi file a registration statement on Form S-3 (or any successor
form to Form S-3 regardless of its designation) for a public offering of Registrable Shares the
reasonably anticipated aggregate price to the public of which would equal or exceed $1,000,000, and
(ii) RXi is a registrant entitled to use Form S-3 (or any successor form to Form S-3) to register
such shares, then RXi shall use its best efforts to cause all Registrable Shares that CytRx has
requested be registered to be registered on Form S-3 (or any successor form to Form S-3).

          (b) Notwithstanding the foregoing, (i) RXi shall not be obligated to effect a registration
pursuant to this Section 11 during the period starting with the date sixty (60) days prior to RXi’s
estimated date of filing of, and ending on a date six (6) months following the effective date of, a
registration statement pertaining to an underwritten public offering of securities for the account
of RXi, provided that RXi is actively employing in good faith its best efforts to cause such
registration statement to become effective and that RXi’s estimate of the date of filing such
registration statement is made in good faith; (ii) RXi shall not be obligated to effect a
registration pursuant to this Section 11 within six (6) months after the effective date of a prior
registration under this Section 11; and (iii) if RXi shall furnish to CytRx a certificate signed by
the President of RXi stating that in the good faith judgment of the Board of Directors it would be
seriously detrimental to RXi or its shareholders for a registration statement to be filed in the
near future, then RXi’s obligation to use its best efforts to file a registration statement shall
be deferred for a period not to exceed ninety (90) days; provided, however, that RXi shall not be
permitted to so defer its obligation more than once in any 12-month period.

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          (c) CytRx’s rights to registration under this Section 11 are in addition to, and not in lieu
of, their rights to registration under Section 2 and Section 3 of this Exhibit.

     SECTION 12. No Transfer of Registration Rights. The registration rights and
obligations of CytRx under this Exhibit with respect to any Registrable 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 CytRx or any entity that merges with or into CytRx

     SECTION 13. Future Events. If CytRx is, at the time participating in a Registration,
RXi will notify CytRx of the occurrence of any of the following events of which RXi is actually
aware, and when so notified, CytRx will immediately discontinue any disposition of Registrable
Shares until notified by RXi that such event is no longer applicable:

          (a) 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 RXi will make reasonable efforts to obtain the
withdrawal of any such order or the cessation of any such proceedings); or

          (b) 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 RXi will make reasonable efforts to amend the applicable document to correct the deficiency).

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