Document:

exv4w2

Exhibit 4.2

THIS NOTE AND THE SECURITIES UNDERLYING THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE SOLD, TRANSFERRED OR
ASSIGNED UNLESS COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, A TRANSFER MEETING
THE REQUIREMENTS OF RULE 144 OF THE SECURITIES AND EXCHANGE COMMISSION, OR AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY SUCH TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

RNCS, INC.

SECURED CONVERTIBLE PROMISSORY NOTE

			
	Up to $78,947.37
	 	San Francisco, California

September 24, 2011

     For Value Received, RNCS, Inc., a Delaware corporation (the “Company”),
hereby unconditionally promises to pay to the order of RTW Investments, LLC (together with its
successors and assigns, “Holder”), in lawful money of the United States of America and in
immediately available funds, the principal sum of up to Seventy Eight Thousand Nine Hundred Forty
Seven and 37/100 Dollars ($78,947.37), or such lesser amount as the Company may owe Holder
hereunder, as determined in accordance with Section 1.2 (such amount, the
“Principal”), together with accrued and unpaid interest thereon, each due and payable on
the date and in the manner set forth below.

     This Secured Convertible Promissory Note (this “Note”) is one of a series of Secured
Convertible Notes (collectively, the “Notes”) executed and delivered in connection with
that certain Securities Purchase Agreement by and among the Company and the purchasers listed on
Annex I thereto (the “Investors”), dated as of September 24, 2011 (the
“Securities Purchase Agreement”). Subject to the terms and conditions of the Notes, funds
will be provided to the Company under the Notes in up to three funding tranches of Five Hundred
Thousand Dollars ($500,000) each, with the first tranche to be funded concurrently with the
execution and delivery of the Notes (the “First Tranche”). The purchasers of the Notes
under the Securities Purchase Agreement other than the Holder are referred to below as the
“Other Holders” and the Other Holders and the Holder are collectively referred to herein as
the “Holders.” All capitalized terms used herein and not otherwise defined herein will
have the respective meanings given to them in the Securities Purchase Agreement.

     1. Principal Repayment; Security.

          1.1 Repayment of this Note will be made in lawful money of the United States of America to
Holder at 1350 Avenue of the Americas, 28th Floor, New York, NY 10019, or at such other
place as Holder may designate in writing. Unless earlier converted pursuant to Section 4
hereof, the Principal and accrued and unpaid interest will be due and payable in cash on the
earlier to occur of (the “Maturity Date”): (i) 150 days from the date set forth above, or
(ii) an Event of Default (as defined below). This Note is secured by certain collateral of the
Company and RXi (defined below) and subject to a guaranty, as described in that certain: (a)

1

 

Security Agreement, dated September 24, 2011, by and between the Company and Tang Capital
Partners, LP as agent (the “Agent”); (b) Pledge, Assignment and Security Agreement, dated
September 24, 2011, by and between RXi Pharmaceuticals Corporation, a Delaware corporation
(“RXi”); and the Agent, and (c) General Continuing Guaranty, dated September 24, 2011, by
and between RXi and the Agent.

          1.2 The Principal due under Section 1.1 shall be equal to: (x) Twenty Six Thousand
Three Hundred Fifteen and 79/100 Dollars ($26,315.79), which sum the Holder has lent to the Company
concurrent with the execution of this Note (the “First Tranche Loan Amount”), plus (y) the
Second Tranche Loan Amount and the Third Tranche Loan Amount (each defined below), to the extent
such sums are lent to the Company in accordance with Section 1.3 of this Note.

          1.3 Use of Proceeds; Additional Tranches.

               1.3.1 The funds provided by the Holders in the First Tranche will be used to fund the
Company’s operations pursuant to the budget attached hereto as Annex A (the “Initial
Budget”). Subject to the approval of the Second Tranche Budget and the Third Tranche Budget
(each defined below), the Holders will provide up to two additional funding tranches of Five
Hundred Thousand Dollars ($500,000) each, as set forth below.

               1.3.2 Within fifteen (15) days prior to the exhaustion of the funds underlying the First
Tranche, the Company will present the Holders with an updated budget for their review and approval,
in their sole discretion (the “Second Tranche Budget”), which budget will detail the
planned use of proceeds for a second tranche of funding under the Notes in the aggregate sum of sum
of Five Hundred Thousand Dollars ($500,000) (the “Second Tranche”). Upon the Company and
the Requisite Holders (defined below) mutually agreeing upon the use of proceeds under the Second
Tranche Budget, the Holders will fund the Second Tranche, with the Holder under this Note thereupon
being required to lend the Company an additional Twenty Six Thousand Three Hundred Fifteen and
79/100 Dollars ($26,315.79) of Principal hereunder (the “Second Tranche Loan Amount”).
Upon the funding of the Second Tranche Loan Amount, interest will thereafter accrue on such
additional Principal balance, as set forth below in Section 2.

               1.3.3 Within fifteen (15) days prior to the exhaustion of the funds underlying the Second
Tranche, the Company will present the Investors with an updated budget for their review and
approval, in their sole discretion (the “Third Tranche Budget”), which budget will detail
the planned use of proceeds for a third tranche of funding under the Notes in an amount equal to in
the aggregate sum of sum of Five Hundred Thousand Dollars ($500,000) (the “Third Tranche”).
Upon the Company and the Requisite Holders (defined below) mutually agreeing on the use of
proceeds under the Third Tranche Budget, the Holders will fund the Third Tranche, with the Holder
under this Note thereupon being required to lend the Company an additional Twenty Six Thousand
Three Hundred Fifteen and 79/100 Dollars ($26,315.79) of Principal hereunder (the “Third
Tranche Loan Amount”). Upon the funding of the Third Tranche Loan Amount, interest will
thereafter accrue on such additional Principal balance, as set forth below in Section 2.
For purposes of this Note, each of the Initial Budget, the Second Tranche Budget and the Third
Tranche Budget are referred to below as a “Budget.”

2

 

     2. Interest Rate. The Company further promises to pay interest on the outstanding
Principal from the date hereof until payment in full, with interest accruing from the Funding Date
(defined below) with respect to each tranche at a rate of seven percent (7.0%) per annum or the
maximum rate permitted by law, whichever is less. Interest will be due and payable on the Maturity
Date and will be calculated on the basis of a 360-day year for the actual number of days elapsed.
Notwithstanding the foregoing, upon the occurrence of an Event of Default, interest shall
thereafter accrue at a rate of eighteen percent (18%) per annum, or the maximum rate permitted by
law, whichever is less. For purposes of this Section 2, the “Funding Date” shall
mean the respective dates on which the Company receives the First Tranche Loan Amount, the Second
Tranche Loan Amount and the Third Tranche Loan Amount.

     3. Prepayment. The Company may not in whole or in part prepay its obligations under
this Note without the prior written consent of Holder.

     4. Conversion

          4.1 Series A Preferred Conversion. At the Closing, the Principal and accrued interest
due under the Note will automatically convert into fully paid shares (the “Conversion
Shares”) of Series A Preferred at rate of $1,000 per share. To the extent necessary, the
Company may issue fractional shares of Series A Preferred in issuing the Conversion Shares pursuant
to this Section 4.1.

          4.2 Common Stock Conversion. If, as of the Maturity Date, (i) neither the Company nor
the Investors have terminated the Securities Purchase Agreement pursuant to Sections 8.01(d) or
8.01(e), respectively, and (ii) the Closing has not occurred, then, in such case, this Note will be
automatically cancelled as to 50% of the outstanding balance (i.e., Principal and accrued interest)
thereof in exchange for the Company’s sale and issuance to the Investors at such time of a number
of shares of Company common stock, par value $0.0001 per share, (the “Common Stock”)
constituting 51% of the outstanding shares of Common Stock (measured on a Fully-Diluted Basis)
immediately following such issuance, after giving effect to the issuance contemplated by the
Advirna Amendment. The remaining balance due under this Note will be due and payable at the
Maturity Date as set forth herein. For purposes of this Note, “Fully-Diluted Basis”
includes the issued and outstanding capital stock of the Company, determined on an as-converted
basis, as well as any securities underlying outstanding options, warrants, convertible securities
or future stock issuance obligations, conditional, unconditional or otherwise. In the events
described in clauses (i) and (ii), above, it is intended and agreed that the shares of Company
common stock held by RXi shall constitute 44% of the outstanding shares of Common Stock (measured
on a Fully-Diluted Basis) and that the Company, RXi and the holders shall enter into a customary
form of stockholders agreement under which RXi shall be entitled to designate one or more members
of the Board of Directors of the Company constituting a minority of the members of the Board of
Directors, to receive periodic financial and other information from the Company, tag-along (and
drag-along) rights in connection with proposed sales or other dispositions of capital stock of the
Company, and other protective rights as a minority stockholder of the Company, all as shall be
mutually agreed upon among the Company, RXi and the holders.

          4.3 Delivery of Stock Certificates, Etc.

3

 

               4.3.1 Conversion Pursuant to Section 4.1. If this Note is converted pursuant to
Section 4.1, written notice will be delivered to Holder at the address last shown on the
records of the Company for Holder or given by Holder to the Company for the purpose of notice,
notifying Holder of the conversion to be effected, the principal amount of this Note to be
converted, together with all accrued and unpaid interest, the date on which such conversion is
expected to occur and calling upon Holder to surrender to the Company, in the manner and at the
place designated, this Note. Upon such conversion of this Note, Holder agrees to deliver the
original of this Note (or a notice to the effect that the original Note has been lost, stolen or
destroyed and an agreement acceptable to the Company whereby the Holder agrees to indemnify the
Company from any loss incurred by it in connection with this Note) at the Closing for cancellation;
provided, however, that at such time, this Note will be deemed converted and of no
further force and effect, whether or not it is delivered for cancellation as set forth in this
sentence. The Company will, as soon as practicable thereafter, issue and deliver to Holder a
certificate or certificates for the number of shares to which Holder will be entitled upon such
conversion.

               4.3.2 Conversion Pursuant to Section 4.2. If this Note is converted pursuant to
Section 4.2, written notice will be delivered to Holder at the address last shown on the
records of the Company for Holder or given by Holder to the Company for the purpose of notice,
notifying Holder of the conversion to be effected, the amount of this Note to be converted (taking
into account all accrued and unpaid interest), the date on which such conversion is expected to
occur and the remaining balance due under the Note. The written notice shall also call upon Holder
to surrender to the Company, in the manner and at the place designated, this Note and the remaining
balance due under this Note. Upon such conversion of this Note and payment of remaining balance
due, Holder agrees to deliver the original of this Note (or a notice to the effect that the
original Note has been lost, stolen or destroyed and an agreement acceptable to the Company whereby
the Holder agrees to indemnify the Company from any loss incurred by it in connection with this
Note) on the Maturity Date for cancellation; provided, however, that at such time,
as long as the remaining balance due under this Note is paid in full, this Note will be deemed
converted as set forth in Section 4.2 and paid in full and of no further force and effect,
whether or not it is delivered for cancellation as set forth in this sentence. The Company will,
as soon as practicable thereafter, issue and deliver to Holder a certificate or certificates for
the number of shares to which Holder will be entitled upon such conversion.

               4.3.3 Any conversion of this Note pursuant to Section 4 will be deemed to have been
made immediately prior to the Closing or the Maturity Date, as applicable, and on and after such
date the persons entitled to receive the shares issuable upon such conversion will be treated for
all purposes as the record Holder of such shares.

     5. Default. If any of the following events (hereafter called “Events of
Default”) occur:

          (a) The Company makes a general assignment for the benefit of creditors;

          (b) The Company files a voluntary petition in bankruptcy, or becomes insolvent or adjudicated
bankrupt, or files any petition or answer seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under the

4

 

present or any future federal bankruptcy act or other applicable federal, state or other
statute, law or regulation, or files any answer admitting the material allegation of a petition
filed against the Company in such proceeding, or seeks or consents to or acquiesce in the
appointment of any trustee, receiver or liquidator of the Company of all or any substantial part of
the properties of the Company, or the Company commences the winding up or the dissolution or
liquidation of the Company;

          (c) Within sixty (60) days after a court of competent jurisdiction has entered an order,
judgment or decree approving any complaint or petition against the Company seeking reorganization,
dissolution or similar relief under the present or any future federal bankruptcy act or other
applicable federal, state or other statute, law or regulation, such order, judgment or decree has
not been dismissed or stayed pending appeal, or, within sixty (60) days after the appointment,
without the consent or acquiescence of the Company, of any trustee, receiver or liquidator of the
Company or of all or any substantial part of the properties of the Company, such appointment has
not been vacated or stayed pending appeal, or if, within sixty (60) days after the expiration of
any such stay, has not been vacated;

          (d) The Company or RXi materially breach any representation, warranty or covenant contained in
the Transaction Documents and such breach is not cured (if it can be cured) within five (5)
Business Days after the Investors provide notice of such breach;

          (e) The Company’s actual aggregate expenditures with respect to any Budget exceed 105% of the
aggregate budgeted amount for that time period covered by such Budget, without the prior approval
of the Investors;

          (f) There is a Material Adverse Effect with respect to the Company, the Company or RXi provide
written notice to the Investors that either of them will be unable to satisfy a condition to
Closing set forth in Article V of the Securities Purchase Agreement, or the Securities
Purchase Agreement is terminated by the Investors as permitted under Section 8.01(e)
thereof;

          (g) A final judgment or order for the payment of monetary damages or awarding injunctive
relief in connection with the transactions contemplated by the Securities Purchase Agreement is
rendered against the Company and the same remains undischarged for a period of thirty (30) days
during which execution has not been effectively stayed, or any injunction, judgment, writ,
assessment, warrant of attachment, or execution or similar process has been issued or levied
against a substantial part of the property of the Company, if any and such injunction, judgment,
writ, or similar process is not released, stayed, vacated or otherwise dismissed within thirty (30)
days after issue or levy;

     then, and in each and every such case, amounts under this Note will be forthwith due and
payable, without presentation, protest or further demand or notice of any kind, all of which are
hereby expressly waived. The Company will give prompt written notice to Holder of the occurrence
of any and all of the foregoing events. In addition to the foregoing remedies, upon the occurrence
and during the continuance of any Event of Default, Holder may exercise any other right power or
remedy granted to it by the Transaction Documents or otherwise permitted to it by law, either by
suit in equity or by action at law, or both.

5

 

     For the purposes of this Note, a “Business Day” means a day other than a Saturday or a Sunday
on which banks are open for business in New York.

     6. Payment. Unless converted into the Company’s equity securities pursuant to the
terms hereof, payment will be made in lawful tender of the United States.

     7. Waiver. The Company waives presentment and demand for payment, notice of
dishonor, protest and notice of protest of this Note, and will pay all costs of collection when
incurred, including, without limitation, reasonable attorneys’ fees, costs and other expenses. The
right to plead any and all statutes of limitations as a defense to any demands hereunder is hereby
waived to the fullest extent permitted by law.

     8. Assignment. The rights, interests or obligations hereunder may not be assigned, by
operation of law or otherwise, in whole or in part, by the Company without the prior written
consent of Holder.

     9. Registration, Transfer and Replacement of the Note. This Note will be a registered
Note. The Company will keep, at its principal executive office, books for the registration and
registration of transfer of this Note. Prior to presentation of any Note for registration of
transfer, the Company will treat the person in whose name such Note is registered as the owner and
Holder of such Note for all purposes whatsoever, whether or not such Note will be overdue, and the
Company will not be affected by notice to the contrary. Subject to any restrictions on or
conditions to transfer set forth herein, the Holder, at its option, may in person or by duly
authorized attorney surrender the same for exchange at the Company’s chief executive office, and
promptly thereafter and at the Company’s expense, except as provided below, receive in exchange
therefor one new Note, in the principal requested by such holder, dated the date to which interest
will have been paid on the Note so surrendered or, if no interest will have yet been so paid, dated
the date of the Note so surrendered and registered in the name of such person or persons as will
have been designated in writing by such Holder or its attorney for the same principal amount as
then unpaid principal amount of the Note so surrendered. Upon receipt by the Company of evidence
reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of
any Note and (a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to
it; or (b) in the case of mutilation, upon surrender thereof, the Company, at its expense, will
execute and deliver in lieu thereof a new Note executed in the same manner as the Note being
replaced, in the same principal amount as the unpaid principal amount of such Note and dated the
date to which interest will have been paid on such Note or, if no interest will have yet been so
paid, dated the date of such Note.

     10. Governing Law; Consent to Jurisdiction. This Note and all actions arising out of
or in connection with this Note will be governed by and construed in accordance with the laws of
the State of California, without regard to the conflicts of law provisions of the State of
California or of any other state. Each of the Company and the Holder (i) hereby irrevocably
submits to the exclusive jurisdiction of the United States District Court sitting in California and
the courts of the State of California for the purposes of any suit, action or proceeding arising
out of or relating to this Note and (ii) hereby waives, and agrees not to assert in any such suit,
action or proceeding, any claim that it is not personally subject to the jurisdiction of such
court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action

6

 

or proceeding is improper. Each of the Company and the Holder consents to process being served
in any such suit, action or proceeding by mailing a copy thereof to such party at the address in
effect for notices to it under the Securities Purchase Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing in this Section
10 shall affect or limit any right to serve process in any other manner permitted by law. Each
of the Company and the Holder hereby agree that the prevailing party in any suit, action or
proceeding arising out of or relating to this Note shall be entitled to reimbursement for fees and
expenses, including reasonable legal fees, from the non-prevailing party.

     11. Notices. All notices and other communications required or permitted hereunder
will be in writing and will be transmitted by e-mail or facsimile, or, if sent within the United
States, mailed by first-class mail, postage prepaid, to the address set forth below the recipient’s
signature, or at such other address as the recipient will have furnished to the other party in
writing. All notices will be deemed effectively delivered upon transmission or mailing.

     12. Amendment. No provision of the Notes may be modified or amended on behalf of all
of the Holders other than by a written instrument signed by the Company and the holders of at least
a majority of the combined principal amount of the then outstanding Notes (the “Requisite
Holders”); provided that if any of the rights of the Holder under this Note are materially
diminished by such waiver or amendment in a manner that is not similar in all material respects to
the effects on the Other Holders, then such waiver or amendment shall not be effective with respect
to the Holder without the written consent of the Holder. The Holder acknowledges that any
amendment or modification made in compliance with this Section 12 shall be binding on all
Holders of the Notes, including, without limitation, an amendment or modification that has an
adverse effect on any or all Holders. Notwithstanding the foregoing, nothing provided in this
Section 12 shall limit the Holder’s right to waive or amend any provision of this Note on
its own behalf. No consideration shall be offered or paid to any Holder of Notes to amend or waive
or modify any provision of the Notes unless the same consideration is also offered to all of the
Holders holding Notes on the date of such amendment, waiver or modification, on a pro rata basis
based upon the outstanding Principal amount of the Notes. This provision constitutes a separate
right granted to each Holder by the Company and shall not in any way be construed as the Holders
acting in concert or as a group.

     13. Ranking of Notes. The obligations of the Company under the Notes shall be senior
in time and right of payment to all other Indebtedness (defined below) of the Company. Upon
maturity or any Event of Default, the Holder will be entitled to receive, before any distribution
or payment is made upon, or set apart with respect to, any Indebtedness of the Company other than
Indebtedness represented by the Notes, or any class of capital stock of the Company, an amount
equal to the Principal amount plus all accrued and unpaid interest thereon. For purposes of this
Section 13, “Indebtedness” means (a) all obligations for borrowed money; (b) all
obligations evidenced by bonds, debentures, notes, or other similar instruments and all
reimbursement or other obligations in respect of letters of credit, bankers acceptances, current
swap agreements, interest rate hedging agreements, interest rate swaps, or other financial
products; (c) all capital lease obligations; (d) all obligations or liabilities secured by a lien
or encumbrance on any asset of the Company, irrespective of whether such obligation or liability is
assumed; (e) all obligations for the deferred purchase price of assets, together with trade debt
and other accounts payable; (f) all synthetic leases; (g) any obligation guaranteeing or intended
to

7

 

guarantee (whether directly or indirectly guaranteed, endorsed, co-made, discounted or sold
with recourse) any of the foregoing obligations of any other person; (h) trade debt; and (i)
endorsements for collection or deposit.

     14. Usury. In the event any interest is paid on this Note which is deemed to be in
excess of the then legal maximum rate, then that portion of the interest payment representing an
amount in excess of the then legal maximum rate will be deemed a payment of principal and applied
against the principal of this Note.

[Signature page follows]

8

 

     IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first set forth
above.

	 	 	 	 	 
	 	RNCS, Inc.

 	 
	 	By:  	/s/ Mark J. Ahn
 	 
	 	 	Name:  	Mark J. Ahn, Ph.D. 	 
	 	 	Title:  	President and Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	Agreed and Accepted:

RTW Investments, LLC

 	 
	 	By:  	/s/ Roderick Wong
 	 
	 	 	Name:  	Roderick Wong 	 
	 	 	Title:  	Managing Member 	 
	 

[Signature Page to Note]exv10w3

 Exhibit 10.3

Text Marked By [* * *] Has Been Omitted Pursuant To A Request For Confidential Treatment And Was

Filed Separately With The Securities And Exchange Commission.

RXi Pharmaceuticals Corporation

One Innovation Drive

Worcester, MA 01605

Attention: Tod Woolf, President and CEO

Re: Patent Rights Based On Certain Patent Applications To Be Filed Claiming The Benefit Of One Or
More Of USSN 10/940892, 10/7 14333, 60/502050 and 60/426 137

Ladies and Gentlemen:

     In connection with the future filing of U.S. patent applications by Dharmacon, Inc., a
Delaware corporation (“Dharmacon”) claiming the benefit of one or more of U.S. applications
10/940892, 10/714333, 60/502050 and 60/426137 (the ‘Priority Applications”), Dharmacon and RXi
agree as follows:

	 	1.	 	RXi shall pay Dharmacon $150,000 as a non-refundable (except if the 12 applications
are not able to be filed, the pro rata amount shall be refundable) fee within 30 days of
the signing of this letter. The $150,000 shall be credited towards the $[***] fee per
application filed between October 24, 2007 and October 31, 2007 that meets the criteria
of paragraph 3, below. RXi shall pay Dharmacon a further non-refundable fee of $[***] per
additional (beyond the first 12 cited above) application filed between October 24, 2007
and October 31, 2007 that meets the criteria of paragraph 3, below, payable within thirty
(30) days of RXi’s receipt of notice of the filing of the respective First Round
Application. If it comes to pass that the U S Patent And Trademark Office allows claims
to additional gene targets to be filed and prosecuted subsequent to Nov 1st
2007, then RXi shall have the right to add additional human gene targets under the terms
of this agreement for an initial fee of $[***] per additional human gene target for the
First Round Application as specified herein and under the additional terms and
restrictions set forth in this agreement.
	 
	 	2.	 	At or before 3 PM MDT on October 26, 2007, RXi shall transmit to Dharmacon a list
of no more than fifty (50) proposed human gene targets (by name and NCBI accession
number) in priority ranking order. Dharmacon shall promptly inform RXi which of the
proposed gene targets are excluded because of Dharmacon commitments to third

 

 

	 	 	 	parties (“Excluded Targets”) or because Dharmacon has already filed, prior to October
24, 2007, a U S patent application claiming priority from one or more of the Priority
Applications directed to sequences for silencing that human gene target (“Already Filed
Targets”).
	 
	 	3.	 	For each human gene target proposed by RXi which is not an Excluded Target or an
Already Filed Target, Dharmacon shall use commercially reasonable efforts (following
RXi’s prioritization) to file a target-specific application before November 1, 2007
directed at multiple sequences disclosed, but not claimed, in at least one of the
Priority Applications. Dharmacon shall report promptly to RXi which such patent
applications (First Round Applications) have been filed and, for each, the serial number
and filing date. After Dharmacon’s receipt of the $[***] fee per First Round
Application, Dharmacon shall transmit to RXi a copy of the respective First Round
Application Information transmitted by either party to the other under Paragraphs 2 and 3
shall be subject to an obligation of non-disclosure in effect until December 31, 2008,
excluding that which is in the public domain, but otherwise shall be without obligation
except as expressly provided in this agreement.
	 
	 	4.	 	Each human gene target on which a First Round Application has been filed shall
remain subject to the following terms so long as the First Round Application and any
divisional or continuation of that First Round Application remains pending or, if issued,
remains in force, provided, however, that RXi may remove any First Round Application (and
the associated human gene target) from the coverage of these terms by thirty days notice
to Dharmacon.
	 
	 	5.	 	So long as a human gene target is subject to these terms, RXi shall promptly
reimburse Dharmacon for: (a) any and all out-of-pocket expenses (including outside
attorney fees and USPTO fees) associated with the prosecution (but not filing which would
have already been paid as part of the fees specified above) of each respective First
Round Application and (b) any and all out-of-pocket expenses (including outside attorneys
fees and USPTO fees) associated with the filing and prosecution of each divisional or
continuation of each respective First Round Application which RXi either proposes (and
Dharmacon accepts) or which Dharmacon proposes (and RXi accepts). Neither party shall be
obligated to file or support more than three pending applications at any one time on the
same human gene target.
	 
	 	6.	 	So long as a human gene target is subject to these terms, RXi shall have a
non-exclusive license under the respective First Round Application and all continuations
and divisionals of it to make, use and sell siRNA (defined herein as RNAi having a
duplexed region shorter than 25 nucleotides) compositions and methods for all purposes
including, without limitation, research, diagnostics, the development of therapeutics
(subject to the progress payments of Paragraph 10) and therapeutics compositions and
methods (subject to the progress payments of Paragraph 10 having been paid). Each such
license shall be without the right to sublicense or assign, except as provided in
paragraphs 8 and 9, below. Furthermore, so long as a human gene target is subject to
these terms, RXi shall have an exclusive license

 

 

	 	 	 	under the respective First Round Application and all continuations and divisionals of it
to make, use and sell RNAi compositions and methods for RNAi compounds having a duplexed
region 25 nucleotides or longer that cleave the respective target mRNA and specifically
excludes antigomers, for all purposes including, without limitation, research,
diagnostics, the development of therapeutics (subject to the progress payments of
Paragraph 10) and therapeutics compositions and methods (subject to the progress
payments of Paragraph 10 having been paid); provided, however, that for RNAi compounds
having a duplexed region of 25 nucleotides or longer, Dharmacon reserves a non-exclusive
right to make, use and sell for research purposes. Each such license shall be without
the right to sublicense or assign, except as provided in paragraphs 8 and 9, below.
	 
	 	7.	 	Dharmacon shall consult with, and give reasonable consideration to the comments and
recommendations of RXi in the prosecution of each First Round Application subject to this
agreement and in the selection, filing and prosecution of divisional applications and
continuation applications claiming priority from each such First Round Application
(“Subsequent Round Applications”). To the extent that RXi has made a progress payment
under paragraph 10 with respect to a particular sequence which is within the scope of a
First Round Application as filed which has been subject to a restriction requirement,
Dharmacon shall either (after consultation with RXi) elect a species which covers RXi’s
sequence of interest or, if the period for such election has passed, file a divisional
application directed to a species which covers RXi’s sequence of interest.
	 
	 	8.	 	RXi may not sublicense any rights under this agreement to any third party, except
for the limited purpose of evaluating siRNA composition made by RXi for possible
acquisition of rights consistent with the terms of paragraph 9, below.
	 
	 	9.	 	RXi may not assign its rights under this agreement to any third party (including
without limitation, a change of control in RXi), in whole or in part, except:

	 	a.	 	With respect to a particular human gene target which is subject to this
Agreement, RXi may assign its license rights to a third party upon paying Dharmacon
a non-refundable, non-creditable fee of [***], provided that RXi shall remain
liable (along with the third party assignee) to reimburse Dharmacon for patent
filing and prosecution costs unless and until Dharmacon is notified by RXi that the
license rights with respect to that human gene target have been terminated.
	 
	 	b.	 	With respect to all of RXi’s license rights (excluding those assigned
to other third parties under subparagraph 9(a)), RXi may assign all of its rights
hereunder in case of a merger or acquisition of its RNAi therapeutics program to a
single third party (or such rights may survive a change of control in RXi).

 

 

	 	c.	 	If such merger or acquisition involves payment to RXi or RXi
shareholders of $[***] or more by a company worth [***] dollars or more, RXi pays
Dharmacon $[***].

	 	10.	 	If RXi or a permitted assignee under subparagraph 9(a) or 9(b) achieves any of the
following milestones with respect to the therapeutic development of an siRNA composition
covered by any of: a) a First Round Application as filed or b) a pending continuation or
division of a First Round Application or c) any patent issuing on either, then Dharmacon
shall be paid the milestone payment indicated below (for which RXi shall remain
responsible, jointly and severally with the permitted assignee unless Dharmacon has
expressly accepted the assignee as solely responsible):

	 	a.	 	Approval of IND or equivalent $[***]
	 
	 	b.	 	First dosing in a Phase II study $[***]
	 
	 	c.	 	First dosing in a Phase III study $[***]
	 
	 	d.	 	Regulatory approval (USA) $[***]
	 
	 	e.	 	Regulatory approval (EU) $[***]

     Each of milestone payments (a) through (e) shall be payable only once per therapeutic
indication for any particular human gene target.

	 	11.	 	For sales of siRNA compositions covered by a claim of an issued patent in the
country of manufacture, use or sale, RXi and its permitted assignee shall pay Dharmacon a
royalty of [***] percent ([***]%) of Net Sales (subject to standard definitions) for an
exclusive license or [***] percent ([***]%) for a non-exclusive license. RXi shall be
permitted to downgrade to a nonexclusive license at it sole discretion.
	 
	 	12.	 	Upon payment of either Regulatory Approval milestone payment with respect to a
particular human gene target and indication, RXi or its permitted assignee may notify
Dharmacon which particular sequence (among those disclosed in the respective First Round
Application) is the basis for the approval and, then and only then, the licenses provided
in this Agreement shall become exclusive for nucleic acids compositions containing that
sequence, directed against that human gene target for that clinical indication (subject
to whatever rights Dharmacon may have granted to third parties during the period of
non-exclusivity). Within the scope of such exclusivity, RXi or the permitted licensee
shall have the right to participate (at its own expense) in any enforcement of
Dharmacon’s patent rights on such basis as the parties then reasonably determine.

 

 

	 	13.	 	No license is granted by either party to the other under any invention, patent
application or patent, nor are any rights granted by either party to the other expressly
or by implication with respect to any trade secret or other propriety right by virtue of
this Letter Agreement.
	 
	 	14.	 	While the parties shall negotiate in good faith a restated License Agreement to
memorialize the terms of this Letter Agreement in greater detail, it is the intention of
the parties that this Letter Agreement be a binding agreement, enforceable as of October
26, 2007 (the “Effective Date”). The parties may address, but undertake no obligation to
address intellectual property in the License Agreement which is not addressed in this
Letter Agreement.
	 
	 	15.	 	This Letter Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts irrespective of conflict of laws principles.
Any legal action that arises out of or in connection with its provisions shall be brought
solely in the Superior Court of Suffolk County, Massachusetts unless subject to the
exclusive jurisdiction of federal courts, in which event it shall be brought in the
federal district of Massachusetts.
	 
	 	16.	 	This letter agreement may be executed via facsimile or electronic means, and each
fully-signed copy exchanged by the parties shall be deemed to be an original of the same
instrument and agreement.

	 	 	 	 	 
	 	Dharmacon, Inc.

 	 
	 	By:  	/s/ Mitchell Kennedy
 	 
	 	 	Mitchell Kennedy, General Manager 	 
	 	 	Date: October 29, 2007	 
	 
	 	RXi Pharmaceuticals Corporation

 	 
	 	By:  	/s/ Tod Woolf
 	 
	 	 	Tod Woolf, Ph.D. 	 
	 	 	President and CEO

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00195-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00195-of-00352.parquet"}]]