Document:

exv10w6

EXHIBIT 10.6

Factory Building Lease Agreement

This Factory Building Lease Agreement (the “Lease Agreement”) is entered into as of March 1,
2008 (“Effective Date”) in the city of Shanghai, by and between SHANGHAI KAI HONG TECHNOLOGY
CO., LTD. (hereinafter referred to as “DSH”) with its registered office at No.1 Lane 18 San Zhuang
Road, Songjiang Export Processing Zone, Shanghai, P.R.China and SHANGHAI YUAN HAO ELECTRONIC CO.,
LTD. (hereinafter referred to as “Yuan Hao”) with its registered office at No.8 Lane 18 San Zhuang
Road, Songjiang Export Processing Zone, Shanghai, P.R.China

DSH and Yuan Hao are collectively referred to as the “Parties” and individually as a “Party”.

WHEREAS,

The Parties agree on the lease of a portion of the first floor of the Factory Building (as defined
below) and a portion of the second floor of the Factory Building. Yuan Hao represents that it is
the lawful owner of the Factory Building.

1. Definitions

Unless otherwise defined in this Lease Agreement, the terms used herein shall have the following
meanings:

1.1 “Factory Building” shall mean the three-story building located at No.8 Lane 18 San Zhuang Road,
Songjiang Export Processing Zone, Shanghai, P.R.China.

1.2 “First Floor” shall mean the portion of the first floor of the Factory Building that is to be
leased (Exhibit 1, first floor layout of the Factory Building).

1.3 “Second Floor” shall mean the portion of the second floor of the Factory Building that is to be
leased (Exhibit 1, second floor layout of the Factory Building).

1.4 “Lease Floors” shall mean First Floor and Second Floor of the Factory Building.

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1.5 “Lease Term” shall mean the period of time in which DSH is entitled to use the Lease Floors,
and Yuan Hao is entitled to receive rent from DSH in accordance with the terms and conditions of
the Lease Agreement.

1.6 “DSH #2 Building” shall mean the building in construction located at No.2 Lane 18 San Zhuang
Road, Songjiang Export Processing Zone, Shanghai, P.R.China.

2. The Standard of the Factory Building

2.1 Yuan Hao shall provide minimum quality standards for the Factory Building and shall guarantee
that ancillary facilities of the Factory Building and supports for the Lease Floors (such as the
Factory Building elevators) are in compliance with all the relevant quality standards and meet
DSH’s demands and requirements.

3. Lease Term

3.1For the Lease Floors, the Parties agree that the Lease Term shall begin on March 1, 2008
until the time when DSH #2 Building is leased by DSH.

3.2 DSH shall decide the initial lease date of DSH #2 Building and shall notify such initial lease
date of DSH #2 Building not less than thirty (30) days before the expiration of the Lease Term.

3.3 The Parties agree that the Lease Term for the Lease Floors shall be terminated without further
extension unless DSH gives written notice of a request to extend such Lease Term not less than
thirty (30) days before the expiration of the Lease Term. Yuan Hao shall not terminate this Lease
Agreement without DSH’s written approval. During the Lease Term extension period, the items
relating to the rental set forth in Article 5 of the Lease Agreement shall be adjusted on the basis
of the market prices at the time of the Lease Term extension and after consultation between the
Parties.

3.4 If during the Lease Term or the Lease Term extension period, Yuan Hao receives from a third
party a bona fide, legally binding offer to lease the portion of the Fourth Floor not already
leased by DSH, Yuan Hao shall notify DSH of this fact. The notice shall specify all the terms of
the bona fide third party offer. DSH shall then have thirty (30) days to lease that portion of the
Lease Floors specified in the third party’s bona fide

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offer for the rent and related details set forth in Articles 4 and 5. Yuan Hao shall not lease any
portion of the Lease Floors to any third party until the thirty (30) days has expired without DSH
exercising its right of first refusal. Any other terms not specified in this Lease Agreement
regarding the Lease Floors, both Parties shall negotiate and sign a supplemental agreement for
these unspecified terms. Such signed supplemental agreement shall constitute a part of the entire
Lease Agreement and shall have the same effectiveness as the entire Lease Agreement.

4. Total Lease Area of the Lease Floors

4.1 First Floor has a total lease area of 998 square meters.

4.2 Second Floor has a total lease area of 1,292 square meters.

4.3 Lease Floors has a total lease area of 2,280 square meters.

5. Rental

5.1 The Parties agree that the monthly rent per square meter for the First Floor shall be Renminbi
(“RMB”) 26.07 per square meter. The total monthly rent for the First Floor shall be RMB
25,757.16.

5.2 The Parties agree that the monthly rent per square meter for the Second Floor shall be RMB
26.07 per square meter. The total monthly rent for the Second Floor shall be RMB
33,682.44.

5.3 The Parties agree that the total monthly rent for the Lease Floors shall be RMB
59,439.60.

6. Deposit

DSH shall pay Yuan Hao a deposit amount of RMB 59,439.60 within ninty (90) days of the
Effective Date of the Lease Agreement.

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7. Method of Payment

For the Fourth Floor, DSH shall pay the Rental in RMB to the RMB bank account as designated by Yuan
Hao before the first day of every month.

8. Termination of the Lease Agreement

If either Party terminates the Lease Agreement prior to the expiration of the Lease Term without
the consent from the other Party, the Party that terminates the Lease Agreement shall pay damages
to the other Party to compensate for such Party’s actual loss. The amount of damages shall
include, but not be limited to, the reasonable profits, out-of-pocket costs, legal service fees,
Court fees, arbitration fees, accounting fees and removal or relocation fees.

9. Insurance and Repair Costs

9.1 During the term of the Lease Agreement, Yuan Hao shall purchase and maintain insurance coverage
to cover any and all casualty damage to the Factory Building, and shall be responsible for
repairing all structural damages to the Factory Building that are not the result of improper use by
DSH. DSH shall be responsible for all repair costs arising from improper building usage by DSH.
If Yuan Hao cannot obtain building insurance, DSH will need to obtain insurance for the Fourth
Floor, and Yuan Hao will reimburse DSH for all costs of such insurance coverage.

9.2 Yuan Hao shall be entitled to inspect the Factory Building at reasonable intervals and upon
reasonable notice to DSH. DSH shall provide assistance to allow such inspections.

10. Liability for Breach of the Lease Agreement

10.1 If DSH violates Article 5 of the Lease Agreement for failing to pay the Rental, then DSH shall
pay a penalty at the rate of 0.011% of the Rental for each day of delay.

10.2 If Yuan Hao breaches Articles 2, 3, 11 and any of its warranties set forth in this Lease
Agreement, Yuan Hao shall compensate DSH for all of DSH’s losses and damages including
consequential, special, punitive and incidental damages.

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10.3 DSH shall not:

	 	(1)	 	sub-lease the Lease Floors or exchange the use of the Lease Floors with any third
party without Yuan Hao’s prior written consent.

	 
	 	(2)	 	alter the structure of the Lease Floors or damage the Factory Building without Yuan
Hao’s prior written consent.

	 
	 	(3)	 	change the lease purpose stipulated by the competent authorities without Yuan Hao’s
consent.

11. Warranties

11.1 Yuan Hao hereby warrants that if the Factory Building is sold to any third party during the
Lease Term or the period of renewal, such third party shall be required to fulfill all obligations
of Yuan Hao under the Lease Agreement. If said third party fails to carry out the Lease Agreement,
Yuan Hao shall compensate DSH for all of DSH’s losses and damages including consequential, special,
punitive and incidental damages.

11.2 In case Yuan Hao mortgages the Factory Building to the third party, any loss suffered by DSH
shall be paid by Yuan Hao.

12. Force Majeure

12.1. The definition of Force Majeure

Force Majeure shall mean any event which arises after the Effective Date that is beyond the control
of the Parties, and is unforeseen, unavoidable and insurmountable, and which prevents total or
partial performance by either Party. Such events shall include earthquakes, typhoons, flood, fire,
war, acts of government or public agencies, strikes and ay other event which cannot be foreseen,
prevented and controlled, including events which are recognized as Force Majeure in general
international commercial practice.

12.2 Consequences of Force Majeure

a. If an event of Force Majeure occurs, the contractual obligation of a Party affected by such an
event shall be suspended during the period of delay and the time for performing such obligation
shall be extended, without penalty, for a period equal to such suspension.

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b. The Party claiming Force Majeure shall give prompt notice to the other Party in writing and
shall furnish, within fifteen (15) days thereafter, sufficient proof of the occurrence and expected
duration of such Force Majeure. The Party claiming Force Majeure shall also use all reasonable
efforts to mitigate or eliminate the effects of the Force Majeure.

c. If an event of Force Majeure occurs, the Parties shall immediately consult with each other in
order to find an equitable solution and shall use all reasonable efforts to minimize the
consequences of such Force Majeure.

13. Effective Date of the Lease Agreement

The Lease Agreement shall become effective after the legal representatives or authorized
representatives of both Parties affix their signatures and company seals on the Lease Agreement.

14. Language of the Lease Agreement

The Lease Agreement is made and executed in Chinese and English, both versions having equal
validity except as prohibited by law.

15. Settlement of Dispute

15.1 Friendly consultations

a. In the event of any dispute, difference, controversy or claim arising out of or related to the
Lease Agreement, including, but not limited to, any breach, termination or validity of the Lease
Agreement, (the “Dispute”) then upon one Party giving the other Party notice in writing of the
Dispute (the “Notice of Dispute”), the Parties shall attempt to resolve such Dispute through
friendly consultation.

b. If the Dispute has not been resolved through friendly consultations with thirty (30) days from
the Notice of Dispute, the Dispute shall be resolved by arbitration in accordance with Article 15.2
of this Lease Agreement. Such arbitration may be initiated by either Party.

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15.2 Arbitration

The arbitration shall be conducted by Shanghai Arbitration Commission in Shanghai, China in
accordance with its procedure and rules. The arbitration award shall be final and binding on the
Parties. The costs of arbitration shall be borne by the losing Party except as may be otherwise
determined by the arbitration tribunal.

15.3 Continuance of performance

Except for the matter in Dispute, the Parties shall continue to perform their respective
obligations under the Lease Agreement during any friendly consultations or any arbitration pursuant
to this Article 15.

15.4 Separability

The provisions of this Article 15 shall be separable from the other terms of the Lease Agreement.
Neither the terminated nor the invalidity of the Lease Agreement shall affect the validity of the
provisions of this Article 15.

16. Applicable Law

The validity, interpretation and implementation of the Lease Agreement and the settlement of
Disputes shall be governed by relevant laws of the People’s Republic of China and regulations that
are officially promulgated and publicly available.

17. Compliance with the Foreign Corrupt Practices Act

17.1 Yuan Hao acknowledges that DSH is a corporation with substantial presence and affiliation in
the United States and, as such, is subject to the provisions of the Foreign Corrupt Practices Act
of 1977 of the United States of America, 15 U.S.C. §§ 78dd-1, et seq., which prohibits the making
of corrupt payments (the “FCPA”). Under the FCPA, it is unlawful to pay or to offer to pay anything
of value to foreign government officials, or employees, or political parties or candidates, or to
persons or entities who will offer or give such payments to any of the foregoing in order to obtain
or retain business or to secure an improper commercial advantage.

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17.2 Yuan Hao further acknowledges that it is familiar with the provisions of the FCPA
and hereby agrees that Yuan Hao shall take or permit no action which will either constitute a
violation under, or cause DSH to be in violation of, the provisions of the FCPA.

18. Miscellaneous

18.1 Any amendment to this Lease Agreement shall be in writing and duly signed by both Parties.
Such amendment shall constitute a part of the entire Lease Agreement.

18.2 Both Parties acknowledge that they are aware of their respective rights, obligations and
liabilities and will perform their obligations under the Lease Agreement in accordance with the
provisions of the Lease Agreement. If one Party violates the Lease Agreement, the other Party
shall be entitled to claim damages in accordance with the Lease Agreement.

18.3 Any notice or written communication requited or permitted by this Lease Agreement shall be
made in writing in Chinese and English and sent by courier service. The date of receipt of a
notice or communication shall be deemed to be seven (7) days after the letter is deposited with the
courier service provided the deposit is evidenced by a confirmation receipt. All notice and
communications shall be sent to the appropriate address set forth below, until the same is changed
by notice given in writing to the other Party.

To: DSH

Address: No.1 Lane 18 San Zhuang Road, Songjiang Export Processing Zone, Shanghai, P.R.China

Attn.: Shanghai Kai Hong Technology Co., Ltd.

To: Yuan Hao

Address: No.8 Lane 18 San Zhuang Road, Songjiang Export Processing Zone, Shanghai, P.R.China

Attn.: Shanghai Yuan Hao Electronic Co., Ltd.

18.4 This Lease Agreement comprises the entire understanding between the Parties with respect to
its subject matters and supersedes any previous or contemporaneous

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communications, representations, or agreements, whether oral or written. For purposes of
construction, this Lease Agreement will be deemed to have been drafted by both Parties. No
modification of this Lease Agreement will be binding on either Party unless in writing and signed
by an authorized representative of each Party.

	 	 	 	 	 
	Shanghai Kai Hong Technology Co., Ltd.

 	 	 
	By  	 	 	 
	 	Authorized Representative 	 	 
	 	Date: 	 	 
	 
	Shanghai Yuan Hao Electronic Co., Ltd.

 	 	 
	By  	 	 	 
	 	Authorized Representative 	 	 
	 	Date: 	 	 
	 

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EXHIBIT 10.1

July 28, 2008

RXi Pharmaceuticals Corporation

One Innovation Drive

Worcester, Massachusetts 01605

     Re:     Amendment to Stockholders Agreement

Gentlemen:

     This letter will serve to amend in certain respects set forth below the Stockholders
Agreement, dated February 15, 2007, among RXi Pharmaceuticals Corporation (“RXi”), CytRx
Corporation (“CytRx”), and Michael P. Czech, Ph.D., Gregory J. Hannon, Ph.D., Craig C. Mello,
Ph.D., and Tariq M. Rana, Ph.D. (the “Stockholders Agreement”). Unless otherwise defined herein,
capitalized terms used in this letter, including Annex 1 hereto, shall have the meanings ascribed
to them in the Stockholders Agreement.

     In accordance with Section 7 of the Stockholders Agreement, the Stockholders Agreement is
hereby amended as follows:

     1. Preemptive Rights. Annex 1 to the Stockholders Agreement is hereby amended and
restated in its entirety to read as set forth in Annex 1 to this letter.

     2. No Other Effect. Except as set forth in this letter, including Annex 1 hereto, the
Stockholders Agreement shall remain in full force and effect.

[Remainder of page intentionally left blank]

 

 

RXi Corporation

July 28, 2008

Page 2

     If the foregoing correctly states the parties’ agreement, please acknowledge the same by
signing and returning a copy of this letter.

	 	 	 	 	 
	 	Very truly yours,

 	 
	 	/s/ Steven A. Kriegsman
 	 
	 	Steven A. Kriegsman 	 
	 	President and Chief Executive Officer

CytRx Corporation 	 

	 	 	 	 	 
	AGREED AND ACCEPTED:

 	 	 
	/s/ Tod Woolf
 	 	Dated: July 28, 2008 
	Tod Woolf, Ph.D. 	 	 
	President
 	 	 
	RXi Pharmaceuticals Corporation 	 	 
	 
	/s/ Craig C. Mello
 	 	Dated: July 28, 2008 
	Craig C. Mello, Ph.D. 	 	 
	 	 	 
	/s/ Tariq M. Rana
 	 	Dated: July 28, 2008 
	Tariq M. Rana, Ph.D. 	 	 
	 	 	 
	 
 	 	Dated: July 28, 2008 
	Michael P. Czech, Ph.D. 	 	 
	 	 	 
	/s/ Gregory J. Hannon
 	 	Dated: July 28, 2008 
	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 maximum number of New Securities proposed to be offered in the
Cash Sale (the “Offered Securities”), (3) describe the sale price, or where the
price has not been established the method for determining the same, of the Offered
Securities and other proposed terms of the proposed Cash Sale to the extent known, (4)
identify the persons or entities, if known, or the class of persons or entities, 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
securities that are held of record by CytRx or held in the name of a broker or other
custodian for CytRx’s account.

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	 	(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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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 maximum number of New
Securities, (3) describe the proposed price or value attributable to the New
Securities, or where the same has not been determined the method for determining the
price or value, and other proposed terms of the Non-Cash Sale to the extent known, (4)
identify the persons or entities, if known, or the class of persons or entities, 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 purchase
price to CytRx of such shares of RXi Common Stock shall be the Fair Value (as
defined below) of such shares.

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	 	(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

 

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.

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