CONTRIBUTION AGREEMENT

Exhibit 10.1

CONTRIBUTION AGREEMENT

by and between

CYTRX CORPORATION

and

RXI PHARMACEUTICALS CORPORATION

January 8, 2007

EXHIBITS

CONTRIBUTION AGREEMENT

THIS CONTRIBUTION AGREEMENT is dated as of January 8, 2007 and is made by and between CytRx Corporation, a Delaware corporation (“ CytRx ”), and RXi Pharmaceuticals Corporation, a Delaware corporation (“ RXi ”). CytRx and RXi are sometimes referred to herein individually as a “ Party ” and collectively as the “ Parties .”

RECITALS:

A. CytRx has assisted in the formation of RXi for the purpose of carrying out the RXi Business (as defined below).

B. CytRx desires to transfer to RXi certain technology, contractual rights and obligations and intellectual property rights relating to or useful for the conduct of the RXi Business, and RXi desires to obtain such technology, contractual rights and obligations and intellectual property rights.

C. The Parties intend for the transactions contemplated by this Agreement to qualify as a contribution pursuant to Section 351 of the Code (as defined below).

      NOW, THEREFORE, in consideration of the mutual covenants set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, CytRx and RXi agree as follows:

ARTICLE 1
DEFINITIONS

All capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth below:

     1.1. “Affiliate” shall mean a Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the Person of which such Person is deemed an Affiliate. “Control” (and, with correlative meanings, the terms “controlled by” and “under common control with”) shall mean the possession of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting stock, by contract or otherwise. In the case of a corporation, “control” shall mean, among other things, the direct or indirect ownership of more than fifty percent (50%) of a Person’s outstanding voting stock. For the purposes of this Agreement, neither Party hereto shall be considered an Affiliate of the other Party hereto.

     1.2. “Agreement” shall mean this Contribution Agreement by and between CytRx and RXi.

     1.3. “Assigned Contracts” shall mean the Contracts listed on Schedule 1.3 hereto.

     1.4. “Assumed Liabilities” shall have the meaning set forth in Section 2.2(a) hereof.

     1.5. “Business Documents” shall have the meaning set forth in Section 2.1(a)(vi) hereof.

     1.6. “Closing” shall have the meaning set forth in Section 2.3 hereof.

     1.7. “Closing Date” shall mean the date of the Closing.

     1.8. “Code” shall mean the Internal Revenue Code of 1986, as amended.

     1.9. “Common Stock” shall mean the common stock, $0.0001 par value per share, of RXi.

     1.10. “Contracts” shall mean any contracts, agreements, leases, mortgages or other arrangements.

     1.11. “CytRx” shall have the meaning set forth in the preamble to this Agreement.

     1.12. “Damages” shall mean out-of-pocket losses, damages, assessments, fines, penalties, fees, expenses, costs (including reasonable attorney’s fees) or amounts paid in settlement, but shall exclude punitive, consequential, special damages or lost profits.

     1.13. “Effective Time” shall mean 11:59 p.m. Eastern Standard Time on the Closing Date.

     1.14. “Encumbrances” shall mean any charge, claim, equitable interest, lien, license, option, pledge, security interest, mortgage, right of way, easement, encroachment, restriction on transfer and right of first offer or first refusal other than Permitted Encumbrances.

     1.15. “Excluded Assets” shall have the meaning set forth in Section 2.1(b) hereof.

     1.16. “FICA” shall mean any applicable taxes established under the Federal Insurance Contribution Act.

     1.17. “Force Majeure” shall mean any contingency beyond the reasonable control of the Party claiming to be affected, including, without limitation, an act of God, judicial or regulatory action, war, civil commotion, destruction of production facilities or materials by explosion, fire, earthquake, flood or storm, and labor disturbances (whether or not any such labor disturbance is within the power of the affected Party to settle).

     1.18. “Governmental Entity” shall mean any United States federal, state or local or any foreign government, or political subdivision thereof, or any multinational organization or authority or any authority, agency or commission entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power or any court or tribunal (or any department, bureau or division thereof).

     1.19. “Indemnified Party” shall mean a party seeking indemnification under Sections 7.1 or 7.2 hereof.

     1.20. “Indemnifying Party” shall mean the party from which indemnification is sought under Sections 7.1 or 7.2 hereof.

     1.21. “Indemnity Claim” means a claim for indemnity under Section 7.1 or 7.2, as the case may be.

     1.22. “Intellectual Property” shall mean all rights and interests (including contractual rights) pertaining to or deriving from: (a) patents, copyrights and trade marks; (b) trade names,

service marks and service names; (c) registrations, applications, and licenses relating to any of the foregoing; and (d) any and all technology, inventions or technical information, whether patentable or not, discovered, invented or developed before the Effective Time.

     1.23. “Legal Requirement” shall mean any United States federal, state or local or foreign law, statute, ordinance or regulation, or any Governmental Order, or any license, franchise or permit granted under any of the foregoing.

     1.24. “Material Adverse Effect” shall mean any change in, or effect on, the RXi Business or the Transferred Assets (including on the operations or financial condition of the RXi Business) which, when considered either individually or in the aggregate together with all other adverse changes or effects with respect to which such phrase is used in this Agreement, is materially adverse to the RXi Business or the Transferred Assets; provided, however, that the following shall not be deemed to constitute a Material Adverse Effect: (a) the loss of a RXi Employee after the date of this Agreement or (b) any matter resulting from or arising out of (i) actions taken in connection with the transactions contemplated by this Agreement and the pendency of the transactions contemplated hereby; (ii) the condition of the United States economy, financial markets or political conditions generally; (iii) a condition generally affecting participants in the life sciences industry; or (iv) hostilities or terrorist activities, any war or other national or international calamity or emergency.

     1.25. “Ordinary Course of Business” means an action taken by any Person in the ordinary course of such Person’s business which is consistent with the past customs and practices of such Person.

     1.26. “Organizational Documents” means, with respect to any Person, the certificate or articles of incorporation or organization and any joint venture, limited liability company, operating or partnership agreement and other similar documents adopted or filed in connection with the creation, formation or organization of such Person and all by-laws of such Person, in each case, as amended or supplemented.

     1.27. “Party” and “Parties” shall have the meaning set forth in the preamble to this Agreement.

     1.28. “Permitted Encumbrances” shall mean (i) those encumbrances set forth in Schedule 1.2828 of this Agreement, (ii) all encumbrances approved in writing by RXi, (iii) mechanics’, materialmen’s, carriers’, workers’, repairers’ and similar statutory liens, (iv) zoning, entitlement, building and other land use regulations imposed by governmental agencies, (v) deposits or pledges made in connection with, or to secure payment of, worker’s compensation, unemployment insurance, and pension programs mandated under applicable Legal Requirements or other social security, (vi) encumbrances arising out of operation of law with respect to any and all debts, liabilities and obligations, whether accrued or fixed, known or unknown, absolute or contingent, matured or unmatured or determined or determinable incurred in the Ordinary Course of Business and which are not delinquent, (vii) covenants, conditions, restrictions, easements, encumbrances and other similar matters of record, (viii) restrictions on the transfer of securities arising under federal, state or foreign securities laws, (ix) such easements, restrictions of record and other non-monetary encumbrances or other imperfections of title as do not materially detract from the value or unreasonably interfere with the use of or the conduct of the RXi Business or the Transferred Assets, or (x) statutory liens for Taxes, special assessments or other governmental charges not yet due and payable.

     1.29. “Person” shall mean any individual or corporation, association, partnership, limited liability company, joint venture, joint stock or other company, business trust, trust, organization, Governmental Entity or other entity of any kind.

     1.30. “Plans” shall mean all pension, profit sharing, retirement, deferred compensation, welfare, insurance, disability, bonus, vacation pay, severance pay and similar plans, programs or arrangements, including without limitation, all employee benefit plans as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) covering current employees or former employees of CytRx employed in conducting the RXi Business.

     1.31. “RXi Business” shall mean the development, manufacture and/or commercialization of therapeutic products related to, based on or utilizing RNA interference technology.

     1.32. “RXi” shall have the meaning set forth in the preamble to this Agreement.

     1.33. “Securities Act” shall mean the Securities Act of 1933, as amended.

     1.34. “Shares” shall have the meaning set forth in Section 3.1 hereof.

     1.35. “Tax” means any and all federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, social security (including FICA), unemployment, real property, sales, use, value added or alternative minimum including any interest or penalties unless subject to a good faith dispute.

     1.36. “Third Party” shall mean any Person other than CytRx or RXi and their respective Affiliates.

     1.37. “Third Party Claim” shall have the meaning set forth in Section 7.3.

     1.38. “Transfer Impediment” shall have the meaning set forth in Section 6.1(a) hereof.

     1.39. “Transferred Assets” shall have the meaning set forth in Section 2.1(a) hereof.

     1.40. “Transferred Technology” shall mean Intellectual Property that is used exclusively by CytRx in its conduct of the RXi Business at the Closing Date and any remedies against any and all past, present and future infringements thereof and rights to protections of interest therein.

ARTICLE 2
TRANSFER OF ASSETS

      2.1 Contribution and Purchase of Transferred Assets.

          (a) CytRx hereby contributes, transfers, assigns, conveys, and delivers to RXi and its successors and assigns, for its and their own use and behalf, all of CytRx’s right, title, and interest in and to the following assets, other than the Excluded Assets (the “Transferred Assets”), and all goodwill associated therewith, and RXi hereby accepts the contribution, transfer, assignment, conveyance and delivery of the Transferred Assets and agrees to fully and entirely stand in the place of CytRx in all matters related thereto:

     (i) the Assigned Contracts;

     (ii) the Transferred Technology;

     (iii) all (a) accounting and other books and records, (b) correspondence, (c) reports, (d) studies and (e) documents and other business records and files (“Business Documents”) to the extent related exclusively to the RXi Business at the Effective Time; and

     (iv) the equipment listed on Schedule 2.1(a)(iv) of this Agreement.

          (b) Notwithstanding anything to the contrary contained in Section 2.1 or elsewhere in this Agreement, the following properties, assets and rights of CytRx (collectively, the “Excluded Assets”) are excluded from the Transferred Assets:

     (i) the names and marks “CytRx” and any variants and derivations thereof;

     (ii) all items listed in Schedule 2.1(b)(ii) of this Agreement;

     (iii) all claims for refunds of Taxes and other governmental charges of whatever nature;

     (iv) all rights in connection with and assets of any Plans;

     (v) all insurance policies and rights thereunder;

     (vi) all personnel and other records that CytRx is required by law to retain in its possession;

     (vii) CytRx’s rights under this Agreement; and

     (viii) CytRx’s rights under any Contracts not included in the Assumed Liabilities.

      2.2 Assumption of Liabilities.

          (a) At the Effective Time, RXi shall assume and agree to discharge and be responsible for all of the liabilities and obligations, known and unknown, whether absolute or contingent, to the extent (but only to the extent) that such liabilities and obligations relate to the Transferred Assets or the RXi Business (the “Assumed Liabilities”), including without limitation:

     (i) all of CytRx’s payment, performance and other obligations under the Assigned Contracts, whether arising prior to, on or after the Effective Time;

     (ii) all other liabilities relating to the Transferred Assets, whether incurred prior to, on or after the Effective Time.

          (b) Except as provided under this Section 2.22.1(b)(viii), RXi shall not assume or agree to perform, pay or discharge, or have any liability for, and CytRx shall remain unconditionally liable for and shall discharge, any obligations, liabilities and commitments of CytRx, of any kind or nature, known or unknown, fixed or contingent (the “Excluded Liabilities”).

          (c) The assumption of the liabilities by RXi under this Section 2.2 shall not enlarge any rights of Third Parties under Contracts with RXi or CytRx.

      2.3 Closing. The closing of the transactions contemplated hereby (the “Closing”) shall take place at the offices of Ropes & Gray LLP, One International Place, Boston,

Massachusetts, on the date hereof at 10:00 a.m. local time, or at such other place as CytRx and RXi agree in writing. The Closing shall be effective as of the Effective Time.

      2.4 Deliveries.

          (a) At the Closing and subject to Section 6.1 hereof, CytRx shall deliver or cause to be delivered to RXi all of the Transferred Assets, and in furtherance thereof:

     (i) CytRx shall deliver or cause to be delivered to RXi all of the Assigned Contracts with such assignments thereof and consents to assignments as are necessary to transfer to RXi CytRx’s full right, title and interest in the same;

     (ii) CytRx shall execute and deliver to RXi a bill of sale in substantially the form attached hereto as Exhibit A (the “Bill of Sale”) and an Assignment and Assumption Agreement in substantially the form attached hereto as Exhibit B (the “Assignment and Assumption Agreement”); and

     (iii) RXi shall execute and deliver to CytRx the Assignment and Assumption Agreement and deliver to CytRx the Shares (as defined in Section 3.1).

          (b) In addition, within 90 days after the Closing, CytRx shall make available, transfer, and deliver any and all physical embodiments of the Transferred Technology to RXi.

ARTICLE 3
CONSIDERATION

      3.1 Consideration. In consideration of the contribution, transfer and rights granted to RXi hereunder, RXi agrees to issue to CytRx 3,953 shares of the Common Stock of RXi, par value $0.0001 per share (the “Shares”), which, when aggregated with the 200 shares of the Common Stock of RXi held by CytRx on the date hereof, shall represent 85.366% of the issued and outstanding shares of RXi as of the Effective Time. CytRx acknowledges that the certificates representing the Shares will contain customary legends as are required by the Delaware General Corporation Law and regarding restrictions on transf