exv10w4



 





Exhibit 10.4




EXCLUSIVE LICENSE AGREEMENT




     This Agreement, effective as of January 10, 2007 (the “Effective Date”), is between the
University of Massachusetts (“University”), a public institution of higher education of the
Commonwealth of Massachusetts as represented by its Worcester campus, and RXi Pharmaceuticals
Corporation (“Company”), a Delaware corporation.



RECITALS




     WHEREAS, University owns intellectual property rights which relate to therapeutic applications
of RNAi, as described in University’s invention disclosure number UMMC 06-21, entitled “Methods and
Synthesis of Reagents to Treat ALS”;



     WHEREAS, Company is engaged in business relating to the development and commercialization of
products that use or incorporate University’s intellectual property rights and has the capability
of developing commercial applications of the intellectual property;



     WHEREAS, Company desires to obtain an exclusive license to University’s intellectual property
rights, and University is willing to grant an exclusive license to its intellectual property rights
under the following conditions so that these intellectual property rights may be developed to their
fullest and the benefits enjoyed by the general public; and



     WHEREAS, the license that is granted in this Agreement promotes the development of publicly
funded intellectual property to practical application for the public good.



     THEREFORE, University and Company agree as follows:


1. Definitions.




     1.1 “Affiliate” means an entity that controls, is controlled by, or is under common
control with a party to this Agreement. The term “control” as used in the preceding sentence means
possession of the power to direct or call for the direction of the management and policies of an
entity, whether through ownership of a majority of the outstanding voting securities, by contract,
or otherwise.



     1.2 “Companion UMass License Agreements” means this Agreement and the license
agreements with University that are executed on the same date as this Agreement for University
technologies, UMMC 03-75, UMMC 06-08, UMMC 07-08, UMMC 03-68, UMMC 06-38, and UMMC 06-39,
collectively.



     1.3. “Confidential Information” means any confidential or proprietary information
furnished by one party (the “Disclosing Party”) to the other party (the “Receiving Party”) in
connection with this Agreement that is specifically designated as confidential, as further
described in Article 7.



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     1.4. “Field” means Primary Field and Secondary Field collectively. Any commercial
sale of research reagents covered by the Patent Rights is specifically excluded from the Field.
The foregoing shall not be interpreted to prevent Company, its Affiliates or corporate partners
from performing research related to discovery or development of Licensed Products for itself or any
Affiliate or Sublicensee. (a) “Primary Field” means therapeutic, prophylactic, or
diagnostic health care applications for amyotrophic lateral sclerosis (ALS), diabetes, and obesity,
in humans. (b) “Secondary Field” means therapeutic, prophylactic, or diagnostic health
care applications in humans that are not included in the Primary Field.



     1.5. “Licensed Product” means any product that cannot be developed, manufactured,
used, or sold without infringing one or more Valid Claims.



     1.6. “Net Sales” means the gross amount billed or invoiced on sales of Licensed
Products by Company, its Affiliates and Sublicensees, less the following: (a) customary trade,
quantity, or cash discounts to non-affiliated brokers or agents to the extent actually allowed and
taken; (b) amounts repaid or credited by reason of rejection or return; (c) to the extent
separately stated on purchase orders, invoices, or other documents of sale, any taxes or other
governmental charges levied on the production, sale, transportation, delivery, or use of a Licensed
Product which is paid by or on behalf of Company; and (d) outbound transportation costs prepaid or
allowed and costs of insurance in transit.



     In any transfers of Licensed Products between any of Company and Affiliates and Sublicensees,
Net Sales are calculated based on the final sale of the Licensed Product to an independent third
party. If Company or an Affiliate or Sublicensee receives non-monetary consideration for any
Licensed Products, Net Sales are calculated based on the fair market value of that consideration.
If Company or its Affiliates or Sublicensees use or dispose of a Licensed Product in the provision
of a commercial service, the Licensed Product is sold and the Net Sales are calculated based on the
sales price of the Licensed Product to an independent third party during the same Royalty Period
or, in the absence of sales, on the fair market value of the Licensed Product as determined by the
parties in good faith.



     1.7. “Patent Rights” means the United States patent applications listed in Exhibit A,
patent applications covering invention disclosures listed in Exhibit A, and any divisional,
continuation, or continuation-in-part of those patent applications to the extent the claims are
directed to subject matter specifically described therein as well as any patents issued on these
patent applications and any reissues or reexaminations or extensions of the patents, and any
foreign counterparts to any of the foregoing.



     1.8. “Royalty Period” means the partial calendar quarter commencing on the date on
which the first Licensed Product is sold or used and every complete or partial calendar quarter
thereafter during which either (a) this Agreement remains in effect or (b) Company has the right to
complete and sell work-in-progress and inventory of Licensed Products pursuant to Section 8.5.



     1.9. “Sublicense Agreement” means any agreement in which Company grants rights to the
Patent Rights pursuant to Section 2.2.



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     1.10. “Sublicense Income” means payments or other value that Company receives from a
Sublicensee in consideration of the sublicense of the rights granted Company under Section 2.1.,
including without limitation, license fees, equity, milestone payments, and license maintenance
fees, but excluding the following payments: (a) payments made in consideration for the issuance of
equity or debt securities of Company at fair market value, (b) payments specifically committed to
the development of Licensed Products, (c) reimbursements of patent expenses for the Patent Rights,
and (d) royalties.



     1.11. “Sublicensee” means any permitted sublicensee of the rights granted Company
under this Agreement, as further described in Section 2.2.



     1.12. “Valid Claim” means (a) a claim of an issued and unexpired patent covering the
Patent Rights which has not been permanently revoked or held unenforceable or invalid by an
unappealable or unappealed decision of a court or government agency of competent jurisdiction or
(b) a claim of a pending patent application within the Patent Rights that has not been abandoned or
finally disallowed without the possibility of appeal or refiling.


2. Grant of Rights




     2.1. License Grant. University grants to Company an exclusive, worldwide,
royalty-bearing license in the Patent Rights to make, have made, use, offer to sell, sell, have
sold and imported Licensed Products in the Field, including research for development of Licensed
Products.



     2.2. Sublicenses. Company may grant sublicenses of its rights under Section 2.1. with
the consent of University, which consent may not be unreasonably withheld or delayed. All
Sublicense Agreements executed by Company pursuant to this Section 2.2 shall expressly bind the
Sublicensee to the terms of this Agreement. Company shall promptly furnish University with a fully
executed copy of any Sublicense Agreement.



     2.3. Retained Rights.



          (a) University. University retains the right to use the Patent Rights for academic
research, teaching, and non-commercial patient care, without payment of compensation to Company.
University may license its retained rights under this Subsection 2.3(a) to research collaborators
of University faculty members, post-doctoral fellows, and students.




          (b) Federal Government. If the federal government has funded any invention claimed in
the Patent Rights, this Agreement and the grant of any rights in Patent Rights are subject to the
federal law set forth in 35 U.S.C. §§ 201-211 and the regulations promulgated thereunder, as
amended, or any successor statutes or regulations. Company acknowledges that these statutes and
regulations reserve to the federal government a royalty-free, non-exclusive, non-transferrable
license to practice any government-funded invention claimed in the Patent Rights. If any term of
this Agreement fails to conform to those laws and regulations, the relevant term is invalid, and
the parties shall modify the term pursuant to Section 10.11.




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          (c) Other Organizations. University represents that all inventions claimed in the
Patent Rights have been funded only by the federal government or University funds.




     2.4. Assignment of UMass/CytRx Licenses. On or before March 31, 2007, Company shall
obtain assignment from CytRx Corporation of the license agreements that cover the following RNAi
technologies that CytRx has licensed from University and the Carnegie Institution , UMMC 01-36,
UMMC 02-01, UMMC 03-17, UMMC 03-33, UMMC 03-60, and UMMC 98-22, in a manner compliant with the
relevant license agreements. University shall consent to any assignment as necessary. If Company
does not obtain assignment of those license agreements on or before March 31, 2007, this Agreement
immediately terminates.


3. Company Obligations Relating to Commercialization.




     3.1. Diligence Requirements. Company shall use diligent efforts or cause its
Affiliates and Sublicensees to use diligent efforts to develop Licensed Products and to introduce
Licensed Products into the commercial market. Thereafter, Company or its Affiliates or
Sublicensees shall make Licensed Products reasonably available to the public. Specifically,
Company shall fulfill the following obligations:



          (a) Financing the Company. On or before March 31, 2007, Company shall raise at least
Fifteen Million Dollars ($15,000,000) from investors which may include CytRx Corporation (the
“Initial Financing”) or this Agreement automatically terminates, and Company shall pay University
Seventy-Five Thousand Dollars ($75,000) due April 1, 2007 (payable only once under the Companion
UMass License Agreements). However, if Company demonstrates to the reasonable satisfaction of
University that, on March 31, 2007, investors are performing due diligence for, or, in the case of
CytRx Corporation, is otherwise taking actions that are reasonably likely to result in, the
financing of Company of at least $15,000,000, University grants Company a thirty (30) day extension
from March 31, 2007, to fulfill the financing obligation set forth in this Subsection 3.1(a). If
Company can demonstrate to the reasonable satisfaction of University that investors are performing
due diligence for, or, in the case of CytRx Corporation, is otherwise taking actions that are
reasonably likely to result in, the financing of Company of at least $15,000,000, Company shall be
granted up to two additional thirty (30) day extensions to fulfill the financing obligation by
paying to University Twenty-Five Thousand Dollars ($25,000) each on the last day of the previous
extension. The extension fees are non-refundable but creditable to the upfront license fee.




          (b) Development of Licensed Products.





                    (i) On or before execution of this Agreement, Company shall furnish University with a written
business plan under which Company intends as of the Effective Date to develop Licensed Products.
University acknowledges that this business plan is a statement of Company’s current intention
regarding the development of Licensed Product and that Company’s plans regarding the development of
Licensed Products may change.




                    (ii) Within sixty (60) days after the start of each calendar year, beginning on January 1,
2008, Company shall furnish University with a written report on progress during the prior year to
develop and commercialize Licensed Products, including



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without limitation research and development, efforts to obtain regulatory approval, marketing, and
sales figures. The Company shall also include in the report a discussion of its intended
development and commercialization efforts and sales projections for the current year.




                    (iii) Within five (5) years after the Effective Date, Company, its Affiliate or Sublicensee
shall file an IND or its equivalent with the FDA covering at least one (1) Licensed Product.




                    (iv) Within twelve (12) years after the Effective Date, Company, its Affiliate or Sublicensee
shall file an NDA or BLA with the FDA covering at least one (1) Licensed Product.




                    (v) Within three (3) months after receiving FDA approval of the NDA or BLA for any Licensed
Product, Company, its Affiliate or Sublicensee shall market the approved Licensed Product in the
United States.




                    (vi) Company or its partner shall spend at least {***} per calendar year for development of
Licensed Products until the earlier of three years after the Effective Date or the commencement of
a Phase II clinical trial on a Licensed Product.



     3.2. If University determines that Company has not fulfilled its obligations under Subsection
3.1(b), University shall furnish Company with written notice of the determination. Within sixty
(60) days after receipt of the notice, Company shall either (a) fulfill the relevant obligation or
(b) negotiate with University a mutually acceptable schedule of revised diligence obligations,
failing which University may, immediately upon written notice to Company, terminate this Agreement
or convert the exclusive license into a non-exclusive license.



     3.3. Indemnification.



          (a) Indemnity. Company shall indemnify, defend, and hold harmless University and its
trustees, officers, faculty, students, employees, and agents and their respective successors, heirs
and assigns (the “Indemnitees”), against any liability, damage, loss, or expense (including
reasonable attorneys’ fees and expenses of litigation) incurred by or imposed upon any of the
Indemnitees in connection with any claims, suits, actions, demands or judgments arising out of any
theory of liability (including without limitation actions in the form of tort, warranty, or strict
liability and regardless of whether the action has any factual basis) concerning any product,
process, or service that is made, used, or sold pursuant to any right or license granted under this
Agreement. However, indemnification does not apply to any liability, damage, loss, or expense to
the extent directly attributable to (i) the gross negligence or intentional misconduct of the
Indemnitees or (ii) the settlement of a claim, suit, action, or demand by Indemnitees without the
prior written approval of Company.




          (b) Procedures. The Indemnitees agree to provide Company with prompt written notice
of any claim, suit, action, demand, or judgment for which indemnification is sought under this
Agreement. Company agrees, at its own expense, to provide attorneys reasonably acceptable to
University to defend against any claim. The Indemnitees shall cooperate fully with Company in the
defense and will permit Company to conduct and control




Page 5 of 19 









 




the defense and the disposition of the claim, suit, or action (including all decisions
relative to litigation, appeal, and settlement). However, any Indemnitee may retain its own
counsel, at the expense of Company, if representation of the Indemnitee by the counsel retained by
Company would be inappropriate because of actual or potential conflicts in the interests of the
Indemnitee and any other party represented by that counsel. Company agrees to keep University
informed of the progress in the defense and disposition of the claim and to consult with University
regarding any proposed settlement.




          (c) Insurance. Company shall maintain insurance or self-insurance that is reasonably
adequate to fulfill any potential obligation to the Indemnitees, but not less than one million
dollars ($1,000,000) for injuries to any one person arising out of a single occurrence and five
million dollars ($5,000,000) for injuries to all persons arising out of a single occurrence.
Company shall provide University, upon request, with written evidence of insurance or
self-insurance. Company shall continue to maintain the insurance or self-insurance after the
expiration or termination of this Agreement while Company, its Affiliate or Sublicensee continues
to make, use, or sell a Licensed Product and thereafter for five (5) years.




     3.4. Use of University Name. In accordance with Section 7.2., Company and its
Affiliates and Sublicensees may not use the name “University of Massachusetts” or any variation of
that name in connection with the marketing or sale of any Licensed Products.



     3.5. Marking of Licensed Products. To the extent commercially feasible and consistent
with prevailing business practices, Company shall mark and shall cause its Affiliates and
Sublicensees to mark all Licensed Products that are manufactured or sold under this Agreement with
the number of each issued patent under the Patent Rights that applies to a Licensed Product.



     3.6. Compliance with Law. Company shall comply with, and shall ensure that its
Affiliates and Sublicensees comply with, all local, state, federal, and international laws and
regulations relating to the development, manufacture, use, and sale of Licensed Products. Company
expressly agrees to comply with the following:



          (a) Company or its Affiliates or Sublicensees shall obtain all necessary approvals from the
United States Food & Drug Administration and any similar foreign governmental authorities in which
Company or Affiliate or Sublicensee intends to make, use, or sell Licensed Products.




          (b) Company and its Affiliates and Sublicensees shall comply with all United States laws and
regulations controlling the export of commodities and technical data, including without limitation
all Export Administration Regulations of the United States Department of Commerce. Among other
things, these laws and regulations prohibit or require a license for the export of certain types of
commodities and technical data to specified countries and foreign nationals. Company hereby gives
written assurance that it will comply with and will cause its Affiliates and Sublicensees to comply
with all United States export control laws and regulations, that it bears sole responsibility for
any violation of those laws and regulations by itself or its Affiliates or Sublicensees, and that
it will indemnify, defend, and hold University harmless (in accordance with Section 3.3.) for the
consequences of any violation.




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          (c) If any invention claimed in the Patent Rights has been funded by the United States
government, and only to the extent required by applicable laws and regulations, Company agrees that
any Licensed Products used or sold in the United States will be manufactured substantially in the
United States or its territories. Current law provides that if domestic manufacture is not
commercially feasible under the circumstances, University may seek a waiver of this requirement
from the relevant federal agency on behalf of Company.




     4. Consideration for Grant of Rights.



     4.1. License Fees.



          (a) On the Effective Date, Company shall pay to University {***}.




          (b) Within thirty (30) days after the closing of the Initial Financing, Company shall pay to
University {***}.



The license fees are nonrefundable and are not creditable against any other payments due to
University under this Agreement.




     4.2. Equity.



          (a) Within thirty (30) days after the closing of the Initial Financing, Company shall issue to
University that number shares of Common Stock of Company having an aggregate valuation equal to
{***} according to the Company valuation at the Initial Financing. In connection with the issuance
of stock pursuant to this Section 4.2, the University agrees to become a party to other agreements
of Company to the same extent (except any limitations relating to the University’s status as an
agency of the Commonwealth of Massachusetts, e.g., prohibition on indemnification) as holders of
more than five percent (5%) of the Common Stock of Company (such as, voting agreement and stock
restriction agreement). University acknowledges that all certificates representing the shares
described in this Subsection 4.2(a) may bear customary legends that require compliance with the
Securities Act of 1933 and related state securities laws upon any transfer of the shares.
Company shall use commercially reasonable efforts to register the stock issued to University
pursuant to this Subsection 4.2(a) as soon as possible, subject to customary terms in connection
with the registration.




          (b) Beginning on the Effective Date, Company shall notify University reasonably prior to each
Company board of directors meeting and provide University with related documentation to the same
extent that is supplied to the board of directors. Company shall permit one representative of
University to attend all board of director meetings until the earlier of five (5) years after the
Effective Date or the commencement by the Company of a Phase II clinical trial relating to a
Licensed Product. The University attendee may not be a voting member of the board. The University
attendee shall comply with restrictions to which other board members are subject, such as,
confidentiality requirements relating to Board discussions and shall execute any agreement
reasonably required by Company to effect those restrictions. The Company board of directors may
exclude University representative from those portions of board meetings that pertain to
compensation and personnel issues and as deemed




Page 7 of 19 









 




reasonably necessary for the board members to exercise their fiduciary responsibilities and to
comply with applicable laws and regulations.




     4.3. License Maintenance Fee. At the beginning of each calendar year during the term
of this Agreement, commencing on January 1, 2008, Company shall pay to University {***}. This
annual license maintenance fee is nonrefundable and is not creditable against any other payments
due to University under this Agreement.



     4.4. Milestone Payments. Company shall pay University the following milestone
payments within thirty (30) days after the occurrence of each event for each Licensed Product:



	 	 	 	 	 
	Event	 	Payment
	The first issuance of any claim under any Patent Rights
	 	 	{***}	 
	Earlier of filing IND or 5 years after Effective Date
	 	 	{***}	 
	Earlier of initiation Phase II clinical trial or 7 years after the
Effective Date
	 	 	{***}	 
	Earlier of initiation of Phase III clinical trial or 9 years after
the Effective Date
	 	 	{***}	 
	Earlier of filing NDA or 12 years after the Effective Date
	 	 	{***}	 
	Commencement of Licensed Product marketing in US or 13 years after
the Effective Date
	 	 	{***}	 





If a milestone payment is made under this Section 4.4 based on the passage of time rather than on
the achievement of a particular milestone event, that milestone payment is not due for the first
Licensed Product with respect to the later achievement of that milestone event. These milestone
payments are nonrefundable and are not creditable against any other payments due to University
under this Agreement. For each Licensed Product, Company shall make all milestone payments, even
if an earlier milestone event has not occurred. For example, if Company proceeds from Phase I
clinical trial directly to Phase III, the milestone payments for both Phase II and III are due upon
achievement of the Phase III milestone event. Also, if Company uses a Phase II clinical trial as a
registration trial and proceeds directly to NDA submission without performing a Phase III trial,
then upon filing of the NDA, both the Phase III and NDA milestone payments are due.




     4.5. Royalties. Company shall pay to University a royalty of {***} of Net Sales.



     4.6. Minimum Royalty. Within sixty (60) days after the beginning of each calendar
year during the term of this Agreement, beginning January 1, 2012, Company shall pay to University
a minimum royalty of {***}. Company may credit the minimum royalty paid under this Section 4.6
against actual royalties due and payable for the same calendar year. Waiver of any minimum royalty
payment by University is not a waiver of any subsequent minimum royalty payment. If Company fails
to make any minimum royalty payment within the sixty-day period, that failure is a material breach
of its obligations under this Agreement, and University may terminate this Agreement in accordance
with Section 8.3.



     4.7. Sublicense Income. Company shall pay University the following percentages of all
Sublicense Income:



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          (a) {***} for Sublicense Agreements that are executed by Company from January 1, 2007 through
December 31, 2007;




          (b) {***} for Sublicense Agreements that are executed by Company from January 1, 2008 through
December 31, 2008; and




          (c) {***} for Sublicense Agreements that are executed by Company from and after January 1,
2009.




     Sublicense Income is due within sixty (60) days after Company receives the relevant payment from
the Sublicensee. If Sublicense Income is payable by Company for any one Sublicense Agreement under
more than one of the Companion UMass License Agreements and the license agreements assigned to
Company pursuant to Section 2.4 (“Assigned License Agreements”), Company shall pay the highest rate
of Sublicense Income among the Companion UMass License Agreements and the Assigned License
Agreements. That one payment satisfies the payment requirements for the applicable Sublicense
Agreement under each of the Companion UMass License Agreements and Assigned License Agreements.



     4.8. Third-Party Royalties. As long as Company remains the exclusive licensee of the
Patent Rights in any portion of the Field, if Company is legally required to make royalty payments
to one or more third parties in order to practice the Patent Rights granted under this Agreement in
the portion of the Field for which the license is exclusive, Company may offset up to {***} of
third-party payments against royalty payments that are due to University in the same Royalty
Period. However, the royalty payments under Section 4.5., may never be reduced by more than {***}
in any Royalty Period.


5. Royalty Reports; Payments; Records.




     5.1. First Sale. Company shall report to University the date of first commercial sale
of each Licensed Product within thirty (30) days after occurrence in each country.



     5.2. Reports and Payments.



          (a) Within sixty (60) days after the conclusion of each Royalty Period, Company shall deliver
to University a report containing the following information:





                    (i) the number of Licensed Products sold to independent third parties in each country and the
number of Licensed Products used by Company, its Affiliates and Sublicensees in the provision of
services in each country;




                    (ii) the gross sales price for each Licensed Product by Company, its Affiliates and
Sublicensees during the applicable Royalty Period in each country;




                    (iii) calculation of Net Sales for the applicable Royalty Period in each country, including a
listing of applicable deductions;



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                    (iv) total royalty payable on Net Sales in United States dollars, together with the exchange
rates used for conversion; and




                    (v) Sublicense Income due to University for the applicable Royalty Period from each
Sublicensee.



          (b) Concurrent with this report, Company shall remit to University any payment due for the
applicable Royalty Period. If no royalties are due to University for any Royalty Period, the
report shall so state.




     5.3. Payments in United States Dollars. Company shall make all payments in United
States dollars. Company shall convert foreign currency to United States dollars at the conversion
rate existing in the United States (as reported in the Wall Street Journal) on the last working day
of the calendar quarter preceding the applicable Royalty Period. Company may not deduct exchange,
collection, or other charges.



     5.4. Payments in Other Currencies. If by law, regulation, or fiscal policy of a
particular country, conversion into United States dollars or transfer of funds of a convertible
currency to the United States is restricted or forbidden, Company shall give University prompt
written notice of the restriction within the sixty-day payment deadline described in Section 5.2.
Company shall pay any amounts due University through whatever lawful methods University reasonably
designates. However, if University fails to designate a payment method within thirty (30) days
after University is notified of the restriction, Company may deposit payment in local currency to
the credit of University in a recognized banking institution selected by Company and identified by
written notice to University, and that deposit fulfills all obligations of Company to University
with respect to that payment.



     5.5. Records. Company shall maintain and shall cause its Affiliates and Sublicensees
to maintain complete and accurate records of Licensed Products that are made, used, or sold under
this Agreement and any amounts payable to University in relation to Licensed Products with
sufficient information to permit University to confirm the accuracy of any reports delivered to
University under Section 5.2. The relevant party shall retain records relating to a given Royalty
Period for at least three (3) years after the conclusion of that Royalty Period, during which time
University may, at its expense, cause its internal accountants or an independent, certified public
accountant to inspect records during normal business hours for the sole purpose of verifying any
reports and payments delivered under this Agreement. The accountant may not disclose to University
any information other than information relating to accuracy of reports and payments delivered under
this Agreement. The parties shall reconcile any underpayment or overpayment within thirty (30)
days after the accountant delivers the results of the audit. If any audit performed under this
Section 5.5 reveals an underpayment in excess of ten percent (10%) in any Royalty Period, Company
shall bear the full cost of the audit. University may exercise its rights under this Section 5.5
only once every year and only with reasonable prior notice to Company.



     5.6. Late Payments. Any payments by Company that are not paid on or before the date
payments are due under this Agreement bear interest at 1.5% per month, calculated on the number of
days that payment is delinquent.



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     5.7. Method of Payment. All payments under this Agreement should be made to the
“University of Massachusetts” and sent to the address identified below. Each payment should
reference this Agreement and identify the obligation under this Agreement that the payment
satisfies.



     5.8. Withholding and Similar Taxes. Royalty payments and other payments due to
University under this Agreement may not be reduced by reason of any withholding or similar taxes
applicable to payments to University. Therefore all amounts owed to University under this
Agreement are net amounts and shall be grossed-up to account for any withholding taxes, value-added
taxes or other taxes, levies or charges.


6. Patents and Infringement.




     6.1. Responsibility for Patent Rights.



          (a) University has primary responsibility at the expense of Company for the preparation,
filing, prosecution, and maintenance of all Patent Rights, using patent counsel reasonably
acceptable to Company. University shall consult with Company as to the preparation, filing,
prosecution, and maintenance of all Patent Rights reasonably prior to any deadline or action with
the United States Patent & Trademark Office or any foreign patent office and shall furnish Company
with copies of relevant documents reasonably in advance of consultation. University shall consider
in good faith any comments of Company on any patent filings for the Patent Rights.




          (b) If University desires to abandon any patent or patent application within the Patent
Rights, University shall provide Company with reasonable prior notice of the intended abandonment,
and Company may, at its expense, prepare, file, prosecute, and maintain the relevant Patent Rights.




     6.2. Cooperation. Each party shall provide reasonable cooperation in the preparation,
filing, prosecution, and maintenance of all Patent Rights. Cooperation includes, without
limitation, promptly informing the other party of matters that may affect the preparation, filing,
prosecution, or maintenance of Patent Rights (such as, becoming aware of an additional inventor who
is not listed as an inventor in a patent application).



     6.3. Payment of Expenses.



          (a) Within thirty (30) days after the Effective Date, Company shall pay the University {***}
to reimburse University for its actual expenses incurred as of the Effective Date in connection
with obtaining the Patent Rights. If this Agreement is terminated according to the terms of
Subsection 3.1(a), University shall reimburse Company for any patent expenses that are paid
pursuant to this Subsection 6.3(a), if it enters into a license agreement with another party for
the Patent Rights in the Field.




          (b) Within thirty (30) days after University invoices Company, Company shall reimburse
University for all patent-related expenses that have not been paid under Subsection




Page 11 of 19 









 




6.3(a) and that are incurred by University pursuant to Section 6.1. Company may elect, upon
sixty (60) days’ written notice to University, to cease payment of the expenses associated with
obtaining or maintaining patent protection for one or more Patent Rights in one or more countries.
If Company elects to cease payment of any patent expenses, Company loses all rights under this
Agreement with respect to the particular Patent Rights in those one or more countries.




     6.4. Infringement.



          (a) Notification of Infringement. Each party agrees to provide written notice to the
other party promptly after becoming aware of any infringement of the Patent Rights.




          (b) Company Right to Prosecute. As long as Company remains the exclusive licensee of
the Patent Rights in the Field, Company may, under its own control and at its own expense,
prosecute any third party infringement of the Patent Rights in the Field or, together with
licensees of the Patent Rights in other fields (if any), defend the Patent Rights in any
declaratory judgment action brought by a third party which alleges invalidity, unenforceability, or
infringement of the Patent Rights. Prior to commencing any action, Company shall consult with
University and shall consider the views of University regarding the advisability of the proposed
action and its effect on the public interest. Company may not enter into any settlement, consent
judgment, or other voluntary final disposition of any infringement action under this Subsection
6.4(b) without the prior written consent of University, which consent may not be unreasonably
withheld or delayed. Any recovery obtained in an action under this Subsection 6.4(b) shall be
distributed as follows: (i) each party shall be reimbursed for any expenses incurred in the action
(including the amount of any royalty payments withheld from University as described below); (ii) as
to ordinary damages, Company shall receive an amount equal to its lost profits or a reasonable
royalty on the infringing sales (whichever measure of damages the court applied), less a reasonable
approximation of the royalties that Company would have paid to University if Company had sold the
infringing products and services rather than the infringer; and (iii) as to special or punitive
damages, the parties shall share equally in any award. Company may offset a total of fifty percent
(50%) of any expenses incurred under this Subsection 6.4(b) against any royalty payments due to
University under this Agreement. However, Company may never reduce royalty payments under Section
4.5. by more than fifty percent (50%) in any Royalty Period.




          (c) University as Indispensable Party. University shall permit any action under
Subsection 6.4(b) to be brought in its name if required by law, provided that Company shall hold
University harmless from, and if necessary indemnify University against, any costs, expenses, or
liability that University may incur in connection with the action.




          (d) University Right to Prosecute. If Company fails to initiate an infringement
action within a reasonable time after it first becomes aware of the basis for the action, or to
answer a declaratory judgment action within a reasonable time after the action is filed, University
may prosecute the infringement or answer the declaratory judgment action under its sole control and
at its sole expense, and any recovery obtained shall be given to University. If University takes
action under this Subsection 6.4(d), University shall keep Company reasonably informed of material
actions taken by University pursuant to the infringement or declaratory action.




Page 12 of 19 









 








          (e) Cooperation. Both parties shall cooperate fully in any action under this Section
6.4. which is controlled by the other party, provided that the controlling party reimburses the
cooperating party promptly for any reasonable costs and expenses incurred by the cooperating party
in connection with providing assistance.



7. Confidential Information; Publications; Publicity.




     7.1. Confidential Information.



          (a) Designation. The Disclosing Party shall mark Confidential Information that is
disclosed in writing with a legend indicating its confidential status (such as, “Confidential” or
“Proprietary”). The Disclosing party shall document Confidential Information that is disclosed
orally or visually in a written notice and deliver the notice to the Receiving Party within thirty
(30) days of the date of disclosure. The notice shall summarize the Confidential Information that
was disclosed and reference the time and place of disclosure.




          (b) Obligations. For five (5) years after disclosure of any portion of Confidential
Information, the Receiving Party shall (i) maintain Confidential Information in confidence, except
that the Receiving Party may disclose or permit the disclosure of any Confidential Information to
its trustees or directors, officers, employees, consultants, and advisors who are obligated to
maintain the confidential nature of Confidential Information and who need to know Confidential
Information for the purposes of this Agreement; (ii) use Confidential Information solely for the
purposes of this Agreement; and (iii) allow its trustees or directors, officers, employees,
consultants, and advisors to reproduce the Confidential Information only to the extent necessary
for the purposes of this Agreement, with all reproductions being Confidential Information.




          (c) Exceptions. The obligations of the Receiving Party under Subsection 7.1(b) do not
apply to the extent that the Receiving Party can demonstrate that Confidential Information (i) was
in the public domain prior to the time of its disclosure under this Agreement; (ii) entered the
public domain after the time of its disclosure under this Agreement through means other than an
unauthorized disclosure resulting from an act or omission by the Receiving Party; (iii) was already
known or independently developed or discovered by the Receiving Party without use of the
Confidential Information; (iv) is or was disclosed to the Receiving Party at any time, whether
prior to or after the time of its disclosure under this Agreement, by a third party having no
fiduciary relationship with the Disclosing Party and having no obligation of confidentiality with
respect to the Confidential Information; or (v) is required to be disclosed to comply with
applicable laws or regulations or with a court or administrative order, provided that the
Disclosing Party receives reasonable prior written notice of the disclosure.




          (d) Ownership and Return. The Receiving Party acknowledges that the Disclosing Party
(or a third party entrusting its own information to the Disclosing Party) owns the Confidential
Information in the possession of the Receiving Party. Upon expiration or termination of this
Agreement, or at the request of the Disclosing Party, the Receiving Party shall return to the
Disclosing Party all originals, copies, and summaries of documents, materials, and other tangible
manifestations of Confidential Information in the possession or control of the




Page 13 of 19 









 




Receiving Party, except that the Receiving Party may retain one copy of the Confidential
Information in the possession of its legal counsel solely for the purpose of monitoring its
obligations under this Agreement.




     7.2. Publicity Restrictions. Company may not use the name of University or any of its
trustees, officers, faculty, students, employees, or agents, or any adaptation of their names, or
any terms of this Agreement in any promotional material or other public announcement or disclosure
without the prior written consent of University. The foregoing notwithstanding, Company or CytRx
Corporation may disclose that information without the consent of University in any prospectus,
offering memorandum, or other document or filing required by applicable securities laws or other
applicable law or regulation, provided that Company provides University at least ten (10) days (or
a shorter period in order to enable Company to make a timely announcement to fulfill applicable
securities laws or other applicable law or regulation, while affording University the maximum
feasible time to review the announcement) prior written notice of the proposed text for the purpose
of giving University the opportunity to comment on the text.


8. Term and Termination.




     8.1. Term. This Agreement commences on the Effective Date and remains in effect until
the expiration of all issued patents within the Patent Rights unless earlier terminated in
accordance with the provisions of this Agreement.



     8.2. Voluntary Termination by Company. Company may terminate this Agreement for any
reason upon ninety (90) days’ prior written notice to University.



     8.3. Termination for Default. If either party commits a material breach of its
obligations under this Agreement and fails to cure that breach within sixty (60) days after
receiving written notice of the breach, the other party may terminate this Agreement immediately
upon written notice to the party in breach. If the alleged breach involves nonpayment of any
amounts due University under this Agreement, Company has only one opportunity to cure a material
breach for which it receives notice as described above. Any subsequent material breach by Company
will entitle University to terminate this Agreement immediately upon written notice to Company,
without the sixty-day cure period.



     8.4. Force Majeure. Neither party is responsible for delays resulting from causes
beyond its reasonable control, including without limitation fire, explosion, flood, war, strike,
act of terrorism or riot, provided that the nonperforming party uses commercially reasonable
efforts to avoid or remove those causes of nonperformance and continues performance under this
Agreement with reasonable dispatch whenever the causes are removed.



     8.5. Effect of Termination. The following provisions survive the expiration or
termination of this Agreement: Articles 1 and 9; Sections 3.3., 3.4, 3.6., 5.2. (obligation to
provide final report and payment), 5.3., 5.4., 5.5., 5.6., 5.7., 5.8., 6.4., 7.1., 7.2., 8.5 and
10.9. Upon the early termination of this Agreement, Company and its Affiliates and Sublicensees
may complete and sell any work-in-progress and inventory of Licensed Products that exist as of the
effective date of termination, provided that (a) Company is current in payment of all amounts



Page 14 of 19 









 







due University under this Agreement, (b) Company pays University the applicable royalty and
Sublicense Income on sales of Licensed Products in accordance with the terms of this Agreement, and
(c) Company and its Affiliates and Sublicensees complete and sell all work-in-progress and
inventory of Licensed Products within six (6) months after the effective date of termination. Upon
the expiration or termination of this Agreement, University may enter into a license agreement
directly with each Sublicensee on terms that are reasonably negotiated directly with each
Sublicensee. Notwithstanding the foregoing, upon the expiration or termination of this Agreement,
University shall enter into a license agreement directly with each Sublicensee on the same terms as
each Sublicense Agreement that is in effect. However, the University and Sublicensee shall modify
each Sublicense Agreement to the extent necessary to ensure that University does not assume any
greater obligations under the license agreement than those set forth in this Agreement and that
Sublicensee complies with all obligations of the Company under this Agreement.


9. Dispute Resolution.




     9.1. Procedures Mandatory. The parties shall resolve any dispute arising out of or
relating to this Agreement solely by means of the procedures set forth in this Article. These
procedures constitute legally binding obligations that are an essential provision of this
Agreement. If either party fails to observe the procedures of this Article, as modified by their
written agreement, the other party may bring an action for specific performance in any court of
competent jurisdiction.



     9.2. Dispute Resolution Procedures.



          (a) Negotiation. In the event of any dispute arising out of or relating to this
Agreement, the affected party shall notify the other party, and the parties shall attempt in good
faith to resolve the matter within ten (10) days after the date of notice (the “Notice Date”). Any
disputes not resolved by good faith discussions shall be referred to senior executives of each
party, who shall meet at a mutually acceptable time and location within thirty (30) days after the
Notice Date and attempt to negotiate a settlement.




          (b) Mediation. If the matter remains unresolved within sixty (60) days after the
Notice Date, or if the senior executives fail to meet within thirty (30) days after the Notice
Date, either party may initiate mediation upon written notice to the other party, and both parties
shall engage in a mediation proceeding under the then current CPR Institute for Dispute Resolution
(“CPR”) Model Procedure for Mediation of Business Disputes. Specific provisions of this Subsection
9.2(b) override inconsistent provisions of the CPR Model Procedure. The parties shall select the
mediator from the CPR Panels of Neutrals. If the parties cannot agree upon the selection of a
mediator within ninety (90) days after the Notice Date, then upon the request of either party, the
CPR shall appoint the mediator. The parties shall attempt to resolve the dispute through mediation
until one of the following occurs: (i) the parties reach a written settlement; (ii) the mediator
notifies the parties in writing that they have reached an impasse; (iii) the parties agree in
writing that they have reached an impasse; or (iv) the parties have not reached a settlement within
one hundred twenty (120) days after the Notice Date.




Page 15 of 19 









 








          (c) Trial Without Jury. If the parties fail to resolve the dispute through
mediation, or if neither party elects to initiate mediation, each party may pursue any other
remedies legally available to resolve the dispute. However, the parties expressly waive the right
to a jury trial in the legal proceeding under this Subsection 9.2(c).




     9.3. Preservation of Rights Pending Resolution.



          (a) Performance to Continue. Each party shall continue to perform its obligations
under this Agreement pending final resolution of any dispute arising out of or relating to this
Agreement. However, a party may suspend performance of its obligations during any period in which
the other party fails or refuses to perform its obligations.




          (b) Provisional Remedies. Although the procedures specified in this Article are the
exclusive procedures for resolution of disputes arising out of or relating to this Agreement,
either party may seek a preliminary injunction or other provisional equitable relief if, in its
reasonable judgment, that action is necessary to avoid irreparable harm to itself or to preserve
its rights under this Agreement.




          (c) Statute of Limitations. The parties agree that all applicable statutes of
limitation and time-based defenses (such as, estoppel and laches) are tolled while the procedures
set forth in Subsections 9.2.(a) and 9.2(b) are pending. The parties shall take any actions
necessary to effectuate this result.




10. Miscellaneous.



     10.1. Representations and Warranties. University represents that its employees have
assigned to University their entire right, title, and interest in the Patent Rights, and that it
has authority to grant the rights and licenses set forth in this Agreement, and that it has not
granted any rights in the Patent Rights to any third party that is inconsistent with the grant of
rights in this Agreement. UNIVERSITY MAKES NO OTHER WARRANTIES CONCERNING THE PATENT RIGHTS,
INCLUDING WITHOUT LIMITATION ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. Specifically, University makes no warranty or representation (a) regarding the
validity or scope of the Patent Rights, (b) that the exploitation of the Patent Rights or any
Licensed Product will not infringe any patents or other intellectual property rights of a third
party, and (c) that any third party is not currently infringing or will not infringe the Patent
Rights.



     10.2. Compliance with Law and Policies. Company agrees to comply with applicable law
and the policies of University in the area of technology transfer and shall promptly notify
University of any violation that Company knows or has reason to believe has occurred or is likely
to occur. The University policies currently in effect at the Worcester campus are the Intellectual
Property Policy, Policy on Conflicts of Interest Relating to Intellectual Property and Commercial
Ventures, and Policy on Faculty Consulting and Outside Activities.



     10.3. Tax-Exempt Status. Company acknowledges that University, as a public
institution of the Commonwealth of Massachusetts, is an exempt organization under the United States
Internal Revenue Code of 1986, as amended. Company also acknowledges that certain



Page 16 of 19 









 







facilities in which the licensed inventions were developed may have been financed through
offerings of tax-exempt bonds. If the Internal Revenue Service determines, or if counsel to
University reasonably determines, that any term of this Agreement jeopardizes the tax-exempt status
of University or the bonds used to finance University facilities, the relevant term is invalid and
shall be modified in accordance with Section 10.11.



     10.4. Counterparts. This Agreement may be executed in one or more counterparts, each
of which is an original, and all of which together are one instrument.



     10.5. Headings. All headings are for convenience only and do not affect the meaning
of any provision of this Agreement.



     10.6. Binding Effect. This Agreement is binding upon and inures to the benefit of the
parties and their respective permitted successors and assigns.



     10.7. Assignment. This Agreement may not be assigned by either party without the
prior written consent of the other party, which consent may not be unreasonably withheld or
delayed. Notwithstanding the foregoing, this Agreement may be assigned by either party in
connection with a merger, consolidation, sale of all of the equity interests of the party, or a
sale of all or substantially all of the assets of the party to which this Agreement relates.



     10.8. Amendment and Waiver. The parties may only amend, supplement, or otherwise
modify this Agreement through a written instrument signed by both parties. The waiver of any rights
or failure to act in a specific instance relates only to that instance and is not an agreement to
waive any rights or fail to act in any other instance.



     10.9. Governing Law. This Agreement is governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts irrespective of any conflicts of law principles. The
parties may only bring legal action that arises out of or in connection with this Agreement in the
Massachusetts Superior Court in Suffolk County.



     10.10. Notice. Any notices required or permitted under this Agreement shall be in
 writing, shall specifically refer to this Agreement, and shall be sent by recognized national
overnight courier, or registered or certified mail, postage prepaid, return receipt requested, to
the following addresses:



	 	 	 
	If to University:

	 	If to Company:
	 
	 	 
	Office of Technology Management

	 	RXi Pharmaceuticals Corporation
	University of Massachusetts

	 	One Innovation Drive
	333 South Street, Suite 400

	 	Worcester, MA 01605
	Shrewsbury, MA 01545
	 	 
	Attention: Executive Director

	 	Attention: President





All notices under this Agreement are effective upon receipt. A party may change its contact
information immediately upon written notice to the other party in the manner provided in this
Section 10.10.




Page 17 of 19 









 








     10.11. Severability. If any provision of this Agreement is held invalid or
unenforceable for any reason, the invalidity or unenforceability does not affect any other
provision of this Agreement, and the parties shall negotiate in good faith to modify the Agreement
to preserve (to the extent possible) their original intent. If the parties fail to reach a
modified agreement within sixty (60) days after the relevant provision is held invalid or
unenforceable, then the dispute shall be resolved in accordance with the procedures set forth in
Article 9. While the dispute is pending resolution, this Agreement shall be construed as if the
provision were deleted by agreement of the parties.



     10.12. Entire Agreement. This Agreement constitutes the entire agreement between the
parties with respect to its subject matter and supersedes all prior agreements or understandings
between the parties relating to its subject matter.



     The parties have caused this Agreement to be executed by their duly authorized
representatives as of the Effective Date.



	 	 	 	 	 	 	 	 	 	 	 
	UNIVERSITY OF MASSACHUSETTS	 	 	 	RXI PHARMACEUTICALS CORP.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	/s/ James P. McNamara 	 	 	 	By:	 	/s/ Tod Woolf 	 	 
	 
	 	 
	 	 	 	 	 	 

	 	 
	Name:

	 	James P. McNamara, Ph.D.,
	 	 	 	Name:
	 	Tod Woolf, Ph.D.	 	 
	Title:

	 	Executive Director,
Office of Technology Management
	 	 	 	Title:
	 	President & CEO	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date:

	 	 	 	 	 	Date:	 	 	 	 
	 

	 	 

	 	 	 	 	 	 

	 	 






Page 18 of 19 









 





EXHIBIT A




Patent Rights




UMMC 06-21




     Invention Disclosure




Entitled: “Methods and Synthesis of Reagents to Treat ALS”

Tariq M. Rana, Ph.D. and Zuoshang Xu.



     Provisional Application




Entitled: “Improved RNA Interference Agents for Therapeutic Use”

Tariq M. Rana, Ph.D., Filed 1/26/2006 – Application No. 60/762,957




Page 19 of 19