Document:

exv10w4

Exhibit 10.4

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

Filed Separately With The Securities And Exchange Commission.

NON-EXCLUSIVE LICENSE AGREEMENT

     This Agreement, effective as of April 15, 2003 (the “Effective Date”), is between the
University of Massachusetts Medical School (“Medical School”), a public institution of
higher education of the Commonwealth of Massachusetts having an address of 55 Lake Avenue North,
Worcester, MA 01655 and CytRx Corporation (“Company”), a Delaware corporation having an
address of 11726 San Vicente Blvd., Suite 650, Los Angeles, CA 90049.

R E C I T A L S

     WHEREAS, Medical School is owner by assignment of the invention claimed in the United States
Patent Application listed in Exhibit A pertaining to the Medical School’s invention
disclosure number UMMC 01-36 entitled RNA Sequence-Specific Mediators of RNA Interference;

     WHEREAS, Company desires to obtain a non-exclusive license in the field of therapeutics
limited to the narrowed fields of other Medical School license agreements; specifically, using RNAi
to inhibit HCMV Immediate Early (IE) gene expression in Retinitis applications, using RNAi to
inhibit mutant SOD1 gene expression in Amytrophic Lateral Sclerosis (ALS) applications, and using
RNAi to inhibit gene targets implicated in Type II Diabetes and Obesity under the rights of Medical
School in any patent rights claiming those inventions; and

     WHEREAS, Medical School is willing to grant Company a non-exclusive license on the terms set
forth in this Agreement.

     NOW, THEREFORE, Medical School and Company hereby agree as follows:

     1. Definitions.

          1.1. “Affiliate” means any legal entity (such as a corporation, partnership, or limited
liability company) that is controlled by Company. For the purposes of this definition, the term
“control” means (a) beneficial ownership of at least fifty percent (50%) of the voting securities
of a corporation or other business organization with voting securities or (b) a fifty percent (50%)
or greater interest in the net assets or profits of a partnership or other business organization
without voting securities.

          1.2. “Biological Materials” means the tangible biological materials described on
Exhibit A, as well as tangible materials that are routinely produced through use of the
original materials, including, for example, any progeny derived from a cell
line, monoclonal antibodies produced by hybridoma cells, DNA or RNA replicated from isolated
DNA or RNA, recombinant proteins produced through use of isolated DNA or RNA, and substances
routinely purified from a source material included in the original materials (such as recombinant
proteins isolated from a cell extract or supernatant by non-proprietary affinity purification
methods). These Biological

 

 

Materials shall be listed on Exhibit A, which will be
periodically amended to include any additional Biological Materials that Medical School may furnish
to Company.

          1.3. “Combination Product” means a product that contains a Licensed Product component
and at least one other essential functional component.

          1.4. “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, provided that such information is specifically
designated as confidential. Such Confidential Information shall include, without limitation, any
diligence reports furnished to Medical School under Section 3.1 and royalty reports furnished to
Medical School under Section 5.2.

          1.5. “Field” means therapeutics, prophylactics, and diagnostics arising from the limited
use of RNAi to inhibit HCMV Immediate Early (IE) gene expression in Retinitis applications, using
RNAi to inhibit mutant SOD1 gene expression in Amyotrophic Lateral Sclerosis (ALS) applications,
and using RNAi to inhibit gene targets implicated in Type II Diabetes and Obesity.

          1.6. “Licensed Product” means any product that cannot be developed, manufactured, used,
or sold without (a) infringing one or more claims under the Patent Rights or (b) using or
incorporating some portion of one or more Biological Materials.

          1.7. “Net Sales” means the gross amount billed or invoiced on sales by Company and its
Affiliates and Sublicensees of Licensed Products, less the following: (a) customary trade,
quantity, or cash discounts and commissions 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; (d) outbound transportation costs
prepaid or allowed and costs of insurance in transit; and (e) allowance for bad debt that is
customary and reasonable for the industry and in accordance with generally accepted accounting
principles. Notwithstanding anything to the contrary in this Section 1.7, Net Sales does not
include sales of Licensed Products at or below the fully burdened cost of manufacturing solely for
research or clinical testing or for indigent or similar public support or compassionate use
programs.

     In any transfers of Licensed Products between Company and an Affiliate or Sublicensee, Net
Sales shall be calculated based on the final sale of the Licensed Product to an independent third
party. In the event that Company or an Affiliate or Sublicensee receives
non-monetary consideration for any Licensed Products, Net Sales shall be calculated based on
the fair market value of such consideration.

     In the case of Combination Products, Net Sales means the gross amount billed or invoiced on
sales of the Combination Product less the deductions set forth above, multiplied by a proration
factor that is determined as follows:

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                    (i) If all components of the Combination Product were sold separately during the same or
immediately preceding Royalty Period, the proration factor shall be determined by the formula [A /
(A+B)], where A is the aggregate gross sales price of all Licensed Product components during such
period when sold separately from the other essential functional components, and B is the aggregate
gross sales price of the other essential functional components during such period when sold
separately from the Licensed Product Components; or

                    (ii) If all components of the Combination Product were not sold separately during the same or
immediately preceding Royalty Period, the proration factor shall be determined by the formula [C /
(C+D)], where C is the aggregate fully absorbed cost of the Licensed Product components during the
prior Royalty Period and D is the aggregate fully absorbed cost of the other essential functional
components during the prior Royalty Period, with such costs being determined in accordance with
generally accepted accounting principles.

          1.8. “Patent Rights” means the U.S. patent applications listed on Exhibit A, and
any divisional, continuation, or continuation-in-part of such patent applications to the extent the
claims are directed to subject matter specifically described therein, as well as any patent issued
thereon and any reissue or reexamination of such patent, and any foreign counterparts to such
patents and patent applications. Exhibit A shall be periodically amended to include any
additional Patent Rights that may arise. “Medical School Patent Rights” means Patent
Rights assigned to the Medical School and the joint owners Massachusetts Institute of Technology,
the Whitehead Institute for Biomedical Research, and Max-Planck-Gesellschaft Zur Foerderung Der
Wissenschaften E.V.

          1.9. “Royalty Period” means the partial calendar quarter commencing on the date on which
the first Licensed Product is sold or used 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 6.5.

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

          1.11. “Sublicense Income” means any payments 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, royalties, 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, and
(b) payments specifically committed to the development of Licensed Products.

     2. Grant of Rights.

          2.1. Subject to the terms of this Agreement, Medical School hereby grants to Company and its
Affiliates a non-exclusive, worldwide, royalty-bearing license (with the right to sublicense) under
its commercial rights in the Patent Rights and Biological Materials to develop, make, have made,
use, and sell Licensed Products in the Field.

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          2.2. Sublicenses. Company shall have the right to grant sublicenses of its rights under Section
2.1 with the consent of Medical School, which consent shall not be unreasonably withheld or
delayed. All sublicense agreements executed by Company pursuant to this Article 2 shall expressly
bind the Sublicensee to the terms of this. Company shall promptly furnish Medical School with a
fully executed copy of any such sublicense agreement.

     3. Company Obligations Relating to Commercialization.

          3.1. Diligence Requirements. Company shall use diligent efforts or shall cause its Affiliates
or 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 or its Affiliates
or Sublicensees shall fulfill the following obligations:

               (a) Within ninety (90) days after the Effective Date, Company shall furnish Medical School
with a written research and development plan under which Company intends to develop Licensed
Products.

               (b) Within sixty (60) days after each anniversary of the Effective Date, Company shall
furnish Medical School with a written report on the progress of its efforts during the prior year
to develop and commercialize Licensed Products, including without limitation research and
development efforts, efforts to obtain regulatory approval, marketing efforts, and sales figures.
The report shall also contain a discussion of intended efforts and sales projections for the
current year.

               (c) Company shall endeavor to obtain all necessary governmental approvals for the
manufacture, use and sale of Combination Product and Licensed Product. Specifically, Company
shall:

                    (i) Within eight (8) years after the Effective Date, file an Investigational New Drug
Application (“IND”) or its equivalent covering at least one Combination Product or Licensed
Product with the U.S. Food and Drug Administration (“FDA”);

                    (ii) Within thirteen (13) years after the Effective Date, file a New Drug Application
(“NDA”) with the FDA covering at least one Combination Product or Licensed Product;

                    (iii) Within eighteen (18) months after receiving FDA approval of the NDA for a Combination
Product or Licensed Product, market at least one Combination Product or Licensed Product in the
U.S.; and

                    (iv) reasonably fill the market demand for any Combination Product or Licensed Product
following commencement of marketing of such product at any time during the exclusive period of this
Agreement.

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               (d) Within eighteen (18) months after the Effective Date, Company shall successfully
undertake a public or private offering of raising ten million dollars ($10,000,000).

               (e) In addition to the obligations set forth above, Company or its Affiliates or Sublicensees
shall spend (either directly or through sponsored research by Company or its Affiliates or
Sublicensees at the Medical School) an aggregate of not less than [* * *] per calendar
year for the development of Combination Product and/or Licensed Product commencing with the year
2004.

     Company shall have the responsibility to finance its obligations in this Section 3.1, and the
Medical School shall provide reasonable cooperation to Company in this regard. In the event that
Medical School determines that Company (or an Affiliate or Sublicensee) has not fulfilled its
obligations under this Section 3.1, Medical School shall furnish Company with written notice of
such determination. Within sixty (60) days after receipt of such notice, Company shall either (i)
fulfill the relevant obligation or (ii) negotiate with Medical School a mutually acceptable
schedule of revised diligence obligations, failing which Medical School shall have the right,
immediately upon written notice to Company, to terminate this Agreement.

          3.2. Indemnification.

               (a) Indemnity. Company shall indemnify, defend, and hold harmless Medical School 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 such 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; provided, however, that such indemnification shall not apply to any
liability, damage, loss, or expense to the extent directly
attributable to (i) the negligent activities 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
Medical School to defend against any such claim. The Indemnitees shall cooperate fully with
Company in such defense and will permit Company to conduct and control such defense and the
disposition of such claim, suit, or action (including all decisions relative to litigation, appeal,
and settlement); provided, however, that any Indemnitee shall have the right to retain its own
counsel, at the expense of Company, if representation of such Indemnitee by the counsel retained by
Company would be inappropriate because of actual or potential differences in the interests of such
Indemnitee and any other party represented by such counsel. Company agrees to keep Medical School
informed of the progress in the defense and disposition of such claim and to consult with Medical
School with regard to any proposed settlement.

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               (c) Insurance. Company shall maintain insurance or self-insurance that is
reasonably adequate to fulfill any potential obligation to the Indemnitees, but in any event 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 Medical School, upon request, with written evidence of
such insurance or self-insurance. Company shall continue to maintain such insurance or
self-insurance after the expiration or termination of this Agreement during any period in which
Company or any Affiliate or Sublicensee continues to make, use, or sell a product that was a
Licensed Product under this Agreement and thereafter for a period of two (2) years.

          3.3. Use of Medical School Name. In accordance with Section 6.3, Company and its
Affiliates and Sublicensees shall not use the name “University of Massachusetts Medical
School” or any variation of that name in connection with the marketing or sale of any Licensed
Products.

          3.4. 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 such Licensed Product.

          3.5. 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 and Sublicensees shall obtain all necessary approvals from the
United States Food & Drug Administration and any similar governmental authorities of any foreign
jurisdiction in which Company or an 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 certain 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. 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 such laws and regulations by itself or its Affiliates and
Sublicensees, and that it will indemnify, defend, and hold Medical School harmless (in accordance
with Section 3.1) for the consequences of any such violation.

     4. Consideration for Grant of Rights.

          4.1. License Fee. In partial consideration of the rights granted Company under this
Agreement, Company shall pay to Medical School, within thirty (30) days after the Effective Date,
(a) a license fee of [* * *], and (b) a payment in the amount of [* * *] to
reimburse Medical

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School for its actual expenses incurred as of January 31, 2003 in connection with
obtaining the Patent Rights. These license fee payments are nonrefundable and are not creditable
against any other payments due to Medical School under this Agreement.

          4.2. Equity. In partial consideration of the license granted to Company under this
Agreement, on or about April 18, 2003, Company shall issue to Medical School a total number of
shares of Common Stock of Company, ($.01 par value per share) equal to [* * *] of the
outstanding shares of Company. Company shall register the shares that are issued to the Medical
School within ninety (90) days after their issuance and those shares will then be unrestricted.

          4.3. License Maintenance Fee. Beginning on the anniversary of the Effective Date, and
in each calendar year during the term of the Agreement, Company shall pay to Medical School fifteen thousand dollars ($15,000). This annual license maintenance fee is nonrefundable and is not creditable against any
other payments due to Medical School under this Agreement.

          4.4. Royalties. In partial consideration of the rights granted Company under this
Agreement, Company shall pay to Medical School a royalty of [* * *] of Net Sales of
Licensed Products by Company and its Affiliates.

               (a) If there is a competing product in the marketplace, no royalties are due for a Licensed
Product that is within the definition of “Licensed Product” because it uses or incorporates
only Biological Materials.

               (b) If during the Royalty Period, patents under the Patent Rights have expired or have been
abandoned in a particular country, (i) no royalty is payable by Company, if there is a competing
product in that country, and (ii) if Company reduces its prices for Licensed Products in that
country, even if there is no competing product in that country, Company and Medical School shall
negotiate in good faith a reduction in the royalty rate to reflect the reduction in Company’s gross
margins caused by the price reduction.

               (c) Company
shall pay Medical School ten percent (10%) of Net Sales of commercial clinical
laboratory services by Company and its Affiliates.

          4.5. Minimum Royalty. At the beginning of each calendar year during the term of this
Agreement, beginning January 1, 2016, Company shall pay to Medical School a minimum royalty of
fifty thousand dollars ($50,000). If the actual royalty payments to Medical School in any calendar year are less
than the minimum royalty payment required for that year, Company shall have the right to pay
Medical School the difference between the actual royalty payment and the minimum royalty payment in
full satisfaction of its obligations under this Section, provided such minimum payment is made to
Medical School within sixty (60) days after the conclusion of the calendar year. Waiver of any
minimum royalty payment by Medical School shall not be construed as a waiver of any subsequent
minimum royalty payment. If Company fails to make any minimum royalty payment within the sixty-day
period, such failure shall constitute a material breach of its obligations under this Agreement,
and Medical School shall have the right to terminate this Agreement in accordance with Section 7.3.

          4.6. Third-Party Royalties. If Company is legally required to make royalty payments to
Medical School under any agreement other than this Agreement (the “Other

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Medical School
Licenses”), or to one or more third parties in the same Royalty Period for which royalties are
due under Section 4.5 or 4.7 in order for Company to make, use or sell Licensed Products or have
its sublicense make, use, or sell Licensed Products:

               (a) in the case of any payments to Medical School under Other Medical School Licenses with
respect to Licensed Products under this Agreement, the royalty payment made by Company to Medical
School under this Agreement for the applicable Royalty Payment shall be reduced by fifty percent
(50%) of the aggregate amounts payable for the same Royalty Period under the Other Medical School
Licenses (before making any similar reduction in those payments pursuant to a corresponding
reduction clause in those agreements), with a minimum floor of [* * *] of Net Sales of
Licensed Products or [* * *] of the Sublicense Income to be paid under this Agreement;
and

               (b) in the case of payments to one or more third parties, an offset of fifty percent (50%) of
the amount paid to third parties may be taken by Company against any royalties payable by Company
to the Medical School under this Agreement with a minimum floor of [* * *] of Net Sales
of Licensed Products or [* * *] of all Sublicense Income, provided that in no event shall
the
royalty payments under Section 4.5 and 4.7, when aggregated with any other offsets and credits
allowed under this Agreement, be reduced by more than fifty percent (50%); in the case of payments
to one or more third parties, Medical School shall receive [* * *] of the Sublicense
Income net of the foregoing third party payments; and

               (c) in the case of both payments under Other Medical School Licenses and to third parties in
the same Royalty Period, the reduction described in (i) above shall first be made, and then the
offset described in (ii) above shall be taken, provided that only a pro rata amount of the offset
pursuant to (ii) above shall be taken against the royalties payable under this Agreement (with the
pro-ration calculated based on the relative royalty rates under this Agreement and the Other
Medical School Licenses), with a minimum floor under this Agreement of [* * *] of Net
Sales of Licensed Products and [* * *] of Sublicense Income.

     By way of illustration, assume a royalty of [* * *] under the Other Medical School
Licenses of Net Sales of Licensed Products and a payment of [* * *] of Net Sales of
Licensed Products to a third party. The reduction and offsets calculation would be as follows:

                    (i) The [* * *] of Net Sales of Licensed Products would be reduced to [* * *]
of Net Sales of Licensed Products (i.e., a reduction of 50% of the [* * *] of Net
Sales of Licensed Products under Other Medical School Licenses); and

                    (ii) The remaining [* * *] of Net Sales of Licensed Products would be offset by an
amount equal to [* * *] of Net Sales of Licensed Products, for a net royalty to the
Medical School under this Agreement of [* * *] of Net Sales of Licensed Products (i.e.,
the offset of 50% of the [* * *] of Net Sales of Licensed Products payable to the third
party is allocated pro rata against Medical School under this Agreement, with 33 1/3% of this net
offset of [* * *] of Net Sales of Licensed Products being allocated to the royalties
under this Agreement (the [* * *] royalty rate under this Agreement divided by the
[* * *] royalty rate under this Agreement plus the [* * *] royalty rate under
the Other Medical School Licenses)).

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     5. Royalty Reports; Payments; Records.

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

          5.2. Reports and Payments. Within sixty (60) days after the conclusion of each Royalty
Period, Company shall deliver to Medical School a report containing the following information:

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

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

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

               (d) total royalty payable on Net Sales in U.S. dollars, together with the exchange rates used
for conversion.

     If no royalties are due to Medical School for any Royalty Period, the report shall so state.
Concurrent with this report, Company shall remit to Medical School any payment due for the
applicable Royalty Period. Medical School shall instruct Company as to the method of payment.

     The contents of all such reports shall be the confidential and proprietary information of
Company. To the extent permitted by applicable law, Medical School shall use reasonable efforts to
maintain the confidentiality of such reports.

          5.3. Payments in U.S. Dollars. All payments due under this Agreement shall be payable
in United States dollars. Conversion of foreign currency to U.S. dollars shall be made 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. Such
payments shall be without deduction of 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 Medical School prompt
written notice of such restriction, which notice shall satisfy the sixty-day payment deadline
described in Section 5.2. Company shall pay any amounts due Medical School through whatever lawful
methods Medical School reasonably designates; provided, however, that if Medical School fails to
designate such payment method within thirty (30) days after Medical School is notified of the
restriction, Company may deposit such payment in local currency to the credit of Medical School in
a recognized banking institution selected by Company and identified by written notice to Medical
School, and such deposit shall fulfill all obligations of Company to Medical School with respect to
such payment.

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          5.5. Records. Company shall maintain, and shall cause its Affiliates to maintain,
complete and accurate records of Licensed Products that are made, used, sold, or performed under
this Agreement and any amounts payable to Medical School in relation to such Licensed Products,
which records shall contain sufficient information to permit Medical School to confirm the accuracy
of any reports delivered to Medical School under Section 5.2. The relevant party shall retain such
records relating to a given Royalty Period for at least three (3) years after the conclusion of
that Royalty Period, during which time Medical School shall have the
right, at its expense, to cause its internal accountants or an independent, certified public
accountant to inspect such records during normal business hours for the sole purpose of verifying
any reports and payments delivered under this Agreement. Such accountant shall not disclose to
Medical School 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. In the event that any
audit performed under this Section reveals an underpayment in excess of the greater of (a) five
thousand dollars ($5,000) or (b) ten percent (10%) in any Royalty Period, Company shall bear the
full cost of such audit. Medical School may exercise its rights under this Section 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
such payments are due under this Agreement shall bear interest, to the extent permitted by law, at
two percentage points above the Prime Rate of interest as reported in the Wall Street
Journal on the date payment is due, with interest calculated based on the number of days that
payment is delinquent.

          5.7. Method of Payment. All payments under this Agreement should be made in the name of
the “Medical School 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 Medical
School under this Agreement shall be reduced by reason of any withholding or similar taxes
applicable to such payments to Medical School, which shall be paid by Company as required by
applicable law and reported by Company to the Medical School.

     6. Confidential Information; Publications; Publicity.

          6.1. Confidential Information.

               (a) Designation. Confidential Information that is disclosed in writing shall be
marked with a legend indicating its confidential status (such as “Confidential” or
“Proprietary”). Confidential Information that is disclosed orally or visually shall be
documented in a written notice prepared by the Disclosing Party and delivered to the Receiving
Party within thirty (30) days of the date of disclosure; such notice shall summarize the
Confidential Information disclosed to the Receiving Party and reference the time and place of
disclosure.

               (b) Obligations. For a period of five (5) years after disclosure of any portion of
Confidential
Information, the Receiving Party shall (i) maintain such Confidential

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Information in
strict confidence, except that the Receiving Party may disclose or permit the disclosure of any
Confidential
Information to its directors, officers, employees, consultants, and advisors who are
obligated to maintain the confidential nature of such Confidential Information and who need to
know such Confidential Information for the purposes of this Agreement; (ii) use such 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 such reproductions being
considered Confidential Information.

               (c) Exceptions. The obligations of the Receiving Party under Subsection 6.1.(b)
above shall not apply to the extent that the Receiving Party can demonstrate that certain
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 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 such 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 such disclosure.

               (d) Ownership and Return. The Receiving Party acknowledges that the Disclosing Party
(or any third party entrusting its own information to the Disclosing Party) claims ownership of its
Confidential Information in the possession of the Receiving Party. Upon the expiration or
termination of this Agreement, and 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
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.

          6.2. Publications. Medical School and its employees will be free to publicly disclose
(through journals, lectures, or otherwise) the results of any research in the Field or relating to
the subject matter of the Patent Rights, except as otherwise provided by written agreement between
Medical School and Company (e.g., a sponsored research agreement).

          6.3. Publicity Restrictions. Company shall not use the name of Medical School or any of
its trustees, officers, faculty, students, employees, or agents, or any adaptation of such names,
or any terms of this Agreement in any promotional material or other public announcement or
disclosure without the prior written consent of Medical School. The foregoing notwithstanding,
Company shall have the right to disclose such information without the consent of Medical School in
any prospectus, offering memorandum, or other document or filing required by applicable securities
laws or other applicable law or regulation, provided that Company shall have given Medical School
at least ten (10) days (or such prior shorter period in order to enable Company to make a
timely announcement, while affording the Medical School

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the
maximum feasible time to review
the announcement) prior written notice of the proposed text for the purpose of giving Medical
School the opportunity to comment on such text.

     7. Term and Termination.

          7.1. Term. This Agreement shall commence on the Effective Date and shall remain in
effect until (a) the expiration of all issued patents within the Patent Rights or (b) for a period
of ten (10) years after the Effective Date if no such patents have issued within that ten-year
period, unless earlier terminated in accordance with the provisions of this Agreement.

          7.2. Termination for Default. In the event that 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 thereof, the other party may terminate this Agreement immediately upon
written notice to the party in breach.

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

          7.4. Effect of Termination. The following provisions shall survive the expiration or
termination of this Agreement: Articles 1 and 8; Sections 3.2, 3.5., 5.2. (obligation to provide
final report and payment), 6.1., 7.5., and 9.9. Upon the early termination of this Agreement,
Company and its Affiliates or 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 due Medical School under this Agreement, (b) Company pays
Medical School the applicable royalty on such sales of Licensed Products in accordance with the
terms and conditions of this Agreement, and (c) Company and its Affiliates or Sublicensees shall
complete and sell all work-in-progress and inventory of Licensed Products within six (6) months
after the effective date of termination.

     8. Dispute Resolution.

          8.1. Procedures Mandatory. The parties agree that any dispute arising out of or
relating to this Agreement shall be resolved solely by means of the procedures set forth in this
Article, and that such procedures constitute legally binding obligations that are an essential
provision of this Agreement; provided, however, that all procedures and deadlines specified in this
Article may be modified by written agreement of the parties. 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.

          8.2. 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 such notice (the “Notice
Date”). Any disputes not resolved by good faith discussions shall be referred to senior

12

 

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, whereupon both
parties shall be obligated to engage in a mediation proceeding under the then current Center for
Public Resources (“CPR”) Model Procedure for Mediation of Business Disputes, except that
specific provisions of this Section shall override inconsistent provisions of the CPR Model
Procedure. The mediator will be selected 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 and twenty (120) days after the Notice Date.

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

          8.3. 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 or relating to this
Agreement; provided, however, that 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
sole and exclusive procedures for the resolution of disputes arising out of relating to this
Agreement, either party may seek a preliminary injunction or other provisional equitable relief if,
in its reasonable judgment, such 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) shall be tolled while the
procedures set forth in Subsections 8.2.(a) and 8.2(b) are pending. The parties shall take any
actions necessary to effectuate this result.

     9. Miscellaneous.

          9.1. Representations and Warranties. Representations and Warranties. Medical School
represents and warrants that its employees have assigned to Medical School their entire right,
title, and interest in the Patent Rights, that it has authority to grant the rights and licenses
set forth in this Agreement, and that, to its best knowledge, Medical School does not hold any
other intellectual property rights that would be infringed by the exploitation of the Patent
Rights. MEDICAL SCHOOL MAKES NO OTHER WARRANTIES CONCERNING

13

 

THE PATENT RIGHTS AND BIOLOGICAL
MATERIALS, INCLUDING WITHOUT LIMITATION ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE. Specifically, Medical School makes no warranty or representation
(a) that the exploitation of any Licensed Product will not infringe any patents or other
intellectual property rights of a third party, (b) regarding the validity or scope of the Patent
Rights, and (c) that any third party is not currently infringing or will not infringe the Patent
Rights.

          9.2. Compliance with Law and Policies. Company agrees to comply with applicable law and
the policies of Medical School in the area of technology transfer and shall promptly notify Medical
School of any violation that Company knows or has reason to believe has occurred or is likely to
occur. The Medical School policies currently in effect at 365 Plantation Street, Ste. 130,
Worcester MA, 01605 campus are available online at www.umassmed.edu/research/policies.

          9.3. Tax-Exempt Status. Company acknowledges that Medical School, as a public
institution of the Commonwealth of Massachusetts, holds the status of an exempt organization under
the United States Internal Revenue Code. Company also acknowledges that certain 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 Medical School reasonably
determines, that any term of this Agreement jeopardizes the tax-exempt status of Medical School or
the bonds used to finance Medical School facilities, the relevant term shall be deemed an invalid
provision and modified in accordance with Section 10.11.

          9.4. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, and all of which together shall be deemed to be one and the same
instrument.

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

          9.6. Binding Effect. This Agreement shall be binding upon and inure to the benefit of
the parties and their respective permitted successors and assigns.

          9.7. Assignment. This Agreement may not be assigned by either party without the prior
written consent of the other party, except that Company may assign this Agreement to an Affiliate
or to a successor in connection with the merger, consolidation, or sale of all or substantially all
of its assets or that portion of its business to which this Agreement relates.

          9.8. Amendment and Waiver. This Agreement may be amended, supplemented, or otherwise
modified only by means of a written instrument signed by both parties. Any waiver of any rights or
failure to act in a specific instance shall relate only to such instance and shall not be construed
as an agreement to waive any rights or fail to act in any other instance, whether or not similar.

14

 

          9.9. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts irrespective of any conflicts of law principles.

          9.10. Notice. Any notices required or permitted under this Agreement shall be in
writing, shall specifically refer to this Agreement, and shall be sent by hand, recognized national
overnight courier, confirmed facsimile transmission, confirmed electronic mail, or registered or
certified mail, postage prepaid, return receipt requested, to the following addresses or facsimile
numbers of the parties:

If to Medical School:

Office of Technology Management

Medical School of Massachusetts

365 Plantation Street, Suite 130

Worcester, MA 01605

Attention: Joseph F.X. McGuirl

                 Executive Director

Tel:            (508) 856-1626

Fax:            (508) 856-1482

If to Company:

CytRx Corporation

11726 San Vicente Blvd., Suite 650

Los Angeles, CA 90049

Attention: Steven A. Kriegsman

                 Chief Executive Officer

Tel: (310) 826-5449

Fax: (310) 826-5529

     All notices under this Agreement shall be deemed 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.

          9.11. Severability. In the event that any provision of this Agreement shall be held
invalid or unenforceable for any reason, such invalidity or unenforceability shall 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 7. While the dispute is pending resolution, this Agreement shall be construed as if such
provision were deleted by agreement of the parties.

          9.12. 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.

15

 

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly
authorized representatives as of the date first written above.

	 	 	 	 	 	 	 

	MEDICAL SCHOOL OF MASSACHUSETTS	 	CYTRX CORPORATION
	 
	 	 	 	 	 	 
	By:

	 	/s/ Joseph F.X. McGuirl
	 	By:
	 	/s/ Steven A. Kriegsman
	 

	 	 
	 	 	 	 
	 

	 	Joseph F.X. McGuirl
	 	 	 	Steven A. Kriegsman
	 

	 	Executive Director, CVIP
	 	 	 	Chief Executive Officer

16

 

Exhibit A

List of Patent Rights

     UMMC 01-36 “RNA Sequence-Specific Mediators of RNA Interference” Inventors: David P.
Bartel, Philip A. Sharp, Thomas Tuschl, and Philip D. Zamore

I. United States Patents and Application

	 	 	USSN 60/265232 entitled “RNA Sequence-Specific Mediators of RNA
Interference”, by David P. Bartel, Philip A. Sharp, Thomas Tuschl, and
Philip D. Zamore

	 	 	USSN 09/821832 entitled “RNA Sequence-Specific Mediators of RNA
Interference”, by David P. Bartel, Philip A. Sharp, Thomas Tuschl, and
Philip D. Zamore

II. International (non-U.S.) Patents and Applications

	 	 	PCT/US01/10188 entitle “RNA Sequence-Specific Mediators of RNA
Interference”, by David P. Bartel, Philip A. Sharp, Thomas Tuschl, and
Philip D. Zamore

A - 1

 

AMENDMENT NO. 1

TO

NON-EXCLUSIVE LICENSE AGREEMENT

(UMMC 01-36)

     This Amendment No. 1, dated as of February 1, 2004 (the “Amendment”) is being made to
the Non-Exclusive License Agreement relating to UMMC 01-36 (the “License Agreement”),
effective as of April 15, 2003, by and between the University of Massachusetts Medical School
(“Medical School”), a public institution of higher education of the Commonwealth of
Massachusetts having an address of 55 Lake Avenue North, Worcester, MA 01655, and CytRx Corporation
(“Company”), a Delaware corporation having an address of 11726 San Vicente Boulevard, Suite
650, Los Angeles, California 90049.

R E C I T A L S

     WHEREAS, Section 4.6 of the License Agreement provided for the calculation of payments payable
to Medical School under Section 4.4 of the License Agreement in the event Company was required to
make certain other payments to Medical School or third parties; and

     WHEREAS, Medical School and Company wish to clarify the manner in which Section 4.6 of the
License Agreement shall operate;

     NOW, THEREFORE, Medical School and Company hereby agree as follows:

     1. Amendment to Section 4.6.

     Section 4.6 of the License Agreement is hereby amended to read in full as follows:

     “4.6 Third-Party and Other Payments. If Company is legally required to make royalty
or sublicense income payments to Medical School under any other license agreement, as well as this
Agreement, or to one or more third parties, as well as this Agreement, in the same Royalty Period
for which payments are due under Section 4.4 in order for Company to make, use or sell Licensed
Products or have its Sublicensee make, use, or sell Licensed Products:

     (a) Other Medical School Payments. In the case of payments to Medical School under
Section 4.4 with respect to any Licensed Product, Company shall pay only the highest rate among
this Agreement and any other Medical School licenses, and that one payment shall be deemed to
satisfy the payment requirements for the applicable period under not only this Agreement but each
of the other Medical School licenses.

     (b) Third Party Payments. In the case of payments to one or more third parties with
respect to any Licensed Product under this Agreement, Company may reduce its payment to Medical
School under Section 4.4 of this Agreement for the applicable Royalty Period by fifty percent (50%)
of the amount actually paid to third parties. However, in no event will the reductions made
pursuant to this Section 4.6(b) result in more than a fifty percent (50%) reduction in the payments
that would otherwise be payable to Medical School under Section 4.4 (after taking into account
Section 4.6(b)).

-1-

 

     (c) Example: Royalty Reductions. By way of illustration for Section 4.4 royalty
payment reductions, for a particular Licensed Product, assume a royalty of [* * *] of Net
Sales under another Medical School license and a payment of [* * *] of Net Sales to a
third party. The reduction calculation would be as follows: The total [* * *] royalty
rate in this Agreement would apply, and Company would reduce that rate by 50% due to the [* *
*] due to the third party (with a 50% cap on the rate reduction pursuant to Section 4.6),
resulting in a [* * *] royalty to Medical School under this Agreement, and no royalties
payable to the Medical School under the other Medical School license.

     2. Continuation of All Other Terms of Agreement.

     Except for the amendment of Section 4.6 of the License Agreement provided for in Section 1 of
this Amendment, all of the terms and conditions of the License Agreement shall continue in full
force and effect.

     3. Miscellaneous.

          3.1 Dispute Resolution. The parties agree that any dispute arising out of or relating
to this Amendment shall be resolved solely by means of the procedures set forth in Article 8 of the
Agreement.

          3.2 Counterparts. This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original, and all of which together shall be deemed to be one and the same
instrument.

          3.3 Headings. All headings are for convenience only and shall not affect the meaning
of any provision of this Amendment.

          3.4 Binding Effect. This Amendment shall be binding upon and inure to the benefit of
the parties and their respective permitted successors and assigns.

          3.5 Amendment. This Amendment may be amended, supplemented, or otherwise modified
only by means of a written instrument signed by all of the parties.

          3.6 Governing Law. This Amendment shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts irrespective of any conflicts of law principles.

-2-

 

     IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their duly
authorized representatives as of the date first above written.

	 	 	 	 	 	 	 

	MEDICAL SCHOOL OF MASSACHUSETTS	 	CYTRX CORPORATION
	 
	 	 	 	 	 	 
	By:

	 	/s/ Chester A. Bisbee
	 	By:
	 	/s/ Steven A. Kriegsman
	 

	 	 
	 	 	 	 
	 

	 	Acting Executive Director
	 	 	 	Steven A. Kriegsman
	 

	 	Office of Technology Management
	 	 	 	Chief Executive Officer

-3-exv10w12

Exhibit 10.12

RXi Pharmaceuticals Corporation

2012 LONG TERM INCENTIVE PLAN

1. DEFINED TERMS

     Exhibit A, which is incorporated by reference, defines the terms used in the Plan and sets
forth certain operational rules related to those terms.

2. PURPOSE

     The Plan has been established to advance the interests of the Company by providing for the
grant to Participants of Stock-based incentive Awards and other Awards.

3. ADMINISTRATION

     The Administrator has discretionary authority, subject only to the express provisions of the
Plan, to interpret the Plan; determine eligibility for and grant Awards; determine, modify or waive
the terms and conditions of any Award; prescribe forms, rules and procedures; and otherwise do all
things necessary to carry out the purposes of the Plan. In the case of any Performance Award
intended to qualify as exempt performance-based compensation under Section 162(m), the
Administrator will exercise its discretion consistent with qualifying the Award for that exemption.
Determinations of the Administrator made under the Plan will be conclusive and will bind all
parties.

4. LIMITS ON AWARDS UNDER THE PLAN

     (a) Number of Shares. The maximum number of shares of Stock that may be delivered
upon satisfaction of Equity Awards under the Plan shall be 90,000,000 shares of Stock. Up to the
total number of shares of Stock set forth in the preceding sentence may be issued in satisfaction
of ISOs, but nothing in this Section 4(a) shall be construed as requiring that any, or any fixed
number of, ISOs be awarded under the Plan. The number of shares of Stock delivered in satisfaction
of Equity Awards shall, for purposes of this Section 4(a), be determined net of shares of Stock
withheld by the Company in payment of the exercise price of the Award or in satisfaction of tax
withholding requirements with respect to the Award and, for the avoidance of doubt, without
including any shares of Stock underlying Awards settled in cash or which otherwise expire or become
unexercisable without having been exercised or are forfeited to or repurchased by the Company due
to failure to vest. The limits set forth in this Section 4(a) shall be construed to comply with
Section 422. To the extent consistent with the requirements of Section 422 and with other
applicable legal requirements (including applicable stock exchange requirements, if any), Stock
issued under Substitute Awards shall not reduce the number of shares available for Awards under the
Plan. The shares which may be delivered under Substitute Awards shall be in addition to the
limitations set forth in this Section 4(a) on the number of shares available for issuance under the
Plan, and such Substitute Awards shall not be subject to the per Participant Award limits described
in Section 4(c) below.

 

 

     (b) Type of Shares. Shares of Stock delivered by the Company under the Plan may be
authorized but unissued Stock or previously issued Stock acquired by the Company. No fractional
shares of Stock will be delivered under the Plan.

     (c) Section 162(m) Limits. Solely for purposes of Section 162(m), the maximum number
of shares of Stock for which Stock Options may be granted to any person in any calendar year and
the maximum number of shares of Stock subject to SARs granted to any person in any calendar year
will each be one half of the total number of shares authorized for issuance pursuant to Section
4(a) of the Plan (the “162(m) Limit”). The maximum number of shares of Stock subject to other
Equity Awards granted to any person in any calendar year will be equal to the 162(m) Limit. The
maximum amount payable to any person in any twelve (12) month period under Cash Awards will be
$1,000,000, which limitation, with respect to any Cash Awards for which payment is deferred in
accordance with Section 6(c)(2), shall be applied by assuming that payment of the Award was made at
the time it would have been paid absent the deferral. The foregoing provisions will be construed in
a manner consistent with Section 162(m).

5. ELIGIBILITY AND PARTICIPATION

     The Administrator will select Participants from among those key Employees and directors of,
and consultants and advisors to, the Company or its Affiliates who, in the opinion of the
Administrator, are in a position to make a significant contribution to the success of the Company
and its Affiliates; provided, that, subject to such express exceptions, if any, as the
Administrator may establish, eligibility for Equity Awards shall be further limited to those
persons as to whom the use of a Form S-8 registration statement is permissible. Eligibility for
ISOs is limited to employees of the Company or of a “parent corporation” or “subsidiary
corporation” of the Company as those terms are defined in Section 424 of the Code. Eligibility for
Stock Options other than ISOs is limited to individuals described in the first sentence of this
Section 5 who are providing direct services on the date of grant of the Sock Option to the Company
or to a subsidiary of the Company that would be described in the first sentence of Treas. Regs.
§1.409A-1(b)(5)(iii)(E).

6. RULES APPLICABLE TO AWARDS

     (a) In General

          (1) Award Provisions. The Administrator will determine the terms of all Awards,
subject to the limitations provided herein. By accepting (or, under such rules as the
Administrator may prescribe, being deemed to have accepted) an Award, the Participant agrees to the
terms of the Award and the Plan. The Administrator will determine whether Equity Awards are
settled in shares of Stock or cash or whether the settlement or payment of Awards shall be subject
to deferral. Notwithstanding any provision of this Plan to the contrary, Substitute Awards may
contain terms and conditions that are inconsistent with the terms and conditions specified herein,
as determined by the Administrator.

-2-

 

          (2) Term of Plan. No Awards may be made after the tenth anniversary of the date that
this Plan is first adopted by the Board of Directors of the Company, but previously granted Awards
may continue beyond that date in accordance with their terms.

          (3) Transferability. Neither ISOs nor, except as the Administrator otherwise
expressly provides in accordance with the second sentence of this Section 6(a)(3), other Awards may
be transferred other than by will or by the laws of descent and distribution, and during a
Participant’s lifetime ISOs (and, except as the Administrator otherwise expressly provides in
accordance with the second sentence of this Section 6(a)(3), other Equity Awards requiring
exercise) may be exercised only by the Participant. The Administrator may permit Equity Awards
other than ISOs to be transferred by gift, subject to applicable securities and other laws and such
limitations as the Administrator may impose.

          (4) Vesting, Etc. The Administrator shall determine the time or times at which an
Equity Award will vest or become exercisable and the terms on which an Equity Award requiring
exercise will remain exercisable. Without limiting the foregoing, the Administrator may at any
time accelerate the vesting or exercisability of an Equity Award, regardless of any adverse or
potentially adverse tax or other consequences resulting from such acceleration. Unless the
Administrator expressly provides otherwise, however, the following rules will apply if a
Participant’s Employment ceases: immediately upon the cessation of the Participant’s Employment,
each Award requiring exercise that is then held by the Participant or by the Participant’s
permitted transferees, if any, will cease to be exercisable and will terminate, and all other
Awards that are then held by the Participant or by the Participant’s permitted transferees, if any,
to the extent not already vested will be forfeited, except that:

     (A) subject to (B) and (C) below, all Stock Options and SARs held by the Participant
or the Participant’s permitted transferees, if any, immediately prior to the cessation of
the Participant’s Employment, to the extent then exercisable, will remain exercisable for
the lesser of (i) a period of three months or (ii) the period ending on the latest date on
which such Stock Option or SAR could have been exercised without regard to this Section
6(a)(4), and will thereupon terminate;

     (B) all Stock Options and SARs held by a Participant or the Participant’s permitted
transferees, if any, immediately prior to the cessation of Participant’s Employment due to
death, to the extent then exercisable, will remain exercisable for the lesser of (i) the one
year period ending with the first anniversary of the Participant’s death or (ii) the period
ending on the latest date on which such Stock Option or SAR could have been exercised
without regard to this Section 6(a)(4), and will thereupon terminate; and

     (C) all Stock Options and SARs held by a Participant or the Participant’s permitted
transferees, if any, immediately prior to the cessation of the Participant’s Employment will
immediately terminate upon such cessation if the Administrator in its sole discretion
determines that such cessation of Employment has resulted for reasons

-3-

 

     which cast such discredit on the Participant as to justify immediate termination of the
Award or are otherwise determined by the Administrator to constitute cause. 

          (5) Recovery of Compensation; Other Terms

     (A) Awards (whether or not vested or exercisable) held by a Participant are subject to
forfeiture, termination and rescission, and a Participant will be obligated to return to the
Company the value received with respect to Awards (including payments made and/or Stock
delivered under an Award, and any gain realized on a subsequent sale or disposition of an
Award or Stock delivered under an Award), in each case (i) to the extent provided by the
Administrator in an Award agreement in connection with (A) a breach by the Participant of a
non-competition, non-solicitation, confidentiality or similar covenant or agreement or (B)
an overpayment to the Participant of incentive compensation due to inaccurate financial
data, (ii) in accordance with Company policy relating to the recovery of erroneously-paid
incentive compensation, as such policy may be amended and in effect from time to time, or
(iii) as otherwise required by law or applicable stock exchange listing standards,
including, without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection
Act.

     (B) Each Participant, by accepting an Award pursuant to the Plan, agrees to return the
full amount required under this Section 6(a)(5) at such time and in such manner as the
Administrator shall determine in its sole discretion and consistent with applicable law.
Neither the Administrator nor the Company will be responsible for any adverse tax or other
consequences to a Participant that may arise in connection with this Section 6(a)(5). For
the avoidance of doubt, in addition to any forfeiture or other restrictions imposed by the
terms of an Award agreement, every Award issued under the Plan will be subject to potential
forfeiture or “claw back” to the fullest extent called for by applicable federal or state
law. In addition, to the extent provided by the Administrator, Shares received upon
settlement, vesting or exercise of an Award may be subject to stock ownership guidelines or
policies established by the Company with respect to its employees, directors and/or other
service providers.

          (6) Taxes. The Administrator will make such provision for the withholding of taxes
as it deems necessary. The Administrator may, but need not, hold back shares of Stock from an
Award or permit a Participant to tender previously owned shares of Stock in satisfaction of tax
withholding requirements (but not in excess of the minimum withholding required by law).

          (7) Dividend Equivalents, Etc. The Administrator may provide for the payment of
amounts (on terms and subject to conditions established by the Administrator) in lieu of cash
dividends or other cash distributions with respect to Stock subject to an Equity Award. Any
entitlement to dividend equivalents or similar entitlements shall be established and administered
either consistent with exemption from, or in compliance with, the requirements of Section 409A. In
addition, any amounts payable in respect of Restricted Stock (or any other

-4-

 

Award subject to any vesting condition) may be subject to such limits or restrictions or
alternative terms as the Administrator may impose.

          (8) Rights Limited. Nothing in the Plan will be construed as giving any person the
right to be granted an Award or to continued employment or service with the Company or its
Affiliates, or any rights as a stockholder except as to shares of Stock actually issued under the
Plan. The loss of existing or potential profit in Awards will not constitute an element of damages
in the event of termination of Employment for any reason, even if the termination is in violation
of an obligation of the Company or any Affiliate to the Participant.

          (9) Section 162(m)

     (A) Awards Intended to Qualify for Performance-Based Compensation Exception. This
Section 6(a)(9) applies to any Performance Award intended to qualify as exempt
performance-based compensation under Section 162(m), as determined by the Administrator. In
the case of any Performance Award to which this Section 6(a)(9) applies, (i) the Plan and
such Award will be construed and administered to the maximum extent permitted by law in a
manner consistent with qualifying the Award for such exemption, notwithstanding anything to
the contrary in the Plan; (ii) the Administrator will preestablish, in writing and no later
than 90 days after the commencement of the period of service to which the performance
relates (or at such earlier time as is consistent with qualifying the Award for such
exemption), one or more Performance Criteria applicable to such Award, the amount or amounts
that will be payable or earned (subject to reduction as described below) if the Performance
Criteria are achieved, and such other terms and conditions as the Administrator deems
appropriate with respect to such Award; (iii) at the close of the applicable Performance
Period, the Administrator will certify whether the applicable Performance Criteria have been
attained; (iv) no amount will be paid under such Award unless the Performance Criteria
applicable to the payment of such amount have been so certified, except as provided by the
Administrator consistent with such exemption; and (v) the Administrator may, in its sole and
absolute discretion (either in individual cases or in ways that affect more than one
Participant), reduce the actual payment, if any, to be made under such Award to the extent
consistent with such exemption.

     (B) Certain Transition Awards. Awards intended to be exempt from the limitations of
Section 162(m) will not be required to comply with the provisions of Section 6(a)(9)(A) if
and to the extent they are eligible (as determined by the Administrator) for exemption from
such limitations by reason of the transition relief set forth in Treas. Regs.
§1.162-27(f)(4).

          (10) Coordination with Other Plans. Awards under the Plan may be granted in tandem
with, or in satisfaction of or substitution for, other Awards under the Plan or awards made under
other compensatory plans or programs of the Company or its Affiliates. For example, but without
limiting the generality of the foregoing, awards under other compensatory plans or programs of the
Company or its Affiliates may be settled in Stock (including, without

-5-

 

limitation, Unrestricted Stock) if the Administrator so determines, in which case the shares
delivered shall be treated as awarded under the Plan (and shall reduce the number of shares
thereafter available under the Plan in accordance with the rules set forth in Section 4). In any
case where an award is made under another plan or program of the Company or its Affiliates and such
award is intended to qualify for the performance-based compensation exception under Section 162(m),
and such award is settled by the delivery of Stock or another Award under the Plan, the applicable
Section 162(m) limitations under both the other plan or program and under the Plan shall be applied
to the Plan as necessary (as determined by the Administrator) to preserve the availability of the
Section 162(m) performance-based compensation exception with respect thereto.

          (11) Section 409A. Each Award shall contain such terms as the Administrator
determines, and shall be construed and administered, such that the Award either (i) qualifies for
an exemption from the requirements of Section 409A, or (ii) satisfies such requirements.

          (12) Fair Market Value. Except as otherwise expressly provided herein, in
determining the fair market value of any share of Stock under the Plan, the Administrator shall
make the determination in good faith on such basis as it deems appropriate, taking into account the
requirements of Section 422 and Section 409A, to the extent applicable; provided, that unless
otherwise determined by the Administrator, if the Stock is admitted to trading on an established
securities exchange, “fair market value” shall be the closing price of a share of Stock on such
date (or, if the Stock was not traded on such day, then the next preceding day on which the Stock
was traded).

          (13) Certain Requirements of Corporate Law. Equity Awards shall be granted and
administered consistent with the requirements of applicable Delaware law relating to the issuance
of stock and the consideration to be received therefor, and with the applicable requirements of the
stock exchanges or other trading systems or national market on which the Stock is listed or entered
for trading, in each case as determined by the Administrator.

     (b) Awards Requiring Exercise. Equity Awards requiring exercise will be subject to the
provisions of this Section 6(b).

          (1) Time and Manner of Exercise. Unless the Administrator expressly provides
otherwise, an Award requiring exercise by the holder will not be deemed to have been exercised
until the Administrator receives a notice of exercise (in form acceptable to the Administrator),
which may be an electronic notice, signed (including electronic signature in form acceptable to the
Administrator) by the appropriate person and accompanied by any payment required under the Award.
If the Award is exercised by any person other than the Participant, the Administrator may require
satisfactory evidence that the person exercising the Award has the right to do so.

          (2) Exercise Price. The exercise price (or the base value from which appreciation is
to be measured) of each Award requiring exercise shall be 100% (in the case of an ISO granted to a
ten-percent shareholder within the meaning of subsection (b)(6) of

-6-

 

Section 422, 110%) of the fair market value of the Stock (as provided in Section 6(a)(12)) subject to
the Award, determined as of the date of grant, or such higher amount as the Administrator may
determine in connection with the grant or as otherwise determined by the Administrator with respect
to a Substitute Award.

          (3) Payment of Exercise Price. Where the exercise of an Award is to be accompanied
by payment, payment of the exercise price shall be by cash or check acceptable to the
Administrator, or, if so permitted by the Administrator and if legally permissible, (i) through the
delivery of unrestricted shares of Stock that have a fair market value equal to the exercise price,
subject to such holding requirements, if any, as the Administrator may prescribe, (ii) through a
broker-assisted exercise program acceptable to the Administrator, (iii) through the withholding of
shares of Stock otherwise to be delivered upon exercise of the Award whose fair market value is
equal to the aggregate exercise price of the Award being exercised, (iv) by other means acceptable
to the Administrator, or (v) by any combination of the foregoing permissible forms of payment. The
delivery of shares in payment of the exercise price under clause (i) above may be accomplished
either by actual delivery or by constructive delivery through attestation of ownership, subject to
such rules as the Administrator may prescribe.

          (4) Maximum Term. Awards requiring exercise will have a maximum term not to exceed
ten (10) years from the date of grant (or five (5) years from the date of grant in the case of an
ISO granted to a ten-percent shareholder described in Section 6(b)(2) above); provided, that if an
Award requiring exercise (other than an ISO) would otherwise expire as a result of expiration of
the maximum term of such Award (i.e., ten (10) years from the date of grant or such shorter time
period as set forth in an Award agreement), and at such time the Participant holding such Award is
prohibited by applicable law or written Company policy applicable to similarly situated employees
from engaging in any open-market sales of Stock, the maximum term of such Award will automatically
extend to thirty (30) days following the date the Participant is no longer prohibited from engaging
in such open-market sales.

	(c)	 	Cash Awards 

          (1) A Participant who is granted a Cash Award shall be entitled to a payment, if any, under
the Award only if all conditions to payment have been satisfied in accordance with the Plan and the
terms of the Award. The Administrator will determine the actual payment, if any, under each Cash
Award. The Administrator may, in its sole and absolute discretion (but subject, for the avoidance
of doubt, to Section 6(a)(9) of the Plan), after determining the amount that would otherwise be
payable for a Performance Period with respect to a Cash Award that is a Performance Award, adjust
(including to zero) the payment, if any, to be made under such Award. Cash Awards granted as
Performance Awards under the Plan will be with respect to a Performance Period greater than one
year, except as otherwise determined by the Administrator.

          (2) The Administrator shall determine the payment dates for Cash Awards under the Plan.
Except as otherwise determined by the Administrator, no payment shall be made under a Cash Award
unless the Participant’s Employment continues through the date such Cash Award is paid. Payments
hereunder are intended to fall under the short-term deferral exception to

-7-

 

Section 409A and shall be construed and administered accordingly. Notwithstanding the
foregoing, (i) if the documentation establishing the Cash Award provides a specified and
objectively determinable payment date or schedule that satisfies the requirements of Section 409A,
payment under an Award may be made in accordance with such date or schedule, and (ii) the
Administrator may, but need not, permit a Participant to defer payment of a Cash Award beyond the
date that the Award would otherwise be payable, provided, that any such deferral shall be made in
accordance with and subject to the applicable requirements of Section 409A, and that any amount so
deferred shall be adjusted for notional interest or other notional earnings on a basis, determined
by the Administrator, to the extent necessary to preserve the eligibility of the Award payment as
exempt performance-based compensation under Section 162(m).

7. EFFECT OF CERTAIN TRANSACTIONS

     (a) Mergers, Etc. Except as otherwise provided in an Award, the Administrator shall,
in its sole discretion, determine the effect of a Covered Transaction on Awards, which
determination may include, but is not limited to, the following actions:

          (1) Assumption or Substitution. If the Covered Transaction is one in which there is
an acquiring or surviving entity, the Administrator may provide for the assumption or continuation
of some or all outstanding Awards or for the grant of new awards in substitution therefor by the
acquiror or survivor or an affiliate of the acquiror or survivor.

          (2) Cash-Out of Awards. If the Covered Transaction is one in which holders of Stock
will receive upon consummation a payment (whether cash, non-cash or a combination of the
foregoing), then subject to Section 7(a)(5) below the Administrator may provide for payment (a
“cash-out”), with respect to some or all Awards or any portion thereof, equal in the case of each
affected Equity Award or portion thereof to the excess, if any, of (A) the fair market value of one
share of Stock times the number of shares of Stock subject to the Award or such portion, over (B)
the aggregate exercise or purchase price, if any, under the Award or such portion (in the case of
an SAR, the aggregate base value above which appreciation is measured), in each case on such
payment terms (which need not be the same as the terms of payment to holders of Stock) and other
terms, and subject to such conditions, as the Administrator determines; provided, that the
Administrator shall not exercise its discretion under this Section 7(a)(2) with respect to an Award
or portion thereof providing for “nonqualified deferred compensation” subject to Section 409A in a
manner that would constitute an extension or acceleration of, or other change in, payment terms if
such change would be inconsistent with the applicable requirements of Section 409A.

          (3) Acceleration of Certain Awards. If the Covered Transaction (whether or not there
is an acquiring or surviving entity) is one in which there is no assumption, continuation,
substitution or cash-out, then subject to Section 7(a)(5) below, the Administrator may provide that
each Equity Award requiring exercise will become fully exercisable, and the delivery of any shares
of Stock remaining deliverable under each outstanding Award of Stock Units (including Restricted
Stock Units and Performance Awards to the extent consisting of Stock Units) will be accelerated and
such shares will be delivered, prior to the Covered Transaction, in each case on a

-8-

 

basis that gives the holder of the Award a reasonable opportunity, as determined by the
Administrator, following exercise of the Award or the delivery of the shares, as the case may be,
to participate as a stockholder in the Covered Transaction; provided, that to the extent
acceleration pursuant to this Section 7(a)(3) of an Award subject to Section 409A would cause the
Award to fail to satisfy the requirements of Section 409A, the Award shall not be accelerated and
the Administrator in lieu thereof shall take such steps as are necessary to ensure that payment of
the Award is made in a medium other than Stock and on terms that as nearly as possible, but taking
into account adjustments required or permitted by this Section 7, replicate the prior terms of the
Award.

          (4) Termination of Awards Upon Consummation of Covered Transaction. Each Award will
terminate upon consummation of the Covered Transaction, other than the following: (i) Awards
assumed pursuant to Section 7(a)(1) above; (ii) Awards converted pursuant to the proviso in Section
7(a)(3) above into an ongoing right to receive payment other than Stock; (iii) outstanding shares
of Restricted Stock (which shall be treated in the same manner as other shares of Stock, subject to
Section 7(a)(5) below); and (iv) Cash Awards that by their terms, or as a result of action taken by
the Administrator, continue following such Covered Transaction.

          (5) Additional Limitations. Any share of Stock and any cash or other property
delivered pursuant to Section 7(a)(2) or Section 7(a)(3) above with respect to an Equity Award may,
in the discretion of the Administrator, contain such restrictions, if any, as the Administrator
deems appropriate to reflect any performance or other vesting conditions to which the Award was
subject and that did not lapse (and were not satisfied) in connection with the Covered Transaction.
For purposes of the immediately preceding sentence, a cash out under Section 7(a)(2) above or the
acceleration of exercisability of an Award under Section 7(a)(3) above shall not, in and of itself,
be treated as the lapsing (or satisfaction) of a performance or other vesting condition. In the
case of Restricted Stock that does not vest in connection with the Covered Transaction, the
Administrator may require that any amounts delivered, exchanged or otherwise paid in respect of
such Stock in connection with the Covered Transaction be placed in escrow or otherwise made subject
to such restrictions as the Administrator deems appropriate to carry out the intent of the Plan.

     (b) Changes in and Distributions With Respect to Stock

          (1) Basic Adjustment Provisions. In the event of a stock dividend, stock split or
combination of shares (including a reverse stock split), recapitalization or other change in the
Company’s capital structure that constitutes an equity restructuring within the meaning of FASB ASC
Topic 718, the Administrator shall make appropriate adjustments to the maximum number of shares
specified in Section 4(a) that may be delivered under the Plan and to the maximum share limits
described in Section 4(c), and shall also make appropriate adjustments to the number and kind of
shares of stock or securities subject to Equity Awards then outstanding or subsequently granted,
any exercise prices relating to Equity Awards and any other provision of Awards affected by such
change.

-9-

 

          (2) Certain Other Adjustments. The Administrator may also make adjustments of the
type described in Section 7(b)(1) above to take into account distributions to stockholders other
than those provided for in Section 7(a) and 7(b)(1), or any other event, if the Administrator
determines that adjustments are appropriate to avoid distortion in the operation of the Plan and to
preserve the value of Awards made hereunder, having due regard for the qualification of ISOs under
Section 422, the requirements of Section 409A, and the performance-based compensation rules of
Section 162(m), to the extent applicable.

          (3) Continuing Application of Plan Terms. References in the Plan to shares of Stock
will be construed to include any stock or securities resulting from an adjustment pursuant to this
Section 7.

8. LEGAL CONDITIONS ON DELIVERY OF STOCK

     The Company will not be obligated to deliver any shares of Stock pursuant to the Plan or to
remove any restriction from shares of Stock previously delivered under the Plan until: (i) the
Company is satisfied that all legal matters in connection with the issuance and delivery of such
shares have been addressed and resolved; (ii) if the outstanding Stock is at the time of delivery
listed on any stock exchange or national market system, the shares to be delivered have been listed
or authorized to be listed on such exchange or system upon official notice of issuance; and (iii)
all conditions of the Award have been satisfied or waived. The Company may require, as a condition
to exercise of the Award or delivery of shares of Stock under an Award, such representations or
agreements as counsel for the Company may consider appropriate to avoid violation of such the
Securities Act of 1933, as amended, or any applicable state or non-U.S. securities law. Any Stock
required to be issued to Participants under the Plan will be evidenced in such manner as the
Administrator may deem appropriate, including book-entry registration or delivery of stock
certificates. In the event that the Administrator determines that stock certificates will be
issued to Participants under the Plan, the Administrator may require that certificates evidencing
Stock issued under the Plan bear an appropriate legend reflecting any restriction on transfer
applicable to such Stock, and the Company may hold the certificates pending lapse of the applicable
restrictions.

9. AMENDMENT AND TERMINATION

     The Administrator may at any time or times amend the Plan or any outstanding Award for any
purpose which may at the time be permitted by law, and may at any time terminate the Plan as to any
future grants of Awards; provided, that except as otherwise expressly provided in the Plan the
Administrator may not, without the Participant’s consent, alter the terms of an Award so as to
affect materially and adversely the Participant’s rights under the Award, unless the Administrator
expressly reserved the right to do so at the time of the Award. Any amendments to the Plan shall
be conditioned upon stockholder approval only to the extent, if any, such approval is required by
law (including the Code and applicable stock exchange requirements), as determined by the
Administrator. For the avoidance of doubt, no amendment to the Plan shall be effective unless
approved by stockholders, to the extent stockholder approval is required under the rules of the
applicable stock exchange on which the Stock is admitted to

-10-

 

trading, if it would reduce the exercise price of any Stock Option previously granted
hereunder or otherwise constitute a repricing and, without the receipt of such approval (to the
extent so required), the Administrator shall not approve a repurchase by the Company for cash or
other property of Stock Options or SARs for which the exercise price or base price, as applicable,
exceeds the fair market value of a share of Stock as of the date of such repurchase.

10. OTHER COMPENSATION ARRANGEMENTS

     The existence of the Plan or the grant of any Award will not in any way affect the Company’s
right to award a person bonuses or other compensation in addition to Awards under the Plan.

11. MISCELLANEOUS

     (a) Waiver of Jury Trial. By accepting an Award under the Plan, each Participant
waives any right to a trial by jury in any action, proceeding or counterclaim concerning any rights
under the Plan and any Award, or under any amendment, waiver, consent, instrument, document or
other agreement delivered or which in the future may be delivered in connection therewith, and
agrees that any such action, proceedings or counterclaim shall be tried before a court and not
before a jury. By accepting an Award under the Plan, each Participant certifies that no officer,
representative, or attorney of the Company has represented, expressly or otherwise, that the
Company would not, in the event of any action, proceeding or counterclaim, seek to enforce the
foregoing waivers.

     (b) Limitation of Liability. Notwithstanding anything to the contrary in the Plan,
neither the Company, nor any Affiliate, nor the Administrator, nor any person acting on behalf of
the Company, any Affiliate, or the Administrator, shall be liable to any Participant or to the
estate or beneficiary of any Participant or to any other holder of an Award by reason of any
acceleration of income, or any additional tax (including any interest and penalties), asserted by
reason of the failure of an Award to satisfy the requirements of Section 422 or Section 409A or by
reason of Section 4999 of the Code, or otherwise asserted with respect to the Award; provided, that
nothing in this Section 11(b) shall limit the ability of the Administrator or the Company, in its
discretion, to provide by separate express written agreement with a Participant for a gross-up
payment or other payment in connection with any such acceleration of income or additional tax.

12. ESTABLISHMENT OF SUB-PLANS

     The Board may from time to time establish one or more sub-plans under the Plan for purposes of
satisfying applicable blue sky, securities or tax laws of various jurisdictions. The Board will
establish such sub-plans by adopting supplements to the Plan setting forth (i) such limitations on
the Administrator’s discretion under the Plan as the Board deems necessary or desirable and (ii)
such additional terms and conditions not otherwise inconsistent with the Plan as the Board deems
necessary or desirable. All supplements adopted by the Board will be deemed to be part of the
Plan, but each supplement will apply only to Participants within the affected

-11-

 

jurisdiction and the Company will not be required to provide copies of any supplement to
Participants in any jurisdiction that is not affected.

13. GOVERNING LAW

     Except as otherwise provided by the express terms of an Award agreement or under a sub-plan
described in Section 12, the provisions of the Plan and of Awards under the Plan and all claims or
disputes arising out of our based upon the Plan or any Award under the Plan or relating to the
subject matter hereof or thereof will be governed by and construed in accordance with the General
Corporation Law of the State of Delaware as to matters within the scope thereof, and as to all
other matters shall be governed by and construed in accordance with the domestic substantive laws
of the State of Delaware without giving effect to any choice or conflict of laws provision or rule
that would cause the application of the domestic substantive laws of any other jurisdiction.

-12-

 

EXHIBIT A

Definition of Terms

     The following terms, when used in the Plan, will have the meanings and be subject to the
provisions set forth below:

     “Administrator”: The Compensation Committee, except that the Compensation Committee may
delegate (i) to one or more of its members (or one or more other members of the Board, including
the full Board) such of its duties, powers and responsibilities as it may determine; (ii) to one or
more officers of the Company the power to grant Awards to the extent permitted by Section 157(c) of
the Delaware General Corporation Law; and (iii) to such Employees or other persons as it determines
such ministerial tasks as it deems appropriate.

     “Affiliate”: Any corporation or other entity that stands in a relationship to the Company
that would result in the Company and such corporation or other entity being treated as one employer
under Section 414(b) and Section 414(c) of the Code, except that in determining eligibility for the
grant of a Stock Option or SAR by reason of service for an Affiliate, Sections 414(b) and 414(c) of
the Code shall be applied by substituting “at least 50%” for “at least 80%” under Section
1563(a)(1), (2) and (3) of the Code and Treas. Regs. § 1.414(c)-2; provided, that to the extent
permitted under Section 409A, “at least 20%” shall be used in lieu of “at least 50%”; and further
provided, that the lower ownership threshold described in this definition (50% or 20% as the case
may be) shall apply only if the same definition of affiliation is used consistently with respect to
all compensatory stock options or stock awards (whether under the Plan or another plan). The
Company may at any time by amendment provide that different ownership thresholds (consistent with
Section 409A) apply but any such change shall not be effective for twelve (12) months.

     “Award”: Any or a combination of the following:

	 	(i)	 	Stock Options.
	 
	 	(ii)	 	SARs.
	 
	 	(iii)	 	Restricted Stock.
	 
	 	(iv)	 	Unrestricted Stock.
	 
	 	(v)	 	Stock Units, including Restricted Stock Units.
	 
	 	(vi)	 	Performance Awards.
	 
	 	(vii)	 	Cash Awards.

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	 	(viii)	 	Awards (other than Awards described in (i) through (vii) above) that are
convertible into or otherwise based on Stock.

     “Board”: The Board of Directors of the Company; provided, however, that if the Company is a
direct or indirect subsidiary of a publicly held corporation, it shall mean the Board of Directors
of the publicly held corporation.

     “Cash Award”: An Award denominated in cash.

     “Code”: The U.S. Internal Revenue Code of 1986 as from time to time amended and in effect, or
any successor statute as from time to time in effect.

     “Compensation Committee”: In the event that the Company is a direct or indirect subsidiary of
a publicly held corporation, the Compensation Committee shall mean the Compensation Committee of
the Board of the publicly held corporation; otherwise, Compensation Committee shall mean the
Compensation Committee of the Board.

     “Company”: RXi Pharmaceuticals Corporation.

     “Covered Transaction”: Any of (i) a consolidation, merger, or similar transaction or series
of related transactions, including a sale or other disposition of stock, in which the Company is
not the surviving corporation or which results in the acquisition of all or substantially all of
the Company’s then outstanding common stock by a single person or entity or by a group of persons
and/or entities acting in concert, (ii) a sale or transfer of all or substantially all the
Company’s assets, or (iii) a dissolution or liquidation of the Company. Where a Covered
Transaction involves a tender offer that is reasonably expected to be followed by a merger
described in clause (i) (as determined by the Administrator), the Covered Transaction shall be
deemed to have occurred upon consummation of the tender offer.

     “Employee”: Any person who is employed by the Company or an Affiliate.

     “Employment”: A Participant’s employment or other service relationship with the Company and
its Affiliates. Employment will be deemed to continue, unless the Administrator expressly provides
otherwise, so long as the Participant is employed by, or otherwise is providing services in a
capacity described in Section 5 to the Company or its Affiliates. If a Participant’s employment or
other service relationship is with an Affiliate and that entity ceases to be an Affiliate, the
Participant’s Employment will be deemed to have terminated when the entity ceases to be an
Affiliate unless the Participant transfers Employment to the Company or its remaining Affiliates.
Notwithstanding the foregoing and the definition of “Affiliate” above, in construing the provisions
of any Award relating to the payment of “nonqualified deferred compensation” (subject to Section
409A) upon a termination or cessation of Employment, references to termination or cessation of
employment, separation from service, retirement or similar or correlative terms shall be construed
to require a “separation from service” (as that term

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is defined in Section 1.409A-1(h) of the Treasury Regulations) from the Company and from all other
corporations and trades or businesses, if any, that would be treated as a single “service
recipient” with the Company under Section 1.409A-1(h)(3) of the Treasury Regulations. The Company
may, but need not, elect in writing, subject to the applicable limitations under Section 409A, any
of the special elective rules prescribed in Section 1.409A-1(h) of the Treasury Regulations for
purposes of determining whether a “separation from service” has occurred. Any such written
election shall be deemed a part of the Plan.

     “Equity Award”: Awards other than Cash Awards.

     “ISO”: A Stock Option intended to be an “incentive stock option” within the meaning of
Section 422. Each option granted pursuant to the Plan will be treated as providing by its terms
that it is to be a non-incentive stock option unless, as of the date of grant, it is expressly
designated as an ISO.

     “Participant”: A person who is granted an Award under the Plan.

     “Performance Award”: An Award subject to Performance Criteria. The Committee in its
discretion may grant Performance Awards that are intended to qualify as exempt performance-based
compensation under Section 162(m) and Performance Awards that are not intended so to qualify.

     “Performance Criteria”: For a Performance Period, specified criteria, other than the mere
continuation of Employment or the mere passage of time, the satisfaction of which is a condition
for the grant, exercisability, vesting or full enjoyment of an Award. For purposes of Awards that
are intended to qualify for the performance-based compensation exception under Section 162(m), a
Performance Criterion will mean an objectively determinable measure of performance relating to any
or any combination of the following (measured either absolutely or by reference to an index or
indices and determined either on a consolidated basis or, as the context permits, on a divisional,
subsidiary, line of business, project or geographical basis or in combinations thereof): sales;
revenues; assets; expenses; earnings before or after deduction for all or any portion of interest,
taxes, depreciation, or amortization, whether or not on a continuing operations or an aggregate or
per share basis; return on equity, investment, capital or assets; one or more operating ratios;
borrowing levels, leverage ratios or credit rating; market share; capital expenditures; cash flow;
stock price; stockholder return; sales of particular products or services; customer acquisition or
retention; acquisitions and divestitures (in whole or in part); joint ventures and strategic
alliances; spin-offs, split-ups and the like; reorganizations; or recapitalizations,
restructurings, financings (issuance of debt or equity) or refinancings. A Performance Criterion
and any targets with respect thereto determined by the Administrator need not be based upon an
increase, a positive or improved result or avoidance of loss. To the extent consistent with the
requirements for satisfying the performance-based compensation exception under Section 162(m), the
Administrator may establish that in the case of any Award intended to qualify for such exception
that one or more of the Performance Criteria applicable to such Award will be adjusted in an
objectively determinable manner to reflect events (for example, the impact

-15-

 

of charges for restructurings, discontinued operations, mergers, acquisitions, extraordinary
items, and other unusual or non-recurring items, and the cumulative effects of tax or accounting
changes, each as defined by U.S. generally accepted accounting principles) occurring during the
Performance Period that affect the applicable Performance Criterion or Criteria.

     “Plan”: The RXi Pharmaceuticals Corporation 2012 Long Term Incentive Plan as from time to
time amended and in effect.

     “Restricted Stock”: Stock subject to restrictions requiring that it be redelivered or offered
for sale to the Company if specified conditions are not satisfied.

     “Restricted Stock Unit”: A Stock Unit that is, or as to which the delivery of Stock or cash
in lieu of Stock is, subject to the satisfaction of specified performance or other vesting
conditions.

     “SAR”: A right entitling the holder upon exercise to receive an amount (payable in cash or in
shares of Stock of equivalent value) equal to the excess of the fair market value (as defined in
Section 6(b)) of the shares of Stock subject to the right over the base value from which
appreciation under the SAR is to be measured.

     “Section 409A”: Section 409A of the Code.

     “Section 422”: Section 422 of the Code.

     “Section 162(m)”: Section 162(m) of the Code.

     “Stock”: Common stock of the Company, par value $0.0001 per share.

     “Stock Option”: An option entitling the holder to acquire shares of Stock upon payment of the
exercise price.

     “Stock Unit”: An unfunded and unsecured promise, denominated in shares of Stock, to deliver
Stock or cash measured by the value of Stock in the future.

     Substitute Awards”: Awards that are the result of converting, replacing, or adjusting equity
awards of an acquired company in connection with the acquisition.

     “Unrestricted Stock”: Stock not subject to any restrictions under the terms of the Award.

-16-

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