Document:

exv10w2

 

Exhibit 10.2

RXi-CSHL LICENSE AGREEMENT

This License Agreement is made and entered into effective as of March 15th, 2007 (the “Effective
Date”), by and between Cold Spring Harbor Laboratory (hereafter “CSHL”), having an address of One
Bungtown Road, Cold Spring Harbor, NY 11724 and RXi Pharmaceuticals Corp., (hereafter “Company”),
having an address of One Innovation Drive, Worcester, MA, Massachusetts 01605.

R E C I T A L S

WHEREAS, CSHL is the owner by assignment or otherwise of the inventions claimed in the United
States patent applications listed in Exhibit A, attached hereto and incorporated herein by
reference, pertaining to CSHL’s inventions entitled “Methods and Composition for RNA Interference”
(in part, the “Patent Rights”, as further defined herein), the Know-How (as defined herein)
(collectively, the foregoing defined as the “CSHL Intellectual Property”); and

WHEREAS, Company intends, among other things, to develop ribonucleic acid interference-based
products (“RNAi”) products in the human therapeutic field; and

WHEREAS, Company desires to obtain a non-exclusive license to certain CSHL intellectual property,
including the Patent Rights identified in Exhibit A in the Therapeutic Field (as defined herein),
as well as the Research Field and for purposes of providing the Licensed Services as provided
herein; and

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

THEREFORE, CSHL and Company agree to state such license as follows:

1. Definitions.

1.1. “Biological Materials” means tangible biological materials that, to the extent that
CSHL has a right to transfer such materials, are necessary for the effective exercise of the Patent
Rights and are actually provided by Dr. Hannon or a member of Dr. Gregory Hannon’s lab to the
Company, as well as additional tangible materials that are routinely produced through use of those
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). Dr. Hannon will secure
the approval of CSHL and/or, as needed, the Howard Hughes Medical Institute (HHMI) prior to the
transfer of any such Biological Material to Company.

[***] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with the Commission.

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1.2. “Confidential Information” means any confidential or proprietary information furnished
by one party (the “Disclosing Party”) to the other party (the “Receiving Party”), as further
described and limited by Section 7 below, in connection with this Agreement.

1.3. “Therapeutic Field” means the use of short hairpin RNA (shRNA) for (i) drug discovery
or (ii) the development of therapeutic drugs and drug targets or (iii) use in a drug-screening
program.

1.4. “Research Field” means the use of shRNA, under the Patent Rights, by Company for its
internal scientific research and development.

1.5. “Licensed Product” means any “Covered Product” or “Developed Product.”

(a) “Covered Product” means any product that (i) the manufacture, use, sale, offer for
sale, or import of which, but for the license granted in this Agreement, would infringe one or more
Valid Claims under the Patent Rights, as if such Valid Claims were present in an issued or granted
patent; or (ii) incorporates some portion of one or more Biological Materials proprietary to CSHL;
or (iii) cannot be manufactured, used, or sold without using some portion of the Know-How.

(b) “Developed Product” means any product that is not a Covered Product and is discovered
or developed (i) using either any composition or method that would infringe one or more Valid
Claims under the Patent Rights, as if such Valid Claims were present in an issued or granted patent
or (ii) using the Know-How.

1.6. “Licensed Service” means any service that (a) cannot be developed or performed without
using at least one process that infringes one or more claims under the Patent Rights, (b) uses some
portion of one or more Biological Materials, or (c) uses some portion of the Know-How.

1.7. “Net Sales” means the gross amount billed or invoiced on sales by Company of Licensed
Products and Licensed Services, less the following: (a) customary trade, quantity, or cash
discounts to non-affiliated brokers or agents to the extent actually allowed and taken; (b) amounts
repaid or credited by reason of rejection or return; (c) to the extent separately stated on
purchase orders, invoices, or other documents of sale, any taxes or other governmental charges
levied on the production, sale, transportation, delivery, or use of a Licensed Product or Licensed
Service which is paid by or on behalf of Company; and (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, and without otherwise acting as a
limitation, “Net Sales” does not include sales or transfers of Licensed Products where such sales
are solely for clinical testing purposes or are made to an Affiliate for its internal research
purposes or to a Co-Marketer for the purpose of commercial sale. No rights under the Patent Rights
are granted to such third parties under this Agreement.

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If Company receives non-monetary consideration for any Licensed Products or Licensed Services, Net
Sales are calculated based on the fair market value of that consideration. If Company uses or
disposes of a Licensed Product in the provision of a commercial service other than a Licensed
Service, the Licensed Product is sold and the Net Sales are calculated based on the sales price of
the Licensed Product to an independent third party during the same Royalty Period or, in the
absence of sales, on the fair market value of the Licensed Product as determined by the parties in
good faith.

1.8. “Patent Rights” means the United States patent applications listed on Exhibit
A and any divisional, continuation, or continuation-in-part of those patent applications to the
extent the claims are directed to subject matter specifically described therein, as well as any
patents issued on these patent applications and any reissues or reexaminations of those patents,
and any foreign counterparts to those patents and patent applications. Exhibit A shall be
periodically amended to include any additional Patent Rights that may arise. Patent Rights include
improvements to the Patent Rights controlled by CSHL and made by Gregory Hannon as a member of the
scientific staff of CSHL to the extent that such an improvement (a) is in the field of shRNA; (b)
is dominated by another patent or application within the Patent Rights; and (c) is conceived and
reduced to practice within two (2) years of the Effective Date.

1.9. “Know-How” means know-how, technical information, research and development
information, test results, and data which are owned or Controlled by CSHL and that have been
actually provided by Dr. Hannon or a member of Dr. Gregory Hannon’s lab to the Company, and which
(a) have been developed by Dr. Gregory Hannon and his associates in his laboratory at CSHL (either
as an employee of Howard Hughes Medical Institute or CSHL) as of the Effective Date or (b) are
subsequently developed by Dr. Gregory Hannon at CSHL as an employee of Howard Hughes Medical
Institute. Dr. Hannon will designate in writing or orally all Know-How disclosed by him to
Company.

1.10. “Royalty Period” means the partial calendar quarter commencing on the date on which
the first Licensed Product is sold or used or the first Licensed Service is performed and every
complete or partial calendar quarter thereafter during which either (a) this Agreement remains in
effect or (b) Company has the right to complete and sell work-in-progress and inventory of Licensed
Products or perform Licensed Services pursuant to Section 8.6.

1.11. “Control” or “Controlled” means the possession of the ability to grant access
to or a license as provided for herein without violating the terms of any agreement or other
arrangement with any third party.

1.12. “Bona Fide Collaborator” means a third party having a bona fide research
collaboration with Company, and such collaboration is undertaken by Company and such third party
pursuant to a written agreement, (a) having a specific plan of research; (b) having a finite term;
(c) granting Company intellectual proprietary rights in any invention resulting from such
collaboration; and (d) granting Company commercial rights in any Licensed Product or Licensed
Service resulting from such collaboration.

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1.13. “Co-Marketer” means a third party that makes or sells a Licensed Product or a
Licensed Service developed by Company and does so for the benefit, in whole or in part, of the
Company but only where such third party qualifies for and has actually entered into, in advance, a
Co-Marketer License under Section 2.4 of this Agreement or is otherwise licensed in writing by CSHL
to do so.

1.14. “Dr. Gregory Hannon’s lab” means the Howard Hughes Medical Institute lab at CSHL
where Dr. Gregory Hannon is the principal investigator and the scientists in that lab that are
under his direct supervision or control.

1.15. “Valid Claim” shall mean a claim in a pending patent application, or an unexpired and
issued patent that has not been revoked, held invalid, declared unpatentable or unenforceable in a
decision of a court or other body of competent jurisdiction, in a decision that is unappealable or
not appealed within the time allowed for appeal.

1.16. “Date of First Sale” shall mean the time at which Licensed Product, or Licensed
Services is/are transferred by Company to a third party for consideration.

1.17. “Affiliate” shall mean a corporation, company, or partnership, or other entity which
is controlled by Company. For the purposes of this Section 1.17 only, “control” shall mean (A) the
ownership or control of at least fifty percent (50%) or more of (i) the stock (or other securities
or voting rights) having the right to vote for directors or other governing authority thereof or
(ii) ownership interest or (B) in any country where the local law shall not permit foreign equity
participation of fifty percent (50%) or more, then the ownership or control of the maximum
percentage of such outstanding stock or voting rights permitted by local law.

2. Grant of Rights.

2.1. License Grants.

(a) Patent Rights and Biological Materials. CSHL grants to Company a non-exclusive,
worldwide, royalty-bearing license (without the right to sublicense) under its commercial rights in
the Patent Rights and Biological Materials to develop, make, have made, use, offer to sell and sell
Licensed Products and to develop and perform Licensed Services in Therapeutic Field and in Research
Field.

(b) Know-How. CSHL grants to Company a non-exclusive, worldwide royalty-bearing license
(without the right to sublicense) under its commercial rights in the Know-How necessary for the
effective exercise of the Patent Rights, and/or necessary to develop, make, have made, use, offer
to sell and sell Licensed Products and to develop and perform Licensed Services in Therapeutic
Field and in Research Field.

2.2. Rights of the U.S. Government.

To the extent that any invention claimed in the Patent Rights has been funded by the U.S. federal
government, this Agreement and the grant of any rights in Patent Rights are subject to and

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governed by federal law as set forth in 35 U.S.C. §§201-211, and the regulations promulgated
thereunder, as amended, or any successor statutes or regulations. Company acknowledges that these
statutes and regulations reserve to the federal government a royalty-free, non-exclusive,
non-transferable license to practice any government-funded invention claimed in the Patent Rights.
If any term of this Agreement fails to conform to those laws and regulations, the relevant term is
an invalid provision and shall be modified by the parties pursuant to Section 10.11.

2.3. Additional Research Licensees.

CSHL agrees to grant a non-exclusive license, in the Research Field only (no sales), under
substantially similar terms as are in this Agreement, to up to three (3) companies that qualify as
Bona Fide Collaborators except that each such Additional Research Licensee shall pay CSHL, a
License Fee of $100,000 and a License Maintenance Fee of $100,000 per year.

2.4. Co-Marketer Licensees.

CSHL agrees to grant a non-exclusive license in the Therapeutic Field (to develop, make, have made,
use, market, and sell only), under substantially similar terms as are in this Agreement (including
but not limited to the royalty provisions in Section 4.5), to up to three (3) companies that
qualify as Co-Marketers, except that each such Co-Marketer Licensee shall also pay CSHL a License
Fee of $250,000 and a License Maintenance Fee of $75,000 per year.

The payments in Section 2.3 and this Section 2.4 shall begin on the Effective Date of each such
Additional Research License or Co-Marketer License.

3. Company Obligations Relating to Commercialization.

3.1 Within eighteen (18) months after the Effective Date, Company shall successfully undertake a
public or private offering or raising or otherwise committing at least ten million dollars
($10,000,000) to the business of Company using RNA interference technology (the
“Financing”).]

3.2. Indemnification.

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

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have the sole right to settle such claim or suit; provided that Company shall not settle or
compromise any such claim or suit in a manner that is inconsistent with this Agreement, that
includes any statement of liability, fault of, or by CSHL (or any of the CSHL Indemnitees) or
involves any payment from any CSHL Indemnitee or include any statement, administration of
wrongdoing on the part of CSHL (or any of CSHL Indemnitees), or that could result in any adverse
affect on CSHL (or any of CSHL Indemnitees) or any of the Licensed Patents.

(b) Procedures. Subject to the other terms of this Agreement, CSHL Indemnitees agree to
provide the 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 such Indemnitees to defend against any Claim. Each of
the CSHL Indemnitees shall cooperate fully with Company in the defense and will permit Company to
conduct and control the defense and the disposition of the claim, suit, or action (including all
decisions relative to litigation, appeal, and settlement). However, any such Indemnitee may retain
its own counsel, at the expense of the indemnifying party (such expenses to be reasonable and
pre-approved by the indemnifying party), if representation of the Indemnitee by the counsel
retained by the indemnifying party causes a conflict of interest as ultimately determined by said
counsel. Company agrees to keep CSHL Indemnitees informed of the progress in the defense and
disposition of the Claim and to consult with CSHL Indemnitees regarding any proposed settlement.

(c) Insurance. Subject to the other terms of this Agreement, Company shall maintain
insurance that is reasonably adequate to fulfill any potential obligation to the Indemnitees, but
not less than one million dollars ($1,000,000) for injuries to any one person arising out of a
single occurrence and five million dollars ($5,000,000) for injuries to all persons arising out of
a single occurrence. Company shall provide CSHL, upon request, with written evidence of insurance.
Company shall continue to maintain such insurance after the expiration or termination of this
Agreement during any period in which Company continues (a) to make, use, or sell a product that was
a Licensed Product under this Agreement or (b) to perform a service that was a Licensed Service
under this Agreement, and thereafter for a period of five (5) years.

(d) Product Liability Insurance. Commencing one month prior to the First Sale of Licensed
Products or Licensed Services, Company shall maintain comprehensive general liability insurance,
including products liability insurance, with reputable and financially secure liability carriers,
reasonably acceptable to Licensor to cover the activities of Company, in an amount customary in the
pharmaceutical industry and sufficient to protect the interests of CSHL. Such insurance shall
include CSHL, HHMI and their respective trustees, officers, employees, and agents as additional
insured. Company shall furnish a certificate of insurance evidencing such coverage one month prior
to the date of First Sale of any Licensed Product or Licensed Service with thirty (30) days written
notice to Licensor of cancellation or material change.

3.3. Use of CSHL Name. Subject to the other terms of this Agreement, in accordance with
Section 7.2, and except as otherwise required by Applicable Law, Company may not use the name “Cold
Spring Harbor Laboratory” or “CSHL” or any variation of that name in connection with the marketing
or sale of any Licensed Products or Licensed Services.

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

3.5. Compliance with Law. Company shall comply with all local, state, federal, and
international laws and regulations relating to the development, manufacture, use, and sale of
Licensed Products and Licensed Services. Company expressly agrees to comply with the following:

(a) Company shall be responsible for obtaining all necessary approvals from the United States Food
& Drug Administration and any similar governmental authorities of any foreign jurisdiction in which
Company intends to make, use, or sell Licensed Products or to perform Licensed Services.

(b) Company shall comply with all United States laws and regulations controlling the export of
commodities and technical data, including without limitation all Export Administration Regulations
of the United States Department of Commerce. Among other things, these laws and regulations
prohibit or require a license for the export of certain types of commodities and technical data to
specified countries. Company hereby gives written assurance that it will comply with all United
States export control laws and regulations, that it bears sole responsibility for any violation of
those laws and regulations, and that it will indemnify, defend, and hold CSHL harmless (in
accordance with Section 3.2.) for the consequences of any violation.

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

4. Consideration for Grant of Rights.

4.1. License Fee. Company shall pay to CSHL (a) $50,000 within sixty (60) days of the
Effective Date of this Agreement; and (b) an additional $50,000 upon the earlier of (i) the
granting of U.S. Patent application No. 09/866,557 by the U.S. Patent and Trademark Office or (ii)
the one year anniversary of the Effective Date if the Agreement has not yet been terminated. These
license fee payments are nonrefundable and are not creditable against any other payments due to
CSHL under this Agreement

4.2. License Maintenance Fee. Beginning on the first anniversary of the Effective Date,
and on each anniversary of the Effective Date thereafter during the term of the Agreement, Company
shall pay to CSHL $75,000 (license to include both Research Field and Therapeutic Field). This
annual license maintenance fee is nonrefundable and is not creditable against any other payments
due to CSHL under this Agreement

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4.3. Milestone Payments.

(a) Company shall pay CSHL for Covered Products the following milestone payments within thirty (30)
days after the occurrence of each event achieved by Company:

	 	 	 
	Milestone	 	Payment
	Filing of IND or equivalent for each Covered Product

	 	{***}
	Entry into Phase II clinical trial or equivalent for each Covered Product

	 	{***}
	Entry into Phase III clinical trial or equivalent for each Covered Product

	 	{***}
	Filing for market approval (NDA or equivalent) in any country besides the United States

	 	{***}
	Date of First Sale of Covered Product in the United States

	 	{***}
	Date of First Sale for first three countries outside US

	 	{***}

(b) Company shall pay CSHL a one-time bonus of {***} upon the filing of the first IND
on a Covered Product.

(c) Company shall pay CSHL a one-time bonus of {***} in the event that cumulative Net
Sales of Covered Products by Company exceed $150 Million in one calendar year in the United States.

(d) Company shall pay CSHL for Developed Products for each milestone event set forth in subsection
(a), except that each payment shall be reduced by two-thirds (2/3) of the amount specified for
Covered Products.

(e) These milestone payments are nonrefundable and are not creditable against any other payments
due to CSHL under this Agreement.

(f) For any one Licensed Product, if Company or any Co-Marketer makes an equivalent payment under
another agreement with CSHL or any affiliate of CSHL with respect to that Licensed Product for a
milestone event that is specified in this Section 4.3, then payment under this Section is
satisfied, so that the aggregate payments under all CSHL (or its affiliates’) agreements with
Company or any Bona Fide Collaborator or Co-Marketer for that milestone, including this Agreement,
do not exceed the amount specified in this Section 4.3 for any one (1) Licensed Product.

4.4. Royalties. In partial consideration of the rights granted Company under the
Agreement, Company shall pay to CSHL the following royalties:

(a) Covered Products. Company shall pay to CSHL a royalty of {***} of Net Sales
of Covered Products by Company.

(b) Developed Products. Company shall pay to CSHL a royalty of {***} of Net Sales
of Developed Products by Company.

(c) Licensed Services. Company shall pay to CSHL a royalty of {***} of Net Sales
of Licensed Services by Company.

(d) These royalty payments are nonrefundable and are not creditable against any other payments due
to CSHL under this Agreement.

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(e) For any one Licensed Product, if Company or any Co-Marketer makes an equivalent payment under
another agreement with the CSHL with respect to that Licensed Product for a royalty that is
specified in this Section 4.4, then payment under this Section is satisfied, so that the aggregate
payments under all CSHL agreements with Company or any Co-Marketer for that royalty including this
Agreement do not exceed the amount specified in this Section 4.4 for any one (1) Licensed Product.

(f) Expired or Abandoned Patent Rights. If during the Royalty Period, (a) a patent under
the Patent Rights which only covers a Covered Product or a Licensed Service, but not a Developed
Product has expired or has been abandoned in a particular country; and (b) if, as a result of such
expiration or abandonment, Company reduces its prices for Covered Products or Licensed Services in
that country, then Company and CSHL shall negotiate in good faith a reduction in the royalty rate
for Covered Products or Licensed Services to reflect the reduction in the Company’s gross margins
caused by the price reduction.

5. Royalty Reports; Payments; Records and Auditing.

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

5.2. Reports and Payments. Within sixty (60) days after the conclusion of each Royalty
Period, Company shall deliver to CSHL 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 in the provision of Licensed Services and other
services in each country;

(b) the number of Licensed Services provided by Company in each country;

(c) the gross sales price for each Licensed Product and the gross charge for each Licensed Service
by Company during the applicable Royalty Period in each country;

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

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

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If no royalties are due to CSHL for any Royalty Period, the report shall so state. Concurrent with
this report, Company shall remit to CSHL any payment due for the applicable Royalty Period. All
reports under this Section 5.2 are Company Confidential Information.

5.3. Payments in United States Dollars. All payments due under this Agreement are payable
in United States dollars. Conversion of foreign currency to United States 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. 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 CSHL prompt written notice of the
restriction, within the sixty-day payment deadline described in Section 5.2. Company shall pay any
amounts due CSHL through whatever lawful methods CSHL reasonably designates. However, if CSHL
fails to designate a payment method within thirty (30) days after CSHL is notified of the
restriction, Company may deposit payment in local currency to the credit of CSHL in a recognized
banking institution selected by Company and identified by written notice to CSHL, and that deposit
fulfills all obligations of Company to CSHL with respect to that payment.

5.5. Late Payments. Any undisputed payments by Company that are not paid on or before the
date payments are due under this Agreement bear interest to the extent permitted by law at one
percentage point 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.

5.6. Method of Payment. All payments under this Agreement should be made from U.S. bank
and to “COLD SPRING HARBOR LABORATORY” and sent to the address identified below. Each payment
should reference this Agreement and identify the obligation under this Agreement that the payment
satisfies.

Payee Information:

	 
	COLD SPRING HARBOR LABORATORY

Bungtown Road

P.O. Box 100

Cold Spring Harbor, New York 11724

Attn: Mr. John Maroney

Director, Office of technology Transfer

For wire transfer by Company:

	 	 	 
	CSHL Bank:

	 	The Chase Manhattan Bank

ABA No. 021 000 021

350 Main St.

Huntington, NY 11743

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	Payee:

	 	Cold Spring Harbor Laboratory

Account no. 777521385

5.7. Withholding and Similar Taxes. Company shall be responsible for all the taxes and
wire transfer fees or the like related with Royalty payments and all other payments due to CSHL
under this Agreement.

5.8. Auditing, Records and Reporting. Company shall keep and maintain records of sales and
the discovery and development of Licensed Products and Licensed Services pursuant to this
Agreement. Such records shall be open to inspection at any reasonable time during normal business
hours not more often than once each calendar year within five (5) years after the royalty period to
which such records relate by Certified Public Accountant selected by CSHL, to whom Company has no
reasonable objection, who October 29, 2007 shall have the right to examine and make abstracts of
the records kept pursuant to this Agreement and report findings of said examination of records to
CSHL insofar as it is necessary to evidence any mistake or impropriety on the part of Company.

6. Patents and Infringement.

6.1. Responsibility for CSHL Patent Rights. CSHL has the sole rights for and controls the
preparation, filing, prosecution, and maintenance of all CSHL Patent Rights, using patent counsel
of CSHL’s choice.

6.2. Notification of Infringement. Company agrees to reasonably provide written notice to
CSHL promptly after becoming aware of any infringement of the Patent Rights. CSHL is not obligated
to prosecute any such infringers and CSHL’s failure to do so does not in any way release Company of
its obligations under this Agreement. 

7. Confidential Information; Publications; Publicity.

7.1. 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. The 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 Confidential Information in
confidence, except that the Receiving Party may disclose or permit the disclosure of any
Confidential Information to its trustees or directors, officers, employees, consultants, and

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advisors who are obligated to maintain the confidential nature of Confidential Information and who
need to know Confidential Information for the purposes of this Agreement; (ii) use Confidential
Information solely for the purposes of this Agreement; and (iii) allow its trustees or directors,
officers, employees, consultants, and advisors to reproduce the Confidential
Information only to the extent necessary for the purposes of this Agreement, with all reproductions
being Confidential Information.

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

(d) Ownership and Return. The Receiving Party acknowledges that the Disclosing Party (or a
third party entrusting its own information to the Disclosing Party) owns the Confidential
Information in the possession of the Receiving Party. Upon expiration or termination of this
Agreement, or at the request of the Disclosing Party, the Receiving Party shall return to the
Disclosing Party all originals, copies, and summaries of documents, materials, and other tangible
manifestations of Confidential Information in the possession or control of the Receiving Party,
except that the Receiving Party may retain one copy of the Confidential Information in the
possession of its legal counsel solely for the purpose of monitoring its obligations under this
Agreement.

7.2. Publicity.

7.2.1 Press Release Announcing this Agreement. CSHL shall allow Company to use the names
Cold Spring Harbor Laboratory and Dr. Gregory Hannon in conjunction with a press release announcing
the signing of this Agreement. Company shall submit a draft press release to CSHL and CSHL shall
review the same within twenty-four (24) hours of submission. CSHL shall work diligently with
Company to approve a press release acceptable to both parties so that such a release can be
published as soon as possible after execution of this Agreement.

7.2.2 Restrictions. Other than the press release referred to in Section 7.2.1, above,
Company may not use the name Cold Spring Harbor Laboratory or the names of any of its trustees,
officers, faculty, students, employees, or agents, or any adaptation of their names, or any terms
of this Agreement in any promotional material or other public announcement or disclosure without
the prior written consent of CSHL. The foregoing notwithstanding, Company

12

 

may disclose that information without the consent of CSHL in any prospectus, offering memorandum, or other document
or filing but only to the extent legally required by applicable securities laws or other applicable
law or regulation, provided that Company provides CSHL at
least ten (10) days prior written notice of the proposed text for the purpose of giving CSHL the
opportunity to comment on the text.

8. Term and Termination.

8.1. Term. This Agreement commences on the Effective Date and remains in effect until (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 patents have issued within the Patent Rights within that ten-year
period, unless earlier terminated in accordance with the provisions of this Agreement.

8.2. Voluntary Termination by Company. Company may terminate this Agreement for any reason
upon ninety (90) days prior written notice to CSHL, but the obligation to pay the milestones and
royalties under Sections 4.3 and 4.4, respectively shall survive any such Termination to the extent
that the sale of Licensed Products and Licensed Services are in accordance with Section 8.6.

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

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

8.5. Termination by CSHL. This Agreement may also be terminated by CSHL immediately upon
written notice if Company or any of its Affiliates (a) provokes an interference with any of the
Patent Rights, (b) commences any action challenging the scope, validity or enforceability of any of
the Patent Rights or (c) to the extent Company has such control, encourages, assists or, permits
any third party to do any of the foregoing.

8.6. Effect of Termination. In addition to the survival provisions in Section 8.2, the
following provisions survive the expiration or termination of this Agreement Articles 1, 5 and 9;
Sections 3.2, 3.5, 4.3, 4.4, 6.3, 7.1, 7.2, 8.6, and 10.9 Upon the early termination of this
Agreement, Company may complete and sell any work-in-progress and inventory of Covered Products and
Licensed Services that exist as of the effective date of termination, provided that (a) Company is
current in payment of all amounts due CSHL under this Agreement, (b) Company

13

 

pays CSHL the applicable royalty on sales of Licensed Products and Licensed Services in accordance with the terms
of this Agreement, and (c) Company completes and sells all work-in-progress and inventory of
Licensed Products and Licensed Services within twelve (12) months
after the effective date of termination. Notwithstanding the foregoing, Company may continue to
provide Licensed Services as defined in Section 1.6(b) or 1.6(c) following termination. The
obligation to pay milestones and royalties on Developed Products under Sections 4.3(a), 4.3(d) and
4.4(b), and on Licensed Services under Section 4.4(c) shall survive termination.

9. Dispute Resolution.

9.1. Procedures Mandatory. The parties agree that any dispute arising out of or relating
to this Agreement will be resolved solely by means of the procedures set forth in this Article, and
that these procedures constitute legally binding obligations that are an essential provision of
this Agreement. However, all procedures and deadlines specified in this Article may be modified
only 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.

9.2. Dispute Resolution Procedures.

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

(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 engage in a mediation proceeding under the then current CPR Institute for Dispute Resolution
(“CPR”) Model Procedure for Mediation of Business Disputes, except that specific provisions of this
Section 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 or resolution; (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 or
resolution within one hundred 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 may pursue any other remedies legally
available to resolve the dispute.

9.3. Preservation of Rights Pending Resolution.

14

 

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

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

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

10. Miscellaneous.

10.1. Representations and Warranties. CSHL represents that its employees and members of
its staff have assigned to CSHL their entire right, title, and interest in the Patent Rights and
Biological Material and Know How and the other CSHL Intellectual Property and that it has authority
to grant the rights and licenses set forth in this Agreement. NEITHER CSHL, NOR COMPANY, MAKES ANY
OTHER WARRANTIES CONCERNING THE PATENT RIGHTS, KNOW-HOW, AND BIOLOGICAL MATERIALS, INCLUDING
WITHOUT LIMITATION ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, AND IN THE CASE OF COMPANY ITS OBLIGATIONS, AND THE PRODUCTS AND SERVICES IT WILL BE
DEVELOPING AND COMMERCIALIZING HEREUNDER. SPECIFICALLY, CSHL MAKES NO WARRANTY OR REPRESENTATION
(A) REGARDING THE VALIDITY OR SCOPE OF THE PATENT RIGHTS, (B) THAT THE EXPLOITATION OF THE PATENT
RIGHTS, BIOLOGICAL MATERIALS, KNOW-HOW OR ANY LICENSED PRODUCT OR LICENSED SERVICE WILL NOT
INFRINGE ANY PATENTS OR OTHER INTELLECTUAL PROPERTY RIGHTS OF A THIRD PARTY, AND (C) THAT ANY THIRD
PARTY IS NOT CURRENTLY INFRINGING OR WILL NOT INFRINGE THE PATENT RIGHTS.

10.2 Limitation of Liability. NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL,
CONSEQUENTIAL, LOST PROFIT, EXPECTATION, PUNITIVE OR OTHER INDIRECT DAMAGES IN CONNECTION WITH ANY
CLAIM ARISING OUT OF OR RELATED TO THIS AGREEMENT, WHETHER GROUNDED IN TORT (INCLUDING NEGLIGENCE),
STRICT LIABILITY, CONTRACT, OR OTHERWISE.

10.3. Compliance with Law and Policies. Company agrees to comply with applicable law and
the conflict of interest policies of CSHL in the area of technology transfer and shall promptly
notify CSHL of any violation that Company knows or has reason to believe has occurred or is likely
to occur.

15

 

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

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

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

10.7. Assignment. Neither party may assign this Agreement without the prior written
consent of the other party, which consent may not be unreasonably withheld, except that Company may
assign this Agreement to an 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.

10.8. 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 relates only to that instance and is not an agreement to
waive any rights or fail to act in any other instance.

10.9. Governing Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York irrespective of any conflicts of law principles.

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

If to CSHL:

	 
	COLD
SPRING HARBOR LABORATORY

Bungtown Road

P.O. Box 100

Cold Spring Harbor, New York 11724

	Attn:  Mr.
John Maroney 

            Director, Office of technology Transfer

	 
	If to Company:

	 
	RXi
Corporation 

Suite 650

11726 San Vicente Blvd. 

Los Angeles, CA 90049

16

 

	 
	Attn:

	        Chief Executive Officer

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

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

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

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

	 	 	 
	COLD SPRING HARBOR LABORATORY

	 	 
	 
	 	 
	By: John Maroney
	 	 
	 
	 	 
	 
	 	 
	 

Director, Office of technology Transfer
	 	 
	 
	 	 
	Date:
	 	 
	 
	 	 
	 	 
	 
	 
	 	 
	RXi Pharmaceuticals Corp.
	 	 
	By:
	 	 

     

Chief Executive Officer

Date: 3/15/07

17

 

EXHIBIT A

CSHL-P-010/HANNON01

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Client-Matter/Subcase	 	Case	 	Application	 	Publication	 	Patent	 	Status
	Country Name	 	Type	 	Number/Date	 	Number/Date	 	Number/Date	 	Expiration Date
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	CSHL-P-010 A1

	 	PCT
	 	2003210621	 	 	 	 	 	 	 	 	Pending
	Australia

	 	 	 	22-Jan-2003	 	 	 	 	 	 	 	 	 
	Title:	 	METHODS AND COMPOSITIONS FOR RNA INTERFERENCE
	Inventor(s):	 	BERNSTEIN, Emily; CAUDY, Amy; HANNON, Gregory J.; PADDISON, Patrick J.; CONKIN, Douglas
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	CSHL-P-010 AU

	 	ORD
	 	2001245793	 	 	 	 	 	 	 	 	Pending
	Australia

	 	 	 	16-Mar-2001	 	 	 	 	 	 	 	 	 
	Title:	 	METHODS AND COMPOSITIONS FOR RNA INTERFERENCE
	Inventor(s):	 	HAMMOND, Scott, HANNON, Gregory J.; BEACH, David H.; BERNSTEIN, Emily; CAUDY, Amy
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	CSHL-P-010 CI

	 	PCT
	 	2473944	 	 	 	 	 	 	 	 	Pending
	Canada

	 	 	 	22-Jan-2003
	 	 	 	 	 	 	 	 
	Title:	 	METHODS AND COMPOSITIONS FOR RNA INTERFERENCE
	Inventor(s):	 	BERNSTEIN, Emily; CAUDY, Amy; HANNON, Gregory J.; PADDISON, Patrick J.; CONKIN, Douglas
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	CSHL-P-010 CA

	 	ORD
	 	2403397	 	 	 	 	 	 	 	 	Pending
	Canada

	 	 	 	16-Mar-2001
	 	 	 	 	 	 	 	 
	Title:	 	METHODS AND COMPOSITIONS FOR RNA INTERFERENCE
	Inventor(s):	 	HAMMOND, Scott, HANNON, Gregory J.; BEACH, David H.; BERNSTEIN, Emily; CAUDY, Amy
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	CSHL-P-010 E1

	 	PCT
	 	03732052.0	 	 	1546174	 	 	 	 	Published
	European Patent Convention

	 	 	 	22-Jan-2003
	 	29-Jun-2005
	 	 	 	 
	Title:	 	METHODS AND COMPOSITIONS FOR RNA INTERFERENCE
	Inventor(s):	 	BERNSTEIN, Emily; CAUDY, Amy; HANNON, Gregory J.; PADDISON, Patrick J.; CONKIN, Douglas
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	CSHL-P-010 EP

	 	ORD
	 	01918752.5	 	 	1272630	 	 	 	 	Published
	European Patent Convention

	 	 	 	16-Mar-2001
	 	08-Jan-2003
	 	 	 	 
	Title:	 	METHODS AND COMPOSITIONS FOR RNA INTERFERENCE
	Inventor(s):	 	HAMMOND, Scott, HANNON, Gregory J.; BEACH, David H.; BERNSTEIN, Emily; CAUDY, Amy
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	CSHL-P-010 H1

	 	ORD
	 	05106782.4	 	 	1073660	 	 	 	 	Published
	Hong Kong

	 	 	 	22-Jan-2003
	 	14-Oct-2005
	 	 	 	 
	Title:	 	METHODS AND COMPOSITIONS FOR RNA INTERFERENCE
	Inventor(s):	 	BERNSTEIN, Emily; HANNON, Gregory J.; PADDISON, Patrick J.; CAUDY, Amy; CONKLIN, Douglas
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	CSHL-P-010 HK

	 	ORD
	 	03104793.8	 	 	 	 	 	 	 	 	Published
	Hong Kong

	 	 	 	07-Jul-2003
	 	13-Oct-2003
	 	 	 	 
	Title:	 	METHODS AND COMPOSITIONS FOR RNA INTERFERENCE
	Inventor(s):	 	HAMMOND, Scott, HANNON, Gregory J.; BEACH, David H.; BERNSTEIN, Emily; CAUDY, Amy
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	CSHL-P-010 IL

	 	ORD
	 	151781	 	 	 	 	 	 	 	 	Pending
	Israel

	 	 	 	17-Sep-2002
	 	 	 	 	 	 	 	 
	Title:	 	METHODS AND COMPOSITIONS FOR RNA INTERFERENCE
	Inventor(s):	 	HAMMOND, Scott, HANNON, Gregory J.; BEACH, David H.; BERNSTEIN, Emily; CAUDY, Amy

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Client-Matter/Subcase	 	Case	 	Application	 	Publication	 	Patent	 	Status
	Country Name	 	Type	 	Number/Date	 	Number/Date	 	Number/Date	 	Expiration Date
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	CSHL-P-010 JI

	 	PCT
	 	2003-562262	 	 	533484	 	 	 	 	Published
	Japan

	 	 	 	22-Jan-2003
	 	10-Nov-2005
	 	 	 	 
	Title:	 	METHODS AND COMPOSITIONS FOR RNA INTERFERENCE
	Inventor(s):	 	BERNSTEIN, Emily; CAUDY, Amy; HANNON, Gregory J.; PADDISON, Patrick J.; CONKIN, Douglas
	 
	CSHL-P-010 JP

	 	ORD
	 	2001-567320	 	 	2003-52636	 	 	 	 	Published
	Japan

	 	 	 	16-Mar-2001
	 	09-Sep-2003
	 	 	 	 
	Title:	 	METHODS AND COMPOSITIONS FOR RNA INTERFERENCE
	Inventor(s):	 	HAMMOND, Scott, HANNON, Gregory J.; BEACH, David H.; BERNSTEIN, Emily; CAUDY, Amy
	 
	CSHL-0-010 WI

	 	ORD
	 	US03/001963
	 	03/062394	 	 	 	 	National
	Patent Cooperation Treaty

	 	 	 	22-Jan-2003
	 	31-Jul-2003
	 	 	 	 
	Title:	 	METHODS AND COMPOSITIONS FOR RNA INTERFERENCE
	Inventor(s):	 	BERNSTEIN, Emily; CAUDY, Amy; HANNON, Gregory J.; PADDISON, Patrick J.; CONKIN, Douglas
	 
	CSHL-P-010 W2

	 	ORD
	 	US05/42488
	 	 	 	 	 	 	 	Pending
	Patent Cooperation Treaty

	 	 	 	23-Nov-2005
	 	 	 	 	 	 	 	 
	Title:	 	METHODS AND COMPOSITIONS FOR RNA INTERFERENCE
	Inventor(s):	 	PADDISON, Patrick J.; HANNON, Gregory J.; SIOLAS, Despina C.
	 
	CSHL-P-010 WO

	 	ORD
	 	US01-08435
	 	WO01/68836
	 	 	 	National
	Patent Cooperation Treaty

	 	 	 	16-Mar-2001
	 	20-Sep-2001
	 	 	 	 
	Title:	 	METHODS AND COMPOSITIONS FOR RNA INTERFERENCE
	Inventor(s):	 	HAMMOND, Scott, HANNON, Gregory J.; BEACH, David H.; BERNSTEIN, Emily; CAUDY, Amy
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	CSHL-P-010 01

	 	CIP
	 	09/858862	 	 	04/0018999	 	 	 	 	Published
	 

	 	 	 	16-May-2001
	 	29-Jan-2004
	 	 	 	 
	Title:	 	METHODS AND COMPOSITIONS FOR RNA INTERFERENCE
	Inventor(s):	 	HAMMOND, Scott, HANNON, Gregory J.; BEACH, David H.; CAUDY, Amy; BERNSTEIN, Emily
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	CSHL-P-010 02
	 	CIP	 	090-866557	 	 	0162126-A1	 	 	 	 	Allowed
	United States of America

	 	 	 	24-May-2001
	 	31-Oct-2002
	 	 	 	 
	Title:	 	METHODS AND COMPOSITIONS FOR RNA INTERFERENCE
	Inventor(s):	 	HAMMOND, Scott, HANNON, Gregory J.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	CSHL-P-010 03
	 	CIP	 	10/055797	 	 	0084471	 	 	 	 	Published
	United States of America
	 	 	 	22-Jan-2002	 	01-May-2003	 	 	 	 
	Title:	 	METHODS AND COMPOSITIONS FOR RNA INTERFERENCE
	Inventor(s):	 	HAMMOND, Scott, HANNON, Gregory J.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	CSHL-P-010 04
	 	CIP	 	10/350798	 	 	0086884	 	 	 	 	Published
	United States of America
	 	 	 	24-Jan-2003	 	06-May-2004	 	 	 	 
	Title:	 	METHODS AND COMPOSITIONS FOR RNA INTERFERENCE
	Inventor(s):	 	HAMMOND, Scott, HANNON, Gregory J.; BEACH, David H.; BERNSTEIN, Emily; CAUDY,
Amy; PADDISON, Patrick J.; CONKLIN, Douglas

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Client-Matter/Subcase	 	Case	 	Application	 	Publication	 	Patent	 	Status
	Country Name	 	Type	 	Number/Date	 	Number/Date	 	Number/Date	 	Expiration Date
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	CSHL-P-010 05

	 	CIP
	 	10/997086	 	 	 	 	 	 	 	 	Pending
	United States of America

	 	 	 	23-Nov-2004
	 	 	 	 	 	 	 	 
	Title:	 	METHODS AND COMPOSITIONS FOR RNA INTERFERENCE
	Inventor(s):	 	HANNON, Gregory J.; PADDISON, Patrick J.; SIOLAS, Despina C.
	 
	CSHL-P-010 -6

	 	CON
	 	10-Jan-2006
	 	 	 	 	 	 	 	Pending
	Title:	 	METHODS AND COMPOSITIONS FOR RNA INTERFERENCE
	Inventor(s):	 	HAMMOND, Scott, HANNON, Gregory J.; BEACH, David H.; BERNSTEIN, Emily; CAUDY, Amy
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	CSHL-P-010 60

	 	PRO
	 	60/189739	 	 	 	 	 	 	 	 	Expired
	 

	 	 	 	16-Mar-2000	 	 	 	 	 	 	 	 
	Title:	 	METHODS AND COMPOSITIONS FOR RNA INTERFERENCE
	Inventor(s):	 	HAMMOND, Scott, HANNON, Gregory J.; BEACH, David H.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	CSHL-P-010 61

	 	PRO
	 	60/243097	 	 	 	 	 	 	 	 	Expired
	 

	 	 	 	24-Oct-2000
	 	 	 	 	 	 	 	 
	Title:	 	METHODS AND COMPOSITIONS FOR RNA INTERFERENCE
	Inventor(s):	 	HAMMOND, Scott, HANNON, Gregory J.; BERNSTEIN, Emily; CAUDY, Amyexv10w4

 

Exhibit 10.4

EXCLUSIVE LICENSE AGREEMENT

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

RECITALS

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

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

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

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

     THEREFORE, University and Company agree as follows:

1. Definitions.

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

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

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

[***] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.
An unredacted version of this exhibit has been filed separately with the Commission.

Page 1 of 19 

 

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

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

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

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

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

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

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

Page 2 of 19 

 

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

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

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

2. Grant of Rights

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

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

     2.3. Retained Rights.

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

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

Page 3 of 19 

 

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

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

3. Company Obligations Relating to Commercialization.

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

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

          (b) Development of Licensed Products.

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

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

Page 4 of 19 

 

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

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

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

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

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

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

     3.3. Indemnification.

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

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

Page 5 of 19 

 

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

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

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

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

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

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

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

Page 6 of 19 

 

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

     4. Consideration for Grant of Rights.

     4.1. License Fees.

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

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

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

     4.2. Equity.

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

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

Page 7 of 19 

 

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

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

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

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

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

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

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

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

Page 8 of 19 

 

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

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

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

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

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

5. Royalty Reports; Payments; Records.

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

     5.2. Reports and Payments.

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

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

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

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

Page 9 of 19 

 

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

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

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

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

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

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

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

Page 10 of 19 

 

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

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

6. Patents and Infringement.

     6.1. Responsibility for Patent Rights.

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

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

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

     6.3. Payment of Expenses.

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

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

Page 11 of 19 

 

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

     6.4. Infringement.

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

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

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

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

Page 12 of 19 

 

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

7. Confidential Information; Publications; Publicity.

     7.1. Confidential Information.

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

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

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

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

Page 13 of 19 

 

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

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

8. Term and Termination.

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

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

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

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

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

Page 14 of 19 

 

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

9. Dispute Resolution.

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

     9.2. Dispute Resolution Procedures.

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

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

Page 15 of 19 

 

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

     9.3. Preservation of Rights Pending Resolution.

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

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

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

10. Miscellaneous.

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

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

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

Page 16 of 19 

 

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

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

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

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

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

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

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

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

	 	 	 
	If to University:

	 	If to Company:
	 
	 	 
	Office of Technology Management

	 	RXi Pharmaceuticals Corporation
	University of Massachusetts

	 	One Innovation Drive
	333 South Street, Suite 400

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

	 	Attention: President

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

Page 17 of 19 

 

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

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

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

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

	 	 
	Name:

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

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

	 	 	 	 	 	Date:	 	 	 	 
	 

	 	 

	 	 	 	 	 	 

	 	 

Page 18 of 19 

 

EXHIBIT A

Patent Rights

UMMC 06-21

     Invention Disclosure

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

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

     Provisional Application

Entitled: “Improved RNA Interference Agents for Therapeutic Use”

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

Page 19 of 19

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